Final Results

RNS Number : 9609H

Photo-Me International PLC

27 June 2013

 

PHOTO-ME INTERNATIONAL PLC - PRELIMINARY ANNOUNCEMENT

Further strong increase in profits - launch of "Revolution" underpins confident outlook

Photo-Me International plc ("Photo-Me" or "the Group"), the instant service equipment group, announces its results for the year to 30 April 2013. 

Results highlights:

	2013	2012	Change	2013 †	Change
Revenue	£195.6m	£207.8m	-5.9%	£203.8m	-2.0%
EBITDA	£44.9m	£44.0m	+2.0%
Pre-tax Profit	£24.3m	£20.1m	+20.7%
EPS (diluted)	4.76p	3.95p	+20.5%
Net Cash *	£61.4m	£51.8m	+18.5%
Dividend**	3.00p	2.50p	+20.0%

† At constant currency

* As defined in note 7 to the accounts

** Excluding the special dividend of 3.00p per share

·      Revenue 5.9% lower at £195.6 million (-2.0% at constant currency)

·      EBITDA at £44.9 million, remains substantial at 23.0% of Revenue

·      Pre-tax Profit of £24.3 million, up 20.7%

·      Further material increase in the net cash position to £61.4 million

·      Special dividend of 3.0 pence per share paid during the year

·      Increase of 20% in the annual dividend to 3.0 pence per share

The above-mentioned figures include a profit of £2.4 million on the sale of an industrial building in France, and additional stock and other various provisions.

John Lewis, Non-Executive Chairman, said; 'We have again produced a significant increase in profits against what continues to be a challenging backdrop. This has been a result of removing losses in our Sales & Servicing division whilst continuing to improve the performance of our core Operations business.

Cash generation remains very strong and we have further increased our net cash balance to £61.4 million. This is after an outflow in the second half of the year of £5.1m, relating to the cost of the special dividend of £10.9m offset by the sale of treasury shares of £5.8m. As a result we will be recommending a final dividend of 1.5 pence to give a total dividend for the year of 3.0 pence, representing an increase of 20% over the year.

'The overall revenue for the Group was a little lower than last year and has been on a gently declining trend for some time. The Board is optimistic that going forward this trend will reverse with the progressive rollout of our laundry product - branded Revolution - which we believe has a real commercial opportunity in Europe, beginning in France and Belgium. This, combined with increased penetration and maturity of our Starck photobooths, lower manufacturing costs and expansion into other territories means the Group has strong prospects.

Subject to the risks and uncertainties detailed in the business and financial review, the Board once again anticipates further progress over the coming year.'

Enquiries:
Photo-Me International	01372 453 399
Serge Crasnianski or Françoise Coutaz-Replan
Media
Madano Partnership
Matthew Moth/Julien Cozens	020 7593 4000
Investors
IR Focus
Neville Harris	020 7593 4015

CHAIRMAN'S STATEMENT

Results

At constant currency, Group Revenue was 2.0% lower over the year, which was principally due to a further expected decline in revenue from our Sales and Servicing division. Despite lower sales, Group EBITDA increased during the period, with EBITDA margins improving to 23.0% from 21.2% in 2012. Our Operations division grew revenues by 1.2%, aided by a 6% increase in photobooth units and there were strong performances in a number of our markets. Profitability in our Operations division also continued to improve - aided by lower costs - with operating profit rising by 14.3%.

Strategy

Our strategy is to use the significant cash flow generated from our long established photobooth business to develop new and complementary products which will drive our future growth. Alongside this, we are keen to penetrate new geographic markets, which offer the potential of long-term growth.

We have made good progress over the last two years implementing this strategy, with the introduction of the new designer photobooth by Starck, entries into China, Poland and Malaysia and Korea and the development of our new laundry product. It has been the case however, that other product sales have remained at low levels due to continued reluctance by individual businesses and larger corporations to invest capital.

Costs

We have made a number of changes to the cost base in the recent past. We have restructured the French Sales & Servicing subsidiary and transferred management control to the CEO of the European activities. This has resulted in a centralised logistics platform for the Group and has led to savings from reducing both the level of stocks and staff numbers.  We have also introduced new software relating to both the analysis of machine takings - which will allow better ongoing management - and accounting, with a reduction in associated licence costs.

Our focus going forward is to try and drive down material costs even further by the use of smarter technology and design and by using low cost manufacturing bases. This will be especially important in our Photobooth and laundry businesses.

Dividends

We have rapidly grown dividends since reintroducing them in 2010. This year, we are pleased to be recommending a final dividend of 1.5 pence to give a total dividend for the year of 3.0 pence, representing a further increase of 20% over the year.

