6th Jul 2006 07:01
Photo-Me International PLC06 July 2006 PHOTO-ME INTERNATIONAL PLC - PRELIMINARY ANNOUNCEMENT PMI, the FTSE 250 digital imaging company, announces results for the year to 30April 2006 (presented this year under IFRS) which, after last year's record, areits second best ever, on both an underlying and a reported basis. Vending, thelarger of PMI's two activities, increased its revenue and profit. Manufacturing,a less predictable business in the minilab area, did not repeat last year'soutstanding 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 thecurrent year in both Vending and Manufacturing. Vending should benefit fromrecent high levels of capital expenditure invested in both broadening itsbusiness and improving its photobooth estate and from increasing regulatoryrequirements for ID photos. A further useful performance is expected fromwholesale lab manufacturing, benefiting from the AgfaPhoto acquisition. Theprincipal area of uncertainty continues to be minilab manufacturing, where themarket remains in a state of flux and is dominated in terms of market share bythe recent Fuji/Noritsu association, whilst PMI is in transition between itssecond generation DKS 15xx and its third generation DKS 3 series, which willimpact significantly on first half sales. Further out, the Board believes that the digital imaging market will sustain forthe foreseeable future the strong growth it has consistently displayed since itsestablishment in the late 1990s, to the advantage of PMI's Vending andManufacturing businesses." Legal Disclaimer: This announcement contains statements that are or may be forward lookingstatements with respect to the financial condition, operations and businesses ofPMI. All statements other than statements of historical facts included in thisannouncement may be forward looking statements. These forward-looking statements involve known and unknown risk, uncertaintiesand other factors which may cause the actual performance or achievements of PMI,or industry results, to be materially different from any performance orachievements expressed or implied by such forward-looking statements. Theseforward-looking statements are based on numerous assumptions regarding thepresent and future business strategies of PMI and the environment in which itwill operate in the future which are not necessarily indicative of futureoutcomes or the financial performance of PMI and should not be considered inisolation. Presentation: A presentation to investors and brokers' analysts will be given from 09.00 to10.00 today at Regus, CityPoint, 1 Ropemaker Street, London EC2 (approximately200 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 andprofit. Manufacturing, a less predictable business in the minilab area, did notrepeat last year's outstanding performance, notwithstanding a much improvedsecond half. FINANCIAL REVIEW The accompanying consolidated financial statements for the year to 30 April 2006are presented in accordance with International Financial Reporting Standards("IFRS"). Since this is the first full year in respect of which the Group hasreported under IFRS, comparative figures for the year to 30 April 2005 have beenrestated. The effect on last year's Income Statement and the opening BalanceSheet has been immaterial. On revenue down 3.1% at £230.0m (2005: £237.4m), operating profit before theexceptional operating charge reduced by 22.7% to £27.9m (2005: £36.1m), anoperating margin of 12.1% (2005: 15.2%). If the exceptional operating charge andthe 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 totalled4.8p (2005: 6.3p). The exceptional operating charge of £3.2m (2005: £0.8m) was in respect ofrestructuring costs, primarily at Grenoble, France, following the transfer ofthe great majority of the minilab manufacturing business to sub-contractors inEastern Europe and the Far East. As reported in January 2006's InterimAnnouncement, the non-operating exceptional profit of £5.4m (2005: nil) arosefrom an insurance recovery in connection with the fire at the Bookham, Surreywarehouse. 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), whichalso reflects a reduced effective tax rate of 26.3% (2005: 32.5%) as a result ofthe 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 in2005 (when Manufacturing performed particularly well) and £6.3m in 2004 and witha loss of £3.3m in 2003. Total shareholders' equity increased by 18.7% to £104.6m (2005: £88.1m). Netdebt of £16.7m replaced 2005 net cash of £3.9m (including financial currentassets available for sale), representing gearing of 15.6% (2005: nil). The£20.6m cash outflow reflected capital expenditure of £36.8m - substantiallyahead of the £25.1m depreciation charge - and a working capital outflow of£19.1m. This principally comprised high levels of stocks - of wholesale labparts following the AgfaPhoto acquisition, of digital media kiosks prior totheir siting, and of DKS3 minilab components in preparation for commencement ofvolume 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) bypre-exceptional operating profit. DIVIDENDS A final dividend per share of 1.4p (2005: 1.2p), up 16.7%, is proposed. Togetherwith 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 on2 November 2006 to shareholders on the register at close of business on 6October 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 UKmanufacturer of kiddie rides, for £1.6m. In July 2005, PMI acquired certain assets of R G Mitchell Limited, a UK operatorand manufacturer of kiddie rides, for £3.9m. This acquisition, with that ofJolly Roger, made PMI by far the UK market leader in kiddie rides, which havesynergies with the photobooth business, being often sited in the same locations. In November 2005, PMI acquired, from the Administrator of AgfaPhoto GmbH, thestocks of spare parts of its German-based Wholesale Lab Division for £6.1m. Theacquisition reinforced PMI's global market leading position in wholesale labs. In January 2006, PMI acquired 60% of Deith Group Limited, one of the UK'sleading