TIDMPHTM
RNS Number : 9055F
Photo-Me International PLC
18 July 2019
18 July 2019
PHOTO-ME INTERNATIONAL PLC
("Photo-Me" or "the Group")
RESULTS FOR THE YEARED 30 APRIL 2019
Innovation and diversification securing long-term growth
prospects
Photo-Me International plc (PHTM.L), the instant-service
equipment group, announces its results for the year ended 30 April
2019.
RESULTS SUMMARY:
Reported At constant currency
------------------------------- -----------------------
2019 2018 Change 2018(1) Change(1)
Revenue GBP228.1m GBP229.8m -0.7% GBP230.0m -0.8%
EBITDA (excluding associates) GBP69.7m GBP71.0m -1.8% GBP70.9m -1.7%
Underlying profit before
tax(2) GBP44.1m GBP46.8m -5.8% GBP46.8m -5.5%
Reported profit before
tax GBP42.6m GBP50.2m -15.1% GBP50.0m -14.9%
Profit after tax GBP31.3m GBP40.3m -23.3%
Cash generated from operations GBP63.9m GBP61.0m +4.9%
Net cash(3) GBP16.3m GBP26.7m -38.8%
Earnings per share (diluted) 8.26p 10.60p -22.1%
Total dividend per share 8.44p 8.44p
(1) 2018 trading results of overseas subsidiaries converted at
2019 exchange rates.
(2) Underlying profit before tax is 2019 profit before tax
adjusted to exclude the gain on the disposal of the Group's
interest in Stilla Technologies SA (GBP3.2m), the fair value loss
on the Group's shareholding in Max Sight Group Holdings Limited
(-GBP2.9m) and restructuring costs incurred in the Group's Japanese
subsidiary (-GBP1.8m). 2018 profit before tax is adjusted to
exclude the gain on the Group's shareholding in Max Sight Group
Holdings Limited (GBP3.7m), the profit on disposal of the former
head office building (GBP2.3m), and restructuring fees relating
Photo-Me Retail (-GBP2.6m).
(3) Refer to note 7 for the reconciliation of Net Cash to Cash
and cash equivalents as per the financial statements.
All percentage change figures are calculated from actual figures
in the financial statements as opposed to the rounded figures
included in the above table.
FINANCIAL SUMMARY
-- Excluding the UK, Group revenue increased by 5.9%. Reported
revenue was broadly maintained at GBP228.1 million (2018: GBP229.8
million).
-- Group revenue growth of 2.1%, when excluding a loss of GBP6.3
million in revenue following the restructuring of Photo-Me Retail
in FY2018.
-- EBITDA (excluding associates) was down 1.8% at GBP69.7m (2018: GBP71.0m).
-- Underlying profit before tax down 5.8% at GBP44.1m (2018: GBP46.8m).
-- Reported profit before tax down 15.1% at GBP42.6m (2018:
GBP50.2m), slightly ahead of our revised expectations.
-- Profit after tax of GBP31.3m down 22.4% from the year prior
(2018: GBP40.3m), impacted by Brexit-related uncertainties.
-- Net cash position of GBP16.3m, down 38.8% from the prior year (2018: GBP26.7m).
-- Total Ordinary dividend maintained at 8.44p, comprising an
interim dividend of 3.71p per share and a final dividend of 4.73p
per share.
OPERATIONAL SUMMARY
-- Continued rapid growth of the Laundry business, with total
Laundry revenue growth of 19.0% and contributing 19.2% of total
Group revenue (2018: 16%). Revolution machine revenue grew by 30.2%
year-on-year.
-- Identification continued to deliver revenue growth and strong
cash flow, with revenue up 0.7% excluding the UK. Total reported
revenue declined by 1.0%.
-- Kiosk reported revenue was down 19.1%, following the
restructuring of Photo-Me Retail in the UK which was completed in
FY2018 leading to a reduction in units in operation. Excluding the
UK, Kiosk revenue increased by 1.6%.
-- The Japanese business has returned to profit, following the
completion of the turnaround plan.
-- Entry into the fresh fruit and vegetable juice market with
the acquisition of SEMPA Sarl ("Sempa") in April 2019, with the
intention of growing this business area and further diversifying
Group operations.
-- Sempa acquisition expected to be earnings enhancing in the
financial year ending 30 April 2020 and expected to contribute
profit before tax of approximately EUR3.7 million in FY2020.
Commenting on the results, Serge Crasnianski, CEO, said:
"In 2019, our operations outside of the UK performed well and in
line with our expectations. We delivered revenue and profit growth
in Continental Europe, and our Japanese business returned to
profitability as planned. In the UK, our operations were adversely
impacted by macro headwinds and uncertainty.
"Expansion of our Laundry services business remains a key driver
of growth, with total Laundry revenue up 19.0% and revenue from
Revolution machines up 30.2% year-on-year.
"Looking ahead, we will continue to drive profitability through
our existing estate and new product innovation. Our entry into the
fresh fruit and vegetable equipment market through the acquisition
of Sempa provides us with the platform to further diversify our
product offer. We remain confident for the future."
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Enquiries:
Photo-Me International plc +44 (0) 1372 453 399 / ir@photo-me.co.uk
Serge Crasnianski, CEO
Stéphane Gibon, CFO
Hudson Sandler +44 (0) 20 7796 4133
Wendy Baker/ Emily Dillon/ Nick photo-me@hudsonsandler.com
Moore
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 approximately 47,000 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, launderettes, B2B services
-- Kiosks: high-quality digital printing
The Group entered the self-service fresh fruit juice equipment
market in April 2019, with the acquisition of Sempa. This will
become a key business area alongside Identification, Laundry and
Kiosks, and will be a significant part of the Group's future growth
strategy.
In addition, the Group operates other vending equipment such as
children's rides, amusement machines and business service
equipment.
Whilst the Group both sells and services this equipment, the
vast majority of units are owned, operated and maintained by
Photo-Me. Photo-Me pays the site owner a commission based on
turnover, which varies depending on the country and location and
the type of the machine.
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), public, transport locations and
administration buildings (City Hall, Police etc). Equipment is
maintained and serviced by an established network of 700 field
engineers.
The Company's shares have been listed on the London Stock
Exchange since 1962.
CHAIRMAN'S STATEMENT
In the 2019 financial year, the Group continued to make progress
on its growth strategy, led by the expansion of our self-service
Laundry operations.
Total revenues from Laundry operations increased by 19.0% and
revenue from Revolution increased by 30.2%. This growth was
achieved despite a decrease in B2B Laundry revenue and aided by the
first-year contribution from La Wash laundry services. In line with
our plan, revenue from Laundry activity has continued to increase
as a proportion of the Group's total revenue.
Identification declined by 1.1%, reflecting challenging market
conditions in the UK. Excluding the UK operations, Identification
revenue grew by 0.7%.
Revenue from Kiosks declined by 19.1%, following to the
restructuring of Photo-Me Retail, which happened in financial year
2018 and resulted in a lower number of kiosk units in the Group's
portfolio.
Results
Our operations in Continental Europe and Asia continued to
perform in line with our expectations. As previously announced,
overall trading in the UK became more challenging than expected as
consumer activity slowed, owing to uncertainty around the UK's exit
from the European Union. This resulted in lower revenues from
business-to-business and machine sales activity due to delays in
order decisions, albeit we expect part of these revenue delays to
be recovered during the 2020 financial year.
Reported revenue reduced by 0.7% to GBP228.1 million and by 0.8%
at constant currency. Adjusted revenue increased by 2.1%, excluding
a GBP6.3 million revenue contribution from Photo-Me Retail in the
prior year.
Reported EBITDA (excluding associates) was GBP69.7 million
(2018: GBP71.0 million), resulting in an EBITDA margin of 31.4%.
Excluding the impact of one-off items detailed below, EBTIDA margin
was 32.0%.
Adjusted profit before tax was 6.0% lower at GBP44.1 million
when adjusted for one-off items in the financial year 2019 and the
prior financial year. A reconciliation of Reported profit before
tax to Adjusted profit before tax is detailed in the table
below.
Reconciliation of Reported profit before tax to Adjusted profit
before tax
2019 2018
GBPm GBPm
------------------------------------------------------------- ------------ ------
Profit before tax 42.6 50.2
Adjustments to exclude:
(3.2) -
* Gain on disposal of Stilla Technologies SA
* Fair value loss on financial instrument held at FVTPL 2.9 -
* Gains on available for sale financial instruments - (3.7)
* Profit on sale of land & buildings - (2.3)
* Restructuring costs 1.8 2.6
------------------------------------------------------------- ------------ ------
Underlying profit before tax 44.1 46.8
------------------------------------------------------------- ------------ ------
* Favourable commercial litigation - (1.6)
* Exchange gain - (0.9)
------------------------------------------------------------- ------------ ------
Adjusted profit before tax 44.1 44.3
------------------------------------------------------------- ------------ ------
The Group remains highly cash generative, with GBP63.9 million
of cash generated from operations in the period (2018: GBP61.0
million). This continues to support the ongoing investment in
innovation and its future growth.
