TIDMPHTM

RNS Number : 7198R

Photo-Me International PLC

10 March 2021

10 March 2020

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.

PHOTO-ME INTERNATIONAL PLC

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

PRELIMINARY RESULTS FOR

THE 18 MONTHS AND 12 MONTHSED 31 OCTOBER 2020

Photo-Me International plc (PHTM.L), the instant-service equipment group, announces its results for the 18 months and 12 months ended 31 October 2020.

FINANCIAL SUMMARY

 
                                                        Reported 
                                     18 months     12 months     12 months  12 months 
                                         ended         ended         ended      ended 
                                    31 October    31 October    31 October   30 April 
                                          2020          2020          2019       2019 
                                  ------------  ------------  ------------  --------- 
 Revenue                             GBP310.2m     GBP186.3m     GBP232.2m  GBP228.1m 
                                  ------------  ------------  ------------  --------- 
 Underlying Revenue                  GBP300.4m     GBP180.1m      GBP228.6  GBP228.1m 
                                  ------------  ------------  ------------  --------- 
 EBITDA (excluding associates)        GBP87.3m      GBP41.4m      GBP76.5m   GBP69.7m 
  (1) 
                                  ------------  ------------  ------------  --------- 
 EBITDA excluding IFRS16 impact       GBP78.4m      GBP35.1m      GBP73.9m   GBP69.7m 
                                  ------------  ------------  ------------  --------- 
 Profit before tax(2)                  GBP0.5m    GBP(27.8)m      GBP44.9m   GBP42.6m 
                                  ------------  ------------  ------------  --------- 
 Profit before tax excluding           GBP1.0m    GBP(27.4)m      GBP45.0m   GBP42.6m 
  IFRS16 impact 
                                  ------------  ------------  ------------  --------- 
 Adjusted profit before tax            GBP2.5m    GBP(26.0)m      GBP45.9m   GBP44.1m 
  (3) 
                                  ------------  ------------  ------------  --------- 
 Profit after tax                    GBP(2.4)m    GBP(24.9)m      GBP33.6m   GBP31.3m 
                                  ------------  ------------  ------------  --------- 
 Cash generated from operations       GBP92.9m      GBP51.8m      GBP68.9m   GBP63.9m 
                                  ------------  ------------  ------------  --------- 
 Gross cash                          GBP106.2m     GBP106.2m      GBP84.8m   GBP84.6m 
                                  ------------  ------------  ------------  --------- 
 Net Cash(4)                          GBP21.9m      GBP21.9m      GBP25.2m   GBP16.3m 
                                  ------------  ------------  ------------  --------- 
 Earnings per share (diluted)               0p           N/A           N/A      8.26p 
                                  ------------  ------------  ------------  --------- 
 Total dividend per share                   0p           N/A           N/A      8.44p 
                                  ------------  ------------  ------------  --------- 
 

(1) EBITDA is Reported profit before tax- total depreciation and amortization - other net gain-Finance cost and revenue.

(2) includes impairments and provisions resulting directly and indirectly of the pandemic, see breakdown below.

(3) Adjusted profit before tax for the 18 months to 31 October 2020 is profit before tax adjusted to exclude the loss on the Group's shareholding in Max Sight Group Holdings Limited and restructuring costs.

(4) Refer to note 8 for the reconciliation of Net Cash to Cash and cash equivalents as per the financial statements.

OPERATIONAL SUMMARY

 
 --   Swift and decisive action was taken to manage the impact of COVID-19 
       and preserve the Group's cash position , and to protect the wellbeing 
       of colleagues and the wider community. 
 --   Nevertheless, COVID-19 has severely impacted each business area and 
       early indications are B2B, children's rides and, to a lesser extent 
       Identification, will be the most challenging from which to recover. 
       Laundry operations were more resilient due to the accessibility of 
       machines throughout the pandemic. 
 --   Identification was significantly impacted by the pandemic and ongoing 
       challenging market conditions, especially in the UK, due to home-taken 
       photos being accepted for official documents such as passports, with 
       revenue down 26.3%. As a result, Identification revenue in the UK 
       and Republic of Ireland reduced by 52.4%, and the number of photobooths 
       declined by 1,367 units. 
 --   Good progress was made with restructuring programmes to remove unprofitable 
       photobooths from operating estate. On track to complete restructuring 
       programmes in April 2021. 
 --   Continued expansion of the Group's Laundry presence in Continental 
       Europe, the UK and the Republic of Ireland, with total laundry units 
       deployed (owned, sold and as a result of acquisitions) up 389 units 
       in the last 12 months to October 2020. Total revenue from laundry 
       operations was stable due a significant decrease in B2B activity 
       the 12-month period. 
 --   Revenue from Revolution laundry operations grew by 13.8% in the 12-month 
       period, and the number of units in operation increased by 14.8%. 
       Revolution represents 7.7% of the total Group vending estate. 
 --   SEMPA performed in line with the Board's expectations, contributing 
       GBP9.8 million of revenue in the 18-month period to October 2020. 
       Professional apple and pineapple juice machines have been developed 
       for commercial use in restaurants and hotels. Planned tests and installation 
       of the first machines (apple and pineapple juice) were delayed due 
       to the pandemic. 
 

Commenting on the results, Serge Crasnianski, CEO & Deputy Chairman, said:

"2020 was a challenging year for the Group. At the onset of the pandemic we acted quickly to mitigate its impact of COVID-19 on our business, including by preserving cash, whilst doing all we could to protect the wellbeing of our colleagues, customers and the wider community.

"Despite this, the Group continued to make strategic progress and further expanded Laundry operations in key target markets in Europe. O ur self-service Revolution laundry operations proved to be more resilient than other business areas, in part due to the accessibility of these site locations during lockdowns.

Going ahead, the Board's initial strategy is to focus investment across all 17 countries in which the Group operates, and on the continued expansion of our Laundry operations and to grow the KIS Food business, which together, over time, we believe will compensate for lower expected demand for Identification and other vending equipment."

Enquiries:

 
 Photo-Me International plc               +44 (0) 1372 453 399 
                                           ir@photo-me.co.uk 
 Serge Crasnianski, Chief Executive & 
  Deputy Chairman 
 Stéphane Gibon, Chief Financial 
  Officer 
 
 Hudson Sandler                           +44 (0) 20 7796 4133 
 Wendy Baker / Nick Moore                 photo-me@hudsonsandler.com 
 

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 vending units across 17 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, 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 Halls, 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

The Group is pleased to report its financial results for the 18 months ended 31 October 2020 (18-month period) and the 12 months ended 31 October 2020 (12-month period).

As previously announced, the Group's financial year-end was extended from 30 April 2020 to 31 October 2020 due to challenges related to the pandemic. Going forward, to the extent they have not already done so, all subsidiary companies in the Group will align their accounting reference dates (or equivalent) to 31 October.

Revenue for the 18-month period was GBP310.2 million. Overall, the 2020 financial performance was significantly hindered by the onset of the COVID-19 pandemic and its unprecedented impact on consumer activity across the globe. In the 12-month period revenue declined by 19.7% and EBITDA fell by 45.9% year-on-year.

This performance reflected the sudden fall in Group operating revenue (excluding B2B and sales) of -30% between February and July 2020 compared with the same period in 2019, as the pandemic impacted all countries of operation. In August to October 2020, as lockdown restrictions were eased and activity levels increased slightly, operating revenue was -14.8% on average. Identification and children's rides were the most severely impacted services.

Despite this, the Group continued to make strategic progress and further expanded laundry operations in key target markets in Europe. Revolution units in operation grew to 3,437 at 31 October 2020, an increase of 14.8% compared with 31 October 2019. Our Revolution operations were more resilient than other parts of the business, with operating revenue up 13.8% in the 12-month period.

Our response to COVID-19

As the scale of the outbreak became apparent and markets across the globe went into lockdown, we took all appropriate measures to protect the health and safety of employees and other stakeholders, and to lessen the impact of the pandemic on our operations. We followed (and continue to follow) the guidance of governments, the World Health Organization, and other relevant authorities across our regions of operation.

Decisive action was taken to preserve the Group's cash position, including reducing capital and other expenditure where feasible, using government job retention schemes available to the Group to support payroll costs (amounting to GBP2.3 million), and cancellation of the interim dividend payment due on 11 May 2020 (GBP14 million retained within the business). The Group also secured EUR30 million of additional debt funding and, with the agreement of lenders, it deferred loan repayments. This loan is backed by the French Government with 0% interest charged until and remain available until June 2021 and more if needed.

In addition, the Board initiated restructuring programmes in the UK, China, South Korea, and Continental Europe to realign the Group's operations to the changed market conditions and lower consumer demand owing to the pandemic. An update on our restructuring is set out in the Chief Executive's statement.

Our business strategy

The Group operates, sells and services a wide range of instant-service equipment, primarily aimed at the end consumer. We operate across 17 countries and are focused on three principal business areas: Identification, Laundry, and digital Kiosks.

Before the outset of COVID-19, the Board saw growth opportunities across all three principal business areas, with a focus on the expansion of our Laundry operations. However, in light of the pandemic, and the dramatic impact that it has had on the growth drivers for our Identification and Kiosks business areas, the Board has refined its strategy to align its ambitions to the current and expected market dynamics in the short to medium term.

Going forward, the Group's key investment priorities will be Laundry expansion and the growth of KIS Foods. The Board expects that these two business areas will contribute an increasing proportion of total Group revenue and profit which, over time, will progressively compensate for lower Identification revenue.

Continued investment in Laundry expansion

The expansion of our Laundry operations will continue to be driven by the installation of Revolution machines in target countries across the UK & Republic of Ireland and Continental Europe.

The resilience of our Revolution operations during the pandemic gives the Board confidence that over the next years our investments will see Laundry revenue and profit increasingly compensate for any decrease in our photobooths and children's ride operations, albeit it will take time and depend on the pace of Revolution installations. The Group aims to install an average of 70 Revolution units per month, subject to the easing of pandemic restrictions. Capex in 2021 is expected to be GBP45 million as well and with a focus on Revolutions.

KIS Food

The Group entered the self-service fresh fruit juice and equipment market in April 2019, further diversifying our operations. Our R&D team have since developed new professional juice machines which further extend our product offering.

The Board maintains a focus on this area, with plans to commercialise its new juice machine, when COVID-19 restrictions allow, and believes this will become a key business area alongside Identification, Laundry, and Kiosks, and become a significant part of the Group's future growth strategy.

Identification

The Board continues to see longer term opportunities in the Identification market outside Europe (in countries where self-taken ID photos are not permitted), particularly for the deployment of its Identification security technology. Nonetheless, the market growth drivers across all our countries of operation have been adversely impacted by the pandemic. This includes ongoing travel restrictions which impact consumer demand for our photobooths.

As a result, the Board does not currently anticipate that Identification activity will return to pre-COVID-19 levels in the near term and consequently machines capex in the foreseeable future will be significantly reduced.

Kiosks

Digital Kiosks are positioned in high footfall locations and therefore demand has been hindered by lockdowns and similar restrictions.

The Group will continue to consider opportunities to extend the services it offers through its machines network, as well as product partnership within its existing territories. Nevertheless, investment will remain low in the short to medium term.

