Regulatory Story
Go to market news section View chart   Print
RNS
Photo-Me International PLC  -  PHTM   

Interim Results

Released 07:00 11-Dec-2017

RNS Number : 9272Y
Photo-Me International PLC
11 December 2017
 

 

 

11 December 2017

Photo-Me International plc
("Photo-Me" or "the Group")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2017

Solid first half as laundry remains primary growth accelerator

 

Photo-Me International plc ('Photo-Me" or "the Group"), the instant service equipment group, announces its results for the six-month period ended 31 October 2017.

Results Highlights


Reported

At constant currency


Six months ended
31 Oct 2017

Six months ended
31 Oct 2016

Change

Six months ended
31 Oct 20161

Change1

Revenue

£122.2 m

£110.6m

+10.5%

+7.8%

EBITDA2

£44.9 m

£40.3m

+11.4%

+7.9%

Profit Before Tax

£32.9 m

£31.0m

+6.1 %

+3.1%

Net Cash3

£47.1 m

£68.0m

(30.7) %


EPS (diluted)

6.40p

5.84p

+9.6 %


Interim dividend per Ordinary share

3.71p

3.09p

+20.1 %



1 For constant currency comparatives, average rates of exchange used were £/€ 1.13 (H1 2017: 1.20), £/Yen 145 (H1 2017: 139)

2 Refer to the note 3 to the financial statements for the reconciliation of EBITDA to PBT 

3 Refer to the note 8 to the financial statements for the reconciliation of Net Cash to Cash and cash equivalents as per the financial statements

 

Financial Highlights

·     Revenue was up 10.5% to £122.2 million (up 7.8% at constant currency)

 

·     Reported EBITDA was up 11.4% and EBITDA margin expanded to 36.7%, up 300bpts, including £2.3 million profit on the sale of property and £0.9 million one-off costs in relation to the UK retail estate

 

·     Reported profit before tax was £32.9 million, up 6.1% (up 3.1% at constant currency)

 

·     Net cash was £47.1 million, reflecting a total of £68.6 million in higher dividend payments (£34.6 million) and investments in future growth (£34.0 million) since 31 October 2016, up £7.9 million from £39.2 million at 30 April 2017

 

·     Interim dividend increased by 20.1% to 3.71 pence per Ordinary share, in line with the stated progressive dividend policy

 

·     Total laundry revenues up 75% to £17.3 million (H1 2017: £9.9 million)

 

Operational Highlights

·     Continued strong performance led by Continental Europe in all three key business areas: identification, laundry and printing kiosks.

 

·     Further progress in the deployment of ID security technology:

·     Continued rollout of encrypted passport photo ID upload technology in Ireland.

·     In the UK, positive conclusion of discussions with Her Majesty's Passport Office and of the testing of the new online passport service; E-passport photobooths being rolled out across the UK, from mid December 2017.

 

·     Laundry remains the primary growth driver of the Group:

·     Manufacturing capacity increased in H2 2018 in support of growth target.

·     B2B services extended through acquisitions, with further opportunities under review.

 

·     Action taken to boost profitability of UK digital printing business:

·     Photo-Me Retail operations being refocused to provide unattended digital printing kiosk activities, with the phased closure of manned retail outlets

·     This will result in a total one-off restructuring cost of £2.0 million in the current financial year, of which £0.9 million has been accounted for in the period ended  31 October 2017.

 

·     Continued investment in innovation for future growth focused on:

·     Complementary products and technologies with multiple applications, such as a banking front-end application for the Group's booths.

·     Ongoing upgrade to support market leading position.

 

Commenting on the results, Serge Crasnianski, Chief Executive Officer, said:

"The Group has once again performed strongly, with good operational progress made against our strategy to diversify operations.

In the first half, further excellent progress was achieved in the deployment of laundry operations, a key growth driver for the Group. As a result, the Board anticipates that laundry revenue will become an increasing proportion of total Group revenue as we get closer to achieving our mid-term deployment targets."

 

ENQUIRIES:

 

 

Photo-Me International

+44 (0) 1372 453 399

Gabriel Pirona, CFO

ir@photo-me.com



Hudson Sandler LLP

+44 (0) 20 7796 4133

Wendy Baker/Emily Dillon/Jasper Bartlett

photo-me@hudsonsandler.com

 

 

An interview with Serge Crasnianski, CEO, and Gabriel Pirona, CFO, commenting on the interim results is available to view at www.photo-me.com and www.brrmedia.co.uk/event/161041

An audio webcast of the analyst and investor presentation will be available to download later today at www.photo-me.com .

NOTES TO EDITORS

 

Photo-Me International plc (LSE: PHTM) operates, sells and services a wide range of instant service vending equipment, primarily aimed at the consumer market.

 

The Group operates more than 47,300 vending units across 18 countries and its technological innovation is focused on three principal areas:

 

·     Identification: photobooths and integrated biometric identification solutions

·     Laundry: unattended laundry services

·     Kiosks: high-quality digital printing

 

In addition, the Group operates vending equipment such as children's rides, amusement machines and business service equipment.

 

The Group has built long-term relationships with major site owners and its equipment is generally sited in prime locations in areas of high footfall such as supermarkets, shopping malls (indoors and outdoors) and public transport venues. The equipment is maintained and serviced by an established network of 700 field engineers.

 

The Company's shares have been fully-listed on the London Stock Exchange since 1962.

 

 



 

CHAIRMAN'S STATEMENT

 

Results

The Group continues to perform in line with expectations, delivering strong reported revenue growth and further operational progress in the first half. 

The increase in revenues reflects expansion both through acquisitions as well as the continued extension of our laundry business, particularly in Continental Europe. This reflects our strategy to invest consistently in future growth. Furthermore, given the international nature of the business, with 80% of profits generated from operations outside of the United Kingdom, the Group has benefited from favourable currency movements.  

Reported revenue increased by 10.5% to £122.2 million. The rapid growth in our automated laundries and the unattended digital photo printing kiosks have largely mitigated lower photobooth takings in the UK and Japan.

Reported EBITDA increased by 11.4% to £44.9 million, resulting in a 300 bpts improvement in reported EBITDA margin to 36.7% of revenue.  Profit before tax increased by 6.1% to £32.9 million.  At constant currency, revenue increased by 7.8 % and profit before tax increased by 3.1%. Those results include the profit of £2.3 million on the sale of the head-office building in Bookham, as well as a one-off charge of £0.9 million in relation to the UK retail estate.

The Group remains highly cash generative, with cash generated from operations of £39.9 million. The Group's net cash position as at 31 October 2017 was £47.1 million, compared with net cash of £68.0 million as at 31 October 2016, following dividend payments and investments of £34.6 million and £34.0 million respectively, in the last 12 months, reflecting the progressive dividend policy, and our ongoing investment in the expansion of existing services and new product innovation. Compared to 30 April 2017, net cash increased by £7.9 million, from £39.2 million, while in the same period £18.6 million was invested in future growth and £11.6 million paid out as dividends.

Update on Photo-Me Retail

As previously announced, the Group has undertaken a review of the progress of its Photo-Me Retail operations, the business resulting from the acquisition of the UK Photo Division of Asda Stores in November 2016, in order to reshape the digital printing operations and boost profitability.

In line with the Board's strategy to improve profitability, the Photo-Me Retail business is being refocused to provide online and unattended digital printing kiosks services, as the manned retail outlets are being progressively closed. This action will result in a one-off charge of £2.0 million, of which £0.9 million has been accounted for in the period to 31 October 2017.

The Board is confident the action taken will improve the future profitability of these operations.

Strategy

The Group remains focused on three market segments: identification, laundry and digital kiosks, currently operating across 18 countries.

The Board is committed to diversifying operations and developing new technologies with multiple applications, which can be rapidly deployed across new and existing geographies, to provide a rapid return on investment. 

This strategy is based on expanding the number of units in operation, increasing the yield per unit, and minimising production and operational costs to the Group.

During the first half, we continued to expand the laundry business, increased the breadth of our identification solutions and invested further in research and development.  Details of our strategic progress are set out in the Business and Financial Review.

 

Dividends

The Board is declaring an interim dividend of 3.71 pence per Ordinary Share, an increase of 20.1% compared with the interim dividend of 3.09 pence per ordinary share paid last year.

This increase is in line with the Group's progressive dividend policy and the Board's pledge in 2016 to increase the ordinary dividend by 20% for the financial years ending 30 April 2017 and 30 April 2018. Since 1 May 2016, the Group has returned £44.3 million to shareholders by way of dividends.

