Interim Results

Photo-Me International PLC 17 December 2007 Monday 17 December 2007 PHOTO-ME INTERNATIONAL PLC - INTERIM ANNOUNCEMENT Photo-Me, the digital imaging company, announces its results for the half year to 31 October 2007. Key Points - Financial • Revenue down 3% at £107.1m (2006: £110.9m) • Adjusted+ EBITDA down 6% at £24.4m (2006: £26.0m) • Adjusted+ pre-tax profit down 39% at £7.3m (2006: £11.9m), reflecting £2.2m of increased depreciation and £1.5m of adverse movement in exchange differences • Reported pre-tax profit of £1.6m (2006: £12.9m) • Interim dividend maintained at 1.00p per share, reflecting the quantum of the Group's adjusted+ EBITDA and operating profit • Present intention to resume share buy-back programme when the Company's distributable reserves permit, which is expected to be in February 2008 + Adjusted disregards exceptional items (see Note 4) and a business discontinued in April 2007. Key Points - Commercial • Vending, the principal Division, continued to trade robustly, generating an EBITDA of £22.4m. Manufacturing's adjusted+ EBITDA was £3.7m • Vending operating profit was down 21% at £10.9m (2006: £13.8m) on revenue down 1% at £79.1m (2006: £80.3m), 74% (2006: 72%) of the Group total. The profit decrease mainly reflected £2.1m of increased depreciation, principally of photobooths, and £0.5m of adverse movement in exchange differences • Manufacturing made a pre-exceptional operating loss of £0.5m (2006: profit of £1.0m) on revenue down 8% at £28.0m (2006: £30.6m). The profit decrease was shared between minilabs and wholesale labs, the latter reflecting a delayed product launch Key Points - Board • On 14 December 2007, Thierry Barel, since 3 December 2007 also Group Chief Executive, was appointed a Director following signature of detailed contractual terms • The constitution of the Board and its Committees is now fully compliant with best corporate governance standards David Young, Chairman, stated: 'In the half year to 31 October 2007, Photo-Me was faced with the distraction engendered by the Vending Division disposal process (which was terminated in September) and the proposed corporate restructuring. It also had to contend with the unsettling effect on customers, staff and suppliers of the related uncertainty and also of the unsought prominence of the Group's corporate affairs. In these circumstances, the pre-exceptional result for the half year, whilst lower than that for the half year to 31 October 2006, is disappointing but understandable. Group revenue and EBITDA suffered a small decrease relative to the 2006 comparative period and their quantum remains substantial. The revenue and EBITDA of Vending, the Group's principal Division, declined marginally, in an adverse vending environment, and this activity both maintained its footprint in all three major territories and remains strongly cash generative. Proportionately, Manufacturing did less well, its pre-exceptional operating result reflecting a reduced average selling price for minilabs and reduced unit sales for wholesale labs. When preparing the interim financial statements, the Group also reviewed its estimates for the full year to 30 April 2008. Following this review, the Board now believes that the Group is unlikely to be profitable in the second half, which is traditionally its weaker half'. Legal Disclaimer: Certain statements made in this announcement are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from these forward looking statements. Presentation: A presentation to investors and brokers' analysts will be given from 09.00 to approximately 10.00 today in the Madrid Room at Regus, CityPoint, 1 Ropemaker Street, London EC2 (approximately 200 yards from Moorgate Station). Enquiries: Photo-Me International 01372-453 399 David Young (Chairman) 020-7367 8889 from 10.30 to 12.30 on Monday 17 December 2007 Jean-Luc Peurois (CFO) Bankside Consultants Charles Ponsonby 020-7367 8851 / 07789-202 312 INTERIM BUSINESS AND FINANCIAL REVIEW In the half year to 31 October 2007, Photo-Me was faced with the distraction engendered by the Vending Division disposal process (which was terminated in September) and the proposed corporate restructuring. It also had to contend with the unsettling effect on customers, staff and suppliers of the related uncertainty and also of the unsought prominence of the Group's corporate affairs. In these circumstances, the pre-exceptional result for the half year, whilst lower than that for the half year to 31 October 2006, is disappointing but understandable. Group revenue and EBITDA suffered a small decrease relative to the 2006 comparative period and their quantum remains substantial. The revenue and EBITDA of Vending, the Group's principal Division, declined marginally, in an adverse vending environment, and this activity both maintained its footprint in all three major territories and remains strongly cash generative. Proportionately, Manufacturing did less well, its pre-exceptional operating result reflecting both a reduced average selling price for minilabs and reduced unit sales for wholesale labs. When preparing the interim financial statements, the Group also reviewed its estimates for the full year to 30 April 2008. Following this review, the Board now believes that the Group is unlikely to be profitable in the second half, which is traditionally its weaker half. FINANCIAL REVIEW Figures in this paragraph disregard exceptional items and a business discontinued in April 2007. On revenue down 3.4% at £107.1m (2006: £110.9m), EBITDA was 6.2% lower at £24.4m (2006: £26.0m), representing 22.8% (2006: 23.5%) of revenue. Operating profit reduced by 31.4% to £8.3m (2006: £12.1m) and pre-tax profit, after an increased net finance cost of £1.1m (2006: £0.2m, after crediting a £0.7m put option revaluation), amounted to £7.3m (2006: £11.9m). These profit reductions reflected a £2.2m increase in the depreciation charge, following substantial expenditure on photobooths in the past two years, and a £1.5m adverse movement in exchange differences. Exceptional items comprised, in the current period, a £5.7m charge for Strategic Review and restructuring costs (see Note 4) and, in the 2006 comparative period, a £1.0m credit from the write-back of part of a provision for restructuring. After exceptional items, operating profit amounted to £2.7m (2006: £13.2m) and the pre-tax profit was £1.6m (2006: £12.9m). The tax charge of £2.4m (2006: £4.4m) was unusually high, relative to Group pre-tax profit, principally as a consequence of non-tax deductible exceptional Strategic Review costs. Taking this into account, the result after tax from continuing operations was a loss of £0.7m (2006: profit of £8.5m). On a per share basis, the loss from continuing operations was 0.25p (2006: earnings of 2.27p). Disregarding exceptional items, earnings per share from continuing operations were 1.09p (2006: 2.08p). Total shareholders' equity of £85.8m was lower than the 30 April 2007 figure of £98.3m as a result of the payment of the previous year's £3.6m interim dividend, the provision for the previous year's final dividend of £5.1m and expenditure of £3.8m on share buy-backs. Net debt of £33.6m compared with £27.7m at 30 April 2007 and £14.5m at 31 October 2006. Consequently, gearing (defined as net debt as a percentage of total equity) was 38% (30 April 2007: 28%; 31 October 2006: 14%). The £5.9m increase in net debt in the period was the net of cash flows of £25.1m (2006: £26.3m) and uses of cash flow of £31.0m (2006: £23.9m). The principal cash flow elements were depreciation of £16.1m (2006: £13.9m) and a positive working capital movement of £6.3m (2006: £0.3m). The principal uses of cash flow were capital expenditure of £17.4m (2006: £19.0m) - much of it on the latter stages of a programme to update the photobooth estate - together with dividends and share buy-backs of £7.5m (2006: £3.6m) and tax of £4.7m (2006: £0.4m). Accordingly, the Group remains fundamentally cash generative, the Vending Division substantially so. BUSINESS REVIEW Divisional analysis of revenue and profit Revenue Operating Profit + Half year to 31 October 2007 2006 2007 2006 £m £m £m £m Vending 79.1 