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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