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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Photo-me International Plc | LSE:PHTM | London | Ordinary Share | GB0008481250 | ORD 0.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 107.00 | 107.00 | 107.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMPHTM
RNS Number : 8902J
Photo-Me International PLC
10 December 2018
10 December 2018
Photo-Me International plc
("Photo-Me" or "the Group")
INTERIM RESULTS FOR THE SIX MONTHSED 31 OCTOBER 2018
Continued strong Laundry performance
Photo-Me International plc (PHTM.L), the instant-service equipment group, announces its results for the six months ended 31 October 2018.
Results summary
Hot Features
Premium
Reported At constant currency
----------------------------------- -----------------------
Six months Six months Change Six months Change(1)
ended ended ended
31 Oct 31 Oct 31 Oct
2018 2017 2017(1)
Revenue GBP119.8m GBP122.2m -2.0% GBP121.9m -1.7%
Underlying Revenue GBP119.8m GBP116.9m +2.5% GBP116.6m +2.7%
EBITDA GBP39.1m GBP44.7m -12.9% GBP44.7m -12.5%
Profit Before Tax(3) GBP26.0m GBP32.9m -21.0% GBP32.7m -20.4%
Adjusted Profit Before
Tax(3) GBP26.7m GBP29.0m -7.9% GBP28.9m -7.6%
Cash Generated from Operations GBP36.1m 39.9m -9.5%
Net Cash(2) GBP32.4m GBP47.1m -31.2%
EPS (diluted) 5.33p 6.40p -16.7%
Adjusted EPS 5.47p 5.64p -3.0%
Interim dividend per
Ordinary share 3.71p 3.71p -
(1) For constant currency comparatives, average rates of exchange used were GBP/EUR 1.139 (H1 2018: 1.129), GBP/Yen 146.057 (H1 2018: 145.173)
(2) Refer to the note 8 to the financial statements for the reconciliation of Net Cash to Cash and cash equivalents as per the financial statements
(3) The breakdown of profit before tax to adjusted profit before tax is presented in the table on page 4.
Financial summary
-- Underlying revenue was up 2.5% to GBP119.8m, excluding the impact of restructuring Photo-Me Retail in the comparative period.
-- Adjusted profit before tax was down 7.9%, when adjusted for one-off items in H1 2018 and H1 2019.
-- The Group remains highly cash generative with GBP36.1 million of cash generated from operations in the period (2017: GBP39.9m).
-- Net cash position of GBP32.4 million, (2017: GBP47.1m) following distribution of GBP28.8 million to shareholders in dividend payments and GBP33.4 million of investments made in the last 12 months.
-- Interim dividend maintained at 3.71 pence per Ordinary share in line with stated dividend policy for 2019
Operational summary
-- Operations in Japan have recovered faster than expected, with underlying Asia operating profit up 15%, excluding the cost of restructuring operations in Japan.
-- Continued expansion of Laundry operations, with over 30% more Revolution units in operation at the period end and total revenue from Revolution up 28.5%.
-- Identification revenue growth increased 2%, reflecting further diversification of services and successful deployment of secure photo ID upload technology.
Innovation update
-- After the period end in November 2018, the first banking booths which provide front-end retail banking services to customers were launched in Paris.
Outlook
-- The Group maintains its guidance for the FY2019 and expects to report profit before tax of GBP44 million, net of restructuring costs in Japan and excluding any movement in the value of Max Sight Holdings.
-- The Group's ability to meet guidance will be reliant on normalised trading conditions in its key markets.
Serge Crasnianski, CEO, said:
"In the last six months, the expansion of Laundry operations and deployment of photobooth identification solutions continued in line with our plan. Revolution Laundry units in operation and revenue from these machines were up 30.4% and 28.5% respectively in H1 2019. In additional we continue to diversify our identification business offering.
"The Board expects to meet its previously stated guidance for FY 2019, with profit before tax of GBP44 million, net of restructuring costs in Japan and excluding movements in the value of the Group's investment in Max Sight Holdings. The Group's ability to meet guidance remains subject to the economic environment, foreign exchange movements and consumer sentiment, which could affect performance."
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.