80.3 10.9 13.8 Manufacturing 28.0 30.6 (0.5) 1.0 Group overheads - - (2.1) (2.7) 107.1 110.9 8.3 12.1 + Pre-exceptional Vending accounted for 74% (2006: 72%) of Group revenue and the entirety (2006: 93%) of Group operating profit (before Group overheads). Geographical analysis of revenue and profit (by origin) Revenue Operating Profit + Half year to 31 October 2007 2006 2007 2006 £m £m £m £m Continental Europe 60.7 62.0 6.5 8.8 UK & Republic of Ireland 33.1 33.5 1.7 1.8 Asia & Australia 12.6 14.1 0.6 1.8 USA 0.7 1.3 (0.5) (0.3) 107.1 110.9 8.3 12.1 + Pre-exceptional Continental Europe, which includes the great majority of Manufacturing revenue, contributed 57% (2006: 56%) of Group revenue and 78% (2006: 73%) of Group operating profit (after deducting the losses in the USA). Vending Vending comprises the operation of photobooths (as to approximately 82% of revenue), digital media kiosks and other vending equipment, notably amusement machines. During the period, the total number of vending sites worldwide increased by 500 to 42,300, following substantial increases, mainly in other vending equipment, over the previous two years. PMI's Vending business is global, operating in 16 industrialised countries. However, 86% of sites are located in three territories - the UK & Ireland, France and Japan. By area, Continental Europe accounted for 17,300 (2006: 16,100) sites; the UK & Ireland for 17,300 (2006:15,500) sites; Asia & Australia for 7,400 (2006: 6,400) sites; and the USA for 300 (2006: 500) sites. In the half year, Vending generated an EBITDA of £22.4m, down 3%. The £1.2m reduction in Vending revenue reflected the £1.3m translation difference arising from the weaker Yen. The £2.9m reduction in Vending operating profit reflected £2.1m of increased depreciation, following substantial expenditure in the last two years on facilitating customer compliance with the passport regulations of the International Civil Aviation Organisation ('ICAO'), and £0.5m of adverse movement in exchange differences. Photobooths Following a review of less profitable sites, the number of photobooths sited decreased marginally to 21,300 (2006: 21,400), of which Continental Europe 9,500 (2006: 9,400), the UK & Ireland 5,500 (2006: 5,800), Asia & Australia 6,000 (2006: 5,700) and the USA 300 (2006: 500). Photobooths are an efficient and competitively-priced provider of ID photographs and represent a mature cash generative business. The 1% reduction in photobooth revenue to £65m was essentially in Japan and reflected currency translation differences. Revenue benefited from the upgrading of the photobooth estate. Digital Media Kiosks The number of digital media kiosks sited was unchanged from a year ago at 4,500. Of these, Continental Europe remained at 3,700, with France by far the principal territory with 2,800, followed by Switzerland with 400. Revenue from digital media kiosks increased by 5% to £6m. Other Vending Equipment Units of other vending equipment sited increased to 16,500 (2006: 12,600), of which 6,400 (2006: 5,700) were kiddie rides, the balance comprising mainly amusement machines, copiers and card machines. The vast majority of kiddie rides are sited in the UK & Ireland. Other vending equipment benefits from being located alongside photobooths and serviced by the same personnel, resulting in operational efficiencies. Revenue from other vending equipment increased by 2% to £8m. Manufacturing Manufacturing revenue primarily derives from the sale to third parties of photo-processing equipment manufactured by PMI or by sub-contractors on its behalf. PMI has a unique and comprehensive range, covering all market segments from wholesale labs, to minilabs and self-service digital media kiosks, with outputs of between 500 and 20,000 prints per hour. Digital media kiosks and kiddie rides are mainly manufactured for operation by the Group, but some are sold to third parties. The £2.6m reduction in Manufacturing revenue and £1.5m deterioration in the pre-exceptional Manufacturing result principally reflected a reduced average selling price for minilabs and reduced unit sales for wholesale labs. Minilabs Minilabs are designed and developed by Photo-Me's subsidiary, KIS, in France, with volume production sub-contracted to specialist manufacturers in low cost territories, currently in Asia. A substantial majority of Manufacturing revenue is represented by the sale of minilabs, machines with an output ranging from 800 to 2,000 prints per hour, and of related equipment, spares and consumables. Typically, minilabs are sited in specialist photographic outlets, supermarkets and pharmacies. Historically, minilabs are a second-half weighted business, as retailers prefer to install new machines in advance of the summer. In the period, minilab revenue reduced by 5% to £19.9m and a loss was incurred, representing a deterioration on the 2006 comparative period. Whilst minilab units sold increased slightly on the comparative period, their average selling price reduced, reflecting competitive price pressures and a large order priced in US$. The PhotoBook-Pro has been well received by retailers who are keen to develop the added value parts of their business. Its profit potential, however, is less than that for minilabs, with their associated spares and consumables. In these market conditions, a cost reduction programme has been put in place. Following the resignation of the existing sub-contractor with effect from 30 April 2008, well before that date, the Group will appoint a new sub-contractor to manufacture minilabs in Asia. Wholesale Labs The Group's wholesale lab business, Imaging Solutions, based in Switzerland, is involved in the development, manufacture, sale and technical support of equipment and systems for high volume photo-finish laboratories (up to 20,000 prints per hour). In the period, revenue reduced by 19% to £7.5m, translating into a profit which was substantially behind the 2006 comparative period. The reduction is mainly explained by reduced unit sales of the FastPrint machine. It had been expected that initial sales of the Purus photo-album making machine would compensate for this, but launch delays intervened, caused by problems with glue technology. The late launch of the Purus machine also disadvantaged sales of the related WidePrint machine, which had been launched in May 2007. The Purus machine will now not be fully ready in time to have a significant impact on the result for the current year. BOARD The half year and subsequently have seen considerable Board changes. The constitution of the Board and its Committees is now fully compliant with best corporate governance standards. In May, Roger Partington and David Young joined the Board as non-executive Directors. Following these appointments, and effective from 30 May 2007, the membership of the Audit, Nomination and Remuneration Committees was revised, so as to become fully compliant with the Combined Code. In July, three long-standing Directors - Riccardo Costi and Francois Giuntini, executive Directors, and Francis Wahl, a non-executive Director - resigned from the Board. In September, Vernon Sankey, non-executive Chairman, resigned from the Board and David Young was appointed non-executive Chairman in the interim. On 30 November, Serge Crasnianski resigned as Group CEO, being replaced by Thierry Barel, following a search both externally and internally by outside recruitment consultants. Thierry Barel, aged 46, is a French national and had been in charge of the Group's minilab manufacturing activity since April 2007. Previously, he was at Staeubli Group from 1984 to 2006, latterly as Chief Executive Officer from 2005 to 2006 and as Corporate Development Officer and a member of the Group Executive Committee from 2001 to 2004. Staeubli is a Swiss-based manufacturer of textile machinery, robotics and industrial connectors, with a 2006 turnover of SFR 1bn. On 14 December, Thierry Barel was appointed a Director, following signature of detailed contractual terms. On 7 December, Serge Crasnianski notified the Board of his resignation as a Director with effect from 13 December 2007. Serge Crasnianski, who is aged 65, founded KIS in 1963. He