10 March 2020
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
PHOTO-ME INTERNATIONAL PLC
("Photo-Me" or "the Group")
PRELIMINARY RESULTS FOR
THE 18 MONTHS AND 12 MONTHS ENDED 31 OCTOBER 2020
Photo-Me International plc (PHTM.L), the instant-service equipment group, announces its results for the 18 months and 12 months ended 31 October 2020.
FINANCIAL SUMMARY
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| Reported | |||
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| 18 months ended | 12 months ended | 12 months ended | 12 months ended |
| Revenue | £310.2m | £186.3m | £232.2m | £228.1m |
| Underlying Revenue | £300.4m | £180.1m | £228.6 | £228.1m |
| EBITDA (excluding associates)1 | £87.3m | £41.4m | £76.5m | £69.7m |
| EBITDA excluding IFRS16 impact | £78.4m | £35.1m | £73.9m | £69.7m |
| Profit before tax2 | £0.5m | £(27.8)m | £44.9m | £42.6m |
| Profit before tax excluding IFRS16 impact | £1.0m | £(27.4)m | £45.0m | £42.6m |
| Adjusted profit before tax3 | £2.5m | £(26.0)m | £45.9m | £44.1m |
| Profit after tax | £(2.4)m | £(24.9)m | £33.6m | £31.3m |
| Cash generated from operations | £92.9m | £51.8m | £68.9m | £63.9m |
| Gross cash | £106.2m | £106.2m | £84.8m | £84.6m |
| Net Cash4 | £21.9m | £21.9m | £25.2m | £16.3m |
| Earnings per share (diluted) | 0p | N/A | N/A | 8.26p |
| Total dividend per share | 0p | N/A | N/A | 8.44p |
1 EBITDA is Reported profit before tax- total depreciation and amortization - other net gain-Finance cost and revenue.
2 includes impairments and provisions resulting directly and indirectly of the pandemic, see breakdown below.
3 Adjusted profit before tax for the 18 months to 31 October 2020 is profit before tax adjusted to exclude the loss on the Group's shareholding in Max Sight Group Holdings Limited and restructuring costs.
4 Refer to note 8 for the reconciliation of Net Cash to Cash and cash equivalents as per the financial statements.
OPERATIONAL SUMMARY
| • | Swift and decisive action was taken to manage the impact of COVID-19 and preserve the Group's cash position, and to protect the wellbeing of colleagues and the wider community.
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| • | Nevertheless, COVID-19 has severely impacted each business area and early indications are B2B, children's rides and, to a lesser extent Identification, will be the most challenging from which to recover. Laundry operations were more resilient due to the accessibility of machines throughout the pandemic.
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| • | Identification was significantly impacted by the pandemic and ongoing challenging market conditions, especially in the UK, due to home-taken photos being accepted for official documents such as passports, with revenue down 26.3%. As a result, Identification revenue in the UK and Republic of Ireland reduced by 52.4%, and the number of photobooths declined by 1,367 units.
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| • | Good progress was made with restructuring programmes to remove unprofitable photobooths from operating estate. On track to complete restructuring programmes in April 2021.
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| • | Continued expansion of the Group's Laundry presence in Continental Europe, the UK and the Republic of Ireland, with total laundry units deployed (owned, sold and as a result of acquisitions) up 389 units in the last 12 months to October 2020. Total revenue from laundry operations was stable due a significant decrease in B2B activity the 12-month period.
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| • | Revenue from Revolution laundry operations grew by 13.8% in the 12-month period, and the number of units in operation increased by 14.8%. Revolution represents 7.7% of the total Group vending estate.
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| • | SEMPA performed in line with the Board's expectations, contributing £9.8 million of revenue in the 18-month period to October 2020. Professional apple and pineapple juice machines have been developed for commercial use in restaurants and hotels. Planned tests and installation of the first machines (apple and pineapple juice) were delayed due to the pandemic. |
Commenting on the results, Serge Crasnianski, CEO & Deputy Chairman, said:
"2020 was a challenging year for the Group. At the onset of the pandemic we acted quickly to mitigate its impact of COVID-19 on our business, including by preserving cash, whilst doing all we could to protect the wellbeing of our colleagues, customers and the wider community.
"Despite this, the Group continued to make strategic progress and further expanded Laundry operations in key target markets in Europe. Our self-service Revolution laundry operations proved to be more resilient than other business areas, in part due to the accessibility of these site locations during lockdowns.
Going ahead, the Board's initial strategy is to focus investment across all 17 countries in which the Group operates, and on the continued expansion of our Laundry operations and to grow the KIS Food business, which together, over time, we believe will compensate for lower expected demand for Identification and other vending equipment."
Enquiries:
| Photo-Me International plc | +44 (0) 1372 453 399 |
| Serge Crasnianski, Chief Executive & Deputy Chairman |
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| Stéphane Gibon, Chief Financial Officer |
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| Hudson Sandler | +44 (0) 20 7796 4133 |
| Wendy Baker / Nick Moore |
An audio webcast of the analyst and investor presentation will be available to download later today at www.photo-me.com
NOTES TO EDITORS
Photo-Me International plc (LSE: PHTM) operates, sells and services a wide range of instant-service vending equipment, primarily aimed at the consumer market.
The Group operates vending units across 17 countries and its technological innovation is focused on three principal areas:
· Identification: photobooths and integrated biometric identification solutions
· Laundry: unattended laundry services, launderettes, B2B services
· Kiosks: high-quality digital printing
The Group entered the self-service fresh fruit juice equipment market in April 2019, with the acquisition of Sempa. This will become a key business area alongside Identification, Laundry, and Kiosks, and will be a significant part of the Group's future growth strategy.
In addition, the Group operates other vending equipment such as children's rides, amusement machines, and business service equipment.
Whilst the Group both sells and services this equipment, the vast majority of units are owned, operated and maintained by Photo-Me. Photo-Me pays the site owner a commission based on turnover, which varies depending on the country, location and the type of the machine.
The Group has built long-term relationships with major site owners and its equipment is generally sited in prime locations in areas of high footfall such as supermarkets, shopping malls (indoors and outdoors), public transport locations, and administration buildings (City Halls, Police etc.). Equipment is maintained and serviced by an established network of 700 field engineers.
The Company's shares have been listed on the London Stock Exchange since 1962.
CHAIRMAN'S STATEMENT
The Group is pleased to report its financial results for the 18 months ended 31 October 2020 (18-month period) and the 12 months ended 31 October 2020 (12-month period).
As previously announced, the Group's financial year-end was extended from 30 April 2020 to 31 October 2020 due to challenges related to the pandemic. Going forward, to the extent they have not already done so, all subsidiary companies in the Group will align their accounting reference dates (or equivalent) to 31 October.
Revenue for the 18-month period was £310.2 million. Overall, the 2020 financial performance was significantly hindered by the onset of the COVID-19 pandemic and its unprecedented impact on consumer activity across the globe. In the 12-month period revenue declined by 19.7% and EBITDA fell by 45.9% year-on-year.
This performance reflected the sudden fall in Group operating revenue (excluding B2B and sales) of -30% between February and July 2020 compared with the same period in 2019, as the pandemic impacted all countries of operation. In August to October 2020, as lockdown restrictions were eased and activity levels increased slightly, operating revenue was -14.8% on average. Identification and children's rides were the most severely impacted services.
Despite this, the Group continued to make strategic progress and further expanded laundry operations in key target markets in Europe. Revolution units in operation grew to 3,437 at 31 October 2020, an increase of 14.8% compared with 31 October 2019. Our Revolution operations were more resilient than other parts of the business, with operating revenue up 13.8% in the 12-month period.
Our response to COVID-19
As the scale of the outbreak became apparent and markets across the globe went into lockdown, we took all appropriate measures to protect the health and safety of employees and other stakeholders, and to lessen the impact of the pandemic on our operations. We followed (and continue to follow) the guidance of governments, the World Health Organization, and other relevant authorities across our regions of operation.
Decisive action was taken to preserve the Group's cash position, including reducing capital and other expenditure where feasible, using government job retention schemes available to the Group to support payroll costs (amounting to £2.3 million), and cancellation of the interim dividend payment due on 11 May 2020 (£14 million retained within the business). The Group also secured €30 million of additional debt funding and, with the agreement of lenders, it deferred loan repayments. This loan is backed by the French Government with 0% interest charged until and remain available until June 2021 and more if needed.
In addition, the Board initiated restructuring programmes in the UK, China, South Korea, and Continental Europe to realign the Group's operations to the changed market conditions and lower consumer demand owing to the pandemic. An update on our restructuring is set out in the Chief Executive's statement.
Our business strategy
The Group operates, sells and services a wide range of instant-service equipment, primarily aimed at the end consumer. We operate across 17 countries and are focused on three principal business areas: Identification, Laundry, and digital Kiosks.
Before the outset of COVID-19, the Board saw growth opportunities across all three principal business areas, with a focus on the expansion of our Laundry operations. However, in light of the pandemic, and the dramatic impact that it has had on the growth drivers for our Identification and Kiosks business areas, the Board has refined its strategy to align its ambitions to the current and expected market dynamics in the short to medium term.
Going forward, the Group's key investment priorities will be Laundry expansion and the growth of KIS Foods. The Board expects that these two business areas will contribute an increasing proportion of total Group revenue and profit which, over time, will progressively compensate for lower Identification revenue.
Continued investment in Laundry expansion
The expansion of our Laundry operations will continue to be driven by the installation of Revolution machines in target countries across the UK & Republic of Ireland and Continental Europe.
The resilience of our Revolution operations during the pandemic gives the Board confidence that over the next years our investments will see Laundry revenue and profit increasingly compensate for any decrease in our photobooths and children's ride operations, albeit it will take time and depend on the pace of Revolution installations. The Group aims to install an average of 70 Revolution units per month, subject to the easing of pandemic restrictions. Capex in 2021 is expected to be £45 million as well and with a focus on Revolutions.
KIS Food
The Group entered the self-service fresh fruit juice and equipment market in April 2019, further diversifying our operations. Our R&D team have since developed new professional juice machines which further extend our product offering.
The Board maintains a focus on this area, with plans to commercialise its new juice machine, when COVID-19 restrictions allow, and believes this will become a key business area alongside Identification, Laundry, and Kiosks, and become a significant part of the Group's future growth strategy.
Identification
The Board continues to see longer term opportunities in the Identification market outside Europe (in countries where self-taken ID photos are not permitted), particularly for the deployment of its Identification security technology. Nonetheless, the market growth drivers across all our countries of operation have been adversely impacted by the pandemic. This includes ongoing travel restrictions which impact consumer demand for our photobooths.