distributors and developers of coin-operated amusement gaming machines,for £1.5m (rising to £2.4m, depending on performance). The Deith acquisitioncontinued 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 Grouppre-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%) ofGroup pre-exceptional operating profit (excluding Group overheads). Vending Vending comprises the operation of photobooths, digital media kiosks and othervending equipment, notably kiddie rides. During the year, in accordance withPMI's policy of diversification, the total number of Vending sites worldwideincreased 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 & Australiafor 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 whichContinental 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 photographsand represent a stable and cash generative business. In the UK, PMI's marketleading position was further strengthened by the winning back in February 2006of the Crown Post Office contract, whilst Japan benefited from a reduction inits cost base following the restructuring undertaken in the previous year. In the current year, PMI's photobooth business should benefit from theintroduction in Japan in April 2006 of a new generation of passports and fromthe introduction in France in mid-2006 of the biometric passport. Further out,the date of introduction in France of the proposed photo National Healthidentification card (potentially requiring 48m photos), originally scheduled forthis year, has been delayed and is uncertain. In Japan, the introduction of atobacco card (potentially requiring 25m photos) and a pension card (potentiallyrequiring 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 byfar the principal territory with 2,300 (2005: 1,000). Digital media kiosks generate photographic prints from both digital cameras anddigital camera phones. They provide vending machine convenience, do not requirethird party assistance, and can be sited at PMI's installed network of locationsworldwide or at third party retail locations. The percentage of revenue payablein site owner commission is much lower than for photobooths. Digital media kiosks have had an encouraging roll-out in France, where they werethe 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), ofwhich 5,800 (2005: 2,900) were kiddie rides, the balance principally comprisingcopiers 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 itsVending business in the year. It is planned to extend the siting of rides toother territories worldwide, utilising production from the newly-acquired UKkiddie ride manufacturing activity. Manufacturing Manufacturing revenue primarily derives from the sale to third parties ofphoto-processing equipment manufactured by PMI or by sub-contractors on itsbehalf. PMI has a unique and comprehensive range covering all market segments,from wholesale labs, to minilabs, to end-consumer vending kiosks. In outputtingterms, processing labs range from 250 to 20,000 prints per hour. In the past month, Manufacturing has been strengthened by the appointment ofThierry Villard, 46, as Chief Operating Officer of Manufacturing. From 1996until 2006, he was at Kodak, latterly as General Manager of Digital Films andImaging Systems for Central Europe, the Middle East and Africa. Wholesale Labs The Group's principal Wholesale Lab business, Imaging Solutions, based nearZurich in Switzerland, is involved in the development, manufacture, sale andtechnical support of equipment and systems for high volume photo-finishlaboratories (up to 20,000 prints per hour). In November 2005, PMI acquired astock of AgfaPhoto spare parts, for sale out of Munich, Germany to previouscustomers of AgfaPhoto. This activity took some time to reorganise, socontributed immaterially to Wholesale Lab's annual result - a 13% revenueincrease and another useful contribution to profit. Minilabs A substantial majority of Manufacturing revenue is represented by the sales ofDKS15xx range of minilabs. These minilabs, which since January 2004 have beenmanufactured by the sub-contractor Flextronics in Poland, have an output rangingfrom 800 to 1,500 prints per hour. For the last four years, unprecedently, theyhave 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 andpharmacies. 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 adecline in print volumes (as demand for analogue prints fell faster than digitalrose); by retail print price wars; by the imminent availability of thirdgeneration minilabs; and by some major chains, in particular in the USA,deferring their purchases (since they were still operating substantialquantities of analogue minilabs which were not fully depreciated). Additionallyas regards demand, PMI had to contend with the loss of the principal customerfor its minilabs of recent years in Kodak, following its exit from the OEMminilab market. Demand and margins were also depressed by the low priceclearance of minilabs by those exiting the minilab market - AgfaPhoto, Konica,Kodak and, latterly, Fuji (following the establishment of its association withNoritsu). These factors are believed to be substantially of a temporary nature. In this context, unit sales in the first half were considerably below thoseachieved in the comparable period of the previous year, as reported in theInterim Announcement. In the second half, unit sales were very substantiallyincreased, with a high proportion of these being to CVS, the largest retailpharmacy chain in the US. This month, the sub-contractor Solectron will commence volume manufacture inSingapore of PMI's third generation DKS3 minilab. This has already beenrecognised as an outstanding model - in terms of maximum productivity (2,000prints 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 andthat, with effect from mid/late 2006, manufacture of the DKS15xx series shouldcease. Digital Media Kiosks Digital media kiosks are manufactured for PMI by the sub-contractor Via Systemin 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 MartinReavley, were appointed and two