was elected to the Board of Photo-Me in 1990 and was appointed Chief Executive Officer in 1998. Over 44 years, he has made a massive contribution to what is now the Photo-Me Group. STRATEGY From November 2006 until September 2007, the Board and its advisors were heavily engaged in examining options for the Group's three principal businesses - Vending, minilab manufacturing and wholesale lab manufacturing - and ways of restructuring the Group so as to permit a significant return of capital to shareholders. This represented a huge, multi-faceted and complex project involving several leading expert advisors. As part of this process, the Board sought to dispose of the Vending Division. In September, the Board decided to terminate the Vending Division disposal process, as the indicative offers received had not translated into firm offers at an acceptable level, in part reflecting turbulence in the debt markets. It remains the intention to restructure the Group, so as better to enable the transfer of distributable reserves to the Company and thereby facilitating distributions to shareholders. As the newly-appointed Group CEO, Thierry Barel will be reviewing strategy in the light of challenging market conditions. PROSPECTS Historically, Photo-Me's principal activity, Vending, is first-half weighted, whilst Manufacturing, in particular its principal constituent, minilabs, is second-half weighted. In the absence of an outstanding Manufacturing result in the second half, the first half tends to be much the stronger of the two for the Group. Whilst Vending is trading fairly well, the Board does not anticipate a strong second half for Manufacturing. Accordingly, the Board now believes that the Group is unlikely to be profitable in the second half. The move from analogue to digital in photography has inevitably had both favourable and unfavourable influences on the Group, and this will continue. Amongst the benefits are an opportunity for diversification and the improved efficiency, reliability and ease of maintenance of the equipment. One possible development that the Board is monitoring is the potential move in some territories towards centralisation of biometric data collection, which could, in certain circumstances, materially impact the Group's Vending business. INTERIM DIVIDEND Having regard to the quantum of pre-exceptional EBITDA and operating profit, the Board has declared a maintained Interim dividend of 1.00p per share. The dividend will be paid on 3 May 2008 to shareholders on the register on 29 February 2008, with an ex-dividend date of 27 February 2008. The level of final dividend to be proposed for the year to 30 April 2008 will be considered by the Board at the time of the Preliminary Announcement in the light of the result of the year, prospects at that time, and the financial requirements of the strategy developed by Thierry Barel. SHARE BUY-BACKS It is the present intention of the Board to resume the Company's share buy-back programme as soon as the Company's distributable reserves permit, which is expected to be in February 2008. David Young 14 December 2007 Chairman GROUP INCOME STATEMENT (unaudited) for the six months ended 31 October 2007 Notes 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 ---------------------- -------- -------- -------- -------- Revenue 3 107,082 110,868 214,919 Cost of sales (88,956) (87,854) (177,659) ---------------------- -------- -------- -------- -------- Gross profit 18,126 23,014 37,260 Other operating income 574 480 1,096 Administrative expenses (10,282) (11,403) (23,490) Share of post-tax (losses)/profits from associates (71) 59 41 ---------------------- -------- -------- -------- -------- Operating profit before exceptional items 8,347 12,150 14,907 Strategic review costs 4 (3,950) - - Restructuring costs 4 (1,707) 1,019 1,109 ---------------------- -------- -------- -------- -------- Operating profit after exceptional items 3 2,690 13,169 16,016 ---------------------- -------- -------- -------- -------- profit before finance items and tax 2,690 13,169 16,016 Finance revenue 6 1,026 1,099 1,848 Finance cost 6 (2,085) (1,325) (3,101) ---------------------- -------- -------- -------- -------- profit before tax 1,631 12,943 14,763 ---------------------- -------- -------- -------- -------- Taxation - UK 718 (1,671) (1,063) Taxation - overseas (3,074) (2,749) (4,134) ---------------------- -------- -------- -------- -------- Total tax charge 7 (2,356) (4,420) (5,197) ---------------------- -------- -------- -------- -------- (Loss)/profit for the period - from continuing operations (725) 8,523 9,566 Loss for the period - from discontinued operations 5 - (835) (2,165) ---------------------- -------- -------- -------- -------- (Loss)/profit for the period - from continuing and discontinued operations (725) 7,688 7,401 ---------------------- -------- -------- -------- -------- Attributable to: - Equity shareholders of the Parent 12 (890) 7,763 7,804 - Minority interests 12 165 (75) (403) ---------------------- -------- -------- -------- -------- (725) 7,688 7,401 ---------------------- -------- -------- -------- -------- Dividends Proposed dividend (£'000) 8 3,594 3,646 5,100 Proposed dividend per share 8 1.00p 1.00p 1.40p Paid in the period (£'000) 8 3,659 3,646 8,751 Paid in the period per share 8 1.00p 1.00p 2.40p Earnings per share (total) Basic (loss)/earnings per share 9 (0.25p) 2.13p 2.14p Alternative basic earnings per share 9 1.09p 1.94p 1.76p Diluted (loss)/earnings per share 9 (0.25p) 2.11p 2.12p Alternative diluted earnings per share 9 1.09p 1.93p 1.75p Earnings per share (continuing operations) Basic (loss)/earnings per share 9 (0.25p) 2.27p 2.51p Alternative earnings per share 9 1.09p 2.08p 2.13p Diluted (loss)/earnings per share 9 (0.25p) 2.25p 2.49p Alternative diluted earnings per share 9 1.09p 2.07p 2.12p GROUP BALANCE SHEET (unaudited) as at 31 October 2007 Notes 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 --------------------------- -------- -------- -------- -------- Assets Non-current assets Goodwill 10 9,728 9,673 9,347 Other intangible assets 10 22,785 24,015 22,565 Property, plant and equipment 10 86,288 80,784 84,243 Investment property 10 3,004 3,373 3,192 Investments in associates 516 343 99 Financial assets - held to maturity 328 - 327 - available-for-sale 109 109 109 Deferred tax asset 852 351 382 Trade and other receivables 1,577 1,723 1,266 --------------------------- -------- -------- -------- -------- 125,187 120,371 121,530 --------------------------- -------- -------- -------- -------- Current assets Inventories 30,742 35,718 32,387 Trade and other receivables 32,720 34,650 41,574 Financial assets - held to maturity 64 344 64 - available-for-sale 406 7 307 Current tax 1,882 650 160 Cash and cash equivalents 11 27,808 31,059 31,340 --------------------------- -------- -------- -------- -------- 93,622 102,428 105,832 --------------------------- -------- -------- -------- -------- Total assets 218,809 222,799 227,362 --------------------------- -------- -------- -------- -------- Equity Total shareholders' equity 12 85,810 98,706 98,301 Minority interests 12 2,313 2,570 2,135 --------------------------- -------- -------- -------- -------- Total equity 88,123 101,276 100,436 --------------------------- -------- -------- -------- -------- Liabilities Non-current liabilities Financial liabilities 13 14,466 22,017 17,868 Post-employment benefit obligations 15 3,862 2,752 2,736 Provisions 4 25 6 Deferred tax liability 10,577 11,163 12,083 Derivative financial liabilities - 650 - Trade and other payables 961 1,701 963 --------------------------- -------- -------- -------- -------- 29,870 38,308 33,656 --------------------------- -------- -------- -------- -------- Current liabilities Financial liabilities 13 47,877 24,538 42,174 Provisions 2,326 2,590 2,380 Current tax 5,586 7,257 4,284 Trade and other payables 45,027 48,830 44,432 --------------------------- -------- -------- -------- -------- 100,816 83,215 93,270 --------------------------- -------- -------- -------- -------- Total equity and liabilities 218,809 222,799 227,362 --------------------------- -------- -------- -------- -------- GROUP