Final Results
Photo-Me International PLC
06 July 2006
PHOTO-ME INTERNATIONAL PLC - PRELIMINARY ANNOUNCEMENT
PMI, the FTSE 250 digital imaging company, announces results for the year to 30
April 2006 (presented this year under IFRS) which, after last year's record, are
its second best ever, on both an underlying and a reported basis. Vending, the
larger of PMI's two activities, increased its revenue and profit. Manufacturing,
a less predictable business in the minilab area, did not repeat last year's
outstanding performance, although the second half was much improved.
Key Points - Financial
• On revenue down 3.1% at £230.0m, operating profit (before the £3.2m
operating exceptional restructuring charge) reduced by 22.7% to £27.9m,
resulting in an operating margin of 12.1% (2005: 15.2%). The restructuring
charge related primarily to the Manufacturing activities in France.
• If the operating exceptional restructuring charge and the £5.4m exceptional
insurance recovery are excluded, EBITDA was £53.3m (2005: £59.4m), down
10.3%, pre-tax profit amounted to £26.2m (2005: £34.8m), down 24.7%, and
basic EPS totalled 4.8p (2005: 6.3p), down 24.5%.
• The reported pre-tax profit was £28.5m (2005: £33.9m), down 15.9%, and
the reported basic EPS was 5.5p (2005: 6.2p), down 11.3%.
• Total shareholders' equity increased by 18.7% to £104.6m.
• Dividends per share of 2.4p (2005: 2.0p), up 20.0%, are proposed, with
a final dividend per share of 1.4p (2005: 1.2p), up 16.7%
• On 5 June 2006, in response to press speculation, PMI confirmed that it had
been conducting a strategic review which may or may not lead to an offer
being made for the Company. This process continues.
Key Points - Commercial
• As usual, Continental Europe accounted for over half of revenue and profit,
albeit a reduced proportion of the latter, reflecting the Manufacturing
result.
• The Vending Division (which has an unrivalled network of 35,200 sites
worldwide, including 20,600 photobooths) increased its revenue by 4.6% to
£146.4m and contributed an increased operating profit (before exceptional
item) of £18.9m (2005: £16.1m), up 17.4%. Expansion of the sited equipment
principally comprised kiddie rides in the UK and digital media kiosks in
France, in accordance with the divisional strategy of diversification.
• Manufacturing Division revenue reduced by 14.2% to £83.6m and its operating
profit (before exceptional item) totalled £13.8m (2005: £24.8m), down
44.4%. During the year, the minilab market was experiencing a period of
transition and, as such, was particularly weak. CVS, the largest retail
pharmacy in the US, which was the principal customer in the much improved
second half, represented a breakthrough into the important US market.
• 2007 should benefit from volume production (from July 2006) of the third
generation DKS 3 minilab (in Manufacturing) and from the introduction of
new passports in Japan (from April 2006) and of biometric passports in
France (from mid-2006).
Serge Crasnianski, Chief Executive, stated: 'The Board is confident about the
current year in both Vending and Manufacturing. Vending should benefit from
recent high levels of capital expenditure invested in both broadening its
business and improving its photobooth estate and from increasing regulatory
requirements for ID photos. A further useful performance is expected from
wholesale lab manufacturing, benefiting from the AgfaPhoto acquisition. The
principal area of uncertainty continues to be minilab manufacturing, where the
market remains in a state of flux and is dominated in terms of market share by
the recent Fuji/Noritsu association, whilst PMI is in transition between its
second generation DKS 15xx and its third generation DKS 3 series, which will
impact significantly on first half sales.
Further out, the Board believes that the digital imaging market will sustain for
the foreseeable future the strong growth it has consistently displayed since its
establishment in the late 1990s, to the advantage of PMI's Vending and
Manufacturing businesses.'
Legal Disclaimer:
This announcement contains statements that are or may be forward looking
statements with respect to the financial condition, operations and businesses of
PMI. All statements other than statements of historical facts included in this
announcement may be forward looking statements.
These forward-looking statements involve known and unknown risk, uncertainties
and other factors which may cause the actual performance or achievements of PMI,
or industry results, to be materially different from any performance or
achievements expressed or implied by such forward-looking statements. These
forward-looking statements are based on numerous assumptions regarding the
present and future business strategies of PMI and the environment in which it
will operate in the future which are not necessarily indicative of future
outcomes or the financial performance of PMI and should not be considered in
isolation.
