2nd Jul 2007 07:01
Photo-Me International PLC02 July 2007 Monday 2 July 2007 PHOTO-ME INTERNATIONAL PLC Preliminary Announcement, Strategy, Board and EGM Requisition Update . Key Points - Financial * Revenue for the year to 30 April 2007 at £214.9m (2006: £224.9m) down 4.4%, mainly in the Manufacturing Division * Adjusted EBITDA (excluding exceptionals) of £45.1m (2006: £52.8m), 21.0% (2006: 23.5%) of revenue * Reflecting a £4.7m increase in depreciation and a £1.4m reduction in profit as a result of the strengthening of Sterling, reported pre-tax profit (including exceptionals) of £14.8m (2006: £28.0m), adjusted pre-tax profit (excluding exceptionals) of £13.0m (2006: £25.7m), in line with current market expectations. * Reported profit after tax from continuing and discontinued operations of £7.4m (2006: £21.0m) * Gross capital expenditure of £40.5m, mainly on substantial roll-out of next generation digital photobooths • Unchanged final dividend per share of 1.4p proposed, making an unchanged 2.4p for the year. • Continuation , but on a more aggressive basis, of the share buy-back programme as part of the Strategic Review process Key Points - Commercial •Continental Europe continued to account for over half of revenue and profit. •Vending Division revenue reduced by 1.0% to £145.0m (2006: £146.5m) and adjusted operating profit decreased by 24.7% to £14.2m (2006: £18.9m), reflecting the temporary impact of the change in international passport photo regulations and an increased depreciation charge •Manufacturing Division revenue reduced by 10.9% to £69.9m (2006: £78.4m) and adjusted operating profit decreased by 61.1% to £5.1m (2006: £13.3m), primarily reflecting the continuing weak market for minilabs Key Points - Strategy •The Board has asked Lazard to explore whether an acceptable offer might be achievable for PMI's Vending Division. Whilst the process is in its early stages, with potential bidders having recently been contacted, there appears to be strong interest in PMI's Vending Division, given its leading position in key territories, technical strength, attractive market outlook and cash generative financial profile •In addition to the share buy-back programme, it remains PMI's intention to return to shareholders a significant amount of surplus cash arising from a successful outcome of the Strategic Review Key Points - Board •So as further to improve Corporate Governance, Messrs Riccardo Costi and Francois Giuntini, executive Directors, and Francis Wahl, a non-executive Director, have tendered their immediate resignations from the Board. •For the same reason, Mr Dan David, a non-executive Director (and the Company's Life President), has indicated his intention to resign at the conclusion of the Strategic Review and certainly by no later than 31 December 2007. •The Board now comprises the independent Chairman, four independent non-executive Directors, two executive Directors, and the above non-executive Director who has intimated his forthcoming resignation. Key Points - EGM Requisition •Given the resignations referred to above, Resolutions 1-4, as proposed, should no longer be necessary. •The Board believes that shareholders representing a majority of PMI's issued share capital continue to support the Strategic Review process and, in particular, would like the Board to continue to explore whether an acceptable offer might be achievable for PMI's Vending Division. •The Board hopes that Principle Capital will be persuaded to withdraw its proposed Resolution calling for the immediate cessation of any talks with regard to the sale of any of PMI's businesses or business divisions and, if this is not the case, the Board would propose unanimously to recommend its rejection to shareholders. Vernon Sankey, Chairman, said "The Board is unanimous in its belief that thestrategy it is pursuing on a number of fronts is the right one to maximise valuefor shareholders. On behalf of the PMI Board, I would like to pay tribute to theselfless decision of Riccardo, Francois and Francis to step down at this time,each of them having made a very considerable contribution to the Board over manyyears". Serge Crasnianski, Chief Executive Officer, stated "In the current year, Vendingshould benefit substantially from the £32m of capital expenditure on photoboothsin the last two years and attendant reduced maintenance costs as well as fromthe improvement in international passport photo sales, following theintroduction of the International Civil Aviation Organisation ("ICAO")standards, which encourage the early renewal of passports. From the second halfof the year, the national health card in France and the tobacco card in Japanshould generate substantial additional revenue. Overall, Manufacturing isexpected to trade at broadly similar levels to the year under review, includingin terms of the number of minilabs sold, and will benefit from a full year ofsales of the PhotoBook Pro album-making machine. Beyond FY 2008, Vending should benefit from the increasing requirement for IDphotos and from the extension of its estate. In market conditions which remaindifficult, Manufacturing (which is less predictable than Vending) is difficultto assess but should show improving results, given PMI's excellent range ofproducts, low cost manufacturing base and particularly strong market position inwholesale labs". 