The interim dividend will be paid on 11 May 2018 to shareholders on the register on 6 April 2018. The ex-dividend date will be 5 April 2018.

 

Outlook

The Group's performance in the first half was in line with the Board's expectation, notwithstanding the challenges of the macroeconomic environment.

Good operational progress has been made, particularly in the identification and laundry businesses in Continental Europe. The expansion of the Group's estate of automated laundries has continued apace. Sales of laundry equipment have increased according to expectations and the Board is actively looking for further business-to-business laundry acquisition opportunities in Europe. In the medium term, it is anticipated that laundry revenue will grow significantly as a proportion of the total Group revenues and satisfactory progress is being made towards our target of 6,000 total laundry units (owned and sold) deployed by the end 2020.

In the second half, the Group will benefit from the enhanced profitability of Photo-Me Retail's operations once the refocus of activities towards unattended services is complete.

Whilst remaining mindful of the macroeconomic environment, foreign exchange movements and consumer sentiment, the Board remain confident about the Group's prospects. 

 



 

CHIEF EXECUTIVE'S BUSINESS AND FINANCIAL REVIEW

 

The Group has performed strongly in the first half.  As at 31 October 2017, the Group's estate comprised 47,325 units, an increase of 1.2% compared with the prior year period. Units were added principally in the laundry business (up 47.1%) and in digital kiosks (up 5.6%), while some 800 unprofitable amusement machines were retired, mainly in Asia.

 

Vending units in operation


As at
31 October 2017

As at
31 October 2016

Change year on year


No of units

% of total

No of units

% of total


Continental Europe

24,229

51%

23,605

50%

+2.6%

UK & Republic of Ireland

12,951

27%

12,602

27%

+2.8%

Asia & ROW

10,145

22%

10,553

23%

(3.9)%


47,325

100%

46,760

100%

+1.2%

 

Laundry units

The growth strategy for the laundry business, which was launched in 2012, is predicated on leveraging our well-established relationship with site owners to access prime locations, mainly where we already operate other instant service equipment, such as photobooths. 

 


H1 2018

H1 2017

Change

Owned and operated units

2,332

1,579

+47.7%

Average monthly takings per owned unit (€)4

€1,508

€1,400

+7.7%

 

4Average calculated on mature estate (machines in France, Ireland and Portugal with at least one month full month takings)

 

Further progress has been achieved by the Group in the laundry business, with total laundry revenues across the Group up 74.7% to £17.3 million compared with the prior year period (H1 2017: £9.9 million).

The revenue relating to our operated laundry estate increased by 54.2% to £11.1 million in the period (H1 2017: £7.2 million), due to 47.7% increase in the size of our owned and operated laundry machines estate and a 7.7% increase in average takings per unit to €1,508.

 

 

Investment programme

A key part of our strategy is the ongoing investment in new technologies to develop new and complementary products and services, to support future growth and create shareholder value.

Cashflow from our operations has remained strong at £39.9 million. This has enabled the Board to invest £18.7 million in the first half of the financial year, primarily in the roll-out of Revolution laundries and the purchase of launderette shops in Europe, while in the same period, a total of £11.6 million was returned to shareholders through dividend payments.

Strategic progress

Photo identification (photobooths and integrated biometric identification solutions)

We have continued to expand our services in Ireland through the deployment of our encrypted photo ID upload technology in our photobooths for Online Passport Applications. Since the Irish Government launched the new system in April 2017, approximately 200 photobooths have been enabled with secure digital upload technologies.  We are on track to upgrade a total of 300 units by the end of the financial year.

As previously announced, in the UK, discussions with Her Majesty's Passport Office regarding the new online passport service and testing have concluded positively. The service is being rolled out to photobooths across the UK from mid December 2017.

The progressive rollout of secure and direct data transfer technologies in photobooths in Germany has continued with approximately 20 photobooths upgraded.

Laundry (unattended laundry services)

The owned and operated laundry segment remains a key driver of growth for the Group, with revenues from laundry expected to represent half of total Group revenue in the medium term.  

In the first half, the Group delivered strong growth from its laundry operations, with additional units deployed across all regions. 

During the period, our manufacturing partner transferred production of the Revolution machine from Hungary to a new facility in Poland. Whilst this transition resulted in a short term slowdown in production, the new facility has the capacity to support production of 150 Revolution units per month from the second half of the financial year. This increase in production volumes will enable the Group to accelerate deployment in the longer term.

The Group remains on track to reach its target to deploy 6,000 (owned and sold) units by the end of 2020.

The Group made good progress on expanding its presence in the launderette market through the acquisition of underperforming launderette businesses in attractive locations. There are currently 66 outlets in operation, including six shops in Japan. Japan is a particularly attractive market where the lifestyle and laundry market dynamics offer significant opportunities for growth.

As part of the strategy to complement its laundry offering, the Group is expanding its activities in the business to business laundry services through acquisitions. Further to the October 2015 acquisition of Fowler (UK) Limited, in July 2017, the Group acquired Inox Equip Limited and Tersus Limited. These UK based B2B laundry operations provide bespoke professional design, procurement and installation of laundry and catering facilities for blue chip companies and institutions such as care homes and hospitals. In line with its strategy, the Group continues to actively seek out further bolt-on acquisitions in this area. The revenues of the B2B laundry services amounted to £4.1 million for the six months to 31 October 2017.

Kiosks (High quality digital printing)

The Group has continued to invest in the further deployment of digital kiosks. Compared to the same period last year, a global net total of 311 digital printing kiosks were deployed, mainly in the UK leveraging the Group's presence across the Asda network via the Photo-Me Retail business.

The Group is pleased with the performance of the new equipment, achieving average monthly gross takings per unit of £800 across the estate and reaching £1,500 in the UK.

The Group will pursue its strategy to further expand the roll-out of the SpeedLab Cube and SpeedLab Bio released last year, offering both the latest state-of -the art digital printing technology and a significantly  enhanced consumer experience, creating potential for further growth.

Investment in innovation

Investment in new technologies and products has continued, particularly focused on offering technology via our photobooth network to provide customers with front-end retail banking services and proprietary 3D Capture and enrolment technologies. The Group believes that those new self-service banking front-end booths address the need from financial institutions to find additional, cost effective platforms to support their traditional network, especially in the context of the rationalisation of the banking industry. 

Once again, the Group showcased selected new products at TRUSTECH, a large event dedicated to Trust Based Technology in Cannes (France) which took place in November.

At this year's event, The Group's banking booth technology won the 2017 Sesames Award for Best eTransactions Solution, and its 3D Enrolment Kiosk product was a finalist. The Awards are given in recognition of the best innovations in payments, identification, digital security and wireless technology. 

 

Registered office

In July 2017, the Group completed the sale of its head office buildings in Bookham, Surrey. The freehold was sold to Shanly Homes Limited (SHL) for a consideration of £2.5 million. The book value of the assets sold was £0.1 million and therefore the profit on the sale amounts to approximately £2.3 million, taking into account ancillary costs amounting to £0.1 million.

This disposal was part of the Group's review of the property portfolio and consolidated its head office and UK operations into one location. This strategy has rationalised the Group's property footprint and has enabled it to achieve further efficiencies in its UK operations.

The Group's new registered office is Unit 3B Blenheim Road, Epsom, KT19 9AP.

 

REVIEW OF PERFORMANCE BY GEOGRAPHY

The commentaries on the financial performance of the business are set out below in line with the segments as operated by the Board and the management of Photo-Me and consistently with the information prepared to support the Board decision process. Although the Group is not managed around product lines, some commentary below relates to the performance of specific products in the relevant geographies.

Key financials

The Group reports its financial performance based on three principal geographic areas of operation; Continental Europe, UK & Republic of Ireland and Asia & the Rest of the World. 


Revenue

Operating profit


Six months
ended 31 October

Six months
ended 31 October


2017
£m

2016

£m

20165
£m

Change
%

2017
£m

2016

£m

20165
£m

Change
%

Continental Europe

66.1

61.1

64.6

8.2%

22.5

22.0

23.0

+2.3%

UK & ROI (inc. corporate)

33.5

25.4

25.5

31.9%

7.9

4.4

4.3

+79.6%

Asia & ROW

22.6

24.1

23.3

(6.2)%

2.50

3.7

3.7

(31.9)%

Total

122.2

110.6

113.4

+10.5%

32.9

30.1

31.0

+14.6%


5 For constant currency comparatives, average rates of exchange used were £/€ 1.13 (2016: 1.20), £/Yen 145 (2016: 139)

 

Continental Europe

Continental Europe continued to perform extremely strongly in the first half across all business areas. The division, which operates in ten countries, remains the largest contributor to the Group's performance representing 54.1% of total Group revenue (H1 2017: 55.2%) and 68.3% of operating profit (H1 2017: 73.1%). 