Presentation:
A presentation to investors and brokers' analysts will be given from 09.00 to
10.00 today at Regus, CityPoint, 1 Ropemaker Street, London EC2 (approximately
200 yards from Moorgate Station).
Enquiries:
Photo-Me International 01372-453 399
Vernon Sankey (Chairman)
Serge Crasnianski (CEO)
Jean-Luc Peurois (GFD)
Bankside Consultants
Charles Ponsonby 020-7367 8851 / 07789-202 312
CHIEF EXECUTIVE'S STATEMENT
After last year's record result, this year's result is PMI's second best ever,
on both an underlying and a reported basis. Vending increased its revenue and
profit. Manufacturing, a less predictable business in the minilab area, did not
repeat last year's outstanding performance, notwithstanding a much improved
second half.
FINANCIAL REVIEW
The accompanying consolidated financial statements for the year to 30 April 2006
are presented in accordance with International Financial Reporting Standards
('IFRS'). Since this is the first full year in respect of which the Group has
reported under IFRS, comparative figures for the year to 30 April 2005 have been
restated. The effect on last year's Income Statement and the opening Balance
Sheet has been immaterial.
On revenue down 3.1% at £230.0m (2005: £237.4m), operating profit before the
exceptional operating charge reduced by 22.7% to £27.9m (2005: £36.1m), an
operating margin of 12.1% (2005: 15.2%). If the exceptional operating charge and
the exceptional non-operating profit are both excluded, EBITDA was £53.3m (2005:
£59.4m), pre-tax profit amounted to £26.2m (2005: £34.8m) and basic EPS totalled
4.8p (2005: 6.3p).
The exceptional operating charge of £3.2m (2005: £0.8m) was in respect of
restructuring costs, primarily at Grenoble, France, following the transfer of
the great majority of the minilab manufacturing business to sub-contractors in
Eastern Europe and the Far East. As reported in January 2006's Interim
Announcement, the non-operating exceptional profit of £5.4m (2005: nil) arose
from an insurance recovery in connection with the fire at the Bookham, Surrey
warehouse. Taking into account these two items, the reported pre-tax profit was
£28.5m (2005: £33.9m) and the reported EPS amounted to 5.5p (2005: 6.2p), which
also reflects a reduced effective tax rate of 26.3% (2005: 32.5%) as a result of
the minimal tax charge on the non-operating exceptional profit.
The Group profit, pre-exceptionals and tax, in the second half (traditionally,
the weaker half of the year for Vending) of £ 10.2m compared with £ 17.0m in
2005 (when Manufacturing performed particularly well) and £6.3m in 2004 and with
a loss of £3.3m in 2003.
Total shareholders' equity increased by 18.7% to £104.6m (2005: £88.1m). Net
debt of £16.7m replaced 2005 net cash of £3.9m (including financial current
assets available for sale), representing gearing of 15.6% (2005: nil). The
£20.6m cash outflow reflected capital expenditure of £36.8m - substantially
ahead of the £25.1m depreciation charge - and a working capital outflow of
£19.1m. This principally comprised high levels of stocks - of wholesale lab
parts following the AgfaPhoto acquisition, of digital media kiosks prior to
their siting, and of DKS3 minilab components in preparation for commencement of
volume production - and of debtors following a busy year end of minilab sales.
The net finance cost of £1.7m (2005: £1.4m) was covered 16x (2005: 27x) by
pre-exceptional operating profit.
DIVIDENDS
A final dividend per share of 1.4p (2005: 1.2p), up 16.7%, is proposed. Together
with the interim dividend of 1.0p (2005: 0.8p), dividends per share total 2.4p
(2005: 2.0p), up 20.0%.
If approved at the AGM on 20 September 2006, the final dividend will be paid on
2 November 2006 to shareholders on the register at close of business on 6
October 2006. The ex-dividend date is 4 October 2006.
ACQUISITIONS
During the year, PMI made four acquisitions.
In May 2005, PMI acquired Jolly Roger (Amusement Rides) Limited, a UK
manufacturer of kiddie rides, for £1.6m.
In July 2005, PMI acquired certain assets of R G Mitchell Limited, a UK operator
and manufacturer of kiddie rides, for £3.9m. This acquisition, with that of
Jolly Roger, made PMI by far the UK market leader in kiddie rides, which have
synergies with the photobooth business, being often sited in the same locations.