Capital expenditure in the year was GBP30.3 million (2018:
GBP43.6 million). This reflects lower trading in the UK and our
strategy to reduce the level of capex and focus on the expansion of
our Laundry business, through deploying Revolution machines only at
high-footfall locations.
Our net cash position at 30 April 2019 was GBP16.3 million,
compared with net cash of GBP26.7 million at 30 April 2018. This
net cash position reflects the distribution of dividends amounting
to GBP31.9 million during the financial year and GBP36.4 million of
net cash outflow on investing activities. Investing activities
includes the net cash outflow on the acquisition of La Wash (GBP4.2
million) and Sempa SARL (GBP9.3 million), and ongoing investment in
the growth of Photo-Me's existing business.
Strategy
Photo-Me operates, sells and services a wide range of
instant-service equipment, primarily aimed at the end consumer. Our
operations are focused on the three principal business areas of
Identification, Laundry, and digital Kiosks. We currently operate
across 18 countries.
Our growth strategy is focused on diversifying our operations by
developing new technologies with multiple applications that can be
speedily deployed, at a relatively low cost to the business, across
new and existing geographies and provide a rapid return on
investment.
We have R&D centres in France (primary facility), Portugal,
Vietnam and Japan. Our capabilities in this area are supported by a
team of more than 60 dedicated engineers.
In recent years, our activities have been focused on the
development and deployment of our secure upload Photo ID technology
in our Identification business.
Acquisition of SEMPA Sarl ("Sempa")
In line with our strategy to grow Photo-Me through product
diversification and innovation, the Group acquired Sempa in April
2019, for a gross consideration EUR20.64 million funded by a new
debt facility of EUR20.0 million. Sempa's net cash position upon
acquisition was more than EUR9.8 million, resulting in net cash
outflow of approximately EUR10.8 million.
Sempa is the leader in France for the commercialisation of
self-service fresh fruit juice equipment and operates 2,788 units.
This acquisition was an important strategic development for
Photo-Me and marked the Group's entry into the fresh fruit and
vegetable juice market, which is estimated to be worth $154
billion(*) globally, and the platform to develop a new business
area for the Group.
Sempa has already achieved considerable success in France and we
look forward to replicating this via our existing network and
commercial relationships across Photo-Me's international markets,
with our initial focus being on Europe. The rollout of the new
juice estate will leverage our existing network of regional field
engineers and our sales team, alongside Sempa's industry
experience, at low incremental cost to the Group.
(*) source: Global Fruit and Vegetable Juice Market Research
2018-2025; Grand View Research.
Dividends
Photo-Me is committed to creating value for its shareholders.
Subject to approval at the Annual General Meeting, the Board is
proposing a final dividend payment of 4.73 pence per share (2018:
4.73 pence per share). When combined with the interim dividend of
3.71 pence per share, this brings the total dividend for the year
ended 30 April 2019 to 8.44 pence per share (2018: 8.44 pence per
share). This will be paid on 8 November 2019 to shareholders listed
on the register on 18 October 2019. The ex-dividend date will be 17
October 2019.
For the current financial year ending 30 April 2020, the Board
intends to maintain a total dividend of 8.44 pence per ordinary
share.
The Board
During the last few years, having regard to the substantial
changes being made to the businesses of the Group, the Board has
been mindful of the importance of maintaining stability, and
continuity. Nevertheless, it is conscious of the need to bring in
new Directors to take the Group forward and will continue to review
the composition of the Board accordingly. The first steps have been
taken following the recent decision to appoint a new Non-Executive
Director to the Board.
Colleagues
On behalf of the Board, I would like to thank all our team
members across the world for their ongoing hard work and continued
commitment throughout the year, supported by our country
managers.
I would also like to welcome our new colleagues from Sempa into
the Group as we look ahead to building an exciting new business
together.
Current trading and outlook
Our Laundry business will remain the core growth driver for the
Group, accounting for an increasing proportion of the Group's total
revenue in the medium term. We will continue to progress our
rollout of Identification products for governments, that supports
our strong presence in the Identification market.
Our entry into the growing fresh fruit and vegetable market will
enable us to further diversify our operations. We plan to replicate
the success of this business in France across other geographies in
which we operate. In addition, we are investing in new product
development to expand the products offered to the end consumer,
such as an apple and pineapple juice machine. The intention is for
this business to become a significant part of the Group's growth
strategy, and in the financial year ending 2020 we will report
fresh juice activities separately, alongside our current business
areas of Identification, Laundry and Kiosks.
This new business presents an exciting new opportunity for
Photo-Me and steps have been taken to introduce patents and
innovations to allow us to further penetrate the fresh juice
market.
While consumer uncertainty continues to weigh on our business in
the UK, we remain confident that overall the Group will continue to
perform well in the current financial year and beyond.
Sir John Lewis
Non-executive Chairman
17 July 2019
BUSINESS REVIEW
The 2019 financial year saw macro headwinds and uncertainty in
the UK, resulting in a slowdown in consumer activity and delays to
B2B orders. This put pressure on our financial performance, and
resulted in a GBP9.7 million negative revenue impact. As a result,
Group revenues declined by 0.7%, and underlying profit before tax
by 5.8%.
Across our other geographies, the Group performed well and in
line with our expectations. Overall, profit before tax was slightly
ahead of our revised expectations.
We continued to make progress on our strategy to expand our
Laundry services business and we achieved strong results with a
9.4% increase in total laundry machines deployed, translating to a
19.0% increase in Laundry revenue in the financial year, while
total revenue from Revolution laundry units increased by 30.2%.
Growth strategy through product diversification and
innovation
Investment in innovation remains at the core of the business.
Photo-Me's growth strategy to deploy new products and technologies,
with multiple applications across our vending estate, is
underpinned by an ongoing focus on R&D and product
diversification.
We have in-house research and development capabilities in
France, Portugal, Vietnam and Japan, and we employ a team of 60
dedicated and highly experienced engineers.
Our team specialises in new product and software development,
focused on three key areas: (i) the refurbishment and upgrade of
our estate; (ii) further development and rollout of our proprietary
security biometric identification solutions; and (iii)
complementary products and services.
Our largest facility is in France, where our team plays a key
role in identifying new market opportunities and carries out
small-scale product manufacture and testing. Once new products are
fully launched, larger scale production is outsourced to our
manufacturing partners.
The expansion of our Laundry business, currently present in
Ireland, Portugal, the UK, France, Belgium and the Netherlands,
remains a core pillar of the Group's long-term growth strategy,
with significant potential across territories where Photo-Me
operates.
Expansion is funded by cash generated from our Identification
business, which represents a global market-leading estate of
hi-tech photobooths offering multiple instant-vending services.
Essentially, our growth strategy is focused on expanding the
number of units in operation, increasing the yield per unit, and
minimising production and operational costs to the Group in
achieving this objective.
We are continually looking for opportunities to enhance our
product offering and leverage our established long-term
relationships with site owners and our network of 700 dedicated
field engineers.
Development of a fresh fruit and vegetable juice product
offering
As part of our diversification and innovation approach, we
entered the growing fresh fruit and vegetable juice market with the
acquisition of Sempa in April 2019.
The business operates via a lease model, whereby Sempa sells
fresh fruit juice equipment to customers through lease finance
agreements. It receives payment upon the sale of the equipment and
the lease finance contracts are then subject to renewal every 12
months, on average. Sempa's customers include retail, office and
work spaces, and small businesses.
The growing importance people place on their health and
well-being makes it an exciting time to enter this market, with the
health benefits of juice driving its popularity and potential.
Our intention is for Photo-Me to become the global leader in
self-service fresh fruit juice machines and to replicate the
success Sempa has seen in France by rolling out the equipment
across our European network.
The Group will open a fruit juice dedicated R&D department
at our facility in France, with the aim of launching a new and
innovative fruit juice machine by the calendar year end.
(*) Source: Global Fruit and Vegetable Juice Market Research
2018-2025; Grand View Research.
Launch of first banking booth
In November 2018, the Group launched its first banking booth,
which provides front-end retail banking services to customers, in
Paris, in partnership with Anytime, a Belgian Fintech business.
The technology allows customers to open a personal or
professional bank account and scan in supporting documents. It then
takes two days for a new account to be opened once compliance
checks have been completed. The new client receives a credit card
by post within two days of the account opening. In the long-term,
customers will be able to deposit cheques and cash in the booths
and speak directly to bank specialists through the screen. A
10-machine pilot is underway in Paris with the support of
Anytime.
