Final Results
Photo-Me International PLC
30 June 2003
PHOTO-ME INTERNATIONAL PLC - PRELIMINARY ANNOUNCEMENT
PMI, the world's leading operator of photobooths and a significant manufacturer
of photoprocessing equipment, announces a much better year to 30 April 2003 than
a pre-tax loss of £2.2m (before exceptionals) and £3.4m (after exceptionals)
might imply.
•The loss in part derives from the year being a transitional one for
Manufacturing and is slightly less than long-standing market expectations.
•EBITDA remained substantial at £35.4m
•Net debt reduced by £18.0m to £33.4m
•UK photobooth Operations were stabilised, ahead of expectations.
•The DKS 1500 digital minilab was successfully launched, winning the top
industry award
•An OEM agreement was signed with Kodak for the System 89 version of the
DKS 1500
•The asset base of the Gretag high volume 'central lab' business was
acquired, completing PMI's photoprocessing range.
•The H2 result was substantially better than that in 2001/02 H2.
With regard to prospects, Serge Crasnianski (CEO) stated 'France is expected to
continue to trade well, whilst the UK and Japan are expected to make a small
recovery from the effects of predatory competition and prolonged recession,
respectively.
As was stated in the Interim Announcement and with the subsequent re-launch of
the Gretag business, Manufacturing has promising prospects for a materially
positive contribution to results.
PMI continues to believe that 2003/04 will register not just a material
improvement in results but also a further material reduction in indebtedness,
reflecting the cash generative nature of PMI's Operations and the improved
result of its Manufacturing.'
Enquiries:
Photo-Me International plc 01372-453399
Vernon Sankey (Deputy Chairman) (on 30 June)
020-7444 4140
Serge Crasnianski (Chief Executive Officer) (on 30 June)
020-7444 4140
Jean-Luc Peurois (Group Finance Director) (on 30 June)
020-7444 4140
Bankside Consultants Limited
Charles Ponsonby 020-7444 4166
Presentation to brokers' analysts and investors:
A presentation will be made today from 9:30 a.m. to 10:30 a.m. at Regus, No 1
Poultry, London EC2R 8JR, opposite Exit 9 of Bank tube station.
CHIEF EXECUTIVE'S STATEMENT
The year to 30 April 2003 was much better than the pre-tax loss of £2.2m (before
exceptionals) and £3.4m (after exceptionals) might imply. Since last year's
Preliminary Announcement in July 2002, a loss for the year under review had been
anticipated, but the actual loss is somewhat better than market expectations; in
addition, EBITDA remained substantial, and net debt was materially reduced.
Commercially, UK Operations was stabilised, the DKS 1500 digital minilab was
successfully launched, an OEM agreement was signed with Kodak for the System 89
version of the DKS 1500 (to add to that for the System 88), following exhaustive
quality tests, and, late in the year, the asset base of Gretag's high volume
'central lab' business was acquired. Accordingly, PMI is a stronger company and
better placed to go forward. The current year should see further substantial
cash generation, resulting in additional significant reductions in net debt, and
a return to profitability.
FINANCIAL OVERVIEW
In order to make comparisons more meaningful, exceptional items have been
excluded from the analysis in this Financial Overview, but are described
separately below.
On turnover up 0.3% at £187.4m (2001/02: £186.9m), profit before interest and
tax totalled £0.1m (2001/02: £5.5m) and the loss before tax amounted to £2.2m
(2001/02: profit of £2.5m). Removing the effect of exchange rate movements,
turnover in 2002/3 would have fallen by 3.5% to £180.4m and the loss before tax
would have been £2.7m.
The basic loss per share was 0.98p (2001/02: earnings of 0.03p), reflecting a
tax charge in 2002/03 notwithstanding the loss before tax for the year (and an
unusually high effective tax rate in 2001/02). EBITDA remained substantial at
£35.4m (2001/02: £38.4m) and the depreciation charge of £35.3m (2001/02: £32.8m)
compared with net capital expenditure of £17.0m (2001/02: £21.9m).
The result for the second half of a pre-tax loss of £3.6m on a turnover of
£91.8m compared with a pre-tax profit of £1.3m on a turnover of £95.6m in the
first half and a pre-tax loss of £5.8m on a turnover of £80.4m in the second
half of 2001/02. The first half of the year is traditionally the stronger of the
two, in particular for the Operations business.
Operations turnover increased by 1.8% to £149.8m (80% of total turnover) from
£147.1m (79% of total turnover), of which £70.6m arose in the second half.