As at 31 October 2017, the Group had a total of 24,229 units in operation in Continental Europe (H1 2017: 23,605), representing 51% of the total estate sited in the division. This 2.6% increase was driven by the continued roll out of the Group's laundry operations in this region.

France, which is the largest contributor to the Continental Europe segment, performed strongly with  revenue (in local currency) up 3.2%, and gross takings from the estate of automated Revolution laundries and the launderette outlets increased by 40.4%.

In Portugal, the success of the laundry deployment is evidenced by the shift in the product mix over the last three years.  Between 2015 and 2017, revenue from laundry operations has increased from nil in 2015 to €0.7 million for the same period this year. Laundry revenues now represent 63% of revenue in the country. The profit before tax and excluding group fees increased by 118% in the same period.

At constant currency, revenues for the segment increased by 2.3%, primarily driven by a 39.4% increase in takings from our operated laundry machines, as well as the recent upgrades to the photobooth estate with digital security features and roll out of further kiosks.   

 

UK & Republic of Ireland (including Corporate)

The UK & Republic of Ireland contributed 27.4% of Group revenue in the first six months (H1 2017: 24.0%), and 24.0% of operating profit (H1 2017: 14.6%). The division's increased contribution to Group revenue and operating profit reflects continued expansion in laundry in Ireland and the UK, and the successful roll-out of the secure digital upload technology for the Irish Online Passport Service.

Ireland has been a focus for the laundry roll out programme and the country has seen revenues from laundry operations increase from € 0.1 million in the six months ended 31 October 2015 to €2.1 million during the same period this year. Laundry revenues now account for 70% of the country's total revenue.  The profit before tax (excluding group fees) increased by 835% reflecting the speed of shift in product mix since the deployment programme commenced.

As at 31 October 2017, 27% of the Group's estate was sited in this region, the same as prior year. The estate increased by 2.8% to 12,951 machines, reflecting the expansion in the laundry business as well as the roll-out of the new SpeedLab Bio and SpeedLab Cube digital printing kiosks.

As previously mentioned, there has been some softening in the UK market due to consumer disposable income constraints. This resulted in lower revenue from the UK's photo identification operations in the first half, with slightly reduced demand for photo identification. This backdrop will be mitigated by actions to improve operational efficiencies in the business and maximise profitability in the UK. Price rises from £5 to £6 have been successfully implemented across the UK photobooth estate. 

The restructuring of Photo-Me Retail to focus on unattended digital printing kiosks (detailed above) will improve the profitability of the business segment in the second half of the financial year, although there will be a negative impact on revenue in this geography.

Revenue was £33.5 million, an increase of 31.9% (acquisitions contribute £8.2 million). Operating profit in this segment was £7.9 million (H1 2017: £4.3 million), with acquisitions accounting for £0.7 million, and this also includes a profit of £2.3 million on the sale of the head office building in Bookham, as well as a one-off charge of £0.9m relating to the first phase of the restructuring of the Photo-Me Retail Business.

 

Asia & Rest of the World

Asia and the Rest of the World contributed 18.5% of Group revenue (H1 2017: 21.8%) and 7.7% of operating profit (H1 2017: 12.3%). Japan remaining the largest business in the region.

At 31 October 2017, 22% of the Group's estate was sited in Asia and the Rest of the World (H1 2017: 23%) comprising 10,145 machines. This represents a decrease of 3.9%, mainly due to the retirement of some 800 unprofitable amusement machines.

Revenues in this region were £22.6 million, a decline of 6.2%, mainly reflecting the impact of currency exchange rates. At constant rates of exchange, the year on year decrease of 3.0% reflected more challenging market conditions and a lower contribution from the Japan My Number ID card programme, compared with the prior year period.

In Japan, the largest of the Group's operations in the region, the Group sees future growth mainly arising from the investment in launderette shops. There are six shops now open.

Photo identification competition has remained high with new entrants looking to capitalise on the longer-term opportunity presented by the Japanese government's My Number initiative which is expected to be made compulsory in the medium term.

 

Statement of Financial Position

Shareholders' equity as at 31 October 2017 totalled £126.8 million (30 April 2017: £128.0 million), equivalent to 33.7 pence (30 April 2017: 34.0 pence) per share.

The Group's net financial position remains strong, with a net cash balance of £47.1 million as at the 31 October 2017 (30 October 2016: £68.0 million, 30 April 2017: £39.2 million), reflecting £18.7 million of investments and £11.6 million distributed to shareholders through dividend payments.

 

PRINCIPAL RISKS

Similar to any business, the Group faces risks and uncertainties that could impact the achievement of the Group's strategy. These risks are accepted as inherent to the Group's business. The Board recognises that the nature and scope of these risks can change and so regularly reviews the risks faced by the Group as well as the systems and processes to mitigate them.

The table below sets out what the Board believes to be the principal risks and uncertainties, their impact, and actions taken to mitigate them.

 

Nature of the risk

Description and impact

Mitigation

 

Economic



 

Global economic conditions

 

Economic growth has a major influence on consumer spending. A sustained period of economic recession could lead to a decrease in consumer expenditure in discretionary areas.

 

 

The Group focuses on maintaining the characteristics and affordability of its needs driven and regulatory products.

Volatility of foreign exchange rates

The majority of the Group's revenue and profit is generated outside the UK, and the Group results could be adversely impacted by an increase in the value of sterling relative to those currencies.

The Group naturally hedges its exposure to currency fluctuations on transactions, as relevant. However, by its nature, in the Board's opinion, it is very difficult to hedge against currency fluctuations arising from translation in consolidation in a cost-effective manner.

 

Regulations

 



Centralisation of production of ID photos

In many European countries where the Group operates, if governments were to implement centralised image capture, for biometric passport and other applications or widen the acceptance of self-made or home-made photographs for official document applications, the Group's revenues and profits could be seriously affected.

 

The Group has developed new systems that respond to this situation, leveraging 3D technology in ID security standards, and securely linking our booths to the administration repositories (solutions in place in France, Ireland, Germany and Switzerland, discussions in the UK, Belgium and Holland).

 

Furthermore, the Group also ensures that its ID products remain affordable and of high quality.

 

In the UK, the Group is lobbying both alone, and in tandem with its trade association, to propose a solution similar to the ANTS system in France which sends photos electronically, maintaining the integrity of the photos, compliance with ICAO standards and, in the Board's opinion, posing less threat to national security.

 

Brexit

The UK's referendum decision to leave the EU ("Brexit") will most probably lead to changes in regulations in the UK as well as modifications to numerous arrangements between the UK and other members of the EU, affecting trade and customs conditions, taxation, movements of resources, etc.

 

The Board is keeping the potential impacts of the referendum decision to leave the EU on all the Group's operations under review.

 

Any potential developments, including new information and policy indications from the UK government and the EU, will be looked at carefully on a continual basis with a view to enhancing the ability to take appropriate action targeted at managing and where possible minimising any adverse repercussions of Brexit.

 

The specific impact of Brexit on the Group will depend on the details of the conditions of the break-up to be negotiated between the UK and the European Union.

 

The Board foresees however that, while in the short term the negative impact of the uncertainty overshadowing the general UK economy could also overspill on the Group's UK operations. In the long term, potential 're-nationalisation' of UK identity documents (including the conversion of the EU burgundy passports to the navy blue British version) as well as strengthened immigration regulations, could lead to increased requests for the Group's secure identification products.

 

Business rates

Since early 2015, the Valuation Office Authority has been issuing significantly increased assessments for some of the Company's estate, mainly photobooths and printing kiosks, and in some instances applying rates that the Company considers unreasonable. The census campaign led by the Government is part of the well-publicised strategy to systematically increase the amount of tax collected through business rates. The business tax risk is limited to the Company's operations in the UK. The Company has expensed the cost of the tax charge as reasonably estimated.

 

The Company has engaged advisers to reduce its exposure to business rates. The Company has received advice that the vast majority of the affected estate should not be subject to business rates, and therefore it has systematically appealed before the Valuation Tribunal the assessments received, while negotiating with the authorities to reduce that exposure. The Company believes that following the latest decision by the Upper Tribunal on 12 April 2017 in the ATM case, the risk should be capable of successful mitigation.Discussions are ongoing with the Valuation Office Agency on this matter.

