PHOTO-ME INTERNATIONAL PLC
(“Photo-Me” or “the Group”)
RESULTS FOR THE YEAR ENDED 30 APRIL 2018
Investment in Laundry continues to drive growth
Photo-Me International plc (PHTM.L), the instant-service equipment group, announces its results for the year ended 30 April 2018.
RESULTS HIGHLIGHTS:
|
|
Reported |
At constant currency |
|||
|
|
2018 |
2017 |
Change |
20171 |
Change1 |
|
Revenue |
£229.8m |
£214.7m |
+7.1% |
£216.9m |
+5.9% |
|
EBITDA (excluding associates) |
£71.0m |
£69.0m |
+2.8% |
£70.4m |
+1.0% |
|
Underlying profit before tax2 |
£46.8m |
£46.6m |
+0.3% |
£47.5m |
-1.6% |
|
Reported profit before tax |
£50.2m |
£48.0m |
+4.4% |
£49.0m |
+2.5% |
|
Profit after tax |
£40.3m |
£35.1m |
+14.7% |
|
|
|
Net cash 3 |
£26.7m |
£39.2m |
-31.9% |
|
|
|
Earnings per share (diluted) |
10.60p |
9.27p |
+14.2% |
|
|
|
Total dividend per share |
8.44p |
7.03p |
+20.0% |
|
|
12017 trading results of overseas subsidiaries converted at 2018 exchange rates.
2 Underlying profit before tax is 2018 profit before tax adjusted to exclude the gain on the Group's shareholding in Max Sight Group Holdings Limited, the profit on disposal of the former head office building, and restructuring fees relating Photo-Me Retail. 2017 profit before tax is adjusted to exclude the translation reserve taken to profit on disposal of subsidiaries.
3 Refer to note 7 for the reconciliation of Net Cash to Cash and cash equivalents as per the financial statements.
All percentage change figures are calculated from actual figures in the financial statements as opposed to the rounded figures included in the above table.
FINANCIAL HIGHLIGHTS
· Revenues up 7.1% at £229.8 million driven by continued growth in Identification and rapid expansion of Laundry. At constant currency, growth was 5.9%.
· EBITDA up 2.8% at £71.0 million, reflecting investment in strategic acquisitions and organic growth, and favourable euro to sterling exchange rates in 2018. EBITDA margin was 30.9%.
· Underlying profit before tax increased by 0.3%, and at constant currency declined by 1.6%.
· Reported profit before tax was £50.2 million, up 4.4% and at constant currency was up 2.5%, profit margin was 21.8% as percentage of sales.
· Profit after tax up 14.7%, supported by a reduction of Photo-Me's effective tax rate to 19.7% (2017: 26.9%).
· Net cash position of £26.7 million after distribution of £26.5 million dividends and investment in future growth, with 35% of capex spent on the ongoing expansion of Laundry.
· Total Ordinary dividend increased by 20% to 8.44 pence per share.
OPERATIONAL HIGHLIGHTS
· Continued revenue growth in all of Photo-Me's territories, apart from Japan.
· Continued rapid growth of higher margin Laundry business, with revenue growth of 69% and contributing 16% of total Group revenue. (2017: 10%).
· Identification continuing to deliver profit growth and strong cashflow:
o Rollout of secure upload passport ID technology launched with HMPO in the UK (2,200 booths upgraded at 30 April 2018).
o Continued rollout of secure upload solution in partnership with governments in France, Ireland and Germany, and discussions ongoing with the Dutch government.
· Kiosks continue to deliver revenue growth: 24.1%
o Refocus of Photo-Me Retail completed, with improved profitability already achieved.
· Restructuring of Japanese subsidiary expected to improve profitability in FY2019 and beyond.
Commenting on the results, Serge Crasnianski, CEO, said:
“2018 has been another year of good operational progress, reflected in revenue growth of 7.1%, 4.4% growth in PBT, including a one-off gain on the Group's shareholding in Max Sight Holdings Limited, and double-digit EPS growth. Revenue in our Laundry business rose 69% in the year, and we expect that these operations will contribute an increasingly dominant share to Group profits as we capitalise on the significant expansion opportunities in our markets. Our Identification business continues to perform wellas we focus on government partnerships for the adoption of our secure ID upload technology in new countries.
“Supported by steady cash flows from our global, market-leading photobooth estate, the Group will remain focused on investing in new and complementary products to drive further profitability and extend the suite of services available through our established instant-service equipment network. We remain confident for the future.”