Overview by principal business area
-- Identification (photobooths and integrated biometric identification solutions)
Photo-Me is the world's largest operator of photobooths with
market-leading photographic quality and technology, operating a
well-established network of photobooths. Identification accounts
for 61.5% of vending units in operation.
Our strategy is to (i) expand our presence in high-footfall
locations; (ii) grow revenue by offering customers a broader range
of services via our photobooths; and (iii) penetrate new
geographies. In particular, we remain focused on deploying our
proven identification security technology.
The increasing appetite from governments for improved and
digitalised security ID underpins our growth strategy in this
business area.
30 April 30 April Change
2019 2018
---------- ---------- -------
Number of units in operation 28,873 29,015 -0.5%
------------------------------------------ ---------- ---------- -------
Percentage of total Group vending estate
(number of units) 61.5% 62.0% -0.8%
------------------------------------------ ---------- ---------- -------
Revenue GBP147.7m GBP149.3m -1.1%
------------------------------------------ ---------- ---------- -------
Capex GBP9.7m GBP13.4m -27.6%
------------------------------------------ ---------- ---------- -------
Excluding the UK, Identification revenue grew by 0.7% and the
number of units in operation increased by 0.9%
Overall Identification revenue declined by 1.1% due to a more
challenging trading environment in the UK and continued uncertainty
around the UK's European Union exit negotiations. Consumer activity
slowed and footfall in retail locations was lower year-on-year. In
addition, the UK Government's decision to allow photo ID taken on a
smart device or camera at home to be used for passport photo ID has
impacted Identification volumes and 178 machines were removed from
the UK estate, and will be relocated, due to rising operational
costs.
Elsewhere, we continued to see a resilient performance aided by
the diversification of our photobooth services, including the
rollout of our encrypted photo ID upload technology with
governments in the UK, France, Germany, Ireland and the
Netherlands. In total, the Group has more than 12,000 photobooths
connected to government organisations for the secure upload of
photo ID. The Board anticipates that this number will continue to
grow as discussions with governments progress.
Capex for Identification reduced in the period as we prioritised
expenditure on the installation of Revolution machines, only in
high-footfall locations.
We will continue to invest in advanced identification technology
and innovative solutions. A photobooth capable of delivering photo
ID for babies and young children - the 'first of its kind' - is
currently in development.
-- Laundry (unattended laundry services, launderettes, B2B services)
The Group owns and operates laundry units and has a presence in
12 countries, with operations primarily in France, the UK, Ireland,
Belgium and Portugal. The expansion of our Laundry business,
organically and by acquisition, remains the primary growth driver
for the Group.
30 April 30 April Change
2019 2018
--------- --------- -------
Total Laundry units deployed (owned, sold
and acquisitions) 4,876 4,449 +9.4%
------------------------------------------------------------ --------- --------- -------
Total revenue from Laundry operations GBP43.7m GBP36.7m +19.0%
------------------------------------------------------------ --------- --------- -------
Revolution (excludes Launderettes and B2B):
* Number of Revolutions in operation 2,732 2,313 +18.1%
* Percentage of total Group vending estate (number of
units) 5.8% 5.0% +16.0%
* Total revenue from Revolutions GBP27.6m GBP21.2m +30.2%
* Revolution capex GBP10.9m GBP15.2m -28.3%
------------------------------------------------------------ --------- --------- -------
* There were 2,522 full-time units in operation during FY2019
compared with 2,031 in FY2018.
Total Laundry revenue grew by 19.0% year-on-year, despite a
decrease in B2B Laundry revenue (-GBP3.6m), and represented 19.2%
of total Group revenue in FY 2019, up from 16.0% in the prior year
and 10.0% in FY2017.
This reflects the continued expansion of our Laundry operations,
with 427 new units installed in the 2019 financial year generating
stable revenues. During the period we installed 45 units per month
on average (including sales).
The key geographies for growth continue to be the UK, Ireland,
Portugal, France and Spain. The Group is looking to expand its
presence in Germany (currently 20 units) and Austria (two
units).
We anticipate approaching 6,000 owned, sold and acquired laundry
units by the end of calendar year 2020, subject to macro-economic
factors outside of the Group's control. And we continue to expect
this business to contribute an increasing proportion of total Group
revenue and profits.
Our Laundry business comprises three areas of operation:
Revolution, Launderette, and business-to-business laundry
services.
Revolution is our 24-hour, outdoor, self-service laundry unit,
which is typically located in high-footfall sites such as
supermarket car parks and petrol station forecourts. Our strategy
is to expand the estate through our partnerships with strategic
site owners globally and identify and expand into new high-demand
markets.
The number of Revolution units in operation increased by 18.1%,
with 2,732 machines operating as at 30 April 2019 (2018:
2,313).
Total revenue from Revolution units increased by 30.2%
year-on-year, and now represents 12.1% of our total vending estate
compared with 9.2% in 2018, an increase of 2.9 percentage
points.
Revolution capex reduced year-on-year reflecting the lower cost
of production as well as the Group's focus and discipline around
identifying high-footfall locations where the Revolution units will
be highly profitable rather being wholly focused on the number of
units deployed.
Launderette shops are typically situated in or near to town
centres where there is limited competition from other laundry
services. Our aim is to continue to expand our launderette presence
through an owned-and-operated model.
La Wash, our Spanish launderettes franchise company, which the
Group acquired in May 2018, contributed revenue of GBP3.8 million
and a profit before tax of GBP0.9 million, in accordance with our
expectations. We are looking to build on our presence in Spain.
Business-to-business (B2B) laundry services provides the
distribution and leasing of laundry and catering equipment. Our B2B
customers include institutions such as hospitals, care homes and
universities. The growth strategy is to extend our presence both in
the UK and into new territories through acquisitive growth.
The Group's B2B operations are currently focused in the UK,
where overall trading became more challenging in the second half of
the 2019 financial year. Year-on-year, revenue declined 39% to
GBP5.8 million (2018: GBP9.5 million), while underlying loss before
tax declined to -GBP0.1m (2018: underlying profit before tax of
GBP1.4 million). As previously announced, due to economic
uncertainty, the Group experienced delays in orders that
significantly affected the performance of this business. We believe
this is a timing issue and that these orders will be recovered in
FY2020.
-- Kiosks (high-quality digital printing services)
Our digital printing kiosks offer a wide range of print formats
and personalised products that are competitively priced. Our latest
generation kiosks - Speedlab cube and Speedlab bio - are fully
integrated with all major social media networks and offer rapid and
high-quality printing for customers.
Our key geographic markets are France, the UK and Switzerland.
Our strategy is to capitalise on our market-leading position by
increasing our presence in high-footfall locations, extending the
range of services in our kiosks, and entering new geographies.
30 April 30 April Change
2019 2018 %
--------- --------- -------
Number of units in operation 5,487 5,416 +1.3%
------------------------------------------ --------- --------- -------
Percentage of total Group vending estate
(number of units) 11.7% 11.6% +0.9%
------------------------------------------ --------- --------- -------
Revenue GBP13.3m GBP16.5m -19.1%
------------------------------------------ --------- --------- -------
Capex GBP2.3m GBP3.4m -32.4%
------------------------------------------ --------- --------- -------
Our kiosk business is profitable and the number of units in
operation is growing.
At the period end, the number of kiosks in operation had
increased by 1.3%, following the completion of the relocation of
kiosks from Photo-Me Retail shops in the UK as part of the 2018
restructuring programme. Upon relocation in France, revenue from
these units increased by at least 15.0%.
These Speedlab units were transferred to Photomaton in France,
were refurbished, and then redeployed across the country to replace
previous generation machines.
The decrease in revenue is due to the removal of 491 kiosks
related to the Photo-Me Retail restructuring programme in FY2018.
Excluding this, Kiosks revenue has increased by 1.6%.
Other vending equipment
The Group operates 9,621 (2018: 9,829) other vending units such
as children's rides (4,749 units), photocopiers (3,391 units) and
amusement machines (455 units).
These are typically an extension of our product range at sites
where we have an existing relationship with the site owner.
While this is not one of our three principal business areas,
these machines are profitable and benefit from synergies relating
to other areas of the business, such as our network of field
engineers.
Further details on financial and strategic progress in each of
our three principal areas of operation are provided in the Review
of Performance by Geography.
REVIEW OF PERFORMANCE BY GEOGRAPHY
Commentary on the Group's financial performance is set out
below, in line with the segments as operated by the Board and the
management of Photo-Me. These segmental breakdowns are consistent
with the information prepared to support the Board decision-making.