 

Strategic



 

Identification of new business opportunities

 

Failure to identify new business areas may impact the ability of the Group to grow in the long term.

 

Management teams constantly review demand in existing markets and potential new opportunities. The Group continues to invest in research into new products and technologies.

 

Inability to deliver anticipated benefits from the launch of new products

The realisation of long-term anticipated benefits depends mainly upon the continued growth of the laundry business and the successful development of integrated secure ID solutions.

The Group regularly monitors the performance of its entire estate of machines. New technology enabled secure ID solutions are heavily trialled before launch and the performance of operating machines is monitored consistently.

 

 

Market



 

Commercial relationships

 

The Group has well-established long-term relationships with a number of site-owners. The deterioration in the relationship with, or ultimately the loss of, a key account would have an adverse albeit contained impact on the Group's results, bearing in mind that the Group's turnover is spread over a large client base and none of the accounts represent more than 1% of Group turnover.

 

 

The Group's major key relationships are supported by medium-term contracts. We actively manage our site-owner relationships at all levels to ensure a high quality of service.

 

Operational



 

Reliance on foreign manufacturers

 

The Group sources most of its products from outside the UK. Consequently, the Group is subject to risks associated with international trade.

 

Extensive research is conducted into quality and ethics before the Group procures products from any new country or supplier. The Group also maintains very close relationships with both its suppliers and shippers to ensure that risks of disruption to production and supply are managed appropriately.

 

Reliance on one single supplier of consumables

The Group currently buys all its paper for photobooths from one single supplier. The failure of this supplier could have a significant adverse impact on paper procurement.

.

The Board has decided to hold a strategic stock of paper, allowing for 6 to 10 months' worth of paper consumption, to allow enough time to put in place alternative solutions.

 

Reputation

The Group's brands are key assets of the business. Failure to protect the Group's reputation and brands could lead to a loss of trust and confidence. This could result in a decline in the customer base.

The protection of the Group's brands in its core markets is sustained by products with certain unique features. The appearance of the machine is subject to high maintenance standards. Furthermore, the reputational risk is diluted as the Group also operates under a range of brands.

 

Product and service quality

The Board recognises that the quality and safety of both its products and services is of critical importance and that any major failure will affect consumer confidence.

The Group continues to invest in its existing estate, to ensure that it remains contemporary, and in constant product innovation to meet customer needs. The Group also has a programme in place to regularly train its technicians.

 

 

Technological



 

Failure to keep up with advances in technology

 

The Group operates in fields where upgrades to new technologies are mission critical, particularly in relation to photography

 

The Group mitigates this risk by continually focusing on R&D.

 

Cyber risk: third party attack on our secure ID data transfer feeds

 

The Group operates an increasing number of photobooths capturing ID data and transferring it directly to governmental databases

 

The Group performs an ongoing assessment of the risks and ensures that the infrastructure meets the security requirements.

 


 

GROUP CONDENSED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 31 October 2017



Unaudited

Unaudited

Audited



6 months to 31 October 2017

6 months to 31 October 2016

Year to 30 April 2017



Total

Total

Total


Notes

£ '000

£ '000

£ '000

Revenue

3

122,228 

110,608 

214,653 

Cost of Sales


(84,387)

(73,530)

(156,427)

Gross Profit


37,841 

37,078 

58,226 

Other Operating Income


748 

698 

2,203 

Administrative Expenses


(5,822)

(7,800)

(13,818)

Share of Post-Tax Profits from Associates


136 

94 

196 

Operating Profit

3

32,903 

30,070 

46,807 

Finance Revenue


126 

1,092 

1,488 

Finance Cost


(147)

(137)

(256)

Profit before Tax

3

32,882 

31,025 

48,039 

Total Tax Charge

4

(8,589)

(8,932)

(12,901)

Profit for Year


24,293 

22,093 

35,138 






Earnings per Share





Basic Earnings per Share

6

6.43p

5.86p

9.30p

Diluted Earnings per Share

6

6.40p

5.84p

9.27p


 



 

GROUP CONDENSED STATEMENT OF COMPREHENSIVE INCOME (continued)

for the six months ended 31 October 2017

 


6 months to 31 October 2017

6 months to
31 October 2016

Year to 30 April 2017

Other Comprehensive Income

£ '000

£ '000

£ '000

Items that are or may subsequently be classified to profit and loss:




Exchange Differences Arising on Translation of Foreign Operations

629 

11,511 

1,862 

Taxation on exchange differences

(2)

918 

1,058 

Total items that are or may subsequently be classified to profit and loss

627

12,429

2,920

Items that will not be classified to profit and loss:




Remeasurement (losses)/gains in defined benefit obligations and other post-employment benefit obligations

-

-

(48)

Deferred tax on remeasurement (losses)/gains

-

-

21 

Total Items that will not be classified to Profit and Loss

-

-

(27)

Total Comprehensive Income for the period

24,920 

34,522 

38,031 





Profit for the period Attributable to:




Owners of the Parent

24,216 

22,020 

34,991 

Non-controlling interests

77 

73 

147 


24,293 

22,093 

35,138 





Total comprehensive income attributable to:




Owners of the Parent

24,784 

34,278 

37,799 

Non-controlling interests

136 

244 

232 


24,920 

34,522 

38,031 

 

 

The accompanying notes form an integral part of these condensed consolidated financial statements.


GROUP CONDENSED STATEMENT OF FINANCIAL POSITION

as at 31 October 2017








Unaudited

Unaudited

Audited



31 October

31 October

30 April



2017

2016

2017


Notes

£'000

£'000

£'000

Assets





Non-current assets





Goodwill

7

13,415 

12,000 

11,812 

Other intangible assets

7

14,030 

14,061 

13,451 

Property, plant & equipment

7

81,223 

72,366 

74,989 

Investment property

7

684 

715 

662 

Investment in - associates


1,927 

2,211 

2,095 

Other financial assets - held to maturity

8

1,829 

2,440 

2,389 

Other financial assets - available for sale


219 

87 

81 

Deferred tax assets


3,670 

4,246 

3,641 

Trade and other receivables


2,061 

1,844 

2,025 



119,058 

109,970 

111,145 

Current assets





Inventories


22,684 

20,724 

19,418 

Trade and other receivables


22,765 

19,594 

18,542 

Current tax


3,691 

310 

288 

Cash and cash equivalents

8

63,123 

77,182 

47,505 



112,263 

117,810 

85,753 

Assets held for sale


-

96 

96 

Total assets


231,321 

227,876 

196,994 

Equity





Share capital


1,884 

1,882 

1,882 

Share premium


9,384 

8,967 

8,999 

Translation and other reserves


13,817 

22,672 

13,249 

Retained earnings


101,701 

101,332 

103,831 

Equity attributable to owners of the Parent


126,786 

134,853 

127,961 

Non-controlling interests


1,477 

1,353 

1,341 

Total equity


128,263 

136,206 

129,302 

Liabilities





Non-current liabilities





Financial liabilities

8

14,248 

9,656 

8,192 

Post-employment benefit obligations


5,478 

5,597 

5,456 

Provisions


-

10 

-

Deferred tax liabilities


3,729 

2,279 

3,087 

Trade and other payables


1,725 

3,010 

2,310 



25,180 

20,552 

19,045 

Current liabilities





Financial liabilities

8

3,620 

1,921 

2,490 

Provisions


601 

2,356 

2,072 

Current tax


10,634 

5,708 

4,209 

Trade and other payables


63,023 

61,133 

39,876 



77,878 

71,118 

48,647 

Total equity and liabilities


231,321 

227,876 

196,994 

 

The accompanying notes form an integral part of these condensed consolidated financial statements.