In November 2005, PMI acquired, from the Administrator of AgfaPhoto GmbH, the
stocks of spare parts of its German-based Wholesale Lab Division for £6.1m. The
acquisition reinforced PMI's global market leading position in wholesale labs.
In January 2006, PMI acquired 60% of Deith Group Limited, one of the UK's
leading distributors and developers of coin-operated amusement gaming machines,
for £1.5m (rising to £2.4m, depending on performance). The Deith acquisition
continued PMI's policy of broadening its activities in the leisure sector.
BUSINESS REVIEW
Geographical Analysis of Revenue and Profit (by origin)
Revenue Operating Profit +
Year to 30 April 2006 2005 2006 2005
£m £m £m £m
Continental Europe 127.1 142.7 16.7 30.3
UK & Republic of Ireland 69.3 60.8 5.4 1.8
Asia & Australia 30.9 31.0 4.9 4.0
USA 2.7 2.9 0.9 -
230.0 237.4 27.9 36.1
+ pre-exceptional
Continental Europe, which includes the great majority of Manufacturing revenue,
contributed 55% (2005: 60%) of Group revenue and 60% (2005: 84%) of Group
pre-exceptional operating profit.
Divisional Analysis of Revenue and Profit
Revenue Operating Profit +
Year to 30 April 2006 2005 2006 2005
£m £m £m £m
Vending 146.4 140.0 18.9 16.1
Manufacturing 83.6 97.4 13.8 24.8
Group overheads - - (4.8) (4.8)
230.0 237.4 27.9 36.1
+ pre-exceptional
Vending accounted for 64% (2005: 59%) of Group revenue and 58% (2005: 39%) of
Group pre-exceptional operating profit (excluding Group overheads).
Vending
Vending comprises the operation of photobooths, digital media kiosks and other
vending equipment, notably kiddie rides. During the year, in accordance with
PMI's policy of diversification, the total number of Vending sites worldwide
increased by 6,800 (of which only 500 comprised photobooths) to 35,200.
PMI's Vending business is global, operating in some 20 industrialised countries.
However, over 85% of sites are located in three territories - the UK & Ireland,
France, and Japan. By area, Continental Europe accounted for 15,200 (2005:
13,600) sites; the UK & Ireland for 13,700 (2005: 9,400) sites; Asia & Australia
for 5,700 (2005: 4,700) sites; and the USA for 600 (2005: 700) sites.
Photobooths
The number of photobooths sited increased to 20,600 (2005: 20,100), of which
Continental Europe 9,400 (2005: 9,200), the UK & Ireland 5,400 (2005: 5,600),
Asia & Australia 5,200 (2005: 4,600) and the USA 600 (2005: 700).
Photobooths are an efficient and competitively-priced provider of ID photographs
and represent a stable and cash generative business. In the UK, PMI's market
leading position was further strengthened by the winning back in February 2006
of the Crown Post Office contract, whilst Japan benefited from a reduction in
its cost base following the restructuring undertaken in the previous year.
In the current year, PMI's photobooth business should benefit from the
introduction in Japan in April 2006 of a new generation of passports and from
the introduction in France in mid-2006 of the biometric passport. Further out,
the date of introduction in France of the proposed photo National Health
identification card (potentially requiring 48m photos), originally scheduled for
this year, has been delayed and is uncertain. In Japan, the introduction of a
tobacco card (potentially requiring 25m photos) and a pension card (potentially
requiring 50m photos) is scheduled for end-2007 and end-2008, respectively.
Digital Media Kiosks
The number of digital media kiosks sited increased to 3,500 (2005: 1,400).
Continental Europe accounted for 2,900 (2005: 1,100) of these, with France by
far the principal territory with 2,300 (2005: 1,000).
Digital media kiosks generate photographic prints from both digital cameras and
digital camera phones. They provide vending machine convenience, do not require
third party assistance, and can be sited at PMI's installed network of locations
worldwide or at third party retail locations. The percentage of revenue payable
in site owner commission is much lower than for photobooths.
Digital media kiosks have had an encouraging roll-out in France, where they were
the main reason for the profitable growth of its Vending business in the year.
The roll-out in the current year continues, again principally in France.
Other Vending Equipment
Units of other vending equipment sited increased to 11,000 (2005: 6,900), of
which 5,800 (2005: 2,900) were kiddie rides, the balance principally comprising
copiers and card machines. The vast majority of kiddie rides are sited in the UK
& Ireland, where they were the primary reason for the profitable growth of its
Vending business in the year. It is planned to extend the siting of rides to
other territories worldwide, utilising production from the newly-acquired UK
kiddie ride manufacturing activity.