CASH FLOW STATEMENT (unaudited) for the six months ended 31 October 2007 ---------------------------- -------- -------- -------- -------- Notes 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 ---------------------------- -------- -------- -------- -------- Cash flows from operating activities Operating profit from continuing operations 2,690 13,169 16,016 Operating loss from discontinued operations - (759) (2,453) Share of post-tax loss/(profits) from associates 71 (59) (41) Amortisation, impairment and depreciation 16,077 13,917 30,165 Loss/(profit) on sale of property, plant and equipment 277 (22) (125) Exchange differences 216 (434) (251) Other items (537) 158 411 Changes in working capital 6,328 345 (3,487) ---------------------------- -------- -------- -------- -------- Cash generated from operations 25,122 26,315 40,235 Interest paid (2,085) (1,401) (3,219) Taxation paid (4,677) (429) (2,639) ---------------------------- -------- -------- -------- -------- Net cash generated from operating activities 18,360 24,485 34,377 ---------------------------- -------- -------- -------- -------- Cash flows from investing activities Acquisition of subsidiaries, net of cash acquired 304 - (152) Proceeds from disposal of subsidiaries - - 1,300 Purchase of intangible assets (3,626) (3,295) (6,843) Proceeds from sale of intangible assets 20 - 199 Purchase of property, plant and equipment (14,085) (17,251) (33,668) Proceeds from sale of property, plant and equipment 298 1,607 3,162 Interest received 493 449 998 Dividends received from associate 54 37 37 ---------------------------- -------- -------- -------- -------- Net cash utilised in investing activities (16,542) (18,453) (34,967) ---------------------------- -------- -------- -------- -------- Cash flows from financing activities Issue of Ordinary shares to equity shareholders 5 1 516 Purchase of treasury shares (3,835) - (1,089) Repayment of capital element of finance leases (59) (86) (387) Proceeds from borrowings 1,510 23,856 33,196 Repayment of borrowings (3,965) (17,473) (24,579) Decrease /(increase) in monetary funds 11 (5) (67) Dividends paid to equity shareholders (3,659) (3,646) (8,751) Dividends paid to minority interests - - (4) ---------------------------- -------- -------- -------- -------- Net cash (utilised in)/generated from financing activities (9,992) 2,647 (1,165) ---------------------------- -------- -------- -------- -------- Net (decrease)/increase in cash and cash equivalents (8,174) 8,679 (1,755) Cash and cash equivalents at beginning of the period 11,573 14,143 14,143 Exchange gain/(loss) on cash and cash equivalents 31 (679) (815) ---------------------------- -------- -------- -------- -------- Cash and cash equivalents at end of the period 11 3,430 22,143 11,573 ---------------------------- -------- -------- -------- -------- GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE (unaudited) for the six months ended 31 October 2007 --------------------------------- -------- -------- -------- 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 --------------------------------- -------- -------- -------- Income and expense recognised directly in equity Actuarial loss on defined benefit pension scheme (478) - (50) Exchange differences 1,311 (5,128) (5,516) --------------------------------- -------- -------- -------- 833 (5,128) (5,566) Taxation on items taken directly to or transferred from equity Tax on actuarial loss on defined benefit scheme 137 - 12 --------------------------------- -------- -------- -------- Net income/(expense) recognised directly in equity 970 (5,128) (5,554) (Loss)/profit for the period (890) 7,688 7,401 --------------------------------- -------- -------- -------- Total recognised income and expense for the period 80 2,560 1,847 --------------------------------- -------- -------- -------- Attributable to: - Equity shareholders of the Parent (98) 2,724 2,359 - Minority interests 178 (164) (512) --------------------------------- -------- -------- -------- 80 2,560 1,847 --------------------------------- -------- -------- -------- NOTES TO THE INTERIM REPORT 1 Corporate information. The interim consolidated financial statements of Photo-Me International plc (the 'Company' or 'Photo-Me') for the six months ended 31 October 2007 (the Group's Interim Report) were approved and authorised for issue by the Board of Directors on 17 December 2007. The Company is a public limited company incorporated in England whose shares are quoted on the London Stock Exchange, under symbol PHTM. Photo-Me is a specialist digital imaging company focused on professional laboratories and end-user vending solutions. The Group has two main business segments, Vending and Manufacturing..Photo-Me manufactures a unique and complete range of photo-processing equipment covering all market segments, from wholesale laboratories, to minilabs, to end-consumer vending kiosks. Vending comprises the operation of photobooths and other vending equipment (including digital media kiosks children's rides, photocopiers, card printing machines and amusement machines). 2 Basis of preparation and accounting policies The Interim Report for the six months ended 31 October 2007 has been prepared in accordance with IAS 34 Interim Financial Reporting and International Financial Reporting Standards ('IFRS') as adopted for use in the European Union ('EU') and in accordance with the Disclosure and Transparency Rules of the UK Financial Services Authority. The Interim Report does not include all the information and disclosures required in annual financial statements, and should be read in conjunction with the Group's annual financial statements for the year ended 30 April 2007. The Interim Report is unaudited but has been reviewed by the auditors and their report to the directors will be included in the Interim Report which will be sent to shareholders. It does not comprise statutory financial statements within the meaning of Section 240 of the Companies Act 1985 (as amended). The comparative figures for the year ended 30 April 2007 have been extracted from the 2007 annual financial statements, prepared in accordance with IFRS, as adopted for use in the EU and as applied in accordance with the provisions of the Companies Act 1985, which have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain an emphasis of matter paragraph or a statement under Section 237(2) or (3) of the Companies Act 1985. Accounting policies The Group will be adopting in its April 2008 financial statements those new standards which are effective for that accounting period, and which have been endorsed by the EU. The more significant standards are discussed below. The Group does not consider that these new standards will have a significant impact on the results and financial position of the Group. Apart from these changes, the accounting policies adopted are consistent with those adopted in the Group's consolidated financial statements for the year ended 30 April 2007. IAS 1 Presentation of Financial Statements An amendment to this standard was issued in August 2005 and is effective for accounting periods commencing on or after 1 January 2007. The amendment requires additional disclosures on the objectives, policies and processes for managing capital. These disclosures will appear in the 2008 Annual Report. IFRS 7 Financial Instruments Disclosures This standard applies to accounting periods commencing on or after 1 January 2007 and mainly affects, as far as the Group is concerned, with narrative disclosures. These disclosures will appear in the 2008 Annual Report. IFRIC 10 Interim Financial Reporting and Impairment This standard applies to accounting periods beginning on or after 1 November 2006. The interpretation requires that the Group must not reverse an impairment loss recognised in a previous interim period in respect of an investment in either an equity instrument or a financial asset carried at cost. IFRIC 11 Group and Treasury Share Transactions This standard applies to accounting periods commencing on or after 1 March 2007. The interpretation addresses whether certain share-based payment transactions involving group entities should