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 risks, 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 (approximately 200 yards from Moorgate Station). Enquiries: Photo-Me International 01372-453 399Vernon Sankey (Chairman)Serge Crasnianski (CEO)Jean-Luc Peurois (GFD) Bankside Consultants (analysts)Charles Ponsonby 020-7367 8851 / 07789-202 312 Tulchan Communications (press) 020-7353 4200Andrew GrantDavid Allchurch CHIEF EXECUTIVE'S STATEMENT The results for the year to 30 April 2007 are in line with current marketexpectations, albeit well short of the previous year's actual, which was PMI'ssecond best ever. Most of the shortfall derives from the Manufacturing Division. Since November 2006, PMI has been exploring strategic options for its threeindividual businesses - Vending, Minilab Manufacturing and Wholesale LabManufacturing - with a view to returning a significant amount of surplus cash toshareholders. FINANCIAL REVIEW Figures in this paragraph disregard exceptional items, and the 2006 comparativeshave been re-stated to exclude the results of a discontinued operation. Onrevenue down 4.4% at £214.9m (2006: £224.9m), EBITDA was £45.1m (2006: £52.8m),representing 21.0% (2006: 23.5%) of revenue. Reflecting a £4.7m increase in thedepreciation charge and a £1.4m reduction in profit as a result of thestrengthening of Sterling, operating profit reduced to £14.9m (2006: £27.4m),pre-tax profit amounted to £13.0m (2006: £25.7m) and diluted earnings per shareon continuing activities were 2.12p (2006: 4.65p). In the year to 30 April 2007, an exceptional £1.1m credit resulted from thewrite-back of part of a provision for restructuring. In addition, exceptionalfinance revenue of £0.7m arose as a result of the revaluation of a put optionliability. Exceptionals in the previous year comprised a £3.2m charge forrestructuring costs and a £5.4m non-operating profit on an insurance recovery(supplementing a £3.3m non-exceptional operating profit thereon). Including exceptional items, operating profit totalled £16.0m (2006: £24.2m) andthe pre-tax profit was £14.8m (2006: £28.0m). With an effective tax rate of35.2% (2006: an unusually low 26.5%, on account of the minimal tax charge on theexceptional non-operating profit), the profit for the year from continuingoperations was £9.6m (2006: £20.6m). Deducting a post-tax £2.2m loss for theyear from discontinued operations, namely Deith Group, the profit for the yearfrom continuing and discontinued operations was £7.4m (2006: £21.0m). Thereported diluted earnings per share on continuing operations were 2.49p (2006:5.40p). Total shareholders' equity amounted to £98.3m (2006: £104.6m) and net debt to£27.7m (2006: £16.7m), representing gearing of 27.6% (2006: 15.6%) based ontotal equity of £100.4m (2006: £107.3m). The £11.0m cash outflow reflected netcapital expenditure of £37.2m (substantially ahead of the £30.2m depreciationand amortisation charge), a much reduced working capital outflow of £2.4m and£1.1m of share buy-backs. More than half the gross capital expenditure of £40.5m- a record - was on the replacement of first generation digital photobooths withsecond generation models so as better to comply with new ICAO (InternationalCivil Aviation Organisation) passport standards. Excluding the exceptionalfinance revenue, the net finance cost of £1.9m (2006: £1.7m) was covered 7.8 x(2006: 16.1 x) by pre-exceptional operating profit. DIVIDENDS An unchanged final dividend per share of 1.4p is proposed. Together with theunchanged interim dividend per share of 1.0p, dividends per share total anunchanged 2.4p. If approved at the AGM on 17 October 2007, the final dividend will be paid on 2November 2007 to shareholders on the register at close of business on 5 October2007. The ex-dividend date is 3 October 2007. BUSINESS REVIEW Geographical Analysis of Revenue and Profit (by origin) Revenue Operating Profit +Year to 30 April 2007 2006 2007 2006 £m £m £m £mContinental Europe 122.5 127.1 12.4 16.7UK & Republic of Ireland 62.6 64.2 (0.1) 4.9Asia & Australia 27.7 30.9 3.5 4.9USA 2.1 2.7 (0.9) 0.9 214.9 224.9 14.9 27.4 + pre-exceptionals Continental Europe, which includes the great majority of Manufacturing revenue,contributed 57% (2006: 57%) of Group revenue and 83% (2006: 61%) of totalpre-exceptional operating profits. Substantially all Group overheads are chargedagainst the UK & Republic of Ireland, the reduction in whose operating profitreflected additional depreciation and reduced profit from minilab sales. Divisional Analysis of Revenue and Profit Revenue Operating Profit +Year to 30 April 2007 2006 2007 2006 £m £m £m £m Vending 145.0 146.5 14.2 18.9Manufacturing 69.9 78.4 5.1 13.3Group overheads - - (4.4) (4.8) 214.9 224.9 14.9 27.4+ pre-exceptionals Vending accounted for 67% (2006: 65%) of Group revenue and 73% (2006: 59%) ofGroup pre-exceptional operating profit (excluding Group overheads). Vending Vending comprises the operation of photobooths, digital media kiosks and othervending