In light of the strength of the balance sheet and mindful of shareholder returns, we also decided to return £10.9m by way of a special dividend of 3.0 pence per share in February 2013.

The Group's net cash position remains extremely healthy and we are anticipating success with our new laundry product, the rollout of which can be comfortably financed from internal resources. It is our stated intention to maintain a progressive dividend policy but the Board has now decided to provide greater clarity for shareholders. Therefore, with the strong provisos that the business moves forward as we expect, that our laundry product achieves its targets and we do not make a material acquisition, we intend to increase the annual dividend by 20% next year. In addition, the Board will consider the scope for a further special dividend.

This dividend policy is intended to demonstrate a strong commitment to improving shareholder returns by more aggressively utilising the strong cash flows of the business combined with the Group's existing cash position.

If approved at the Annual General Meeting on 12 September 2013, the final dividend will be paid on 7 November 2013 to shareholders on the register at the close of business on 27 September 2013. The ex-dividend date is 25 September 2013.

Current trading and Outlook 

In the first seven weeks of the new financial period, the Group's core Operations division is performing in line with our expectations and we firmly believe the issues in the Sales and Servicing division, which is now a small part of the Group, are behind us. We are progressively modernising the photobooth estate and we are rolling out our laundry product which we believe will share a similar footprint in its target markets and the same cash flow characteristics as the photobooths.

Subject to the risks and uncertainties detailed in the business and financial review, the Board once again anticipates that the Group will make further good progress over the coming year.

The Board would like to express its thanks to Robert Lowes who retired in April 2013 after 32 years with the Group, having joined in 1981. Robert served as Company Secretary from 1994 to April 2008 when he was appointed as an interim Director, resigning as a Director in July 2008, and returning to the position of Company Secretary. The Board wishes Robert well in his retirement.

John Lewis,

Non-Executive Chairman

BUSINESS AND FINANCIAL REVIEW

Business Review

Photo-Me has two principal activities, which the Board monitors in assessing the Group's performance:

Operations - which comprises the operation of unattended vending equipment, primarily photobooths, digital printing kiosks, laundry machines, photobook makers, amusement machines and business service equipment.

Sales and Servicing - which comprises the development, manufacture, sale and after sale servicing of the above-mentioned Operations equipment and a range of photo processing equipment and photo album maker solutions.

Combined

The business is international in its reach and focused on three main geographic areas at present: Continental Europe, UK & Republic of Ireland and Asia. 

The following geographical analysis is provided in order to give additional information, it is not a segmental analysis used in managing the business.

Geographical analysis of revenue and profit (by origin)

	Revenue				Operating profit/(loss)
Year to 30 April	2013	2013 †	2012	Change †	2013	2013 †	2012	Change †
	£m	£m	£m	%	£m	£m	£m	%
Continental Europe	104.9	110.7	114.0	-3.0	15.2	16.1	13.6	+18.5
UK & Republic of Ireland	44.9	45.1	47.6	-5.4	3.3	3.4	2.5	+32.1
Asia	45.8	48.0	46.2	+4.0	5.7	5.9	3.9	+51.8
	195.6	203.8	207.8	-2.0	24.2	25.4	20.0	+26.8
† 2013 trading results of overseas subsidiaries converted at 2012 exchange rates

The Group strongly improved its overall profitability as losses from Sales & Servicing were eliminated and as costs - principally commissions to site owners, labour and depreciation - were again reduced.

OPERATIONS

	Revenue				Operating profit
	2013	2013 †	2012	Change †	2013	2013 †	2012	Change †
	£m	£m	£m	%	£m	£m	£m	%
Year to 30 April	173.2	180.3	178.0	+1.2	28.1	28.8	25.1	+14.3
† 2013 trading results of overseas subsidiaries converted at 2012 exchange rates

	Vending units
	2013	2012	Change
Continental Europe	20,500	19,400	+5.7%
UK & Republic of Ireland	13,450	14,950	-10.0%
Asia	9,200	8,950	+2.8%
Total	43,150	43,300	-0.5%

This division contributed 89% (2012: 86%) of the reported revenue. Revenue increased by 1.2% at constant rate, but operating profit rose by 14.3%, with the company continuing to reduce costs, particularly those associated with manufacturing as well as commissions payable to site owners. The overall decrease in the number of vending units was largely due to the removal of low value amusement machines in the UK. The European business saw a very strong performance in Germany where changes in the retail market are allowing the business to expand its photobooth estate, while the Belgian business also made good progress. Although revenue was fairly flat, the UK, Swiss and Japanese businesses were able to post good increases in operating profit with lower costs - including depreciation - feeding through.

