Final Results

RNS Number : 3117G

Photo-Me International PLC

28 June 2012

 



PHOTO-ME INTERNATIONAL PLC - PRELIMINARY ANNOUNCEMENT

Photo-Me (PHTM.L), the instant service equipment group, announces its results for the year to 30 April 2012. 

Results highlights:

	2012	2011	Change
Revenue	£207.8m	£219.8m	-5.4%
EBITDA	£44.0m	£47.6m	-7.4%
Pre-tax Profit	£20.1m	£18.0m	+11.9%
EPS (diluted)	3.95p	3.74p	+5.6%
Net Cash *	£51.8m	£40.7m	+27.4%
Dividend	2.50p	2.00p	+25.0%

 * As defined in note 7 to the accounts

·      Revenue 5.4% lower at £207.8 million

·      EBITDA 7.4% lower at £44.0 million, but remains substantial at 21.2% of Revenue

·      Pre-tax Profit of £20.1 million, up 11.9%

·      Further material increase in the net cash position to £51.8 million

·      Increase of 25% in the dividend to 2.5 pence per share

John Lewis, Non-Executive Chairman, said; 'With the global economic backdrop remaining so testing, it is satisfying to report an increase in our pre-tax profits of almost 12%. Sales overall were lower due to continued weakness in our Sales and Servicing division, but once again we have witnessed a very resilient performance in our Operations division in a number of markets. Strong cash generation is a key strength of Photo-Me and we have further increased our net cash balance to £51.8 million. We will be recommending a final dividend of 1.25 pence to give a total dividend for the year of 2.5 pence, representing an increase of 25% over the year.

'We have made further progress in our strategy of focusing on the development of innovative complementary products that build upon the strength of the ID photobooth business, but less this year than we would have hoped.  While the rollout of our next generation photobooth has gone according to plan, other product sales have been adversely affected by weakness in the global economy, curtailing capital investment both from large corporations and individual retailers.

'Our balance sheet is strong and we are continuing to reduce our costs. Despite the difficult trading background we intend to press ahead with new product development and we remain keen to add to our current portfolio of businesses if the right opportunities arise.

Subject to the risks and uncertainties detailed in the business and financial review, the Board once again anticipates  further progress over the coming year.'

Enquiries:

Photo-Me International

01372 453 399

Serge Crasnianski or Françoise Coutaz-Replan   

Media

Madano Partnership      

Matthew Moth/Sarah Mylroie

020 7593 4000

Investors:

IR Focus

Neville Harris

020 7593 4015

CHAIRMAN'S STATEMENT

These are Photo-Me's 50^th set of annual results since its listing as a public company in 1962. It is my pleasure therefore to report another year of progress, in global economic circumstances which are probably unprecedented in the Group's history.

Results

Despite revenue being 5.4% lower over the year, we have continued to improve our profitability thanks to a robust performance from our Operations division in our key geographic markets. Although we experienced disappointing trading in Sales & Servicing, where further restructuring is proving necessary, we have again witnessed a good improvement in Group pre-tax profit, from £18.0 million last year to £20.1 million this year and a further increase in our net cash resources, which increased by £11 million to nearly £52 million.

Strategy

Our strategy is to use the significant cash flow generated from our long established photobooth business to develop new and complementary products which will drive growth in the future. Alongside this, we are keen to penetrate new geographic markets, which offer the potential of long-term growth.

We have made good progress over the last two years implementing this, with the introduction of the new designer photobooth by Starck, a new minilab and a range of pocketbook and photobook machines. However, while the rollout of the new photobooth has gone according to plan, other product sales have been adversely affected by weakness in the global economy, curtailing capital investment both from large corporations and individual retailers.

Costs

We have borne down on costs in the recent past but the continued travails caused by the worldwide recession have led us to undertake additional changes this year. We have restructured further the French Sales and Servicing subsidiary and transferred management control to the CEO of the European activities. This means that there is now a centralised logistics platform for the Group and we have made savings by reducing both the level of stocks and staff numbers.  

In addition, we have introduced new software relating to both the analysis of machine takings - which will allow better ongoing management - and accounting, with a reduction in associated licence costs.

Dividends

We reintroduced dividend payments in 2010. That year we paid 1.25 pence per share and last year we increased that by 60% to 2.0 pence per share. This year, we are pleased to be recommending a final dividend of 1.25 pence to give a total dividend for the year of 2.5 pence, representing a further increase of 25% over the year.

