Preliminary Announcement 2000

Photo-Me International PLC 17 August 2000 17 August 2000 PHOTO-ME INTERNATIONAL PLC PRELIMINARY ANNOUNCEMENT - YEAR ENDED 30 APRIL 2000 * On turnover of £200.1 m (1998/99: £197.5m), PMI achieved an audited pre-tax profit of £21.8 m (1998/99: an underlying £20.0m) or, if this year's £1.8 m profit on disposal of Groupundertakings is excluded, an underlying pre-tax profit of £20.0 m. * Although the opinion of Leading Counsel supports the Board's original intention to recognise the £10.4 m profit arising from the transfer of assets as consideration for the acquisition of the minority interest in PMI's Japanese subsidiary as having been realised, the Board has decided, in agreement with PMI's auditors, to treat this amount in the consolidated financial statements as a reduction in the goodwill arising on the acquisition. * Basic earnings per share were 3.42p or 2.92p on an underlying basis (1998/99: an underlying 3.96p), after an exceptionally high effective tax rate of 48.6% (1998/99: 27.9%). * Net debt decreased by £15.1m to £46.9m notwithstanding £34.2m of capital expenditure. Net cash inflow from operating activities increased to £58.5m from £43.4 m. * 1999/2000 was a year of technological progress for PMI with the successful launch, encouragingly for the future, of both its LCD (liquid crystal display) booster technology in its revolutionary DKS (digital KIS system) minilab and its PhotoPlanet photobooth with Internet access. * On 9 August 2000, PMI announced the creation of an important 50/50 JV with SanDisk Corporation, Inc. - the world's leading supplier of flash data storage products - to manufacture at PMI's factory in France and operate in the USA and Canada self-service digital photo printing kiosks. * In the light of, inter alia, the changing nature of PMI's business, the Board has for some time been mindful that it is necessary to change the structure of the Board, strengthen it and reduce its size. Proposals now include the appointment of an appropriate non-executive Deputy Chairman and of other independent non-executive Directors. * Serge Crasnianski, CEO, stated 'With assistance from the DKS minilab, the digital photo printing kiosk and the PhotoPlanet, we are confident of a satisfactory performance in 2000/01. We also believe that very substantial benefits will accrue in future years from PMI's exploitation of both its technology - notably its LCD booster patent and Internet-related developments - and its unique network of sites in high footfall areas'. Notes for Editors: PMI is the world's leading operator of photobooths, with some 20,000 sites worldwide, and a major manufacturer of photographic developing and processing equipment, with a focus in both businesses on digital technology and the Internet. Enquiries: Photo-Me International plc 01372-453399 Serge Crasnianski (Chief Executive Officer) Jean-Luc Peurois (Group Finance Director) Robert Lowes (Company Secretary) Bankside Consultants Limited 020-7220 7477 Charles Ponsonby Presentation to institutional investors and broker's analysts: A presentation will be held at 9.00 a.m. this morning at Regus, 120 Old Broad Street, EC2. CHIEF EXECUTIVE'S STATEMENT INTRODUCTION 1999/2000 was a year of technological progress for PMI. Encouragingly for the future, we launched both our LCD (liquid crystal display) booster technology in our revolutionary DKS (digital KIS system) minilab and our PhotoPlanet photobooth with Internet access, and we included the Internet as a priority feature in all our research and development activities. Additionally, since the year end, we have signed an important joint venture agreement to manufacture and operate self-service digital photo printing kiosks. FINANCIAL OVERVIEW In order to make comparisons more meaningful, the exceptional items reported in 1998/99 which related to the write-down of older technology photobooths and restructuring costs, have been excluded from the analysis of our results below. In addition, comparatives have been adjusted to take account of the 5 for 1 share split effected in November 1999. On turnover of £200.1 million (1998/99: £197.5 million), PMI achieved a pre-tax profit of £21.8 million (1998/99: £20.0 million) or, if this year's £1.8 million profit on disposal of Group undertakings is excluded, an underlying pre-tax