CHAIRMAN'S STATEMENT
In the 2018 financial year, the Group delivered further financial and operational progress. Our Laundry business has once again been the growth driver of the Group, with revenues increasing 69% over the
12 month period, and we have continued to deliver growth in our Identification business across all of Photo-Me's countries of operation apart from Japan.
Results
Reported revenue increased by 7.1% to £229.8 million (5.9% at constant currency). This growth was driven by further expansion of our Laundry operations, continued deployment of secure photo ID services and progress in the unattended digital photo printing kiosk business.
Reported EBITDA increased by 2.8% to £71.0 million (2017: £69.0 million)
Reported profit before tax rose by 4.4% to £50.2 million, including a one-off investment gain of £3.7 million relating to the Group's shareholding in Max Sight Group Holdings Limited. In addition, these results recognise a £2.3 million profit on the sale of the head office building in Bookham and a one-off £2.6 million Photo-Me Retail restructuring cost. At constant currency profit before tax increased by 2.5% to £50.2 million (2017: £49.0 million).
Underlying profit before tax, which is 2018 profit before tax adjusted to exclude the gain on the Group's shareholding in Max Sight Holdings Limited, the profit on disposal of the former head office building, and restructuring costs relating Photo-Me Retail, was stable at £46.8 million (2017: £46.6 million, excluding the translation reserve taken to profit on disposal of a subsidiary). At constant currency, the underlying profit before tax decreased by 1.6%. A reconciliation of underlying profit before tax to reported profit before tax is provided in note 4 to the financial statements.
During the period the Group achieved a significant increase in profit after tax, up 14.7%, supported by a reduction of Photo-Me's tax rate.
The Group remains highly cash generative, with £61.0 million of its cash generated from operations in the period. This supports the Group's ongoing investment in innovation and its future growth.
Higher capital expenditure year-on-year supported investment in key laundry acquisitions as part of the Group's strategy to deliver substantial growth in the medium and long-term, as well as the restructuring of Photo-Me Retail. This resulted in a Group net cash position as at 30 April 2018 of £26.7 million, compared with net cash of £39.2 million as at 30 April 2017. This net cash position is after the 20% uplift in dividend payments, of £26.5 million, reflecting the Group's progressive dividend policy (2017: £32.6 million), and investments of £43.6 million (2017: £43.5 million) as part of the Group's ongoing investment in expansion of its existing services and new product innovation in the 2018 financial year.
Strategy
Photo-Me operates, sells, and services a wide range of instant-service equipment. Our operations are focused on three principal business areas: Identification, Laundry, and Digital printing kiosks which we currently operate in 18 countries.
The Group's growth strategy is centred on diversifying operations in these three principal business areas by developing new technologies with multiple applications, which can be speedily deployed across new and existing territories and provide a rapid return on investment.
The stable cash flow from our established photobooth business supports our investment plans, including in-house technological innovation. Furthermore, the scale of our operations and low fixed cost base enables us to deploy new products and services at a relatively low cost to the business.
During the year, we continued to make excellent progress in the expansion of our Laundry business and the deployment of our photobooth identification solutions. In addition, we invested in technological innovation and the commercialisation of new products. Details of our strategic progress are set out in the Business Review.
Restructuring of Japanese subsidiary
The Japanese photo-identification market continues to be highly competitive, with the highest density of photobooth units per person of any country worldwide. The number of photobooths increased significantly following the launch of the Japanese government's My Number ID card programme. However, this card programme is not compulsory and has not gained the momentum photobooth operators initially anticipated.
During the financial year ending 30 April 2019, the Group will invest in a thorough restructuring of its Japanese subsidiary which is expected to improve profitability in FY19 and beyond.
The planned restructuring will involve a management reorganisation, rationalisation of administrative functions, the re-location of low revenue machines, and removal of unprofitable units. In addition, the Group will introduce a new photobooth to the country, the production of which is significantly cheaper than previous units deployed. We expect these decisive initiatives to enable our Japanese business to return to growth in the medium term. Our underlying profit expectations for the financial year ending 30 April 2019 take into consideration this restructuring cost.
Dividends
Photo-Me is committed to creating value for its shareholders. The business is both highly cash-generative and lowly leveraged, enabling the Board to constantly invest in the ongoing and future growth of the business, whilst also delivering very attractive returns to our shareholders.