The biggest contributor to the division's turnover and profits is the photobooth estate. This extensive network of sites, with long-standing site-owner contracts and relationships, supplemented by an established field service and cash collection infrastructure, represents one of Photo-Me's greatest strengths. They are very cash generative and provide much of the finance for corporate developments, including investment in R&D to produce the next generation of products.

Increasing the number of photobooth sites remains a priority for the Group and the increase of 6% to 24,900 was driven by increased penetration in Germany and the roll-out of the Starck booth. The photobooth estate is also changing in two ways. Firstly, they are becoming cheaper to produce by re-siting manufacturing and by using smarter technology inside. Secondly, the estate is being progressively modernised following the introduction of the designer Photobooth by Starck. These units numbered 1,200 at year end, an increase of 825 over the year. The performance of these units as they mature is encouraging as they provide a higher degree of profitability than comparable "older" units. From September 2013, all units sited, either new or by way of replacement, will be Starck booths.

These trends, combined with the opportunity to expand into newer territories like Thailand, Ukraine, Malaysia and Poland, give the Group confidence that the photobooth estate can be returned to a growth footing going forward.

Laundry units

As the Group announced at the Interim results in December 2012, over the last three years and following a period of R&D and product development in Grenoble, Photo-Me has been trialling stand-alone heavy-duty laundry units in France and Belgium, sited predominantly at major supermarkets, standing outside the main buildings. The trials were focused on both the uptake of the product as well as the durability and reliability of the machines, which are designed essentially for the washing and drying of large laundry items such as duvets or bedding, accommodating large loads of up to 18kg. The price of an 18kg wash is normally €8, an 8kg wash is €4 and there is a further charge of €1 for drying, a price level which is usually cheaper than local alternatives.

The results from the trials, both from a durability and takings standpoint, were sufficiently good that Photo-Me believes a significant opportunity exists to roll-out this product aggressively in France and Belgium initially, followed by other European countries in due course, utilising the same sites as the photobooth estate. The machines are currently assembled in France, but Photo-Me believes it will be able to reduce costs in the medium-term by increased sourcing from the Far East.

The roll-out of the units will be self-financed by Photo-Me and they will be operated and maintained by Photo-Me's extensive network of service engineers, using the same information systems as the photobooth estate. Photo-Me believes that this network, combined with its excellent long-standing relationships with site-owners - as well as price - will provide effective competitive barriers.  As with photobooths, a commission is paid to the site-owner.

Since the Interim results, the modernised design of the machines has been finalised and they have been re-branded as "Revolution". At the end of the year, the total number of units in the field was 275, comprising 213 sales to third parties and 62 units owned and operated by Photo-Me. This will be accelerated by additional production from supplier in Eastern Europe.  The target is to have between 2,000 and 3,000 units (either by way of sales or owned/operated) in the field by the end of calendar year 2015.

As with photobooths, the machines are very cash generative and to date, the average EBITDA margin on a laundry unit has exceeded 50%.

Other products

Digital printing kiosksare very much focused in Continental Europe, particularly France and Switzerland.

While the market for simple printed photos is fairly mature, the Group continues to develop its range of innovative products, the latest of which is the Posterframe machine, for the production of high quality posters. This follows the introduction last year of the "all-in-one" kiosk, which incorporates a pocketbook maker. These products are designed to appeal to changing consumer taste.

Amusement machines are predominantly a UK business and the year has seen a reduction in the number of low value units which were loss making. The business overall is profitable but very small.

Business service equipment is largely in France, and much of the estate is co-located with photobooths and kiosks, and again is a small part of the business.

SALES & SERVICING

	Revenue				Operating loss
	2013	2013 †	2012	Change †	2013	2013 †	2012	Change †
	£m	£m	£m	%	£m	£m	£m	%
Year to 30 April	22.4	23.5	29.8	-21.1	(0.6)	(0.1)	(2.5)	+96.5
† 2013 trading results of overseas subsidiaries converted at 2012 exchange rates

Substantially all of Sales & Servicing revenue derives from the sale to third parties of retail photographic equipment, in the form of machines and related supplies and consumables.  

Revenue decreased a further 21.1%, but, following extensive restructuring, the business returned to break-even. The result includes a £2.4m profit on the sale of an industrial building in France (used within Sales & Servicing), offset by increased provisions on stock and other provisions.

Sales of product have remained at low levels in what continues to be a difficult market. The division is focusing its effort on supporting the Operations division in relation to manufacturing costs, R&D for the Group as a whole, and the sales of consumables.