Focus on Innovation

New product innovation is at the core of Photo-Me. Our growth strategy has been focused on diversifying our operations and responding to consumer needs.

This strategy is supported by in-house R&D capabilities and a team of more than 60 dedicated engineers. Our R&D centres are in France (primary facility), Vietnam and Japan. In recent years, our activities have been focused on the expansion of our laundry operations in Continental Europe, the UK, and the Republic of Ireland, and deployment of our secure upload Photo ID technology in our Identification business.

Our corporate responsibility

The Board recognises the Group's responsibilities to the community and the environment and believes that health, safety and environmental issues are integral and important components of best practice in business management. This is an area of increased focus for all stakeholders. The Board is accountable for the Group's approach to corporate responsibility, led by Serge Crasnianski, and believes that effective management of these areas can reduce risks and help us identify business opportunities.

We are an international business and an equal opportunities employer, committed to promoting diversity and encouraging employee engagement across all our countries of operation. The health and safety of our employees, customers and site owners is of the utmost importance to us. To that end, we have a network of dedicated engineers servicing our products and the Company is an accredited contractor.

We are actively working to reduce our impact on the environment as a business. We use highly concentrated washing liquid, free of phosphates, colouring agents and preservatives, we monitor water and power consumption of our equipment, and have implemented initiatives to reduce our energy use and demand for natural resources, such as photovoltaic installations on our Laundry kiosks. Where possible we refurbish and re-sell our equipment.

Update on governance and Board changes

The composition of the Board changed during the period. Mr Janailhac joined the Group and the Board as a Non-executive Director in July 2019. In July 2020, he was appointed an Executive Director and Chair of the Strategic Committee, whose members include the top five managers of the Group and the CEO. This committee is responsible for reviewing and implementing operational decisions across the Group. Mr. Janailhac is a seasoned entrepreneur with a wealth of experience, including being a senior adviser of Macquarie Capital (Europe) Limited and a Non-executive Director of Athena Investments A/S.

Eric Mergui stepped down from his role as Executive Director and Chief Operating Officer in July 2020.

Photo-Me has an entrepreneurial and creative heritage which is aligned to our business strategy. We are committed to nurturing and growing talent within our teams.

Our People

The human cost of the pandemic has been extensive and has touched many people around the world. This has been an extremely challenging period for all our teams and on behalf of the Board I'd like to thank them for their continued hard work and commitment.

Dividend

In March 2020, the Board felt it appropriate to cancel the interim dividend due to be paid on 11 May 2020 in view of the impact of the pandemic, thereby retaining GBP14 million of cash within the business.

Given the current COVID-19 pandemic situation, the Board feels it remains the right decision not to recommend any other dividend in respect of the 18- month period.

In addition, the terms of the French government-backed PGE scheme, under which Photo-Me has a EUR30 million credit facility, require any loans under the scheme to be repaid before any distributions are made to shareholders. We expect to benefit from the PGE scheme for a period of two years more or convert the French "PGE" to a traditional loan in June if we are proposed a more interesting rate than the PGE loan.

Beyond this, the Board will continue to review the dividend policy and align any future dividend payments to performance of the business and its investment strategy, however no dividend will be recommended until at least the PGE facility has been repaid.

Looking ahead

The Board has acted, and continues to act, to mitigate the impact of the current trading environment on the business and to preserve cash.

As we have entered the 2021 financial year, we see ongoing and ever-changing government lockdown measures in place across Europe to combat virus infection rates.

Our multi-country restructuring plans to improve profitability are progressing as expected and the start of vaccination programmes provides some encouragement. Nevertheless, the Board will continue to closely review the make-up of the Group's estate and will act as required to best position the Group going forward.

The visibility on the market outlook for 2021 remains extremely limited. Nevertheless, subject to the factors above, the Board looks forward to achieving revenue of GBP175 million in FY21 (12 months to 31 October 2021), and profit before tax will be GBP9.0 million before any exceptional items, and also expects that the Group will be cash flow positive.

Having reviewed various scenarios, the Board believes that the Group's existing financial resources will be sufficient for the Group to withstand the uncertain economic conditions which are currently expected in 2021 and beyond .

In the near future, the Board's strategy is to focus investment on the expansion of the Group's more resilient Laundry operations and its plans to grow its KIS Food business will over time compensate for lower demand for Identification and other vending equipment.

SIR JOHN LEWIS

Non-executive Chairman

CHIEF EXECUTIVE'S REPORT

BUSINESS REVIEW

The 18-month period ended 31 October 2020 can be split in two parts. Before the onset of the pandemic, we made good strategic progress as we further expanded our laundry operations and entered the self-service fruit juice market, providing a new platform for growth. The Group delivered a robust financial performance and was highly cash generative despite challenging headwinds.

The second half of the financial period was dominated by the significant and unprecedented impact of the COVID-19 pandemic on consumer activity across the globe, and the actions taken by the Board to help navigate the Group through this period of great uncertainty.

Financial performance

Results

Reported revenue for the 18-month period was GBP310.2 million. For the 12-month period reported revenue was GBP186.3 million, 19.7% lower than in the previous 12-month period to 31 October 2019, reflecting the impact of the pandemic on consumer activity.

The Board estimates that the pandemic had more than a GBP50.0 million negative impact on total Group revenue in the period, mainly through lost revenue across Continental Europe, and the UK & Republic of Ireland from March 2020, and through lost revenue from operations in China from mid-January to October 2020. A breakdown of the impact of the pandemic on operating revenue in each country is set out in the Review of Performance by Geography.

Reported EBITDA (excluding associates) for the 18-month period was GBP87.3 million. For the 12-month period, EBITDA fell by GBP35.1 million to GBP41.4 million (31 October 2019: GBP76.5 million), which delivered an EBITDA margin of 22.2% (31 October 2019: 32.9%).

Reported profit before tax in the 18-month period, excluding IFRS16 impact, but including GBP33.6 million provisions and impairment was GBP1.0 million. Reported loss before tax for the 12-month period was GBP27.4 million.

As previously announced, an in-depth review of the Group's operations was undertaken in response to COVID-19 and the challenging trading environment. This resulted in a GBP33.6 million impact from exceptional items, provisions, and impairment. For the 18-month period adjusted profit before tax was GBP2.5 million. In the 12-month period, the Group reported an adjusted loss before tax of GBP26.0 million.

A reconciliation of reported profit before tax to adjusted profit before tax and a breakdown of exceptional items, provisions and impairment by region is set out in the Financial Review.

The Group was cash flow positive in the period. For the 18-month period, t he Group generated cash from operations of GBP92.9 million. For the 12-month period, the Group generated GBP51.8 million of cash from operations, compared with GBP68.9 million in the prior 12-month period due to significantly reduced consumer activity owing to the pandemic.

Capital expenditure in the 18-month period was GBP63.6 million including IFRS16, and GBP47.1m excluding IFRS16. This mainly related to our Identification business and the relocation of a large number of photobooth machines as part of the restructuring program which began in September 2020. Laundry capex was lower than expected as the crisis significantly slowed down the installations of units from March 2020 onwards.

Funding and liquidity

As at 31 October 2020, the Group had gross cash of GBP106.2 million, and a net cash balance of GBP21.9 million. The Group continues to comply with its revised banking covenants. The covenant on Photo-Me France's loan from BNP has been waived by the bank in response to the pandemic, and as long as the "PGE" is in place.

The Group continues to use government support schemes across its operating markets wherever it is possible.

The Board's scenario planning indicates that the Group has sufficient liquidity to navigate the current COVID-19 lockdown measures.

Overview of principal business areas

Below is an overview of the Group's three principal business areas, Identification, Laundry, and Kiosks, as well as its other vending equipment.

Identification

Photobooths and integrated biometric identification solutions

 
                           18 months       12 months    12 months   12 months 
                                  to   to 31 October           to          to 
                          31 October            2020   31 October    30 April 
                                2020                         2019        2019 
                         -----------  --------------  -----------  ---------- 
 Number of units in 
  operation                   27,189          27,189       28,439      28,873 
-----------------------  -----------  --------------  -----------  ---------- 
 Percentage of total 
  Group vending estate 
  (number of units)            61.0%           61.0%        61.0%       61.5% 
-----------------------  -----------  --------------  -----------  ---------- 
 Revenue                   GBP183.4m       GBP106.9m    GBP145.1m   GBP147.7m 
-----------------------  -----------  --------------  -----------  ---------- 
 Capex                      GBP11.1m         GBP5.7m     GBP11.2m     GBP9.7m 
-----------------------  -----------  --------------  -----------  ---------- 
 

Photo-Me is a prominent international player in the photobooth market, offering market-leading photographic quality and technology across our operating regions.

In recent years, our photobooth offer has diversified to include encrypted photo ID upload technology connected to government organisations in the UK, France, Ireland, and the Netherlands.

Our well-established network of photobooths is situated in attractive, high-footfall locations, such as travel hubs and shopping centres. Before the onset of the pandemic, Identification revenue in all regions, except for the UK, remained stable. Especially, both France and Japan delivered a robust performance.

In the UK, the trading environment remained challenging. T he government's policy to accept photos taken at home for official documents and passport identification resulted in lower consumer demand and significantly eroded part of Photo-Me's market share for ID photos. Notably, European regulation does not permit this method, and the Board hopes that at some stage official documents in the UK will once again need to conform to ICAO and ISO rules.

As the scale of COVID-19 became apparent, demand for our photobooths was severely impacted by government lockdowns, constraints on international travel, and social distancing rules across our operations. This resulted in significantly lower consumer demand for Identification across all our jurisdictions in the calendar year 2020; Asia from January 2020 and Continental Europe, the UK and the Republic of Ireland from March 2020.

Action being taken to remove,and in some cases relocate, unprofitable machines to mitigate the impact of COVID-19 and the continued challenging UK market conditions evident pre-COVID, resulted in a significant reduction in the total number of photobooths in operation.

Due to the above factors, revenue for the 12-month period declined by 26.3% to GBP106.9 million. Revenue was down 36% in February to July 2020 compared with the same month in 2019, with the greatest decline seen in the UK which was down 52.4% in that period. In the 18-month period, Identification revenue was GBP183.4 million.

At 31 October 2020, 27,189 photobooths were in operation, a reduction of -5.8% compared with 30 April 2019 and -4.4% compared with 31 October 2019.

At 31 October 2020, Identification accounted for 61.0% of vending units in operation. The number of photobooths has declined mainly in UK and Ireland (1,367 units), but also slightly in Asia (253 units) and Europe (64 units). The Group plans to remove a further 1,500 units from its estate by October 2021.

Identification capex (18-month period) was GBP11.1 million. For the 12-month period, capex reduced from GBP11.2 million to GBP5.7 million year-on-year, mainly due to the relocation of removed machines to new sites instead of purchasing new machines.

Whilst the Board continues to believe that there are some longer-term opportunities in the photo ID market and continues to install photobooths in countries outside of the UK, it anticipates that short-term demand for photo ID will be subdued and may not recover fully to pre-COVID-19 levels.