profit of £20.0 million. The pre-tax profit of £21.8 million excludes the profit arising on the acquisition of the minority interest in Nippon Auto Photo KK ('Nippon'), as more fully explained below. Basic earnings per share were 3.42p or 2.92p on an underlying basis (1998/99: 3.96p), after an effective tax rate of 48.6 per cent (1998/99: 27.9 per cent). This high tax rate is a consequence of profits being generated in countries with high levels of tax,exhaustion of certain tax losses and some tax being payable on the profit relating to the acquisition ofthe minority interest in Nippon (although the 'profit' itself is not recognised on the profit and loss account). In thecurrent year, PMI expects a lower effective rate. During the year, net debt decreased by £15.1 million to £46.9 million, notwithstanding £34.2 million of capital expenditure, of which £32.6 million relates to Operations equipment. Gearing decreased to 74.3 per cent from 80.3 per cent. Net cash inflow from operating activities increased to £58.5 million from £43.4 million. Net interest paid reduced to £2.8 million (1998/99: £3.5 million) and was covered 8.2 times (1998/99: 6.8 times). This year, the UK and the Republic of Ireland was the principal contributor to pre-tax profit from £12.1 million (1998/99: £7.3million) on a turnover of £60.8 million (1998/99: £62.9million). This result principally reflected restructuring benefits, including 1998/99's closure of the Bookham factory,together with certain matters referred to in the Operations business review below. After an exceptionally good year in 1998/99, Continental Europe was affected by the weakening Euro and lower manufacturing activity, contributing £4.9 million(1998/99: £11.9 million) on a turnover of £82.6 million(1998/99: £85.1 million). The Americas continued to be a difficult market with the local management teams implementing new strategies during 1999/2000. The associated costs were incurred in 1999/2000, but the benefits have not yet been realised, leading to an increase in losses to £2.9 million from the prior year's £2.0 million on a turnover of £11.4 million (1998/99: £14.1 million). Asia's profit increased to £7.6 million (1998/99:£2.8 million) on a turnover of £45.3 million (1998/99: £35.3 million). An improved performance in Japan, assisted by the stronger Yen, was the principal contributor. Operations turnover increased by 4.8 per cent to £ 166.0 million (83 per cent of total turnover). Manufacturing turnover decreased by 13.0 per cent to £34.1 million (17 per cent of total turnover), the 1998/99 turnover benefiting from a large contract to supply equipment to the USA. DIVIDENDS In view of the Board's confidence in the business, an increased final dividend of 1.2p (1998/99: 1.06p) net per share, up 13.2 per cent, is proposed. If approved at the AGM on 20 October 2000, the dividend will be paid on 2 January 2001 to shareholders on the register at close of business on 27 October 2000. Together with the interim dividend of 0.5p (1998/99: 0.44p) net per share, paid on 3 April 2000, dividends per share are increased by 13.3 per cent to 1.7p (1998/99: 1.5p) net per share, twice covered. ACQUISITION OF THE NIPPON MINORITY INTEREST At the Extraordinary General Meeting held on 30 June 1999, the Company's shareholders approved the acquisition of the 49.8% minority interest in the issued share capital of its Japanese subsidiary, Nippon, for a consideration of £25.2 million. The results of Nippon represent almost all the profits from Asia - which have increased by 167% to £7.6 million this year. Nippon owns and operates approximately 3,400 photo booths in Japan, where it has a leading market share. It also operates other coin-operated equipment in the important entertainment sector, such as photographic sticker and postcard machines. THE ANNOUNCEMENT OF 3 AUGUST 2000 At the time of the announcement of the acquisition of the minority interest in Nippon, it was envisaged that the value of assets to be transferred as consideration would approximate to their net book value. However, when the specific assets to be supplied to the vendor of the 49.8% interest were identified and agreed, the net book value of these assets was lower than expected, giving rise to a surplus of £10.4 million. The specific assets agreed included photobooth parts, as