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, to end-consumer vending kiosks. In outputting
terms, processing labs range from 250 to 20,000 prints per hour.
In the past month, Manufacturing has been strengthened by the appointment of
Thierry Villard, 46, as Chief Operating Officer of Manufacturing. From 1996
until 2006, he was at Kodak, latterly as General Manager of Digital Films and
Imaging Systems for Central Europe, the Middle East and Africa.
Wholesale Labs
The Group's principal Wholesale Lab business, Imaging Solutions, based near
Zurich 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 November 2005, PMI acquired a
stock of AgfaPhoto spare parts, for sale out of Munich, Germany to previous
customers of AgfaPhoto. This activity took some time to reorganise, so
contributed immaterially to Wholesale Lab's annual result - a 13% revenue
increase and another useful contribution to profit.
Minilabs
A substantial majority of Manufacturing revenue is represented by the sales of
DKS15xx range of minilabs. These minilabs, which since January 2004 have been
manufactured by the sub-contractor Flextronics in Poland, have an output ranging
from 800 to 1,500 prints per hour. For the last four years, unprecedently, they
have received the leading global trade show award for quality - the DIMA
(Digital Imaging Marketing Association) Digital Printer award. Typically,
minilabs are sited in specialist photographic outlets, supermarkets and
pharmacies.
During the year, the minilab market was experiencing a period of transition and,
as such, was particularly weak. Demand for minilabs was adversely affected by a
decline in print volumes (as demand for analogue prints fell faster than digital
rose); by retail print price wars; by the imminent availability of third
generation minilabs; and by some major chains, in particular in the USA,
deferring their purchases (since they were still operating substantial
quantities of analogue minilabs which were not fully depreciated). Additionally
as regards demand, PMI had to contend with the loss of the principal customer
for its minilabs of recent years in Kodak, following its exit from the OEM
minilab market. Demand and margins were also depressed by the low price
clearance of minilabs by those exiting the minilab market - AgfaPhoto, Konica,
Kodak and, latterly, Fuji (following the establishment of its association with
Noritsu). These factors are believed to be substantially of a temporary nature.
In this context, unit sales in the first half were considerably below those
achieved in the comparable period of the previous year, as reported in the
Interim Announcement. In the second half, unit sales were very substantially
increased, with a high proportion of these being to CVS, the largest retail
pharmacy chain in the US.
This month, the sub-contractor Solectron will commence volume manufacture in
Singapore of PMI's third generation DKS3 minilab. This has already been
recognised as an outstanding model - in terms of maximum productivity (2,000
prints per hour), maximum format (12' x 18') and minimum footprint (10.8 sq ft.)
It is intended that manufacturing output of the DKS3 be ramped up gradually and
that, with effect from mid/late 2006, manufacture of the DKS15xx series should
cease.
Digital Media Kiosks
Digital media kiosks are manufactured for PMI by the sub-contractor Via System
in China. Whilst most digital media kiosks are destined for operation by PMI,
some are sold to third parties.
BOARD
During the year, two independent non-executive Directors, Hugo Swire and Martin
Reavley, were appointed and two Directors, David Scotland and Patrick
McNair-Wilson, retired.
Hugo Swire was appointed in June 2005 - as reported in last year's Preliminary
Announcement. The appointment in February 2006 of Martin Reavley - First Bursar
of King's College, Cambridge, a non-executive Director of Matalan plc and
previously Group Finance Director of Kesa Electricals plc - took the PMI Board
to nine Directors, of whom four are executive and five are non-executive.
STRATEGIC REVIEW
On 5 June 2006, in response to press speculation, PMI confirmed that it had been
conducting a strategic review which may or may not lead to an offer being made
for the Company. This process continues and shareholders will be informed of
significant developments, as appropriate.
OUTLOOK
The Board is confident about the current year in both Vending and Manufacturing.
Vending should benefit from recent high levels of capital expenditure invested
in both broadening its business and improving its photobooth estate and from
increasing regulatory requirements for ID photos. A further useful performance
is expected from wholesale lab manufacturing, benefiting from the AgfaPhoto
acquisition. The principal area of uncertainty continues to be minilab
manufacturing, where the market remains in a state of flux and is dominated in
terms of market share by the recent Fuji/Noritsu association, whilst PMI is in
transition between its second generation DKS 15xx and its third generation DKS 3
series, which will impact significantly on first half sales.