Laundry

Unattended Revolution laundry services, launderettes, business to business laundry services

 
                                                                18 months       12 months       12 months   12 months 
                                                                       to   to 31 October   to 31 October          to 
                                                               31 October            2020            2019    30 April 
                                                                     2020                                        2019 
                                                              -----------  --------------  --------------  ---------- 
 Total Laundry units 
  deployed 
  (owned, sold and acquisitions)                                    5,568           5,568           5,179       4,876 
------------------------------------------------------------  -----------  --------------  --------------  ---------- 
 Total revenue from Laundry 
  operations                                                     GBP72.9m        GBP47.3m        GBP47.4m    GBP43.7m 
------------------------------------------------------------  -----------  --------------  --------------  ---------- 
 Revolution 
  (excludes Launderettes 
  and B2B): 
------------------------------------------------------------  -----------  --------------  --------------  ---------- 
 
   *    Number of Revolutions in operation                          3,437           3,437           2,995       2,732 
------------------------------------------------------------  -----------  --------------  --------------  ---------- 
 
   *    Percentage of total Group vending estate (number of 
        units)                                                       7.7%            7.7%            6.4%        5.8% 
------------------------------------------------------------  -----------  --------------  --------------  ---------- 
 
   *    Total revenue from Revolutions                           GBP52.8m        GBP35.4m        GBP31.1m    GBP27.6m 
------------------------------------------------------------  -----------  --------------  --------------  ---------- 
 
   *    Revolution capex                                         GBP20.9m        GBP14.4m        GBP13.1m    GBP10.9m 
------------------------------------------------------------  -----------  --------------  --------------  ---------- 
 

* There were 3,216 full-time units in operation during the 12 months ended 31 October 2020 compared with 2761 in 12 months ended 31 October 2019.

Our owned and operated laundry business was launched in 2013. We now have a presence in 12 countries, with operations primarily located in France, the UK, Ireland and Portugal.

In total the Group had deployed (owned, sold and acquired) 5,568 Laundry units at 31 October 2020, up 14.2% in the 18-month period and up 7.5% in the 12-month period.

Total revenue from Laundry operations grew to GBP72.9 million for the 18-month period 2020. In the 12-month period revenue was GBP47.3 million, down slightly year-on-year reflecting at the same time the good performance of the Revolution operation and the collapse of activity in our B2B business during COVID.

Our Laundry business comprises three areas of operation: Revolution, Launderette, and business-to-business laundry services.

Revolution

Revolution is our 24-hour, outdoor, self-service laundry unit which is typically located on busy sites such as supermarket car parks and petrol station forecourts.

Our strategy is to continue to expand our operations through partnerships with strategic site owners and identify and expand into new high-demand markets.

In the period, the rollout of Revolution units across Continental Europe and the UK & Republic of Ireland continued, with a focus on installing machines in Germany and the UK.

In the 12-month period, the number of Revolution units grew by 14.8% to 3,437 machines. Revolutions accounted for 7.7% of the Group's total vending estate, up from 6.4% at 31 October 2019.

Prior to the onset of the pandemic, we deployed an average of 50 machines each month. However, the installation of machines was significantly curtailed by country lockdowns, with a total of only 36 machines deployed between April and October 2020. We plan to return to an average of 70 Revolution installations per month, subject to lockdown restrictions being eased.

Total revenue from Revolution machines in the 12-month period increased by 13.8% to GBP35.4 million. From February to October 2020, revenue grew by 10.0%, reflecting continued expansion and the more resilient nature of our Laundry operations, which were more accessible to consumers than photobooths during lockdown. Total revenue from Revolution machines in the 18-month period was GBP52.8 million.

Revolution capex increased by 10.1% to GBP14.4 million in the 12-month period.

Our investment in expanding our Revolution operations, primarily in the UK, Ireland, Portugal and France, remains a key growth driver for the Group. In addition, we are looking to further roll out Revolution units in Germany and Austria.

Looking ahead, we continue to expect that Revolution operations will contribute an increasing proportion of total Group revenue and profit which will progressively compensate for the loss of Identification.

Launderette

These shops are typically situated in or near to town centres where there is limited competition from other laundry services. Expansion has been delivered through an owned-and operated model. Due to COVID-19, the Group decided to postpone Launderettes' installations except when very good acquisition opportunities arose.

The Group is also removing or selling unprofitable locations in Spain, UK, Belgium, Portugal and France.

Business-to-business (B2B) laundry services

Our B2B operations distribute and lease laundry and catering equipment. Customers include institutions such as hospitals, care homes, and universities.

Before the impact of COVID-19, the performance of the Group's Launderettes and B2B were stable. Nevertheless, in the six months ended 31 October 2020, our B2B operations were adversely impacted by COVID-19 and activity levels were extremely low.

As a result, the Group is closely monitoring the situation and may decide to close its B2B activities if more normalised and profitable trading conditions do not return in the near future.

Kiosks

High-quality digital printing services

 
                                  18 months       12 months       12 months   12 months 
                                         to   to 31 October   to 31 October          to 
                                 31 October            2020            2019    30 April 
                                       2020                                        2019 
                                -----------  --------------  --------------  ---------- 
 Number of units in operation         5,304           5,304           5,508       5,487 
------------------------------  -----------  --------------  --------------  ---------- 
 Percentage of total Group 
  vending estate (number 
  of units)                           11.9%           11.9%           12.0%       11.7% 
------------------------------  -----------  --------------  --------------  ---------- 
 Revenue                           GBP18.4m        GBP11.4m        GBP13.7m    GBP13.3m 
------------------------------  -----------  --------------  --------------  ---------- 
 Capex                              GBP2.5m         GBP1.4m         GBP1.6m     GBP2.3m 
------------------------------  -----------  --------------  --------------  ---------- 
 

Our estate of digital printing kiosks offers a wide range of competitively priced print formats and personalized products. Our key markets are France, where most machines are situated, the UK, and Switzerland.

The number of kiosks in operation was 5,304, compared with 5,508 in October 2019, and represented 11.9% of the Group's total vending estate.

Our state-of-the-art machines - Speedlab cube and Speedlab bio - are fully integrated with all major social media networks and offer consumers a fast, high-quality printing service.

Prior to the pandemic, our Kiosks business performed well, driven by a strong performance in France with revenue in the country up 6.5% year-on-year in the 12 months to April 2020.

Nevertheless, in the 12-month period, Kiosk revenue fell 17.5%. Between February and October 2020, revenue was down 24.0% due to significantly lower demand due to pandemic lockdown restrictions in the period.

Capex was reduced by 10.3% to GBP1.4 million in the 12-month period. Revenue in the 18-month period was GBP18.4 million.

KIS Food

Fresh fruit and vegetable juice equipment

Our medium to long-term goal is to become a global leader in the distribution of self-service fresh fruit and vegetable juice machines. We plan to replicate Sempa's B2B business model for orange juice machines across other geographies, notably Switzerland, Ireland and the UK, by leveraging our existing network of field engineers and new product development. Competition in this market is relatively limited. We have already started with success in Belgium.

Our R&D team in France has developed professional apple juice and pineapple juice machines for commercial use in restaurants and hotels. Prototypes of these machines underwent market testing in October at several locations across France and Belgium. The results were promising, however, the roll out of these machines has been delayed by the impact of the pandemic on key target end markets, such as the hospitality sector.

The Group ceased trials of its B2C juice vending machines in Paris. The trials did not perform as well as expected and the juice vending machines have been removed.

In the 12-month period, revenue was GBP6.3 million and contributed 3.4% to Group revenue. In the 18-month period, B2B juice machine operations contributed GBP9.8 million of revenue to the Group and contributed 3.2% of the Group revenue.

Before the impact of COVID-19, the strategic progress and performance of this business area was in line with the Board's expectations.

The Board remains confident in the long-term opportunities in this market and expects that KIS Food will become an increasingly important business area for the Group.

Other vending equipment

Alongside the business areas detailed above, we operate 8,539 other vending units. These units include 3,783 children's rides, 3,392 photocopiers and 1,364 other miscellaneous machines.

These are typically an extension of our product range at sites where we have an existing relationship with the site owner and where the profitability benefits from the synergies related to operating other equipment on the same site, for example field engineers and maintenance.

Government lockdowns and social distancing rules due to the pandemic deeply impacted demand for this equipment across all the Group's countries of operation, most notably children's rides of which we have removed 966 units from operation. Revenue in this business area was down 43.2% in February to October 2020.

At 31 October 2020, other vending equipment accounted for 19.2% of the Group's total vending estate by number of units and 4.2% of the total Group revenue.

Further details on all our operations are provided in the Review of Performance by Geography.

Update on restructuring programmes

The Board has refined and initiated its plans, announced in July 2020, to remove all unprofitable machines (primarily photobooths and children's rides) across the Group's operations, and restructure operations in the UK, China, South Korea and Continental Europe.

These restructuring programmes will address the significant loss in Identification revenue due to the structural shift in the UK photo ID market as well as reduced consumer demand and site footfall due to the pandemic. The action being taken will better realign our operations in these countries with the expected lower levels of consumer activity in the short to medium term.

In total we plan to remove approximately 3,000 photobooths from the UK (approximately 32% of machines in the UK) and 700 units from China (approximatively 57% of machines in China). In South Korea, the Group has impaired 200 units (100% of machines in South Korea). In Continental Europe (mainly France, the Netherlands and Spain), approximately 1,000 machines will be removed. The main part of this plan is realised to date.

When completed in April 2021, approximately 5,000 machines will have been removed or relocated, reducing the total machines in operation by approximately 7% compared with 31 October 2019.

Safeguarding our people, customers and the community at large during the COVID-19 pandemic

Our workforce is our most valuable asset and the driving force behind Photo-Me's success. Over the years we have attracted an incredibly talented team of highly skilled innovators and engineers worldwide. Looking after their wellbeing is a fundamental company priority.

In 2020 we were faced with the unprecedented challenge of the COVID-19 pandemic. Our absolute priority was to ensure minimal risk to our employees, customers and the wider community while the spread of coronavirus accelerated and led to varying contagion levels and restrictions in the countries we operate in across the world.

We took immediate action to implement measures to protect our employees. We encouraged all office workers to work from home where possible and organised socially distanced working in our office environments, with stringent sanitation measures and rules in place.

The measures implemented to protect the interests of our customers and users of our equipment included: enhanced cleaning regimes and an antimicrobial surface coasting applied to machines which enables the surface to self-disinfect (reapplied every 90 days); mask wearing by engineers at all times while on site; and signage for customers to wear face coverings and sanitise their hands before using our equipment.

Throughout the year we have monitored the situation very closely to ensure that Photo-Me complies with the safety recommendations from the WHO and governments in all of the jurisdictions in which the Group operates. It is thanks to these comprehensive measures, and also the responsible actions taken by our individual employees, that we were able to safely continue to provide instant services via a large part of our vending estate.

In addition to health concerns, this difficult time put a financial strain on many individuals and families. Therefore, despite the economic challenges, as a responsible company we felt it our duty wherever possible to support the continued financial wellbeing of our colleagues. We accessed government job retention schemes where available across our operations but unavoidably there were some redundancies in the most impacted countries, such as the UK.

I am proud of how hard our teams have worked during this time, despite the tremendous pressures and challenges. While remaining vigilant to the virus, we have been able to continue providing convenient and safe instant services to our customers without compromising the safety of our colleagues or other stakeholders, and I thank the whole team for their continued commitment and hard work.

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's 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.