As a result, the Board does not currently anticipate that Identification activity will return to pre-COVID-19 levels in the near term and consequently machines capex in the foreseeable future will be significantly reduced.
Kiosks
Digital Kiosks are positioned in high footfall locations and therefore demand has been hindered by lockdowns and similar restrictions.
The Group will continue to consider opportunities to extend the services it offers through its machines network, as well as product partnership within its existing territories. Nevertheless, investment will remain low in the short to medium term.
Focus on Innovation
New product innovation is at the core of Photo-Me. Our growth strategy has been focused on diversifying our operations and responding to consumer needs.
This strategy is supported by in-house R&D capabilities and a team of more than 60 dedicated engineers. Our R&D centres are in France (primary facility), Vietnam and Japan. In recent years, our activities have been focused on the expansion of our laundry operations in Continental Europe, the UK, and the Republic of Ireland, and deployment of our secure upload Photo ID technology in our Identification business.
Our corporate responsibility
The Board recognises the Group's responsibilities to the community and the environment and believes that health, safety and environmental issues are integral and important components of best practice in business management. This is an area of increased focus for all stakeholders. The Board is accountable for the Group's approach to corporate responsibility, led by Serge Crasnianski, and believes that effective management of these areas can reduce risks and help us identify business opportunities.
We are an international business and an equal opportunities employer, committed to promoting diversity and encouraging employee engagement across all our countries of operation. The health and safety of our employees, customers and site owners is of the utmost importance to us. To that end, we have a network of dedicated engineers servicing our products and the Company is an accredited contractor.
We are actively working to reduce our impact on the environment as a business. We use highly concentrated washing liquid, free of phosphates, colouring agents and preservatives, we monitor water and power consumption of our equipment, and have implemented initiatives to reduce our energy use and demand for natural resources, such as photovoltaic installations on our Laundry kiosks. Where possible we refurbish and re-sell our equipment.
Update on governance and Board changes
The composition of the Board changed during the period. Mr Janailhac joined the Group and the Board as a Non-executive Director in July 2019. In July 2020, he was appointed an Executive Director and Chair of the Strategic Committee, whose members include the top five managers of the Group and the CEO. This committee is responsible for reviewing and implementing operational decisions across the Group. Mr. Janailhac is a seasoned entrepreneur with a wealth of experience, including being a senior adviser of Macquarie Capital (Europe) Limited and a Non-executive Director of Athena Investments A/S.
Eric Mergui stepped down from his role as Executive Director and Chief Operating Officer in July 2020.
Photo-Me has an entrepreneurial and creative heritage which is aligned to our business strategy. We are committed to nurturing and growing talent within our teams.
Our People
The human cost of the pandemic has been extensive and has touched many people around the world. This has been an extremely challenging period for all our teams and on behalf of the Board I'd like to thank them for their continued hard work and commitment.
Dividend
In March 2020, the Board felt it appropriate to cancel the interim dividend due to be paid on 11 May 2020 in view of the impact of the pandemic, thereby retaining £14 million of cash within the business.
Given the current COVID-19 pandemic situation, the Board feels it remains the right decision not to recommend any other dividend in respect of the 18- month period.
In addition, the terms of the French government-backed PGE scheme, under which Photo-Me has a €30 million credit facility, require any loans under the scheme to be repaid before any distributions are made to shareholders. We expect to benefit from the PGE scheme for a period of two years more or convert the French "PGE" to a traditional loan in June if we are proposed a more interesting rate than the PGE loan.
Beyond this, the Board will continue to review the dividend policy and align any future dividend payments to performance of the business and its investment strategy, however no dividend will be recommended until at least the PGE facility has been repaid.
Looking ahead
The Board has acted, and continues to act, to mitigate the impact of the current trading environment on the business and to preserve cash.
As we have entered the 2021 financial year, we see ongoing and ever-changing government lockdown measures in place across Europe to combat virus infection rates.
Our multi-country restructuring plans to improve profitability are progressing as expected and the start of vaccination programmes provides some encouragement. Nevertheless, the Board will continue to closely review the make-up of the Group's estate and will act as required to best position the Group going forward.
The visibility on the market outlook for 2021 remains extremely limited. Nevertheless, subject to the factors above, the Board looks forward to achieving revenue of £175 million in FY21 (12 months to 31 October 2021), and profit before tax will be £9.0 million before any exceptional items, and also expects that the Group will be cash flow positive.
Having reviewed various scenarios, the Board believes that the Group's existing financial resources will be sufficient for the Group to withstand the uncertain economic conditions which are currently expected in 2021 and beyond.
In the near future, the Board's strategy is to focus investment on the expansion of the Group's more resilient Laundry operations and its plans to grow its KIS Food business will over time compensate for lower demand for Identification and other vending equipment.
SIR JOHN LEWIS
Non-executive Chairman
CHIEF EXECUTIVE'S REPORT
BUSINESS REVIEW
The 18-month period ended 31 October 2020 can be split in two parts. Before the onset of the pandemic, we made good strategic progress as we further expanded our laundry operations and entered the self-service fruit juice market, providing a new platform for growth. The Group delivered a robust financial performance and was highly cash generative despite challenging headwinds.
The second half of the financial period was dominated by the significant and unprecedented impact of the COVID-19 pandemic on consumer activity across the globe, and the actions taken by the Board to help navigate the Group through this period of great uncertainty.
Financial performance
Results
Reported revenue for the 18-month period was £310.2 million. For the 12-month period reported revenue was £186.3 million, 19.7% lower than in the previous 12-month period to 31 October 2019, reflecting the impact of the pandemic on consumer activity.
The Board estimates that the pandemic had more than a £50.0 million negative impact on total Group revenue in the period, mainly through lost revenue across Continental Europe, and the UK & Republic of Ireland from March 2020, and through lost revenue from operations in China from mid-January to October 2020. A breakdown of the impact of the pandemic on operating revenue in each country is set out in the Review of Performance by Geography.
Reported EBITDA (excluding associates) for the 18-month period was £87.3 million. For the 12-month period, EBITDA fell by £35.1 million to £41.4 million (31 October 2019: £76.5 million), which delivered an EBITDA margin of 22.2% (31 October 2019: 32.9%).
Reported profit before tax in the 18-month period, excluding IFRS16 impact, but including £33.6 million provisions and impairment was £1.0 million. Reported loss before tax for the 12-month period was £27.4 million.
As previously announced, an in-depth review of the Group's operations was undertaken in response to COVID-19 and the challenging trading environment. This resulted in a £33.6 million impact from exceptional items, provisions, and impairment. For the 18-month period adjusted profit before tax was £2.5 million. In the 12-month period, the Group reported an adjusted loss before tax of £26.0 million.
A reconciliation of reported profit before tax to adjusted profit before tax and a breakdown of exceptional items, provisions and impairment by region is set out in the Financial Review.
The Group was cash flow positive in the period. For the 18-month period, the Group generated cash from operations of £92.9 million. For the 12-month period, the Group generated £51.8 million of cash from operations, compared with £68.9 million in the prior 12-month period due to significantly reduced consumer activity owing to the pandemic.
Capital expenditure in the 18-month period was £63.6 million including IFRS16, and £47.1m excluding IFRS16. This mainly related to our Identification business and the relocation of a large number of photobooth machines as part of the restructuring program which began in September 2020. Laundry capex was lower than expected as the crisis significantly slowed down the installations of units from March 2020 onwards.
Funding and liquidity
As at 31 October 2020, the Group had gross cash of £106.2 million, and a net cash balance of £21.9 million. The Group continues to comply with its revised banking covenants. The covenant on Photo-Me France's loan from BNP has been waived by the bank in response to the pandemic, and as long as the "PGE" is in place.
The Group continues to use government support schemes across its operating markets wherever it is possible.
The Board's scenario planning indicates that the Group has sufficient liquidity to navigate the current COVID-19 lockdown measures.
Overview of principal business areas
Below is an overview of the Group's three principal business areas, Identification, Laundry, and Kiosks, as well as its other vending equipment.
Identification
Photobooths and integrated biometric identification solutions
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| 18 months to | 12 months to 31 October 2020 | 12 months to 31 October 2019 | 12 months to 2019 |
| Number of units in operation | 27,189 | 27,189 | 28,439 | 28,873 |
| Percentage of total Group vending estate (number of units) | 61.0% | 61.0% | 61.0% | 61.5% |
| Revenue | £183.4m | £106.9m | £145.1m | £147.7m |
| Capex | £11.1m | £5.7m | £11.2m | £9.7m |
Photo-Me is a prominent international player in the photobooth market, offering market-leading photographic quality and technology across our operating regions.
In recent years, our photobooth offer has diversified to include encrypted photo ID upload technology connected to government organisations in the UK, France, Ireland, and the Netherlands.
Our well-established network of photobooths is situated in attractive, high-footfall locations, such as travel hubs and shopping centres. Before the onset of the pandemic, Identification revenue in all regions, except for the UK, remained stable. Especially, both France and Japan delivered a robust performance.
In the UK, the trading environment remained challenging. The government's policy to accept photos taken at home for official documents and passport identification resulted in lower consumer demand and significantly eroded part of Photo-Me's market share for ID photos. Notably, European regulation does not permit this method, and the Board hopes that at some stage official documents in the UK will once again need to conform to ICAO and ISO rules.
As the scale of COVID-19 became apparent, demand for our photobooths was severely impacted by government lockdowns, constraints on international travel, and social distancing rules across our operations. This resulted in significantly lower consumer demand for Identification across all our jurisdictions in the calendar year 2020; Asia from January 2020 and Continental Europe, the UK and the Republic of Ireland from March 2020.
Action being taken to remove,and in some cases relocate, unprofitable machines to mitigate the impact of COVID-19 and the continued challenging UK market conditions evident pre-COVID, resulted in a significant reduction in the total number of photobooths in operation.
Due to the above factors, revenue for the 12-month period declined by 26.3% to £106.9 million. Revenue was down 36% in February to July 2020 compared with the same month in 2019, with the greatest decline seen in the UK which was down 52.4% in that period. In the 18-month period, Identification revenue was £183.4 million.
At 31 October 2020, 27,189 photobooths were in operation, a reduction of -5.8% compared with 30 April 2019 and -4.4% compared with 31 October 2019.
At 31 October 2020, Identification accounted for 61.0% of vending units in operation. The number of photobooths has declined mainly in UK and Ireland (1,367 units), but also slightly in Asia (253 units) and Europe (64 units). The Group plans to remove a further 1,500 units from its estate by October 2021.