Further out, the Board believes that the digital imaging market will sustain for
the foreseeable future the strong growth it has consistently displayed since its
establishment in the late 1990s, to the advantage of PMI's Vending and
Manufacturing businesses.
Serge Crasnianski
Chief Executive Officer 6 July 2006
GROUP INCOME STATEMENT
for the year ended 30 April 2006
2006 2005+
Notes £'000 £'000
----------------------------- ------- ----------- ----------
Revenue 2 230,031 237,395
Cost of sales (182,037) (176,999)
----------------------------- ------- ----------- ----------
Gross profit 47,994 60,396
Other operating income 1,268 1,481
Profit on insurance recovery 3,331 -
Administrative expenses (24,833) (25,771)
Share of post-tax profits from associates 151 6
----------------------------- ------- ----------- ----------
Operating profit before exceptional items 27,911 36,112
Restructuring costs 3 (3,158) (821)
----------------------------- ------- ----------- ----------
Operating profit after exceptional items 24,753 35,291
Non-operating profit - insurance recovery 3 5,441 -
----------------------------- ------- ----------- ----------
Profit before finance items and tax 30,194 35,291
Finance revenue 592 371
Finance cost (2,325) (1,721)
----------------------------- ------- ----------- ----------
Profit before tax 2 28,461 33,941
----------------------------- ------- ----------- ----------
Taxation expense - UK (2,286) (49)
Taxation expense - overseas (5,198) (10,971)
----------------------------- ------- ----------- ----------
Total tax charge (7,484) (11,020)
----------------------------- ------- ----------- ----------
Profit for year - from continuing 20,977 22,921
operations ------- ----------- ----------
-----------------------------
Attributable to:
- Equity shareholders of the Parent 20,158 22,528
- Minority interests 819 393
----------------------------- ------- ----------- ----------
20,977 22,921
----------------------------- ------- ----------- ----------
+ Restated for the transition to International Financial Reporting Standards
Dividends
paid in year (£000) 5 4,373 6,557
paid in year per share 5 1.20p 1.80p
Earnings per share (total and continuing
operations)
Basic earnings per share 4 5.53p 6.18p
Alternative basic earnings per share * 4 4.77p 6.32p
Diluted earnings per share 4 5.47p 6.12p
Alternative diluted earnings per share * 4 4.72p 6.26p
* The alternative measure of earnings per share is provided to reflect the
Group's underlying trading performance excluding the effects of exceptional
items (Note 4).
GROUP BALANCE SHEET
as at 30 April 2006
2006 2005+
£'000 £'000
-------------------------- ------------ ------------
Assets
Non-current assets
Goodwill 10,677 9,265
Other intangible assets 20,485 17,334
Property, plant and equipment 77,334 66,022
Investment property 3,745 4,149
Investments - in associates 335 206
Financial assets - held to maturity - 348
- available for sale 113 58
Deferred tax asset 277 1,087
Trade and other receivables 1,398 1,130
-------------------------- ------------ ------------
114,364 99,599
-------------------------- ------------ ------------
Current assets
Inventories 41,113 23,130
Trade and other receivables 53,374 40,425
Financial assets - held to maturity 356 6
- derivative financial assets - 56
- available for sale 7 8,727
Current tax 3,034 126
Cash and cash equivalents 25,838 24,879
-------------------------- ------------ ------------
123,722 97,349
-------------------------- ------------ ------------
Total assets 238,086 196,948
-------------------------- ------------ ------------
Equity
Share capital 2,029 2,022
Share premium 4,862 3,487
Treasury shares (878) -
Other reserves 832 2,536
Retained earnings 97,732 80,028
-------------------------- ------------ ------------
Total shareholders' equity 104,577 88,073
Minority interest 2,734 1,188
-------------------------- ------------ ------------
Total equity 107,311 89,261
-------------------------- ------------ ------------
Liabilities
Non-current liabilities
Financial liabilities 17,932 16,673
Post-employment benefit obligations 2,994 3,343
Provisions 33 162
Deferred tax liability 13,379 9,048
Derivative financial liabilities 1,300 -
Trade and other payables 2,694 2,606
-------------------------- ------------ ------------
38,332 31,832
-------------------------- ------------ ------------
Current liabilities
Financial liabilities 25,597 14,017
Provisions 5,985 1,696
Current tax 3,980 9,843
Trade and other payables 56,881 50,299
-------------------------- ------------ ------------
92,443 75,855
-------------------------- ------------ ------------
Total equity and liabilities 238,086 196,948
-------------------------- ------------ ------------
+ Restated for the transition to International Financial Reporting Standards
GROUP CASH FLOW STATEMENT
