Final Results
PHOTO-ME INTERNATIONAL PLC
17 August 1999
PHOTO-ME INTERNATIONAL plc
PRELIMINARY RESULTS - YEAR ENDED 30 APRIL 1999
'A successful and eventful year'
* Photo-Me, the world's leading operator and manufacturer
of coin-operated photobooths which is also a major
manufacturer of photographic mini-lab machines, announces
a 32% increase in underlying pre-tax profit to £20.0
million:
Year ended 30 April 1999 1998 Increase
Turnover (£m) 197.5 168.7 17.0%
Underlying operating profit (£m) 23.5 17.2 36.9%
Underlying pre-tax profit (£m) 20.0 15.2 32.0%
Underlying basic earnings
per share (p) 19.83 13.18 50.5%
Dividends per share (p) 7.50 6.50 15.4%
* A substantial increase in the number of digital
photobooths, whose sales are much higher than for
traditional photobooths, is planned to supplement the
existing 20,000 photobooths directly operated.
* The first 800 personalised post card machines were
successfully installed and Photo-Me is confident of its
ability to develop a substantial business from the vast
global post card market.
* The full benefit of the radical restructuring of
Operations commenced in H2 following the appointment of
Serge Crasnianski as CEO will only be shown in fiscal
2000.
* Digital KIS minilabs should benefit substantially from
the replacement by digital technology of the 144,000
minilabs worldwide.
* In May 1999, BT signed an agreement to support Photo-Me's
development of a UK network of multimedia photobooths
with Internet access, and a rapid development of this
business is planned.
* In June 1999, the 49.8% minority interest in Photo-Me's
Japanese subsidiary was purchased on what the Group
considers to be very favourable terms.
* Serge Crasnianski, Chief Executive, stated 'I am pleased
to report that the year ended 30 April 1999 was a
successful and eventful one for Photo-Me. For the first
quarter of fiscal 2000, Operations revenues were up by an
average of 18 per cent in the three key markets of the
UK, France and Japan, yet these figures, and the results
for fiscal 1999, reflect only a small part of both the
huge technological advance Photo-Me has made and is
making and the efficiency gains in its Operations.
Accordingly, I look forward to reporting our continued
progress in the implementation of our enhanced and
already successful strategy.'
There will be an analyst meeting at 0900 today at the offices
of Greig Middleton, 30 Lombard Street, London EC3.
Enquiries:
Photo-Me International plc 01372-453399
Serge Crasnianski (CEO) 0171-655 4000 (until 3.00 pm)/or
00 33 6 11 95 63 63/00 33 6 85 82 96 03 (mobiles)
Bankside Consultants Limited 0171-220 7477
Charles Ponsonby
CHIEF EXECUTIVE'S STATEMENT
INTRODUCTION
I am pleased to report that the year ended 30 April 1999 was a
successful and eventful one for Photo-Me. We improved margins
and cash-flow, achieved record earnings per share before
exceptional write-offs and, consequently, increased our
dividend. As announced in May 1999, we made exceptional write-
offs, totalling £29.4 million before tax and £15.0 million
after tax and minorities, principally related to equipment
made obsolete by our rapid development of digital technology.
This strong financial result was based on progress in
implementation of our corporate strategy in both our
Operations and our Manufacturing activities.
In particular, progress in our digital photobooth technology
and in our strategic partnerships position Photo-Me to provide
added benefits for its customers from the introduction of an
Internet-driven product line.
FINANCIAL OVERVIEW
On turnover 17.0 per cent higher at £197.5 million, pre-tax
profit (before exceptional items) increased by 32.0 per cent
to £20.0 million. Underlying basic earnings per share were up
50.5 per cent at 19.83p, benefiting in part from a lower
effective tax rate of 27.9 per cent (1998: 37.1 per cent).
The Prontophot acquisitions contributed substantially to the
increase in turnover, but rather less to the increase in
profits, precise figures being unavailable due to the merging
of the Prontophot activities with those of Photo-Me. The
impact of movements in exchange rates assisted, with gains on
exchange contributing £0.5 million (1998: £0.5 million loss).
Continental Europe was Photo-Me's principal trading area, with
the merging of the Prontophot companies increasing turnover by
34.5 per cent at £85.1 million (43 per cent of total turnover)
and underlying pre-tax profit 25.9 per cent higher at £9.9
million. The UK and Republic of Ireland saw turnover increase
by 12.1 per cent to £62.9 million (32 per cent of total
turnover) and underlying pre-tax profit 83 per cent better at
£9.3 million. Asia made an underlying profit of £2.8 million
on a turnover of £35.4 million (18 per cent of total
turnover), whilst the Americas lost an underlying £2.0 million
on a turnover of £14.1 million (7 per cent of total turnover).