Identification capex (18-month period) was £11.1 million. For the 12-month period, capex reduced from £11.2 million to £5.7 million year-on-year, mainly due to the relocation of removed machines to new sites instead of purchasing new machines.
Whilst the Board continues to believe that there are some longer-term opportunities in the photo ID market and continues to install photobooths in countries outside of the UK, it anticipates that short-term demand for photo ID will be subdued and may not recover fully to pre-COVID-19 levels.
Laundry
Unattended Revolution laundry services, launderettes, business to business laundry services
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| 18 months to | 12 months to 31 October 2020 | 12 months to 31 October 2019 | 12 months to 2019 |
| Total Laundry units deployed | 5,568 | 5,568 | 5,179 | 4,876 |
| Total revenue from Laundry operations | £72.9m | £47.3m | £47.4m | £43.7m |
| Revolution |
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| - Number of Revolutions in operation | 3,437 | 3,437 | 2,995 | 2,732 |
| - Percentage of total Group vending estate (number of units) | 7.7% | 7.7% | 6.4% | 5.8% |
| - Total revenue from Revolutions | £52.8m | £35.4m | £31.1m | £27.6m |
| - Revolution capex | £20.9m | £14.4m | £13.1m | £10.9m |
* There were 3,216 full-time units in operation during the 12 months ended 31 October 2020 compared with 2761 in 12 months ended 31 October 2019.
Our owned and operated laundry business was launched in 2013. We now have a presence in 12 countries, with operations primarily located in France, the UK, Ireland and Portugal.
In total the Group had deployed (owned, sold and acquired) 5,568 Laundry units at 31 October 2020, up 14.2% in the 18-month period and up 7.5% in the 12-month period.
Total revenue from Laundry operations grew to £72.9 million for the 18-month period 2020. In the 12-month period revenue was £47.3 million, down slightly year-on-year reflecting at the same time the good performance of the Revolution operation and the collapse of activity in our B2B business during COVID.
Our Laundry business comprises three areas of operation: Revolution, Launderette, and business-to-business laundry services.
Revolution
Revolution is our 24-hour, outdoor, self-service laundry unit which is typically located on busy sites such as supermarket car parks and petrol station forecourts.
Our strategy is to continue to expand our operations through partnerships with strategic site owners and identify and expand into new high-demand markets.
In the period, the rollout of Revolution units across Continental Europe and the UK & Republic of Ireland continued, with a focus on installing machines in Germany and the UK.
In the 12-month period, the number of Revolution units grew by 14.8% to 3,437 machines. Revolutions accounted for 7.7% of the Group's total vending estate, up from 6.4% at 31 October 2019.
Prior to the onset of the pandemic, we deployed an average of 50 machines each month. However, the installation of machines was significantly curtailed by country lockdowns, with a total of only 36 machines deployed between April and October 2020. We plan to return to an average of 70 Revolution installations per month, subject to lockdown restrictions being eased.
Total revenue from Revolution machines in the 12-month period increased by 13.8% to £35.4 million. From February to October 2020, revenue grew by 10.0%, reflecting continued expansion and the more resilient nature of our Laundry operations, which were more accessible to consumers than photobooths during lockdown. Total revenue from Revolution machines in the 18-month period was £52.8 million.
Revolution capex increased by 10.1% to £14.4 million in the 12-month period.
Our investment in expanding our Revolution operations, primarily in the UK, Ireland, Portugal and France, remains a key growth driver for the Group. In addition, we are looking to further roll out Revolution units in Germany and Austria.
Looking ahead, we continue to expect that Revolution operations will contribute an increasing proportion of total Group revenue and profit which will progressively compensate for the loss of Identification.
Launderette
These shops are typically situated in or near to town centres where there is limited competition from other laundry services. Expansion has been delivered through an owned-and operated model. Due to COVID-19, the Group decided to postpone Launderettes' installations except when very good acquisition opportunities arose.
The Group is also removing or selling unprofitable locations in Spain, UK, Belgium, Portugal and France.
Business-to-business (B2B) laundry services
Our B2B operations distribute and lease laundry and catering equipment. Customers include institutions such as hospitals, care homes, and universities.
Before the impact of COVID-19, the performance of the Group's Launderettes and B2B were stable. Nevertheless, in the six months ended 31 October 2020, our B2B operations were adversely impacted by COVID-19 and activity levels were extremely low.
As a result, the Group is closely monitoring the situation and may decide to close its B2B activities if more normalised and profitable trading conditions do not return in the near future.
Kiosks
High-quality digital printing services
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| 18 months to | 12 months to 31 October 2020 | 12 months to 31 October 2019 | 12 months to 2019 |
| Number of units in operation | 5,304 | 5,304 | 5,508 | 5,487 |
| Percentage of total Group vending estate (number of units) | 11.9% | 11.9% | 12.0% | 11.7% |
| Revenue | £18.4m | £11.4m | £13.7m | £13.3m |
| Capex | £2.5m | £1.4m | £1.6m | £2.3m |
Our estate of digital printing kiosks offers a wide range of competitively priced print formats and personalized products. Our key markets are France, where most machines are situated, the UK, and Switzerland.
The number of kiosks in operation was 5,304, compared with 5,508 in October 2019, and represented 11.9% of the Group's total vending estate.
Our state-of-the-art machines - Speedlab cube and Speedlab bio - are fully integrated with all major social media networks and offer consumers a fast, high-quality printing service.
Prior to the pandemic, our Kiosks business performed well, driven by a strong performance in France with revenue in the country up 6.5% year-on-year in the 12 months to April 2020.
Nevertheless, in the 12-month period, Kiosk revenue fell 17.5%. Between February and October 2020, revenue was down 24.0% due to significantly lower demand due to pandemic lockdown restrictions in the period.
Capex was reduced by 10.3% to £1.4 million in the 12-month period. Revenue in the 18-month period was £18.4 million.
KIS Food
Fresh fruit and vegetable juice equipment
Our medium to long-term goal is to become a global leader in the distribution of self-service fresh fruit and vegetable juice machines. We plan to replicate Sempa's B2B business model for orange juice machines across other geographies, notably Switzerland, Ireland and the UK, by leveraging our existing network of field engineers and new product development. Competition in this market is relatively limited. We have already started with success in Belgium.
Our R&D team in France has developed professional apple juice and pineapple juice machines for commercial use in restaurants and hotels. Prototypes of these machines underwent market testing in October at several locations across France and Belgium. The results were promising, however, the roll out of these machines has been delayed by the impact of the pandemic on key target end markets, such as the hospitality sector.
The Group ceased trials of its B2C juice vending machines in Paris. The trials did not perform as well as expected and the juice vending machines have been removed.
In the 12-month period, revenue was £6.3 million and contributed 3.4% to Group revenue. In the 18-month period, B2B juice machine operations contributed £9.8 million of revenue to the Group and contributed 3.2% of the Group revenue.
Before the impact of COVID-19, the strategic progress and performance of this business area was in line with the Board's expectations.
The Board remains confident in the long-term opportunities in this market and expects that KIS Food will become an increasingly important business area for the Group.
Other vending equipment
Alongside the business areas detailed above, we operate 8,539 other vending units. These units include 3,783 children's rides, 3,392 photocopiers and 1,364 other miscellaneous machines.
These are typically an extension of our product range at sites where we have an existing relationship with the site owner and where the profitability benefits from the synergies related to operating other equipment on the same site, for example field engineers and maintenance.
Government lockdowns and social distancing rules due to the pandemic deeply impacted demand for this equipment across all the Group's countries of operation, most notably children's rides of which we have removed 966 units from operation. Revenue in this business area was down 43.2% in February to October 2020.
At 31 October 2020, other vending equipment accounted for 19.2% of the Group's total vending estate by number of units and 4.2% of the total Group revenue.
Further details on all our operations are provided in the Review of Performance by Geography.
Update on restructuring programmes
The Board has refined and initiated its plans, announced in July 2020, to remove all unprofitable machines (primarily photobooths and children's rides) across the Group's operations, and restructure operations in the UK, China, South Korea and Continental Europe.
These restructuring programmes will address the significant loss in Identification revenue due to the structural shift in the UK photo ID market as well as reduced consumer demand and site footfall due to the pandemic. The action being taken will better realign our operations in these countries with the expected lower levels of consumer activity in the short to medium term.
In total we plan to remove approximately 3,000 photobooths from the UK (approximately 32% of machines in the UK) and 700 units from China (approximatively 57% of machines in China). In South Korea, the Group has impaired 200 units (100% of machines in South Korea). In Continental Europe (mainly France, the Netherlands and Spain), approximately 1,000 machines will be removed. The main part of this plan is realised to date.
When completed in April 2021, approximately 5,000 machines will have been removed or relocated, reducing the total machines in operation by approximately 7% compared with 31 October 2019.
Safeguarding our people, customers and the community at large during the COVID-19 pandemic
Our workforce is our most valuable asset and the driving force behind Photo-Me's success. Over the years we have attracted an incredibly talented team of highly skilled innovators and engineers worldwide. Looking after their wellbeing is a fundamental company priority.
In 2020 we were faced with the unprecedented challenge of the COVID-19 pandemic. Our absolute priority was to ensure minimal risk to our employees, customers and the wider community while the spread of coronavirus accelerated and led to varying contagion levels and restrictions in the countries we operate in across the world.
We took immediate action to implement measures to protect our employees. We encouraged all office workers to work from home where possible and organised socially distanced working in our office environments, with stringent sanitation measures and rules in place.
The measures implemented to protect the interests of our customers and users of our equipment included: enhanced cleaning regimes and an antimicrobial surface coasting applied to machines which enables the surface to self-disinfect (reapplied every 90 days); mask wearing by engineers at all times while on site; and signage for customers to wear face coverings and sanitise their hands before using our equipment.
Throughout the year we have monitored the situation very closely to ensure that Photo-Me complies with the safety recommendations from the WHO and governments in all of the jurisdictions in which the Group operates. It is thanks to these comprehensive measures, and also the responsible actions taken by our individual employees, that we were able to safely continue to provide instant services via a large part of our vending estate.
In addition to health concerns, this difficult time put a financial strain on many individuals and families. Therefore, despite the economic challenges, as a responsible company we felt it our duty wherever possible to support the continued financial wellbeing of our colleagues. We accessed government job retention schemes where available across our operations but unavoidably there were some redundancies in the most impacted countries, such as the UK.
I am proud of how hard our teams have worked during this time, despite the tremendous pressures and challenges. While remaining vigilant to the virus, we have been able to continue providing convenient and safe instant services to our customers without compromising the safety of our colleagues or other stakeholders, and I thank the whole team for their continued commitment and hard work.