GROUP CONDENSED STATEMENT OF CASH FLOWS

for the six months ended 31 October 2017

 



Unaudited

Unaudited

Audited



6 months to

6 months to

Year to



31 October

31 October

30 April



2017

2016

2017


Notes

£'000

£'000

£'000

Cash flow from operating activities





Profit before tax


32,882 

31,025 

48,039 

Finance cost


147 

137 

256 

Finance revenue


(126)

(1,092)

(1,488)

Operating profit


32,903 

30,070 

46,807 

Share of post tax profit from associates


(136)

(94)

(196)

Amortisation of intangible assets


1,267 

891 

2,479 

Depreciation of property, plant and equipment


10,698 

9,345 

19,944 

Profit on sale of property, plant and equipment


(2,195)

(173)

(887)

Exchange differences


(689)

961 

(727)

Other items


(34)

(2,309)

(3,877)

Changes in working capital:





Inventories


(2,376)

(1,086)

(1,088)

Trade and other receivables


(3,033)

3,302 

(1,534)

Trade and other payables


5,070 

6,484 

2,377 

Provisions


(1,579)

(2,337)

(2,045)

Cash generated from operations


39,896 

45,054 

61,253 

Interest paid


(147)

(137)

(256)

Taxation paid


(4,948)

(9,698)

(11,969)

Net cash generated from operating activities


34,801 

35,219 

49,028 

Cash flows from investing activities





Acquisition of subsidiaries net of cash acquired


(1,354)

-

-

Investment in associates


-

(361)

(361)

Loans advanced to associates


-

-

(1,014)

Investment in intangible assets


(1,581)

(5,218)

(6,686)

Proceeds from sale of intangible assets


-

Purchase of property, plant and equipment


(15,722)

(18,779)

(36,652)

Proceeds from sale of property, plant and equipment


2,799 

644 

2,783 

Purchase of available for sale investments


(134)

-

-

Interest received


126 

68 

75 

Dividends received from associates


304 

133 

279 

Net cash used in investing activities


(15,562)

(23,506)

(41,567)



 


GROUP CONDENSED STATEMENT OF CASH FLOWS (continued)

for the six months ended 31 October 2017

 



Unaudited

Unaudited

Audited



6 months to

6 months to

Year to



31 October

31 October

30 April



2017

2016

2017


Notes

£'000

£'000

£'000

Cash flows from financing activities





Issue of Ordinary shares to equity shareholders


387 

816 

848 

Repayment of capital element of finance leases


(87)

(103)

(173)

Borrowings


8,795 

-

693 

Repayment of borrowings


(1,961)

(867)

(1,630)

Decrease in assets held to maturity


573 

11 

(29)

Dividends paid to owners of the Parent


(11,633)

(9,669)

(32,629)

Net cash utilised in financing activities


(3,926)

(9,812)

(32,920)

Net increase in cash and cash equivalents


15,313 

1,901 

(25,459)

Cash and cash equivalents at beginning of period


47,505 

71,005 

71,005 

Exchange loss on cash and cash equivalents


305 

4,276 

1,959 

Cash and cash equivalents at end of period

8

63,123 

77,182 

47,505 

 

The accompanying notes form an integral part of these condensed consolidated financial statements.

 


GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY

for the six months ended 31 October 2017

 


Share capital £'000

Share premium £'000

Other reserves £'000

Translation reserve £'000

Retained earnings £'000

Attributable to owners of the Parent £'000

Non-controlling interests £'000

Total £'000

At 1 May 2016

 1,877

 8,156

 1,874

 8,633

 101,101

 121,641

 1,109

 122,750

Profit for period

 -  

 -  

 -  

 -  

 22,020

 22,020

 73

 22,093

Other comprehensive (expense)/income









Exchange differences

 -  

 -  

 -  

 12,780

 -  

 12,780

 171

 12,951

Tax on exchange

 -  

 -  

 -  

 918

 -  

 918

 -  

 918

Translation reserve taken to income statement on disposal of subsidiaries

 -  

 -  

-

 (1,440)

 -  

 (1,440)

 -  

 (1,440)

Transfers between reserves

 -  

 -  

 (93)

 -  

 93

 -  

 -  

-

Total other comprehensive (expense)/income

 -  

 -  

 (93)

 12,258

 93

 12,258

 171

 12,429

Total comprehensive (expense)/income

 -  

 -  

 (93)

 12,258

 22,113

 34,278

 244

 34,522

Transactions with owners of the Parent









Shares issued in the period

 5

 811

 -  

 -  

 -  

 816

 -  

 816

Share options

 -  

 -  

 -  

 -  

 151

 151

 -  

 151

Dividends

 -  

 -  

 -  

 -  

 (22,033)

 (22,033)

 -  

 (22,033)

Total transactions with the Parent

 5

 811

 -  

 -  

 (21,882)

 (21,066)

 -  

 (21,066)

At 31 October 2016

 1,882

 8,967

 1,781

 20,891

 101,332

 134,853

 1,353

 136,206

 1,877

 8,156

 1,874

 8,633

 101,101

 121,641

 1,109

 122,750

Profit for year

 -  

 -  

 -  

 -  

 34,991

 34,991

 147

 35,138

Other comprehensive (expense)/income









Exchange differences

 -  

 -  

 -  

 3,192

 -  

 3,192

 85

 3,277

Tax on exchange

 -  

 -  

 -  

 1,058

 -  

 1,058

 -  

 1,058

Translation reserve taken to income statement on disposal of subsidiaries

 -  

 -  

 -  

 (1,415)

 -  

 (1,415)

 -  

 (1,415)

Transfers between reserves

 -  

 -  

 (93)

 -  

 93

 -  

 -  

 -  

Remeasurement gains in defined benefit pension scheme and other post-employment benefit obligations

 -  

 -  

 -  

 -  

 (48)

 (48)

 -  

 (48)

Deferred tax on remeasurement gains

 -  

 -  

 -  

 -  

 21

 21

 -  

 21

Total other comprehensive (expense)/income

 -  

 -  

 (93)

 2,835

 66

 2,808

 85

 2,893

Total comprehensive (expense)/income

 -  

 -  

 (93)

 2,835

 35,057

 37,799

 232

 38,031

Shares issued in the period

 5

 843

 -  

 -  

 -  

 848

 -  

 848

Share options

 -  

 -  

 -  

 -  

 296

 296

 -  

 296

Deferred tax on share options

 -  

 -  

 -  

 -  

 6

 6

 -  

 6

Dividends

 -  

 -  

 -  

 -  

 (32,629)

 (32,629)

 -  

 (32,629)

Total transactions with the Parent

 5

 843

 -  

 -  

 (32,327)

 (31,479)

 -  

 (31,479)

At 30 April 2017

 1,882

 8,999

 1,781

 11,468

 103,831

 127,961

 1,341

 129,302



 

GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY

for the six months ended 31 October 2017 continued

 

 


Share capital £'000

Share premium £'000

Other reserves £'000

Translation reserve £'000

Retained earnings £'000

Attributable to owners of the Parent £'000

Non-controlling interests £'000

Total £'000

At 1 May 2017

 1,882

 8,999

 1,781

 11,468

 103,831

 127,961

 1,341

 129,302

Profit for period

 -  

 -  

 -  

 -  

 24,216

 24,216

 77

 24,293

Other comprehensive (expense)/income









Exchange differences

 -  

 -  

 -  

 570

 -  

 570

 59

 629

Tax on exchange

 -  

 -  

 -  

 (2)

 -  

 (2)

 -  

 (2)

Total other comprehensive (expense)/income

 -  

 -  

 -  

 568

 -  

 568

 59

 627

Total comprehensive (expense)/income

 -  

 -  

 -  

 568

 24,216

 24,784

 136

 24,920

Transactions with owners of the Parent









Shares issued in the period

 2

 385

 -  

 -  

 -  

 387

 -  

 387

Share options

 -  

 -  

 -  

 -  

 132

 132

 -  

 132

Dividends

 -  

 -  

 -  

 -  

 (26,478)

 (26,478)

 -  

 (26,478)

Total transactions with the Parent

 2

 385

 -  

 -  

 (26,346)

 (25,959)

 -  

 (25,959)

At 31 October  2017

 1,884

 9,384

 1,781

 12,036

 101,701

 126,786

 1,477

 128,263

 

 

The accompanying notes form an integral part of these condensed consolidated financial statements.

 


NOTES

 

1.   Corporate information

The condensed consolidated interim financial statements of Photo-Me International plc (the "Company") for the six months ended 31 October 2017 ("the Interim Report") were approved and authorised for issue by the Board of Directors on 8 December 2017. These condensed consolidated interim financial statements comprise the Company and its subsidiaries (together the "Group") and are presented in pounds sterling, rounded to the nearest thousand.

The Company is a public limited company, incorporated and domiciled in England, whose shares are quoted on the London Stock Exchange, under symbol PHTM. Its registered number is 735438 and its registered office is at Unit 3B, Blenheim Rd, Epsom, KT19 9AP.

Photo-Me's principal activity is the operation of non-food unattended vending equipment aimed primarily at the consumer market. The largest part of the estate comprises photobooths and digital printing kiosks, with the remainder including laundry units, amusement machines and business service equipment. The Group manages these on a geographical basis with the principal operations of the Group in the United Kingdom and Ireland, Continental Europe, and Asia.