Enquiries:
Photo-Me International plc +44 (0) 1372 453 399 / ir@photo-me.co.uk Serge Crasnianski, CEO Stéphane Gibon, CFO Hudson Sandler +44 (0) 20 7796 4133 Wendy Baker/ Emily Dillon/ Nick photo-me@hudsonsandler.com Moore
An audio webcast of the analyst and investor conference call 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 approximately 47,000 vending units across 18 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
In addition, the Group operates 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 operated and maintained by Photo-Me. Photo-Me pays the site owner a commission based on turnover, which varies depending on the country and location 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) and public transport venues. The 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
Results
During the period, Group profit before tax has been impacted by reduced B2B revenue and machine sales activity, especially in the UK, where we have suffered from large order lags. Due to the extent of our B2B customer relationships, we expect this to recover in the second half of the year.
Our strong performance in Japan and the continued positive momentum of our high margin Laundry business gives the Board continued confidence in re-iterating its previously stated profit before tax guidance of GBP44 million for FY 2019, net of restructuring costs in Japan and any movement on the Group's investment in Max Sight Holdings.
Excluding the impact of the restructuring costs, investments adjustments, exchange gains and a favourable commercial litigation outcome, results for the first half year were down 7.5% compared with the corresponding period in the prior year (H1 2018).
Underlying revenue increased by 2.5% against the comparative period, excluding a GBP5.3 million reduction in revenue from Photo-Me Retail in H1 2018 due to the restructuring programme. On a reported basis, the restructuring of Photo-Me Retail in H2 2018 had a negative impact on total revenue (2.0% decline) when compared with the comparative period.
Expansion of laundry operations remained a key growth driver, with total revenue from Revolution machines up 28.5%. Revenue from Identification grew by 1% and revenue from Kiosks reduced by 27% to GBP6.6 million.
Reported EBITDA was GBP39.1 million, resulting in an EBITDA margin of 32.6% (H1 2018: 36.7%, but was 34.7% when excluding the impact of the one-off items listed below.
Adjusted profit before tax was down 7.9% when adjusted for one-off items in H1 2019 and H1 2018, reflecting the lag in B2B revenue and machines sales activity due which is expected to recover in the second half. A reconciliation of Reported profit before tax to adjusted profit before tax is noted in the below.
Reconciliation of Reported Profit Before Tax to Adjusted Profit Before Tax
Six months Six months to
to 31 October
31 October 2017
2018
------------ --------------
Profit before tax GBP26.0m GBP32.9m
Discontinued operations
GBP(3.2)m
* Profit on disposal of Stilla Technologies SA
GBP2.7m
* Loss of Max Sight Holding investment
Property gain GBP(2.3)m
Exceptional items - restructuring costs GBP1.2m GBP0.9m
Underlying profit before tax GBP26.7m GBP31.5m
H1 2018 one off gains:
GBP(1.6)m
* Favourable commercial litigation
GBP(0.9)m
* Exchange gain
Adjusted profit before tax GBP26.7m GBP29.0m
In H1 2018, the Group reported two exceptional items - a property gain (GBP2.3 million) and the associated restructuring costs for Photo-Me Retail (GBP0.9 million). The Group also benefited from a one off favourable litigation outcome (GBP1.6 million) and a one-off exchange gain (GBP0.9 million).
In H1 2019, the Group recorded a gain on the sale of its investment holding in Stilla Holdings (GBP3.2 million) and a loss on its shareholding in Max Sight Group Holdings Limited (GBP2.7 million). During the period, the Group was also impacted by the cost of restructuring its Japanese operations (GBP1.2 million). On a reported basis, in H1 2019 Profit Before Tax declined by 21.0%, with the Group's Adjusted Profit Before Tax declining by 7.9%.
The Group remains highly cash generative, with GBP36.1 million of cash generated from operations in the period.
The Group's net cash position as at 31 October 2018 was GBP32.4 million, compared with GBP47.1 million as at 31 October 2017, following distribution of GBP28.8 million to shareholders via dividend payments and GBP33.4 million of investments in the last 12 months. Compared with 30 April 2018, net cash increased by GBP5.7 million, from GBP26.7 million. In H1 2019, the Group invested GBP14.1 million in future growth, made GBP4.2 million of acquisitions and paid out GBP14.0 million as dividends to the Group's shareholders.