FINANCIAL REVIEW

Statement of comprehensive income

The following table summarises the results, analysed between the two Divisions, Operations and Sales & Servicing:

	Revenue				Operating profit/(loss)
Year to 30 April	2013	2013 †	2012	Change †	2013	2013 †	2012	Change †
	£m	£m	£m	%	£m	£m	£m	%
Operations	173.2	180.3	178.0	+1.2	28.1	28.8	25.1	+14.1
Sales & Servicing	22.4	23.5	29.8	-21.1	(0.6)	(0.1)	(2.5)	+97.9
Group overheads					(3.3)	(3.3)	(2.6)	-33.1
	195.6	203.8	207.8	-2.0	24.2	25.4	20.0	+25.4
† 2013 trading results of overseas subsidiaries converted at 2012 exchange rates

Reported turnover decreased by 5.9% to £195.6 million (-2.0% at constant currency).

EBITDA increased by 2.0% to £44.9 million; the figure remains substantial, representing 23.0% of revenue.

Operating profit improved by 20.9% from £20.0 million to £24.2 million (+25.4% at constant currency).

Net finance revenue was £0.1 million.  The pre-tax profit increased by 20.7% to £24.3 million (2012: £20.1 million).

After a tax charge of £6.7 million (2012: £5.6 million), representing a charge of 27.8% (2012: 27.8%), the profit after tax of £17.6 million (2012: £14.5 million) reflected a 20.7% improvement.

The fully diluted earnings per share from continuing operations were 4.76 pence (2012: 3.95 pence).

Statement of financial position

Shareholders' equity totalled £97.1million (2012: £95.8 million), equivalent to 26.7 pence (2012: 26.4 pence) per share.

Cash generation has remained very strong and we have further increased our net cash balance to £61.4million (2012: £51.8 million), leaving the Group well placed for the future.

Funding and treasury policy

The £9.6 million net cash inflow is explained in the following summarised cash flow statement:

	2013	2012
	£m	£m
Opening net cash (as defined in note 7 to the accounts)	51.8	40.7
Cash flow
Operating profit	24.2	20.0
Depreciation	20.7	24.0
Working capital	4.3	0.5
Taxation	(7.3)	(5.3)
Interest paid	(0.4)	(0.6)
Profit on sale of fixed assets	(2.7)
All others	0.1	(2.1)
Operating cash flow	38.9	36.5
Use of cash flow
Capital expenditure	(19.0)	(18.3)
Dividends paid	(20.0)	(7.2)
Sale of Treasury Shares	5.7	-
Proceeds from sale of fixed assets	3.7	0.8
All others	0.3	(0.7)
	(29.3)	(25.4)
Net cash inflow	9.6	11.1
Closing net cash	61.4	51.8

Capital structure

The Group's funding policy is to maintain a timely flow of funds to meet anticipated funding requirements.

The Group manages its capital to sustain the future development of the business and to maximise long-term shareholder value. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, sell assets or review the level or type of debt.

At 30 April 2013, the Group's borrowings were mainly short-term, and the amount was not material.

Surplus cash is placed in bank deposits and other investments with high credit ratings and kept under constant review.

The Group is primarily financed by Ordinary shares, retained profits and borrowings.

Financial instruments

With a strong net cash position, the Group currently finances its working capital and capital expenditure programmes from its own resources.

The Group takes the view that short-term debtors and creditors are not financial instruments that play a significant medium to long-term role in the financial risk profile of the Group.

Financial risks

The Group is exposed to the following risks arising from financial instruments: credit risk, liquidity risk and market risk.

Credit risk

The Group has no significant concentrations of credit risk. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, and on outstanding trade and other receivables. Cash deposits are limited to high credit quality financial institutions. The Group has policies in place to ensure that sales of products and services are made to customers with an approved credit history.

Liquidity risk

The Group's liquidity risk management involves maintaining sufficient cash and cash equivalents and the availability of funding through an adequate amount of committed credit facilities. The current facilities provide more than sufficient liquidity headroom to support the business for the foreseeable future. The strong net cash position over the past three years (£61.4m at 30 April 2013) has reduced liquidity risk for the Group.

Market risk

Foreign exchange risk

The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the local functional currency. Where possible, the Group tries to invoice in the local currency of the respective entity. If this is not possible, then to mitigate exposure, the Group endeavours to buy from suppliers and sell to customers in the same currency. In addition, the Group faces currency risks arising from monetary financial instruments held in non-functional currencies. Where possible, the Group tries to hold the majority of its cash and cash equivalent balances in the local currency of the respective entity.