for the year ended 30 April 2006
2006 2005+
£'000 £'000
------------------------------- --------- --------- ---------
Cash flows from operating activities
Operating profit after exceptional items 24,753 35,291
Non-operating exceptional item 5,441 -
Share post-tax profits from associates (151) (6)
Amortisation of intangible assets 6,686 5,062
Impairment of goodwill 298 -
Depreciation of property, plant and equipment 18,434 18,195
(Profit)/loss on sale of property, plant and (189) 129
equipment
Exchange differences 131 (504)
Other items 352 (34)
Increase in inventories (16,403) (146)
Increase in trade and other receivables (8,051) (10,366)
Increase in trade and other payables 1,537 4,918
Movement in provisions 3,814 (1,479)
------------------------------- --------- --------- ---------
Cash generated from operations 36,652 51,060
Interest paid (1,935) (1,710)
Taxation paid (11,810) (5,912)
------------------------------- --------- --------- ---------
Net cash generated from operating activities 22,907 43,438
------------------------------- --------- --------- ---------
Cash flows from investing activities
Acquisition of subsidiaries, net of cash (1,354) -
acquired
Purchase of minority interests equity - (2,454)
Purchase of intangible assets (9,525) (6,823)
Proceeds from sale of intangible assets - 95
Purchase of property, plant and equipment (28,297) (29,401)
Proceeds from sale of property, plant and 989 2,404
equipment
Purchase of associate undertakings (35) -
Purchase of available for sale investments (56) -
Proceeds from sale of available for sale 3 -
investments
Interest received 551 368
Dividends received from associate 47 55
------------------------------- --------- --------- ---------
Net cash utilised in investing activities (37,677) (35,756)
------------------------------- --------- --------- ---------
Cash flows from financing activities
Issue of ordinary shares to equity 182 -
shareholders
Share capital contributed by minority - 10
interests
Purchase of treasury shares (878) -
Repayment of capital element of finance (48) (622)
leases
Proceeds from borrowings 15,369 13,611
Repayment of borrowings (12,639) (9,240)
Decrease in monetary funds 8,978 2,579
Dividends paid to equity shareholders (4,373) (6,557)
Dividends paid to minority interests (7) (33)
------------------------------- --------- --------- ---------
Net cash utilised in financing activities 6,584 (252)
------------------------------- --------- --------- ---------
Net (decrease)/increase in cash and cash (8,186) 7,430
equivalents
Cash and cash equivalents at beginning of 22,022 14,673
year
Exchange gain/(loss) on cash and cash 307 (81)
equivalents --------- --------- ---------
-------------------------------
Cash and cash equivalents at end of year 14,143 22,022
------------------------------- --------- --------- ---------
+ Restated for the transition to International Financial Reporting Standards
Group Statement of Recognised Income and Expense
for the year ended 30 April 2006
2006 2005+
£'000 £'000
------------------------------ ---------- ----------
Income and expense recognised directly in equity
Actuarial gain /(loss) on defined benefit pension 362 (68)
scheme
Cash flow hedge gain - 56
Exchange differences 1,026 (302)
------------------------------ ---------- ----------
1,388 (314)
Transfers to the income statement
Cash flow hedge (56) -
Taxation on items taken directly to or transferred
from equity
Tax on actuarial gain/loss on defined benefit (109) 20
pension scheme
Tax on cash flow hedge 20 (20)
------------------------------ ---------- ----------
Net income/(expense) recognised directly in equity 1,243 (314)
Profit for period 20,977 22,921
------------------------------ ---------- ----------
Total recognised income and expense for the period 22,220 22,607
------------------------------ ---------- ----------
Attributable to
- Equity shareholders of the parent 21,390 22,209
- Minority interests 830 398
------------------------------ ---------- ----------
22,220 22,607
------------------------------ ---------- ----------
+ Restated for the transition to International Financial Reporting Standards
NOTES
1 Basis of preparation
The preliminary results for the year ended 30 April 2006 are an abridged
statement of the full Annual Report, which was approved by the Board of
Directors on 5 July 2006. The Auditors' Report on these financial statements was
unqualified and did not contain statements under section 237(2) or 237 (3) of
the Companies Act 1985. The preliminary results do not comprise statutory
accounts within the meaning of section 240 of the Companies Act 1985. The Annual
Report for the year ended 30 April 2006 will be delivered to the Registrar of
Companies following the Company's Annual General Meeting, to be held on 20
September 2006.