If approved at the Annual General Meeting on 13 September 2012, the final dividend will be paid on 7 November 2012 to shareholders on the register at the close of business on 28 September 2012. The ex-dividend date is 26 September 2012.

Outlook 

Our balance sheet is strong and we are continuing to reduce our costs. Despite the difficult trading background we intend to press ahead with new product development and we remain keen to add to our current portfolio of businesses if the right opportunities arise.

Subject to the risks and uncertainties detailed in the business and financial review, the Board once again anticipates further progress over the coming year.

John Lewis,

Non-Executive Chairman

BUSINESS AND FINANCIAL REVIEW

Business Review

Photo-Me has two principal activities, which the Board monitors in assessing the Group's performance:

Operations - which comprises the operation of unattended vending equipment, primarily photobooths, digital photo kiosks, photobook makers, amusement machines and business service equipment.

Sales and Servicing- which comprises the development, manufacture, sale and after sale servicing of the above-mentioned Operations equipment and a range of photo processing equipment and photo album maker solutions.

Combined

The business is international in its reach and focused on three main geographic areas at present: Continental Europe, UK & Republic of Ireland and Asia. 

The Group continued to improve its overall profitability. Geographically, the Asian business recovered from the previous year's earthquake in Japan and the UK and Europe both improved despite the European business being adversely affected by a weak performance in its Sales & Servicing division.

Geographical analysis of revenue and profit (by origin)

	Revenue			Operating profit
Year to 30 April	2012	2011	Change	2012	2011	Change
	£m	£m	%	£m	£m	%
Continental Europe	114.0	122.9	-7.2	13.6	13.3	+2.7
UK & Republic of Ireland	47.6	53.6	-11.2	2.5	2.0	+23.0
Asia	46.2	43.3	+6.7	3.9	3.1	+26.2
	207.8	219.8	-5.4	20.0	18.4	+8.9

Continental Europe, which includes the largest of the Group's Operations activities, together with the great majority of Sales & Servicing revenue, once again comprised the largest element of reported Group revenue and contributed the majority of Group operating profit. Substantially all Group overheads are charged against the UK & Republic of Ireland.

OPERATIONS

	Revenue			Operating profit
	2012	2011	Change	2012	2011	Change
	£m	£m	%	£m	£m	%
Year to 30 April	178.0	176.8	+0.7	25.1	21.2	+18.7

Operations contributed 86% (2011: 80%) of revenue. Divisional revenue increased by 0.7%, but operating profit rose by 18.7%, led by a strong French performance, but there were also improvements in Germany (where management has been strengthened), Switzerland and Japan.

At the year end, the total number of vending machines sited worldwide was 43,300 (2011: 43,700), the small reduction in the year comprising an increase of over 1,000 in the number of photobooths, combined with a reduction in the quantity of low value amusement machines. With 23,500 now sited, photobooths represent more than half of the total estate of machines. This extensive network of sites, with long-standing site-owner contracts and relationships, supplemented by an established field service and cash collection infrastructure, represents one of Photo-Me's greatest strengths.

Photo-Me's Operations business is global, trading in 15 industrialised countries. However, 86% of sites are located in three territories - the UK & Ireland, France and Japan. By area, Continental Europe accounted for 19,400 (2011: 18,300) sites; the UK & Ireland for 14,950 (2011: 16,850); and Asia for 8,950 (2011: 8,550). Increasing the number of photobooth sites remains a priority for the Group. Vending units provide good cash flow, supporting corporate developments, including investment in R&D to prepare for the next generation of products.

In the UK & Ireland, revenue from Operations was down 8.7% and operating profits were 7.9% lower, with the principal reasons for this being the loss of part of the business of supplying driving licence photographs and an economic climate that remains testing. There have been some reductions in staff numbers in the UK and this area has now been brought fully under the control of the CEO of the European activities, who has done an excellent job in running Continental Europe. Indeed, in Europe, Operations revenues rose by 3.3%, while operating profits were 28.1% higher, led once again by a strong showing from France, but with good support from other areas, such as Switzerland and Germany. Asian revenues (up 5.7%) and profits (up 21.9%) reflect the recovery from the adverse effect of the Japanese earthquake in the previous year.

Photobooths

Photobooths are an efficient and competitively-priced provider of ID and fun photographs and represent a mature cash generative business. Over the year the number of photobooths increased by over a thousand, bringing to 23,500 the total number of sites, internationally.