Operations turnover increased substantially by 29.9 per cent
to £158.3 million (80 per cent of total turnover), largely due
to the acquisition of the Prontophot companies. Manufacturing
turnover fell by 16.3 per cent to £39.2 million (20 per cent
of total turnover) due to the completion in the first half of
the year of the contract to supply equipment to Kodak in the
USA, which had generated significant turnover in the previous
year.
DIVIDENDS
A final dividend of 5.3p (1998: 4.5p) per share is proposed.
If approved at the AGM on 20 October 1999, the dividend will
be paid on 4 January 2000 to shareholders on the register at
close of business on 29 October 1999. Together with the
interim dividend of 2.2p (1998: 2.0p) per share, paid on 1
April 1999, dividends per share are increased by 15.4 per cent
to 7.5p (1998: 6.5p) per share.
OPERATIONS
Digital technology contributed substantially to improvements
in Operations.
Sales from the digital Photovision photobooths are in excess
of our budgets and, on a per machine basis, are much higher
than from traditional machines. This sales increase is driven
by the superior print quality and broader product offering of
our digital photobooths (which deliver 4 ID photos, portraits
and mini photographs, all in colour or black & white, plus a
choice of fun pictures) compared to the colour ID and portrait
photographs from traditional photobooths.
In addition, we have successfully installed the first 800
personalised post card machines (which enable customers to
superimpose their own photograph onto a stored image, which
might be of a scenic location or of a scene from a new Disney
film). To test our confidence in the ability of personalised
post cards to generate substantial business from the vast
global post card market - annually, the Japanese send four
billion and the British and French each some 600 million -
over the next 12 months Photo-Me is planning to install, in
Ireland, the same number of post card machines as photobooths.
Acquisitions and restructuring completed on time and on budget
led to a sharp improvement in our Operations world-wide. We
initiated on 1 May 1998 and completed by 31 October 1998 the
integration of the Prontophot group business (most of which
was acquired on 30 April 1998), which increased our number of
directly operated photobooths by approximately 22 per cent.
By acquiring and integrating into the Group all Prontophot's
national subsidiaries in Austria, Switzerland, Germany,
Belgium, the Netherlands, France, Ireland and the UK, we have
provided a better service to site owners and customers and
accelerated the renewal of machine technology with the
installation of digital photobooths.
In the UK, during the fiscal year we closed the Bookham
factory, computerised the maintenance and cash accounting
systems and reinforced the site owner focus of the commercial
team. We are now well positioned to take full advantage of the
new UK photocard driving licence which the DVLA began issuing
to all categories of applicant in July 1999.
We changed our management teams in the USA and Brazil,
increased the number of photobooths in Brazil by shipments of
existing, traditional technology machines from Europe, reduced
staff by 30 per cent and increased site productivity. We
anticipate profitability from these important markets in
fiscal 2000.
The Japanese subsidiary performed well in the fiscal year. We
expect continued growth as Japan is also now benefiting from
the renewal of photocard driving licences. With the
acquisition in June 1999 of the 49.8 per cent minority
interest in the Japanese subsidiary on what the Group
considers to be very favourable terms (being a consideration
of £25.2 million of which £23.0 million is in soon to be
replaced, older generation photobooths), Japan has
consolidated its position as one of Photo-Me's key three
territories alongside the UK and France.
In so far as the restructuring (other than in France and in
connection with the integration of the Prontophot group
business) only commenced following my appointment as Chief
Executive Officer in late October 1998, the full benefit will
only be shown in fiscal 2000.
MANUFACTURING
During the fiscal year, we strengthened our research and
development activities, refocusing them on our digital
technology.
The choice we made in June 1997 of LCD (liquid crystal
display) accelerator technology is now being endorsed by the
successful introduction of our digital minilabs. Indeed, some
of our leading competitors in minilab manufacturing are now
abandoning earlier technology choices to embrace LCD
accelerators, albeit with a substantial time lag relative to
Photo-Me. The digital KIS minilab offers exciting prospects
in two areas: in the renewal of all minilabs worldwide (of
which there are some 144,000), since the great majority of new
orders for minilabs next fiscal year are likely to be for
digital ones, and in the possibility for photographs to be
sent for processing over the Internet without any reduction in
print quality.