Revenue by geographic region

 
                             18 months       12 months    12 months   12 months 
                                    to   to 31 October           to          to 
                            31 October            2020   31 October    30 April 
                                  2020                         2019        2019 
 Continental Europe          GBP195.2m       GBP118.2m    GBP137.3m   GBP130.7m 
 UK & Republic of Ireland     GBP54.6m        GBP30.5m     GBP49.5m    GBP52.9m 
 Asia                         GBP60.4m        GBP37.6m     GBP45.4m    GBP44.5m 
                           -----------  --------------  -----------  ---------- 
 Total                       GBP310.2m       GBP186.3m    GBP232.2m   GBP228.1m 
                           -----------  --------------  -----------  ---------- 
 

Revenue was deeply impacted by government lockdowns and restriction across the Group's operations. As per the table below, notably Identification revenue decreased significantly in the 12-month period: -13.9% in Europe, -17.2% in Asia and up to -38.3% in UK & Ireland. The Group experienced similar impact across its Kiosk activities. While Revolution revenue was impacted, operations are more resilient, and partially offset the decrease Identification and Kiosk revenue.

Operating profit

 
                             18 months       12 months       12 months   12 months 
                                    to   to 31 October   to 31 October          to 
                            31 October            2020            2019    30 April 
                                  2020                                        2019 
 Continental Europe           GBP28.7m         GBP3.4m        GBP38.1m    GBP33.5m 
 UK & Republic of Ireland   GBP(19.1)m      GBP(20.9)m         GBP4.3m     GBP7.1m 
 Asia                          GBP4.5m         GBP1.1m         GBP6.6m     GBP4.7m 
 Corporate costs            GBP(10.8)m       GBP(9.3)m       GBP(3.0)m   GBP(2.6)m 
                           -----------  --------------  --------------  ---------- 
 Total                       GBP(3.3)m      GBP(25.7)m        GBP46.0m    GBP42.7m 
                           -----------  --------------  --------------  ---------- 
 

Administration holding costs (GBP9.8m) have been reclassified in corporate costs instead of in UK & Republic of Ireland as was previously the case

The dramatic fall in operating profit for the 12-month period was a combination of lower revenue due to the COVID and inherent provisions and impairments. Excluding provision and impairments of GBP15.3 million in Continental Europe, GBP16.2 million in the UK & Republic of Ireland and GBP2.1 million in Asia, adjusted operating profit was GBP8.0 million.

The decrease in revenue in the 12-month period was GBP45.9 million, which explains the difference of GBP38.8 million in operation profit year-on-year. Adjusted operating profit in the 12- month period was GBP8.0 million, compared to GBP46.0 million in the prior 12-month period.

Operating revenue evolution (last 12 months by quarter)

The table below provides a detailed breakdown of operating revenue by geographic region and business area for the 12 months, compared with the 12 months ended 31 October 2019.

 
                      Nov 2019  Feb 2020   May 2020       Aug 2020   TOTAL 
                        to Jan    to Apr     to Jul    to Oct 2020 
                          2020      2020       2020 
--------------------  --------  --------  ---------  -------------  ------ 
 CONTIENTIAL EUROPE 
 Identification          -7.5%    -35.3%     -34.9%          -6.2%  -21.5% 
 Kiosks                   1.3%    -36.8%     -17.6%         -10.0%  -14.3% 
 Laundries               22.7%      8.8%       9.0%           9.6%   12.3% 
 Other Vending           -4.7%    -40.1%     -30.5%         -27.0%  -25.2% 
--------------------  --------  --------  ---------  -------------  ------ 
 Total                    0.9%    -27.8%     -24.2%          -3.6%  -13.7% 
--------------------  --------  --------  ---------  -------------  ------ 
 
 UK & REPUBLIC OF 
  Ireland 
 Identification         -16.2%    -53.8%     -65.4%         -68.6%  -52.4% 
 Kiosks                 -32.8%    -40.7%     -47.4%         -48.8%  -41.4% 
 Laundries               20.5%     24.3%       0.0%          11.1%   13.7% 
 Other Vending           -9.4%    -28.3%     -96.3%         -74.2%  -51.9% 
--------------------  --------  --------  ---------  -------------  ------ 
 Total                   -7.7%    -40.3%     -56.6%         -50.1%  -39.1% 
--------------------  --------  --------  ---------  -------------  ------ 
 
 ASIA 
 Identification          -4.9%    -12.5%     -29.4%         -16.7%  -16.3% 
 Kiosks                 -12.7%    -16.6%     -32.4%         -32.1%  -23.4% 
 Laundries               30.3%     24.6%       1.2%          19.1%   16.8% 
 Other Vending           54.9%    -90.5%     920.3%         -29.1%  -34.8% 
--------------------  --------  --------  ---------  -------------  ------ 
 Total                   -2.5%    -19.3%     -27.4%         -17.2%  -17.0% 
--------------------  --------  --------  ---------  -------------  ------ 
 
 TOTAL 
 Identification          -8.2%    -32.9%     -38.2%         -19.0%  -25.6% 
 Kiosks                  -3.7%    -37.1%     -20.8%         -14.2%  -17.5% 
 Laundries               22.1%     12.8%       7.0%          10.0%   12.7% 
 Other Vending            1.0%    -52.1%     -56.5%         -47.9%  -38.6% 
--------------------  --------  --------  ---------  -------------  ------ 
 Total                   -1.7%    -28.7%     -30.8%         -14.8%  -19.6% 
--------------------  --------  --------  ---------  -------------  ------ 
 

Vending units in operations

 
 
 
                           At 31 October            At 31 October          At 30 April 
                                2020                    2019                  2019 
                          Number  % of total   Number of   % of total     Number     % of 
                        of units      estate       units       estate   of units    total 
                                                                                   estate 
 Continental Europe       25,097       56.3%      25,436        54.3%     25,230    53.8% 
 UK & Republic 
  of Ireland               9,499       21.3%      11,357        24.2%     11,701    24.9% 
 Asia                      9,955       22.3%      10,061        21.5%     10,025    21.3% 
                       ---------  ----------  ----------  -----------  ---------  ------- 
 Total                    44,551      100.0%      46,854       100.0%     46,956   100.0% 
                       ---------  ----------  ----------  -----------  ---------  ------- 
 
 

As at 31 October 2020, the Group's estate comprised 44,551 units, a decline of 5.1% in the 18-month period and 4.9 % compared with the 12-month period. This was mainly due to implementation of the restructuring programme and removal of approximately 3,000 unprofitable machines, primarily photobooths in the UK and children's rides across the estate to mitigate the impact of the pandemic and structural changes to the UK photobooth market.

Continental Europe

Continental Europe is the largest region of operation by both machine volume and contribution to Group revenue.

The region remained profitable despite the unprecedented challenges of the pandemic. This performance was driven by a less significant reduction in Photobooth revenue in France compared with other countries (excluding Japan), and a good performance of Laundry operations in general.

Revenue for the 18-month period was GBP195.2 million. In the 12-month period, revenue fell by 13.9% to GBP118.2 million, reflecting the sudden loss of most of the expected revenue from March 2020 onwards due to COVID-19. Laundry operations were resilient and grow by 12.3%, however operating revenue for the other business areas severely impacted: Identification (-21.5%), Kiosks (-14.3%) and Other Vending (-25.2%).

Operating profit for the 12-month period fell by 90.9% to GBP3.4 million.

As at 31 October 2020, there were 25,097 units in operation in the region, which represented 56.3% of the Group's total estate. The region contributed 62.9% of total Group revenue.

UK & Republic of Ireland

As previously disclosed, the performance of this region was impacted by two factors. First of all, challenging photobooth market conditions due to the UK government's decision to permit home-taken photographs for photo ID; and then the impact of COVID-19 from March 2020 onwards and the disruption caused by lockdown measures which severely reduced demand for our products, particularly photobooths and children's rides.

Nevertheless, we expanded our Laundry operations and now operate 641 laundry units in the region, most of which are located in Ireland. Whilst Revolution machines delivered a resilient performance, this was not enough to offset the significant loss in revenue in our photobooth business.

In both Ireland and the UK, Revolution units performed extremely well in the 12-month period (including the COVID period) with an average revenue of GBP11,000 per unit. The Group now operates 416 revolutions in Ireland and 299 in UK, where, post year-end 20 machines a month were deployed.

Revenue for the 18-month period was GBP54.6 million. In the 12-month period revenue declined by 38.3% to GBP30.5 million. The UK photobooth market was already challenging and this along with the impact of the pandemic from March 2020 onwards, resulted in a 52.4% reduction in operating revenue year-on-year, and children's rides were down 51.9% year on year. However, operating revenue from Revolution units grew by 13.7% year-on-year.

There was an operating loss of GBP19.1 million in the 18-month period and a loss of GBP20.9 million in the 12-month period. Excluding the GBP16.2 million provision, operating profit declined to GBP(4.7) million.

At 31 October 2020, 9,499 units were located in the UK & Republic of Ireland, which represented 21.3% of the Group's total units in operation.

Asia

Before the impact of COVID-19, trading in the region was robust, driven by a strong performance in Japan. Japan is the largest contributor in Asia and was almost resilient to COVID-19, with a 13.4% revenue decrease between May and October 2020 as the country continued to benefit from highly effective turnaround plans implemented in 2018 which returned the country to profitability.

Nonetheless, this performance was not sustainable during the pandemic and more than offset by the sudden decline in revenue across our Asian operations (particularly in China) from the second half of January 2020. All business, except for Laundry, was significantly impacted year-on-year from February to October 2020; Identification 30.0%, Kiosks 22.8% and Other Vending 52.0%.

Revenue for the 18-month period was GBP60.4 million. In the 12-month period, revenue declined by 17.2% to GBP37.6 million.

Nevertheless, the region remained profitable, reported operating profit for the 12-month period of GBP1.1 million. Operating profit for the 18-month period was GBP4.5 million.

At 31 October 2020, 9,955 units were situated in Asia, representing 22.3% of the Group's total units in operation.

Key performance Indicators (KPIs)

The Group measures its performance using different types of indicators. The main objective of these KPIs is to monitor the Group's cash generation, long-term profitability, preservation of the value of its assets, and of returns to shareholders.