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
geographic regions of operation: (i) Continental Europe; (ii) the
UK & Republic of Ireland; and (iii) Asia.
In Continental Europe, revenue grew by 7.9% and operating profit
by 5.0%. The performance in the UK & Republic of Ireland was
impacted by macro headwinds in the UK, which resulted in a revenue
decline of 16.9% and a 32.2% decline in operating profit. The
turnaround in Asia continued and, while revenue was down
marginally, operating profit decreased by 13.5% including the
impact of restructuring fees of GBP1.8m relating to the Japanese
business.
Segment revenue Segment operating profit
3
Year to 30 April Year to 30 April
-------------------------------------- --------------------------------------
2019 2018 Change(2) 2018(1) 2019 2018 Change(2) 2018(1)
GBPm GBPm % GBPm GBPm GBPm % GBPm
Continental Europe 130.7 121.1 7.9% 120.6 33.5 31.9 +5.0% 32.0
UK & Republic of
Ireland 52.9 63.7 -16.9% 63.7 7.1 10.4 -32.2% 10.0
Asia 44.5 45.0 -1.0% 45.7 4.7 5.4 -13.5% 5.5
------- ------- ---------- -------- ------- ------- ---------- --------
228.1 229.8 -0.7% 230.0 45.3 47.7 -1.9% 47.5
------- ------- ---------- -------- ------- ------- ---------- --------
Corporate costs (2.6) (1.8) +148.8% (1.6)
------- ------- ---------- -------- ------- ------- ---------- --------
42.7 45.9 -7.0% 45.9
-------------------- ------- ------- ---------- -------- ------- ------- ---------- --------
(1) 2018 trading results of overseas subsidiaries converted at
2019 exchange rates.
(2) Refers to change compared to reported results.
(3) Operating profit exclude results of associate
Vending units in operations
As 30 April 2019 At 30 April 2018 Change
year-on-
------------------------- ------------------------- ----------
No of units % of total No of units % of total
Continental Europe 25,230 53.8 24,550 52.6 +2.8%
UK & Republic of
Ireland 11,701 24.9 12,055 25.8 -2.9%
Asia 10,025 21.3 10,105 21.6 -0.8%
------------ ----------- ------------ ----------- ----------
46,956 100.0 46,710 100.0 +0.5%
In Continental Europe, machine units increased by 2.8% with 266
laundry units, 193 photobooths and 67 kiosks.
In the UK, 225 unprofitable photobooths were removed and an
additional 85 Revolution machines were in operation at the period
end.
Following the restructuring programme, the number of units in
Asia stabilised.
Continental Europe
Financial performance
Continental Europe remains the largest revenue contributor to
the Group. As at 30 April 2019, 53.8% of the Group's total units in
operation were situated in Continental Europe, compared with 52.6%
in the prior year.
This region contributed 57.3% of Group revenues for the year
(2018: 52.7%) and 74.1% of Group operating profit before Corporate
costs (2018: 66.9%).
Looking forward, the acquisition of Sempa is expected to be
earnings enhancing in the financial year ending 30 April 2020 and
thereafter. In the financial year ending 30 April 2020, it is
expected to contribute profit before tax of approximately GBP3.2
million at current exchange rates.
Strategic progress
The Group remains in discussions with the French Government
regarding the extension of its secure photo ID transfer technology
to include photo ID for new passports and identification cards (91%
of photobooths are enabled). Advanced discussions continued with
the Dutch Government regarding the deployment of this technology
for use in driving licences in the Netherlands, with 70 photobooths
already upgraded with this technology.
The Laundry business continued to perform well, including a
first-time contribution from La Wash Group, which was acquired in
May 2018 for a consideration of GBP4.4 million. The profit before
tax of La Wash was GBP0.9 million in FY2019. The expansion of
Revolution laundry operations in Portugal, France and Spain has
continued and the Group is looking at the viability of the German
and Austrian markets.
The acquisition of Sempa during the period marks a significant
new opportunity for the division, as Photo-Me becomes the leading
player in the French self-service fresh juice equipment market,
with plans to expand this offer into other countries in Europe via
the Group's existing commercial network.
UK & Republic of Ireland (including Corporate)
Financial performance
The performance of this division was impacted by the macro
environment, which generated ongoing consumer uncertainty during
the financial year, in relation to the UK's European Union exit
negotiations and the tough trading conditions faced by retailers. A
slowdown in consumer spending had a significant effect on earnings
in the UK, which affected performance at a Group level. UK revenues
in the first half were also temporarily impacted by the
restructuring of Photo-Me Retail in the UK market in H2 2018.
Photo-Me Retail now operates 241 kiosks, which generate very high
revenue levels and the business is profitable.
In Ireland, the continued rollout of Laundry has delivered 64
new Revolutions, and revenue in the country increased significantly
by 19.0% in FY2019.
The UK & Republic of Ireland division contributed 23.2% of
Group revenue in the 2019 financial year (2018: 27.7%), and 15.6%
of operating profit before corporate costs (2018: 21.8%).
Revenue was GBP52.9 million, representing a decline of 16.9%
compared with the prior year. Operating profit was GBP7.1 million,
down 32.2%.
As at 30 April 2019, 24.9% of the Group's total units in
operation were situated in the UK & Republic of Ireland (2018:
25.8%).
Strategic progress
In its Identification business, the Group continued to focus on
the rollout of secure digital upload technology for Irish Online
Passport renewal and British passport renewals. In total, 51.0% of
the photobooths are now enabled for UK passport renewals.
Laundry continued to grow apace in the Republic of Ireland, with
64 units deployed in the period. Laundry revenues now account for
77.4% of the country's total revenue (2018: 72.2%).
Asia
Financial performance
The Group's turnaround plan implemented in H2 2018, to address
the significant challenges in the Japanese market, identified in
the 2018 financial year, has proven highly effective. The business
has recovered faster than initially expected and is performing
well. Trading in the other countries in Asia remains strong.
Asia contributed to 19.5% of Group revenue (2018: 19.6%) and
10.3% of Group operating profit excluding corporate costs (2018:
11.3%).
At constant currency, revenue was down marginally (-0.8%) and
operating profit decreased by 13.5%, including the costs of
restructuring the Japanese business.
The restructuring programme in Japan was completed in the
period, at a total cost of GBP1.8 million. Excluding this one-off
cost, operating profit in Asia was GBP6.5 million compared to
GBP5.4 million in FY2018, an increase of 20.2%.
As at 30 April 2019, 21.3% of the Group's total units in
operation were situated in Asia, compared with 21.6% in the prior
year.
Strategic progress
While the photo identification market in Japan remains highly
competitive, the Board continues to believe that there are growth
opportunities, given Photo-Me's dominant market position in the
country. As a result, the Group intends to commence the deployment
of its new units, which have a significantly lower production cost
than the units deployed previously and will offer a 35.0% faster
return on investment.
Key Performance Indicators (KPIs)
The Group measures its performance using a mixture of financial
and non-financial indicators. The main objective of these KPIs is
to ensure the Group remains highly cash generative, delivers
sustained long-term profitability, preserves the value of its
assets, and provides high returns to shareholders.
Description Relevance Performance
30 April 30 April
2019 2018
----------------------------- -------------------------------------- ---------- ----------
Total Group revenue GBP228.1m GBP229.8m
at actual rate of
exchange
----------------------------- -------------------------------------- ---------- ----------
Group profit before GBP42.6m GBP50.2m
tax
----------------------------- -------------------------------------- ---------- ----------
Underlying profit GBP44.1m GBP46.8m
before tax
----------------------------- -------------------------------------- ---------- ----------
The EBITDA margin is a good
EBITDA margin indicator of improved profitability 31.4% 32.0%
----------------------------- -------------------------------------- ---------- ----------
Gross takings is an important
Gross takings (including indicator of the trend in
Photo-Me Retail) our core vending business -0.7% +3.9%
----------------------------- -------------------------------------- ---------- ----------
The increase in number of
photobooths is a constant
Increase in number priority and a main driver
of photobooths for growth -142 +474
----------------------------- -------------------------------------- ---------- ----------
The increase in number of
laundry units measures our
Increase in number penetration in markets where
of Laundry units (operated there is a significant potential
or sold) for growth and strong profits +427 +1,198
----------------------------- -------------------------------------- ---------- ----------
Our team
At Photo-Me, our team is structured to reflect our
entrepreneurial and creative heritage and is aligned to our
business strategy and objectives. We are committed to nurturing
talent within our teams and developing the next generation of
leaders.
This year the business has met with both challenges and
successes. I would like to take this opportunity specifically to
thank the teams who have worked so successfully on the recovery of
our Japan operations to deliver strong results that give us real
confidence in the future of this business. I would also like to
acknowledge the ongoing hard work of our teams, which continue to
meet the challenges of the UK market.