The roll-out of the Group's new designer Photobooth by Starck - is progressing to plan and results to date have been encouraging. Whilst there were only 370 in operation at year-end, the target over the next two years is to increase this by 2,000.

Progress in China has been slower than had originally been anticipated, but the Group now has operating licences in Shanghai, Beijing and Guangzhou. This market needs to be considered a long-term development prospect.

Digital printing kiosks and Photobook makers

Digital printing kiosks are very much focused in Continental Europe, particularly France and Switzerland.

The market in France for digital printing kiosks remains positive and the introduction of the Group's new "all-in-one" kiosk, which also incorporates a pocketbook maker, has been well received, and has generated improved revenues. This machine (producing prints or a printed 10x15cm photo album) gives Photo-Me a unique market offering. The range has now also been augmented by the ability to produce large-format prints.

Amusement and business service equipment

Overall, this activity suffered against a poor general economic backdrop. However, in the UK, the Group remains a major player and the largest operator of coin-operated children's rides.  The latest range of simulator-type rides is generating encouraging results.

SALES & SERVICING

	Revenue			Operating profit/(loss)
	2012	2011	Change	2012	2011	Change
	£m	£m	%	£m	£m	%
Year to 30 April	29.8	43.0	-30.7	(2.4)	0.5	-556.9

Substantially all of Sales & Servicing revenue derives from the sale to third parties of retail photographic equipment, in the form of machines and related supplies and consumables.  

Revenue decreased by 30.7% and a loss of £2.4 million was recorded compared to a profit of £0.5 million in 2011.

This year's result from KIS (the R&D and manufacturing unit in France) was very disappointing, with sales of product constrained by the unwillingness of large companies to invest in new equipment in the current market, while individual retailers have been unable to access capital in many cases. Whilst the business has been rationalised and restructured in the recent past, a far more significant restructuring has been started which has resulted in both a reduction in staff numbers and the transference of the maintenance and refurbishing activities of KIS into a new Group company under the management of the CEO of the European activities. The refurbishing activities in particular are very important for the Operations division and the new smaller company will be more efficient and focused.

The Group remains in discussions with existing OEM customers regarding further orders for its pocketbook makers and photobook builders. The prospects for the latter should also be enhanced by the ability to process inkjet material. Sales of the Group's new DKS4 minilab have made a slow start, as the background in the photographic market remains difficult, as demonstrated by Kodak's move into Chapter 11 in early 2012.

FINANCIAL REVIEW

Statement of comprehensive income

The following table summarises the results, analysed between the two Divisions, Operations and Sales & Servicing:

	Revenue			Operating profit/(loss)
Year to 30 April	2012	2011	Change	2012	2011	Change
	£m	£m	%	£m	£m	%
Operations	178.0	176.8	+0.7	25.1	21.2	+18.7
Sales & Servicing	29.8	43.0	-30.7	(2.4)	0.5	-556.9
Group overheads				(2.7)	(3.3)	+20.0
	207.8	219.8	-5.4	20.0	18.4	+8.9

Foreign exchange rate movements had little effect on the revenue and operating profit, both divisionally and centrally.

Turnover decreased by 5.4% to £207.8 million.

EBITDA was 7.4% lower at £44.0 million (2011: £47.6 million), but the figure remains substantial, representing 21.2% of revenue.

Operating profit improved by 8.9% from £18.4 million to £20.0 million.

Net finance revenue was £0.1 million, compared to net finance costs of £0.4 million last year.  The pre-tax profit increased by 11.9% to £20.1million (2011: £18.0 million).

After a tax charge of £5.6 million (2011: £4.3 million), representing a charge of 27.8% (2011: 23.6%) the profit after tax of £14.5 million (2011: £13.8 million) reflected a 5.8% improvement.

The fully diluted earnings per share from continuing operations were 3.95 pence (2011: 3.74 pence).

Statement of financial position

Shareholders' equity totalled £95.8 million (2011: £87.8 million), equivalent to 26.4 pence (2011: 24.3 pence) per share.

Cash generation has remained strong and we finished the year with a net cash balance of £51.8 million (2011: £40.7 million), leaving the Group well placed for the future. The improvement in the net cash position has been very substantial over the past three years, with a net change of £75.3 million from net debt of £23.5 million at 30 April 2009. 