well as second hand photobooths. The Board had intended to reflect this £10.4 million as a profit in the profit and loss account. However, it was not until the detailed financial statements were drafted that the auditors requested this profit be disclosed as an exceptional item. Shortly thereafter, during the auditors' internal technical review of the draft consolidated accounts, the recognition of this profit as a realised profit was questioned. Once the Board was made aware of this matter, a trading statement was issued on 3 August 2000, which also indicated that there would be a delay in the preliminary announcement of our results. Subsequently, the Board has obtained an opinion from Leading Counsel. This opinion supports the Board's original intention to recognise the profit in the profit and loss account as having been realised. However, the Board has decided, in agreement with our auditors, to treat this amount in the consolidated financial statements as a reduction in the goodwill arising on the acquisition. BOARD In January 2000, Jean-Luc Peurois CA, MBA was appointed Group Finance Director in succession to Peter Berridge, who retired from his executive position after 29 years with the Group. Mr Peurois, who is 42, has been an executive Director since 1994 and was previously the Finance Director of the Group's Continental European operations. In the light of, inter alia, the changing nature of PMI's business, the Board has for some time been mindful that it is necessary to change the structure of the Board, strengthen it and reduce its size.Accordingly,proposals include the appointment of an appropriate non-executive Deputy Chairman and other independent non-executive Directors. The process for recruiting such individuals is already underway and it is hoped to announce the first of these appointments by the time of the AGM on 20 October 2000. As a first step in the restructuring of the Board, one of the non-executive Directors, David Miller, a former Managing Director of PMI, resigned from the Board yesterday. BUSINESS REVIEW Operations Operations comprises the running of photobooths and other vending equipment. At the year end, the number of sites operated world-wide was 26,000, including 20,000 photobooths, of which 9,000 were digital. Operations continued to benefit from the cost reduction measures that were put in place in 1998/99 following my appointment as Chief Executive in October 1998. PMI is a global company but it has three major operational areas - the UK & Ireland, France and Japan. In the UK & Ireland (with 7,500 sites, including 5,300 photobooths), turnover increased strongly and margins improved. The UK benefited from a full year of child passports (introduced in October 1998), the requirement for photocard versions of new driving licences being extended to all categories of applicant in July 1999 and an increase in the photobooth vend price to £3.00 from £2.50 in August 1999. However, new competitors have entered the market and commissions to site owners have increased in certain areas. Following a very successful year in 1998/99, due to increased ID legislation, France (with 7,700 sites, including 5,000 photobooths) was flat. Japan (with 3,600 sites, including 3,400 photobooths) benefited from the renewed demand for driving licence photographs, the assumption of 100 per cent control and cost reduction. Sales rose by 28 per cent and profits increased significantly. Following the agreement signed with BT in May 1999, the year under review involved development of the PhotoPlanet, leading to the installation of the first machines in the UK in April 2000. Manufacturing Manufacturing comprises the manufacture of photoprocessing equipment for operation by third parties or in joint venture and of photobooths, primarily for operation by PMI. Following the closure of our UK factory in early 1999, all manufacturing and R & D activity is located at our plant in Grenoble, France. Third party manufacturing turnover was principally represented by sales of the AKS (analogue KIS system) range of minilabs, but turnover was limited by the imminent availability of the DKS and by the Group's focus on the development of other applications for its LCD booster technology. During the year, the high level of research and development expenditure continued. With