REVIEW OF PERFORMANCE BY GEOGRAPHY
Commentary on the Group's financial performance is set out below, in line with the segments as operated by the Board and the management of Photo-Me. These segmental breakdowns are consistent with the information prepared to support the Board's decision-making. Although the Group is not managed around product lines, some commentary below relates to the performance of specific products in the relevant geographies.
Key financials
The Group reports its financial performance based on three geographic regions of operation: (i) Continental Europe; (ii) the UK & Republic of Ireland; and (iii) Asia.
Revenue by geographic region
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| 18 months to | 12 months to 31 October 2020 | 12 months to 31 October 2019 | 12 months to 2019 |
| Continental Europe | £195.2m | £118.2m | £137.3m | £130.7m |
| UK & Republic of Ireland | £54.6m | £30.5m | £49.5m | £52.9m |
| Asia | £60.4m | £37.6m | £45.4m | £44.5m |
| Total | £310.2m | £186.3m | £232.2m | £228.1m |
Revenue was deeply impacted by government lockdowns and restriction across the Group's operations. As per the table below, notably Identification revenue decreased significantly in the 12-month period: -13.9% in Europe, -17.2% in Asia and up to -38.3% in UK & Ireland. The Group experienced similar impact across its Kiosk activities. While Revolution revenue was impacted, operations are more resilient, and partially offset the decrease Identification and Kiosk revenue.
Operating profit
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| 18 months to | 12 months to 31 October 2020 | 12 months to 31 October 2019 | 12 months to 2019 |
| Continental Europe | £28.7m | £3.4m | £38.1m | £33.5m |
| UK & Republic of Ireland | £(19.1)m | £(20.9)m | £4.3m | £7.1m |
| Asia | £4.5m | £1.1m | £6.6m | £4.7m |
| Corporate costs | £(10.8)m | £(9.3)m | £(3.0)m | £(2.6)m |
| Total | £(3.3)m | £(25.7)m | £46.0m | £42.7m |
Administration holding costs (£9.8m) have been reclassified in corporate costs instead of in UK & Republic of Ireland as was previously the case
The dramatic fall in operating profit for the 12-month period was a combination of lower revenue due to the COVID and inherent provisions and impairments. Excluding provision and impairments of £15.3 million in Continental Europe, £16.2 million in the UK & Republic of Ireland and £2.1 million in Asia, adjusted operating profit was £8.0 million.
The decrease in revenue in the 12-month period was £45.9 million, which explains the difference of £38.8 million in operation profit year-on-year. Adjusted operating profit in the 12- month period was £8.0 million, compared to £46.0 million in the prior 12-month period.
Operating revenue evolution (last 12 months by quarter)
The table below provides a detailed breakdown of operating revenue by geographic region and business area for the 12 months, compared with the 12 months ended 31 October 2019.
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| Nov 2019 | Feb 2020 | May 2020 to Jul 2020 | Aug 2020 to Oct 2020 | TOTAL |
| CONTIENTIAL EUROPE |
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| Identification | -7.5% | -35.3% | -34.9% | -6.2% | -21.5% |
| Kiosks | 1.3% | -36.8% | -17.6% | -10.0% | -14.3% |
| Laundries | 22.7% | 8.8% | 9.0% | 9.6% | 12.3% |
| Other Vending | -4.7% | -40.1% | -30.5% | -27.0% | -25.2% |
| Total | 0.9% | -27.8% | -24.2% | -3.6% | -13.7% |
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| UK & REPUBLIC OF Ireland |
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| Identification | -16.2% | -53.8% | -65.4% | -68.6% | -52.4% |
| Kiosks | -32.8% | -40.7% | -47.4% | -48.8% | -41.4% |
| Laundries | 20.5% | 24.3% | 0.0% | 11.1% | 13.7% |
| Other Vending | -9.4% | -28.3% | -96.3% | -74.2% | -51.9% |
| Total | -7.7% | -40.3% | -56.6% | -50.1% | -39.1% |
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| ASIA |
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| Identification | -4.9% | -12.5% | -29.4% | -16.7% | -16.3% |
| Kiosks | -12.7% | -16.6% | -32.4% | -32.1% | -23.4% |
| Laundries | 30.3% | 24.6% | 1.2% | 19.1% | 16.8% |
| Other Vending | 54.9% | -90.5% | 920.3% | -29.1% | -34.8% |
| Total | -2.5% | -19.3% | -27.4% | -17.2% | -17.0% |
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| TOTAL |
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| Identification | -8.2% | -32.9% | -38.2% | -19.0% | -25.6% |
| Kiosks | -3.7% | -37.1% | -20.8% | -14.2% | -17.5% |
| Laundries | 22.1% | 12.8% | 7.0% | 10.0% | 12.7% |
| Other Vending | 1.0% | -52.1% | -56.5% | -47.9% | -38.6% |
| Total | -1.7% | -28.7% | -30.8% | -14.8% | -19.6% |
Vending units in operations
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| Number | % of total estate | Number of units | % of total estate | Number of units | % of total estate |
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| Continental Europe | 25,097 | 56.3% | 25,436 | 54.3% | 25,230 | 53.8% |
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| UK & Republic of Ireland | 9,499 | 21.3% | 11,357 | 24.2% | 11,701 | 24.9% |
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| Asia | 9,955 | 22.3% | 10,061 | 21.5% | 10,025 | 21.3% |
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| Total | 44,551 | 100.0% | 46,854 | 100.0% | 46,956 | 100.0% |
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As at 31 October 2020, the Group's estate comprised 44,551 units, a decline of 5.1% in the 18-month period and 4.9 % compared with the 12-month period. This was mainly due to implementation of the restructuring programme and removal of approximately 3,000 unprofitable machines, primarily photobooths in the UK and children's rides across the estate to mitigate the impact of the pandemic and structural changes to the UK photobooth market.
Continental Europe
Continental Europe is the largest region of operation by both machine volume and contribution to Group revenue.
The region remained profitable despite the unprecedented challenges of the pandemic. This performance was driven by a less significant reduction in Photobooth revenue in France compared with other countries (excluding Japan), and a good performance of Laundry operations in general.
Revenue for the 18-month period was £195.2 million. In the 12-month period, revenue fell by 13.9% to £118.2 million, reflecting the sudden loss of most of the expected revenue from March 2020 onwards due to COVID-19. Laundry operations were resilient and grow by 12.3%, however operating revenue for the other business areas severely impacted: Identification (-21.5%), Kiosks (-14.3%) and Other Vending (-25.2%).
Operating profit for the 12-month period fell by 90.9% to £3.4 million.
As at 31 October 2020, there were 25,097 units in operation in the region, which represented 56.3% of the Group's total estate. The region contributed 62.9% of total Group revenue.
UK & Republic of Ireland
As previously disclosed, the performance of this region was impacted by two factors. First of all, challenging photobooth market conditions due to the UK government's decision to permit home-taken photographs for photo ID; and then the impact of COVID-19 from March 2020 onwards and the disruption caused by lockdown measures which severely reduced demand for our products, particularly photobooths and children's rides.
Nevertheless, we expanded our Laundry operations and now operate 641 laundry units in the region, most of which are located in Ireland. Whilst Revolution machines delivered a resilient performance, this was not enough to offset the significant loss in revenue in our photobooth business.
In both Ireland and the UK, Revolution units performed extremely well in the 12-month period (including the COVID period) with an average revenue of £11,000 per unit. The Group now operates 416 revolutions in Ireland and 299 in UK, where, post year-end 20 machines a month were deployed.
Revenue for the 18-month period was £54.6 million. In the 12-month period revenue declined by 38.3% to £30.5 million. The UK photobooth market was already challenging and this along with the impact of the pandemic from March 2020 onwards, resulted in a 52.4% reduction in operating revenue year-on-year, and children's rides were down 51.9% year on year. However, operating revenue from Revolution units grew by 13.7% year-on-year.
There was an operating loss of £19.1 million in the 18-month period and a loss of £20.9 million in the 12-month period. Excluding the £16.2 million provision, operating profit declined to £(4.7) million.
At 31 October 2020, 9,499 units were located in the UK & Republic of Ireland, which represented 21.3% of the Group's total units in operation.
Asia
Before the impact of COVID-19, trading in the region was robust, driven by a strong performance in Japan. Japan is the largest contributor in Asia and was almost resilient to COVID-19, with a 13.4% revenue decrease between May and October 2020 as the country continued to benefit from highly effective turnaround plans implemented in 2018 which returned the country to profitability.
Nonetheless, this performance was not sustainable during the pandemic and more than offset by the sudden decline in revenue across our Asian operations (particularly in China) from the second half of January 2020. All business, except for Laundry, was significantly impacted year-on-year from February to October 2020; Identification 30.0%, Kiosks 22.8% and Other Vending 52.0%.
Revenue for the 18-month period was £60.4 million. In the 12-month period, revenue declined by 17.2% to £37.6 million.
Nevertheless, the region remained profitable, reported operating profit for the 12-month period of £1.1 million. Operating profit for the 18-month period was £4.5 million.
At 31 October 2020, 9,955 units were situated in Asia, representing 22.3% of the Group's total units in operation.
Key performance Indicators (KPIs)
The Group measures its performance using different types of indicators. The main objective of these KPIs is to monitor the Group's cash generation, long-term profitability, preservation of the value of its assets, and of returns to shareholders.
| Description | Relevance | Performance | |||
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| 18 months | 12 months | 12 months 2019 | 12 months to 31 October 2019 |
| Total Group revenue at actual rate of exchange |
| £310.2m | £186.3m | £228.1m | £232.2m |
| Group profit before tax |
| £0.5m | £(27.8)m | £42.6m | £44.9m |
| Adjusted profit before tax |
| £2.5m | £(26.0)m | £44.1m | £45.9m |
| EBITDA margin | The EBITDA margin is a good indicator of improved profitability | 28.1% | 22.2% | 30.6% | 32.9% |
| Gross takings (including Photo-Me Retail) | Gross takings is an important indicator of the trend in our core vending business | N/A | (19.6)% | (0.7)% | 0.9% |
| Increase in number of photobooths |
| (1,684) | (1,250) | (142) | NA |
| Increase in number of Laundry units (operated or sold) | The increase in number of Revolutions is a constant priority and a main driver for growth | 692 | 389 | 427 | NA |
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FINANCIAL REVIEW
Financial performance
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| 18 months to | 12 months to 31 October 2020 | 12 months to 31 October 2019 | 12 months to 2019 |
| Revenue | £310.2m | £186.3m | £232.2m | £228.1m |
| EBITDA (excluding associates) | £87.3m | £41.4m | £76.5m | £69.7m |
| Operating profit (excluding associates) | £3.3m | £(25.7)m | £46.0m | £42.7m |
| Profit / (loss) before tax | £0.5m | £(27.8)m | £44.9m | £42.6m |
| Profit / (loss) after tax | £(2.4)m | £(24.9)m | £33.6m | £31.3m |
The movements in turnover are outlined in the following table.