The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. The main currency translation risk relates to foreign operations whose functional currency is the Euro, Swiss franc or Japanese yen. The investments are not hedged.

Interest rate risk

With the low level of external debt at 30 April 2013, the Group is not currently exposed to significant interest rate risk exposure.

Key performance indicators

The Group measures its performance using a mixture of financial and non-financial indicators. These are aligned to the Group's long-term strategy of enhancing shareholder value.

	2013	2012	Change
Vending sites:
Total	43,150	43,300	-0.3%
Photobooths	24,900	23,500	+6.0%
Digital printing kiosks & photobook makers	5,000	5,100	-2.0%
Other vending equipment	13,250	14,700	-9.9%
Revenue:
Total	£195.6m	£207.8m	-5.9%
Operations	£173.2m	£178.0m	-2.7%
Sales & Servicing	£22.4m	£29.8m	-24.9%
EBITDA	£44.9m	£44.0m	+2.0%
Operating profit
Total	£24.2m	£20.0m	+£4.2m
Operations	£28.1m	£25.1m	+£3.0m
Sales & Servicing	£(0.6)m	£(2.4)m	+£1.8m
Group overhead	£(3.3)m	£(2.7)m	-£0.6m
Increase in net cash position	£9.6m	£11.1m	-£1.5m
Gearing ratio	-	-	-
Gross capital expenditure	£19.2m	£18.4m	+£0.8m
Depreciation and amortisation	£20.7m	£24.0m	-£3.3m

Financial objective

Photo-Me's main financial targets for the future are to increase revenue, to maintain profitability and to provide attractive returns for investors backed by the Group's strong cash generation.

RISKS AND UNCERTAINTIES

Like all businesses, the Group faces risks and uncertainties that could impact the achievement of the Group's strategy. These risks are accepted as being part of doing business and 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 the mitigation actions.

Nature of the risk	Description and impact	Mitigation
Economic
• Global economic conditions	Economic growth is 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 products
• Volatility of foreign exchange rates	The majority of the Group's revenue and profit is generated outside of the UK, and the Group results could be adversely impacted by an increase in the value of sterling relative to those currencies	The Group sometimes hedges its exposure to currency fluctuations on transactions. However, by its nature, in the Board's opinion, it is very difficult to hedge against currency fluctuation 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, the Group's revenues and profits could be seriously affected	The group is developing new systems that could respond to this situation. The Group also ensures that its ID product remains affordable and of high quality The Group is also conducting lobbying actions
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	The Management teams constantly review demand in existing markets and potential new opportunities. The Group continues to invest in research for new products and technologies
• Inability to deliver anticipated benefits from the launch of new products	The realisation of long-term anticipated benefits depends upon the successful launch of the "Revolution" laundry unit	The Group regularly monitors the performance of newly installed machines, which are heavily trialled before launch
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 could have a material impact on the Group's results	Some of the Group's 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 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 dramatic effect	The Board has decided to hold a strategic stock of paper, allowing for one year's worth of paper consumption, to give enough time to put in place alternative solutions
• Reputation	The Group's brand is a key asset of the business. Failure to protect the Group's reputation and brand 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 brand in its core markets is sustained by products with certain unique features and offerings as well as regular maintenance to maintain appearance
• 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 both its existing estate, to ensure that it remains contemporary, and in constant product innovation to meet customer needs. The Group also has a programme to regularly train its technicians

Group STATEMENT OF COMPREHENSIVE income

for the year ended 30 April 2013

		2013	2012
	Notes	£'000	£'000
Revenue	2	195,590	207,841
Cost of sales		(153,363)	(169,340)
Gross profit		42,227	38,501
Other operating income		1,138	1,194
Administrative expenses		(19,221)	(19,765)
Share of post-tax profits from associates		55	89
Operating profit	2	24,199	20,019
Finance revenue		533	844
Finance cost		(426)	(723)
Profit before tax		24,306	20,140
Total tax charge	3	(6,746)	(5,594)
Profit for year		17,560	14,546
Other comprehensive income
Items that are, or may subsequently be, classified to profit and loss:
Exchange differences arising on translation of foreign operations		(2,161)	(2,841)
Translation reserve taken to income statement on disposal		-	(12)
Total items that are, or may subsequently be, classified to profit and loss		(2,161)	(2,853)
Items that will not be classified to profit and loss
Actuarial movements in defined benefit obligations and other post-employment benefit obligations		15	(531)
Deferred tax on actuarial movements		(308)	118
Total items that will not be classified to profit and loss		(293)	(413)
Other comprehensive expense net of tax		(2,454)	(3,266)
Total comprehensive income for the year		15,106	11,280
Profit for  the year attributable to:
Owners of the Parent		17,405	14,349
Non-controlling interests		155	197
		17,560	14,546
Total comprehensive income attributable to:
Owners of the Parent		14,910	11,175
Non-controlling interests		196	105
		15,106	11,280
Earnings per share
Basic earnings per share	4	4.78p	3.97p
Diluted earnings per share	4	4.76p	3.95p