equipment, notably amusement machines. During the year, in accordancewith PMI's policy of diversification, the total of Vending sites worldwideincreased by 6,600 (primarily, amusement machines) to 41,800. PMI's vending business is global, operating in 17 industrialised countries.However, 86% of sites are located in three territories - the UK & Ireland,France and Japan. By area, Continental Europe accounted for 17,200 (2006:15,200) sites; the UK & Ireland for 17,400 (2006: 13,700); Asia and Australiafor 6,800 (2006: 5,700); and the USA for 400 (2006: 600). Photobooths Photobooths are an efficient and competitively-priced provider of ID photographsand represent a stable and cash generative business. The number of photobooths sited increased to 21,000 (2006: 20,600), of whichContinental Europe constitutes 9,300 (2006: 9,400), the UK & Ireland 5,600(2006: 5,400), Asia & Australia 5,700 (2006: 5,200) and the USA 400 (2006: 600). In the year under review, photobooths lost revenue, mainly due to rigorousapplication of the new ICAO passport standards by some national issuingauthorities; these problems are being addressed by continuing the programme ofsiting the next generation of photobooths and installing ICAO-compatiblesoftware on second generation machines. In the current year, photobooths areexpected to benefit from the introduction of a national health card in France(potentially requiring 50m photos) and of a tobacco card in Japan (potentiallyrequiring 25m photos), whilst a pension card in Japan (potentially requiring 75mphotos) is scheduled for late calendar 2008. Digital Media Kiosks 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. The number of digital media kiosks sited increased to 4,700 (2006: 3,500).Continental Europe accounted for 3,900 (2006: 2,900) of these, with France byfar the principal territory with 2,900 (2006: 2,300), followed by Switzerlandwith 500 (2006: 200). In the year, digital media kiosks increased their revenue by a substantialpercentage, also reflecting the development of this market place, which remainsin its early stages. Other Vending Equipment Units of other vending equipment sited increased to 16,100 (2006: 11,000), ofwhich 13,500 (2006: 8,000) were amusement machines (notably, kiddie rides), thebalance principally comprising photocopiers and express card machines. The vastmajority of kiddie rides is sited in the UK & Ireland, although the number sitedin Continental Europe increased to 1,700 (2006: 400). It is planned to extendthe siting of rides outside the UK & Ireland, utilising product from PMI's 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, normally in low cost territories. PMI has a unique and comprehensiverange covering all market segments, from wholesale labs, to minilabs andend-consumer vending kiosks, with outputs of between 500 and 20,000 prints perhour. Wholesale Labs The Group's Wholesale Lab business, Imaging Solutions, based near Zurich inSwitzerland, is involved in the development, manufacture, sale and technicalsupport of equipment and systems for high volume photo-finish laboratories (upto 20,000 prints per hour). In the year, revenue was similar to the prior year, but profits declinedsubstantially, mainly due to the first year's depreciation of intangible assetsacquired from the Administrator of AgfaPhoto, yet a significant contribution wasstill made to the Manufacturing result. In the current year, Imaging Solutions should benefit from the launch of two newmachines - a wider format printer and the FastBook 100, which can print 100photo albums per hour. Subsequent to the year end, Imaging Solutions agreed to acquire, for a smallconsideration, Albin Spitzke KG (GmbH & Co), based in Hamburg, a manufacturer ofspecialist cutting and packaging systems for photographic products. Minilabs A substantial majority of Manufacturing revenue is represented by the sale ofminilabs, machines with an output ranging from 800 to 2,000 prints per hour.Typically, minilabs are sited in specialist photographic outlets, supermarketsand pharmacies. Again this year, for the fifth successive year, PMI's minilabs have received theleading global trade show award for quality - the DIMA (Digital ImagingMarketing Association) Digital Printer Award. During the year, the minilab market remained weak. In addition, in the firsthalf, PMI was in transition between the DKS15 series, manufactured by asub-contractor in Poland, and the third generation DKS16/17 series, manufacturedby a sub-contractor in Singapore. In this context, first half unit sales wereless than they might have been, with sales in the last batch of the DKS15 seriesbeing made at below average margins, primarily to fulfil a large contract. In the second half, unit sales, most of them of the DKS16/17 series ,substantially increased (although not to the extent of the second half of theprevious year), but margins were again constrained by a substantial proportionbeing in satisfaction of a large contract. In the year, with reduced unit salesand a slightly lower average unit price, both revenue and profit decreased. A feature of the year was the successful launch of the Photobook Proalbum-making machine