Strategy update
The Group's strategy remains unchanged, and the Board continues its commitment to further diversifying its operations and developing new technologies with multiple applications, which can be deployed across new and existing geographies, and will be expected to provide a rapid return on investment.
In the last six months, the expansion of Laundry operations and deployment of photobooth identification solutions continued in line with our plan.
In addition, the Board rapidly addressed performance issues in Japan and realigned operations to the more challenging and competitive market conditions in the country. The benefit of the restructuring programme is already evident, and the Group remains confident that this business will return to growth in FY 2019.
Details of strategic progress by business area are set out in the Business Review.
Dividends
The Board is declaring a maintained interim dividend of 3.71 pence per Ordinary Share (H1 2018: 3.71 pence per share).
This is line with the Board's intention to maintain a total dividend of 8.44 pence per ordinary share for the current financial year ending 30 April 2019.
The interim dividend will be paid on 10 May 2019 to shareholders on the register on 5 April 2019. The ex-dividend date will be 4 April 2019.
Outlook
Expansion of the Group's Laundry operations remains a key priority for the Group in the second half of the year, building on the growth in the number of Revolution laundry units in operation and revenue from Revolution machines which were up 30.4% and 28.5% respectively in H1 2019. In line with the Group's strategy, Laundry operations will continue to make up an increasing proportion of the Group's total revenue in the medium term. In addition, diversification of identification solutions will continue to be the driver of revenue growth in this business area
The Board expects to meet its previously stated guidance for the 2019 financial year, with profit before tax of GBP44 million, net of restructuring costs in Japan and excluding any movement in the value of the Group's investment in Max Sight Holdings, This guidance remains subject to the economic environment, foreign exchange movements and consumer sentiment, which could affect performance.
CHIEF EXECUTIVE'S BUSINESS AND FINANCIAL REVIEW
BUSINESS REVIEW
The Group has three principal areas of business; Identification, Laundry and Kiosks.
In addition, the Group operates other vending equipment such as children's rides, photocopiers and amusement machines. Whilst this is not one of our three principal business areas, these machines are profitable and benefit from synergies relating to other areas of the business, such as our network of field engineers.
In the first half, the Group remained focused on the expansion of its Laundry operations and deployment of secure photo ID upload technology in its identification business.
Identification
Photobooths and integrated biometric identification solutions
31 October 31 October Change
2018 2017
----------- ----------- -------
Number of units in operation 28,421 28,211 +1%
Percentage of total Group vending estate
(number of units) 61% 60% +1%
Revenue GBP79.1m GBP78.3m +1%
Capex GBP3.9m GBP4.9 -19%
Identification revenue increased by 1%, with a 1% growth in the number of units in operation. This resilient performance gives us confidence for the future and reflects the successful diversification of photobooth services, including the extension of our encrypted photo ID upload for documents such as passports and driving licences.
In total, the Group has more than 10,000 photobooths connected to government organisations for the secure upload of photo ID. The Board anticipates that this number will continue to grow as discussion with governments progress.
New services have been introduced to a small number of photobooths in the UK & Republic of Ireland and France, enabling customers to scan and copy documents. We are monitoring customer response and, if successful, further photobooths will be enabled with these services during the second half.
Capex reduced in the period, following significant capex in H1 2018 as part of the ongoing maintenance and renewal cycle.
Laundry
Unattended Revolution laundry services, launderettes, business-to-business laundry services
31 October 31 October Change
2018 2017
----------- ----------- --------
Total laundry units deployed (owned,
sold and acquisitions) 4,636 3,850 +20.0%
Total revenue from laundry operations GBP21.9m GBP17.3m +26.0%
Revolution (excludes Launderettes and
B2B):
Number of Revolutions in operation 2,527 1,937 +30.4%*
Percentage of total Group vending estate
(number of units) 5% 4%
Total revenue from Revolutions GBP13.9m GBP10.8m +28.5%
Revolution capex GBP4.3m GBP6.6m -35.0%
*There were 2,232 full time units in operation during H1 2019 compared with 1,937 in H1 2018.