be accounted for as equity settled or cash settled under IFRS2. IFRIC 14 IAS19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction This interpretation has been adopted in the current period, as noted in note 15. The Group continues to monitor and assess the impact of new standards and interpretations which the IASB periodically issues. This includes IFRS 8 Operating Segments, which will apply to the Group's 2009 financial statements. Initial considerations indicate that this standard will have a minimal impact on the Group's financial statements. Discontinued operations On 30 April 2007, the Group disposed of its investment in Deith Group Ltd ('Deith Group'). Accordingly, the results of Deith Group are presented as discontinued operations for the periods ended 31 October 2006 and 30 April 2007. Use of non-GAAP profit measures Underlying profit Exceptional items, due to their significance and special nature which do not reflect the Group's underlying performance, are excluded from underlying profit and performance. These items may be gains or losses and can have a significant impact on both absolute profit and profit trends. The directors believe that underlying profit (referred to as adjusted profit) and underlying diluted earnings per share measure (referred to as alternative earnings per share) provide additional useful information to shareholders on underlying trends and performance. These measures are used internally and may not be directly comparable to other companies' adjusted profit measures, as underlying profit is not defined under IFRS. Risks and uncertainties The principal risks and uncertainties affecting the business activities of the Group remain those detailed on pages 11 and 15 of the 30 April 2007 Annual Report, a copy of which is available from the Company. The Interim Business and Financial Review contained within this Interim Report includes a commentary on the outlook for the Group for the remaining six months of the financial year. Responsibility statement 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 interim management report includes a fair review of the information required by: a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year ending 30 April 2008 and the 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 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first half of the financial year ending 30 April 2008 and that have materially affected the financial position or performance of the entity during that period and any changes in the related party transactions described in the last annual report that could do so. By order of the Board David Young (Chairman) Jean-Luc Peurois (Group Finance Director) 14 December 2007 3 Segmental analysis The Group has two main business segments: Vending and Manufacturing. These segments have been identified as the primary segments, as the Group organises and manages its business in accordance with these activities. Vending comprises the operation of photobooths and other vending equipment including digital media kiosks and children's rides. Manufacturing comprises the manufacture and sale of photo-processing equipment. This equipment is manufactured by both the Group and by subcontractors. The segment results are as follows: Manufacturing Vending Group Sub-total Discontinued Total overheads operations £'000 £'000 £'000 £'000 £'000 £'000 -------------------- -------- ------ ------- ------ -------- ------- Six months to 31 October 2007 Total revenue 41,723 79,130 - 120,853 - 120,853 Inter-segment sales (13,771) - - (13,771) - (13,771) -------------------- -------- ------ ------- ------ -------- ------- Revenue 27,952 79,130 - 107,082 - 107,082 -------------------- -------- ------ ------- ------ -------- ------- Operating profit/(loss) before exceptional items and share of post-tax profits from associates (463) 10,976 (2,095) 8,418 - 8,418 Exceptional items (1,215) (144) (4,298) (5,657) - (5,657) -------------------- -------- ------ ------- ------ -------- ------- Operating profit/(loss) after exceptional items excluding associates (1,678) 10,832 (6,393) 2,761 - 2,761 Share of post-tax loss from associates (33) (38) - (71) - (71) -------------------- -------- ------ ------- ------ -------- ------- Operating profit/(loss) (1,711) 10,794 (6,393) 2,690 - 2,690 Profit on disposal - - - - - - -------------------- -------- ------ ------- ------ -------- ------- profit/(loss) before finance items and taxation (1,711) 10,794 (6,393) 2,690 - 2,690 Finance costs - net (1,059) - (1,059) -------------------- -------- ------ ------- ------ -------- ------- profit before tax 1,631 - 1,631 Taxation expense (2,356) - (2,356) -------------------- -------- ------ ------- ------ -------- ------- (Loss) for the period (725) - (725) -------------------- -------- ------ ------- ------ -------- ------- Manufacturing Vending Group Sub-total Discontinued Total overheads operations £'000 £'000 £'000 £'000 £'000 £'000 -------------------- -------- ------ ------- ------ -------- ------- Six months to 31 October 2006 Total revenue 45,101 80,269 - 125,370 2,089 127,459 Inter-segment sales (14,502) - - (14,502) - (14,502) -------------------- -------- ------ ------- ------ -------- ------- Revenue 30,599 80,269 - 110,868 2,089 112,957 -------------------- -------- ------ ------- ------ -------- ------- Operating profit/(loss) before exceptional items and share of post-tax profits from associates 971 13,778 (2,658) 12,091 (759) 11,332 Exceptional items 1,019 - - 1,019 - 1,019 -------------------- -------- ------ ------- ------ -------- ------- Operating profit/(loss) after exceptional items excluding associates 1,990 13,778 (2,658) 13,110 (759) 12,351 Share of post-tax profits from associates 35 24 - 59 - 59 -------------------- -------- ------ ------- ------ -------- ------- Operating profit/(loss) 2,025 13,802 (2,658) 13,169 (759) 12,410 Profit on disposal - - - - - - -------------------- -------- ------ ------- ------ -------- ------- profit/(loss) before finance items and taxation 2,025 13,802 (2,658) 13,169 (759) 12,410 Finance costs - net (226) (76) (302) -------------------- -------- ------ ------- ------ -------- ------- profit /(loss) before tax 12,943 (835) 12,108 Taxation expense (4,420) - (4,420) -------------------- -------- ------ ------- ------ -------- ------- profit/(loss) for the period 8,523 (835) 7,688 -------------------- -------- ------ ------- ------ -------- ------- Manufacturing Vending Group Sub-total Discontinued Total overheads operations £'000 £'000 £'000 £'000 £'000 £'000 -------------------- -------- ------ ------- ------ -------- ------- Year to 30 April 2007 Total revenue 99,124 145,033 - 244,157 3,677 247,834 Inter-segment sales (29,238) - - (29,238) - (29,238) -------------------- -------- ------ ------- ------ -------- ------- Revenue 69,886 145,033 - 214,919 3,677 218,596 -------------------- -------- ------ ------- ------ -------- ------- Operating profit/(loss) before exceptional items and share of post-tax profits from associates 5,135 14,205 (4,474) 14,866 (2,453) 12,413 Exceptional items 1,109 - - 1,109 - 1,109 -------------------- -------- ------ ------- ------ -------- ------- Operating profit/(loss) after exceptional items excluding associates 6,244 14,205 (4,474) 15,975 (2,453) 13,522 Share of post-tax profits from associates 13 28 - 41 - 41 -------------------- -------- ------ ------- ------ -------- ------- Operating profit/(loss) 6,257 14,233 (4,474) 16,016 (2,453) 13,563 Profit on disposal - - - - 310 310 -------------------- -------- ------ ------- ------ -------- ------- profit/(loss) before finance items and taxation 6,257 14,233 (4,474) 16,016 (2,143) 13,873 Finance costs - net (1,253) (118) (1,371) -------------------- -------- ------ ------- ------ -------- ------- profit/(loss) before tax 14,763 (2,261) 12,502 Taxation expense (5,197) 96 (5,101) -------------------- -------- ------ ------- ------ -------- ------- profit/(loss)for the period 9,566 (2,165) 7,401 -------------------- -------- ------ ------- ------ -------- ------- Seasonality of operations Historically, Vending has shown greater revenue and profits in the first half of the year than the second, whilst Manufacturing has shown greater revenue and profits in the second half. For the current year ending 30 April 2008, it is expected this pattern will continue for Vending but for Manufacturing revenue is expected to increase but,owing to continuing difficult trading conditions, trading profit may reduce. A review of the Group by the new Chief Executive Officer may result in further restructuring costs in the second half of the year. 4 Exceptional items Six months ended 31 October 2007 Strategic review costs totalled £3,950,000 (mainly, accounting, commercial, investment banking, legal and tax advice incurred in the proposed disposal of the Vending division) with a tax credit of £ 256,000. Restructuring costs in the UK and Continental Europe totalled £1,707,000, with a tax credit of £559,000. Six months ended 31 October 2006 and year ended 30 April 2007 The provision for restructuring in Continental Europe made at 30 April 2006 has been settled, resulting in a write-back of £1,109,000 at 30 April 2007, with a tax charge of £381,000. At 31 October 2006 the process had been substantially completed, resulting in a write-back of £1,019,000 with a tax charge of £340,000. 