 
Description             Relevance                                       Performance 
---------------------  ----------------------------  -------------------------------------------------- 
                                                       18 months    12 months   12 months     12 months 
                                                              to           to          to            to 
                                                      31 October   31 October    30 April    31 October 
                                                            2020         2020        2019          2019 
---------------------  ----------------------------  -----------  -----------  ----------  ------------ 
Total Group revenue                                    GBP310.2m    GBP186.3m   GBP228.1m     GBP232.2m 
 at actual rate 
 of exchange 
---------------------  ----------------------------  -----------  -----------  ----------  ------------ 
Group profit before                                      GBP0.5m   GBP(27.8)m    GBP42.6m      GBP44.9m 
 tax 
---------------------  ----------------------------  -----------  -----------  ----------  ------------ 
Adjusted profit                                          GBP2.5m   GBP(26.0)m    GBP44.1m      GBP45.9m 
 before tax 
---------------------  ----------------------------  -----------  -----------  ----------  ------------ 
                        The EBITDA margin 
                         is a good indicator 
EBITDA margin            of improved profitability         28.1%        22.2%       30.6%         32.9% 
---------------------  ----------------------------  -----------  -----------  ----------  ------------ 
                        Gross takings is 
                         an important indicator 
Gross takings            of the trend in 
 (including Photo-Me     our core vending 
 Retail)                 business                            N/A      (19.6)%      (0.7)%          0.9% 
---------------------  ----------------------------  -----------  -----------  ----------  ------------ 
Increase in number 
 of photobooths                                          (1,684)      (1,250)       (142)            NA 
---------------------------------------------------  -----------  -----------  ----------  ------------ 
                        The increase in 
                         number of Revolutions 
Increase in number       is a constant priority 
 of Laundry units        and a main driver 
 (operated or sold)      for growth                          692          389         427            NA 
 
 

FINANCIAL REVIEW

Financial performance

 
                                  18 months       12 months       12 months  12 months 
                                         to   to 31 October   to 31 October         to 
                                 31 October            2020            2019   30 April 
                                       2020                                       2019 
------------------------------  -----------  --------------  --------------  --------- 
 Revenue                          GBP310.2m       GBP186.3m       GBP232.2m  GBP228.1m 
 EBITDA (excluding associates)     GBP87.3m        GBP41.4m        GBP76.5m   GBP69.7m 
 Operating profit (excluding 
  associates)                       GBP3.3m      GBP(25.7)m        GBP46.0m   GBP42.7m 
 Profit / (loss) before 
  tax                               GBP0.5m      GBP(27.8)m        GBP44.9m   GBP42.6m 
 Profit / (loss) after 
  tax                             GBP(2.4)m      GBP(24.9)m        GBP33.6m   GBP31.3m 
------------------------------  -----------  --------------  --------------  --------- 
 

The movements in turnover are outlined in the following table.

 
                                             GBPm 
----------------------------------------  ------- 
 Turnover at 31 October 2019 (12 month)     232.2 
----------------------------------------  ------- 
 Change in core business revenue: 
 Continental Europe                        (19.1) 
 UK & Ireland                              (18.9) 
 Asia                                       (7.8) 
 Turnover at 31 October 2020 (12 month)     186.4 
----------------------------------------  ------- 
 

The decline in the profit before tax can be explained as follows:

 
                                                      GBPm 
 Profit before tax at 31 October 2019 (12 month)      44.9 
 Changes in revenue                                 (45.8) 
 Changes in costs                                   (24.7) 
 Restructuring costs                                 (0.6) 
 Increase in net finance income & other gains        (2.2) 
 Impact of exchange rates                            (0.5) 
 Profit before tax 31 October 2020 (12 month)       (27.9) 
-------------------------------------------------  ------- 
 

Review of operating costs

Operating costs were GBP115.2 million:

Staff costs were GBP44.3 million. The ratio of staff costs to revenue is 14.2% (31 October 2019: 13.4%).

Operations in the UK & Republic of Ireland received GBP1.5 million from government furlough schemes, and Continental Europe received GBP755,000.

 
                                  18 months       12 months       12 months  12 months 
                                         to   to 31 October   to 31 October         to 
                                 31 October            2020            2019   30 April 
                                       2020                                       2019 
 Staff costs                       GBP44.3m        GBP28.4m        GBP31.2m   GBP30.6m 
 Inventory costs                   GBP20.5m        GBP20.5m        GBP25.7m   GBP25.6m 
 Other operating costs              GBP5.5m         GBP2.1m         GBP7.6m    GBP6.5m 
                                -----------  --------------  --------------  --------- 
 Depreciation and amortisation     GBP44.9m        GBP29.2m        GBP27.9m   GBP24.3m 
 Profit on disposal of 
  fixed assets                      GBP3.4m         GBP2.8m         GBP1.7m    GBP1.8m 
                                -----------  --------------  --------------  --------- 
 Operating costs                  GBP115.2m        GBP80.2m        GBP92.4m   GBP87.0m 
                                -----------  --------------  --------------  --------- 
 

Exceptional items provision and impairment

Due to the significant impact of COVID-19 on consumer activity in all the Group's end markets, the Group's performance in the period was significantly impacted. COVID-19 started to impact trading in Asia (especially China) in mid-January and by March all the Group's end markets were severely disrupted and the majority of expected revenue did not materialise as a result.

 
 --   COVID-19 has adversely impacted each business area: B2B, children's 
       rides and, to a lesser extent Identification, will be the most 
       challenging from which to recover. 
 --   Identification was significantly impacted by the pandemic and ongoing 
       challenging market conditions in the UK, due to the UK government's 
       decision to allow home-taken photos for official documents such 
       as passports. 
 

The COVID-19 crisis has required an in-depth review of the Group's operations and increased rigor to address the current trading environment. This has led to a GBP33.6 million impact from exceptional items, provisions and impairment for the results for the 18-month period. The largest elements are:

 
 --   The write down of the carrying value of non-profitable machines 
       (mainly photobooths and children's rides) due to the disruption 
       caused by the COVID-19 situation, and the likely slow recovery in 
       consumer spending habits should social distancing measures remain 
       in place for the foreseeable future. Photo-Me expects that unprofitable 
       machines will be removed or relocated in the UK, China, South Korea 
       and Continental Europe. 
 --   The impairment of goodwill and investments, especially for the B2B 
       companies in the UK. 
 --   The impairment of R&D and other intangibles. 
 --   This also includes a provision for bad debt, machines costs provision, 
       such as dilapidation costs that will occur when leaving non profitable 
       sites, and stocks impairment. In addition, there are provisions 
       for receivables from customer attrition or bankruptcy. 
 

The table below provides a breakdown of exceptional items, provisions and impairment by region:

 
 
                                 Asia    Europe   UK & Ireland     TOTAL 
                              GBP'000   GBP'000        GBP'000   GBP'000 
---------------------------  --------  --------  -------------  -------- 
 Bad debt                           -       314             10       324 
 Intangibles impairment             -     5,621          6,331    11,953 
 Machine costs provision          590       554              -     1,144 
 Machine impairment             1,539     6,164          9,835    17,538 
 R&D Intangible impairment          -     1,660              -     1,660 
 Stock impairment                   -       995             20     1,015 
---------------------------  --------  --------  -------------  -------- 
 TOTAL                          2,129    15,308         16,196    33,634 
---------------------------  --------  --------  -------------  -------- 
 

Reconciliation of Reported profit before tax to Adjusted profit before tax

 
                                      18 months       12 months       12 months   12 months 
                                             to   to 31 October   to 31 October          to 
                                     31 October            2020            2019    30 April 
                                           2020                                        2019 
                                    -----------  --------------  --------------  ---------- 
 Reported profit before 
  tax(1)                                GBP0.5m      GBP(27.8)m        GBP44.9m    GBP42.6m 
 Discontinued operations 
 - Profit on disposals 
  of Stilla Tech                              -               -               -   GBP(3.2)m 
 - Loss of MaxSight Holding 
  investment                            GBP0.4m         GBP0.4m       GBP(2.7)m           - 
 Fair value loss on financial 
  instrument held at FVTPL                    -               -         GBP2.9m     GBP2.9m 
 Exceptional items - restructuring 
  costs                                 GBP1.5m         GBP1.3m         GBP0.8m     GBP1.8m 
                                    -----------  --------------  --------------  ---------- 
 Adjusted profit before 
  tax(1)                                GBP2.5m      GBP(26.0)m        GBP45.9m    GBP44.1m 
                                    -----------  --------------  --------------  ---------- 
 

(1) Profit before tax includes GBP33.6 million loss due to exceptional items, provisions and impairment due to COVID-19

Earnings per share

For the 18-month period, diluted earnings per share was nil pence. Basic earnings per share was nil pence.

Taxation

The Group tax charge of GBP2.8 million corresponds to an effective tax rate of 578.0% (30 April 2019: 26.6%).

The effective tax rate is distorted due to the large amount of non-deductible impairments (goodwill).

Statement of financial position

Since the end of April 2020, the Group has secured additional debt funding to ensure that it has sufficient liquidity during this uncertain period. A EUR30 million loan was agreed with three French banks (BNP, LCL and Credit du Nord which have always been extremely supportive of Photo-Me) participating under the French government-backed "PGE" scheme and the funds were received in May and June, with the loan now drawn down in full. The Group has the right to repay the loan between one and five years without penalty. As long as the loan is outstanding (in whole or part), Photo-Me cannot distribute dividends to shareholders.

Photo-Me remains in line with its statement Photo-Me and BNP have agreed in principle to waive the existing gross cash to debt covenant, to give Photo-Me more flexibility in the current environment.

The Group balance sheet can be summarised as follows:

 
                            31 October  31 October 2019    30 April 
                                  2020                         2019 
 Non-current assets          GBP127.5m        GBP162.0m   GBP143.2m 
 Current assets              GBP139.8m        GBP130.2m   GBP128.7m 
 Non-current liabilities      GBP55.9m         GBP69.3m    GBP64.5m 
 Current liabilities          GBP97.4m         GBP88.4m    GBP63.7m 
 Net cash                    GBP106.2m         GBP84.8m    GBP84.6m 
--------------------------  ----------  ---------------  ---------- 
 Total equity                GBP114.6m        GBP132.8m   GBP142.0m 
--------------------------  ----------  ---------------  ---------- 
 Minority interests            GBP1.7m          GBP1.6m     GBP1.9m 
 Total shareholders' funds   GBP116.3m        GBP134.4m   GBP143.8m 
--------------------------  ----------  ---------------  ---------- 
 

Non-current assets detailed are outlined in the following table:

 
 
                              31 October  31 October    30 April 
                                    2020        2019        2019 
 Goodwill                       GBP13.8m    GBP27.1m    GBP26.6m 
 Other intangible assets        GBP21.4m    GBP14.6m    GBP15.2m 
 Plant and machinery            GBP87.8m   GBP114.2m    GBP95.4m 
 Investment property             GBP0.7m     GBP0.6m     GBP0.7m 
----------------------------  ----------  ----------  ---------- 
 Financial instruments           GBP1.9m     GBP2.5m     GBP2.4m 
 Deferred tax assets               GBP0m     GBP0.9m     GBP0.9m 
 Trade and other receivables     GBP1.8m     GBP1.7m     GBP1.8m 
----------------------------  ----------  ----------  ---------- 
 Total non-current assets      GBP127.5m      162.0m   GBP143.3m 
----------------------------  ----------  ----------  ---------- 
 

Transfer from goodwill to intangible assets (GBP10.6m) and increase of goodwill (GBP2.4 m) due to SEMPA investment retreatments according to IFRS3.

Transfer from Other intangibles assets to Property, plant & equipment of IFRS16 NBV according to IFRS16.