 

2.   Basis of preparation and accounting policies

This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU. As required by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, the condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 30 April 2017.

The condensed consolidated interim financial statements comprise the unaudited financial information for the six months ended 31 October 2017 and 31 October 2016, together with the audited results to 30 April 2017. They do not include all of the information and disclosures required for full annual financial statements, and should be read in conjunction with the Group's financial statements for the year ended 30 April 2017. The condensed financial statements do not constitute statutory accounts within the meaning of section 434 of the UK Companies Act 2006.

The consolidated financial statements of the Group for the year ended 30 April 2017 are available at www.photo-me.com or upon request from the Company's registered office at Unit 3B, Blenheim Rd, Epsom, KT19 9AP.

The Interim Report is unaudited but has been reviewed by the auditors and their report to the Company is included in the Interim Report. The comparative figures for the financial year ended 30 April 2017 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors (i) was unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Accounting policies and estimates

The accounting policies applied by the Group in this Interim Report are the same as those applied in the Group's financial statements for the year ended 30 April 2017, except as indicated below.

New standards adopted in the period:

There are a number of new and revised standards and interpretations, not all of which are applicable to the Group, which have been issued and are effective for the year 2018 and future reporting periods. The most significant standards and interpretations which are likely to have a more material impact on the Group's financial statements were listed in the Group's 2017 Annual Report. The effect of adopting new standards for the 2018 year end has not had a material impact on this Interim Report. 

Estimates and significant judgements

The preparation of the condensed consolidated financial information requires management to make estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and the disclosure of contingent liabilities at the date of the condensed consolidated financial information. Such estimates and assumptions are based on historical experience and various other factors that are believed to be reasonable in the circumstances and constitute management's best judgement at the date of the financial statements. In future, actual experience may deviate from these estimates and assumptions, which could affect the financial statements as the original estimates and assumptions are modified, as appropriate, in the period in which the circumstances change.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were in the same areas as those that applied in the consolidated financial statements as at and for the year ended 30 April 2017.

Use of non-GAAP profit measures

The Group measures performance using earnings before interest, tax, depreciation and amortisation ("EBITDA"). EBITDA is a common measure used by a number of companies, but is not defined in IFRS.

The Group measures cash on a net cash basis as explained in note 8.

Risks and uncertainties and cautionary statement regarding forward looking statements

The principal risks and uncertainties affecting the business activities of the Group are set out in the "Risks and Uncertainties" section of the Interim Management Report, contained within this Interim Report. The cautionary statement regarding forward looking statements is shown below.

Going Concern

The Annual Report for the year ended 30 April 2017 provided a full description of the Group's business activities, its financial position, cash flows, funding position and available facilities together with the factors likely to affect its future development, performance and position. It also detailed risks associated with the Group's business. This interim report provides updated information on these subjects for the six months to 31 October 2017.

The Group has at the date of this Interim Report, sufficient financing available for its estimated requirements for at least the next twelve months. Together with the proven ability to generate cash from its trading performance, this provides the Directors with confidence that the Group is well placed to manage its business risks successfully in the context of the current financial conditions and the general outlook in the global economy.

After reviewing the Group's annual budgets, plans and financing arrangements, the Directors consider that the Group has adequate resources to continue operating for the foreseeable future and that it is therefore appropriate to continue to adopt the going concern basis in preparing this Interim Report.

 

3.   Segmental analysis

IFRS8 requires operating segments to be identified based on information presented to the Chief Operating Decision Maker (CODM), in order to allocate resources to the segments and monitor performance.


The Group monitors performance at the adjusted operating profit level before special items, interest and taxation.

In accordance with IFRS8, no segment information is provided for assets and liabilities in the disclosures below, as this information is not regularly provided to the Chief Operating Decision Maker.

Seasonality of operations

Historically, the first half of the financial year is seasonally the strongest for the Group in terms of profits, and this is expected to be the case again for the current year ending 30 April 2018.


Asia

Europe

United Kingdom & Ireland

Total

6 months to 31 October 2017

£'000

£'000

£'000

£'000






Total revenue

22,609 

71,578 

33,669 

127,856 

Inter segment sales

(3)

(5,423)

(202)

(5,628)

Revenue from external customers

22,606 

66,155 

33,467 

122,228 

EBITDA

4,707 

29,152 

10,097 

43,956 

Depreciation and amortisation

(2,323)

(6,671)

(2,804)

(11,798)

Operating profit excluding associates

2,384 

22,481 

7,293 

32,158

Share of post-tax profits from associates




136 

Corporate income excluding depreciation and amortisation




776

Corporate depreciation and amortisation




(167)

Operating profit




32,903 

Finance Revenue




126 

Finance costs




(147)

Profit before tax




32,882 

Tax




(8,589)

Profit for period




24,293 






Capital expenditure

3,499 

10,100 

3,426 

17,025 

Corporate capital expenditure




327 

Total capital expenditure




17,352 






Reconciliation of operating profit






Asia

Europe

United Kingdom & Ireland

Total


£'000

£'000

£'000

£'000

Operating profit before associates

2,384 

22,481 

7,293 

32,158 

Share of past tax profits from associates

136 

-

136 

Corporate operating profit

-

556 

53

609

Total operating profit

2,520 

23,037 

7,346 

32,903 

 

 


Asia

Europe

United Kingdom & Ireland

Total

6 months to 31 October 2016

£'000

£'000

£'000

£'000






Total revenue

24,259

68,243

25,546

118,048

Inter segment sales

(127)

(7,175)

(138)

(7,440)

Revenue from external customers

24,132

61,068

25,408

110,608

EBITDA

5,592

28,012

6,904

40,508

Depreciation and amortisation

(1,890)

(6,016)

(2,190)

(10,096)

Operating profit excluding associates

3,702

21,996

4,714

30,412

Share of post-tax profits from associates




94

Corporate costs excluding depreciation and amortisation




(296)

Corporate depreciation and amortisation




(140)

Operating profit




30,070

Finance Revenue




1,092

Finance costs




(137)

Profit before tax




31,025

Tax




(8,932)

Profit for period




22,093






Capital expenditure

3,783

9,686

9,838

23,307

Corporate capital expenditure




774

Total capital expenditure




24,081






Reconciliation of operating profit






Asia

Europe

United Kingdom & Ireland

Total


£'000

£'000

£'000

£'000

Operating profit before associates

3,702 

21,996 

4,714 

30,412 

Share of past tax profits from associates

94 

-

-

94 

Corporate operating profit

-

474 

(910)

(436)

Total operating profit

3,796 

22,470 

3,804 

30,070 

 



 

Reconciliation of EBITDA



6 months to 31 October 2017

6 months to 31 October 2016

Year to 30 April 2017



£ '000

£ '000

£ '000

Profit before tax


32,882 

31,025

48,039

Finance income


(126)

(1,092)

(1,488)

Finance costs


147 

137

256

Depreciation and amortisation


11,965 

10,392

22,423

EBITDA


44,868 

40,462 

69,230 

 


Asia

Europe

United Kingdom & Ireland

Total

Year ended 30 April 2017

£'000

£'000

£'000

£'000






Total revenue

49,472

124,739

53,870

228,081

Inter segment sales

(128)

(13,069)

(231)

(13,428)

Revenue from external customers

49,344

111,670

53,639

214,653

EBITDA

12,340

46,978

12,349

71,667

Depreciation and amortisation

(3,940)

(13,038)

(5,041)

(22,019)

Operating profit excluding associates

8,400

33,940

7,308

49,648

Share of post-tax profits from associates




196

Corporate costs excluding depreciation and amortisation




(2,633)

Corporate depreciation and amortisation




(404)

Operating profit




46,807

Finance Revenue




1,488

Finance costs




(256)

Profit before tax




48,039

Tax




(12,901)

Profit for year




35,138






Capital expenditure

7,227

20,125

15,301

42,653

Corporate capital expenditure




820

Total capital expenditure




43,473






Reconciliation of operating profit






Asia

Europe

United Kingdom & Ireland

Total


£'000

£'000

£'000

£'000

Operating profit before associates

8,400

33,940

7,308

49,648

Share of post tax profits from associates

196

-

-

196

Corporate operating profit

-

938

(3,975)

(3,037)

Total operating profit

8,596

34,878

3,333

46,807

 

4.   Taxation








6 months to
31 October

6 months to
31 October

Year to                30 April 



2017

2016

2017



£'000

£'000

£'000






Profit before tax


32,882

31,025

48,039

Total taxation charge


8,589

8,932

12,901

Effective tax rate


26.1%

28.8%

26.9%

 

The tax charge in the Group Income Statement is based on management's best estimate of the full year effective tax rate based on expected full year profits to 30 April 2018.