In addition, I would like to welcome the Sempa team to Photo-Me.
We look forward to replicating the success they have already
achieved in France across the territories that Photo-Me operates,
through the sharing of technological and industry expertise.
Future Prospects
The Group will remain focused on driving profitability from its
existing estate and investing in new and complementary products to
extend the suite of services available through its established
instant-service equipment network. There will be a strong focus on
R&D, particularly as it relates to the Group's fresh fruit
juice offering and its entry into this highly attractive new market
for the Group. We remain confident for the future.
FINANCIAL REVIEW
Financial performance
The Group delivered a stable performance despite significant
headwinds in the UK market, that impacted the financial performance
of the UK & Republic of Ireland region.
Reported revenue declined by 0.7% to GBP228.1 million, supported
by the continued growth of our Laundry operations in Europe and a
strong recovery in Asia.
Operating profit also declined by 7.0%.
April 2019 April 2018
GBPm GBPm
----------------------------------------- ----------- -----------
Revenue 228.1 229.8
EBITDA (excluding associates) 69.7 71.0
Operating profit (excluding associates) 42.7 45.9
Profit before tax 42.6 50.2
Profit after tax 31.3 40.3
------------------------------------------ ----------- -----------
The movements in turnover are outlined in the following
table:
GBPm
---------------------------------- -------
Turnover at 30 April 2018 229.8
---------------------------------- -------
Change in core business revenue:
Continental Europe 10.1
UK & Ireland (10.8)
Asia (1.2)
Impact of exchange rates 0.2
---------------------------------- -------
Turnover at 30 April 2019 228.1
---------------------------------- -------
The decline in the profit before tax can be explained as
follows:
GBPm
Profit before tax at 30 April 2018 50.2
Effect of acquisitions 0.9
Changes in revenue (5.5)
Changes in costs 2.8
Restructuring costs 0.8
Profit on sale of former head office (2.3)
Increase in net finance income & other gains (Max
Sight gain, GBP3.7m) (4.2)
Impact of exchange rates (0.1)
Profit before tax at 30 April 2019 42.6
--------------------------------------------------- ------
Review of operating costs
Operating costs were GBP185.5 million:
Staff costs were GBP48.9 million. The ratio of staff costs to
revenue is 21.4% (2018: 22.5%).
April 2019 April 2018 April 2018
GBPm GBPm (constant
rate)
GBPm
----------- ----------- -----------
Staff costs 48.9 51.7 51.7
Inventory costs 19.5 23.6 23.6
Other operating costs 89.9 85.9 86.3
----------- ----------- -----------
158.3 161.2 161.6
Depreciation and amortisation 27.0 25.1 25.1
Profit on disposal of fixed
assets 0.2 (2.4) (2.4)
----------- ----------- -----------
Operating costs 185.5 183.9 184.3
----------- ----------- -----------
Earnings per share
Diluted earnings per share were 8.26 pence (2018: 10.60 pence),
a decrease of 22.1%. Basic earnings per share were 8.27 pence
(2018: 10.64 pence).
Taxation
The Group tax charge of GBP11.3 million corresponds to an
effective tax rate of 26.6% (2018: 19.7%). The increase in the
effective tax rate over last year is attributable to a one off
catch up deferred tax charge in the Group's French operations.
The Group undertakes business in 18 countries worldwide, with
most of the tax charge arising in France, Japan and the UK In each
jurisdiction in which the Group operates, operations are organised
so that the Group pays the appropriate amount of tax at the right
time in accordance with local regulations, and ensuring compliance
with the Group's tax policy and guidelines.
Dividends
During the year, the Group paid dividends totalling GBP31.9
million in respect of the interim and final dividends for the year
ended 30 April 2018.
The interim dividend for the year ended 30 April 2019 was 3.71
pence per share (2018: 3.71 pence), which was paid to shareholders
on the register on 5 April 2019.
Statement of financial position
The Group balance sheet can be summarised as follows:
April 2019 April 2018
GBPm GBPm
-------------------------------------------- ----------- -----------
Non-current assets (excl. deposits) 142.3 130.6
Current assets (excl. cash and deposits) 44.1 48.0
Non-current liabilities (excl. borrowings) (11.1) (8.4)
Current liabilities (excl. borrowings) (47.8) (52.0)
Net cash 16.3 26.7
-------------------------------------------- ----------- -----------
Total equity 143.8 144.9
Minority interests (1.9) (1.6)
-------------------------------------------- ----------- -----------
Total shareholders' funds 141.9 143.3
-------------------------------------------- ----------- -----------
Following the payment of dividends of GBP31.9 million,
shareholders' funds at 30 April 2019 amounted to GBP141.9 million,
a decrease of GBP1.4 million compared with the previous financial
year-end.
Non-current assets detailed are outlined in the following
table:
April 2019 April 2018
GBPm GBPm
------------------------------------------- ----------- -----------
Goodwill 26.6 13.4
R&D costs capitalised 6.1 6.5
Other intangible assets 9.1 7.5
Operating equipment 81.8 80.8
Plant and machinery 10.4 9.5
Land and buildings 3.2 2.3
Investment property 0.7 0.7
------------------------------------------- ----------- -----------
137.9 120.7
Investments 1.7 5.9
Deferred tax assets 0.9 1.9
Trade and other receivables 1.8 2.1
------------------------------------------- ----------- -----------
Total non-current assets (excl. deposits) 142.3 130.6
------------------------------------------- ----------- -----------
Cash flow and net cash position
April 2019 April 2018
GBPm GBPm
--------------------------------------- ----------- -----------
Opening net cash 26.7 39.2
--------------------------------------- ----------- -----------
Cash generated from operations 63.9 61.0
Taxation (6.2) (8.3)
--------------------------------------- ----------- -----------
Net cash generated from operations 57.7 52.7
Net cash used in investing activities (36.4) (39.9)
Dividends paid net of shares issued (31.7) (25.1)
--------------------------------------- ----------- -----------
Net cash utilised (10.4) (12.3)
Impact of exchange rates - (0.2)
--------------------------------------- ----------- -----------
Net cash outflow (10.4) (12.5)
--------------------------------------- ----------- -----------
Closing net cash 16.3 26.7
--------------------------------------- ----------- -----------
The net cash generated from operations improved by 9.5% in
FY2019. The net cash used in investing activities decreased to
GBP36.4 million (2018: GBP39.9 million). Closing net cash was
GBP16.3 million.
Outstanding debt of GBP69.3 million (2018: GBP33.7 million) was
deducted from the closing net cash balance at 30 April 2019.
Total cash and cash equivalents at 30 April 2019 were GBP84.6
million (2018: GBP58.7 million).
At the end of April 2019, the Group's net cash was GBP16.3
million (2018: GBP26.7 million), and could be split as follows:
Cash and Borrowings Net Cash
deposits GBPm GBPm
GBPm
-------------------------- ---------- ----------- ---------
Balance at 30 April 2018 60.4 (33.7) 26.7
Cash flow 25.9 (35.2) (9.3)
Non-cash movements (0.7) (0.4) (1.1)
-------------------------- ---------- ----------- ---------
Balance at 30 April 2019 85.6 (69.3) 16.3
-------------------------- ---------- ----------- ---------
Serge Crasnianski
Chief Executive Officer & Deputy Chairman
17 July 2019
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; it
therefore 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 The Group focuses on
a major influence on maintaining the characteristics
consumer spending. and affordability of
A sustained period its needs-driven products.
of economic recession
could lead to a decrease
in consumer expenditure
in discretionary areas.
Volatility of foreign The majority of the The Group hedges its
exchange rates Group's revenue and exposure to currency
profit is generated fluctuations on transactions,
outside the UK, and as relevant. However,
the Group results could by its nature, in the
be adversely impacted Board's opinion, it
by an increase in the is very difficult to
value of sterling relative hedge against currency
to those currencies. fluctuations arising
from translation in
consolidation in a
cost-effective manner.
Regulations
-------------------------------------------------------------------------------------------------------------------
Centralisation of the In many European countries The Group has developed
production of ID photos where the Group operates, new systems that respond
if governments were to this situation,
to implement centralised leveraging 3D technology
image capture, for in ID security standards,
biometric passport and securely linking
and other applications, our booths to the administration
or widen the acceptance repositories. Solutions
of self-made or home-made are in place in France,
photographs for official Ireland, Germany, Switzerland
document applications, and the UK; discussions
the Group's revenues in Belgium and the
and profits could be Netherlands).
affected.
Furthermore, the Group
also ensures that its
ID products remain
affordable and of a
high quality.