In 2016, the Board pledged to increase the ordinary dividend by 20% for the financial years ending 30 April 2017 and 30 April 2018. In line with this pledge, the Board is proposing a final dividend payment of 4.73 pence per share (2017: 3.94 pence per share). When combined with the interim dividend of 3.71 pence per ordinary share, this brings the total dividend for the year ended 30 April 2018 to 8.44 pence per ordinary share, representing a 20.1% year-on-year increase (2017: 7.03 pence per ordinary share).
Subject to approval at the Annual General Meeting, the final dividend will be paid on 9 November 2018 to shareholders listed on the register on 19 October 2018. The ex-dividend date will be 18 October 2018.
For the current financial year ending 30 April 2019, the Board intends to maintain a total dividend of 8.44 pence per ordinary share.
The Board
On 2 May 2018, after the year end, Eric Mergui was appointed an Executive Director of the Group. He will continue in his role as Chief Operating Officer. Eric Mergui joined the Group in 1995 and was appointed Chief Operating Officer in 2015. Before this, he headed up Photo-Me's European operations and oversaw the development of Photo-Me's business in China.
The Board looks forward to working with Eric and benefiting from his breadth of industry knowledge and expertise.
BUSINESS REVIEW
The 2018 financial year was focused on the execution of our growth strategy. We are pleased to report that good operational progress was achieved with Group revenue increasing by 7.1% and EBITDA by 2.8%.
The expansion of our Laundry operations, both organically and by acquisition, remained the primary growth driver for the Group. Our photo-identification business once again delivered growth in line with our expectations, except in Japan.
Execution of our strategy
Our strategy is unchanged. We aim to grow each of our three principal areas of business through ongoing investment in new technologies and complementary products and services.
We have a solid business model both in terms of Identification, with the adoption of new biometric and government standards, and in the laundry services market. In Laundry, our aim is to further expand our operations to deliver a significant revenue contribution in the future.
Our geographical presence and network of field engineers enables us to leverage the scale of our operations and quickly deploy these products and services at low incremental cost to the business, providing a rapid return on investment.
Essentially, we are focused on expanding the number of units in operation, increasing the yield per unit, and minimising production and operational costs to the Group in achieving this objective.
Site owners and large retailer chains, who are competing with online retailers, have realised the importance of providing additional services, such as photobooths, laundry services and kiosks, which help to attract customers to their sites and shops.
Overview by principal business area
· Identification (photobooths and integrated biometric identification solutions)
|
|
30 April 2018 |
30 April 2017 |
Change |
|
Number of units in operation |
29,015 |
28,541 |
+1.7% |
|
Percentage of total Group vending estate (number of units) |
62.0% |
59.0% |
+5.1% |
|
Revenue |
£149.3m |
£152.2m |
-1.9% |
|
Capex |
£13.4m |
£12.0m |
+11.6% |
Photo-Me is the world's largest operator of photobooths with market-leading photographic quality and technology, operating a well-established network of photobooths.
Our strategy is to (i) expand our presence in high-footfall locations, (ii) grow revenue by offering customers a broader range of services via our photobooths, and (iii) penetrate new territories. In particular, we are focused on deploying our proven identification security technology.
The increasing appetite from governments for improved and digitalised security ID underpin our growth strategy.
Excluding Japan, revenue from the identification business increased by 1.2% in the 2018 financial year.
· Laundry (unattended laundry services, launderettes, B2B services)
|
|
30 April 2018 |
30 April 2017 |
Change |
|
Total laundry units deployed (owned, sold and acquisitions) |
4,449 |
3,251 |
+36.9% |
|
Total revenue from laundry operations |
£36.7m
|
£21.7m |
69.1%
|
|
Revolution (excludes Launderettes and B2B): |
|
|
|
|
Number of Revolutions in operation |
2,313 |
1,750 |
+32.2% |
|
Percentage of total Group vending estate (number of units) |
5.0% |
3.6% |
+38.9% |
|
Total revenue from Revolutions |
£21.2m |
£14.2m |
+49.3% |
|
Revolution capex |
£15.2m |
£10.5m |
+44.8% |
The Group owns and operates laundry units and has a presence in 12 countries, with operations primarily in France, UK, Ireland, Belgium and Portugal. The expansion of our laundry business, which delivers the highest margins of Photo-Me's three principal business areas, remains the primary growth driver for the Group.
Total laundry revenue now accounts for 16% of total Group revenue (2017: 10%). This reflects the significant expansion of our Laundry operations in recent years, which is set to continue.
