Preliminary Results - Part 1

Photo-Me International PLC
24 July 2001


PART ONE 

PHOTO-ME INTERNATIONAL plc - PRELIMINARY RESULTS

PMI, the world's leading operator of photobooths and a leading manufacturer of
digital photoprocessing equipment, announces an underlying pre-tax profit
(before exceptional items) up 18.6% to £23.7m, in line with expectations, in a
year in which it made its first deliveries of the DKS photoprocessing minilab,
which has substantial profit potential.

y/e 30 April                       2001           2000       Increase

Turnover (£m)                     208.8          200.1         4.4% 
EBITDA (£m)                        59.2           49.9        18.8% 
Underlying PBT (£m)                23.7           20.0        18.6% 
Underlying basic EPS (p)           4.01           2.92        37.3% 
DPS(p)                             1.90           1.70        11.8%

EBITDA, PBT and EPS disregard £24.1m exceptional impairment provision in 00/01,
included in January's Interim Results, and £1.8m profit on disposal of Group
undertakings in 99/00.

*  PMI increased its total turnover by 4.4%. The Operating businesses' turnover
decreased by 1.5% to £163.4m (78% of total turnover) and Manufacturing turnover
increased by 33% to £45.4m (22% of total turnover, up from 17% in 1999/2000).

*  DKS production has continued to increase, with the principal customer being
Eastman Kodak, with which an OEM agreement was signed in September 2000.

*  Commercial roll-out of DigitalPortal kiosks is scheduled from September 2001.

*  Serge Crasnianski (CEO) stated 'The Board is confident that, overall,
progress will again be made in the current year. Whilst the Operating business
currently offers solid profits and good cash flow, the Manufacturing business
can be expected to grow both in the current year and beyond, resulting from the
significant long term growth in digital photography worldwide'.

Presentation to brokers' analysts:

A presentation will be made from 9.00 a.m. to 10.00 a.m. today at Regus,
CityPoint, 1 Ropemaker Street, EC2 (under 200 yards from Moorgate Underground
station).

Webcasting:

For those unable to attend the presentation, a webcast will be available from
late afternoon today at the following web address: www.uctx.com/photome

Note for Pictures Editors:

High resolution photographs of Serge Crasnianski (CEO), at the recent
installation of the 1000th DKS machine, are available to the media, without
charge, for download from www.newscast.co.uk

Enquiries:
Photo-Me International plc                                       01372-453399
Vernon Sankey (Deputy Chairman)              )
Serge Crasnianski (Chief Executive Officer)  ) on 24 July        020-74 44 4140
Jean-Luc Peurois (Group Finance Director)    ) 
Robert Lowes (Company Secretary)                                 01372-453399

Bankside Consultants Limited                                     020-74 44 41 66
Charles Ponsonby


                             CHIEF EXECUTIVE'S STATEMENT

In the year ended 30 April 2001, PMI increased underlying pre-tax profit by
18.6% to £23.7 million, in line with expectations, and made its first deliveries
of the DKS digital photoprocessing minilab which has the potential to capture a
substantial share of the world market for minilabs, which is estimated at some
160,000 units.

FINANCIAL OVERVIEW

In order to make comparisons more meaningful, the exceptional items initially
reported in the 2000/01 Interim Announcement, which related to the write-down of
old technology analogue equipment (as more fully explained below), have been
excluded from the following analysis.

On turnover up 4.4% at £208.8 million (1999/2000: £200.1 million), PMI achieved
a pre-tax profit up 18.6% at £23.7 million (1999/2000: underlying £20.0 million
before a profit on disposal of Group undertakings). Underlying EBITDA increased
by 18.8% to £59.2 million (1999/2000: £49.9 million).

Basic earnings per share before exceptional items were 4.01p (1999/2000: 2.92p),
representing an increase of 37.3%, after an effective tax rate of 37.3%
(1999/2000: 48.6%).
    
Operating turnover decreased by 1.5% to £163.4 million (78% of total turnover)
from £166.0 million (83% of total turnover). Manufacturing turnover, however,
increased by 33% to £45.4 million (22% of total turnover) from £34.1 million
(17% of total turnover).

This year, Continental Europe was the principal contributor to pre-tax profit
with £13.8 million (1999/2000: £4.9 million) on a turnover of £95.7 million
(1999/2000: £82.6 million), reflecting principally increased Manufacturing
activity and a better Operating performance in France. An explanation of the
profit variances of the principal Operating businesses is included in the
Business Review below.

THE IMPAIRMENT PROVISION

The impairment provision was announced on 18 January 2001 and included in the
Interim Results of 29 January 2001. The provision is in respect of old
technology analogue equipment and is a consequence of the acceleration of the
take-up of PMI's digital technology which had been particularly evident in the
last months of 2000.

As was stated in the Interim Announcement, the provision totalled £24.1 million
(gross) and comprises £18.1 million against the written down value of older
generation photobooths (which at 30 April 2000 were included in the Group's
balance sheet at a written down value of £33 million), a write-down mainly of
related stocks and property of £4.2 million and £1.8 million in respect of
previously capitalised development costs of analogue minilabs. The provision is
stated as an exceptional charge and is a non-cash item.

As has previously been stated, the analogue equipment is now depreciated over
three and half years and digital equipment over five to eight years.  In
accordance with FRS 11, PMI regularly conducts an impairment review to ensure
that the estimated discounted cash flows from the equipment - analogue and
digital - cover their net book value. However, the Directors continue to believe
that these useful lives are prudent.