at the Photokina Exhibition in Cologne in October 2006; 350units were sold in the second half, and the machine is believed to haveconsiderable potential. Importantly for the future, the DKS16/17 minilabs are outstanding in terms ofmaximum productivity (2,000 prints per hour), maximum format (12" x 18") andminimum footprint (10.8 sq ft), as well as quality of output. Market estimatesare that the current worldwide population of minilabs is some 150,000, evenlysplit between analogue and digital. Many of these machines, especially theanalogue ones, should require replacement in the coming years. In May 2007, new management was recruited to lead and drive the future of theminilab business. Digital Media Kiosk Manufacturing Digital media kiosks, which have an output of 500 prints per hour, aremanufactured for PMI by a sub-contractor in China. Whilst most digital mediakiosks are destined for operation by PMI, some are sold to third parties. DISPOSAL In January 2006, PMI acquired a 60% interest in Deith Group Limited, adistributor and developer of coin-operated amusement gaming machines, for £1.5m(mainly in new PMI shares). This investment was seen as a major diversificationby the Group. Following the acquisition, the industry in which Deith operatedsuffered adverse developments, and Deith's performance fell substantially shortof the Group's expectations. As a result of the Strategic Review, it was decidedto dispose of the business. Its sale, for £0.85m in cash, was completed in April2007. The total loss for the year from this discontinued operation was £2.2m. BOARD Subsequent to the year end, on 17 May 2007, two additional independentnon-executive Directors, Roger Partington and David Young, were appointed. Roger Partington (51) was Executive Vice President and President, Retail,responsible for UK Sales and Marketing, of TXU Europe Group, an energy company,from 1999 to 2002; at Safeway from 1994 to 1999, latterly as Group MarketingDirector on the main Board; and at Nestle-Rowntree from 1986 to 1994, ultimatelyas Marketing Director. David Young, 56, was Chief Executive of Perkins FoodsHoldings, an international food manufacturer, from 2003 to 2005, and, from 1976to 2001, he was with Duracell, the battery manufacturer acquired by Gillette in1997. Roger and David bring to PMI valuable experience in its two businesses -retailing and manufacturing - as well as considerable strengths in marketing. Following the new appointments and effective from 30 May 2007, the membership ofthe Audit, Remuneration and Nomination Committees was revised so as to becomefully compliant with the Combined Code. The Audit Committee now comprises Martin Reavley (Chairman), Hugo Swire andDavid Young, all of whom are independent non-executive Directors, with MrReavley having "recent and relevant financial experience". The Remuneration Committee now comprises Hugo Swire (Chairman), Martin Reavleyand Roger Partington, all of whom are independent non-executive Directors. The Nomination Committee now comprises Vernon Sankey (Chairman), SergeCrasnianski, Roger Partington, Martin Reavley, Hugo Swire and David Young. Additionally, Martin Reavley was appointed Senior Independent non-executiveDirector. So as further to improve Corporate Governance, Messrs Riccardo Costi andFrancois Giuntini, executive Directors, and Francis Wahl, a non-executiveDirector, have today tendered their immediate resignations from the Board. Forthe same reason, Mr Dan David, a non-executive Director (and the Company's LifePresident), has also indicated his intention to resign at the conclusion of theStrategic Review and certainly by no later than 31 December 2007. The Board nowcomprises the independent Chairman, four independent non-executive Directors,two executive Directors, and the non-executive Director who has intimated hisforthcoming resignation. STRATEGIC REVIEW On 5 June 2006, PMI announced that it was conducting a Strategic Review whichmay or may not lead to an offer being made for the Company. On 15 November 2006, the Board announced that, having regard to the differentnature of the individual businesses within PMI, as highlighted by the StrategicReview implementation process, it had concluded that shareholder value would bemaximised by the pursuit of strategic options for the individual businessesrather than an offer for the Company as a whole. The Board also announced that, having assessed PMI's existing capital structure,future capital requirements and anticipated cash flows, it would seek to effecta significant return of surplus capital to shareholders. To this effect, PMI has retained leading financial, accounting, tax and legaladvisers, given the complexities and time needed to resolve the technicalitiesinvolved. On 14 March 2007, PMI announced that it proposed to commence a buy-back of itsown shares. Following the transfer of sufficient distributable reserves into theCompany, in the period from 30 March 2007 to 27 April 2007, PMI bought in atotal of 1.6 million of its own shares (0.4% of its issued share capital at theoutset of the exercise). It is intended that this buy-back process willcontinue, on a more aggressive basis. In addition, it