We remain on track to deploy 6,000 owned and sold laundry units by 2020. With continued growth in laundry (organic and by acquisition), these operations will contribute an increasingly dominant share to Group profits.
Our Laundry business is comprised of three areas of operation: Revolution, Launderette, and business-to-business laundry services.
Revolution is our 24-hour, outdoor, self-service laundry unit which is typically located in high-footfall sites such as supermarket car parks or petrol station forecourts. The Revolution unit comprises two larger washers and a dryer and is manufactured in 10m2 and 5m2 footprints, providing flexibility in different locations and the demands of different geographic markets. Our Revolution growth strategy is to expand the estate through our partnerships with strategic site owners globally and identify and expand into new high-demand markets.
Year-on-year, the Group increased its Revolution estate by 32.2% globally, with 2,313 Revolution machines operated as at 30 April 2018 (2017: 1,750). Revolutions now represent 5.0% of our total vending estate and the revenue contribution increased by 69%.
The continued, and further accelerated, growth of this estate will be supported by increased production capacity. In the first half of the year the Group's manufacturing partner transferred production from Hungary to Poland, enabling it to increase production volumes. The early benefits of these additional volumes started to come through towards the end of the financial year ended 30 April 2018.
Launderette shops are typically situated in or near to town centres where there is limited competition from other laundry services. Our aim is to expand our launderette presence through an owned-and-operated model.
Our Launderette strategy is to identify and fit out suitable new and existing retail sites and to acquire underperforming launderette businesses located at attractive locations. We then refit the shops in a stylish, contemporary format that is more attractive to the end consumer to deliver good profitability. In addition, we take an opportunistic approach to evaluating potential bolt-on acquisitions that will further accelerate our growth in attractive markets.
Our Business-to-business (B2B) laundry services provide the distribution and leasing of laundry and catering equipment. Our B2B customers include institutions such as hospitals, care homes and universities. Our B2B laundry services strategy is to extend our presence both in the UK and into new territories through acquisitive growth.
We have made good progress in the year, with the acquisition of two B2B laundry service businesses in the UK to complement our existing offer provided through Fowler UK (acquired in 2016). Inox Equip Ltd. and Tersus Ltd, two companies that design, procure and lease laundry and catering equipment to businesses and institutions, were acquired by the Group in July 2017.
The profit of the Group's B2B laundry services amounted to £1.3 million for the year ended 30 April 2018. We continue to seek out further B2B acquisition opportunities, with a focus on Continental Europe.
In May 2018, the Group acquired La Wash Group, a leader in the Spanish B2B laundry services market, for a consideration of €4.75 million. The business, which is a franchise model, has annual revenue of €3.7 million for the year ended 31 December 2017, along with a profit before tax of €796,000 for the same period. In the current financial year, we will benefit from both a financial contribution from La Wash and the company's launderette expertise.
· Kiosks (high-quality digital printing services)
|
|
30 April 2018 |
30 April 2017 |
Change |
|
Number of units in operation |
5,416 |
5,872 |
(7.8)% |
|
Percentage of total Group vending estate (number of units) |
11.6% |
12.2% |
(4.9)% |
|
Revenue |
£16.5m |
£13.3m |
24.1% |
|
Capex |
£3.4m |
£6.9m |
(50.7)% |
Our digital printing kiosks offer a wide range of print formats and personalised products which are competitively priced. Our latest generation kiosks – Speedlab cube and Speedlab bio – are fully integrated with all major social media networks and offer rapid and high-quality printing for customers.
Our key geographic markets are France, UK and Switzerland. Our strategy is to capitalise on our market-leading position by increasing our presence in high-footfall locations, extending the range of services in our kiosks, and entering new territories.
Overall, kiosks achieved revenue growth of 24.1% in the 2018 financial year, mainly due to the reorganisation of Photo-Me Retail, where we have replaced manned sites with unattended vending machines (predominantly Speedlab cube). This restructuring programme also resulted in a small decrease of kiosk machines, delivering positive results.
Other vending equipment
This business area comprises vending equipment such as children's rides, photocopiers and amusement machines. These are typically an extension of our product range at sites where we have an existing relationship with the site owner. Whilst this is not one of our three principal business areas, these machines are profitable and benefit from synergies relating to other areas of the business, such as our network of field engineers.
