LONDON, November 17 /PRNewswire/ -- Financial highlights - continuing operations

2009 2008 Change GBPm GBPm Revenue (excluding Joint Ventures) 574.1 456.5 +26% Group Turnover* 601.1 513.7 +17% Underlying Profit Before 44.6 38.3 +16% Taxation** Profit Before Taxation 32.8 21.5 +53% Underlying Earnings Per Share(p)*** 17.6 15.2 +16% Cash Conversion**** 88% 125% Basic Earnings Per Share (p) 13.0 8.7 +49% Interim Dividend Per Share (p) 4.3 3.9 +10%

* Includes share of turnover from equity accounted joint ventures and associates.

**Underlying profit before taxation (and underlying operating profit also referred to in this statement) excludes amortisation of intangibles arising from business combinations (GBP11.8m; 2008: GBP10.1m), share of joint venture taxation (GBP0.2m; 2008: GBP1.3m), fair value movements arising from derivatives (GBP0.2m; 2008: nil) and exceptional items and other one off charges (GBP0.4m gain; 2008: GBP5.4m charge).

***Before exceptional items, fair value movements arising from derivatives and intangible amortisation arising from business combinations

**** Underlying operating cash as a percentage of underlying operating profit.

2008 figures have been restated as detailed in note 1.

The above definitions apply throughout this document.

Operational highlights

- Good order book visibility of GBP4.4bn and significant bids and pipeline of GBP8bn - Continuing good organic growth with the business well positioned to take advantage of increased Government outsourcing - Strong cash conversion together with cash proceeds from BVT leaves the Group with balance sheet strength from which to drive further growth - Reorganisation programme well underway and on track to deliver the expected cost savings of GBP7m net per annum - Move to FTSE Business Support Services sub-sector in December 2009

Outlook

VT Group CEO Paul Lester said: Our strong first half performance and our focus as a support services business puts the Group on the threshold of an exciting new era as we prepare to celebrate our 150th anniversary in 2010.

With greater pressure on Government budgets, we believe that opportunities in outsourcing will increase. We are well placed to take advantage of this by maintaining our success in existing markets and by broadening our service offering to our current customer base. In addition, the cash from the sale of our shareholding in BVT Surface Fleet provides us with the financial resources to acquire further support services businesses.

The combination of these opportunities and the visibility of our future order book, means that the Board remains confident about VT's short and longer-term prospects.

Notes to Editors

1. VT Group is an engineering-based support services company providing services to Central and Local Government. The Group employs over 12,000 people and has its Headquarters in Southampton, UK, with operations from various locations, primarily in the UK and USA.

2. For the year ended 31 March 2009 VT Group reported turnover for its continuing operations of GBP1,096 million (2008: GBP845 million) and Group Underlying Profit Before Tax of GBP86.6 million (2008: GBP61.6 million). The order book for continuing operations was around GBP4.5 billion as of the end of March 2009.

3. VT operates in a wide range of markets including defence, education, secure communications, waste and nuclear services, providing services focused on:

- Critical asset management - Facilities management - Logistics of people and equipment - Education and training - Design, procure and build

4. Going forward, VT Group's services businesses will consist of three operating segments - Defence, Government and Critical Services in the UK and VT Group Inc in the US. The operations of these segments will be as follows:

5.

a. Defence will be responsible for managing and strengthening our relationship with the UK MoD b. Government and Critical Services will manage and develop our non-defence Central and Local Government relationships. c. VT Group Inc. will concentrate on growing our work with the US Department of Defense (DoD).

6. Further information about VT Group, its services and products can be found at http://www.vtplc.com.

Interim Management Report

VT Group manages assets and provides services that our customers consider critical to their own activities. We use our people, skills and experience to deliver solutions to our customers as effectively and efficiently as possible.

Overview

The first half of 2009 was another period of growth for the Group with our businesses performing strongly, despite the challenging economic conditions. With our transition to a support services business now complete, we have the opportunity to grow further, both organically and through acquisition.

The disposal of our shareholding in BVT Surface Fleet Limited (BVT) was completed on 30 October. As a result, we now have considerable financial resources to increase our capability by adding support services businesses which offer a good strategic fit and enhance shareholder value. In particular, we will look at businesses that extend our capability in either existing or adjacent markets.