5 Discontinued operations The discontinued operation relates to the disposal on 30 April 2007 of Deith Group, details of which were disclosed in the April 2007 Annual Report. The results of the discontinued operation are summarised in the table below. 6 months to Year to 31 October 30 April 2006 2007 £'000 £'000 Revenue 2,089 3,677 ----------------- ------------------- ------------------- Operating loss (759) (2,453) Net finance costs (76) (118) ----------------- ------------------- ------------------- Loss before tax (835) (2,571) Taxation expense - 96 ----------------- ------------------- ------------------- Loss after tax (835) (2,475) Profit on sale - 310 ----------------- ------------------- ------------------- Loss for period (835) (2,165) ----------------- ------------------- ------------------- During the six months ended 31 October 2007, the discontinued operation contributed cash flows of £253,000 from operating activities, £936,000 from investing activities and an outflow of £576,000 from financing activities. During the year ended 30 April 2007, the discontinued operation contributed cash flows of £227,000 from operating activities, £1,348,000 from investing activities and an outflow of £596,000 from financing activities. 6 Finance revenue and costs 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 --------------------------------- -------- -------- -------- Finance revenue Bank interest 78 60 129 Interest from available-for-sale and other investments 415 372 811 Other finance revenue 533 17 258 Revaluation of put option over minority interest - 650 650 --------------------------------- -------- -------- -------- 1,026 1,099 1,848 --------------------------------- -------- -------- -------- Finance costs Bank loan and overdraft interest 2,010 1,275 2,872 Other loan interest 41 24 172 Finance lease interest 26 17 39 Preference share dividend 8 9 18 Other finance charges - - - --------------------------------- -------- -------- -------- 2,085 1,325 3,101 --------------------------------- -------- -------- -------- Finance costs for the discontinued operation were £76,000 for the period to 31 October 2006 and £118,000 for the year ended30 April 2007. 7 Taxation The major components of tax expense in the Group income statement are: 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 --------------------------------- -------- -------- -------- Current tax (credit)/charge - UK (165) 1,694 40 Prior year tax (credit)/charge - UK (364) 3 1,110 Current tax charge - overseas 3,701 4,292 4,781 Prior year tax charge/(credit) - overseas 1,000 182 (17) --------------------------------- -------- -------- -------- 4,172 6,171 5,914 --------------------------------- -------- -------- -------- Deferred tax relating to origination and reversal of temporary differences Deferred tax credit - UK (221) (26) (87) Deferred tax change in rate - UK 32 - - Deferred tax credit - overseas (1,573) (1,725) (630) Deferred tax change in rate - overseas (54) - - --------------------------------- -------- -------- -------- (1,816) (1,751) (717) --------------------------------- -------- -------- -------- Total taxation charge 2,356 4,420 5,197 --------------------------------- -------- -------- -------- Effective tax rate 144.5% 34.1% 35.20% --------------------------------- -------- -------- -------- There was no taxation charge for the discontinued operation for the six months ended 31 October 2006. The year ended 30 April 2007 included a UK current tax credit of £42,000 and a UK deferred tax credit of £54,000, the two credits totalling £96,000. The taxation expense is recognised based on management's best estimate of the tax rate expected for the full financial year. The variation in tax rates can be explained as follows: The significantly higher effective tax rate for the six months to 31 October 2007 arises from a combination of certain exceptional strategic review costs which are not deductible for tax in the UK, an overseas adverse prior year adjustment and no tax relief being taken for losses arising overseas. 8 Dividends Pence per share 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 ----------------------------- ------- ------- ------- ------- Dividends declared and paid during the period Interim dividend for the year ended 30 April 2006 1.00 3,646 3,646 Final dividend for the year ended 30 April 2006 1.40 5,105 Interim dividend for the year ended 30 April 2007 1.00 3,659 ----------------------------- ------- ------- ------- ------- 3,659 3,646 8,751 ----------------------------- ------- ------- ------- ------- Dividends declared but not approved - not recognised as a liability Interim dividend for the year ended 30 April 2007 1.00 3,646 Final dividend for the year ended 30 April 2007 1.40 5,100 Interim dividend for the year ending 30 April 2008 1.00 3,594 ----------------------------- ------- ------- ------- ------- 3,594 3,646 5,100 ----------------------------- ------- ------- ------- ------- Dividends approved - recognised as a liability Final dividend for the year ended 30 April 2006 1.40 5,105 Final dividend for the year ended 30 April 2007 1.40 5,031 ----------------------------- ------- ------- ------- ------- 5,031 5,105 - ----------------------------- ------- ------- ------- ------- The final dividends are approved by shareholders at the Annual General Meeting and as such are liabilities at 31 October in each of the years under review. The amounts are included in current liabilities - trade and other payables in the balance sheet. The final dividend for the year ended 30 April 2006 was paid on 2 November 2006. The final dividend for the year ended 30 April 2007 was approved by the shareholders on 17 October 2007 and paid on 2 November 2007. Interim dividends are not recognised as a liability. The interim dividend for the year ended 30 April 2006 of 1.00p per share was paid on 3 May 2006. The interim dividend for the year ended 30 April 2007 of 1.00p per share was paid on 3 May 2007 to shareholders on the register at 2 March 2007. The Directors propose an interim dividend for the year ending 30 April 2008 of 1.00p per share to be paid on 3 May 2008 to shareholders on the register at 29 February 2008. 