Manufacturing turnover decreased by 5.5% to £37.6m from £39.8m, of which £21.2m
was generated in the second half.
Continental Europe, which includes the great majority of the Manufacturing
turnover, alone of the areas grew its turnover. It contributed 52.2% (2001/02:
48.5%) of turnover, with the UK and the Republic of Ireland accounting for 27.3%
(2001/02: 28.9%). The pre-tax result ranged from a profit of £1.3m in
Continental Europe, the only profitable area, to a loss of £1.6m in the UK and
the Republic of Ireland.
EXCEPTIONAL ITEMS
The exceptional charge in 2002/03 of £1.2m relates to a non-operating provision
for diminution in value of trade investments in France.
The exceptional charge in the previous year totalled £12.5m and comprised £8.4m
in respect of business activities which the Board had decided not to pursue on
account of there being insufficient profit potential, £3.5m in respect of
one-off items and a non-operating charge of £0.6m being a write-off of goodwill,
previously debited to reserves.
DIVIDENDS
No dividend has been paid since the 2001/02 interim dividend of 0.3p per share
and no final dividend is now being proposed. As indicated in the 2002/03 Interim
Announcement of 10 December 2002, the payment of dividends will be resumed when
overall trading significantly improves and net debt is further reduced.
BORROWINGS AND INTEREST
Despite the reduced operating profit, net cash inflow from operating activities
remained strong at £42.2m (2001/02: £43.6m), reflecting the cash-generative
nature of the Operations business.
As a result, net debt was reduced significantly, by £18.0m to £33.4m (2001/02:
£51.4m). Gearing decreased to 54.0% from 83.8% on net assets before minority
interests which increased to £61.9m (2001/02: £61.3m).
The net interest charge reduced by almost one-quarter to £2.3m (2001/02: £3.0m).
BUSINESS OVERVIEW
Operations
The Operations business comprises the operation of photobooths and other vending
equipment. At the year end, the total number of Operations sites worldwide was
similar to that a year previously at around 25,000, including some 20,000
photobooths (more than 70% of which are now digital).
PMI is a global company with three main Operations countries - the UK, France
and Japan - in all of which it continues to enjoy the market leading position.
All three benefited from further reductions in controllable overheads in the
year.
Operations turnover in the UK and the Republic of Ireland decreased by 3.2%.
This decrease is substantially explained by the previously announced loss of the
Safeway contract in October 2002. With an increase in revenues from vending
machines other than photo-booths and greater efficiencies, operations in this
territory have been stabilised under new management.
Operations turnover in France increased by 17.0% (or 3.9% in Euro terms). This
improvement reflects the fact that French operations are 92% equipped with
digital machines and are well managed. Subsequent to the year end, the important
contract with the Paris Metro was renewed.
Operations turnover in Japan decreased by 6.4%, reflecting sustained recession
and the weakness of the Yen (without which there would have been a negligible
fall in turnover). The significant investment in new digital photobooths in the
year under review and the introduction of a new ID card in August 2003 are
expected to help PMI's business in Japan.
Of PMI's smaller markets, Switzerland and the Benelux countries did well.
Germany and the US remain difficult, but both improved their result, following
improved cost control.
Manufacturing
The Manufacturing activity saw the launch, in December 2002, of the DKS 1500
(which can make up to 1,500 prints an hour) and its OEM variant for Kodak, the
System 89, which had been eagerly awaited by the market and had resulted in
reduced orders and, consequently, turnover in the first half of the financial
year. Since its launch, the gradual rollout of the DKS 1500 has progressed.
The DKS 1500 and System 89 are high quality machines (the DKS 1500 won the
industry's top award at the prestigious PMA exhibition in the USA, in March
2003).
The DKS range (comprising the DKS 550, 750 and 1500) now addresses requirements
for approximately 95% of the market, as against 40% previously. Substantial
orders have been received for the DKS 1500/System 89.
In April 2003, PMI announced that it had acquired from the liquidator, for
CHF3.0m (£1.4m) in cash, certain assets of the Central Lab Equipment ('CLE')
division of the former Gretag Imaging AG. This activity has been re-launched by
PMI under the trading name of 'Gretag Imaging Solutions'. The new business,
which is based near Zurich in Switzerland, is involved in the development,
manufacture, sale and technical support of equipment and systems for high volume
photofinishing laboratories. Its CYRA system is the most advanced in the market,
and the equipment is capable of processing 13,000 prints an hour.