Future organic growth will be based on broadening the range of services to our existing customers, adding value by using our relationship management and proven track record to expand our activities into adjacent sectors, and by increasing our footprint in existing markets. Areas such as Local Government, nuclear and waste-to-energy offer particularly good opportunities.

We will also be well placed to benefit from pressure on the spending profiles of sectors such as defence. Delays or reductions to capital expenditure, both in the UK and US, are likely to result in existing equipment requiring additional support to extend its service life.

VT has established a strong position in its existing markets with a record of providing innovative solutions to improve services and create improved value-for-money. This pedigree will enable us to take advantage of the expected growth in outsourcing as budgetary pressures increase at Central and Local Government levels and result in a further drive for greater efficiency and reduced costs. Currently only GBP80bn of the current UK public expenditure of GBP620bn is outsourced. Whilst we believe that opportunities will increase, budgetary constraints will also result in continuing margin pressures. Our 'One VT' reorganisation programme leaves us well placed to respond to this challenge.

Our order book continues to show good visibility and stands at GBP4.4bn, marginally below the level at year end (GBP4.5bn). We are working on a number of significant opportunities to add to our order book, including the UK's Search and Rescue helicopter (SAR-H) programme, various waste-to-energy projects, the outsourcing of Army recruitment and the Joint Military Air Traffic Services (JMATS) programme, together valued at over GBP8bn.

As part of our transition to a support services company, we announced in May our intention to restructure the Group into three business streams aligned to the customers we serve. These streams are Defence, Government and Critical Services (both in the UK) and VT Group Inc (in the US). Concentrating our business in these areas will strengthen our capability as a support services company offering higher value services, an important differentiator in the services sector.

Our 'One VT' programme is progressing well and we are on track to deliver the planned net savings of GBP7m per year that we have targeted through implementing operational efficiencies.

Following the exit from BVT, VT Group will move to the Business Support Services sub-sector of the FTSE classifications with effect from 21 December 2009.

Half Year Results

Half year results - continuing operations

Group turnover for the period increased by 17% to GBP601.1m (2008: GBP513.7m). Excluding the impact of acquisitions and foreign exchange, organic turnover growth amounted to 8%.

Reported profit before tax increased by 53% to GBP32.8m (2008: GBP21.5m), although the prior year included net exceptional charges of GBP5.4m in relation to group reorganisation, industrial injury provision and sale of non-core properties.

The higher net finance charges incurred in the period are due to financing charges associated with defined benefit pension schemes, which reflect the volatility in financial markets. Underlying profit

The Group uses underlying profit before taxation as a key measure of performance, defined as follows:

As restated 30 30 31 September September March 2009 2008 2009 GBPm GBPm GBPm Profit before tax 32.8 21.5 29.6 Amortisation of intangible assets* 11.8 10.1 23.0 Exceptional items*** - 5.4 28.3 Other non-recurring items*** (0.4) - - Market value movements in respect of derivatives** 0.2 - 0.8 Joint Venture taxation 0.2 1.3 1.6 Underlying profit before tax 44.6 38.3 83.3

* arising from business combinations

** including in respect of Joint Ventures

*** details regarding exceptional and non-recurring items can be found in note 4.

Underlying profit achieved for the period of GBP44.6m (2008: GBP38.3m) represents a 16% increase over the prior year. Organic growth in underlying operating profit (excluding the impact of acquisitions and foreign exchange) was 13.5%.

Prior year restatement

Due to the adoption of IFRIC 12 and the finalisation of provisional fair values for a prior year acquisition, comparative profit has been restated. The impact is to reduce reported profit after tax by GBP0.2m for the comparative six month period. Full details of this restatement are included in note 1.

Reorganisation

The reorganisation programme announced in March 2009 is well underway and to date expenditure of GBP4.2m has been incurred and set against the provision created in the March 2009 accounts. Further expenditure will be incurred during the second half of the year.

Cash and net debt

The Group continues to generate strong cash conversion against underlying operating profits, achieving an 88% conversion rate for the six month period to 30 September 2009 (30 September 2008: 125%). Significant advanced payments in respect of FSTA subcontracts had an impact on the prior period.