The UK 2016 Finance Act was enacted in September 2016 and confirmed the basic rate of UK Corporation tax at 19% for the financial years ending 30 April 2018 and 30 April 2019 and 17% for the financial year ending 30 April 2020.

 

5.   Dividends

Dividends paid and proposed






31 October 2017

31 October 2016

30 April 2017


pence
per share

£'000

pence
per share

£'000

pence
per share

£'000








Interim







H1 2016 paid on 12 May 2016



2.575

9,669

2.575

9,669

H1 2017 paid on 11 May 2017

3.09

11,633












Final







FY 2016 paid 10 November 2016



3.285

12,365

3.285

12,365

FY 2017 approved at AGM held







on 25 October 2017

3.94

14,845












Special







FY 2016 paid 10 November 2016





2.815

10,595


7.03

26,478

5.86

22,093

8.675

32,629

 



 

Financial year ending 30 April 2018

Interim dividend for the six months ended 31 October 2017

The Board has declared an interim dividend of 3.71p per share for the six months ended 31 October 2017, to be paid on 11 May 2018 to shareholders on the register on 6 April 2018. The ex-dividend date will be 5 April 2017

Financial year ended 30 April 2017

The Board declared an interim dividend of 3.09p per share for the six months ended 31 October 2016, which was paid to shareholders on 11 May 2017.

The Board proposed a final dividend of 3.94p per share for the year ended 30 April 2017 which was approved by shareholders at the Annual General Meeting held on 25 October 2017. It is included in the amount shown as dividend in transactions with owners of the parent in the Group Statement of Changes in Equity and in current liabilities - trade and other payables in the Group Statement of Financial Position. This dividend was paid on 10 November 2017.

Financial year ended 30 April 2016

The interim dividend for 2016 of 2.575p per share was paid on 12 May 2016.

The final dividend for 2016 of 3.285p per share amounting to £12,365,000 was approved by the shareholders at the Annual General Meeting on 20 October 2016. It is included in the amount shown as dividend in transactions with owners of the parent in the Group Statement of Changes in Equity and in current liabilities -trade and other payables in the Group Statement of Financial Position. This dividend was paid on 10 November 2016.

In addition, the Board proposed a special dividend of 2.816p per share, £10,596,000 which was paid on 10 November 2016. This dividend is not shown in these consolidated financial statements.

 

6.   Earnings per share

The earnings and weighted average number of shares used in the calculation of earnings per share are set out in the table below:


Six months

Six months

Year             


to 31 October

to 31 October

to 30 April


2017

2016

2017

Basic earnings per share

6.43p

5.86p

9.30p

Diluted earnings per share

6.40p

5.84p

9.27p

Earnings available to shareholders (£'000)

24,216

22,020

34,991

Weighted average number of shares in issue in the period




- basic ('000)

376,572

375,838

376,141

- including dilutive share options ('000)

378,160

377,312

377,462

 



 

7.   Non-current assets - intangibles, property, plant and equipment and investment property


Goodwill

Other Intangible assets

Property, plant & equipment

Investment property


£'000

£'000

£'000

£'000

Net book value at 1 May 2016

11,606

8,706

56,094

629

Exchange adjustment

394

1,035

7,217

94

Additions





- photobooths & vending machines

-

-

17,229

-

- research & development

-

1,637

-

-

- other additions

-

616

1,286

-

Acquisitions

-

2,965

348

-

Transfers

-

-

-

-

Depreciation provided in the period

-

(891)

(9,337)

(8)

Net book value of disposals

-

(7)

(471)

-

Net book value at 31 October 2016

12,000

14,061

72,366

715

Net book value at 1 May 2016

11,606

8,706

56,094

629

Exchange adjustment

206

547

3,942

48

Additions





- photobooths & vending machines

-

-

33,787

-

- research & development

-

2,390

-

-

- other additions

-

4,296

3,000

-

New subsidiaries- net book value

-

-

-

-

Transfers

-

-

-

-

Depreciation provided in the period

-

(2,479)

(19,929)

(15)

Transfer to assets held for sale

-

-

-

-

Net book value of disposals

-

(9)

(1,905)

-

Net book value at 30 April 2017

11,812

13,451

74,989

662

Net book value at 1 May 2017

11,812

13,451

74,989

662

Exchange adjustment

87

265

1,633

30

Additions





- photobooths & vending machines

-

-

13,469

-

- research & development

-

1,265

-

-

- other additions

-

316

2,302

-

Acquisitions

1,516

-

28

-

Depreciation provided in the period

-

(1,267)

(10,690)

(8)

Net book value of disposals

-

-

(508)

-

Net book value at 31 October 2017

13,415

14,030

81,223

684






Included in additions for property, plant & equipment are the following amounts under finance leases.


31 October 
2017

31 October
2016

30 April
2017


£'000

£'000

£'000

Property, plant & equipment additions - finance leases

49

84

135

 

8.   Net Cash



31 October

31 October

30 April



2017

2016

2017



£'000

£'000

£'000

Cash and cash equivalents per statement of financial position


 63,123

 77,182

 47,505

Financial assets -   held to maturity


 1,829

 2,440

 2,389

Non-current instalments                                                                   due on bank loans


 (13,996)

 (9,304)

 (7,894)

Current instalments due on bank loans


 (3,479)

 (1,750)

 (2,344)

Leases


 (393)

 (523)

 (444)

Net cash


 47,084

 68,045

 39,212






At 31 October 2017, £1,829,000 (31 October 2016: £2,440,000, 30 April 2017: £2,389,000) of the total net cash comprised bank deposit accounts that are subject to restrictions and are not freely available for use by the Group.

Cash and cash equivalents per the cash flow comprise cash at bank and in hand and short-term deposit accounts with an original maturity of less than three months, less bank overdrafts.

Net cash is a non-GAAP measure since it is not defined in accordance with IFRS but is a key indicator used by management in assessing operational performance and financial position strength. The inclusion of items in net cash as defined by the Group may not be comparable with other companies' measurement of net cash/debt. The Group includes in net cash: cash and cash equivalents and certain financial assets (mainly deposits), less instalments on loans and other borrowings.

The tables below, which are not currently required by IFRS, reconcile the Group's net cash to the Group's statement of cash flows. Management believes the presentation of the tables will be of assistance to shareholders.

Other movements for loans and finance leases for the period ended 31 October 2017, period ended 31 October 2016 and year ended 30 April 2017 include transfers between non-current and current and new finance leases taken out in the period.

 

 

 


1 May 2016

Exchange difference

Other movements

Cash flow

31 October 2016


£'000

£'000

£'000

£'000

£'000







Cash and cash equivalents per statement of financial position

71,005

4,276

-

1,901

77,182

Financial assets - held to maturity

2,253

198

-

(11)

2,440

Non-current loans

(8,866)

(1,316)

878

-

(9,304)

Current loans

(1,515)

(224)

(878)

867

(1,750)

Leases

(462)

(80)

(84)

103

(523)

Net cash

62,415

2,854

(84)

2,860

68,045








1  May 2016

Exchange difference

Other movements

Cash flow

30 April  2017


£'000

£'000

£'000

£'000

£'000







Cash and cash equivalents per statement of financial position

71,005

1,959

-

(25,459)

47,505

Financial assets - held to maturity

2,253

165

-

(29)

2,389

Non-current loans

(8,866)

(678)

1,650

-

(7,894)

Current loans

(1,515)

(116)

(1,650)

937

(2,344)

Leases

(462)

(32)

(123)

173

(444)

Net cash

62,415

1,298

(123)

(24,378)

39,212








1 May 2017

Exchange difference

Other movements

Cash flow

31 October 2017


£'000

£'000

£'000

£'000

£'000







Cash and cash equivalents per statement of financial position

47,505

305

-

15,313

63,123

Financial assets - held to maturity

2,389

13

-

(573)

1,829

Non-current loans

(7,894)

(356)

3,049

(8,795)

(13,996)

Current loans

(2,344)

(47)

(3,049)

1,961

(3,479)

Leases

(444)

13

(49)

87

(393)

Net cash

39,212

(72)

(49)

7,993

47,084

 

9.   Fair Values

Fair values of financial instruments by class

There is no difference between the fair values and the carrying value of financial assets and financial liabilities held in the Group's Statement of financial position.