In May 1999, we entered into a commercial agreement with
British Telecommunications to support our development of
advanced technology multimedia photobooths. These new
photobooths will provide UK customers with a free e-mail
address and full e-mail facilities. They will be fully
integrated into the Internet and may also provide
telecommunications and e-commerce services. The initial roll
out in the UK of 1,000 multimedia photobooths is expected by
September 2000, and other territories will follow. To meet
the demand for these new multimedia photobooths, which will
also provide a full range of digital photo-based services, we
have increased the production capacity and versatility of our
Manufacturing facilities in Grenoble.
EXCEPTIONAL ITEMS
Against the background of changes in technology and an
increasing range of services offered within photobooths (as
exemplified by the development of the new multimedia
photobooths), the Board announced in May 1999 that it had
undertaken a review of its older generation photobooths under
the recently introduced accounting standard FRS 11.
As a result of this review, the Board made a non-recurring
reduction to the written down value of older generation
photobooths, stock and capitalised research and development
expenditure as at 30 April 1999. This write down has been
treated as an exceptional item and has no effect on group cash
flows or anticipated takings. The resultant net book value of
the photobooths affected will be written off over the next
five years. The write down, together with restructuring
costs, results in exceptional charges totalling £29.4 million
before and £15.0 million after accounting for the effects of
taxation and minority interests.
Reflecting the write downs, year end shareholders' funds have
decreased to £72.8 million from £77.8 million.
BORROWINGS AND INTEREST
During the fiscal year, net debt increased slightly by £3.3
million to £62.0 million, notwithstanding £37.8 million of
capital expenditure, of which £32.7 million relates to
Operations equipment. As a result of the increase in net debt
combined with the reduction in net assets (before minority
interests) resulting from the exceptional items, gearing has
increased from 65 per cent to 75 per cent. A reduction in the
level of indebtedness is expected in the current year.
Net interest paid of £3.5 million (1998: £2.0 million) was
covered 6.8 times (1998: 8.6 times) by underlying profit
before interest and tax.
STRATEGY
In fiscal 2000 and the years immediately following, our
strategy will be to:
* increase Photo-Me's market presence and market leadership
in terms of the number of sites and the diversity of our
Internet-based product offerings from advanced technology
photobooths. We anticipate 2,500 new photobooth sites in
fiscal 2000 and 4,000 in fiscal 2001. Personalised post
card machine installations should reach 1,500 by 30 April
2000 and 4,000 by the end of the following fiscal year;
* develop rapidly our presence in telecommunications and
Internet-based products through our partnership with
British Telecommunications; and
* capture increased market share in minilabs through the
introduction of our DKS digital technology.
PROSPECTS
In the first quarter of fiscal 2000, Operations revenues were
up by an average of 18 per cent in the three key markets of
the UK, France and Japan, yet these figures, and the results
for fiscal 1999, reflect only a small part of both the huge
technological advance Photo-Me has made and is making and the
efficiency gains in its Operations. Accordingly, I look
forward to reporting our continued progress in the
implementation of our enhanced and already successful
strategy.
Serge Crasnianski 17 August 1999
Chief Executive Officer
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Notes Unaudited - Year to
30 April 1999
Before After Audited
excep- Excep- excep- Year to
tional tional tional
items items items30 April
£000 £000 £000 1998
(Note 3) £000
Turnover 1
Continuing operations
and acquisitions* 197,506 - 197,506 168,738
====== ====== ====== ======
Trading profit/(loss) 50,612 (5,591) 45,021 37,045
Depreciation (27,643)(21,556) (49,199)(19,413)
Foreign exchange differences 482 - 482 (454)
------ ------ ------ ------
Group operating
profit/(loss)* 23,451 (27,147) (3,696) 17,178
Share of operating profit
of associates 68 - 68 -
------ ------ ------ ------
Total operating
profit/(loss) 23,519 (27,147) (3,628) 17,178
Restructuring costs 3 - (2,278) (2,278) -
Loss on disposal of group
undertakings 3 - (7) (7) -
Interest receivable 481 - 481 387
Interest payable (3,951) - (3,951) (2,377)
------ ------ ------ ------
Profit/(loss) on
ordinary activities
before taxation 2 20,049 (29,432) (9,383) 15,188
Tax on profit on
ordinary activities 4 (5,591) 10,917 5,326 (5,629)
------ ------ ------ ------
Profit/(loss) on
ordinary activities
after taxation 14,458 (18,515) (4,057) 9,559
Minority interests -
equity and
non-equity interests (238) 3,546 3,308 (109)
------ ------ ------ ------
Profit/(loss) attributable
to members
of the holding company 14,220 (14,969) (749) 9,450
Dividends 5 (5,380) - (5,380) (4,661)
------ ------ ------ ------
Retained profit/(loss)
for year 8,840 (14,969) (6,129) 4,789
====== ====== ====== ======
Basic earnings per share 6 19.83p (20.87p) (1.04p) 13.18p
Diluted earnings per share 6 19.69p (20.73p) (1.04p) 13.18p
Gross cash inflow per share 7 69.92p - 69.92p 51.61p
Dividends per share 5 7.50p - 7.50p 6.50p
* As the acquisitions have been merged with existing
operations, it is not possible to isolate turnover and
profits arising from those acquisitions.