The Group's net debt increased slightly to GBP191m (March 2009: GBP186m). A large reduction of net debt has occurred since the period end following completion of the BVT exit on 30 October. The Group received net cash proceeds of GBP299m in respect of the exit and settled deferred consideration for the purchase of VT Flagship of GBP70m.

Pensions

The Group's pension deficit in respect of defined benefit pension schemes increased to GBP53m net of deferred tax (March 2009: GBP43.6m). This increase arose largely as a result of market movements in bond yields used to value future pension benefits under IAS 19.

Taxation

The underlying effective tax rate increased to 28.6% (September 2008: 28%) principally as a result of changes in the mix of UK and overseas profits generated within the Group.

Dividend

Based upon the continuing financial strength of the Group, the Board has recommended the payment of an interim dividend of 4.3p per share, an increase of 10%.

Business Stream Performance

Defence

Turnover increased in the period by 29% to GBP251.4m (2008: GBP194.6m) driven by increased activity on the major PFI programmes (20%) and the impact of acquisitions (9%). Underlying operating profit of GBP28.7m (2008: GBP23.8m) grew by 21%, with organic growth of 13% in the period.

In Air, good progress continues to be made on our Future Strategic Tanker Aircraft (FSTA) and UK Military Flying Training System (UKMFTS) programmes.

VT, as part of the AirTanker consortium, is constructing new facilities at RAF Brize Norton where the new A-330 tanker/transport aircraft will be based. In addition, the first two aircraft have been delivered to Airbus Military (a division of EADS) for military modifications with delivery of the first aircraft to the customer scheduled for late 2011.

Ascent, the joint venture between VT and Lockheed Martin, has achieved several milestones in the first full year of the UKMFTS programme, including good progress at RAF Valley to provide new facilities for the Hawk T-2 trainer and the signing of a contract for the delivery of Rear Crew Stage One training. As part of this contract, VT will deliver infrastructure upgrades at RAF Barkston Heath and RNAS Culdrose, and will provide the supporting ICT structure at both locations. The overall contract is worth GBP57m to Ascent, with the sub-contracts to VT for the infrastructure upgrades worth GBP10m over five years.

We are also implementing the expanded initial flying training contract, which started in April and now includes Elementary Flying Training, University Air Squadron and Air Experience Flights. This programme is valued at up to GBP160m and to cater for this growth we have ordered a further 23 Grob Tutor aircraft to supplement our existing fleet of more than 90.

In Sea, our naval training business has secured a training contract for the delivery of UK based training for a Middle East navy. It has also extended its training and soft facilities management support agreements with the Royal Navy from June 2011 to December 2011 and April 2013 respectively. Together, these additions are valued at nearly GBP80m.

Our Land business has delivered a series of Urgent Operational Requirements in the form of training activities and engineering support through our ALC joint venture.

Government and Critical Services

Turnover increased in the period by 3% to GBP187.2m (2008: GBP182.3m). 2008 contained significantly higher turnover in respect of construction activities on the Lewisham Building Schools for the Future (BSF) programme. Underlying operating profit increased by 17% to GBP13.7m (2008: GBP11.7m) as the training and nuclear service streams benefited from higher activity and prior year cost control measures.

Our Training business has strengthened its market leading position with a number of contract wins including our new annual contract with the Learning and Skills Council (which has increased by 14% to GBP42m) as we delivered additional volumes of training, particularly in the engineering and services sectors.

In the automotive sector we have expanded our operations with leading manufacturers and independent outlets. We recently secured new contracts with Jaguar Land Rover, Kawasaki and Euro Parts which together cover technical apprenticeships, sales training and body and paint training. We have secured a two year extension of our apprenticeship training contract with VW Group (VW) until 2015. We have also been selected to run VW's technical services centre, which provides the UK franchised network with specialist expertise. These new contracts are worth GBP10m in total.

