10th Jun 2020 09:21
(Alliance News) - Photo-Me International PLC on Wednesday said it intends to review its options and take further action, where possible, to restructure the business and align operations to the current market conditions.
The instant-service equipment company, offering photo and laundry services, said the Covid-19 pandemic hurt its end-markets, and the majority of expected revenue in March and April did not materialise.
Trading has also been weaker in Asia - especially China - since the second part of January to date, Photo-Me said.
Consequently, the Epsom, Surrey-based company said its overall trading performance for the four months ended April 30 was significantly hurt. Total revenue is now expected to be 5.5% lower than in the previous 12 months to the end of April 2019.
Pretax profit before deduction of the provisions is expected to be GBP28 million, down 34% from GBP42.6 million for the 12 months to the end of April 2019, with a similar reduction in operating cash flows.
Photo-Me explained that provisions, between GBP14 million to GBP18 million, mainly relate to impairment of goodwill and write down of the carrying value of non-profitable machines due to the disruption caused by the unprecedented Covid-19 situation.
This also includes a provision for the anticipated cost of a major reorganisation of Photo-Me's UK business which has experienced a significant loss in identification revenue, including passport photos, due to reduced consumer travel, the company said.
Including these provisions, Photo-Me said pretax profit for the 12 months ended April 30 is now expected to be in the range of GBP10 million to GBP14 million.
As at the end of April, the company said it had gross cash of GBP66.5 million, drawn debt facilities of GBP58.5 million - which is to be repaid by April 2025 - resulting in a net cash balance of GBP8 million.
Since the end of April, Photo-Me said it has obtained additional debt funding to ensure that it has sufficient liquidity during the current uncertain period. A EUR30 million loan was secured with three French banks, the company said.
Looking forward, Photo-Me said the ongoing governmental travel bans and restrictions on the movement of people continue to reduce demand significantly for photo ID via photobooths, as well as the use of children's rides, which together account for 63% of the company's revenue.
"The board is reasonably confident that as lockdown restrictions are eased, consumer demand will return; however, it is likely it will take time to recover to pre-Covid-19 levels," Photo-Me said in its statement Wednesday.
Photo-Me shares were trading 5.1% lower in London on Wednesday at 54.39 pence each.
By Evelina Grecenko; [email protected]
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