SERGE CRASNIANSKI

Chief Executive Office & Deputy Chairman

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               Description and                Mitigation 
  risk                        impact 
--------------------------  -----------------------------  --------------------------------------------------------- 
 Economic 
-------------------------------------------------------------------------------------------------------------------- 
 COVID-19                    The COVID-19 pandemic          The Group has exercised a number 
                              has and may continue          of measures to protect the business 
                              to cause major disruption     and preserve cash during the 
                              to worldwide markets          COVID-19 crisis, including but 
                              and supply chains,            not limited to: 
                              including those 
                              that Photo-Me operates        Focusing on the health and safety 
                              within. Widespread            of employees, other stakeholders 
                              governmental lockdown         and the public at large, stringent 
                              measures, such as             measures have been implemented 
                              travel bans and               across the Group's businesses 
                              restrictions on               in line with guidance of governments, 
                              the movement of               the World Health Organization 
                              people, have significantly    and other relevant authorities 
                              impacted the Group's          across the territories in which 
                              business areas,               the Group operates. Measures 
                              particularly Identification   taken include providing employees 
                              and children's rides          with face shields, surgical 
                              due to significantly          masks, gloves, hand sanitiser 
                              lower consumer demand         and a disinfectant to safely 
                              for its products              clean the Group's equipment. 
                              and services. In 
                              addition, lockdown            Reducing capital and other expenditure 
                              has restricted the            including loan repayment deferrals, 
                              ability of the Group's        obtaining additional credit 
                              field engineers               facilities and government job 
                              to service and replenish      retention schemes. 
                              machines. 
                                                            The Group continues to monitor 
                                                            the COVID-19 situation closely 
                                                            and continually reviews operational 
                                                            practices, updating its practices 
                                                            in line with in line with government 
                                                            guidance and other relevant 
                                                            guidance. 
 Global economic             Economic growth                The Group focuses on maintaining 
  conditions                 has a major influence           the characteristics and affordability 
                             on consumer spending.           of its needs-driven products. 
                             A sustained period 
                             of economic recession 
                             could lead to a 
                             decrease in consumer 
                             expenditure in discretionary 
                             areas. 
 Volatility of               The majority of                The Group hedges its exposure 
  foreign exchange            the Group's revenue           to currency fluctuations on 
  rates                       and profit is generated       transactions, as relevant. However, 
                              outside the UK,               by its nature, in the Board's 
                              and the Group results         opinion, it is very difficult 
                              could be adversely            to hedge against currency fluctuations 
                              impacted by an increase       arising from translation in 
                              in the value of               consolidation in a cost-effective 
                              sterling relative             manner. 
                              to those currencies. 
--------------------------  -----------------------------  --------------------------------------------------------- 
 Regulations 
-------------------------------------------------------------------------------------------------------------------- 
 
   Centralisation              In many European               The Group has developed new 
   of the production           countries where                systems that respond to this 
   of ID photos                the Group operates,            situation, leveraging 3D technology 
                               if governments were            in ID security standards, and 
                               to implement centralised       securely linking our booths 
                               image capture, for             to the administration repositories. 
                               biometric passport             Solutions are in place in France, 
                               and other applications,        Ireland, Germany, Switzerland 
                               or widen the acceptance        and the UK; discussions in Belgium 
                               of self-made or                and the Netherlands). 
                               home-made photographs 
                               for official document          Furthermore, the Group also 
                               applications, the              ensures that its ID products 
                               Group's revenues               remain affordable and of a high 
                               and profits could              quality. 
                               be affected. 
 Brexit                      The UK left the                The Board is continually reviewing 
                              EU on 31 January               the potential impact on the 
                              2020. This will                Group's operations of the UK's 
                              lead to changes                leaving the EU. 
                              in UK regulations              Any potential developments, 
                              as modifications               including new information and 
                              to numerous arrangements       policy indications from the 
                              between the UK and             UK Government and the EU, will 
                              other members of               be scrutinized with a view to 
                              the EU and EEA,                enhancing the Group's ability 
                              affecting trade                to take appropriate action targeted 
                              and customs conditions,        at managing and, where possible, 
                              taxation, movements            minimising adverse repercussions 
                              of resources, among            of Brexit. 
                              other things. 
                                                             The specific impact of Brexit 
                                                             on the Group will depend on 
                                                             the details of any potential 
                                                             renegotiation of the Brexit 
                                                             deal between the UK and the 
                                                             EU. 
 
                                                             The business carried out post- 
                                                             transition impact assessments 
                                                             to include all customs documentation, 
                                                             licences, permits, consents, 
                                                             certificates, rules of origin, 
                                                             commodity codes, and delays 
                                                             at the borders. 
 
                                                             The Board foresees that in the 
                                                             short-term the negative impact 
                                                             of the uncertainty overshadowing 
                                                             the general UK economy could 
                                                             spill over into the Group's 
                                                             UK operations. 
--------------------------  -----------------------------  ----------------------------------------------------------- 
 Strategic 
---------------------------------------------------------------------------------------------------------------------- 
 
   Identification              The failure to identify        Management teams constantly 
   of new business             new business areas             review demand in existing markets 
   opportunities               may impact the ability         and potential new opportunities. 
                               of the Group to                The Group continues to invest 
                               grow in the long-term.         in research in new products 
                                                              and technologies. 
 Inability to                The realisation                The Group regularly monitors 
  deliver anticipated         of long-term anticipated       the performance of its entire 
  benefits from               benefits depends               estate of machines. New technology-enabled 
  the launch of               mainly on the continued        secure 
  new products                growth of the laundry          ID solutions are heavily trialed 
                              business and the               before launch and the performance 
                              successful development         of operating machines is continually 
                              of integrated secure           monitored. 
                              ID solutions. 
--------------------------  -----------------------------  ----------------------------------------------------------- 
 Market 
-------------------------------------------------------------------------------------------------------------------- 
 
  Commercial relationships    The Group has                   The Group's major key relationships 
                              well-established,               are supported by medium-term 
                              long-term relationships         contracts. We actively manage 
                              with a number of                our site-owner relationships 
                              site-owners. The                at all levels to ensure a high 
                              deterioration in                quality of service. 
                              the relationship 
                              with, or ultimately 
                              the loss of, a key 
                              account would have 
                              an adverse, albeit 
                              contained, impact 
                              on the Group's results, 
                              bearing in mind 
                              that the Group's 
                              turnover is spread              The Group continues to monitor 
                              over a large client             the situation in both the French 
                              base and none of                and the UK markets. 
                              the accounts represent 
                              more than 2% of 
                              Group turnover. 
 
                              To maintain its 
                              performance, 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 is conducted 
   manufacturers                  of its products from            into quality and ethics 
                                  outside the UK.                 before the Group procures 
                                  Consequently,                   products from any new country 
                                  the Group is subject            or supplier. The Group 
                                  to risks associated             also maintains very close 
                                  with international              relationships with both 
                                  trade.                          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 to 
  supplier of consumables        buys all its paper              hold a strategic stock 
                                 for photobooths from            of paper, allowing for 
                                 one single supplier.            6 -10 months' worth of 
                                 The failure of this             paper consumption, to allow 
                                 supplier could have             enough time to put in place 
                                 a significant adverse           alternative solutions. 
                                 impact on paper procurement. 
 Reputation                      The Group's brands             The protection of the Group's 
                                  are key assets of the          brands in its core markets 
                                  business. Failure to           is sustained by products 
                                  protect the Group's            with certain unique features. 
                                  reputation and brands          The appearance of machines 
                                  could lead to a loss           is subject to high maintenance 
                                  of trust and confidence.       standards. Furthermore, 
                                  This could result in           the reputational risk is 
                                  a decline in our customer      diluted as the Group also 
                                  base.                          operates under a range 
                                                                 of brands. 
 Product and service             The Board recognises           The Group continues to 
  quality                         that the quality and           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 customer 
                                  failure will affect            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               in fields where                this risk by continually 
  technology                     upgrades to new                focusing on R&D. 
                                 technologies are 
                                 mission-critical. 
 Cyber risk: Third party       The Group operates             The Group performs an 
  attack on secure ID           an increasing number          ongoing assessment of 
  data transfer feeds           of photobooths capturing      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 18 months ended 31 October 2020

 
 
                                                  18 months             12 months       12 months         12 months 
                                                      to 31                 to 31           to 31             to 30 
                                                        Oct                   Oct             Oct             April 
                                                       2020                  2020            2019              2019 
                                                                      (unaudited)     (unaudited) 
 
                                                   GBP '000              GBP '000        GBP '000          GBP '000 
---------------------------------------  ------------------  --------------------  --------------  ---------------- 
 Revenue                                            310,245               186,384         232,218           228,118 
 Cost of sales                                    (255,258)             (168,895)       (166,413)         (164,637) 
---------------------------------------  ------------------  --------------------  --------------  ---------------- 
 Gross profit                                        54,987                17,489          65,805            63,481 
 Other operating income                                 910                   318           1,405             1,601 
 Administrative expenses                           (52,580)              (43,428)        (21,236)          (22,393) 
 Share of post-tax profits from 
  associates                                              -                  (53)              73                50 
---------------------------------------  ------------------  --------------------  --------------  ---------------- 
 Operating profit                                     3,317              (25,674)          46,047            42,739 
                                         ------------------  --------------------  --------------  ---------------- 
 Analysed as:                                                                   - 
 Operating profit before specific 
  items                                               4,852              (24,310)          46,836            44,564 
 Restructuring costs                                (1,535)               (1,364)           (789)           (1,825) 
 Operating profit after specific 
  items                                               3,317              (25,674)          46,047            42,739 
---------------------------------------  ------------------  --------------------  --------------  ---------------- 
 Other gains and losses                               (283)                 (283)           (199)               361 
 Finance revenue                                         51                  (15)              76                20 
 Finance cost                                       (2,593)               (1,879)         (1,003)             (527) 
---------------------------------------  ------------------  --------------------  --------------  ---------------- 
 Profit before tax                                      492              (27,851)          44,921            42,593 
 Total tax charge                                   (2,844)                 2,960        (11,310)          (11,314) 
---------------------------------------  ------------------  --------------------  --------------  ---------------- 
 Loss for the year                                  (2,352)              (24,891)          33,611            31,279 
---------------------------------------  ------------------  --------------------  --------------  ---------------- 
 
 Other comprehensive income 
 Items that are or may subsequently 
  be classified to profit and loss: 
 
  Exchange differences arising 
  on translation of foreign operations                2,879                 2,727         (2,190)             (860) 
 Taxation on exchange differences                       (3)                  (15)              26                 3 
---------------------------------------  ------------------  --------------------  --------------  ---------------- 
 Total items that are or may 
  subsequently be classified to 
  profit and loss                                     2,876                 2,712         (2,164)             (857) 
 Items that will not be classified 
  to profit and loss: 
 
  Remeasurement (losses)/gains 
  in defined benefit obligations 
  and other post-employment benefits 
  obligations                                         1,893                 1,893           (216)             (216) 
 Deferred tax on remuneration 
  gains/(losses)                                      (509)                 (509)              42                42 
---------------------------------------  ------------------  --------------------  --------------  ---------------- 
 Total items that will not be 
  classified to profit and loss                       1,384                 1,384           (174)             (174) 
---------------------------------------  ------------------  --------------------  --------------  ---------------- 
 
  Other comprehensive (loss)/income 
  for the year net of tax                             4,260                 4,096         (2,338)           (1,031) 
---------------------------------------  ------------------  --------------------  --------------  ---------------- 
 
  Total comprehensive income for 
  the year                                            1,908              (20,795)          31,273            30,248 
---------------------------------------  ------------------  --------------------  --------------  ---------------- 
 
 
 
 Loss for the year attributable                                                    - 
  to: 
 Owners of the Parent                           (2,305)                     (24,797)          33,578            31,226 
 Non-controlling interests                         (47)                         (94)              33                53 
                                                (2,352)                     (24,891)          33,611            31,279 
------------------------------------  -----------------  ---------------------------  --------------  ---------------- 
                                                                                   - 
 Total comprehensive income 
 attributable 
 to: 
 Owners of the Parent                             1,927                     (20,730)          31,254            30,228 
 Non-controlling interests                         (19)                         (65)              19                20 
------------------------------------ 
                                                  1,908                     (20,795)          31,273            30,248 
------------------------------------  -----------------  ---------------------------  --------------  ---------------- 
 Earnings per share                                                                - 
 Basic earnings per share                         0.00p                        0.00p           8.89p             8.27p 
 Diluted earnings per share                       0.00p                        0.00p           8.88p             8.26p 
------------------------------------  -----------------  ---------------------------  --------------  ---------------- 
 

All results derive from continuing operations.