The preliminary report for the year ended 30 April 2006 has been prepared in
accordance with International Financial Reporting Standards ('IFRS') as adopted
for use in the European Union ('EU') and in accordance with the Companies Act
1985 and Article 4 of the IAS Regulations. Financial information for the year
ended 30 April 2005, presented as comparative figures in this report, has been
restated from UKGAAP in accordance with IFRS as adopted for use in the EU.
Details of the transition to IFRS were explained in the Interim Report published
in January 2006 and on the Company's web site. Further details will be given in
the Annual Report.
The preparation of the preliminary results requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of assets and liabilities reported in the balance sheet, and the
reported amounts of revenue and expenses during the reporting period. Actual
results could vary from these estimates. The estimates and underlying
assumptions are reviewed on a continuing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the
revision affects only that period or in the period of the revision and future
periods if the revision affects both current and future periods.
2 Segment analysis
The Group has two main business segments: Manufacturing and Vending. These
segments have been identified as the primary segment, as the group organises and
manages its businesses in accordance with these activities. Manufacturing
comprises the manufacture and sale of photo-processing equipment and vending
equipment. The equipment is manufactured by PMI subsidiaries or, increasingly,
by sub-contractors located in low cost territories. Vending comprises the
operation of photobooths and other vending equipment including kiddie rides,
digital media kiosks, photocopiers and express printing machines.
Geographical location has been identified as the secondary segment.
Analysis by business activity
Year to Year to
30 April 2006 30 April 2005
-------------- -------------
Revenue Profit Revenue Profit
£'000 £'000 £'000 £'000
Results per activity (exc.finance
cost)
- Manufacturing
-Total revenue 102,428 10,917 119,784 24,798
-Inter segment eliminations (18,852) (22,435)
-------- ------- -------- -------
83,576 97,349
- Vending 146,455 18,610 140,046 15,310
- Group overheads - (4,774) - (4,817)
-------- ------- -------- -------
230,031 237,395
-------- ------- -------- -------
Group operating profit after
exceptional items 24,753 35,291
Non-operating profit on insurance
recovery 5,441
Net finance cost (1,733) (1,350)
------- -------
Profit before tax 28,461 33,941
Taxation (7,484) (11,020)
------- -------
Profit for the period 20,977 22.921
------- -------
Analysis by geographic area
Year to Year to
30 April 2006 30 April 2005
-------------- -------------
Revenue by Profit Revenue by Profit
origin origin
£'000 £'000 £'000 £'000
Results per area (inc. finance cost)
- Continental Europe 127,168 13,435 142,683 30,302
- United Kingdom &
Republic of Ireland 69,310 9,235 60,789 590
- Asia & Australia 30,880 4,931 31,050 3,067
- United States of
America 2,673 860 2,873 (18)
-------- ------- ------- --------
230,031 28,461 237,395 33,941
Taxation (7,484) (11,020)
------- --------
Profit for the period 20,977 22,921
------- --------
3 Exceptional items
2006 2005
£'000 £'000
---------------------------------- ---------- -----------
Restructuring costs (3,158) (821)
Profit on insurance recovery 5,441 -
---------------------------------- ---------- -----------
Total exceptional income/(expense) 2,283 (821)
---------------------------------- ---------- -----------
The restructuring costs for 2006 relate to provisions made for restructuring in
Continental Europe. Due to the introduction of new digital photobooths requiring
less maintenance and the use of subcontractors to manufacture equipment, the
workforce is being reduced.
The restructuring costs for 2005 relate to the reduction in the workforce in
Japan, following the introduction of new digital photobooths.
The restructuring costs give rise to a tax credit of £1,097,000 (2005:
£345,000).
Profits from insurance recoveries
Following destruction by fire of the Bookham warehouse and workshop in December
2004, agreement has been reached on the resulting insurance claims. The total
settlement was for an amount of £17,700,000.
The insurance policy was on a replacement cost basis for non-current assets and
gave rise to a non-operating exceptional profit before tax of £5,441,000. A
further profit before tax of £3,331,000, relating to insurance settlement for
the loss of inventory held to fulfil a major contract and for business
interruption, is included in operating profit.