Further details on financial and strategic progress in each of our three principal areas of operation are provided in the Review of Performance by Geography
Continental Europe
Financial performance
Continental Europe has continued to deliver good revenue growth during the year, up 8.5% to £121.1 million, driven by the roll out of our laundry operations, particularly in France, Portugal and Spain. Operating profit reduced by 5.8% to £31.9 million, due mainly to an increase in costs in this financial year. Our research and development department is focused at the moment on important long term products (3D identification as well as self-service banking) which are not mature and therefore are not a growth driver yet.
At constant currency, revenue grew by 4.2%, primarily driven by a 41.4% increase in takings from our operated laundry machines, as well as the benefit of the digital security features following upgrades to our photobooth estate in France, and the continued deployment of the latest generation of kiosks.
France remained the largest contributor to the division, with revenue up 4.9% in constant currency.
This division, which operates in Austria, Belgium, France, Germany, the Netherlands, Poland, Portugal, Spain and Switzerland, remains the largest contributor to Group performance, and continued to represent 52.7% of total Group revenue (2017: 52.0%), and 67.0% of operating profit before corporate costs (2017: 68.0%).
At 30 April 2018, 24,550 units were sited in Continental Europe (2017: 23,751), representing 52.6% of the Group total units in operation (2017: 49.5%) reflecting our laundry expansion strategy.
Strategic progress
Identification
In France, 5,700 photobooths have now been upgraded with our secure and direct data transfer technologies for ANTS driving licence applications. These machines are performing very well, reaffirming the Group's leading position in the photo ID market.
The gradual rollout of our secure and direct data transfer technologies in photobooths in Germany continued.
We continue to explore opportunities to expand the range of services available via our photobooths. We have entered into preliminary discussions with the Dutch government regarding deployment of this direct and secure transmission photo ID technology in the Netherlands.
In France, this technology has been successfully deployed for driving licence renewals for more than one year and we are now in discussions with the government to extend the technology to renewals and new passports and identification cards.
Laundry
Our laundry operations have expanded in France, Belgium, Portugal and Spain. This resulted in a 40.4% increase in the number of operated laundry units at the 30 April 2018, compared with 30 April 2017.
Much of our Laundry expansion has been focused in France and Portugal, where results have been encouraging:
In France, new Revolution machines installations increased by 30.8% (owned Revolutions only) and revenue increase by 41.8%
In Portugal, there was a 39% increase in new Revolution machines installed (owned Revolutions only) and a corresponding 55.6% increase in revenue.
In Continental Europe we operated 63 unattended launderette shops as at 30 April 2018, compared with 44 at the end of April 2017. These sites have traded well in the period and we continue to see further opportunities to grow our launderette presence.
Kiosks
We have set up Speedlab cube and Speedlab bio units at high footfall premises.
UK & Republic of Ireland (including Corporate)
Financial performance
This division contributed 27.7% of Group revenue in the 2018 financial year (2017: 25.0%), and 21.8% of trading operating profit (2017: 14.7%).
Revenue increased by 18.8% to £63.6 million (acquisitions contributed £5.6 million). At constant rate of exchange revenue was up 18.2%.
Operating profit in this segment increased by 42.5% to £10.4 million there was a one-off charge of £2.6 million, relating to the restructuring of the Photo-Me Retail business.
Fowler UK, the Group's commercial laundry and catering equipment business, along with Inox and Tersus made a full-year consolidated contribution of £1.3 million to the Group's profit before tax.
This performance reflects the continued expansion of our laundry operations in Ireland and the UK and our business-to-business offering, as well as the successful rollout of the secure digital upload technology for the Irish Online Passport.
Much of our laundry expansion has been focused in Ireland, and the results have been very encouraging with a 52% increase in new Revolution machines installed and a corresponding 66.7% increase in revenue.
At 30 April 2018, 25.8% of the Group's total units in operation were sited in the UK & Republic of Ireland (2017: 27.7%). This equates to a total of 12,055 units (2017: 13,287), of which 6,313 were photobooths (2017: 6,600), 446 were operated Revolution units, an increase of 62.8% year-on-year (2017: 274), and 639 digital printing kiosks, a decrease due to the Photo-Me Retail restructure (2017: 992).
Strategic progress
Identification
We continued the deployment of our encrypted photo ID upload technology for the Irish Online Passport Application Service, with 300 units now upgraded, in line with our plan.