In Education, Learning21, our joint venture with Costain plc has started construction work on Northbrook School, the third BSF school in Lewisham. VT will provide Information Communication Technology (ICT) and Facilities Management services, with a total value of over GBP20m. The successful implementation of new ICT at Lewisham's Forest Hill School has seen us win the British Council for School Environments annual ICT industry award. Construction has also started on the first two BSF schools in Greenwich. BSF remains a key growth area for our education business and we are currently pursuing targeted opportunities worth over GBP180m.

In addition, we have been named preferred supplier for a new three-year contract to assess Higher Learning Teaching Assistants in London and the South East from January 2010. We are also preferred bidder for a further three-year extension to the national programme for assessing Advanced Skills/Excellent Teachers. These contracts are valued at over GBP7m in total.

In Critical Assets, we have extended our capability management service for the New Dimension fleet of emergency vehicles and equipment modules to include Wales. This extension will cover the same 16-year period as our existing work for the fleet in England. We have also added the Greater London Ambulance Service and Belmarsh Prison to our vehicle repair and maintenance services. Our secure communications business has agreed a five year extension of our communications and engineering work for a Government agency. The total value of these contracts is approximately GBP200m.

In Environment, our nuclear services business has benefited from a number of contract awards, together valued at over GBP30m. We have secured an extension to the B29 Project at Sellafield to take it through to completion. This project is to process radioactive waste material and demonstrates multi-discipline engineering capability coupled with proven procurement, construction and commissioning skills. We have also achieved one-year extensions to our laboratory and radiological detection and measuring contracts at Sellafield.

We continue to see demand for our decommissioning skills overseas. We have been selected by the European Bank for Reconstruction and Development as preferred bidder for a contract valued at EUR4m, to carry out decommissioning work on reactor buildings at a plant in Eastern Europe.

Progress on the design, build and operation of waste facilities in Wakefield under a GBP750m programme is ongoing and we now expect financial closure by the end of the financial year. A pipeline of other similar opportunities is also being addressed, worth around GBP4bn.

VT Group Inc.

Turnover for the period increased to GBP162.5m (2008: GBP136.8m) largely as a result of foreign exchange fluctuations. Underlying profit of GBP8.8m (2008: GBP6.7m) is an increase of 31.3% on the comparative six month period. Excluding the effect of currency movements, organic growth of 10% was achieved due in particular to a good performance in the logistics support business formerly known as VT Aepco.

Our US operations have been reorganised into two service streams; Integrated Solutions, which will address systems engineering and communications infrastructure under the US Department of Defense's C4IT programmes and Technical Services, which will concentrate on ranges, facilities, training and logistics.

We are in a good position to expand our naval expertise into other areas of the US military's C4IT programmes and to export our successful UK contracting for availability model as pressures on the US defence budget increase.

The training market presents good opportunities in the US where we will build upon our current capability and utilise the experience and expertise that we have gained in the UK. In particular, we are looking at opportunities in manned and unmanned aerial systems and with potential civilian agency customers including the Federal Aviation Administration (FAA).

Under our existing agreement with the Army Aviation and Missile Command (AMCOM), we have been awarded a task order to provide logistics analyses, maintain and update logistics information management systems and supply logistics support for the CH-47 Chinook cargo helicopter. The contract has a value of around $29m over five years.

We have also been appointed by NASA as prime contractor for the construction of a new hall for rocket assembly at the Wallops Island launch site on the US East Coast. The work is valued at $10m to VT over the next year.

Base operations work presents limited margin growth opportunities in the medium-term but over time we intend to transition to military range work where we can utilise our higher level technical capability, which is rewarded with higher margins.

Our current bidding pipeline sees us awaiting decisions on submitted bids totalling around $300m. In addition, our existing Space and Naval Warfare Systems Command (SPAWAR) contract has potential for more work on the East and West Coasts under the forthcoming rebid which will be valued at up to $900m.

Outlook

Our strong first half performance and our focus as a support services business puts the Group on the threshold of an exciting new era as we prepare to celebrate our 150th anniversary in 2010.

With greater pressure on Government budgets, we believe that opportunities in outsourcing will increase. We are well placed to take advantage of this by maintaining our success in existing markets and by broadening our service offering to our current customer base. In addition, the cash from the sale of our shareholding in BVT Surface Fleet provides us with the financial resources to acquire further support services businesses.