CONSOLIDATED BALANCE SHEET
Unaudited Audited
30 April 30 April
1999 1998
Notes £000 £000
Fixed assets
Intangible assets
- goodwill arising on acquisition 8 377 -
- negative goodwill arising
on acquisition 8 (268) -
- other 8 5,095 8,432
Tangible assets 8 129,500 137,566
Investments 583 657
------- -------
135,287 146,655
------- -------
Current assets
Stocks 30,567 32,954
Debtors 30,275 44,515
Investments and short-term deposits 2,249 3,175
Cash at bank and in hand 6,955 4,759
------- -------
70,046 85,403
Creditors
Amounts falling due within one year 72,962 92,330
------- -------
Net current liabilities (2,916) (6,927)
------- -------
Total assets less current liabilities 132,371 139,728
Amounts falling due after
more than one year 35,401 27,985
------- -------
96,970 111,743
Provision for liabilities and charges
Provisions 2,181 1,697
Deferred taxation 12,416 20,106
------- -------
82,373 89,940
Minority interests
- equity interests 8,765 11,413
- non-equity interests 780 731
------- -------
72,828 77,796
====== ======
Capital and reserves
Called-up share capital 1,994 1,994
Reserves:
Share premium account 9 1,068 1,039
Capital reserves 9 10,834 16,323
Profit and loss account 9 58,932 58,440
------- -------
72,828 77,796
====== ======
Shareholders' funds are attributable to:
- equity interests 72,627 77,595
- non-equity interests 201 201
------- -------
72,828 77,796
====== ======
GROUP CASH FLOW STATEMENT
Notes Unaudited Audited
Year to Year to
30 April 30 April
1999 1998
£000 £000
Net cash inflow from operating
activities (a) 43,392 34,028
Returns on investments and
servicing of finance (b) (3,497) (2,019)
Taxation (2,868) (2,147)
Capital expenditure and
financial investment (c) (33,629) (36,621)
Acquisitions and disposals 245 120
Dividends paid
- equity shareholders (4,805) (3,943)
------- -------
Cash outflow before use of
liquid resources and financing (1,162) (10,582)
Management of liquid resources 737 312
Financing - increase in debt (d) 1,907 3,842
------- -------
Increase/(decrease) in cash 1,482 (6,428)
------- -------
Notes
(a) Cash flow from operating activities
Trading profit 45,021 37,045
Non-cash charge relating
to exceptional stock provisions 5,591 -
Profit on sale of assets (474) (43)
------- -------
Gross cash inflow 50,138 37,002
Exceptional items
- restructuring costs and
profits on sale of group undertakings (2,285) -
Net movement in working capital (4,461) (2,974)
------- -------
43,392 34,028
------- -------
(b)Returns on investments and servicing of finance
Interest received 481 387
Interest paid (3,951) (2,377)
Dividends paid to minority
interests in subsidiary undertakings (27) (29)
------- -------
(3,497) (2,019)
------- -------
(c)Capital expenditure and financial investment
Purchase of intangible and
tangible assets (40,422) (37,937)
Sale of tangible assets 6,793 1,316
------- -------
(33,629) (36,621)
------- -------
(d)Financing - (decrease)/increase in debt
New loans raised 28,700 21,465
Loans and finance leases repaid (26,822) (17,627)
Share capital subscribed 29 4
------- -------
1,907 3,842
------- -------
NOTES
1. Turnover
Turnover was contributed as follows:
Year to Year to
30 April 30 April
1999 1998
£000 £000
Area of activity
Manufacturing
Total sales 62,059 69,232
Sales to group undertakings (22,835) (22,364)
------- -------
39,224 46,868
Operating 158,282 121,870
------- -------
197,506 168,738
====== ======
Geographical area
United Kingdom and
Republic of Ireland 62,941 56,131
Overseas - Continental Europe 85,138 63,299
- The Americas 14,081 19,108
- Asia 35,346 30,200
------- -------
197,506 168,738
====== ======
2. Profit before tax (before exceptional items)
Geographical area
United Kingdom and
Republic of Ireland 9,330 5,091
Overseas - Continental Europe 9,854 7,829
- The Americas (1,980) 79
- Asia 2,845 2,189
------- -------
20,049 15,188
====== ======
3. Exceptional Items
The exceptional items in the year to 30 April 1999 relate
to the impairment of old technology equipment, redundancy
and other costs arising from the restructuring of
operational activities worldwide.