remains intended that afurther substantial return of capital to shareholders will result from asuccessful outcome of the Strategic Review. As a part of the Strategic Review process, the Board has asked Lazard to explorewhether an acceptable offer might be achievable for PMI's Vending Division.While this process is in its early stages, with potential bidders havingrecently been contacted, there appears to be strong interest in the VendingDivision, given its leading positions in key territories, technical strength,attractive market outlook and cash generative financial profile. An announcementregarding a possible sale transaction for the Vending Division is envisaged inthe Autumn. An additional period of two to three months will be required inorder to carry out a corporate restructuring through which to return theproceeds to shareholders. Further details will be provided in due course. EGM REQUISITION On 25 June 2007, Principle Capital Holdings S.A. made an announcement on behalfof its subsidiary company, Principle Capital Fund Managers Ltd ("PrincipleCapital"). The announcement stated that Principle Capital, on behalf of Principle CapitalInvestment Trust plc, Principle Capital L.P. and QVT Financial LP, holdingbetween them 36,643,213 shares, representing 10% of PMI's outstanding sharecapital, had delivered a requisition to the PMI Board to call an ExtraordinaryGeneral Meeting. The first four Resolutions proposed were for the immediate removal of Messrs DanDavid, Francis Wahl, Riccardo Costi and Francois Giuntini as Directors of theCompany. The fifth Resolution was for "the immediate cessation of the StrategicReview announced by the Company on 5 June 2006 save in respect of any corporatereorganisation required in order to effect a substantial return of capital toshareholders as set out in the Company's announcement of 2 March 2007 and theimmediate cessation of any talks the Company may be holding with regard to thesale of any of its businesses or business divisions". Given the immediate and future resignations referred to above, Resolutions 1-4,as proposed, should no longer be necessary. The Board believes that shareholders representing a majority of PMI's issuedshare capital continue to support the Strategic Review process and, inparticular, would like the Board to continue to explore whether an acceptableoffer might be achievable for PMI's Vending Division. The Board hopes that Principle Capital will be persuaded to withdraw itsproposed fifth Resolution and, if this is not the case, the Board would proposeunanimously to recommend its rejection to shareholders. OUTLOOK In the current year, Vending should benefit substantially from the £32m ofcapital expenditure on photobooths in the last two years and attendant reducedmaintenance costs as well as from the improvement in international passportphoto sales, following the introduction of the International Civil AviationOrganisation ("ICAO") standards, which encourage the early renewal of passports.From the second half of the year, the national health card in France and thetobacco card in Japan should generate substantial additional revenue. Overall,Manufacturing is expected to trade at broadly similar levels to the year underreview, including in terms of the number of minilabs sold, and will benefit froma full year of sales of the PhotoBook Pro album-making machine. Beyond FY 2008, Vending should benefit from the increasing requirement for IDphotos and from the extension of its estate. In market conditions which remaindifficult, Manufacturing (which is less predictable than Vending) is difficultto assess but should show improving results, given PMI's excellent range ofproducts, low cost manufacturing base and particularly strong market position inwholesale labs Serge CrasnianskiChief Executive Officer 2 July 2007 GROUP INCOME STATEMENT for the year ended 30 April 2007 2007 2006 Notes £'000 £'000-------------------------------- ------ ---------- ----------Revenue 2 214,919 224,884Cost of sales (177,659) (177,449)-------------------------------- ------ ---------- ----------Gross profit 37,260 47,435Other operating income 1,096 1,268Profit on insurance recovery - 3,331Administrative expenses (23,490) (24,812)Share of post-tax profits from associates 41 151-------------------------------- ------ ---------- ----------Operating profit before exceptional items 14,907 27,373Restructuring costs 3 1,109 (3,158)-------------------------------- ------ ---------- ----------Operating profit after exceptional items 16,016 24,215Non-operating profit - insurance recovery 3 - 5,441-------------------------------- ------ ---------- ----------Profit before finance items and tax 16,016 29,656Finance revenue 3 1,848 592Finance cost (3,101) (2,288)-------------------------------- ------ ---------- ----------Profit before tax 2 14,763 27,960-------------------------------- ------ ---------- ----------Taxation expense - UK 4 (1,063) (2,208)Taxation expense - overseas 4 (4,134) (5,198)-------------------------------- ------ ---------- ----------Total tax charge 4 (5,197) (7,406)-------------------------------- ------ ---------- ----------Profit for year - from continuing