The central labs market is currently moving to digital image processing from
conventional analogue photofinishing. In the segment, PMI, through its new
business, now has the only complete digital solution and is thought to be two
years ahead of its principal competitor for digital printing and scanning
systems. Gretag CLE had a 30% share of the worldwide central laboratory
equipment market and the announcement stated that PMI expects to generate a
turnover of around CHF 30m (£14m) from the new business in the current financial
year.
The re-commencement of the business of Gretag CLE has opened up to PMI a segment
of the industry in which it has not been represented previously. Additionally,
synergies with PMI's existing minilab business are expected in the areas of
research, sales and maintenance.
STRATEGY
PMI's strategy remains as follows.
In the short term, PMI will:
•materially reduce indebtedness;
•keep under review all major cost areas;
•secure continued recovery of UK Operations; and
•improve volume Manufacturing capability.
In the longer term, PMI will:
•maintain or increase the high level of cash flow generation;
•extend the services on offer by Operations into related areas; and
•obtain for Manufacturing a substantial share of the world market for the
manufacture of digital photoprocessing equipment.
The Board believes that further good progress has been made in implementing the
short term strategy and remains committed to its longer term objectives.
PROSPECTS
Operations
France is expected to continue to trade well, whilst the UK and Japan are
expected to make a small recovery from the effects of predatory competition and
prolonged recession, respectively.
Manufacturing
As was stated in the Interim Announcement and with the subsequent re-launch of
the Gretag business, Manufacturing has promising prospects for a materially
positive contribution to results.
Overall
PMI continues to believe that 2003/04 will register not just a material
improvement in results but also a further material reduction in indebtedness,
reflecting the cash generative nature of PMI's Operations and the improved
result of its Manufacturing.
Serge Crasnianski
30 June 2003
Chief Executive Officer
GROUP PROFIT AND LOSS ACCOUNT
for the year ended 30 April 2003
2003 Audited 2002 Audited
_______________ _______________
Before Exceptional After Before Exceptional After
Exceptional Items Exceptional Exceptional Items Exceptional
Items (note 3) Items Items (note 3) Items
Notes £'000 £'000 £'000 £'000 £'000 £'000
Turnover - 187,731 - 187,731 187,284 - 187,284
continuing
operations
Less: share of (343) - (343) (393) - (393)
turnover of
joint
venture
______ ______ ______ _______ _______ _______
Turnover 1 187,388 - 187,388 186,891 - 186,891
Cost of (164,389) (1) (164,390) (158,522) (10,479) (169,001)
sales
______ ______ ______ ______ ______ ______
Gross profit/ 22,999 (1) 22,998 28,369 (10,479) 17,890
(loss)
Administrative (23,891) - (23,891) (23,832) - (23,832)
expenses
Other 1,350 - 1,350 957 - 957
operating
income
______ ______ ______ _______ _______ _______
Operating
profit/(loss)
- continuing 458 (1) 457 5,494 (10,479) (4,985)
operations
Share of (394) - (394) (44) (1,476) (1,520)
operating loss
of joint
venture
Share of 23 - 23 90 - 90
operating
profit of
associates
______ ______ ______ _______ _______ _______
Total 87 (1) 86 5,540 (11,955) (6,415)
operating
profit/(loss)
Loss on - - - - (570) (570)
termination/
disposal of
Group
undertakings
Provision - (1,163) (1,163) - - -
against fixed
asset
investments
______ ______ ______ _______ _______ _______
Profit/(loss)
on ordinary
activities
before 87 (1,164) (1,077) 5,540 (12,525) (6,985)
interest
Interest 285 - 285 343 - 343
receivable
Interest (2,616) - (2,616) (3,390) - (3,390)
payable
______ ______ ______ _______ _______ _______
(Loss)/profit
on ordinary
activities
before 2 (2,244) (1,164) (3,408) 2,493 (12,525) (10,032)
taxation
Tax on profit/ 4 (1,221) 369 (852) (2,176) 2,750 574
loss on
ordinary
activities
______ ______ ______ _______ _______ _______
(Loss)/profit
on ordinary
activities
after (3,465) (795) (4,260) 317 (9,775) (9,458)
taxation
Minority
interests
- equity (58) - (58) (183) 52 (131)
interests
- non-equity (21) - (21) (23) - (23)
interests
______ ______ ______ ______ _______ _______
(Loss)/profit
attributable
to members