Funding and treasury policy

The £11 million net cash inflow is explained in the following summarised cash flow statement:

	2012 £m	2011 £m
Opening net cash	40.7	8.1
Cash flow
Operating profit	20.0	18.4
Depreciation	24.0	29.2
Working capital	0.5	10.7
Taxation	(5.3)	(2.3)
Interest paid	(0.6)	(0.8)
All others	(2.1)	0.1
Operating cash flow	36.5	55.3
Use of cash flow
Net capital expenditure	(17.5)	(19.5)
Dividends paid	(7.2)	(4.5)
All others	(0.7)	1.3
	(25.4)	(22.7)
Net cash inflow	11.1	32.6
Closing net cash	51.8	40.7

Capital structure

The Group's funding policy is to maintain a timely flow of funds to meet anticipated funding requirements.

The Group manages its capital to sustain the future development of the business and to maximise long-term shareholder value. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, sell assets or review the level or type of debt.

The Group's policy is to use a mixture of long-term and short-term borrowings. At 30 April 2012, the Group's borrowings were mainly short-term, a situation which is untypical. The Group is currently evaluating new borrowing sources.

Surplus cash is placed in bank deposits and other investments with high credit ratings and kept under constant review.

The Group is primarily financed by Ordinary shares, retained profits and borrowings.

Financial instruments

The Group's principal financial instruments comprise bank loans, finance leases and overdrafts. These instruments are used to raise finance for the Group's operations and to cover capital expenditure and working capital requirements.

The Group takes the view that short-term debtors and creditors are not financial instruments that play a significant medium to long-term role in the financial risk profile of the Group.

Financial risks

The Group is exposed to the following risks arising from financial instruments: credit risk, liquidity risk and market risk.

Credit risk

To minimise the credit risk relating to cash at bank in the current uncertain economic times, the Group regularly reviews its relationships with banks. During the year it has sought to ensure that cash at bank is spread amongst the leading banks in the countries concerned, being financial institutions that have a strong credit rating.

Liquidity risk

The Group's objective is to ensure adequate facilities are available and to maintain a balance between continuity of funding and flexibility, through use of overdrafts, bank loans and finance leases. As already stated, at 30 April 2012 the Group had a net cash balance of £51.8m. Surplus funds are generally available at short notice.

Market risk

Market risk arises from changes in exchange rates and interest rates. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential risks for the Group. The Board regularly reviews and agrees policies for managing risks.

Foreign exchange risk

The Group has a number of overseas subsidiaries whose functional currency is not Sterling. The principal currencies of the Group are Sterling, Euro, Swiss francs and Japanese yen. As a result, changes in exchange rates can impact on the net assets of the Group's balance sheet. Individual subsidiaries are exposed to exchange rate movements as a result of selling or purchasing in foreign currencies. Hedges may be taken out to cover forward foreign exchange contracts to assist in managing the exchange risk from trading. Any amounts hedged are generally short-term (less than one year) and are monitored for their effectiveness.

Interest rate risk

The Group's income and operating cash flows are substantially independent of changes in interest rates. The Group finances its operations through a mixture of retained profit, cash balances and bank borrowings. The Group borrows in the desired currencies at both fixed and floating rates of interest. The Group regularly monitors the possibility of switching from floating to fixed rate and from fixed to floating. It also monitors the possibility of using cap and floor arrangements. The Group may also take out derivative contracts to limit interest rate exposure. At both 30 April 2012 and 30 April 2011 the majority of the Group's borrowings were subject to floating rates of interest.

Key performance indicators

The Group measures its performance using a mixture of financial and non-financial indicators. These are aligned to the Group's long-term strategy of enhancing shareholder value.

	2012	2011	Change
Vending sites:
Total	43,300	43,700	-0.9%
Photobooths	23,500	22,400	+4.9%
Digital printing kiosks & photobook makers	5,100	5,050	+1.0%
Other vending equipment	14,700	16,250	-9.5%
Revenue:
Total	£207.8m	£219.8m	-5.4%
Operations	£178.0m	£176.8m	+0.7%
Sales & Servicing	£29.8m	£43.0m	-30.7%
EBITDA	£44.0m	£47.6m	-7.4%
Operating profit
Total	£20.0m	£18.4m	+£1.6m
Operations	£25.1m	£21.2m	+£3.9m
Sales & Servicing	£(2.4)m	£0.5m	-£2.9m
Group overhead	£(2.7)m	£(3.3)m	+£0.6m
Increase in net cash position	£11.1m	£32.6m	-£21.5m
Gearing ratio	-	-	-
Gross capital expenditure	£19.1m	£20.6m	-£1.5m
Depreciation and amortisation	£24.0m	£29.2m	-£5.2m
Research and development expenditure (including amounts capitalised)	£3.6m	£4.1m	-£0.5m
Research and development expenditure as a percentage of Sales & Servicing revenue (including inter-segment sales)	7.1%	6.4%	+0.7%

Financial objective

Photo-Me's main financial targets for the future are to increase revenue, to maintain profitability and to provide attractive returns for investors backed by the Group's strong cash generation.