operations 9,566 20,554(Loss) / profit for year - from discontinuedoperations (2,165) 423-------------------------------- ------ ---------- ----------Profit for year - from continuing and discontinuedoperations 7,401 20,977--------------------------------- ----- ---------- ---------- Attributable to:- Equity shareholders of the Parent 7,804 20,158- Minority interests (403) 819-------------------------------- ------ ---------- ---------- 7,401 20,977-------------------------------- ------ ---------- ---------- Dividendspaid in year (£000) 6 8,751 4,373paid in year per share 6 2.40p 1.20pEarnings per share (total)Basic earnings per share 5 2.14p 5.53pAlternative basic earnings per share* 5 1.76p 4.77p Diluted earnings per share 5 2.12p 5.47pAlternative diluted earnings per share* 5 1.75p 4.72p Earnings per share (continuing operations)Basic earnings per share 5 2.51p 5.46pAlternative basic earnings per share* 5 2.13p 4.70p Diluted earnings per share 5 2.49p 5.40pAlternative diluted earnings per share* 5 2.12p 4.65p \* The alternative measure of earnings per share is provided to reflect theGroup's underlying trading performance, excluding the effects of exceptionalitems. GROUP BALANCE SHEET as at 30 April 2007 Notes 2007 2006 £'000 £'000-------------------------- ------ --------- ---------AssetsNon-current assetsGoodwill 7 9,347 10,677Other intangible assets 7 22,565 20,485Property, plant and equipment 7 84,243 77,334Investment property 7 3,192 3,745Investments in associates 99 335Financial assets - held to maturity 327 -- available-for-sale 109 113Deferred tax asset 382 277Trade and other receivables 1,266 1,398-------------------------- ------ --------- --------- 121,530 114,364-------------------------- ------ --------- ---------Current assetsInventories 32,387 41,113Trade and other receivables 41,574 53,374Financial assets - held to maturity 64 356- available-for-sale 307 7Current tax 160 3,034Cash and cash equivalents 31,340 25,838-------------------------- ------ --------- --------- 105,832 123,722-------------------------- ------ --------- ---------Total assets 227,362 238,086-------------------------- ------ --------- ---------EquityShare capital 2,035 2,029Share premium 8 5,372 4,862Treasury shares 8 (1,967) (878)Other reserves 8 (2,282) 832Retained earnings 8 95,143 97,732-------------------------- ------ --------- ---------Total shareholders' equity 98,301 104,577Minority interest 2,135 2,734-------------------------- ------ --------- ---------Total equity 100,436 107,311-------------------------- ------ --------- ---------LiabilitiesNon-current liabilitiesFinancial liabilities 17,868 17,932Post-employment benefit obligations 2,736 2,994Provisions 6 33Deferred tax liability 12,083 13,379Derivative financial liabilities - 1,300Trade and other payables 963 2,694-------------------------- ------ --------- --------- 33,656 38,332-------------------------- ------ --------- ---------Current liabilitiesFinancial liabilities 42,174 25,597Provisions 2,380 5,985Current tax 4,284 3,980Trade and other payables 44,432 56,881-------------------------- ------ --------- --------- 93,270 92,443-------------------------- ------ --------- ---------Total equity and liabilities 227,362 238,086-------------------------- ------ --------- --------- GROUP CASH FLOW STATEMENT for the year ended 30 April 2007 2007 2006 £'000 £'000-------------------------- ------ --------- ---------Cash flows from operating activitiesOperating profit before exceptional items- Operating profit from continuing operations 14,907 27,373- Operating (loss)/profit from discontinued operations (2,453) 538Non-operating exceptional item - 5,441Share of post-tax profits from associates (41) (151)Amortisation of intangible assets 8,477 6,686Impairment of goodwill - 298Depreciation of property, plant and equipment 21,688 18,434Profit on sale of property, plant and equipment (125) (189)Exchange differences (251) 131Other items 411 352Decrease/(increase) in inventories 2,212 (16,403)Decrease/(increase) in trade and other receivables 8,545 (8,051)(Decrease)/increase in trade and other payables (10,722) 1,537Movement in provisions (2,413) 656------------------------------- --------- ---------Cash generated from operations 40,235 36,652Interest paid (3,219) (1,935)Taxation paid (2,639) (11,810)------------------------------- --------- ---------Net cash generated from operating activities 34,377 22,907------------------------------- --------- --------- Cash flows from investing activitiesAcquisition of subsidiaries, net of cash acquired (152) (1,354)Proceeds from disposal of subsidiaries 1,300 -Purchase of intangible assets (6,843) (9,525)Proceeds from sale of intangible assets 199 -Purchase of property, plant and equipment (33,668) (28,297)Proceeds from sale of property, plant and equipment 3,162 989Purchase of associate undertakings - (35)Purchase of available-for-sale investments - (56)Proceeds from sale of available-for-sale investments - 3Interest received 998 551Dividends received from associate 37 47------------------------------- --------- ---------Net cash utilised in investing activities (34,967) (37,677)------------------------------- --------- --------- Cash