GROUP STATEMENT OF FINANCIAL POSITION

as at 30 April 2013

	Notes	2013	2012
		£'000	£'000
Assets
Non-current assets
Goodwill	6	9,980	9,895
Other intangible assets	6	6,735	8,958
Property, plant and equipment	6	45,334	46,128
Investment property	6	723	1,147
Investments in associates		790	592
Other financial assets   - held to maturity		2,447	2,176
- available-for-sale		81	80
Deferred tax assets		2,157	3,148
Trade and other receivables		1,691	1,473
		69,938	73,597
Current assets
Inventories		13,241	16,931
Trade and other receivables		12,848	14,302
Other financial assets  - held to maturity		14	213
- available-for-sale		88	5
Current tax		30	19
Cash and cash equivalents		59,651	54,605
		85,872	86,075
Total assets		155,810	159,672
Equity
Share capital		1,856	1,850
Share premium		6,287	5,873
Treasury shares		-	(5,802)
Other reserves		16,723	18,925
Retained earnings		72,295	74,994
Equity attributable to owners of the Parent		97,161	95,840
Non-controlling interests		1,197	1,001
Total equity		98,358	96,841
Liabilities
Non-current liabilities
Financial liabilities		236	776
Post-employment benefit obligations		3,765	4,285
Provisions		7	77
Deferred tax liabilities		858	2,508
Trade and other payables		4,981	5,646
		9,847	13,292
Current liabilities
Financial liabilities		543	4,386
Provisions		8,297	4,957
Current tax		6,549	5,368
Trade and other payables		32,216	34,828
		47,605	49,539
Total equity and liabilities		155,810	159,672

GROUP STATEMENT OF CASH FLOWS

for the year ended 30 April 2013

		2013 £'000	2012 £'000
Cash flows from operating activities
Profit before tax		24,306	20,140
Finance cost		426	723
Finance revenue		(533)	(844)
Operating profit		24,199	20,019
Share of post-tax profit from associates		(55)	(89)
Amortisation of intangible assets		4,285	3,277
Depreciation of property, plant and equipment		16,443	20,737
Profit on sale of property, plant and equipment		(2,698)	(69)
Exchange differences		(127)	(905)
Other items		222	(1,010)
Changes in working capital:
Inventories		3,966	2,650
Trade and other receivables		374	5,540
Trade and other payables		(2,738)	(8,894)
Provisions		2,738	1,170
Cash generated from operations		46,609	42,426
Interest paid		(423)	(649)
Taxation paid		(7,276)	(5,314)
Net cash generated from operating activities		38,910	36,463
Cash flows from investing activities
Investment in associates		(118)	(62)
Loan advanced to associates		(129)	-
Investment in intangible assets		(1,858)	(2,477)
Proceeds from sale of intangible assets		133	-
Purchase of property, plant and equipment		(17,256)	(15,865)
Proceeds from sale of property, plant and equipment		3,659	866
Purchase of available-for-sale investments		(86)	(387)
Proceeds from sale of available-for-sale investments		-	528
Interest received		533	434
Dividends received from associate		-	101
Net cash utilised in investing activities		(15,122)	(16,862)
Cash flows from financing activities
Issue of Ordinary shares to equity shareholders		420	161
Sale of Treasury Shares		5,749	-
Repayment of capital element of finance leases		(126)	(643)
Repayment of borrowings		(4,489)	(11,148)
Increase in assets held to maturity		(21)	(433)
Dividends paid to owners of the Parent		(19,970)	(7,232)
Dividends paid to non-controlling interests		-	(39)
Net cash utilised in financing activities		(18,437)	(19,334)
Net increase in cash and cash equivalents		5,351	267
Cash and cash equivalents at beginning of year		54,605	56,212
Exchange loss on cash and cash equivalents		(305)	(1,874)
Cash and cash equivalents at end of year		59,651	54,605