DIVIDENDS

An increased final dividend of 1.4 p (1999/2000 : 1.2 p) per share, up 17%, is
proposed. If approved at the AGM on 20 September 2001, the dividend will be paid
on 2 January 2002 to shareholders on the register at close of business on 12
October 2001.

Together with the dividend of 0.5 p (1999/2000 : 0.5 p) per share paid on 6
April 2001, dividends per share are increased by 12% to 1.9 p (1999/2000 :
1.7p). Dividends are twice covered by the underlying profit attributable to
shareholders.

BORROWINGS, CASH AND INTEREST

During the year, net debt increased by £9.3 million to £56.2 million, reflecting
£36.8 million of net capital expenditure, of which £33.3 million relates to
Operating equipment. Gearing increased to 77.9% from 59.8% on net assets before
minority interest reduced to £72.1 million from £78.4 million following the
impairment charge of £24.1 million.

Net cash inflow from operating activities decreased to £44.2 million from £58.5
million, principally as a result of increased working capital requirements.

The net interest charge increased to £3.1 million (1999/2000: £2.8 million) and
was covered 8.6 times (1999/2000: 8.2 times).

BUSINESS REVIEW

Operating

Operating comprises the running of photobooths and other vending equipment. At
the year end, the total number of Operating sites worldwide was around 25,000,
including some 20,000 photobooths.

PMI is a global company with three major Operating territories - the UK, France
and Japan, in all of which it continues to enjoy the leading market position. In
all three territories, demand was flat. The UK, together with Ireland (with
7,600 sites, including 5,900 photobooths), additionally suffered from an
increased cost base consequent on investment in new photobooths and higher site
owner commissions as well as from a number of one-off problems, such as fuel
strikes and railway-related transport disruption in the Autumn and foot and
mouth disease in the Spring. France (with 8,000 sites, including 5,400
photobooths) was affected by fuel strikes in September 2000 and railway strikes
in March/April 2001. In Japan (with 3,700 sites, including 3,600 photobooths),
the results also reflected a higher depreciation charge following investment in
new photobooths.

The loss in the Americas was, however, much reduced at £1.3 million (1999/2000:
£2.9 million) despite a lower turnover of £9.5 million (1999/2000: £11.4
million), following restructuring.

In each of the UK/Ireland, France and Japan, PMI achieved a net increase of
installed photobooths during the year. Many of these installations were
minibooths, occupying approximately one-half of the area of a standard
photobooth and costing significantly less to manufacture and operate. The
performance of the PhotoPlanet (PMI's digital photobooth with Internet access),
whose roll-out commenced in April 2000, was adequate but fell short of initial
expectations. However, the product has been modified and improved, and the
roll-out of the modified photobooths will commence in the UK in the autumn of
2001.

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.

The DKS range of digital photoprocessing minilabs

PMI continues to have high hopes for the DKS range of digital photoprocessing
minilabs in the belief that it is only a matter of time before the replacement
of analogue photoprocessing minilabs, numbering some 160,000 worldwide, will
become a commercial imperative driven by the fast growth in utilisation of
digital cameras.

Volume production of DKS commenced in July 2000 and thereafter the rate of
production was gradually increased, with a total of some 700 units - in line
with budget - in the period to 30 April 2001 and 150 units in June 2001 alone.
The principal customer in the year was Eastman Kodak, with which an OEM
agreement was signed in September 2000, with some 400 units (mainly for the Far
East, excluding Japan, but also for the Middle East, Africa, South America and
Europe).

The DigitalPortal digital self-service photoprocessing kiosk

In August 2000 PMI entered into an agreement to establish a 50/50 joint venture,
DigitalPortal Inc (DPI), with SanDisk, the world's leading supplier of flash
data products. The digital self-service photoprocessing kiosks, which will be
operated by DPI in the USA and Canada, have been under development and will be
manufactured by PMI in Grenoble. The first 12 kiosks were delivered to the USA
in May 2001, for field testing, and commercial roll-out is expected to commence
from September 2001, with a view to the installation of several hundred units by
the year end.

PMI will be accounting for its share of Operating results of the joint venture,
but will not be recognising a Manufacturing profit on the sale of kiosks to the
joint venture.

BOARD

During the year, there were two appointments and three retirements - all of them
non-executives.  The appointments were, in October 2000, Vernon Sankey (formerly
Chief Executive of Reckitt & Colman, and currently a Board Director of several
companies, including Pearson and Zurich Financial Services) as independent
Deputy Chairman and, in March 2001, David Scotland (a Director of Allied
Domecq).  The retirements were Daniel Amar, Peter Berridge and David Miller.

STRATEGY

PMI's strategy for both Manufacturing and Operating, which is unchanged from
that summarised in the Interim  Announcement, is based on the application of
digital technology and the Internet to photography, using its LCD booster
technology.

The Directors continue to believe that this technology should allow it, with its
partners, Eastman Kodak and SanDisk, to capture an important part of the global
market for digital photoprocessing.

In the Operating area, PMI intends to exploit its network of sites in high
footfall areas around the world by extending the range of services offered and
to accelerate the movement from analogue to digital technology.

PROSPECTS

The Board is confident that, overall, progress will again be made in the current
year.  Whilst the Operating business currently offers sold profits and good cash
flow, the Manufacturing business can be expected to grow both in the current
year and beyond, resulting from the significant long term growth in digital
photography worldwide.



Serge Crasnianski                                                   24 July 2001
Chief Executive Officer

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