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| £m |
| Turnover at 31 October 2019 (12 month) | 232.2 |
| Change in core business revenue: |
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| Continental Europe | (19.1) |
| UK & Ireland | (18.9) |
| Asia | (7.8) |
| Turnover at 31 October 2020 (12 month) | 186.4 |
The decline in the profit before tax can be explained as follows:
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| £m |
| Profit before tax at 31 October 2019 (12 month) | 44.9 |
| Changes in revenue | (45.8) |
| Changes in costs | (24.7) |
| Restructuring costs | (0.6) |
| Increase in net finance income & other gains | (2.2) |
| Impact of exchange rates | (0.5) |
| Profit before tax 31 October 2020 (12 month) | (27.9) |
Review of operating costs
Operating costs were £115.2 million:
Staff costs were £44.3 million. The ratio of staff costs to revenue is 14.2% (31 October 2019: 13.4%).
Operations in the UK & Republic of Ireland received £1.5 million from government furlough schemes, and Continental Europe received £755,000.
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| 18 months to | 12 months to 31 October 2020 | 12 months to 31 October 2019 | 12 months to 2019 |
| Staff costs | £44.3m | £28.4m | £31.2m | £30.6m |
| Inventory costs | £20.5m | £20.5m | £25.7m | £25.6m |
| Other operating costs | £5.5m | £2.1m | £7.6m | £6.5m |
| Depreciation and amortisation | £44.9m | £29.2m | £27.9m | £24.3m |
| Profit on disposal of fixed assets | £3.4m | £2.8m | £1.7m | £1.8m |
| Operating costs | £115.2m | £80.2m | £92.4m | £87.0m |
Exceptional items provision and impairment
Due to the significant impact of COVID-19 on consumer activity in all the Group's end markets, the Group's performance in the period was significantly impacted. COVID-19 started to impact trading in Asia (especially China) in mid-January and by March all the Group's end markets were severely disrupted and the majority of expected revenue did not materialise as a result.
| • | COVID-19 has adversely impacted each business area: B2B, children's rides and, to a lesser extent Identification, will be the most challenging from which to recover.
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| • | Identification was significantly impacted by the pandemic and ongoing challenging market conditions in the UK, due to the UK government's decision to allow home-taken photos for official documents such as passports. |
The COVID-19 crisis has required an in-depth review of the Group's operations and increased rigor to address the current trading environment. This has led to a £33.6 million impact from exceptional items, provisions and impairment for the results for the 18-month period. The largest elements are:
| • | The write down of the carrying value of non-profitable machines (mainly photobooths and children's rides) due to the disruption caused by the COVID-19 situation, and the likely slow recovery in consumer spending habits should social distancing measures remain in place for the foreseeable future. Photo-Me expects that unprofitable machines will be removed or relocated in the UK, China, South Korea and Continental Europe.
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| • | The impairment of goodwill and investments, especially for the B2B companies in the UK.
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| • | The impairment of R&D and other intangibles.
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| • | This also includes a provision for bad debt, machines costs provision, such as dilapidation costs that will occur when leaving non profitable sites, and stocks impairment. In addition, there are provisions for receivables from customer attrition or bankruptcy. |
The table below provides a breakdown of exceptional items, provisions and impairment by region:
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| Asia | Europe | UK & Ireland | TOTAL |
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| £'000 | £'000 | £'000 | £'000 |
| Bad debt | - | 314 | 10 | 324 |
| Intangibles impairment | - | 5,621 | 6,331 | 11,953 |
| Machine costs provision | 590 | 554 | - | 1,144 |
| Machine impairment | 1,539 | 6,164 | 9,835 | 17,538 |
| R&D Intangible impairment | - | 1,660 | - | 1,660 |
| Stock impairment | - | 995 | 20 | 1,015 |
| TOTAL | 2,129 | 15,308 | 16,196 | 33,634 |
Reconciliation of Reported profit before tax to Adjusted profit before tax
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| 18 months to | 12 months to 31 October 2020 | 12 months to 31 October 2019 | 12 months to 2019 |
| Reported profit before tax1 | £0.5m | £(27.8)m | £44.9m | £42.6m |
| Discontinued operations |
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| - Profit on disposals of Stilla Tech | - | - | - | £(3.2)m |
| - Loss of MaxSight Holding investment | £0.4m | £0.4m | £(2.7)m | - |
| Fair value loss on financial instrument held at FVTPL | - | - | £2.9m | £2.9m |
| Exceptional items - restructuring costs | £1.5m | £1.3m | £0.8m | £1.8m |
| Adjusted profit before tax1 | £2.5m | £(26.0)m | £45.9m | £44.1m |
1Profit before tax includes £33.6 million loss due to exceptional items, provisions and impairment due to COVID-19
Earnings per share
For the 18-month period, diluted earnings per share was nil pence. Basic earnings per share was nil pence.
Taxation
The Group tax charge of £2.8 million corresponds to an effective tax rate of 578.0% (30 April 2019: 26.6%).
The effective tax rate is distorted due to the large amount of non-deductible impairments (goodwill).
Statement of financial position
Since the end of April 2020, the Group has secured additional debt funding to ensure that it has sufficient liquidity during this uncertain period. A €30 million loan was agreed with three French banks (BNP, LCL and Credit du Nord which have always been extremely supportive of Photo-Me) participating under the French government-backed "PGE" scheme and the funds were received in May and June, with the loan now drawn down in full. The Group has the right to repay the loan between one and five years without penalty. As long as the loan is outstanding (in whole or part), Photo-Me cannot distribute dividends to shareholders.
Photo-Me remains in line with its statement Photo-Me and BNP have agreed in principle to waive the existing gross cash to debt covenant, to give Photo-Me more flexibility in the current environment.
The Group balance sheet can be summarised as follows:
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| 31 October 2020 | 31 October 2019 | 30 April 2019 |
| Non-current assets | £127.5m | £162.0m | £143.2m |
| Current assets | £139.8m | £130.2m | £128.7m |
| Non-current liabilities | £55.9m | £69.3m | £64.5m |
| Current liabilities | £97.4m | £88.4m | £63.7m |
| Net cash | £106.2m | £84.8m | £84.6m |
| Total equity | £114.6m | £132.8m | £142.0m |
| Minority interests | £1.7m | £1.6m | £1.9m |
| Total shareholders' funds | £116.3m | £134.4m | £143.8m |
Non-current assets detailed are outlined in the following table:
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| 31 October 2020 | 31 October 2019 |
2019 |
| Goodwill | £13.8m | £27.1m | £26.6m |
| Other intangible assets | £21.4m | £14.6m | £15.2m |
| Plant and machinery | £87.8m | £114.2m | £95.4m |
| Investment property | £0.7m | £0.6m | £0.7m |
| Financial instruments | £1.9m | £2.5m | £2.4m |
| Deferred tax assets | £0m | £0.9m | £0.9m |
| Trade and other receivables | £1.8m | £1.7m | £1.8m |
| Total non-current assets | £127.5m | 162.0m | £143.3m |
Transfer from goodwill to intangible assets (£10.6m) and increase of goodwill (£2.4 m) due to SEMPA investment retreatments according to IFRS3.
Transfer from Other intangibles assets to Property, plant & equipment of IFRS16 NBV according to IFRS16.
SERGE CRASNIANSKI
Chief Executive Office & Deputy Chairman
PRINCIPAL RISKS
Similar to any business, the Group faces risks and uncertainties that could impact the achievement of the Group's strategy. These risks are accepted as inherent to the Group's business. The Board recognises that the nature and scope of these risks can change; it therefore regularly reviews the risks faced by the Group as well as the systems and processes to mitigate them.
The table below sets out what the Board believes to be the principal risks and uncertainties, their impact, and actions taken to mitigate them.
| Nature of the risk | Description and impact | Mitigation
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| Economic |
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| COVID-19 | The COVID-19 pandemic has and may continue to cause major disruption to worldwide markets and supply chains, including those that Photo-Me operates within. Widespread governmental lockdown measures, such as travel bans and restrictions on the movement of people, have significantly impacted the Group's business areas, particularly Identification and children's rides due to significantly lower consumer demand for its products and services. In addition, lockdown has restricted the ability of the Group's field engineers to service and replenish machines.
| The Group has exercised a number of measures to protect the business and preserve cash during the COVID-19 crisis, including but not limited to:
Focusing on the health and safety of employees, other stakeholders and the public at large, stringent measures have been implemented across the Group's businesses in line with guidance of governments, the World Health Organization and other relevant authorities across the territories in which the Group operates. Measures taken include providing employees with face shields, surgical masks, gloves, hand sanitiser and a disinfectant to safely clean the Group's equipment.
Reducing capital and other expenditure including loan repayment deferrals, obtaining additional credit facilities and government job retention schemes.
The Group continues to monitor the COVID-19 situation closely and continually reviews operational practices, updating its practices in line with in line with government guidance and other relevant guidance.
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| Global economic conditions | Economic growth has a major influence on consumer spending. A sustained period of economic recession could lead to a decrease in consumer expenditure in discretionary areas.
| The Group focuses on maintaining the characteristics and affordability of its needs-driven products. |
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| Volatility of foreign exchange rates | The majority of the Group's revenue and profit is generated outside the UK, and the Group results could be adversely impacted by an increase in the value of sterling relative to those currencies. | The Group hedges its exposure to currency fluctuations on transactions, as relevant. However, by its nature, in the Board's opinion, it is very difficult to hedge against currency fluctuations arising from translation in consolidation in a cost-effective manner. |
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| Regulations |
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Centralisation of the production of ID photos |
In many European countries where the Group operates, if governments were to implement centralised image capture, for biometric passport and other applications, or widen the acceptance of self-made or home-made photographs for official document applications, the Group's revenues and profits could be affected.
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The Group has developed new systems that respond to this situation, leveraging 3D technology in ID security standards, and securely linking our booths to the administration repositories. Solutions are in place in France, Ireland, Germany, Switzerland and the UK; discussions in Belgium and the Netherlands).
Furthermore, the Group also ensures that its ID products remain affordable and of a high quality.
