Prime Focus acquistion plans

Prime Focus Ltd (Prime Focus) has announced that the Company is in discussions with two unlisted entities ("US Entities") based in North America in relation to acquisition of the US Entities by Prime Focus either directly or through its subsidiaries (together the "Prime Focus Group"). The Transaction would be subject to due diligence and execution of definitive agreements.

The US Entities operate post-production and visual effects businesses catering both to the film and the television broadcast industries. If successful, the proposed acquisition would be a material acquisition for the Prime Focus Group as the US Entities', aggregate revenue for [2007] when added to the consolidated revenue of the Prime Focus Group for the same period, would represent a third of the combined revenue of the consolidated Prime Focus Group after such acquisition.

Prime Focus believes that the proposed acquisition would be in line with its strategy of acquiring Companies which are strategically located, have a verifiable track record, relationships and a talent pool but due to a variety of reasons are not generating profits. The Company intends to utilize its management capabilities and industry knowledge to turn around such loss making entities (including the proposed acquisition) into profitable businesses and create a global business model. Within the last 18 months Prime Focus has already carried out a similar exercise with VTR plc.