Group Statements of Financial Position

as at 31 October 2020

 
                                                                       Group 
                                          ---------------------------------------------------------------- 
 
                                                    31 October            31 October              30 April 
                                                                                2019 
                                                          2020           (unaudited)                  2019 
                                                       GBP'000              GBP '000               GBP'000 
----------------------------------------  --------------------  --------------------  -------------------- 
Assets 
Non-current assets 
Goodwill                                                13,767                27,063                26,594 
Other intangible assets                                 21,424                14,550                15,222 
Property, plant & equipment                             87,834               114,224                95,353 
Investment property                                        652                   640                   648 
Investment in associates                                    57                   409                   415 
Financial instruments held at amortised 
 cost                                                      984                   983                   982 
Financial instruments held at FVTPL                        960                  1473                 1,387 
Deferred tax assets                                          -                   877                   912 
Trade and other receivables                              1,799                 1,734                 1,764 
                                                       127,477               161,953               143,277 
----------------------------------------  --------------------  --------------------  -------------------- 
Current assets 
Inventories                                             16,611                23,072                22,339 
Trade and other receivables                             16,740                22,293                20,917 
Current tax                                                217                     -                   876 
Cash and cash equivalents                              106,193                84,794                84,591 
                                                       139,760               130,159               128,723 
---------------------------------------- 
Total assets                                           267,237               292,112               272,000 
----------------------------------------  --------------------  --------------------  -------------------- 
 
Equity 
Share capital                                            1,889                 1,889                 1,889 
Share premium                                           10,599                10,588                10,588 
Treasury shares 
Translation and other reserves                          15,245                12,534                12,369 
Retained earnings                                       84,448               107,785               117,131 
---------------------------------------- 
Equity attributable to owners of 
 the Parent                                            112,181               132,796               141,977 
Non-controlling interests                                1,689                 1,618                 1,870 
                                          --------------------  --------------------  -------------------- 
Total equity                                           113,870               134,414               143,847 
----------------------------------------  --------------------  --------------------  -------------------- 
 
Liabilities 
Non-current liabilities 
Financial liabilities                                   43,900                57,715                53,385 
Post-employment benefit obligations                      5,973                 5,688                 5,635 
Deferred tax liabilities                                 6,058                 5,585                 5,430 
Trade and other payables                                     -                   331                     - 
                                                        55,931                69,319                64,450 
----------------------------------------  --------------------  --------------------  -------------------- 
 
  Current liabilities 
Financial liabilities                                   51,553                18,927                15,850 
Provisions                                               1,262                   222                   218 
Current tax                                              4,909                 8,725                 6,753 
Trade and other payables                                39,712                60,505                40,882 
                                                        97,436                88,379                63,703 
----------------------------------------  --------------------  --------------------  -------------------- 
Total equity and liabilities                           267,237               292,112               272,000 
----------------------------------------  --------------------  --------------------  -------------------- 
 

Group Statement of Cash Flows

for the 18-month period ended 31 October 2020

 
                                                                 2020       2019 
                                                              GBP'000    GBP'000 
 Cash flow from operating activities 
 Profit before tax and group fees                                 492     42,593 
 Finance cost                                                     791        527 
 IFRS- 16 Interest                                              1,801          - 
 
 Finance revenue                                                 (51)       (20) 
 Other gains                                                      283      (361) 
----------------------------------------------------------  ---------  --------- 
 Operating profit                                               3,317     42,739 
----------------------------------------------------------  ---------  --------- 
 Share of post-tax profit from associates                           -       (50) 
 Amortisation of intangible assets                              5,125      2,992 
 Depreciation of property, plant and equipment (IFRS- 16)       7,400          - 
 Depreciation of property, plant and equipment                 39,124     24,189 
 COVID -19 impairments                                         32,347          - 
 
 Exchange differences                                         (2,787)      (707) 
 Other items                                                       43        354 
 Changes in working capital: 
 Inventories                                                    5,728        511 
 Trade and other receivables                                    4,177      (597) 
 Trade and other payables                                     (1,170)    (5,604) 
 Provisions                                                     (369)        108 
 Cash generated from operations                                92,935     63,935 
----------------------------------------------------------  ---------  --------- 
 Interest paid                                                (2,594)      (527) 
 Taxation paid                                                (4,688)    (6,223) 
 Net cash generated from operating activities                  85,653     57,185 
----------------------------------------------------------  ---------  --------- 
 Cash flows from investing activities 
 Acquisition of subsidiaries net of cash acquired               (786)   (13,528) 
 Proceeds from disposal of associate                              357      4,437 
 Repayment of loans advanced to associate                           0      1,612 
 Investment in intangible assets                              (2,326)    (2,167) 
 Proceeds from sale of intangible assets                           50        155 
 Purchase of property, plant and equipment                   (44,782)   (28,169) 
 Payment of deferred consideration                                  0      (225) 
 Proceeds from sale of property, plant and equipment            1,474      2,282 
 Purchase of available for sale investments                         -          - 
 Dividends received from for sale investments                       -          - 
 Interest received                                                259         18 
 Dividends received from associates                             (184)         36 
 Net cash generated from investing activities                (45,938)   (35,549) 
----------------------------------------------------------  ---------  --------- 
 Cash flows from financing activities 
 Issue of Ordinary shares to equity shareholders                  183        224 
 Sale of Treasury shares                                            -          - 
 Repayment of capital element of finance leases                 (286)      (167) 
 Repayment of borrowings                                     (17,097)    (8,397) 
 Increase in borrowings                                        30,964     43,748 
 Decrease in assets held to maturity                                -        741 
 Dividends paid to owners of the Parent                      (31,894)   (31,873) 
 Dividends paid to non-controlling interests 
 Net cash utilised in financing activities                   (18,130)      4,276 
 Net increase in cash and cash equivalents                     21,585     25,912 
----------------------------------------------------------  ---------  --------- 
 Cash and cash equivalents at beginning of year                84,591     58,657 
 Exchange gain on cash and cash equivalents                        17         22 
 Cash and cash equivalents at end of year                     106,193     84,591 
----------------------------------------------------------  ---------  --------- 
 

Group Statement of Changes in Equity

for the year ended 31 October 2020

 
                                                                                                                                                                                 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 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 
-----------------  -------------------------  -------------------------  -------------------------  -------------------------  -------------------------  -----------------------------------  -------------------------  ------------------------ 
Exchange 
 differences                               -                          -                          -                      (827)                          -                                (827)                       (33)                     (860) 
Tax on exchange                            -                          -                          -                          3                          -                                    3                          -                         3 
Remeasurement 
 gains 
 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 in 
 the period                                2                        222                          -                          -                          -                                  224                          -                       224 
-----------------  -------------------------  -------------------------  -------------------------  -------------------------  -------------------------  -----------------------------------  -------------------------  ------------------------ 
Share options                              -                          -                          -                          -                        141                                  141                          -                       141 
Dividends paid                             -                          -                          -                          -                   (31,873)                             (31,873)                          -                  (31,873) 
Acquisition of 
 minority                                  -                          -                          -                          -                          -                                    -                        297                       297 
Total 
 transactions 
 with 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 
At 1 May 2019                          1,889                     10,588                      1,781                     10,588                    117,131                              141,977                      1,870                   143,847 
Profit for year                            -                          -                          -                          -                    (2,305)                              (2,345)                       (47)                   (2,352) 
-----------------  -------------------------  -------------------------  -------------------------  -------------------------  -------------------------  -----------------------------------  -------------------------  ------------------------ 
 
Other 
comprehensive 
(expense)/income 
Exchange 
 differences                               -                          -                          -                      2,879                          -                                2,879                          -                     2,879 
Tax on exchange                            -                          -                          -                        (3)                          -                                  (3)                          -                       (3) 
Remeasurement 
 losses 
 in defined 
 benefit 
 pension scheme 
 and other 
 post-employment 
 benefit 
 obligations                               -                          -                          -                          -                      1,893                                1,893                          -                     1,893 
Deferred tax on 
 remeasurement 
 gains                                     -                          -                          -                          -                      (509)                                (509)                          -                     (509) 
Total other 
 comprehensive 
 income                                    -                          -                          -                      2,876                      1,384                                4,260                          -                     4,260 
-----------------  -------------------------  -------------------------  -------------------------  -------------------------  -------------------------  -----------------------------------  -------------------------  ------------------------ 
Total 
 comprehensive 
 income                                    -                          -                          -                      2,876                      (961)                                1,915                       (47)                     1,868 
-----------------  -------------------------  -------------------------  -------------------------  -------------------------  -------------------------  -----------------------------------  -------------------------  ------------------------ 
Transactions with 
owners of the 
Parent 
Shares issued in 
 the period                                -                         11                          -                          -                          -                                   11                          -                        11 
Share options                              -                          -                          -                          -                        172                                  172                          -                       172 
Dividends                                  -                          -                          -                          -                   (31,894)                             (31,894)                          -                  (31,894) 
Disposal of 
 minority                                  -                          -                          -                          -                          -                                    -                      (134)                     (134) 
Total 
 transactions 
 with owners 
 of the Parent                             -                         11                          -                          -                   (31,722)                             (31,711)                      (134)                  (31,845) 
-----------------  -------------------------  -------------------------  -------------------------  -------------------------  -------------------------  -----------------------------------  -------------------------  ------------------------ 
At 31 October 
 2020                                  1,889                     10,599                      1,781                     13,464                     84,448                              112,181                      1,689                   113,870 
-----------------  -------------------------  -------------------------  -------------------------  -------------------------  -------------------------  -----------------------------------  -------------------------  ------------------------ 
 
 

NOTES

   1.   Basis of preparation and accounting policies 

The preliminary results for the year ended 31 October 2020 have been extracted from near-final versions of the unaudited consolidated financial statements, which the Board expects to approve shortly (and in any case before the end of March) after Photo-Me's auditor, Mazars LLP, signs off on them. The Board is issuing these preliminary results on the strength of a comfort letter from the auditor to the Board dated 9 March 2021 confirming that the audit is materially complete and that the financial information presented in the Preliminary Announcement is unlikely to change.

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 31 October 2020 but is derived from those accounts. Statutory accounts for 2019 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: Continental Europe, United Kingdom & Ireland and Asia. 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.