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| Brexit | The UK left the EU on 31 January 2020. This will lead to changes in UK regulations as modifications to numerous arrangements between the UK and other members of the EU and EEA, affecting trade and customs conditions, taxation, movements of resources, among other things. | The Board is continually reviewing the potential impact on the Group's operations of the UK's leaving the EU. Any potential developments, including new information and policy indications from the UK Government and the EU, will be scrutinized with a view to enhancing the Group's ability to take appropriate action targeted at managing and, where possible, minimising adverse repercussions of Brexit.
The specific impact of Brexit on the Group will depend on the details of any potential renegotiation of the Brexit deal between the UK and the EU.
The business carried out post- transition impact assessments to include all customs documentation, licences, permits, consents, certificates, rules of origin, commodity codes, and delays at the borders.
The Board foresees that in the short-term the negative impact of the uncertainty overshadowing the general UK economy could spill over into the Group's UK operations. | ||||||
| Strategic | ||||||||
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Identification of new business opportunities |
The failure to identify new business areas may impact the ability of the Group to grow in the long-term. |
Management teams constantly review demand in existing markets and potential new opportunities. The Group continues to invest in research in new products and technologies. | ||||||
| Inability to deliver anticipated benefits from the launch of new products | The realisation of long-term anticipated benefits depends mainly on the continued growth of the laundry business and the successful development of integrated secure ID solutions. | The Group regularly monitors the performance of its entire estate of machines. New technology-enabled secure ID solutions are heavily trialed before launch and the performance of operating machines is continually monitored. | ||||||
| Market |
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Commercial relationships |
The Group has well-established, long-term relationships with a number of site-owners. The deterioration in the relationship with, or ultimately the loss of, a key account would have an adverse, albeit contained, impact on the Group's results, bearing in mind that the Group's turnover is spread over a large client base and none of the accounts represent more than 2% of Group turnover.
To maintain its performance, the Group needs to have the ability to continue trading in good conditions in France and the UK, taking into account the situation in these two countries.
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The Group's major key relationships are supported by medium-term contracts. We actively manage our site-owner relationships at all levels to ensure a high quality of service.
The Group continues to monitor the situation in both the French and the UK markets. |
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| Operational |
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Reliance on foreign manufacturers |
The Group sources most of its products from outside the UK. Consequently, the Group is subject to risks associated with international trade. |
Extensive research is conducted into quality and ethics before the Group procures products from any new country or supplier. The Group also maintains very close relationships with both its suppliers and shippers to ensure that risks of disruption to production and supply are managed appropriately. |
| |||||
| Reliance on one single supplier of consumables | The Group currently buys all its paper for photobooths from one single supplier. The failure of this supplier could have a significant adverse impact on paper procurement.
| The Board has decided to hold a strategic stock of paper, allowing for 6 -10 months' worth of paper consumption, to allow enough time to put in place alternative solutions. |
| |||||
| Reputation | The Group's brands are key assets of the business. Failure to protect the Group's reputation and brands could lead to a loss of trust and confidence. This could result in a decline in our customer base. | The protection of the Group's brands in its core markets is sustained by products with certain unique features. The appearance of machines is subject to high maintenance standards. Furthermore, the reputational risk is diluted as the Group also operates under a range of brands. |
| |||||
| Product and service quality | The Board recognises that the quality and safety of both its products and services is of critical importance and that any major failure will affect consumer confidence. | The Group continues to invest in its existing estate, to ensure that it remains contemporary, and in constant product innovation to meet customer needs. The Group also has a programme in place to regularly train its technicians.
|
| |||||
| Technological |
|
| ||||||
|
Failure to keep up with advances in technology |
The Group operates in fields where upgrades to new technologies are mission-critical.
|
The Group mitigates this risk by continually focusing on R&D. |
|
| ||||
| Cyber risk: Third party attack on secure ID data transfer feeds | The Group operates an increasing number of photobooths capturing ID data and transferring these data it directly to government databases. | The Group performs an ongoing assessment of the risks and ensures that the infrastructure meets the security requirements. |
|
| ||||
Group Statement of Comprehensive Income
for the 18 months ended 31 October 2020
|
| 18 months to 31 Oct 2020 | 12 months to 31 Oct 2020 (unaudited) | 12 months to 31 Oct 2019 (unaudited) | 12 months to 30 April 2019 | |
|
| |||||
|
| |||||
|
| £ '000 | £ '000 | £ '000 | £ '000 | |
| Revenue | 310,245 | 186,384 | 232,218 | 228,118 | |
| Cost of sales | (255,258) | (168,895) | (166,413) | (164,637) | |
| Gross profit | 54,987 | 17,489 | 65,805 | 63,481 | |
| Other operating income | 910 | 318 | 1,405 | 1,601 | |
| Administrative expenses | (52,580) | (43,428) | (21,236) | (22,393) | |
| Share of post-tax profits from associates | - | (53) | 73 | 50 | |
| Operating profit | 3,317 | (25,674) | 46,047 | 42,739 | |
| Analysed as: |
| - |
|
| |
| Operating profit before specific items | 4,852 | (24,310) | 46,836 | 44,564 | |
| Restructuring costs | (1,535) | (1,364) | (789) | (1,825) | |
| Operating profit after specific items | 3,317 | (25,674) | 46,047 | 42,739 | |
| Other gains and losses | (283) | (283) | (199) | 361 | |
| Finance revenue | 51 | (15) | 76 | 20 | |
| Finance cost | (2,593) | (1,879) | (1,003) | (527) | |
| Profit before tax | 492 | (27,851) | 44,921 | 42,593 | |
| Total tax charge | (2,844) | 2,960 | (11,310) | (11,314) | |
| Loss for the year | (2,352) | (24,891) | 33,611 | 31,279 | |
|
|
|
|
|
| |
| Other comprehensive income
|
|
|
|
| |
| Items that are or may subsequently be classified to profit and loss: |
|
|
|
| |
|
Exchange differences arising on translation of foreign operations | 2,879 | 2,727 | (2,190) | (860) | |
| Taxation on exchange differences | (3) | (15) | 26 | 3 | |
| Total items that are or may subsequently be classified to profit and loss | 2,876 | 2,712 | (2,164) | (857) | |
| Items that will not be classified to profit and loss: |
|
|
|
| |
|
Remeasurement (losses)/gains in defined benefit obligations and other post-employment benefits obligations | 1,893 | 1,893 | (216) | (216) | |
| Deferred tax on remuneration gains/(losses) | (509) | (509) | 42 | 42 | |
| Total items that will not be classified to profit and loss | 1,384 | 1,384 | (174) | (174) | |
|
Other comprehensive (loss)/income for the year net of tax | 4,260 | 4,096 | (2,338) | (1,031) | |
|
Total comprehensive income for the year | 1,908 | (20,795) | 31,273 | 30,248 | |
| Loss for the year attributable to: |
| - |
|
|
| Owners of the Parent | (2,305) | (24,797) | 33,578 | 31,226 |
| Non-controlling interests | (47) | (94) | 33 | 53 |
|
| (2,352) | (24,891) | 33,611 | 31,279 |
|
Total comprehensive income attributable to: |
| - |
|
|
| Owners of the Parent | 1,927 | (20,730) | 31,254 | 30,228 |
| Non-controlling interests | (19) | (65) | 19 | 20 |
|
| 1,908 | (20,795) | 31,273 | 30,248 |
| Earnings per share |
| - |
|
|
| Basic earnings per share | 0.00p | 0.00p | 8.89p | 8.27p |
| Diluted earnings per share | 0.00p | 0.00p | 8.88p | 8.26p |
All results derive from continuing operations.