GROUP STATEMENT OF CHANGES IN EQUITY

for the year ended 30 April 2013

	Share capital	Share premium	Treasury shares	Other reserves	Translation reserve	Retained earnings	Attributable to owners of the Parent	Non-controlling interests	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 May 2011	1,844	5,718	(5,802)	2,430	19,256	64,374	87,820	935	88,755
Profit for year	-	-	-	-	-	14,349	14,349	197	14,546
Other comprehensive (expense)/income
Exchange differences	-	-	-	-	(2,749)	-	(2,749)	(92)	(2,841)
Translation reserve taken to income statement on disposal of subsidiaries	-	-	-	-	(12)	-	(12)	-	(12)
Actuarial movement in defined benefit pension scheme and other post-employment benefit obligations	-	-	-	-	-	(531)	(531)	-	(531)
Deferred tax on actuarial movements	-	-	-	-	-	118	118	-	118
Total other comprehensive expense	-	-	-	-	(2,761)	(413)	(3,174)	(92)	(3,266)
Total comprehensive (expense)/ income for the year	-	-	-	-	(2,761)	13,936	11,175	105	11,280
Transactions with owners of the Parent
Shares issued in period	6	155	-	-	-	-	161	-	161
Share options	-	-	-	-	-	302	302	-	302
Dividends	-	-	-	-	-	(3,618)	(3,618)	(39)	(3,657)
Total transactions with owners of the Parent	6	155	-	-	-	(3,316)	(3,155)	(39)	(3,194)
At 30 April 2012	1,850	5,873	(5,802)	2,430	16,495	74,994	95,840	1,001	96,841
At 1 May 2012	1,850	5,873	(5,802)	2,430	16,495	74,994	95,840	1,001	96,841
Profit for year	-	-	-	-	-	17,405	17,405	155	17,560
Other comprehensive (expense)/income
Exchange differences	-	-	-	-	(2,202)	-	(2,202)	41	(2,161)
Actuarial movement in defined benefit pension scheme and other post-employment benefit obligations	-	-	-	-	-	15	15	-	15
Deferred tax on actuarial movements	-	-	-	-	-	(308)	(308)	-	(308)
Total other comprehensive expense	-	-	-	-	(2,202)	(293)	(2,495)	41	(2,454)
Total comprehensive (expense)/ income for the year	-	-	-	-	(2,202)	17,112	14,910	196	15,106
Transactions with owners of the Parent
Shares issued in period	6	362	-	-	-	-	368	-	368
Share options	-	-	-	-	-	212	212	-	212
Sale of Treasury Shares	-	52	5,802	-	-	(53)	5,801	-	5,801
Dividends	-	-	-	-	-	(19,970)	(19,970)	-	(19,970)
Total transactions with owners of the Parent	6	414	5,802	-	-	(19,811)	(13,589)	-	(13,589)
At 30 April 2013	1,856	6,287	-	2,430	14,293	72,295	97,161	1,197	98,358

NOTES

1 Basis of preparation and accounting policies

The preliminary results for the year ended 30 April 2013 have been extracted from the audited consolidated financial statements, which were approved by the Board of Directors on 26 June 2013. The audited consolidated financial statements have not yet been delivered to the Registrar of Companies but are expected to be published by the end of July. 

The Group has adopted Presentation of Items of Other Comprehensive Income (amendments to IAS 1 Presentation of Financial Statements in the 2013 consolidated financial statements.

Abridged financial information

The financial information in this announcement which was approved by the Board of Directors does not constitute the Company's statutory accounts for the years ended 30 April 2012 or 2013 but is derived from those accounts. Statutory accounts for 2012 have been delivered to the Registrar of Companies. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under s498(2) or (3) Companies Act 2006.

This preliminary announcement has been prepared in accordance with the accounting policies under IFRS as adopted by the EU.

Whilst the financial information included in this preliminary announcement has been prepared in accordance with IFRS, this announcement does not itself contain sufficient information to comply with IFRS. This preliminary announcement constitutes a dissemination announcement in accordance with Section 6.3 of the Disclosures and Transparency Rules (DTR).

2 Segment analysis

Operating segments are reported in a manner consistent with internal reporting to the Chief Operating Decision Maker as required by IFRS8, Operating Segments.

The Group has identified two segments as set out below:

(i) Operations: comprises the operation of unattended vending equipment, in particular photobooths, digital printing kiosks, amusement machines and business service equipment.

(ii) Sales & Servicing: comprises the development, manufacture, sale and after-sale servicing of this Operations equipment and a range of photo-processing equipment, together with the servicing of other third party equipment.