Brexit The UK's referendum The Board is keeping
decision to leave the the potential impacts
European Union (EU) of the referendum decision
("Brexit") will most to leave the EU on
probably lead to changes all the Group's operations
in regulations in the under review.
UK as well as to modifications Any potential developments,
to numerous arrangements including new information
between the UK and and policy indications
other members of the from the UK Government
EU, affecting trade and the EU, will be
and customs conditions, looked at carefully
taxation, movements on a continual basis,
of resources, etc. 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 EU.
The Board foresees
that in the short-term
the negative impact
of the uncertainty
overshadowing the general
UK economy could also
spill over into 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 The Company has engaged
Valuation Office Authority advisers to reduce
has been issuing significantly its exposure to business
increased assessments rates. The Company
for some of the Company's has received advice
estate, mainly photobooths that the vast majority
and printing kiosks, of the affected estate
and in some instances should not be subject
applying rates that to business rates,
the Company considers and therefore it has
unreasonable. The census systematically appealed
campaign led by the before the Valuation
Government is part Tribunal the assessments
of the well-publicised received, while negotiating
strategy to systematically with the authorities
increase the amount to reduce that exposure.
of tax collected through The Company believes
business rates. The that, following the
business tax risk is latest decision by
limited to the Company's the Upper Tribunal
operations in the UK. on 12 April 2017 in
The Company has expensed the ATM case, the risk
the cost of the tax should be capable of
charge as reasonably successful mitigation.
estimated. Discussions are ongoing
with the Valuation
Office Agency on this
matter.
Strategic
----------------------------------------------------------------------------------------------------------------------
Identification of new The failure to identify Management teams constantly
business opportunities new business areas review demand in existing
may impact the ability markets and potential
of the Group to grow new opportunities.
in the long-term. The Group continues
to invest in research
in new products and
technologies.
Inability to deliver The realisation of The Group regularly
anticipated benefits long-term anticipated monitors the performance
from the launch of benefits depends mainly of its entire estate
new products on the continued growth of machines. New technology-enabled
of the laundry business secure
and the successful ID solutions are heavily
development of integrated trialled before launch
secure ID solutions. and the performance
of operating machines
is continually monitored.
Market
-------------------------------------------------------------------------------------------------------------------
Commercial relationships The Group has well-established, The Group's major key
long-term relationships relationships are supported
with a number of site-owners. by medium-term contracts.
The deterioration in We actively manage
the relationship with, our site-owner relationships
or ultimately the loss at all levels to ensure
of, a key account would a high quality of service.
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 The Group continues
turnover. to monitor the situation
in both the French
To maintain its performance, and the UK markets.
the Group needs to
have the ability to
continue trading in
good conditions in
France and the UK,
taking into account
the situation in these
two countries.
Operational
Reliance on foreign The Group sources most Extensive research
manufacturers of its products from is conducted into quality
outside the UK. Consequently, and ethics before the
the Group is subject Group procures products
to risks associated from any new country
with international or supplier. The Group
trade. 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 The Group currently The Board has decided
supplier of consumables buys all its paper to hold a strategic
for photobooths from stock of paper, allowing
one single supplier. for 6 -10 months' worth
The failure of this of paper consumption,
supplier could have to allow enough time
a significant adverse to put in place alternative
impact on paper procurement. solutions.
Reputation The Group's brands The protection of the
are key assets of the Group's brands in its
business. Failure to core markets is sustained
protect the Group's by products with certain
reputation and brands unique features. The
could lead to a loss appearance of the machine
of trust and confidence. is subject to high
This could result in maintenance standards.
a decline in our customer Furthermore, the reputational
base. risk is diluted as
the Group also operates
under a range of brands.
Product and service The Board recognises The Group continues
quality that the quality and to invest in its existing
safety of both its estate, to ensure that
products and services it remains contemporary,
is of critical importance and in constant product
and that any major innovation to meet
failure will affect customer needs. The
consumer confidence. Group also has a programme
in place to regularly
train its technicians.
Technological
Failure to keep up The Group operates The Group mitigates
with advances in technology in fields where upgrades this risk by continually
to new technologies focusing on R&D.
are mission-critical.
Cyber risk: Third party The Group operates The Group performs
attack on secure ID an increasing number an ongoing assessment
data transfer feeds of photobooths capturing of the risks and ensures
ID data and transferring that the infrastructure
these data it directly meets the security
to government databases. requirements.
Group Statement of Comprehensive Income
for the year ended 30 April 2019
2019 2018
GBP '000 GBP '000
------------------------------------------------------------ ---------- ----------
Revenue 228,118 229,814
Cost of sales (164,637) (168,070)
------------------------------------------------------------- ---------- ----------
Gross profit 63,481 61,744
Other operating income 1,601 1,686
Administrative expenses (22,393) (17,518)
Share of post-tax profits from associates 50 194
------------------------------------------------------------- ---------- ----------
Operating profit 42,739 46,106
------------------------------------------------------------- ---------- ----------
Analysed as:
Operating profit before specific items 44,564 46,416
Profit on sale of land & buildings - 2,320
Restructuring costs (1,825) (2,630)
------------------------------------------------------------- ---------- ----------
Operating profit after specific items 42,739 46,106
------------------------------------------------------------- ---------- ----------
Other gains and losses 361 3,708
Finance revenue 20 658
Finance cost (527) (297)
------------------------------------------------------------- ---------- ----------
Profit before tax 42,593 50,175
Total tax charge (11,314) (9,889)
------------------------------------------------------------- ---------- ----------
Profit for the year 31,279 40,286
------------------------------------------------------------- ---------- ----------
Other comprehensive income
Items that are or may subsequently be classified to profit and loss:
Exchange differences arising on translation of foreign
operations (860) 16
Taxation on exchange differences 3 (12)
------------------------------------------------------------- ---------- ----------
Total items that are or may subsequently be classified
to profit and loss (857) 4
------------------------------------------------------------- ---------- ----------
Items that will not be classified to profit and loss:
Remeasurement (losses)/gains in defined benefit obligations
and other post-employment benefit obligations (216) 150
Deferred tax on remeasurement gains / (losses) 42 (23)
------------------------------------------------------------- ---------- ----------
Total items that will not be classified to profit and
loss (174) 127
------------------------------------------------------------- ---------- ----------
Other comprehensive (loss) / income for the year net
of tax (1,031) 131
------------------------------------------------------------- ---------- ----------
Total comprehensive income for the year 30,248 40,417
------------------------------------------------------------- ---------- ----------
Profit for the year attributable to:
Owners of the Parent 31,226 40,134
Non-controlling interests 53 152
------------------------------------------------------------- ---------- ----------
31,279 40,286
------------------------------------------------------------ ---------- ----------
Total comprehensive income attributable to:
Owners of the Parent 30,228 40,205
Non-controlling interests 20 212
------------------------------------------------------------- ---------- ----------
30,248 40,417
------------------------------------------------------------ ---------- ----------
Earnings per share
Basic earnings per share 8.27p 10.64p
Diluted earnings per share 8.26p 10.60p
------------------------------------------------------------- ---------- ----------
Statements of Financial Position
As at 30 April 2019
2019 2018
GBP'000 GBP'000
--------------------------------------------- ----------- -----------
Assets
Non-current assets
Goodwill 26,594 13,435
Other intangible assets 15,222 13,960
Property, plant & equipment 95,353 92,556
Investment property 648 676
Investment in associates 415 1,583
Investment in subsidiaries - -
Other financial assets held to maturity - 1,710
Financial instruments held at amortised cost 982 -
Other financial assets available for sale - 4,286
Financial instruments held at FVTPL 1,387 -
Deferred tax assets 912 1,935
Trade and other receivables 1,764 2,116
---------------------------------------------- ----------- -----------
143,277 132,257
--------------------------------------------- ----------- -----------
Current assets
Inventories 22,339 22,902
Trade and other receivables 20,917 20,613
Current tax 876 4,480
Cash and cash equivalents 84,591 58,657
---------------------------------------------- ----------- -----------
128,723 106,652
--------------------------------------------- ----------- -----------
Total assets 272,000 238,909
---------------------------------------------- ----------- -----------
Equity
Share capital 1,889 1,887
Share premium 10,588 10,366
Translation and other reserves 12,369 13,193
Retained earnings 117,131 117,811
---------------------------------------------- ----------- -----------
Equity attributable to owners of the Parent 141,977 143,257
Non-controlling interests 1,870 1,553
---------------------------------------------- ----------- -----------
Total equity 143,847 144,810
---------------------------------------------- ----------- -----------
Liabilities
Non-current liabilities
Financial liabilities 53,385 27,540
Post-employment benefit obligations 5,635 5,524
Deferred tax liabilities 5,430 2,671
Trade and other payables - 224
---------------------------------------------- ----------- -----------
64,450 35,959
--------------------------------------------- ----------- -----------
Current liabilities
Financial liabilities 15,850 6,139
Provisions 218 196
Current tax 6,753 8,307