RISKS AND UNCERTAINTIES

The Group's operational performance and growth are influenced and impacted by a number of risks.

The following key risks have been identified by the Board:

Risk related to the economic backdrop

·      Financing difficulties for the Group's customers: sales of equipment to retail customers are dependent upon the ability of the Group's customers to find capital finance providers

·      Consumer spending contraction: the worldwide recession could lead to reductions in discretionary spending, impacting upon the Group's Operations revenues

·      Volatility in foreign exchange rates: as the large majority of the Group's revenue and profits are generated outside of the UK, Group results could be adversely impacted when those currencies are translated into Sterling

Operational risks

·      Reduction in the retail site-owner base: with the possible collapse of additional established retail chains, which traditionally have provided the base of sites for the Group's vending equipment, the Group could lose Operations revenue streams and the market for equipment in the Sales & Servicing activity could be reduced

·      Reliance on OEM sales: the Group's Sales & Servicing business is heavily dependent on its ability to secure further material orders for the photobook maker suite of products

Risks related to regulation

·      Centralisation of production of ID photos: in many European countries where the Group operates, if governments were to implement centralised image capture for biometric passport and other applications, the Group's Operations revenues and profits could be seriously affected

Some of these risks are beyond the control of the Group but the Board is continuously analysing and assessing the risks faced and improving the policies and plans to manage the risks identified.

Group STATEMENT OF COMPREHENSIVE income

for the year ended 30 April 2012

		2012	2011
	Notes	£'000	£'000
Revenue	2	207,841	219,820
Cost of sales		(169,340)	(183,142)
Gross profit		38,501	36,678
Other operating income		1,194	1,916
Administrative expenses		(19,765)	(20,295)
Share of post-tax profits from associates		89	89
Operating profit	2	20,019	18,388
Finance revenue		844	476
Finance cost		(723)	(861)
Profit before tax		20,140	18,003
Total tax charge	3	(5,594)	(4,252)
Profit for year		14,546	13,751
Other comprehensive income
Exchange differences arising on translation of foreign operations		(2,841)	3,686
Translation reserve taken to income statement on disposal		(12)	(10)
Actuarial movements in defined benefit obligations and other post-employment benefit obligations		(531)	(235)
Deferred tax on actuarial movements		118	38
Other comprehensive (expense)/income net of tax		(3,266)	3,479
Total comprehensive income for the year		11,280	17,230
Profit for  the year attributable to:
Owners of the Parent		14,349	13,608
Non-controlling interests		197	143
		14,546	13,751
Total comprehensive income attributable to:
Owners of the Parent		11,175	17,061
Non-controlling interests		105	169
		11,280	17,230
Earnings per share
Basic earnings per share	4	3.97p	3.77p
Diluted earnings per share	4	3.95p	3.74p

GROUP STATEMENT OF FINANCIAL POSITION

as at 30 April 2012

	Notes	2012	2011
		£'000	£'000
Assets
Non-current assets
Goodwill	6	9,895	10,093
Other intangible assets	6	8,958	10,368
Property, plant and equipment	6	46,128	50,847
Investment property	6	1,147	1,749
Investments in associates		592	598
Other financial assets   - held to maturity		2,176	1,857
- available-for-sale		80	80
Deferred tax assets		3,148	3,038
Trade and other receivables		1,473	1,947
		73,597	80,577
Current assets
Inventories		16,931	20,858
Trade and other receivables		14,302	20,398
Other financial assets  - held to maturity		213	14
- available-for-sale		5	23
Current tax		19	34
Cash and cash equivalents		54,605	56,212
		86,075	97,539
Total assets		159,672	178,116
Equity
Share capital		1,850	1,844
Share premium		5,873	5,718
Treasury shares		(5,802)	(5,802)
Other reserves		18,925	21,686
Retained earnings		74,994	64,374
Equity attributable to owners of the Parent		95,840	87,820
Non-controlling interests		1,001	935
Total equity		96,841	88,755
Liabilities
Non-current liabilities
Financial liabilities		776	5,704
Post-employment benefit obligations		4,285	4,061
Provisions		77	85
Deferred tax liabilities		2,508	3,307
Trade and other payables		5,646	7,438
		13,292	20,595
Current liabilities
Financial liabilities		4,386	11,700
Derivative financial liability		-	217
Provisions		4,957	4,428
Current tax		5,368	5,136
Trade and other payables		34,828	47,285
		49,539	68,766
Total equity and liabilities		159,672	178,116