approximately 100 people employed in this area, we are confident that there will be significant future benefits from R & D. POST-BALANCE SHEET EVENTS In May 2000, PMI's Dutch subsidiary, Prontophot Holland B.V., signed a one year renewable contract, effective 1 June 2000, to service the BT payphones situated in The Netherlands, of which there are currently approximately 1,000. In June 2000, PMI and WebPhotos.com of Maryland, USA signed an agreement to develop WebPhotos.com's Internet portal for storing, sharing and printing photographs on line. In addition, PMI acquired 20 per cent of the outstanding shares of common stock of WebPhotos.com, together with an option to acquire a further 10 per cent. We anticipate making further investments in similar areas. In July 2000, PMI announced that it had been chosen by Shashinyasan 45 - which is one of the largest photographic store chains in Japan, with more than 600 retail sites - to supply DKS minilabs. The initial order is for 62 machines. On 9 August 2000, PMI announced the creation of a 50/50 joint venture, to be called DigitalPortal Inc, with SanDisk Corporation Inc. (NASDAQ: SNDK), the world's leading supplier of flash data storage products, to operate self-service digital photo printing kiosks in the USA and Canada. It is intended that DigitalPortal will annually deploy a minimum of 2,000 kiosks for 10 years and this will commence in the final quarter of 2000. PMI will be responsible for the manufacture of the kiosks at its Grenoble facility and, through its operations in the USA, will also be responsible for the installation and maintenance of the kiosks. DigitalPortal will be based in SanDisk's Sunnyvale, California headquarters. STRATEGY PMI's strategy is principally to exploit its network of sites in high footfall areas around the world by extending the range of services offered and developing applications for its unique LCD booster technology, which translates digital information into a high quality image and is both reliable and compact. We intend to capture a very substantial share of the worldwide market for digital photoprocessing equipment. The Board will keep under close review the performance of loss- making subsidiaries, with a view to rationalisation, re- organisation or disposal of these companies. The LCD booster, which is our core photographic technology, will also be applied in our digital photo print kiosk, in Photovision 2 (an enhanced version of a Photovision booth) and in other products under development. PROSPECTS Operations It is still early days but, in the initial market trials, PhotoPlanet has comfortably exceeded our initial expectations; revenues from advertising and the Internet have contributed significantly to this increase. The first 100 PhotoPlanets have now been installed. We intend to expand our products offered by PhotoPlanet from adding print-to-print, digital camera development and additional Internet services. We plan to install 1,000 PhotoPlanet booths by June 2001 and we expect to launch PhotoPlanet in mainland Europe and Japan in the near future. 'Fun' related products have been an important factor in improving sales in Operations and we will continue to add such products to our machines with a view to their complementing our core ID business. In order to be able to address the growing market for processing photos derived from digital cameras, we aim to exploit our LCD booster technology by releasing Photovision 2 in early 2001. We recently lost the contract, as of 30 November 2000, with part of the UK Post Office (on whose premises approximately 2 per cent of our global number of photobooths is sited) as we were not prepared to raise site ownership commissions; sites have already been identified close to affected Post Offices to replace this lost business at sensible commission levels. Manufacturing We have high hopes for PMI's prospects resulting from the growth in digital cameras which in the medium term will capture a significant share of the worldwide developing and processing market, currently estimated at US$ 40 billion. Our factory at Grenoble started producing DKS minilabs with the revolutionary LCD booster technology in July 2000. DKS minilabs process traditional as well as digital inputs, operate on constant optimum productivity with low cost chemicals and silver halide