In the UK, we successfully concluded discussions with Her Majesty's Passport Office regarding the deployment of this photo ID upload technology for its new online passport renewal service. In December 2017, we began the rollout of this technology to our UK photobooths. At the year end, this service had been deployed to 2,200 photobooths and we plan to deploy 4,000 photobooths in total by the end of December 2018.
Laundry
We continue to make excellent progress in expanding our laundry business, with 183 Revolution units deployed in the period (93 in Ireland, 79 in the UK), up 67% year on year.
We are looking for further attractive sites, including petrol forecourts, supermarket car parks, and other high-footfall locations, and are in discussion with the major retailers.
As part of our strategy to expand our presence in the B2B laundry market, in July 2017 we acquired two UK companies (Inox Equip Limited and Tersus Limited), which provide bespoke professional design, procurement and installation of laundry and catering facilities for blue chip companies and institutions (such as care homes and hospitals). These laundry units are either sold or operated by the Photo-Me Group. Our intention is to merge the three UK B2B acquisitions to become the second largest operator in the UK in this business sector.
Kiosks
In the fourth quarter of the financial year, we reviewed the progress of our Photo-Me Retail operations (previously the UK Photo Division of Asda Stores which was acquired in November 2016), in order to reshape the digital printing operations and boost profitability.
As previously announced, the decision was taken to refocus Photo-Me Retail as an online and unattended digital printing kiosks service. As a result, all the manned retail outlets have been closed. The Board remains confident that the action taken will improve the future profitability of these operations. Photo-Me Retail is now profitable.
Asia
Financial performance
The Group operates in China, Japan, Singapore, South Korea and Vietnam, with Japan remaining the largest business in the region.
Asia contributed to 20% of Group revenue (2017: 23%) and to 11% of operating profit (2017: 17%).
As at the end of April 2018, 21.6% of the Group's estate was sited in Asia (2017: 23%). In total there were 10,105 units (2017: 10,908), of which were 9,628 photobooths. (2017: 9,279). The decrease in units is mainly due to the removal of 1,154 unprofitable and fully depreciated sticker machines in Japan.
Revenue in this segment declined by 8.8% to £45.0 million, reflecting an oversupply of photobooths in the Japanese market. At constant rates of exchange, revenue declined by 3.7%.
Strategic progress
Identification
Japan has the highest density of photobooth units per person of any country worldwide resulting from photobooth operators, including Photo-Me, expanding their presence following the launch of the Japanese government's My Number ID card programme. Owing to the programme not having been made compulsory, the ID card programme has not gained the momentum photobooth operators initially anticipated.
The Board plans to restructure its operations in Japan and re-align activities to current market conditions. Further details are set out in the Chairman's statement on pages 4 to 6.
Laundry
The Japanese laundry market remains attractive due to lifestyle and other market dynamics, and the size of residential housing, where a lack of space makes it impractical to have a washing machine at home. However, our priority is to restructure the Group's Japanese subsidiary before embarking on further expansion.
Key Performance Indicators
The Group measures its performance using a mixture of financial and non-financial indicators. The main objective of these KPIs is to ensure the Group remains highly cash generative, delivers sustained long-term profitability, preserves the value of its assets, and provides high returns to shareholders.
|
Description |
Relevance |
Performance |
|
|
|
|
30 April 2018 |
30 April 2017 |
|
Group total revenue at actual rate of exchange |
|
£229.8m |
£214.7m |
|
Group profit before tax |
|
£50.2m |
£48.0m |
|
Underlying PBT |
|
£46.8m |
£46.6m |
|
EBITDA margin |
The EBITDA margin is a good indicator of improved profitability |
30.9% |
32.2% |
|
Gross takings (including VAT) |
Gross takings are an important indicator of the trend in our core vending business |
+3.9% |
+4.8% |
|
Increase in number of photobooths |
The increase in number of photobooths is a constant priority and a main driver for growth |
+474 |
+887 |
|
Increase in number of laundry units (operated or sold) |
The increase in number of laundry units measures our penetration in markets where there is a significant potential for growth and strong profits |
+1,198 |
+1,103 |
Financial performance
The Group performed well in the financial year.
Reported revenue increased by 7.1% to £229.8 million, driven by continued expansion of our Laundry operation in Europe and a solid performance from our Identification business in the UK & Ireland and in Continental Europe. In constant currency, the increase is 4.1%, mainly due to the decrease of sterling against euro this year.