GROUP STATEMENT OF CASH FLOWS

for the year ended 30 April 2012

		2012 £'000	2011 £'000
Cash flows from operating activities
Profit before tax		20,140	18,003
Finance cost		723	861
Finance revenue		(844)	(476)
Operating profit		20,019	18,388
Share of post-tax profit from associates		(89)	(89)
Amortisation of intangible assets		3,277	3,217
Depreciation of property, plant and equipment		20,737	25,963
(Profit)/loss on sale of property, plant and equipment		(69)	21
Exchange differences		(905)	697
Other items		(1,010)	(517)
Changes in working capital:
Inventories		2,650	2,438
Trade and other receivables		5,540	(134)
Trade and other payables		(8,894)	442
Increase in trade and other payables - arising from sale of rental income		-	8,164
Provisions		1,170	(206)
Cash generated from operations		42,426	58,384
Interest paid		(649)	(760)
Taxation paid		(5,314)	(2,279)
Net cash generated from operating activities		36,463	55,345
Cash flows from investing activities
Outflow from disposal of subsidiaries		-	(77)
Investment in associates		(62)	-
Investment in intangible assets		(2,477)	(3,646)
Proceeds from sale of intangible assets		-	2
Purchase of property, plant and equipment		(15,865)	(16,999)
Proceeds from sale of property, plant and equipment		866	1,134
Purchase of available-for-sale investments		(387)	-
Proceeds from sale of available-for-sale investments		528	-
Interest received		434	148
Dividends received from associate		101	65
Net cash utilised in investing activities		(16,862)	(19,373)
Cash flows from financing activities
Issue of Ordinary shares to equity shareholders		161	232
Repayment of capital element of finance leases		(643)	(483)
Proceeds from borrowings		-	391
Repayment of borrowings		(11,148)	(15,281)
Increase in assets held to maturity		(433)	(1,224)
Dividends paid to owners of the Parent		(7,232)	(4,512)
Dividends paid to non-controlling interests		(39)	(26)
Net cash utilised in financing activities		(19,334)	(20,903)
Net increase in cash and cash equivalents		267	15,069
Cash and cash equivalents at beginning of year		56,212	39,796
Exchange (loss)/gain on cash and cash equivalents		(1,874)	1,347
Cash and cash equivalents at end of year		54,605	56,212