Group Statements of Financial Position
as at 31 October 2020
|
| Group | ||
|
|
31 October | 31 October | 30 April |
|
| 2020 | 2019 (unaudited) | 2019 |
|
| £'000 | £ '000 | £'000 |
| Assets |
|
|
|
| Non-current assets |
|
|
|
| Goodwill | 13,767 | 27,063 | 26,594 |
| Other intangible assets | 21,424 | 14,550 | 15,222 |
| Property, plant & equipment | 87,834 | 114,224 | 95,353 |
| Investment property | 652 | 640 | 648 |
| Investment in associates | 57 | 409 | 415 |
| Financial instruments held at amortised cost | 984 | 983 | 982 |
| Financial instruments held at FVTPL | 960 | 1473 | 1,387 |
| Deferred tax assets | - | 877 | 912 |
| Trade and other receivables | 1,799 | 1,734 | 1,764 |
|
| 127,477 | 161,953 | 143,277 |
| Current assets |
|
|
|
| Inventories | 16,611 | 23,072 | 22,339 |
| Trade and other receivables | 16,740 | 22,293 | 20,917 |
| Current tax | 217 | - | 876 |
| Cash and cash equivalents | 106,193 | 84,794 | 84,591 |
|
| 139,760 | 130,159 | 128,723 |
| Total assets | 267,237 | 292,112 | 272,000 |
|
|
|
|
|
| Equity |
|
|
|
| Share capital | 1,889 | 1,889 | 1,889 |
| Share premium | 10,599 | 10,588 | 10,588 |
| Treasury shares |
|
|
|
| Translation and other reserves | 15,245 | 12,534 | 12,369 |
| Retained earnings | 84,448 | 107,785 | 117,131 |
| Equity attributable to owners of the Parent | 112,181 | 132,796 | 141,977 |
| Non-controlling interests | 1,689 | 1,618 | 1,870 |
| Total equity | 113,870 | 134,414 | 143,847 |
|
|
|
|
|
| Liabilities |
|
|
|
| Non-current liabilities |
|
|
|
| Financial liabilities | 43,900 | 57,715 | 53,385 |
| Post-employment benefit obligations | 5,973 | 5,688 | 5,635 |
| Deferred tax liabilities | 6,058 | 5,585 | 5,430 |
| Trade and other payables | - | 331 | - |
|
| 55,931 | 69,319 | 64,450 |
|
Current liabilities |
|
|
|
| Financial liabilities | 51,553 | 18,927 | 15,850 |
| Provisions | 1,262 | 222 | 218 |
| Current tax | 4,909 | 8,725 | 6,753 |
| Trade and other payables | 39,712 | 60,505 | 40,882 |
|
| 97,436 | 88,379 | 63,703 |
| Total equity and liabilities | 267,237 | 292,112 | 272,000 |
Group Statement of Cash Flows
for the 18-month period ended 31 October 2020
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Cash flow from operating activities |
|
|
| Profit before tax and group fees | 492 | 42,593 |
| Finance cost | 791 | 527 |
| IFRS- 16 Interest | 1,801 | - |
|
|
|
|
| Finance revenue | (51) | (20) |
| Other gains | 283 | (361) |
| Operating profit | 3,317 | 42,739 |
| Share of post-tax profit from associates | - | (50) |
| Amortisation of intangible assets | 5,125 | 2,992 |
| Depreciation of property, plant and equipment (IFRS- 16) | 7,400 | - |
| Depreciation of property, plant and equipment | 39,124 | 24,189 |
| COVID -19 impairments | 32,347 | - |
|
|
|
|
| Exchange differences | (2,787) | (707) |
| Other items | 43 | 354 |
| Changes in working capital: |
|
|
| Inventories | 5,728 | 511 |
| Trade and other receivables | 4,177 | (597) |
| Trade and other payables | (1,170) | (5,604) |
| Provisions | (369) | 108 |
| Cash generated from operations | 92,935 | 63,935 |
| Interest paid | (2,594) | (527) |
| Taxation paid | (4,688) | (6,223) |
| Net cash generated from operating activities | 85,653 | 57,185 |
| Cash flows from investing activities |
|
|
| Acquisition of subsidiaries net of cash acquired | (786) | (13,528) |
| Proceeds from disposal of associate | 357 | 4,437 |
| Repayment of loans advanced to associate | 0 | 1,612 |
| Investment in intangible assets | (2,326) | (2,167) |
| Proceeds from sale of intangible assets | 50 | 155 |
| Purchase of property, plant and equipment | (44,782) | (28,169) |
| Payment of deferred consideration | 0 | (225) |
| Proceeds from sale of property, plant and equipment | 1,474 | 2,282 |
| Purchase of available for sale investments | - | - |
| Dividends received from for sale investments | - | - |
| Interest received | 259 | 18 |
| Dividends received from associates | (184) | 36 |
| Net cash generated from investing activities | (45,938) | (35,549) |
| Cash flows from financing activities |
|
|
| Issue of Ordinary shares to equity shareholders | 183 | 224 |
| Sale of Treasury shares | - | - |
| Repayment of capital element of finance leases | (286) | (167) |
| Repayment of borrowings | (17,097) | (8,397) |
| Increase in borrowings | 30,964 | 43,748 |
| Decrease in assets held to maturity | - | 741 |
| Dividends paid to owners of the Parent | (31,894) | (31,873) |
| Dividends paid to non-controlling interests |
|
|
| Net cash utilised in financing activities | (18,130) | 4,276 |
| Net increase in cash and cash equivalents | 21,585 | 25,912 |
| Cash and cash equivalents at beginning of year | 84,591 | 58,657 |
| Exchange gain on cash and cash equivalents | 17 | 22 |
| Cash and cash equivalents at end of year | 106,193 | 84,591 |
Group Statement of Changes in Equity
for the year ended 31 October 2020
|
| Share capital £'000 | Share premium £'000 | Other reserves £'000 | Translation reserve £'000 | Retained earnings £'000 | Attributable to owners of the Parent £'000 | Non-controlling interests £'000 | Total | |||
| At 1 May 2018 | 1,887 | 10,366 | 1,781 | 11,412 | 117,811 | 143,257 | 1,553 | 144,810 | |||
| Profit for year | - | - | - | - | 31,226 | 31,226 | 53 | 31,279 | |||
| Exchange differences | - | - | - | (827) | - | (827) | (33) | (860) | |||
| Tax on exchange | - | - | - | 3 | - | 3 | - | 3 | |||
| Remeasurement gains in defined benefit pension scheme and other post-employment benefit obligations | - | - | - | - | (216) | (216) | - | (216) | |||
| Deferred tax on remeasurement gains | - | - | - | - | 42 | 42 | - | 42 | |||
| Total other comprehensive (expense)/income | - | - | - | (824) | (174) | (998) | (33) | (1,031) | |||
| Total comprehensive (expense)/income | - | - | - | (824) | 31,052 | 30,228 | 20 | 30,248 | |||
| Transactions with owners of the Parent |
|
|
|
|
| - |
| - | |||
| Shares issued in the period | 2 | 222 | - | - | - | 224 | - | 224 | |||
| Share options | - | - | - | - | 141 | 141 | - | 141 | |||
| Dividends paid | - | - | - | - | (31,873) | (31,873) | - | (31,873) | |||
| Acquisition of minority | - | - | - | - | - | - | 297 | 297 | |||
| Total transactions with the Parent | 2 | 222 | - | - | (31,732) | (31,508) | 297 | (31,211) | |||
| At 30 April 2019 | 1,889 | 10,588 | 1,781 | 10,588 | 117,131 | 141,977 | 1,870 | 143,847 | |||
| At 1 May 2019 | 1,889 | 10,588 | 1,781 | 10,588 | 117,131 | 141,977 | 1,870 | 143,847 | |||
| Profit for year | - | - | - | - | (2,305) | (2,345) | (47) | (2,352) | |||
|
|
|
|
|
|
|
|
|
| |||
| Other comprehensive (expense)/income |
|
|
|
|
|
|
|
| |||
| Exchange differences | - | - | - | 2,879 | - | 2,879 | - | 2,879 | |||
| Tax on exchange | - | - | - | (3) | - | (3) | - | (3) | |||
| Remeasurement losses in defined benefit pension scheme and other post-employment benefit obligations | - | - | - | - | 1,893 | 1,893 | - | 1,893 | |||
| Deferred tax on remeasurement gains | - | - | - | - | (509) | (509) | - | (509) | |||
| Total other comprehensive income | - | - | - | 2,876 | 1,384 | 4,260 | - | 4,260 | |||
| Total comprehensive income | - | - | - | 2,876 | (961) | 1,915 | (47) | 1,868 | |||
| Transactions with owners of the Parent |
|
|
|
|
|
|
|
| |||
| Shares issued in the period | - | 11 | - | - | - | 11 | - | 11 | |||
| Share options | - | - | - | - | 172 | 172 | - | 172 | |||
| Dividends | - | - | - | - | (31,894) | (31,894) | - | (31,894) | |||
| Disposal of minority | - | - | - | - | - | - | (134) | (134) | |||
| Total transactions with owners | - | 11 | - | - | (31,722) | (31,711) | (134) | (31,845) | |||
| At 31 October 2020 | 1,889 | 10,599 | 1,781 | 13,464 | 84,448 | 112,181 | 1,689 | 113,870 | |||
NOTES
1. Basis of preparation and accounting policies
The preliminary results for the year ended 31 October 2020 have been extracted from near-final versions of the unaudited consolidated financial statements, which the Board expects to approve shortly (and in any case before the end of March) after Photo-Me's auditor, Mazars LLP, signs off on them. The Board is issuing these preliminary results on the strength of a comfort letter from the auditor to the Board dated 9 March 2021 confirming that the audit is materially complete and that the financial information presented in the Preliminary Announcement is unlikely to change.
Abridged financial information
The financial information in this announcement which was approved by the Board of Directors does not constitute the Company's statutory accounts for the years ended 31 October 2020 but is derived from those accounts. Statutory accounts for 2019 have been delivered to the Registrar of Companies. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under s498(2) or (3) Companies Act 2006.
This preliminary announcement has been prepared in accordance with the accounting policies under IFRS as adopted by the EU.
Whilst the financial information included in this preliminary announcement has been prepared in accordance with IFRS, this announcement does not itself contain sufficient information to comply with IFRS. This preliminary announcement constitutes a dissemination announcement in accordance with Section 6.3 of the Disclosures and Transparency Rules (DTR).
2. Segmental analysis
IFRS 8 requires operating segments to be identified, based on information presented to the Chief Operating Decision Maker (CODM) in order to allocate resources to the segments and monitor performance. The Group reports its segments on a geographical basis: Continental Europe, United Kingdom & Ireland and Asia. The Group's European operations are predominately based in Western Europe and with the exception of the Swiss operations use the Euro as their domestic currency. The Board, being the CODM, believe that the economic characteristics of the European operations, together with the fact that they are similar in terms of operations, use common systems and the nature of the regulatory environment allow them to be aggregated into one reporting segment.
The CODM monitors performance of the segments at the underlying operating profit level before Specific items, interest and taxation.
In accordance with IFRS 8, no segment information is provided for assets and liabilities in the disclosures below, as this information is not regularly provided to the Chief Operating Decision Maker.
|
| Asia | Europe | United Kingdom & Ireland | Corporate costs | Total |
| 18 months to October 2020 | £'000 | £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
|
| Total revenue | 60,394 | 202,297 | 56,369 | - | 319,060 |
| Inter segment sales | (2) | (7,067) | (1,746) | - | (8,815) |
| Revenue from external customers | 60,391 | 195,230 | 54,624 | - | 310,245 |
| EBITDA | 13,222 | 75,486 | 7,923 | (9,319) | 87,313 |
| Depreciation and amortisation | (8,722) | (46,736) | (27,038) | (1,500) | (83,996) |
| Underlying operating profit | 5,232 | 28,882 | (18,444) | (10,818) | 4,852 |
| Specific items | (731) | (133) | (671) | - | (1,535) |
| Operating profit excluding associates | 4,501 | 28,750 | (19,115) | (10,818) | 3,317 |
| Share of post-tax profits from associates |
|
|
|
| - |
| Operating profit |
|
|
|
| 3,317 |
| Other gains |
|
|
|
| (284) |
| Finance Revenue |
|
|
|
| 51 |
| Finance costs |
|
|
|
| (2,593) |
| Profit before tax |
|
|
|
| 491 |
| Tax |
|
|
|
| (2,844) |
| Profit for year |
|
|
|
| (2,353) |
| Capital expenditure | 4,972 | 31,797 | 9,885 | 484 | 47,108 |
|
| Asia | Europe | United Kingdom & Ireland | Corporate costs | Total |
| 12 months to October 2020 | £'000 | £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
|
| Total revenue | 37,634 | 121,147 | 31,219 | - | 190,001 |
| Inter segment sales | (2) | (2,946) | (669) | - | (3,617) |
| Revenue from external customers | 37,631 | 118,201 | 30,551 | - | 186,384 |
| EBITDA | 7,535 | 39,932 | 2,961 | (8,992) | 41,437 |
| Depreciation and amortisation | (6,419) | (36,488) | (22,371) | (1,473) | (66,751) |
| Underlying operating profit | 1,848 | 2,916 | (18,268) | (10,464) | (23,968) |
| Specific items | (731) | (133) | (842) | - | (1,706) |
| Operating profit excluding associates | 1,117 | 2,784 | (19,110) | (10,464) | (25,674) |
| Share of post-tax profits from associates |
|
|
|
| - |
| Operating profit |
|
|
|
| (25,674) |
| Other gains |
|
|
|
| (283) |
| Finance Revenue |
|
|
|
| (15) |
| Finance costs |
|
|
|
| (1,879) |
| Profit before tax |
|
|
|
| (27,851) |
| Tax |
|
|
|
| 2,920 |
| Profit for year |
|
|
|
| (24,891) |
| Capital expenditure | 3,436 | 15,840 | (4,223) | 324 | 15,377 |
| 12 months to 30 April 2019 | Asia | Europe | United Kingdom & Ireland | Corporate costs | Total |
|
| £'000 | £'000 | £'000 | £'000 | £'000 |
|
Total revenue | 44,538 | 138,935 | 54,962 | - | 238,435 |
| Inter segment sales | - | (8,274) | (2,043) | - | (10,317) |
| 44,538 | 130,661 | 52,919 | - | 228,118 | |
| EBITDA | 9,350 | 49,267 | 13,167 | (2,079) | 69,705 |
| Depreciation and amortisation | (4,673) | (15,727) | (6,119) | (497) | (27,016) |
| Underlying operating profit | 6,502 | 33,540 | 7,048 | (2,576) | 44,514 |
| Specific items | (1,825) | - | - | - | (1,825) |
| Operating profit excluding associates | 4,677 | 33,540 | 7,048 | (2,576) | 42,689 |
| Share of post-tax profits from associates |
|
|
|
| 50 |
|
|
|
|
| 42,739 | |
| Other gains |
|
|
|
| 361 |
| Finance Revenue |
|
|
|
| 20 |
| Finance costs |
|
|
|
| (527) |
|
|
|
|
| 42,593 | |
|
|
|
|
| (11,314) | |
|
|
|
|
| 31,279 | |
| Capital expenditure | 2,755 | 19,893 | 7,493 | 379 | 30,520 |
Inter-segment revenue mainly relates to sales of equipment.