paper, are user friendly, support an on-line service via the Internet, yet are competitively priced. These minilabs have a unit list price of £80,000. To date, we have received more orders than we expected. In addition to having won the Shashinyasan 45 contract, we are in the process of negotiating with other chain stores that intend to use our DKS minilabs. We estimate that the world market for minilabs is 150,000. With the increased popularity of digital cameras and the benefits of digital minilabs, conventional minilabs will become obsolete and there will be a requirement to replace them. PMI, through its French subsidiary KIS, is very well positioned to capture a large part of this market. Because of the good reception that the new DKS minilab has received, we will need to set up new production lines and increase staffing levels in order that we can deliver in the current year on orders for an expected 500 - 1,000 machines. Manufacturing activities will also encompass the development and construction of 2,000 digital photo kiosks per annum for the DigitalPortal joint venture. We are also working on various options in the field of Internet kiosks supplying photos, music and software that we are planning to launch in 2001. We will, however, not be going forward with Musicmaker.com, with which an agreement was signed in October 1999, since it is no longer in a position to proceed. Instead, we will be collaborating with other partners and expect to install music kiosks for trials in the UK and France in October 2000. Summary With assistance from the DKS minilab, the digital photo printing kiosk and the PhotoPlanet, we are confident of a satisfactory performance in 2000/01. As manufacturing becomes an increasingly important element of PMI's business, profits will necessarily be that much more dependent on the timing of the winning and roll out of major contracts. We also believe that very substantial benefits will accrue in future years from the Company's exploitation of both its technology - notably its LCD booster patent and Internet-related developments - and its unique network of sites in high footfall areas. Serge Crasnianski 17 August 2000 Chief Executive Officer CONSOLIDATED PROFIT AND LOSS ACCOUNT N 2000 1999 Audited o ------------------------- t e s Audited Before After exception exceptio exceptio al nal nal items items items £000 £000 £000 £000 (Note 3) Turnover 1 Continuing operations 200,074 197,506 - 197,506 and acquisitions ====== ====== ======= ======= Trading profit/(loss) 50,178 50,612 (5,591) 45,021 Depreciation (27,140) (27,643) (21,556) (49,199) Foreign exchange (422) 482 - 482 differences -------- ------- ------- ------ Group operating 22,616 23,451 (27,147) (3,696) profit/(loss) Share of operating 97 68 - 68 profit of associates ------- ------ ------ ------ Total operating 22,713 23,519 (27,147) (3,628) profit/(loss) Restructuring costs - - (2,278) (2,278) Profit/(loss) on disposal of group 3 1,799 - (7) (7) undertakings Interest receivable 670 481 - 481 Interest payable (3,428) (3,951) - (3,951) ------ ------ ------ ----- Profit/(loss) on ordinary activities 2 21,754 20,049 (29,432) (9,383) before taxation Tax on profit/(loss) on ordinary 4 (10,579) (5,591) 10,917 5,326 activities ------ ------ ------ ----- Profit/(loss) on ordinary activities 11,175 14,458 (18,515) (4,057) after taxation Minority interests - equity and 1,120 (238) 3,546 3,308 non-equity interests ------ ------ ------ ----- Profit/(loss) attributable to 12,295 14,220 (14,969) (749) members of the holding company Dividends 5 (6,149) (5,380) - (5,380) ------ ------- ------- ------ Retained 6,146 8,840 (14,969) (6,129) profit/(loss) for ===== ====== ====== ====== year Basic earnings per share 2.92p 3.96p - - - before exceptionals 0.50p - (4.17p) - - exceptional items Basic earnings per share 3.42p - - (0.21p) Diluted earnings per 2.89p 3.96p - - share - before exceptionals 0.50p - (4.17p) - - exceptional items Diluted earnings per 3.39p - - (0.21p) share Dividends per share 5 1.70p 1.50p - 1.50p CONSOLIDATED BALANCE SHEET Audited Audited 30 April 30 April 2000 1999 Notes £000 £000 Fixed assets Intangible assets 7 15,298 5,204 Tangible assets 7 117,132 129,500 Investments 726 583 ------- ------- 133,156 135,287 ------- ------- Current assets Stocks 25,213 30,567 Debtors 29,323 