GROUP STATEMENT OF CHANGES IN EQUITY

for the year ended 30 April 2012

	Share capital	Share premium	Treasury shares	Other reserves	Translation reserve	Retained earnings	Attributable to owners of the Parent	Non-controlling interests	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 May 2010	2,039	5,492	(5,802)	2,229	15,606	57,996	77,560	792	78,352
Profit for year	-	-	-	-	-	13,608	13,608	143	13,751
Other comprehensive income/(expense)
Exchange differences	-	-	-	-	3,660	-	3,660	26	3,686
Translation reserve taken to income statement on disposal of subsidiaries	-	-	-	-	(10)	-	(10)	-	(10)
Actuarial movement in defined benefit pension scheme and other post-employment benefit obligations	-	-	-	-	-	(235)	(235)	-	(235)
Deferred tax on actuarial movements	-	-	-	-	-	38	38	-	38
Total other comprehensive income/(expense)	-	-	-	-	3,650	(197)	3,453	26	3,479
Total comprehensive income for the year	-	-	-	-	3,650	13,411	17,061	169	17,230
Transactions with owners of the Parent
Shares issued in period	6	226	-	-	-	-	232	-	232
Share options	-	-	-	-	-	193	193	-	193
Redemption of Deferred shares	(201)	-	-	201	-	-	-	-	-
Dividends	-	-	-	-	-	(7,226)	(7,226)	(26)	(7,252)
Total transactions with owners of the Parent	(195)	226	-	201	-	(7,033)	(6,801)	(26)	(6,827)
At 30 April 2011	1,844	5,718	(5,802)	2,430	19,256	64,374	87,820	935	88,755
At 1 May 2011	1,844	5,718	(5,802)	2,430	19,256	64,374	87,820	935	88,755
Profit for year	-	-	-	-	-	14,349	14,349	197	14,546
Other comprehensive (expense)/income
Exchange differences	-	-	-	-	(2,749)	-	(2,749)	(92)	(2,841)
Translation reserve taken to income statement on disposal of subsidiaries	-	-	-	-	(12)	-	(12)	-	(12)
Actuarial movement in defined benefit pension scheme and other post-employment benefit obligations	-	-	-	-	-	(531)	(531)	-	(531)
Deferred tax on actuarial movements	-	-	-	-	-	118	118	-	118
Total other comprehensive expense	-	-	-	-	(2,761)	(413)	(3,174)	(92)	(3,266)
Total comprehensive (expense)/ income for the year	-	-	-	-	(2,761)	13,936	11,175	105	11,280
Transactions with owners of the Parent
Shares issued in period	6	155	-	-	-	-	161	-	161
Share options	-	-	-	-	-	302	302	-	302
Dividends	-	-	-	-	-	(3,618)	(3,618)	(39)	(3,657)
Total transactions with owners of the Parent	6	155	-	-	-	(3,316)	(3,155)	(39)	(3,194)
At 30 April 2012	1,850	5,873	(5,802)	2,430	16,495	74,994	95,840	1,001	96,841

NOTES

1 Basis of preparation and accounting policies

The preliminary results for the year ended 30 April 2012 have been extracted from the audited consolidated financial statements, which were approved by the Board of Directors on 27 June 2012. The audited consolidated financial statements have not yet been delivered to the Registrar of Companies but are expected to be published by the end of July. 

From 1 May 2011, the Group has changed its accounting policies in the following areas:

The Group has applied the Improvements to IFRSs (issued May 2010) which includes Amendment to IFRS 7 - Financial Instruments Disclosures.  The Group also applied Amendments to IFRS 7 - Disclosures:  Transfers of Financial Assets.  The impact of both these changes has been minor and has improved qualitative and quantitative disclosures relating to the Group's financial instrument risk exposures and partially derecognised financial assets.

The Group has adopted the changes to IFRS 3 Business Combinations and IFRS 7 - Financial Instruments Disclosures in terms of collateral obligations arising from the 2010 Improvements to IFRS.  The amendments to IAS 34 Interim Reporting will be reflected in the next interim report.

Abridged financial information

The financial information in this announcement which was approved by the Board of Directors does not constitute the Company's statutory accounts for the years ended 30 April 2011 or 2012 but is derived from those accounts. Statutory accounts for 2011 have been delivered to the Registrar of Companies. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under s498(2) or (3) Companies Act 2006.

This preliminary announcement has been prepared in accordance with the accounting policies under IFRS as adopted by the EU.

Whilst the financial information included in this preliminary announcement has been prepared in accordance with IFRS, this announcement does not itself contain sufficient information to comply with IFRS. This preliminary announcement constitutes a dissemination announcement in accordance with Section 6.3 of the Disclosures and Transparency Rules (DTR).

2 Segment analysis

Operating segments are reported in a manner consistent with internal reporting to the Chief Operating Decision Maker as required by IFRS8, Operating Segments.

The Group has identified two segments as set out below:

(i) Operations: comprises the operation of unattended vending equipment, in particular photobooths, digital printing kiosks, amusement machines and business service equipment.

(ii) Sales & Servicing: comprises the development, manufacture, sale and after-sale servicing of this Operations equipment and a range of photo-processing equipment, together with the servicing of other third party equipment.

	Operations £'000	Sales & Servicing £'000	Total £'000
2012
Total revenue	178,063	51,546	229,609
Inter-segment revenue	-	(21,768)	(21,768)
Revenue from external customers	178,063	29,778	207,841
EBITDA	44,994	997	45,991
Depreciation and amortisation	(19,890)	(3,511)	(23,401)
Operating profit excluding associates	25,104	(2,514)	22,590
Share of post-tax profit from associates			89
Corporate costs excluding depreciation and amortisation			(2,047)
Corporate depreciation and amortisation			(613)
Operating profit			20,019
Finance revenue			844
Finance costs			(723)
Profit before tax			20,140
Tax			(5,594)
Profit for year			14,546
2011
Total revenue	176,852	64,283	241,135
Inter-segment revenue	-	(21,315)	(21,315)
Revenue from external customers	176,852	42,968	219,820
EBITDA	46,080	4,086	50,166
Depreciation and amortisation	(24,947)	(3,595)	(28,542)
Operating profit excluding associates	21,133	491	21,624
Share of post-tax profit from associates			89
Corporate costs excluding depreciation and amortisation			(2,687)
Corporate depreciation and amortisation			(638)
Operating profit			18,388
Finance revenue			476
Finance costs			(861)
Profit before tax			18,003
Tax			(4,252)
Profit for year			13,751