The Group's insurers had paid £10,000,000 on account of claims by 30 April 2005;
the final settlement was received in November 2005.
A deferred tax charge of £616,000 arose on the exceptional profit of £
5,441,000. On the £3,331,000 profit included in operating profit, a tax charge
of £999,000 arose, comprising deferred tax of £835,000 and current tax of
£164,000.
4 Earnings per share
Year to 30 Year to 30
April 2006 April 2005
Basic earnings per share 5.53p 6.18p
Diluted earnings per share 5.47p 6.12p
Alternative basic earnings per share 4.77p 6.32p
Alternative diluted earnings per share 4.72p 6.26p
The calculation of earnings per share is based on
the following:
- earnings available to ordinary shareholders (£'000) 20,158 22,528
- adjusted earnings available to ordinary shareholders
(£'000) 17,394 23,004
Weighted average number of shares in
issue in the period:
- basic ('000) 364,711 364,253
- including dilutive share options ('000) 368,229 367,957
Adjusted basic and diluted earnings per share are calculated on the basis of
earnings before exceptional items. The Directors believe that disclosure of this
measure allows shareholders to understand better the elements of financial
performance during the year and to facilitate comprehension with prior
periods.
5 Dividends
Year to Year to
30 April 30 April
2006 2005
£'000 £'000
Dividends charged in the period
First and final dividend for the year ended
30 April 2004 of 1.0p per share - 3,643
Interim dividend for the year ended
30 April 2005 of 0.8p per share - 2,914
Final dividend for the year ended
30 April 2005 of 1.2p per share 4,373 -
--------- ---------
4,373 6,557
--------- ---------
Dividends proposed for approval (not recognised as a
liability at year end)
Final dividend for the year ended 30 April 2005
of 1.2p per share - 4,371
Interim dividend for the year ended 30 April 2006
of 1.0p per share 3,646 -
Final dividend for the year ended 30 April 2006
of 1.4p per share 5,105 -
--------- ---------
8,751 4,371
--------- ---------
The interim dividend for the year to 30 April 2006 was paid on 3 May 2006 to
shareholders on the register on 3 March 2006.
The Directors propose a final dividend for the year ended 30 April 2006 of 1.40p
per share, which, if approved at the Annual General Meeting on 20 September
2006, will be paid on 2 November 2006 to shareholders on the register on 6
October 2006.
6 Non-current assets
Goodwill Intangible Property, plant Investment
assets & equipment property
£000 £000 £000 £000
Net book value
at 1 May 2005 9,265 17,334 66,022 4,149
Exchange difference
and other
movements 39 312 1,540 98
Additions -
photobooths
and vending
equipment - - 26,202 -
Additions -
other assets 1,671 9,525 2,345 -
Impairment (298) - - -
Amortisation - (6.686) - -
Depreciation - - (17,932) (502)
Disposals at
net book value - - (843) -
------------ ------------ ------------- -----------
Net book value
at 30 April 2006 10,677 20,485 77,334 3,745
------------ ------------ ------------- -----------
7 Reserves
Share Premium Treasury Other Retained
Shares Reserves Earnings
£'000 £'000 £'000 £'000
At 1 May 2005 3,487 - 2,536 80,028
Exchange
difference - - 1,016 -
Profit for
year - - - 20,158
Shares issued 1,375 - - -
Purchase of
Treasury
shares - (878) - -
Other reserve
movements - - (2,720) 1,919
Dividends - - - (4,373)
------------ ------------ ------------ ------------
At 30 April 2006 4,862 (878) 832 97,732
------------ ------------ ------------ ------------
8 Publication of non-statutory accounts
This preliminary announcement was approved by the Board of Directors on 5 July
2006. The financial information contained in this preliminary announcement does
not constitute statutory accounts as defined in Section 240 of the Companies Act
1985. The figures have been extracted from statutory accounts on which an
unqualified audit report has been issued. Those accounts are yet to be delivered
to the Registrar of Companies. The financial information for the preceding year
is based on the statutory accounts for the year ended 30 April 2005 (as restated
for transition to IFRS). Those accounts, upon which the auditors issued an
unqualified opinion, have been delivered to the Registrar of Companies.
Copies of the Report and Accounts, for the year ended 30 April 2006, will be
mailed to shareholders by 31 July 2005 and will be available from the Company's
registered office at Church Road, Bookham, Surrey KT23 3EU (telephone:
01372-453399, fax: 01372-459064, e-mail:ir@photo-me.co.uk) after that date.
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