31,875 Investments and short-term 2,973 2,249 deposits Cash at bank and in hand 8,908 6,955 ------ ------ 66,417 71,646 Creditors Amounts falling due within one 69,336 74,562 year Net current (liabilities) (2,919) (2,916) ------ ------ Total assets less current 130,237 132,371 liabilities Amounts falling due after more 35,058 35,401 than one year ------ ------ 95,179 96,970 Provision for liabilities and charges Provisions 3,169 2,181 Deferred taxation 13,612 12,416 ------ ------ 78,398 82,373 Minority interests - equity interests 1,398 8,765 - non-equity interests 824 780 ------ ------ 76,176 72,828 ====== ====== Capital and reserves Called-up share capital 2,010 1,994 Reserves: Share premium account 8 2,443 1,068 Capital reserves 8 6,919 10,834 Profit and loss account 8 64,804 58,932 ------ ------ 76,176 72,828 ====== ====== Shareholders' funds are attributable to: - equity interests 75,975 72,627 - non-equity interests 201 201 ------ ------ 76,176 72,828 ====== ====== CONSOLIDATED CASH FLOW STATEMENT Notes Audited Audited Year to Year to 30 April 30 April 2000 1999 £000 £000 Net cash inflow from operating (a) 58,530 43,392 activities Dividends from associated undertakings 72 - Returns on investments and servicing (b) (2,798) (3,497) of finance Taxation (b) (4,037) (2,868) Capital expenditure and financial (b) (25,124) (33,629) investment Acquisitions and disposals (b) (2,537) 245 Dividends paid - equity shareholders (5,610) (4,805) ------- ------ Cash flow before use of liquid 18,496 (1,162) resources and financing Management of liquid resources (b) (927) 737 Financing (5,047) 1,907 Increase in cash for the year 12,522 1,482 Repayment of capital element of 816 13 finance leases Cash flow from decrease/(increase) in 5,622 (1,891) debt Cash flow from increase/(decrease) in 927 (737) liquid resources ------ ------ Change in net debt resulting from cash 19,887 (1,133) flows Net debt acquired with purchase of - (1,426) subsidiary undertakings Finance leases (8,272) - Foreign exchange translation 3,469 (727) differences ------- -------- Movement in net debt in the year 15,084 (3,286) Net debt at 1 May 1999 (61,952) (58,666) ------- -------- Net debt at 30 April 2000 (46,868) (61,952) ====== ====== (a)Reconciliation of operating profit to operating cash flow Operating profit 22,616 (3,696) Restructuring costs - (2,278) Depreciation and amortisation charges 27,140 49,199 Non-cash items relating to exceptional - 5,591 stock provisions Loss/(profit) on sale of assets 516 (474) ------- ----- Gross cash inflow 50,272 48,342 Net movement in working capital 8,258 (4,950) ------- -------- Net cash inflow from operating 58,530 43,392 activities ======= ======= Audited Audited Year to Year to 30 April 30 April 2000 1999 £000 £000 (b)Analysis of cash flows for headings netted in the cash flow statement Returns on investments and servicing of finance Interest received 670 481 Interest paid (3,046) (3,949) Interest element of finance lease (382) (2) rentals paid Dividends paid to minorities (40) (27) ----- ----- Net cash outflow from returns on (2,798) (3,497) investments and servicing of finance ===== ===== Taxation UK corporation tax paid (1,661) (2,426) Overseas tax paid (2,376) (442) ------ ----- Net cash outflow for taxation (4,037) (2,868) ====== ===== Capital expenditure and financial investment Purchase of intangible assets (2,821) (2,666) Purchase of tangible assets (25,596) (37,757) Sale of tangible assets 3,293 6,794 ------- ----- Net cash outflow for capital (25,124) (33,629) expenditure and financial investments ====== ===== Acquisitions and disposals Purchase of shares from minority (2,380) - interests Purchase of subsidiary undertakings - (170) Net cash balances acquired with - 101 subsidiary undertakings Purchase of associates (157) - Sale of other investments - 314 ------ ----- Net cash (outflow)/inflow for (2,537) 245 acquisitions and disposals ===== ===== Management of liquid resources Sale of liquid resources 56 944 Purchase of liquid resources (1,321) - Net movement in term deposits 338 (207) ------ ----- Net cash (outflow)/inflow from (927) 737 management of liquid resources ===== ===== Audited Audited Year to Year to 30 April 30 2000 April 1999 £000 £000 Financing Issue of Ordinary Shares 1,391 29 Debt due within one year - 3,090 6,545 increase in short-term