Held to maturity, available-for-sale financial assets and derivatives

The fair value is based on quoted prices at the balance sheet date for quoted investments and other valuation techniques for unquoted investments. For restricted deposits accounts held to maturity, the fair value is estimated at the present value of future cash flows, discounted at the market rate of interest at the balance sheet date.

Trade and other receivables

The fair value of trade and other receivables is estimated at the present value of future cash flows, discounted at the market rate of interest at the balance sheet date if the effect is material.

Cash and cash equivalents

The fair value of cash and cash equivalents is estimated at its carrying value where cash is repayable on demand. For short-term cash deposits and other items not repayable on demand, fair value is estimated at the present value of future cash flows, discounted at the market rate of interest at the balance sheet date.



 

Interest bearing borrowings

Fair value is calculated based on the present value of future principal and interest cash flows discounted at the market rate of interest at the balance sheet date. For finance leases the market rate of interest is determined by reference to similar lease agreements.

Trade and other payables

The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the market rate of interest at the balance sheet date if the effect is material.

FRS13 requires an analysis of financial instruments carried at fair value by valuation method as follows.

Level 1    Quoted prices in active markets for identical assets or liabilities

Level 2    Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as process) or indirectly (that is derived from prices).

Level 3    Inputs for asset or liability that are not based on observable market data.

The Group's financial instruments are fair valued at level 2 with the exception of other financial assets available for sale investments which are valued at level 3.

 

Financial Instruments by category

The tables below show financial instruments by category

31 October 2017

Loans and receivables

Available for sale

Total


£'000

£'000

£'000

Assets as per statement of financial position




Other financial assets - held to maturity

1,829

-

1,829

Other financial assets - available for sale

-

219

219

Trade and other receivables

21,256

-

21,256

Cash and cash equivalents

63,123

-

63,123

Total

86,208

219

86,427


Other financial liabilities at amortised cost


Total


£'000


£'000

Liabilities as per statement of financial position




Borrowings

17,475


17,475

Leases

393


393

Trade and other payables excluding  non-financial liabilities

46,138


46,138

Total

64,006


64,006





 

31 October 2016

Loans and receivables

Available for sale

Total


£'000

£'000

£'000

Assets as per statement of financial position




Other financial assets - held to maturity

2,440

-

2,440

Other financial assets - available for sale

-

87

87

Trade and other receivables

18,276

-

18,276

Cash and cash equivalents

77,182

-

77,182

Total

97,898

87

97,985


Other financial liabilities at amortised cost


Total


£'000


£'000

Liabilities as per statement of financial position




Borrowings

11,054


11,054

Leases

523


523

Trade and other payables excluding  non-financial liabilities

48,648


48,648

Total

60,225


60,225



30 April 2017

Loans and receivables

Available for sale

Total


£'000

£'000

£'000

Assets as per statement of financial position




Other financial assets - held to maturity

2,389

-

2,389

Other financial assets - available for sale

-

81

81

Trade and other receivables

17,080

-

17,080

Cash and cash equivalents

47,505

-

47,505

Total

66,974

81

67,055


Other financial liabilities at amortised cost


Total


£'000


£'000

Liabilities as per statement of financial position




Borrowings

10,238


10,238

Leases

444


444

Trade and other payables excluding  non-financial liabilities

39,486


39,486

Total

50,168


50,168

 

Included in liabilities trade and other payables at 31 October 2017 are deferred consideration payables of £2,800,000 (30 April 2017 £2,550,000 and 31 October 2016 £2,550,000) being contingent consideration relating to acquisitions made since September 2015.

 

10.  Related parties

The Group's significant related parties are disclosed in the 2017 Annual Report and include its associates, its pension funds and the Company's Directors. During the 6 months ended 31 October 2017, there were no new related parties and no additional related party transactions have taken place that have materially affected the financial position or performance of the Group. In addition there were no material changes in the nature and relationship of transactions with related parties to those identified in the 2017 Annual Report.

 

11.  Business combinations

In July 2017, the Group acquired 100% of the voting rights and share capital of Inox Equip Limited (Inox) and Tersus Equip Limited (Tersus), both UK based, business to business laundry businesses which provide bespoke professional design, procurement and installation of laundry and catering equipment facilities for blue chip companies and institutions such as care homes and hospitals. This acquisition was in line with the Group's strategy to expand its business to business laundry capabilities.

The results of these companies have been consolidated from 1 August 2017.

The table below shows the provisional value of net assets acquired and the consideration paid and payable.




£ '000

Property, plant and equipment



 28

Total non-current assets



 28

Inventory



 404

Trade and other receivables



 1,158

Cash  and cash equivalents



 155

Total current assets



 1,717

Total assets



 1,745

Deferred tax liabilities



 (2)

Trade and other payables



 (1,249)

Current tax



 (51)

Total liabilities



 (1,302)

Total identifiable net assets



 443

Total identifiable net assets excluding net cash and cash equivalents



 288

Goodwill



 1,516

Goodwill and total identifiable net assets



 1,959





Cost of investment



 1,959

Contingent consideration



 450

Initial cash outlay on purchase of subsidiaries



 (1,510)

Net cash acquired with subsidiaries



 155

Net cash consideration per Group Statement of Cash Flows



 (1,354)





Contingent consideration

A further £450,000 of consideration is payable to the vendors of the acquired businesses contingent on earnings performance in the 12 month periods ending 31 July 2018 and 31 July 2019. The directors consider it likely that the performance conditions will be met and have therefore recognised the maximum amounts payable.

Acquired receivables

The provisional fair value of receivables acquired was £1,158,000.  The gross contractual amounts receivable was £1,233,000 and at the acquisition date, £75,000 of contractual cash flows were not expected to be received.

The following amounts have been included in the Group's post acquisition results in respect of the acquired businesses:




£ '000

Revenue



 1,985

Profit before tax



 442

Profit after tax



 327

 

 

 

RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF-YEARLY FINANCIAL REPORT

 

We confirm that to the best of our knowledge:

·      The condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;

 

·      The Interim Management Report includes a fair review of the information required by:

 

(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

 

 

By order of the Board
John Lewis (Non-executive Chairman)
Serge Crasnianski (Chief Executive Officer and Deputy Chairman)

8 December 2017 



 

INDEPENDENT REVIEW REPORT TO PHOTO-ME INTERNATIONAL PLC

Conclusion 

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2017 which comprises the Group condensed statement of comprehensive income, the Group condensed statement of financial position, the Group condensed statement of cash flows, the Group condensed statement of changes in equity and the related explanatory notes. 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2017 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").   

Scope of review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.   

Directors' responsibilities 

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA. 

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the EU.  The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU. 

Our responsibility 

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. 

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA.  Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached. 

 

Steve Masters

for and on behalf of KPMG LLP
Chartered Accountants  

1 Forest Gate

Brighton Road

Crawley

RH11 9PT


8 December 2017

 

Note:

a) The maintenance and integrity of the Photo-Me International plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

CAUTIONARY STATEMENT AND DISCLAIMERS

This Interim Financial Report is addressed to the shareholders of Photo-Me International plc and has been prepared solely to provide information to them. This report is intended to inform the shareholders of the Group's performance during the 6 months to 31 October 2017. It has been prepared to provide additional information to shareholders to enable them to access the Group's strategies, performance and the potential for those strategies to succeed. It should not be relied upon for any other purpose.

This Interim Financial Report contains certain forward-looking statements which are subject to risk factors associated with, among other things, the economic and business circumstances occurring from time to time in the countries and markets in which the Group operates. It is believed that the expectations reflected in this report are reasonable but they may be affected by a wide range of variables which could cause actual results to differ materially from those currently expected. No assurances can be given that the forward looking statements in this Interim Financial Report will be realised. The forward-looking statements reflect the knowledge and information available at the date of preparation.

 

DISTRIBUTION OF REPORT

This Interim Report is released to the London Stock Exchange. It may be viewed and downloaded from the Company's Investor Relations section on the website www.photo-me.com.

Shareholders and others who require a copy of the report may obtain a copy by contacting the Company Secretary at the Company's registered office.

 

Photo-Me International plc

Unit 3B Blenheim Road

Epsom

KT19 9AP

 

Tel: +44 (0)1372 453399

Fax: +44 (0)1372 459064

e-mail: ir@photo-me.co.uk

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR TBBFTMBABMJR
Close


London Stock Exchange plc is not responsible for and does not check content on this Website. Website users are responsible for checking content. Any news item (including any prospectus) which is addressed solely to the persons and countries specified therein should not be relied upon other than by such persons and/or outside the specified countries. Terms and conditions, including restrictions on use and distribution apply.

 


Interim Results - RNS