flows from financing activitiesIssue of ordinary shares to equity shareholders 516 182Purchase of treasury shares (1,089) (878)Repayment of capital element of finance leases (387) (48)Proceeds from borrowings 33,196 15,369Repayment of borrowings (24,579) (12,639)(Increase) / decrease in monetary funds (67) 8,978Dividends paid to equity shareholders (8,751) (4,373)Dividends paid to minority interests (4) (7)------------------------------- --------- ---------Net cash (utilised in) / generated from financingactivities (1,165) 6,584------------------------------- --------- --------- Net decrease in cash and cash equivalents (1,755) (8,186)Cash and cash equivalents at beginning of year 14,143 22,022Exchange (loss)/gain on cash and cash equivalents (815) 307------------------------------- --------- ---------Cash and cash equivalents at end of year 11,573 14,143------------------------------- --------- --------- GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE for the year ended 30 April 2007 2007 2006 £'000 £'000----------------------------------- ---------- ----------Income and expense recognised directly in equityActuarial (loss)/gain on defined benefit pension scheme and other post-employment benefit obligations (50) 362Exchange differences (5,516) 1,026----------------------------------- ---------- ---------- (5,566) 1,388Transfers to the income statementCash flow hedge - (56) Taxation on items taken directly to or transferred fromequityTax on actuarial gain/loss on defined benefit pension scheme and otherPost-employment benefit obligations 12 (109)Tax on cash flow hedge - 20----------------------------------- ---------- ----------Net (expense)/ income recognised directly in equity (5,554) 1,243 Profit for period 7,401 20,977----------------------------------- ---------- ----------Total recognised income and expense for the period 1,847 22,220----------------------------------- ---------- ---------- Attributable to- Equity shareholders of the parent 2,359 21,390- Minority interests (512) 830----------------------------------- ---------- ---------- 1,847 22,220----------------------------------- ---------- ---------- NOTES 1 Basis of preparation and accounting policies The preliminary results for the year ended 30 April 2007 have been prepared onthe same basis as the 30 April 2006 statutory accounts, and have been extractedfrom the audited consolidated financial statements, which were approved by theBoard of Directors on 29 June 2007. The audited consolidated financialstatements have not yet been delivered to the Registrar of Companies but areexpected to be published on 27 July 2007. The financial information set out in this announcement does not constitutestatutory accounts for the years ended 30 April 2007 or 30 April 2006. Thefinancial information for the year ended 30 April 2006 is derived from thestatutory accounts for that year. The report of the auditors on the statutoryaccounts for the year ended 30 April 2006 was unqualified and did not contain astatement under section 237 of the Companies Act 1985. The consolidated financial statements have been prepared in accordance withInternational Financial Reporting Standards ("IFRS") and the InternationalFinancial Reporting Interpretations Committee's interpretations as adopted foruse in the European Union ("EU"), and with those parts of the Companies Act 1985applicable to companies reporting under IFRS. 2 Segment analysis The Group has two main business segments: Manufacturing and Vending. Thesesegments have been identified as the primary segments, as the Group organisesand manages 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 (continuingoperations) Year to Year to 30 30 April 2007 April 2006 --------------- ------------- Revenue Profit Revenue Profit £'000 £'000 £'000 £'000Results per activity (exc.financecost)- Manufacturing-Total revenue 99,124 6,257 97,281 10,379-Inter-segmenteliminations (29,238) - (18,852) - --------- ------- -------- ------- 69,886 6,257 78,429 10,379- Vending 145,033 14,233 146,455 18,610- Group overheads - (4,474) - (4,774) --------- ------- -------- ------- 214,919 224,884 --------- --------Group operatingprofit afterexceptional items 16,016 24,215Non-operating profiton insurancerecovery - 5,441Net finance cost (1,253) (1,696) ------- -------Profit before tax 14,763 27,960Taxation (5,197) (7,406) ------- -------Profit for theperiod 9,566 20,554 ------- ------- Analysis by geographic area (continuing operations) Year to Year to 30 30 April 2007 April 2006 --------------- ------------- Revenue by Profit Revenue by Profit origin origin £'000 £'000 £'000 £'000 Results per area (inc. finance cost) - Continental Europe 122,543 13,161 127,168 13,435- United Kingdom &Republic of Ireland 62,579 -1,105 64,163 8,734- Asia & Australia 27,659 3,637 30,880 4,931- United States ofAmerica 2,138 -930 2,673 860 --------- ------- ------- -------- 214,919 14,763 224,884 27,960 --------- -------Taxation (5,197) (7,406) ------- --------Profit for theperiod 9,566 20,554 ------- -------- 3 Exceptional items 2007 2006 £'000 £'000---------------------------------- ---------- -----------Restructuring