Trade and other payables 40,882 43,498
---------------------------------------------- ----------- -----------
63,703 58,140
--------------------------------------------- ----------- -----------
Total equity and liabilities 272,000 238,909
---------------------------------------------- ----------- -----------
Group Statement of Cash Flows
for the year ended 30 April 2019
2019 2018
GBP'000 GBP'000
------------------------------------------------------- --------- ---------
Cash flow from operating activities
Profit before tax 42,593 50,175
Finance cost 527 297
Finance revenue (20) (658)
Other gains (361) (3,708)
------------------------------------------------------- --------- ---------
Operating profit 42,739 46,106
Share of post- tax profit from associates (50) (194)
Amortisation of intangible assets 2,992 2,768
Depreciation of property, plant and equipment 24,024 22,301
(Profit)/loss on sale of property, plant and equipment 165 (2,361)
Exchange differences (707) (836)
Other items 354 (318)
Changes in working capital:
Inventories 511 (2,613)
Trade and other receivables (597) (927)
Trade and other payables (5,604) (1,064)
Provisions 108 (1,905)
------------------------------------------------------- --------- ---------
Cash generated from operations 63,935 60,957
Interest paid (527) (297)
Taxation paid (6,223) (8,318)
------------------------------------------------------- --------- ---------
Net cash generated from operating activities 57,185 52,342
------------------------------------------------------- --------- ---------
Cash flows from investing activities
Acquisition of subsidiaries net of cash acquired (13,528) (1,398)
Proceeds from disposal of associate 4,437 -
Repayment of loans advanced to associate 1,612 -
Investment in intangible assets (2,167) (3,218)
Proceeds from sale of intangible assets 155 201
Purchase of property, plant and equipment (28,169) (40,378)
Payment of deferred consideration (225) -
Proceeds from sale of property, plant and equipment 2,282 4,689
Purchase of available for sale investments - (134)
Dividends received from for sale investments - 285
Interest received 18 144
Dividends received from associates 36 304
------------------------------------------------------- --------- ---------
Net cash generated from investing activities (35,549) (39,505)
------------------------------------------------------- --------- ---------
Cash flows from financing activities
Issue of Ordinary shares to equity shareholders 224 1,372
Repayment of capital element of finance leases (167) (118)
Repayment of borrowings (8,397) (3,695)
Increase in borrowings 43,748 26,382
Decrease in assets held to maturity 741 687
Dividends paid to owners of the Parent (31,873) (26,478)
Group Statement of Cash Flows (continued)
for the year ended 30 April 2019
Net cash utilised in financing activities 4,276 (1,850)
----------------------------------------------- ------- --------
Net increase in cash and cash equivalents 25,912 10,987
Cash and cash equivalents at beginning of year 58,657 47,505
Exchange gain on cash and cash equivalents 22 165
----------------------------------------------- ------- --------
Cash and cash equivalents at end of year 84,591 58,657
----------------------------------------------- ------- --------
Group Statement of Changes in Equity
for the year ended 30 April 2019
Attributable
to owners
Share Share Other Translation Retained of the Non-controlling
capital premium reserves reserve earnings Parent interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------
At 1 May 2017 1,882 8,999 1,781 11,468 103,831 127,961 1,341 129,302
---------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------
Profit for year - - - - 40,134 40,134 152 40,286
---------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------
Other comprehensive
income/(expense)
Exchange differences - - - 158 - 158 60 218
Tax on exchange - - - (12) - (12) - (12)
Translation reserve
taken to income
statement
on disposal
of subsidiaries - - - (202) - (202) - (202)
Remeasurement losses
in defined benefit
pension scheme and
other post-employment
benefit obligations - - - - 150 150 - 150
Deferred tax on
remeasurement
gains - - - - (23) (23) - (23)
---------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------
Total other
comprehensive
(expense)/income - - - (56) 127 71 60 131
---------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------
Total comprehensive
(expense)/income - - - (56) 40,261 40,205 212 40,417
---------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------
Transactions with
owners of the Parent
Shares issued 5 1,367 - - - 1,372 - 1,372
Share options - - - - 197 197 - 197
Dividends - - - - (26,478) (26,478) - (26,478)
Total transactions
with owners
of the Parent 5 1,367 - - (26,281) (24,909) - (24,909)
---------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------
At 30 April 2018 1,887 10,366 1,781 11,412 117,811 143,257 1,553 144,810
---------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------
At 1 May 2018 1,887 10,366 1,781 11,412 117,811 143,257 1,553 144,810
---------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------
Profit for year - - - - 31,226 31,226 53 31,279
---------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------
Other comprehensive
income/(expense)
Exchange differences - - - (827) - (827) (33) (860)
Tax on exchange - - - 3 - 3 - 3
Remeasurement losses
in defined benefit
pension scheme and
other post-employment
benefit obligations - - - - (216) (216) - (216)
Deferred tax on
remeasurement
gains - - - - 42 42 - 42
---------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------
Total other
comprehensive
(expense)/income - - - (824) (174) (998) (33) (1,031)
---------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------
Total comprehensive
(expense)/income - - - (824) 31,052 30,228 20 30,248
---------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------
Transactions with
owners of the Parent
Shares issued 2 222 - - - 224 - 224
Share options - - - - 141 141 - 141
Dividends - - - - (31,873) (31,873) - (31,873)
Acquisition of minority - - - - - - 297 297
------------------------ ------ ------- ------ ------- -------- -------- ------ --------
Total transactions
with owners of the
Parent 2 222 - - (31,732) (31,508) 297 (31,211)
------------------------ ------ ------- ------ ------- -------- -------- ------ --------
At 30 April 2019 1,889 10,588 1,781 10,588 117,131 141,977 1,870 143,847
------------------------ ------ ------- ------ ------- -------- -------- ------ --------
NOTES
1. Basis of preparation and accounting policies
The preliminary results for the year ended 30 April 2019 have
been extracted from the audited consolidated financial statements,
which were approved by the Board of Directors on 17 July 2019. 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.
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 2018 or
2019 but is derived from those accounts. Statutory accounts for
2018 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. Segmental analysis
IFRS 8 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 reports its segments on a geographical
basis, Asia, Continental Europe and United Kingdom & Ireland.
The Group's European operations are predominately based in Western
Europe and with the exception of the Swiss operations use the Euro
as their domestic currency. The Board, being the CODM, believe that
the economic characteristics of the European operations, together
with the fact that they are similar in terms of operations, use
common systems and the nature of the regulatory environment allow
them to be aggregated into one reporting segment.
The CODM monitors performance of the segments at the underlying
operating profit level before Specific items, interest and
taxation.
In accordance with IFRS 8, 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.
The segment results are as follows:
United
Continental Kingdom Corporate
Asia Europe & Ireland costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- ----------- ---------- --------- ---------
2019
Total revenue 44,538 138,935 54,962 - 238,435
Inter segment sales - (8,274) (2,043) - (10,317)
-------------------------------- -------- ----------- ---------- --------- ---------
Revenue from external customers 44,538 130,661 52,919 - 228,118
-------------------------------- -------- ----------- ---------- --------- ---------
EBITDA 9,350 49,267 13,167 (2,079) 69,705
-------------------------------- -------- ----------- ---------- --------- ---------
Depreciation and amortisation (4,673) (15,727) (6,119) (497) (27,016)
-------------------------------- -------- ----------- ---------- --------- ---------
Underlying operating profit 6,502 33,540 7,048 (2,576) 44,514
-------------------------------- -------- ----------- ---------- --------- ---------
Specific items (1,825) - - - (1,825)
-------------------------------- -------- ----------- ---------- --------- ---------
Operating profit excluding
associates 4,677 33,540 7,048 (2,576) 42,689
Share of post-tax profits
from associates 50
-------------------------------- -------- ----------- ---------- --------- ---------
Operating profit 42,739
Other gains 361
Finance revenue 20
Finance costs (527)
-------------------------------- -------- ----------- ---------- --------- ---------
Profit before tax 42,593
Tax (11,314)
-------------------------------- -------- ----------- ---------- --------- ---------
Profit for year 31,279
-------------------------------- -------- ----------- ---------- --------- ---------
Capital expenditure 2,755 19,893 7,493 379 30,520
-------------------------------- -------- ----------- ---------- --------- ---------
United
Continental Kingdom Corporate
Asia Europe & Ireland costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- ----------- ---------- --------- ---------
2018
Total revenue 44,979 131,064 65,432 - 241,475
Inter segment sales (6) (9,930) (1,725) - (11,661)
-------------------------------- -------- ----------- ---------- --------- ---------
Revenue from external customers 44,973 121,134 63,707 - 229,814
-------------------------------- -------- ----------- ---------- --------- ---------
EBITDA 10,289 45,967 16,194 (1,469) 70,981
-------------------------------- -------- ----------- ---------- --------- ---------
Depreciation and amortisation (4,879) (14,027) (5,794) (369) (25,069)
-------------------------------- -------- ----------- ---------- --------- ---------
Underlying operating profit 5,410 31,940 13,030 (4,158) 46,222
-------------------------------- -------- ----------- ---------- --------- ---------
Specific items - - (2,630) 2,320 (310)
-------------------------------- -------- ----------- ---------- --------- ---------
Operating profit excluding
associates 5,410 31,940 10,400 (1,838) 45,912
Share of post-tax profits
from associates 194
-------------------------------- -------- ----------- ---------- --------- ---------
Operating profit 46,106
Other gains 3,708
Finance revenue 658
Finance costs (297)
-------------------------------- -------- ----------- ---------- --------- ---------
Profit before tax 50,175
Tax (9,889)
-------------------------------- -------- ----------- ---------- --------- ---------
Profit for year 40,286
-------------------------------- -------- ----------- ---------- --------- ---------
Capital expenditure 5,248 26,429 11,410 590 43,677
-------------------------------- -------- ----------- ---------- --------- ---------
Inter-segment revenue mainly relates to sales of equipment.