The Parent Company is domiciled in the UK. Total revenue from external customers is as follows:
|
| Group | |
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Total revenue from external customers |
|
|
| Asia and rest of the world | 60,392 | 44,538 |
| Europe | 195,230 | 130,601 |
| UK | 54,623 | 52,979 |
|
| 310,245 | 228,118 |
|
|
| 2020 | 2019 |
|
|
| £ '000 | £ '000 |
| Total revenue from external customers |
|
|
|
| Sales of equipment, spare parts & consumables |
| 23,761 | 22,372 |
| Sales of services |
| 5,599 | 4,595 |
| Other sales |
| 239 | 244 |
|
|
| 29,599 | 27,186 |
| Vending revenue |
| 280,646 | 200,932 |
| Total revenue |
| 310,245 | 228,118 |
There were no key customers in the year ended 31 Oct 2020 (2019: none).
3. Taxation expenses
Tax charges/credits in the statement of comprehensive income
|
| 2020 £'000 | 2019 £'000 |
| Taxation |
|
|
| Current taxation |
|
|
| UK Corporation tax |
|
|
| - current year | 700 | 5,274 |
| - prior years | - | 186 |
|
| 700 | 5,460 |
| Overseas taxation |
|
|
| - current year | 4,209 | 2,512 |
| - prior years | - | 193 |
|
| 4,209 | 2,705 |
| Total current taxation | 4,909 | 8,165 |
| Deferred taxation |
|
|
| Origination and reversal of temporary differences |
|
|
| - current year - UK | (175) | 505 |
| - current year - overseas | (1,890) | 2,570 |
| Impact of change in rate | - | 74 |
| Total deferred tax | (2,065) | 3,149 |
| Tax charge in the statement of comprehensive income | 2,844 | 11,314 |
The Group tax charge of £2.8m (2019: £11.3m) corresponds to an effective tax rate of 578.0% (2019: 26.6%
The Group undertakes business worldwide.
4. Earnings per share
Basic earnings per share amounts are calculated by dividing net earnings attributable to shareholders of the Parent of £0.00 (2019: £31,226,000) by the weighted average number of shares in issue during the year.
Diluted earnings per share amounts are calculated by dividing the net earnings attributable to shareholders of the Parent by the weighted average number of shares outstanding during the year plus the weighted average number of shares that would be issued on conversion of all the dilutive potential shares into shares. The Group has only one category of dilutive potential shares being share options granted to senior staff, including directors.
The earnings and weighted average number of shares used in the calculation are set out in the table below:
|
|
2020 |
2019 |
|
| ||||||||
|
| Earnings £'000 | Weighted average number of shares '000 | Earnings per share pence | Earnings £'000 | Weighted average number of shares '000 | Earnings per share pence |
| |||||
|
|
|
|
|
|
|
|
| |||||
| Basic earnings per share | 0.00 | 377,749 | 0.00p | 31,226 | 377,662 | 8.27 |
| |||||
| Effect of dilutive share options |
| 260 | 0 |
| 190 | 0 |
| |||||
| Diluted earnings per share | 0.00 | 378,009 | 0.00p | 31,226 | 377,852 | 8.27 |
| |||||
|
|
|
|
|
|
|
| ||||||
Potential shares (for example, arising from exercising share options) are treated as dilutive only when their conversion to shares would decrease basic earnings per share or increase loss per share from continuing operations.
Alternative earnings per share
The table below reconciles earnings per share (EPS) and diluted earnings per share (DPS) before and after Specific items.
|
| 2020 | 2019 | ||||
|
|
| Earnings per share pence | Diluted earnings per share pence |
| Earnings per share pence | Diluted earnings per share pence |
| Earnings £'000 | Earnings £'000 | |||||
| Profit for the year attributable to owners of the Parent | 0.00 | 0.00 | 0.00 | 31,226 | 8.27 | 8.26 |
| Specific items net of tax | 1,535 | 0.41 | 0.41 | 1,825 | 0.48 | 0.48 |
| Other (losses) / gains | (284) | (0.1) | (0.1) | (361) | (0.1) | (0.1) |
| Earnings after specific items | 0.00 | 0.00 | 0.00 | 32,690 | 8.65 | 8.64 |
5. Dividends paid and proposed
Year ended 31 Oct 2020 - Proposed dividends not yet paid
The Board declared a dividend of 0.00p per share for the year ended 31 Oct 2020. This is due to the recent COVID 19 pandemic and the consequent impact on the business,
Year ended 30 April 2019 - Paid after 30 April 2019
The Board declared an interim dividend of 3.71p per share for the year ended 30 April 2019, amounting to £14,014,000 which was paid on 11 May 2019. The Board proposed a final dividend for the period ended 30 April 2019 of 4.73p per share, amounting to £17,880,000 which was approved by shareholders at the Annual General Meeting held on 24 October 2019 and paid on 9 November 2019.
6. Non-current assets
|
| Goodwill | Intangible assets | Property plant & equipment | Investment property |
|
| £'000 | £'000 | £'000 | £'000 |
| Net book value at 1 May 2018 | 13,435 | 13,960 | 92,556 | 676 |
| Exchange adjustment | (71) | (63) | (358) | (12) |
| Additions - photobooths & vending machines |
|
| 24,938 |
|
| Additions-Other assets |
| 2,167 | 3,415 |
|
| Additions-new subsidiaries | 13,230 | 2,543 | 1,019 |
|
| Amortisation |
| (2,992) |
|
|
| Depreciations |
|
| (24,008) | (16) |
| Disposals at net book value |
| (393) | (2,209) |
|
| Net book value at 30 April 2019 | 26,594 | 15,222 | 95,353 | 648 |
| Exchange adjustment | 84 | 519 | (408) | 28 |
| Additions - photobooths & vending machines |
|
| 38,373 |
|
| Additions - other assets |
| 6,578 | 6,600 |
|
| NBV IFRS16 |
|
| 9,687 |
|
| Transfer | (10,609) | 10,553 |
|
|
| Additions-new subsidiaries | 2,842 |
| 942 |
|
| Amortisation | (5,143) | (11,400) | (59,302) | (24) |
| Disposals at net book value |
| (47) | (3,409) |
|
| Net book value at 31 October 2020 | 13,768 | 21,425 | 87,836 | 652 |
7. Net Cash
|
| Group | |||
|
| 2020 £'000 | 2019 £'000 | ||
| Cash and cash equivalents per statement of financial position | 106,192 | 84,591 | ||
| Financial asset held at amortised cost / held to maturity | 984 | 982 | ||
| Non-current borrowings | (39,444) | (52,322) | ||
| Current borrowings | (45,434) | (15,071) | ||
| Non-current finance leases | (272) | (1,063) | ||
| Current finance leases | (149) | (779) | ||
|
| 21,877 | 16,338 | ||
At 31 October 2020, £984,000 of the total net cash (2019: £982,000) comprised bank deposit accounts that are subject to restrictions and are not freely available for use by the Group and Company. These amounts are shown under financial assets restricted cash / held to maturity.
Net cash is a non-GAAP measure since it is not defined in accordance with IFRS but is a key indicator used by management in assessing operational performance and financial position strength. The inclusion of items in net cash as defined by the Group may not be comparable with other companies' measurement of net cash/debt. The Group includes in net cash, cash and cash equivalents and certain financial assets, mainly deposits, less current and non-current borrowings outstanding.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF FINANCIAL REPORT
We confirm that to the best of our knowledge:
• The condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
• The Preliminary Management Report includes a fair review of the information required by:
(a) DTR 4.2.7 of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first twelve months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8 of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first twelve months of the current financial year and that have materially affected the financial position or performance of the Group during that period and any changes in the related party transactions described in the last annual report that could have a material effect on the financial position or performance of the enterprise in the first twelve months of the current financial year.
In accordance with article 5(2)(c) of the Transparency Directive, the directors who are making this responsibility statement (and their respective functions) are as follows:
Sir John Lewis OBE (Non-executive chairman of the Board, chairman of the nomination committee, and member of the remuneration and audit committees); Serge Crasnianski (CEO and deputy chairman); Jean-Marc Janailhac (Executive Director); Emmanuel Olympitis (senior independent director, chairman of the remuneration committee, and member of the nomination and audit committees); Jean-Marcel Denis (non-executive director, chairman of the audit committee, and member of the nomination and remuneration committees); Françoise Coutaz-Replan (non-executive director and member of the audit committee); Yitzhak Apeloig (non-executive director and member of the audit committee).
By order of the Board
Sir John Lewis OBE (Non-executive Chairman)
Serge Crasnianski (Chief Executive Officer and Deputy Chairman)
9 March 2021
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