Directors, David Scotland and PatrickMcNair-Wilson, retired. Hugo Swire was appointed in June 2005 - as reported in last year's PreliminaryAnnouncement. The appointment in February 2006 of Martin Reavley - First Bursarof King's College, Cambridge, a non-executive Director of Matalan plc andpreviously Group Finance Director of Kesa Electricals plc - took the PMI Boardto 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 beenconducting a strategic review which may or may not lead to an offer being madefor the Company. This process continues and shareholders will be informed ofsignificant 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 investedin both broadening its business and improving its photobooth estate and fromincreasing regulatory requirements for ID photos. A further useful performanceis expected from wholesale lab manufacturing, benefiting from the AgfaPhotoacquisition. The principal area of uncertainty continues to be minilabmanufacturing, where the market remains in a state of flux and is dominated interms of market share by the recent Fuji/Noritsu association, whilst PMI is intransition between its second generation DKS 15xx and its third generation DKS 3series, which will impact significantly on first half sales. Further out, the Board believes that the digital imaging market will sustain forthe foreseeable future the strong growth it has consistently displayed since itsestablishment in the late 1990s, to the advantage of PMI's Vending andManufacturing businesses. Serge CrasnianskiChief 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 theGroup's underlying trading performance excluding the effects of exceptionalitems (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 abridgedstatement of the full Annual Report, which was approved by the Board ofDirectors on 5 July 2006. The Auditors' Report on these financial statements wasunqualified and did not contain statements under section 237(2) or 237 (3) ofthe Companies Act 1985. The preliminary results do not comprise statutoryaccounts within the meaning of section 240 of the Companies Act 1985. The AnnualReport for the year ended 30 April 2006 will be delivered to the Registrar ofCompanies following the Company's Annual General Meeting, to be held on 20September 2006. The preliminary report for the year ended 30 April 2006 has been prepared inaccordance with International Financial Reporting Standards ("IFRS") as adoptedfor use in the European Union ("EU") and in accordance with the Companies Act1985 and Article 4 of the IAS Regulations. Financial information for the yearended 30 April 2005, presented as comparative figures in this report, has beenrestated 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 publishedin January 2006 and on the Company's web site. Further details will be given inthe Annual Report. The preparation of the preliminary results requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities, anddisclosure of assets and liabilities reported in the balance sheet, and thereported amounts of revenue and expenses during the reporting period. Actualresults could vary from these estimates. The estimates and underlyingassumptions are reviewed on a continuing basis. Revisions to accountingestimates are recognised in the period in which the estimate is revised if therevision affects only that period or in the period of the revision and futureperiods if the revision affects both current and future periods. 2 Segment analysis The Group has two main business segments: Manufacturing and Vending. Thesesegments have been identified as the primary segment, as the group organises andmanages its businesses in accordance with these activities. Manufacturingcomprises the manufacture and sale of photo-processing equipment and vendingequipment. The equipment is manufactured by PMI subsidiaries or, increasingly,by sub-contractors located in low cost territories. Vending comprises theoperation 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 inContinental Europe. Due to the introduction of new digital photobooths requiringless maintenance and the use of subcontractors to manufacture equipment, theworkforce is being reduced. The restructuring costs for 2005 relate to the reduction in the workforce inJapan, 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 December2004, agreement has been reached on the resulting insurance claims. The totalsettlement was for an amount of £17,700,000. The insurance policy was on a replacement cost basis for non-current assets andgave rise to a non-operating exceptional profit before tax of £5,441,000. Afurther profit before tax of £3,331,000, relating to insurance settlement forthe loss of inventory held to fulfil a major contract and for businessinterruption, 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 chargeof £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 thismeasure 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 1.40pper 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 July2006. The financial information contained in this preliminary announcement doesnot constitute statutory accounts as defined in Section 240 of the Companies Act1985. The figures have been extracted from statutory accounts on which anunqualified audit report has been issued. Those accounts are yet to be deliveredto the Registrar of Companies. The financial information for the preceding yearis based on the statutory accounts for the year ended 30 April 2005 (as restatedfor transition to IFRS). Those accounts, upon which the auditors issued anunqualified opinion, have been delivered to the Registrar of Companies. Copies of the Report and Accounts, for the year ended 30 April 2006, will bemailed to shareholders by 31 July 2005 and will be available from the Company'sregistered office at Church Road, Bookham, Surrey KT23 3EU (telephone:01372-453399, fax: 01372-459064, e-mail:[email protected]) after that date. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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