The Parent Company is domiciled in the UK. Total revenue from
external customers is as follows:
2019 2018
GBP'000 GBP'000
-------------------------------------- ------- -------
Total revenue from external customers
Asia and rest of the world 44,538 44,975
Europe 130,601 127,050
UK 52,979 57,789
-------------------------------------- ------- -------
228,118 229,814
-------------------------------------- ------- -------
2019 2018
GBP '000 GBP '000
-------- --------
Total revenue from external customers
Sales of equipment, spare parts & consumables 22,347 22,964
Sales of services 4,595 4,366
Other sales 244 285
---------------------------------------------- -------- --------
27,186 27,615
Vending revenue 200,932 202,199
---------------------------------------------- -------- --------
Total revenue 228,118 229,814
---------------------------------------------- -------- --------
There were no key customers in the year ended 30 April 2019
(2018: none).
3. Taxation expense
Tax charges/(credits) in the statement of comprehensive
income:
2019 2018
GBP'000 GBP'000
---------------------------------------------------- ------- --------
Taxation
Current taxation
UK Corporation tax
- current year 5,274 5,517
- prior years 186 (1,198)
---------------------------------------------------- ------- --------
5,460 4,319
---------------------------------------------------- ------- --------
Overseas taxation
- current year 2,512 3,230
- prior years 193 1,302
---------------------------------------------------- ------- --------
2,705 4,532
---------------------------------------------------- ------- --------
Total current taxation 8,165 8,851
---------------------------------------------------- ------- --------
Deferred taxation
Origination and reversal of temporary differences
- current year - UK 505 934
- current year - overseas 2,570 19
Impact of change in rate 74 85
---------------------------------------------------- ------- --------
Total deferred tax 3,149 1,038
---------------------------------------------------- ------- --------
Tax charge in the statement of comprehensive income 11,314 9,889
---------------------------------------------------- ------- --------
4. Earnings per share
Basic earnings per share amounts are calculated by dividing net
earnings attributable to shareholders of the Parent of
GBP31,226,000 (2018: GBP40,134,000) by the weighted average number
of shares in issue during the year.
Diluted earnings per share amounts are calculated by dividing
the net earnings attributable to shareholders of the Parent by the
weighted average number of shares outstanding during the year plus
the weighted average number of shares that would be issued on
conversion of all the dilutive potential shares into shares.
The Group has only one category of dilutive potential shares
being share options granted to senior staff
including directors.
The earnings and weighted average number of shares used in the
calculation are set out in the table below:
2019 2018
-------- ------------ ---------- -------- ---------- ----------
Weighted
Weighted average
average Earnings number Earnings
Earnings number of per share Earnings of shares per share
GBP'000 shares '000 pence GBP'000 '000 pence
------------------------- -------- ------------ ---------- -------- ---------- ----------
Basic earnings per share 31,226 377,662 8.27 40,134 377,190 10.64
Effect of dilutive share
options 190 (0.01) 1,555 (0.04)
------------------------- -------- ------------ ---------- -------- ---------- ----------
Diluted earnings per
share 31,226 377,852 8.26 40,134 378,745 10.60
------------------------- -------- ------------ ---------- -------- ---------- ----------
Potential shares (for example, arising from exercising share
options) are treated as dilutive only when their conversion to
shares would decrease basic earnings per share or increase loss per
share from continuing operations.
Alternative earnings per share
The table below reconciles earnings per share (EPS) and diluted
earnings per share (DPS) before and after Specific items.
Alternative earnings per share
2019 2018
Diluted Diluted
Earnings earnings Earnings earnings
Earnings per share per share per share per share
GBP'000 pence pence GBP'000 pence pence
--------------------------------- ---------- ---------- ---------- ------- ---------- ----------
Profit for the year attributable
to owners of the Parent 31,226 8.27 8.26 40,134 10.64 10.60
Specific items net of tax 1,825 0.48 0.48 (190) (0.05) (0.05)
Other (losses) / gains (361) (0.10) (0.10) (3,708) (0.98) (0.98)
--------------------------------- ---------- ---------- ---------- ------- ---------- ----------
Earnings after specific items 32,690 8.65 8.64 36,236 9.61 9.57
--------------------------------- ---------- ---------- ---------- ------- ---------- ----------
5. Dividends paid and proposed
Year ended 30 April 2019 - Proposed dividends not yet paid
The Board declared an interim dividend of 3.71p per share for
the year ended 30 April 2019, which was paid on 11 May 2019. The
Board proposes a final dividend for the year ended 30 April 2019 of
4.73p per share which is subject to shareholder approval at the
Annual General Meeting to be held on 3 October 2019.
Year ended 30 April 2018 - Paid after 30 April 2018
The Board declared an interim dividend of 3.71p per share for
the year ended 30 April 2018, amounting to GBP14,005,000 which was
paid on 11 May 2018. The Board proposed a final dividend for the
year ended 30 April 2018 of 4.73p per share, amounting to
GBP17,868,000 which was approved by shareholders at the Annual
General Meeting held on 24 October 2018 and paid on 9 November
2018.
6. Non-current assets
Property,
Intangible plant & Investment
Goodwill assets equipment property
GBP '000 GBP '000 GBP '000 GBP '000
------------------------------------- ---------------- ---------------- ---------------- ----------------
Net book value at 30 April 2017 11,812 13,451 74,989 662
Exchange differences 69 260 1,596 30
Additions - photo booths and vending - 34,164 -
equipment
Additions - other assets - 3,218 6,295 -
Additions - new subsidiaries 1,554 29 -
Amortisation - (2,768) -
Depreciation - (22,285) (16)
Disposals at net book value - (201) (2,232) -
-------------------------------------
Net book value at 30 April 2018 13,435 13,960 92,556 676
------------------------------------- ---------------- ---------------- ---------------- ----------------
Exchange differences (71) (63) (358) (12)
Additions - photo booths and vending - - 24,938 -
equipment
Additions - other assets - 2,167 3,415 -
Additions - new subsidiaries 13,230 2,543 1,019 -
Amortisation - (2,992) - -
Depreciation - - (24,008) (16)
Disposals at net book value - (393) (2,209) -
-------------------------------------
Net book value at 30 April 2019 26,594 15,222 95,353 648
------------------------------------- ---------------- ---------------- ---------------- ----------------
7. Net cash
2019 2018
-----------------------------------------------------
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Cash and cash equivalents per statement of financial
position 84,591 58,657
Financial instrument held at amortised cost / held
to maturity 982 1,710
Non-current borrowings (52,322) (27,319)
Current borrowings (15,071) (6,006)
Non-current finance leases (1,063) (221)
Current finance leases (779) (133)
----------------------------------------------------- -------- --------
16,338 26,688
----------------------------------------------------- -------- --------
At 30 April 2019, GBP982,000 of the total net cash (2018:
GBP1,710,000) comprised bank deposit accounts that are subject to
restrictions and are not freely available for use by the Group and
Company. These amounts are shown under financial instrument held at
amortised cost / held to maturity.
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 current and
non-current borrowings outstanding.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR BCGDRGSBBGCR
(END) Dow Jones Newswires
July 18, 2019 02:00 ET (06:00 GMT)
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