9 Earnings per share Basic earnings per share are calculated by dividing net profit attributable to Ordinary shareholders of the Parent by the weighted average number of Ordinary shares in issue during the period excluding those held as treasury shares, which are excluded from the calculation of earnings per share. Diluted earnings per share amounts are calculated by dividing the net profit attributable to Ordinary shareholders of the Parent by the weighted average number of Ordinary shares outstanding during the period plus the weighted average number of Ordinary shares that would be issued on conversion of all the dilutive potential Ordinary shares into Ordinary shares. The Group has only one category of dilutive potential Ordinary shares: the share options granted to senior staff, including directors, where the exercise price is less than the average market price of the Parent's Ordinary shares during the period. The earnings and weighted average number of shares used in the calculation are set out in the table below: 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 --------------------------------- -------- -------- -------- Basic earnings per share (0.25p) 2.13p 2.14p Diluted earnings per share (0.25p) 2.11p 2.12p --------------------------------- -------- -------- -------- Earnings available to Ordinary shareholders (£'000) (890) 7,763 7,804 Weighted average number of shares in issue in the period - basic ('000) 361,288 364,630 364,815 - including dilutive share options ('000) 363,315 367,982 367,877 --------------------------------- -------- -------- -------- As a non-GAAP, measure, the Group has decided to show on the face of the income statement those material one-off items of income and expense which, because of their nature and expected infrequency of the event giving rise to them, merit separate disclosure to allow shareholders to better understand the underlying performance of the Group and to facilitate comparison with prior periods. As a result, the Group also shows basic and diluted earnings per share on this adjusted basis. Adjusted earnings per share calculations --------------------------------- -------- -------- -------- 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 --------------------------------- -------- -------- -------- Adjusted basic earnings per share 1.09p 1.94p 1.76p Adjusted diluted earnings per share 1.09p 1.93p 1.75p --------------------------------- -------- -------- -------- Unadjusted earnings (£'000) (890) 7,763 7,804 Strategic review costs (£'000) 3,950 - - Tax on strategic review costs (£'000) (256) - - Restructuring costs (£'000) 1,707 (1,019) (1,109) Tax on restructuring costs (£'000) (559) 340 381 Revaluation of put option over minority interests (£'000) - - (650) --------------------------------- -------- -------- -------- Adjusted earnings (£'000) 3,952 7,084 6,426 --------------------------------- -------- -------- -------- In addition to showing on the face of the income statement total earnings per share (from continuing and discontinued operations), the Group also shows on the face of the income statement earnings from continuing operations. 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 Basic earnings per share --------------------------------- -------- -------- -------- Continuing (0.25p) 2.27p 2.51p Discontinued - (0.14p) (0.37p) --------------------------------- -------- -------- -------- Total (0.25p) 2.13p 2.14p --------------------------------- -------- -------- -------- Alternative basic earnings per share --------------------------------- -------- -------- -------- Continuing 1.09p 2.08p 2.13p Discontinued - (0.14p) (0.37p) --------------------------------- -------- -------- -------- Total 1.09p 1.94p 1.76p --------------------------------- -------- -------- -------- Diluted earnings per share --------------------------------- -------- -------- -------- Continuing (0.25p) 2.25p 2.49p Discontinued - (0.14p) (0.37p) --------------------------------- -------- -------- -------- Total (0.25p) 2.11p 2.12p --------------------------------- -------- -------- -------- Alternative diluted earnings per share --------------------------------- -------- -------- -------- Continuing 1.09p 2.07p 2.12p Discontinued - (0.14p) (0.37p) --------------------------------- -------- -------- -------- Total 1.09p 1.93p 1.75P --------------------------------- -------- -------- -------- Where earnings are negative, diluted earnings per share are the same as basic earnings per share because the exercise of share options would have the effect of reducing the loss per Ordinary share and is therefore not dilutive under the terms of IAS 33. 10 Non-current assets - intangibles, property, plant and equipment and investment property --------------------------- -------- -------- -------- -------- Other Property, intangible plant and Investment Goodwill assets equipment Property £'000 £'000 £'000 £'000 --------------------------- -------- -------- -------- -------- Net book value at 1 May 2007 9,347 22,565 84,243 3,192 Exchange adjustment 33 295 665 62 Additions - photobooths and vending - - 13,130 - machines - research and development costs - 3,522 - - - other additions - 104 955 - - subsidiaries acquired 348 - 94 - - transfers - 32 (102) - Depreciation provided in the period - (3,713) (12,114) (250) Disposals at net book value - (20) (583) - --------------------------- -------- -------- -------- -------- Net book value at 31 October 9,728 22,785 86,288 3,004 2007 -------- -------- -------- -------- --------------------------- 11 Cash and cash equivalents --------------------------------- -------- -------- -------- 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 --------------------------------- -------- -------- -------- Cash at bank and in hand 26,039 27,475 27,859 Deposit accounts 1,769 3,584 3,481 --------------------------------- -------- -------- -------- Cash and cash equivalents per the balance sheet 27,808 31,059 31,340 Bank overdrafts (24,378) (8,916) (19,767) --------------------------------- -------- -------- -------- Cash and cash equivalents per the cash flow statement 3,430 22,143 11,573 --------------------------------- -------- -------- -------- 12 Reconciliation of movements in equity ---------------- -------- -------- -------- -------- -------- -------- Share Share Treasury Other Retained Total capital premium shares reserves earnings £'000 £'000 £'000 £'000 £'000 £'000 ---------------- -------- -------- -------- -------- -------- -------- Balance at 1 May 2007 2,035 5,372 (1,967) (2,282) 95,143 98,301 Exchange differences - - - 1,298 - 1,298 Shares issued in the period - 5 - - - 5 Purchase of treasury shares - - (3,835) - - (3,835) Loss for the - - - - (890) (890) period Share options - - - - (38) (38) Actuarial movements in defined benefit - - - - (478) (478) pension scheme and other post employment benefit obligations Deferred tax on actuarial - - - - 137 137 movements Transfers and - - - - - - other movements Dividends - - - - (8,690) (8,690) ---------------- -------- -------- -------- -------- -------- -------- At 31 October 2007 2,035 5,377 (5,802) (984) 85,184 85,810 ---------------- -------- -------- -------- -------- -------- -------- ---------------- -------- -------- -------- -------- -------- -------- Share Share Treasury Other Retained Total capital premium shares reserves earnings £'000 £'000 £'000 £'000 £'000 £'000 ---------------- -------- -------- -------- -------- -------- -------- Balance at 1 May 2006 2,029 4,862 (878) 832 97,732 104,577 Exchange differences - - - (5,039) - (5,039) Shares issued in the period - 1 - - - 1 Purchase of - - - - - - treasury shares Profit for the period - - - - 7,763 7,763 Share options - - - - 155 155 Transfers and other - - - 650 (650) - movements Dividends - - - - (8,751) (8,751) ---------------- -------- -------- -------- -------- -------- -------- At 31 October 2,029 4,863 (878) (3,557) 96,249 98,706 2006 -------- -------- -------- -------- -------- -------- ---------------- ---------------- -------- -------- -------- -------- -------- -------- Share Share Treasury Other Retained Total capital premium shares reserves earnings £'000 £'000 £'000 £'000 £'000 £'000 ---------------- -------- -------- -------- -------- -------- -------- Balance at 1 May 2006 2,029 4,862 (878) 832 97,732 104,577 Exchange differences - - - (5,407) - (5,407) Shares issued in the period 6 510 - - - 516 Purchase of treasury shares - - (1,089) - - (1,089) Profit for the period - - - - 7,804 7,804 Share options - - - - 39 39 Transfers and other - - - 2,293 (1,681) 612 movements Dividends - - - - (8,751) (8,751) ----------------- ------- -------- -------- -------- -------- -------- At 30 April 2007 2,035 5,372 (1,967) (2,282) 95,143 98,301 ----------------- ------- -------- -------- -------- -------- -------- Treasury shares In accordance with shareholders' resolutions passed at Annual General Meetings, the Company may purchase its own shares up to a maximum of 10% of the