The combination of these opportunities and the visibility of our future order book, means that the Board remains confident about VT's short and longer-term prospects.

Condensed Consolidated Statement of Financial Performance for the six months ended 30 September 2009

6 months 6 months ended 30 September ended 30 September 2009 2008 (as restated) Note Result Exceptional Total Result Exceptional Total before items GBPm before items GBPm exceptional (note 4) exceptional (note 4) items items GBPm GBPm GBPm GBPm Combined sales of Group and equity accounted investments 601.1 - 601.1 513.7 - 513.7 Less: share of equity accounted investments (27.0) - (27.0) (57.2) - (57.2) Revenue 2 574.1 - 574.1 456.5 - 456.5 Cost of sales (476.9) - (476.9) (375.0) - (375.0) Gross profit 97.2 - 97.2 81.5 - 81.5 Administrative expenses (59.3) (59.3) (57.0) (9.9) (66.9) Profit arising from disposal of properties - - - - 4.5 4.5 Group operating profit 37.9 - 37.9 24.5 (5.4) 19.1 Share of results of equity accounted investments - - - 4.6 - 4.6 Operating profit 2 37.9 - 37.9 29.1 (5.4) 23.7 Financial income 5 14.4 - 14.4 19.6 - 19.6 Financial expense 6 (19.5) - (19.5) (21.8) - (21.8) Profit before tax from continuing operations 2 32.8 - 32.8 26.9 (5.4) 21.5 Income tax expense 7 (9.2) - (9.2) (6.6) 1.1 (5.5) Profit after tax from continuing operations 23.6 - 23.6 20.3 (4.3) 16.0 Net result for the period from discontinued operations 3 (5.1) 109.0 Net result for the period 18.5 125.0 Attributable to: Equity holders of the parent 18.1 124.4 Minority interest 0.4 0.6 Earnings per share (p) Continuing operations Basic earnings per share 13.0p 8.7p Diluted earnings per share 12.8p 8.5p Discontinued operations Basic earnings (2.8)p 61.5p per share Diluted earnings per share (2.8)p 60.0p Total Basic earnings per share 10.2p 70.2p Diluted earnings per share 10.0p 68.5p

Table continued below...

Year ended 31 March 2009 (as restated) Result Exceptional Total before items GBPm exceptional (note 4) items GBPm GBPm Combined sales of Group and equity accounted investments 1,106.9 - 1,106.9 Less: share of equity accounted investments (90.6) - (90.6) Revenue 1,016.3 - 1,016.3 Cost of sales (835.7) - (835.7) Gross profit 180.6 - 180.6 Administrative expenses (124.3) (32.8) (157.1) Profit arising from disposal of properties - 4.5 4.5 Group operating profit 56.3 (28.3) 28.0 Share of results of equity accounted investments 5.1 - 5.1 Operating profit 61.4 (28.3) 33.1 Financial income 40.6 - 40.6 Financial expense (44.1) - (44.1) Profit before tax from continuing operations 57.9 (28.3) 29.6 Income tax expense (14.9) 7.6 (7.3) Profit after tax from continuing operations 43.0 (20.7) 22.3 Net result for the period from discontinued operations 83.5 Net result for the period 105.8 Attributable to: Equity holders of the parent 105.0 Minority interest 0.8 Earnings per share (p) Continuing operations Basic earnings per share 12.1p Diluted earnings per share 11.9p Discontinued operations Basic earnings per share 47.1p Diluted earnings per share 46.1p Total Basic earnings per share 59.2p Diluted earnings per share 58.0p

Contact: Phil Rood Head of Media Relations phil.rood@vtplc.com +44(0)7941-164756 Enquiries: Paul Lester, Chief Executive +44(0)7785-388664 Phil Rood, Media Relations Tel: +44(0)1489-775213 or +44(0)7941-164756

SOURCE: VT Group plc

CONTACT: Contact: Phil Rood, Head of Media Relations, phil.rood@vtplc.com,+44(0)7941-164756. Enquiries: Paul Lester, Chief Executive+44(0)7785-388664, Phil Rood, Media Relations Tel: +44(0)1489-775213 or+44(0)7941-164756.