borrowings - repayment of short- (13,585) (26,072) term borrowings Debt due after one year - increase in 7,106 22,155 long-term borrowings - repayment of long- (2,233) (737) term loans - capital element of (816) (13) finance lease rental payments ------ ----- Net cash (outflow)/inflow from (5,047) 1,907 financing ====== ===== NOTES 1. Turnover Year to Year to 30 April 30 2000 April 1999 £000 £000 Area of activity Manufacturing 34,123 39,224 Operating 165,951 158,282 ------- ------- 200,074 197,506 ====== ======= Geographical area United Kingdom and Republic of 60,755 62,941 Ireland Overseas - Continental 82,624 85,138 Europe - The Americas 11,428 14,081 - Asia 45,267 35,346 ------- ------ 200,074 197,506 ====== ====== 2. Profit/(loss) before tax (1999: before exceptional items) Geographical area United Kingdom and Republic 12,127 7,317 of Ireland Overseas - Continental 4,919 11,867 Europe - The Americas (2,885) (1,980) - Asia 7,593 2,845 ------ ------ 21,754 20,049 ====== ====== 3. Exceptional items The profit on disposal of subsidiary undertakings amounting to £1,799,000 includes the reinstatement of negative goodwill of £1,683,000 on the termination of businesses. The exceptional items in the year to 30 April 1999 of £29,432,000 relates to the impairment of old technology equipment, redundancy and other costs arising from the restructuring of operational activities worldwide. Year to Year to 30 April 30 April 2000 1999 £000 £000 4. Taxation United Kingdom 3,803 90 Overseas 6,776 (5,416) ------ ----- 10,579 (5,326) ====== ===== 5. Dividends Dividends on equity - Ordinary Shares: Interim dividend paid of: 0.50p 1,808 1,578 per share (1999: 0.44p) Proposed final dividend of: 1.20p 4,341 3,802 per share (1999: 1.06p) ------- ----- Total dividend of: 1.70p per share 6,149 5,380 (1999: 1.50p) ===== ===== The proposed final dividend of 1.20p (1999: 1.06p) per Ordinary Share will be paid on 2 January 2001 to shareholders on the register at the close of business on 27 October 2000. To assist comparability, dividends per share are shown on the assumption that the 5 for 1 share subdivision, which was effected in November 1999, applied for both periods. 6. Earnings per share The calculation of earnings per share is based on the following: Year Year to to 30 April 30 April 2000 1999 Profit attributable to shareholders 10,496 14,220 before exceptional items (£000) Profit attributable to shareholders after 12,295 (749) exceptional items (£000) Weighted average number of shares in issue in the period - basic ('000) 359,679 358,556 - including dilutive share options 362,996 358,556 ('000) ------- ------- To assist comparability, earnings per share are shown on the assumption that the 5 for 1 share subdivision, which was effected in November 1999, applied for both periods. 7. Fixed assets Other Goodwill intangi Tangible ble £000 £000 £000 Net book value at 1 May 1999 109 5,095 129,500 Exchange adjustment - (580) (4,453) Additions operating equipment - - 32,592 other - 2,821 1,638 goodwill on acquisition of subsidiary 9,312 - - undertakings Depreciation provided in the period (304) (1,155) (25,681) Disposals at net book value - - (16,464) ----- ----- ------- Net book value at 30 April 2000 9,117 6,181 117,132 ====== ====== ====== 8. Reserves Share Capital Revenue premium reservereserve reserve account £000 £000 £000 Balance at 1 May 1999 1,068 10,834 58,932 Exchange adjustment - (628) (1,878) Profit for year - - 6,146 Transfer between reserves - (3,287) 3,287 Goodwill written back on business - - (1,683) terminations Arising on issue of shares 1,375 - - ______ ______ ______ Balance at 30 April 2000 2,443 6,919 64,804 ===== ====== ===== 9. Net debt 30 30 April April 2000 1999 £'000 £'000 Overdrafts 3,651 15,578 Debt due within one year 19,395 20,211 Debt due after one year 28,223 35,343 Finance lease 7,480 24 ------- -------- 58,749 71,156 Cash at bank and in hand (8,908) (6,955) Current asset investments and (2,973) (2,249) short term deposits ------ ------ 46,868 61,952 ======= ====== 10.Copies of the Report and Accounts will be mailed to shareholders by 13 September 2000 and will be available from the Company's registered office at Church Road, Bookham, Surrey KT23 3EU (telephone: 01372-453399, fax: 01372-459064) after that date.

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