Profit before tax increased by 4.4% to £50.2 million, including a one-off investment gain of £3.7 million relating to the Group's shareholding in Max Sight Group Holdings.
|
|
April 2018 £m |
April 2017 £m |
|
Revenue |
229.8 |
214.7 |
|
EBITDA |
71.0 |
69.0 |
|
Operating profit |
46.1 |
46.8 |
|
Profit before tax |
50.2 |
48.0 |
|
Profit after tax |
40.3 |
35.1 |
The movements in turnover are outlined in the following table:
|
|
£m |
|
Turnover at 30 April 2017 |
214.7 |
|
Change in core business revenue: |
|
|
Continental Europe |
4.9 |
|
UK & Ireland |
9.9 |
|
Asia |
(1.9) |
|
Impact of exchange rates |
2.2 |
|
Turnover at 30 April 2018 |
229.8 |
The increase in the profit before tax can be explained as follows:
|
|
£m |
|
Profit before tax at 30 April 2017 |
48.0 |
|
|
|
|
Effect of acquisitions |
0.8 |
|
Changes in revenue |
7.3 |
|
Changes in costs |
(9.3) |
|
Restructuring costs |
(2.6) |
|
Profit on sale of former head office |
2.3 |
|
Increase in net finance income & other gains (Max Sight gain, £3.7m) |
2.8 |
|
Impact of exchange rates |
0.9 |
|
Profit before tax at 30 April 2018 |
50.2 |
Review of operating costs
Operating costs were £183.9 million, an increase of 9.6% (2017: £167.8 million), due to depreciation and other operating costs mainly, as explained below:
Staff costs were £51.7 million. The ratio of staff costs to revenue is 22.5% (2017: 23.3%).
Photo-Me Retail restructuring costs are separately analysed above and are not included in operating costs below.
The increase in inventory costs was the direct result of the increase of operating activities, which was up 3.6%, combined with the diversification of our activities reflecting expansion of the Laundry business.
The depreciation and amortisation charge at constant rate of exchange increased by £2.3 million compared with the same period last year. Capex has increased significantly over the last five years to £43.6m from £21.3m in 2014 which explains the rise in depreciation.
At constant rate of exchange, the other operating costs increased because we benefited from a higher profit due to favourable currency movements last year.
|
|
April 2018 £m |
April 2017 £m |
April 2017 (constant rate) £m |
|
Staff costs |
51.7 |
50.1 |
50.6 |
|
Inventory costs |
23.6 |
13.5 |
13.8 |
|
Other operating costs |
85.9 |
82.7 |
83.1 |
|
|
161.2 |
146.3 |
147.5 |
|
Depreciation and amortisation |
25.1 |
22.4 |
22.8 |
|
Profit on disposal of fixed assets |
(2.4) |
(0.9) |
(0.9) |
|
Operating costs |
183.9 |
167.8 |
169.4 |
Registered office
In July 2017, the Group completed the sale of its head office buildings in Bookham, Surrey. The freehold was sold to Shanly Homes Limited for a consideration of £2.5 million. The book value of the assets sold was £0.1 million and therefore the profit on the sale amounts to approximately £2.3 million, taking into account disposal costs amounting to £0.1 million.
This disposal was part of the Group's review of the property portfolio and consolidated its head office and UK operations into one location. This strategy has rationalised the Group's property footprint and has enabled it to achieve further efficiencies in its UK operations.
The Group's new registered office is Unit 3B Blenheim Road, Epsom, KT19 9AP.
Earnings per share
Diluted earnings per share were 10.60 pence (2017: 9.27 pence), an increase of 14.2%. Basic earnings per share were 10.64 pence (2017: 9.30 pence).
Taxation
The Group tax charge of £9.9 million corresponds to an effective tax rate of 19.7% (2017: 26.9%).
The Group undertakes business in 18 countries worldwide, with most of the tax charge arising in France, Japan and the United Kingdom. In each jurisdiction in which the Group operates, operations are organised so that the Group pays the appropriate amount of tax at the right time in accordance with local regulations, and ensures compliance with the Group's tax policy and guidelines.
The Group's effective tax rate was reduced, mainly due to a statutory tax rate reduction in the UK and the effect of “Loi Macron” tax initiatives in France.
Dividends
During the year, the Group paid dividends totaling £26.5 million in respect of the interim and final dividends for the year ended 30 April 2017.
The interim dividend for the year ended 30 April 2018 was 3.71 pence per share (H1 2017: 3.09 pence per share), announced in December 2017 was paid on 11 May 2018 and amounted to £11.6 million.