Ordinary shares in issue. During April 2007, the Company purchased an additional 1,600,000 shares at a combined cost of £1,089,000, resulting in a balance at 30 April 2007 of 2,600,000. During the period to 31 October 2007, the Company has purchased on various dates and at various prices an additional 4,905,000 Ordinary shares at a combined cost of £3,835,000. At 31 October 2007, the number of treasury shares held is 7,505,000, representing 2.05% of the Ordinary issued share capital. Other reserves Other reserves include the translation reserve, used to record exchange differences arising from the translation of the financial statements of overseas subsidiaries, associates and joint ventures, other reserves, mainly being non-distributable reserves in overseas subsidiaries in accordance with local legislation, and fair value reserves, to record changes on hedges and other derivatives. In the year to 30 April 2007, an amount of £1,300,000 was included in other reserves, transfers and other movements which related to the write-back of the put option over minority interests in Deith Group which was sold during the year. Minority interests ----------------------------------- ------- ------- ------- 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 ---------------------------------- ------- ------- ------- At 1 May 2,135 2,734 2,734 Exchange differences 13 (89) (109) Profit/(loss) for the period 165 (75) (403) Other movements - - 4 Disposals - - (91) ---------------------------------- ------- ------- ------- At end of period 2,313 2,570 2,135 ---------------------------------- ------- ------- ------- 13 Financial liabilities ---------------------------------- -------- -------- ------- 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 ---------------------------------- -------- -------- ------- Non-current liabilities Non-current instalments due on bank loans 13,471 21,075 16,801 Finance lease creditors 453 351 503 Preference shares 542 591 564 ---------------------------------- -------- -------- ------- 14,466 22,017 17,868 ---------------------------------- -------- -------- ------- Current liabilities Bank overdrafts 24,378 8,916 19,767 Current instalments due on bank loans 23,372 15,419 22,267 Finance lease creditors 127 203 140 ---------------------------------- -------- -------- ------- 47,877 24,538 42,174 ---------------------------------- -------- -------- ------- 14 Net debt 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 Cash and cash equivalents per balance sheet 27,808 31,059 31,340 Financial assets held to maturity 392 344 391 Deposits available for sale 28 27 28 Bank overdrafts (24,378) (8,916) (19,767) Non-current bank loans (13,471) (21,075) (16,801) Current instalments on bank loans (23,372) (15,419) (22,267) Finance leases (580) (554) (643) --------------------------------- -------- -------- -------- Net debt (33,573) (14,534) (27,719) --------------------------------- -------- -------- -------- 15 Post-employment benefit obligations 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 -------------------------------- -------- -------- ------- Company defined benefit scheme 464 (27) 32 Overseas employment benefit obligations 3,398 2,779 2,704 -------------------------------- -------- -------- ------- Amount shown as non-current liability 3,862 2,752 2,736 -------------------------------- -------- -------- ------- The Company and its principal subsidiaries operate pension and other retirement schemes including both funded defined benefit schemes, whereby retirement benefits are based on the employee's final remuneration and length of service, and defined contribution schemes, whereby retirement benefits reflect the accumulated value of agreed contributions. The Group and the Company have a constructive obligation to fund the deficit in the Company's defined benefit pension scheme and this has resulted in a charge to equity of £478,000 shown as a movement in the Group statement of recognised income and expense. 16 Business Combinations On 1 July 2007, Imaging Solutions A.G. acquired 100% of Piazza Imaging Projekt-und Beteiligungs GmbH, subsequently renamed Imaging Management Solutions GmbH (IMS) from a company owned by the Chief Executive Officer and minority shareholder of Imaging Solutions. The net assets of this company at date of acquisition are shown below. A 100% subsidiary company of IMS, now known as Imaging Postprocessing Solutions GmbH (IPS) acquired on 1 July 2007 assets , on deferred consideration terms, from Albin Spitzke KG (GmbH & Co) and commenced trading in the manufacture of machines for cutting, packaging and sorting photofinishing orders. Certain assets cannot be separately identified and have been shown as goodwill. The amount allocated to goodwill and deferred consideration are subject to change in accordance with the terms of the purchase agreement. The value placed on assets and liabilities shown in the table below are provisional as a detailed examination of the assets and liabilities acquired is being performed and the numbers may change by the year-end. Imaging Management Solutions GmbH £'000 Purchase consideration 681 Net assets acquired 333 ------------------------ ---------------------------- Goodwill 348 ------------------------ ---------------------------- Purchase consideration - satisfied in cash 333 - satisfied by deferred consideration 348 ------------------------ ---------------------------- 681 ------------------------ ---------------------------- Acquirees' carrying value and Fair value £'000 Property, plant and equipment 94 Deferred tax 155 Inventories 9 Trade and other receivables 9 Financial assets- available for sale 88 Cash and cash equivalents 637 -------------------------- -------------------------- Total assets 992 -------------------------- -------------------------- Non-current liabilities Post-employment benefit obligations 575 -------------------------- -------------------------- Total non-current liabilities 575 -------------------------- -------------------------- Current liabilities Trade and other payables 84 -------------------------- -------------------------- Total current liabilities 84 -------------------------- -------------------------- Total liabilities 659 -------------------------- -------------------------- Net assets 333 -------------------------- -------------------------- Goodwill 348 -------------------------- -------------------------- The net cash (outflow)/inflow arising on acquisition was as follows: £'000 Purchase consideration - cash consideration (333) Cash and cash equivalents acquired 637 ------------------------ ---------------------------- Acquisition of subsidiaries net of cash acquired (per Group cash flow 304 statement) ---------------------------- ------------------------ The acquired business contributed £171,000 in third party revenue and £56,000 in profit after taxation from the date of acquisition. As assets were acquired, and the acquisition did not occur at the beginning of the year, it is not possible to indicate values for revenue and profit after tax. 17 Contingencies The Directors consider adequate provision has been made for legal disputes and thus they consider no contingent liability for litigation exists. There has been no material change since 30 April 2007 for other contingent liabilities. 18 Related party transactions The Group's significant related parties are disclosed in the 2007 Annual Report and include its associates and companies in which certain directors have declared an interest and with which the Group has a trading relationship. Except for the acquisitions referred to above (note 16), there were no material differences in related parties or related party transactions in the period or prior period. 19 Copies of the Interim Report Copies of the Interim Report will be mailed to shareholders by 14 January 2008 and from that date will be available from the Company's Registered Office at Church Road, Bookham, Surrey KT23 3EU (Tel: 01372-453399). This information is provided by RNS The company news service from the London Stock Exchange

Companies

Me Group International (MEGP)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today