of the holding (3,544) (795) (4,339) 111 (9,723) (9,612)
company
Dividends
- equity 5 - - - (1,089) - (1,089)
interests
______ ______ ______ ______ _______ _______
Retained loss (3,544) (795) (4,339) (978) (9,723) (10,701)
for year
======== ======== ======== ======== ======== ========
Basic (loss)/
earnings per
share
- before 6 (0.98p) - - 0.03p - -
exceptionals
- exceptional - (0.22p) - - (2.68p) -
items
Basic (loss)/ - - (1.20p) - - (2.65p)
earnings per
share
Diluted (loss)
/earnings per
share
- before 6 (0.98p) - - 0.03p - -
exceptionals
- exceptional - (0.22p) - - (2.68p) -
items
Diluted (loss) - - (1.20p) - - (2.65p)
/earnings per
share
______ ______ ______ ______ ______ ______
Dividends per 5 - - 0.30p 0.30p
share
______ ______ ______ ______ ______ ______
GROUP BALANCE SHEET
as at 30 April 2003
Audited Audited
2003 2002
Notes £'000 £'000
Fixed assets
Intangible assets 7 18,273 15,595
Tangible assets 7 78,669 90,152
Investments 307 1,393
______ ______
97,249 107,140
______ ______
Current assets
Stocks 20,189 22,454
Debtors 25,216 31,926
Investments and short-term deposits 1,153 2,157
Cash at bank and in hand 10,122 8,484
______ ______
56,680 65,021
______ ______
Creditors
Amounts falling due within one year 55,027 69,605
______ ______
Net current assets/(liabilities) 1,653 (4,584)
______ ______
Total assets less current liabilities 98,902 102,556
Creditors
Amounts falling due after more than one year 24,959 29,456
______ ______
73,943 73,100
Provisions for liabilities and charges
Provisions 5,198 5,041
Deferred taxation 6,309 6,573
Investment in joint venture 529 148
______ ______
12,036 11,762
______ ______
61,907 61,338
Minority interests
- equity interests 1,106 1,068
- non-equity interests 870 931
______ ______
59,931 59,339
______ ______
Capital and reserves
Called-up share capital 2,016 2,016
Reserves:
Share premium account 8 2,729 2,729
Other reserves 8 2,920 2,371
Profit and loss account 8 52,266 52,223
______ ______
59,931 59,339
______ ______
Shareholders' funds are attributable to:
Equity interests 59,730 59,138
Non-equity interests 201 201
______ ______
59,931 59,339
______ ______
GROUP CASH FLOW STATEMENT
for the year ended 30 April 2003
Audited Audited
2003 2002
Note £'000 £'000
Net cash inflow from operating activities (a) 42,206 43,625
Dividends from associated undertakings - 73
Returns on investments and servicing of finance (2,384) (3,123)
Taxation (1,483) (5,643)
Capital expenditure and financial investment (16,971) (21,856)
Acquisitions and disposals (141) (2,322)
Dividends paid - equity shareholders - (6,155)
______ ______
Cash inflow before use of liquid resources and 21,227 4,599
financing
Management of liquid resources 1,222 (802)
Financing (11,416) (8,684)
______ ______
Increase/(decrease) in cash in the year 11,033 (4,887)
======== ========
Reconciliation of net cash flow to movement in net
debt
Increase/(decrease) in cash for the year 11,033 (4,887)
Repayment of capital element of finance leases 2,137 1,815
Cash flow from decrease in debt 9,279 7,161
Cash flow from (decrease)/increase in liquid (1,222) 802
resources
______ ______
Change in net debt resulting from cash flows 21,227 4,891
Other non-cash movements (26) -
Foreign exchange translation differences (3,198) (110)
______ ______
Movement in net debt in the year 18,003 4,781
Opening net debt (51,404) (56,185)
______ ______
Closing net debt (b) (33,401) (51,404)
======== ========
NOTES TO THE CASH FLOW STATEMENT
(a) Reconciliation of operating profit to operating cash flow
2003
------------------------
--------- ---------
Before After
Exceptional Exceptional Exceptional
Items Items Items 2002
£'000 £'000 £'000 £'000
Operating profit/(loss) 458 (1) 457 (4,985)
Depreciation and amortisation 35,332 - 35,332 34,630
charges
Non-cash charge relating to - 1 1 6,636
exceptional items
Loss on sale of assets 69 - 69 451
Other non-cash movements (508) - (508) (151)
______ ______ ______ ______
Gross cash inflow 35,351 - 35,351 36,581
Decrease in stocks 1,542 - 1,542 3,003
Decrease in debtors 12,166 - 12,166 8,166
Decrease in creditors (6,736) - (6,736) (4,468)
(Decrease)/increase in (117) - (117) 343
provisions
______ ______ ______ ______
Net cash inflow from operating 42,206 - 42,206 43,625
activities
======== ======== ======== ========
(b) Net debt
30 April 30 April
2003 2002
£000 £000
Overdrafts 4,477 13,192
Debt due within one year 13,028 17,548