 
                                                                     United 
                                                                    Kingdom          Corporate 
                                         Asia         Europe      & Ireland              costs              Total 
18 months to October 2020             GBP'000        GBP'000        GBP'000            GBP'000            GBP'000 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
 
Total revenue                          60,394        202,297         56,369                  -            319,060 
Inter segment sales                       (2)        (7,067)        (1,746)                  -            (8,815) 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
Revenue from external customers        60,391        195,230         54,624                  -            310,245 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
EBITDA                               13,222           75,486          7,923            (9,319)             87,313 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
Depreciation and amortisation         (8,722)       (46,736)       (27,038)            (1,500)           (83,996) 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
Underlying operating profit           5,232           28,882       (18,444)           (10,818)              4,852 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
Specific items                          (731)          (133)          (671)                  -            (1,535) 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
Operating profit excluding 
 associates                             4,501         28,750       (19,115)           (10,818)              3,317 
Share of post-tax profits 
 from associates                                                                                                - 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
Operating profit                                                                                            3,317 
Other gains                                                                                                 (284) 
Finance Revenue                                                                                                51 
Finance costs                                                                                             (2,593) 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
Profit before tax                                                                                             491 
Tax                                                                                                       (2,844) 
Profit for year                                                                                           (2,353) 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
Capital expenditure                     4,972         31,797          9,885                484             47,108 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
                                                                     United 
                                                                    Kingdom          Corporate 
                                         Asia         Europe      & Ireland              costs              Total 
12 months to October 2020             GBP'000        GBP'000        GBP'000            GBP'000            GBP'000 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
 
Total revenue                          37,634        121,147         31,219                  -            190,001 
Inter segment sales                       (2)        (2,946)          (669)                  -            (3,617) 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
Revenue from external customers        37,631        118,201         30,551                  -            186,384 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
EBITDA                                 7,535          39,932          2,961            (8,992)             41,437 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
Depreciation and amortisation         (6,419)       (36,488)       (22,371)            (1,473)           (66,751) 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
Underlying operating profit            1,848           2,916       (18,268)           (10,464)           (23,968) 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
Specific items                          (731)          (133)          (842)                  -            (1,706) 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
Operating profit excluding 
 associates                             1,117          2,784       (19,110)           (10,464)           (25,674) 
Share of post-tax profits 
 from associates                                                                                                - 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
Operating profit                                                                                         (25,674) 
Other gains                                                                                                 (283) 
Finance Revenue                                                                                              (15) 
Finance costs                                                                                             (1,879) 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
Profit before tax                                                                                        (27,851) 
Tax                                                                                                         2,920 
Profit for year                                                                                          (24,891) 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
Capital expenditure                     3,436         15,840        (4,223)                324             15,377 
                                                                     United 
                                                                    Kingdom          Corporate 
12 months to 30 April 2019               Asia         Europe      & Ireland              costs              Total 
                                      GBP'000        GBP'000        GBP'000            GBP'000            GBP'000 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
 
  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 
--------------------------------  -----------  -------------  -------------  -----------------  ----------------- 
 

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:

 
                                                Group 
                                         ------------------ 
                                             2020      2019 
                                          GBP'000   GBP'000 
---------------------------------------  --------  -------- 
 Total revenue from external customers 
 Asia and rest of the world                60,392    44,538 
 Europe                                   195,230   130,601 
 UK                                        54,623    52,979 
---------------------------------------  --------  -------- 
                                          310,245   228,118 
---------------------------------------  --------  -------- 
 
 
                                                      2020       2019 
                                                  --------  --------- 
                                                       GBP   GBP '000 
                                                      '000 
                                                  --------  --------- 
 Total revenue from external customers 
 Sales of equipment, spare parts & consumables      23,761     22,372 
 Sales of services                                   5,599      4,595 
 Other sales                                           239        244 
------------------------------------------------  --------  --------- 
                                                    29,599     27,186 
 Vending revenue                                   280,646    200,932 
------------------------------------------------  --------  --------- 
 Total revenue                                     310,245    228,118 
------------------------------------------------  --------  --------- 
 

There were no key customers in the year ended 31 Oct 2020 (2019: none).

   3.   Taxation expenses 

Tax charges/credits in the statement of comprehensive income

 
                                                   2020      2019 
                                                GBP'000   GBP'000 
---------------------------------------------  --------  -------- 
Taxation 
Current taxation 
UK Corporation tax 
    - current year                                  700     5,274 
    - prior years                                     -       186 
---------------------------------------------  --------  -------- 
                                                    700     5,460 
Overseas taxation 
     - current year                               4,209     2,512 
     - prior years                                    -       193 
---------------------------------------------  --------  -------- 
                                                  4,209     2,705 
Total current taxation                            4,909     8,165 
---------------------------------------------  --------  -------- 
Deferred taxation 
Origination and reversal of temporary 
 differences 
     - current year - UK                          (175)       505 
     - current year - overseas                  (1,890)     2,570 
Impact of change in rate                              -        74 
---------------------------------------------  --------  -------- 
Total deferred tax                              (2,065)     3,149 
---------------------------------------------  --------  -------- 
Tax charge in the statement of comprehensive 
 income                                           2,844    11,314 
---------------------------------------------  --------  -------- 
 

The Group tax charge of GBP2.8m (2019: GBP11.3m) corresponds to an effective tax rate of 578.0% (2019: 26.6%

The Group undertakes business worldwide.

   4.     Earnings per share 

Basic earnings per share amounts are calculated by dividing net earnings attributable to shareholders of the Parent of GBP0.00 (2019: GBP31,226,000 ) 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:

 
 
                                       2020                          2019 
                      -----------------------------------  ----------------------  --------- 
                                    Weighted                             Weighted 
                                     average                              average   Earnings 
                                      number     Earnings                  number        per 
                       Earnings    of shares    per share   Earnings    of shares      share 
                        GBP'000         '000        pence    GBP'000         '000      pence 
--------------------  ---------  -----------  -----------  ---------  -----------  --------- 
 
 Basic earnings 
  per share                0.00      377,749        0.00p     31,226      377,662       8.27 
 Effect of dilutive 
  share options                          260            0                     190          0 
--------------------  ---------  -----------  -----------  ---------  -----------  --------- 
 Diluted earnings 
  per share                0.00      378,009        0.00p     31,226      377,852       8.27 
--------------------  ---------  -----------  -----------  ---------  -----------  --------- 
 
 
 

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.

 
                                           2020                                 2019 
-------------------------  -----------------------------------  ----------------------------------- 
 
                                                       Diluted                              Diluted 
                                         Earnings     earnings                Earnings     earnings 
                            Earnings    per share    per share   Earnings    per share    per share 
                             GBP'000        pence        pence    GBP'000        pence        pence 
-------------------------  ---------  -----------  -----------  ---------  -----------  ----------- 
 Profit for the year 
  attributable to 
  owners of the Parent          0.00         0.00         0.00     31,226         8.27         8.26 
 Specific items net 
  of tax                       1,535         0.41         0.41      1,825         0.48         0.48 
 Other (losses) / 
  gains                        (284)        (0.1)        (0.1)      (361)        (0.1)        (0.1) 
-------------------------  ---------  -----------  -----------  ---------  -----------  ----------- 
 Earnings after specific 
  items                         0.00         0.00         0.00     32,690         8.65         8.64 
-------------------------  ---------  -----------  -----------  ---------  -----------  ----------- 
 
   5.   Dividends paid and proposed 

Year ended 31 Oct 2020 - Proposed dividends not yet paid

The Board declared a dividend of 0.00p per share for the year ended 31 Oct 2020. This is due to the recent COVID 19 pandemic and the consequent impact on the business,

Year ended 30 April 2019 - Paid after 30 April 2019

The Board declared an interim dividend of 3.71p per share for the year ended 30 April 2019, amounting to GBP14,014,000 which was paid on 11 May 2019. The Board proposed a final dividend for the period ended 30 April 2019 of 4.73p per share, amounting to GBP17,880,000 which was approved by shareholders at the Annual General Meeting held on 24 October 2019 and paid on 9 November 2019.

   6.   Non-current assets 
 
                                 Goodwill    Intangible     Property   Investment 
                                                 assets      plant &     property 
                                                           equipment 
                                  GBP'000       GBP'000      GBP'000      GBP'000 
------------------------------  ---------  ------------  -----------  ----------- 
 Net book value at 1 May 2018      13,435        13,960       92,556          676 
 Exchange adjustment                 (71)          (63)        (358)         (12) 
 Additions - photobooths & 
  vending machines                                            24,938 
 Additions-Other assets                           2,167        3,415 
 Additions-new subsidiaries        13,230         2,543        1,019 
 Amortisation                                   (2,992) 
 Depreciations                                              (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 
------------------------------  ---------  ------------  -----------  ----------- 
 Exchange adjustment                   84           519        (408)           28 
 Additions - photobooths & 
  vending machines                                            38,373 
 Additions - other assets                         6,578        6,600 
 NBV IFRS16                                                    9,687 
 Transfer                        (10,609)        10,553 
 Additions-new subsidiaries         2,842                        942 
 Amortisation                     (5,143)      (11,400)     (59,302)         (24) 
 Disposals at net book value                       (47)      (3,409) 
------------------------------  ---------  ------------  -----------  ----------- 
 Net book value at 31 October 
  2020                             13,768        21,425       87,836          652 
------------------------------  ---------  ------------  -----------  ----------- 
 
   7.     Net Cash 
 
                                         Group 
                                      2020            2019 
                                   GBP'000         GBP'000 
Cash and cash equivalents 
 per statement of financial 
 position                          106,192          84,591 
Financial asset held 
 at amortised cost 
 / held to maturity                    984             982 
Non-current borrowings            (39,444)        (52,322) 
Current borrowings                (45,434)        (15,071) 
Non-current finance 
 leases                              (272)         (1,063) 
Current finance leases               (149)           (779) 
                              ------------  -------------- 
                                    21,877          16,338 
                              ------------  -------------- 
 
 

At 31 October 2020, GBP984,000 of the total net cash ( 2019: GBP982,000 ) 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 assets restricted cash / 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.

RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF FINANCIAL REPORT

We confirm that to the best of our knowledge:

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

-- The Preliminary Management Report includes a fair review of the information required by:

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

(b) DTR 4.2.8 of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first twelve months of the current financial year and that have materially affected the financial position or performance of the Group during that period and any changes in the related party transactions described in the last annual report that could have a material effect on the financial position or performance of the enterprise in the first twelve months of the current financial year.

In accordance with article 5(2)(c) of the Transparency Directive, the directors who are making this responsibility statement (and their respective functions) are as follows:

Sir John Lewis OBE (Non-executive chairman of the Board, chairman of the nomination committee, and member of the remuneration and audit committees); Serge Crasnianski (CEO and deputy chairman); Jean-Marc Janailhac (Executive Director); Emmanuel Olympitis (senior independent director, chairman of the remuneration committee, and member of the nomination and audit committees); Jean-Marcel Denis (non-executive director, chairman of the audit committee, and member of the nomination and remuneration committees); Françoise Coutaz-Replan (non-executive director and member of the audit committee); Yitzhak Apeloig (non-executive director and member of the audit committee).

By order of the Board

Sir John Lewis OBE (Non-executive Chairman)

Serge Crasnianski (Chief Executive Officer and Deputy Chairman)

9 March 2021

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March 10, 2021 02:00 ET (07:00 GMT)

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