3  Taxation

		2012							2011
							£'000				£'000
Current taxation
UK							742				591
Overseas							5,834				5,535
Prior year adjustments							(211)				293
							6,365				6,419
Deferred taxation
Temporary differences							(276)				(18)
Prior year adjustments							(492)				(2,166)
Impact of change in rate							(3)				17
							(771)				(2,167)
Total tax charge							5,594				4,252
4 Earnings per share
								Year to  30 April 2012				Year to  30 April 2011
Basic earnings per share								3.97p				3.77p
Diluted basic earnings per share								3.95p				3.74p
The earnings and weighted average number of shares used in the calculation are set out in the table below:
Earnings attributable to ordinary shareholders (£'000)								14,349				13,608
Weighted average number of shares in issue in the period:
- basic ('000)								361,840				361,078
- including dilutive share options ('000)								363,760				363,543

5 Dividends paid and proposed
An interim dividend for the year ended 30 April 2011 of 1.0p per share was paid on 6 May 2011 and a final dividend of 1.0p per share was paid on 7 November 2011. The Board has declared an interim dividend of 1.25p per share for the year ended 30 April 2012, which was paid on 8 May 2012. The Board has proposed a final dividend for the year ended 30 April 2012 of 1.25p per share, which is subject to shareholder approval at the Annual General Meeting to be held on 13 September 2012. If approved, the dividend will be paid on 7 November 2012.

6 Non-current assets

	Goodwill	Intangible assets	Property, plant & equipment	Investment property
	£'000	£'000	£'000	£'000
Net book value at 1 May 2011	10,093	10,368	50,847	1,749
Exchange difference and other movements	(198)	(609)	(298)	(121)
Additions - photobooths and vending equipment	-	-	15,792	-
Additions - other assets	-	2,477	842	-
Amortisation	-	(3,277)	-	-
Depreciation	-	-	(20,256)	(481)
Disposals at net book value	-	(1)	(799)	-
Net book value at 30 April 2012	9,895	8,958	46,128	1,147

7 Net cash

	2012 £'000	2011 £'000
Cash and cash equivalents per statement of financial position	54,605	56,212
Financial assets - held to maturity	2,389	1,871
Non-current instalments due on bank loans	(685)	(5,509)
Current instalments due on bank loans	(4,256)	(11,259)
Non-current finance leases	(91)	(195)
Current finance leases	(130)	(441)
Net cash	51,832	40,679

Net cash is a non-GAAP measure since it is not defined in accordance with IFRS but is a key indicator used by management in assessing operational performance and financial position strength. The inclusion of items in net cash as defined by the Group may not be comparable with other companies' measurement of net cash/(debt). The Group includes in net cash, cash and cash equivalents and certain financial assets, mainly deposits, less loans and other borrowings.

At 30 April 2012, £2,389,000 of the total net cash (2011: £1,871,000) comprised bank deposit accounts that are subject to restrictions and are not freely for use by the Group.

8 Responsibility statement of the directors in respect of the annual financial report

The responsibility statement below has been prepared in connection with the Company's full Annual Report for the year ending 30 April 2012.  Certain parts thereof are not included within this announcement.

"We confirm that to the best of our knowledge:

·  the financial statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

·  the Business and financial review, which is incorporated into the Report of the directors, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face."

By order of the Board

John Lewis                                                                           Serge Crasnianski

Chairman                                                                               Chief Executive Officer

27 June 2012

9 Publication of the audited financial statements

Copies of the Report and Accounts for the year ended 30 April 2012 will be mailed to those shareholders who have opted to receive them, by the end of July and will be available from the Company's registered office at Church Road, Bookham, Surrey KT23 3EU (telephone: [phone], fax: [phone], email: [e-mail]) and the Company's website (http://investor.photo-me.com/financial- -reports) after that date.

 

END

 

 

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