	Operations £'000	Sales & Servicing £'000	Total £'000
2013
Total revenue	173,217	47,092	220,309
Inter-segment revenue	-	(24,719)	(24,719)
Revenue from external customers	173,217	22,373	195,590
EBITDA	43,846	3,723	47,569
Depreciation and amortisation	(15,779)	(4,361)	(20,140)
Operating profit excluding associates	28,067	(638)	27,429
Share of post-tax profit from associates			55
Corporate costs excluding depreciation and amortisation			(2,697)
Corporate depreciation and amortisation			(588)
Operating profit			24,199
Finance revenue			533
Finance costs			(426)
Profit before tax			24,306
Tax			(6,746)
Profit for year			17,560
2012
Total revenue	178,063	51,546	229,609
Inter-segment revenue	-	(21,768)	(21,768)
Revenue from external customers	178,063	29,778	207,841
EBITDA	44,994	997	45,991
Depreciation and amortisation	(19,890)	(3,511)	(23,401)
Operating profit excluding associates	25,104	(2,514)	22,590
Share of post-tax profit from associates			89
Corporate costs excluding depreciation and amortisation			(2,047)
Corporate depreciation and amortisation			(613)
Operating profit			20,019
Finance revenue			844
Finance costs			(723)
Profit before tax			20,140
Tax			(5,594)
Profit for year			14,546

3  Taxation

	2013			2012
			£'000			£'000
Current taxation
UK			1,034			742
Overseas			6,710			5,834
Prior year adjustments			(159)			(211)
			7,585			6,365
Deferred taxation
Temporary differences			(1,328)			(276)
Prior year adjustments			400			(492)
Impact of change in rate			89			(3)
			(839)			(771)
Total tax charge			6,746			5,594

4 Earnings per share
							Year to 30 April  2013		Year to  30 April 2012
Basic earnings per share							4.78p		3.97p
Diluted basic earnings per share							4.76p		3.95p
The earnings and weighted average number of shares used in the calculation are set out in the table below:
Earnings attributable to ordinary shareholders (£'000)							17,405		14,349
Weighted average number of shares in issue in the period:
- basic ('000)							364,066		361,840
- including dilutive share options ('000)							365,632		363,760

5 Dividends paid and proposed
An interim dividend for the year ended 30 April 2012 of 1.25p per share was paid on 8 May 2012 and a final dividend of 1.25p per share was paid on 7 November 2012. The Board has declared an interim dividend of 1.50p per share for the year ended 30 April 2013, which was paid on 7 May 2013. A special dividend of 3.00p per share was paid on 8 March 2013.The Board has proposed a final dividend for the year ended 30 April 2013 of 1.50p per share, which is subject to shareholder approval at the Annual General Meeting to be held on 12 September 2013. If approved, the dividend will be paid on 7 November 2013.

6 Non-current assets

	Goodwill	Intangible assets	Property, plant & equipment	Investment property
	£'000	£'000	£'000	£'000
Net book value at 1 May 2012	9,895	8,958	46,128	1,147
Exchange difference and other movements	85	239	(1,064)	27
Additions - photobooths and vending equipment	-	-	16,381	-
Additions - other assets	-	1,859	939	-
Amortisation	-	(4,285)	-	-
Depreciation	-	-	(15,992)	(451)
Disposals at net book value	-	(36)	(1,058)	-
Net book value at 30 April 2013	9,980	6,735	45,334	723

7 Net cash

	2013  £'000	2012 £'000
Cash and cash equivalents per statement of financial position	59,651	54,605
Financial assets - held to maturity	2,461	2,389
Financial assets - available-for-sale	86	-
Non-current instalments due on bank loans	(183)	(685)
Current instalments due on bank loans	(463)	(4,256)
Non-current finance leases	(53)	(91)
Current finance leases	(80)	(130)
Net cash	61,419	51,832

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 loans and other borrowings.

At 30 April 2013, £2,461,000 of the total net cash (2012: £2,389,000) comprised bank deposit accounts that are subject to restrictions and are not freely for use by the Group.

8 Responsibility statement of the directors in respect of the annual financial report

The responsibility statement below has been prepared in connection with the Company's full Annual Report for the year ending 30 April 2013.  Certain parts thereof are not included within this announcement.

"We confirm that to the best of our knowledge:

·  the financial statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

·  the Business and financial review, which is incorporated into the Report of the directors, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face."

By order of the Board

John Lewis                                                                           Serge Crasnianski

Chairman                                                                               Chief Executive Officer

26 June 2013

9 Publication of the audited financial statements

Copies of the Report and Accounts for the year ended 30 April 2013 will be mailed to those shareholders who have opted to receive them, by the end of July and will be available from the Company's registered office at Church Road, Bookham, Surrey KT23 3EU (telephone: [phone], fax: [phone], email: [e-mail]) and the Company's website (http://investor.photo-me.com/financial- -reports) after that date.

 

END

 

 

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