Debt due after one year 24,296 26,896
Finance leases 2,875 4,409
______ ______
44,676 62,045
Cash at bank and in hand (10,122) (8,484)
Current asset investment and short-term deposits (1,153) (2,157)
______ ______
33,401 51,404
======== ========
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
2003 2002
£000 £000
=== ===
Loss attributable to shareholders (4,339) (9,612)
---------
Exchange adjustments 4,931 (936)
______ _______
Total recognised gains and losses for the year 592 (10,548)
======== ========
NOTES
2003 2002
£000 £000
1 Turnover
Area of activity
Manufacturing:
Total sales 40,477 52,968
Sales of capital equipment to Group undertakings for own (2,879) (13,198)
use
______ ______
37,598 39,770
Operations 149,790 147,121
______ ______
187,388 186,891
======== ========
Geographical analysis by origin
UK and Republic of Ireland 51,112 53,931
Overseas - Continental Europe 97,812 90,770
- USA 5,442 7,238
- Asia 33,022 34,952
______ ______
187,388 186,891
======== ========
2 (Loss)/profit before tax (before exceptional items)
Geographical area
UK and Republic of Ireland (1,641) (799)
Overseas - Continental Europe 1,327 3,417
- USA (1,475) (1,696)
- Asia (455) 1,571
______ ______
(2,244) 2,493
======== ========
3 Exceptional items
Operating exceptional items
Exceptional items related to withdrawal from specific
business areas:
- Impairment of development costs - 1,067
- Impairment of tangible fixed assets - 729
- Provision against fixed asset investments - 319
- Exceptional debtor provisions 1,071 3,626
- Exceptional stock provisions - 2,691
- Recovery of previously provided debtors (1,070) -
______ ______
1 8,432
______ ______
One-off items:
- Write-off of joint venture set-up costs - 1,476
- Litigation costs of prosecuting a claim for patent - 1,008
infringement
- Write-off of Euro conversion costs - 1,039
______ ______
- 3,523
______ ______
Total operating exceptional items 1 11,955
Non-operating exceptional items
Provision against fixed asset trade investments 1,163 -
Loss on termination of group undertakings - write-off of - 570
goodwill previously debited to reserves
______ ______
1,164 12,525
======== ========
2003 2002
£000 £000
4 Taxation
United Kingdom (178) (1,049)
Overseas 1,030 475
______ ______
852 (574)
======== ========
5 Dividends
No dividends have been paid nor are proposed in respect of the year to 30 April
2003 (2002: interim dividend paid at 0.3p per Ordinary share, £1,089,000).
2003 2002
6 Earnings per share
The calculation of earnings per share is based on the
following:
Earnings attributable to shareholders before exceptional (3,544) 111
items (£000)
Earnings attributable to shareholders after exceptional items (4,339) (9,612)
(£000)
Weighted average number of shares in issue in the period
- basic ('000) 363,008 362,401
- including dilutive share options ('000) 365,244 364,724
======== ========
7 Fixed assets
Other
Goodwill intangible Tangible
£000 £000 £000
Net book value at 1 May 2002 8,806 6,789 90,152
Exchange adjustment 18 826 4,786
Additions
- Operating equipment - - 12,225
- Other 54 4,893 4,459
Depreciation provided in the period (547) (2,566) (32,219)
Disposals at net book value - - (734)
______ ______ ______
Net book value at 30 April 2003 8,331 9,942 78,669
======== ======== ========
8 Reserves Share
premium Other Revenue
account reserves reserves
£000 £000 £000
Balance at 1 May 2002 2,729 2,371 52,223
Exchange adjustment - 549 4,382
Loss for year - - (4,339)
______ ______ ______
Balance at 30 April 2003 2,729 2,920 52,266
======== ======== ========
9 Publication of non-statutory accounts
The financial information contained in this preliminary announcement does
not constitute statutory accounts as defined in Section 240 of the Companies Act
1985. The financial information for the preceding year is based on the statutory
accounts for the financial year ended 30 April 2002. Those accounts, upon which
the auditors issued an unqualified opinion, have been delivered to the Registrar
of Companies.
Copies of the Report and Accounts, for the financial year ended 30 April
2003, will be mailed to shareholders by 25 July 2003 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.
This information is provided by RNS
The company news service from the London Stock Exchange
Monday, 20th May 2024
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