Impairment of old technology
Stocks 5,591
Tangible assets 16,949
Intangible assets 4,607 21,556
------- -------
27,147
Restructuring and redundancy costs 2,278
-------
29,425
Loss on disposal of group undertakings 7
-------
29,432
=======
Year to Year to
30 April 30 April
1999 1998
£000 £000
4. Taxation
United Kingdom 89 1,570
Overseas (5,415) 4,059
------- -------
(5,326) 5,629
====== ======
5. Dividends
Interim - 2.2p per share (1998: 2.0p) 1,578 1,434
Final - 5.3p per share (1998: 4.5p) 3,802 3,227
------- -------
5,380 4,661
====== ======
The proposed final dividend of 5.3p (1998: 4.5p) per
Ordinary Share will be paid on 4 January 2000 to
shareholders on the register at the close of business on
29 October 1999.
Year to 30 April 1999 Year to
Before After 30 April
excep- excep- 1998
tionals tionals
6. Earnings per share
Basic earnings per share 19.83p (1.04p) 13.18p
Diluted earnings per share 19.69p (1.04p) 13.18p
The calculation of earnings per share
is based on the following:
(Loss)/Profit attributable
to shareholders £14,220,000 (£749,000)£9,450,000
Number of issued Ordinary Shares
- Basic 71,711,172 71,711,172 71,694,990
- Diluted 72,201,695 72,201,695 71,722,306
7. Gross cash inflow per share 69.92p 69.92p 51.61p
The calculation of gross cash inflow per share is based on
the following:
Gross cash inflow £50,138,000 £50,138,000 £37,002,000
Number of issued Ordinary
Shares 71,711,172 71,711,172 71,694,990
8. Fixed assets
Intan- Intan- Intan-Tangible
gible gible gible
- Good- - Neg-- Other
will ative
Goodwill
£000 £000 £000 £000
Net book value at 1 May 1998 - - 8,432 137,566
Exchange adjustment - - 26 2,020
Additions - new subsidiaries
at net book value 377 (277) - 1,657
- operating equipment - - - 32,684
- other - - 2,666 5,072
Depreciation provided in the year - 9(6,029)(43,179)
Disposals at net book value - - - (6,320)
------ ------ ------ ------
Net book value at 30 April 1999 377 (268) 5,095129,500
====== ====== ====== ======
9. Reserves
Share Capital Profit
Premium Reserves and Loss
£000 £000 £000
Balance at 1 May 1998 1,039 16,323 58,440
Exchange adjustment - 352 261
Loss for year - - (6,129)
Transfer between reserves - (5,841) 5,841
Goodwill - - 519
Arising on issue of shares 29 - -
------- ------- -------
Balance at 30 April 1999 1,068 10,834 58,932
====== ====== ======
10.Net debt
30 April 30 April
1999 1998
£000 £000
Net debt comprises:
Bank overdrafts 15,578 14,919
Loans and finance leases
due within one year 20,227 23,522
------- -------
Debt due within one year 35,805 38,441
Loans and finance leases
due after one year 35,351 27,930
------- -------
71,156 66,371
Cash at bank and in hand (6,955) (4,759)
Current asset investments and
short term deposits (2,249) (2,946)
------- -------
61,952 58,666
====== ======
11.Copies of the Report and Accounts will be mailed to
shareholders on 20 September 1999 and will be available
from the Company's registered office at Church Road,
Bookham, Surrey KT23 3EU (telephone: 01372-453399, fax:
01372-459064) after that date.
Latest directors dealings
- 1 hour ago Marlowe
- 1 hour ago Haleon
- 1 hour ago TUI AG Reg Shs (DI)
- 1 hour ago Georgia Capital
- 1 hour ago Weir Group