costs 1,109 (3,158)Profit on insurance recovery - 5,441---------------------------------- ---------- -----------Total exceptional income 1,109 2,283---------------------------------- ---------- ----------- The provision for restructuring made at 30 April 2006 in Continental Europe hasbeen settled and has resulted in a write back in the current financial year of£1,109,000, resulting in a tax charge of £381,000 (2006: provision £3,158,000,tax credit £1,097,000). The provision made in 2006 to reduce the workforce wasdue to the introduction of new digital photobooths requiring less maintenanceand the use of sub-contractors to manufacture equipment. In addition to the above, finance revenue in the year to 30 April 2007 includes£650,000 in relation to the revaluation of the Deith minority put optionliability. Profits from insurance recoveries (year to 30 April 2006) Following destruction by fire of the Bookham warehouse and workshop in December2004, agreement was 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 Taxation 2007 2006------------ -------- -------- -------- -------- -------- --------- UK Overseas Total UK Overseas Total £'000 £'000 £'000 £'000 £'000 £'000------------ -------- -------- -------- -------- -------- ---------Current taxation 1,150 4,764 5,914 1,500 1,069 2,569Deferred taxation (87) (630) (717) 708 4,129 4,837------------ -------- -------- -------- -------- -------- ---------Total tax charge 1,063 4,134 5,197 2,208 5,198 7,406------------ -------- -------- -------- -------- -------- --------- 5 Earnings per share Year to Year to 30 30 April 2007 April 2006 Basic earnings per shareTotal 2.14p 5.53pContinuing 2.51p 5.46pDiscontinued -0.37p 0.07p Diluted earnings per shareTotal 2.12p 5.47pContinuing 2.49p 5.40pDiscontinued -0.37p 0.07p Alternative basic earnings per shareTotal 1.76p 4.77pContinuing 2.13p 4.70pDiscontinued -0.37p 0.07p Alternative diluted earnings per shareTotal 1.75p 4.72pContinuing 2.12p 4.65pDiscontinued -0.37p 0.07p The calculation of earnings per share is based onthe following: Earnings available to ordinary shareholders(£'000)Total 7,804 20,158Continuing 9,167 19,904Discontinued (1,363) 254 Adjusted earnings available to ordinaryshareholders (£'000)Total 6,426 17,394Continuing 7,789 17,140Discontinued (1,363) 254 Weighted average number of shares in issue inthe period:- basic ('000) 364,815 364,711- including dilutiveshare options ('000) 367,877 368,229 Adjusted basic and diluted earnings per share are calculated on the basis ofearnings before exceptional items. The Directors believe that disclosure of thismeasure allows shareholders to understand better the elements of financialperformance during the year and to facilitate comprehension with prior periods. 6 Dividends Year to Year to 30 30 April 2007 April 2006 £'000 £'000 Dividends charged in the periodFinal dividend for theyear ended 30 April 2005of 1.2p per share 4,373Interim dividend for theyear ended 30 April 2006of 1.0p per share 3,646Final dividend for theyear ended 30 April 2006of 1.4p per share 5,105 - --------- ------- 8,751 4,373 --------- ------- Dividends proposed for approval (not recognised as aliability at year end)Interim dividend for theyear ended 30 April 2006of 1.0p per share 3,646Final dividend for theyear ended 30 April 2006of 1.4p per share - 5,105Interim dividend for theyear ended 30 April 2007of 1.0p per share 3,646 -Final dividend for theyear ended 30 April 2007of 1.4p per share 5,100 - --------- ------- 8,746 8,751 --------- ------- The interim dividend for the year to 30 April 2007 was paid on 3 May 2007 toshareholders on the register on 2 March 2007. The Directors propose a final dividend for the year ended 30 April 2007 of 1.40pper share, which, if approved at the Annual General Meeting on 17 October 2007,will be paid on 2 November 2007 to shareholders on the register on 5 October2007. 7 Non-current assets Goodwill Intangible Property, plant Investment assets & equipment property £000 £000 £000 £000 Net book valueat 1 May 2006 10,677 20,485 77,334 3,745Exchangedifference andothermovements (23) (473) (3,055) (61)Additions -photoboothsand vendingequipment - - 30,885 -Additions -other assets 47 6,843 3,501 -Transfer - 4,304 (119) -Newsubsidiaries - - 253 -Amortisation - (8,477) - -Depreciation - - (21,196) (492)Disposals atnet book value (1,354) (117) (3,360) - -------- ----------- ----------- --------Net book valueat 30 April2007 9,347 22,565 84,243 3,192 -------- ----------- ----------- -------- 8 Reserves Share Premium Treasury Shares Other Reserves Retained Earnings £'000 £'000 £'000 £'000At 1 May 2006 4,862 (878) 832 97,732Exchangedifference - - (5,407) -Profit foryear - - - 7,804Shares issued 510 - - -Purchase ofTreasuryshares - (1,089) - -Other reservemovements - - 2,293 (1,642)Dividends - - - (8,751) ------------ ------------ ------------ ------------At 30 April2007 5,372 (1,967) (2,282) 95,143 ------------ ------------ ------------ ------------ 9 Publication of the audited financial statements Copies of the Report and Accounts, for the year ended 30 April 2007, will bemailed to shareholders by 27 July 2007 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:
PHTM.L