Laundry operations continue to be the primary growth driver for the Group, with an average of 50 new machines installed each month, mainly in Continental Europe. In the second half, the Group expects that this will increase to an average of 80 machines per month.
Total revenue from Laundry operations increased by 26%. The rollout of Revolution machines continues apace, with the estate increased by 30.4% as at 31 October 2018. Total revenue from Revolution was up by 28.5%, which was achieved against a 15.2% increase in machines in full time operation throughout H1 2019.
Revolution machines have been redesigned to reduce the cost of manufacturer and provide a faster return on investment. The first Batch of the new machines is due to be delivered in December 2018. New functionality has been installed, including fabric softener, which will increase the yield per machine. When tested via existing machines, the softener has increased revenues by 15%.
The level of capex in the period reflects the Group's focus and discipline around identifying high footfall locations where the Revolution units will be highly profitable rather being wholly focused on the number of units deployed.
The UK, Ireland, Portugal, France and Spain remain key geographies for growth and the Group is looking to extend operations into Germany and Austria.
The Group is still on track to deploy its target of 6,000 units (owned and sold) by the end of the Group's 2020 financial year.
Kiosks
High-quality digital printing services
31 October 31 October Change
2018 2017 %
----------- ----------- -------
Number of units in operation 5,533 5,918 -7%
Percentage of total Group vending estate
(number of units) 12% 13%
Revenue GBP6.6m GBP9.1m -27%
Capex GBP1.8m GBP0.5m 243%
The number of kiosks in operation reduced primarily due to the restructuring of Photo-Me Retail, which resulted in the removal of machines located in shops which were closed. These Speedlab units were transferred to Photomaton in France and have been refurbished prior to being deployed to replace previous generation machines in the country. This explains the decline in revenue and significant increase in capex in the period whilst the machines have improved revenue following relocation in France, there was a period of time when the machines were not operational.
Investment in innovation
After the period end in November 2018, the first banking booth, which provides front-end retail banking services to customers, was launched in partnership with Anytime ("Anytime"), a Belgian Fintech company.
The first ten enabled booths were unveiled in Paris, allowing customers to open a personal or professional bank account and scan in supporting documents. It then takes two days for a new account to be opened once compliance checks have been completed. The new client will receive a credit card by post within two days of the account opening.
Photo-Me has an extensive network of booths throughout Europe. "Anytime" believe that Photo-Me's technology will enable it to address a new market and that in the future the booth will offer further banking services to its clients. In the long-term, customers will be able to deposit cheques and cash in the booths and speak directly to bank specialists through the screen.
REVIEW OF PERFORMANCE BY GEOGRAPHY
Commentary on the Group's financial performance are 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 decision process. 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 areas of operation: (i) Continental Europe; (ii) UK & Ireland; and (iii) Asia.
Whilst reported revenue declined by 2.0%, primarily due to restructuring in the UK, underlying revenue grew by 2.5%.
Revenue Operating profit
Six months Six months
ended 31 October ended 31 October
-------------------- --------------------------------- ------------------------ -------
2018 2017 2017(5) Change 2018 2017 2017(5) Change
GBPm GBPm GBPm GBPm GBPm GBPm
Continental Europe 70.4 66.1 65.9 7% 20.7 22.5 22.6 -8%
UK & ROI 27.5 33.5 33.5 -18% 4.6 7.3 7.6 -37%
Asia 21.9 22.6 22.5 -3% 1.5 2.4 2.4 -37%
------ ------ -------- ------- ------ ------ -------- -------
Corporate costs (1.1) 0.6 0.3
------ ------ -------- ------- ------ ------ -------- -------
Total 119.8 122.2 121.9 -2% 25.7 32.8 32.9 -22%
-------------------- ------ ------ -------- ------- ------ ------ -------- -------
(5) For constant currency comparatives, average rates of exchange used were GBP/EUR 1.139 (H1 2018: 1.129), GBP/Yen 146.057 (H1 2018: 145.173)
Excluding the French commercial litigation outcome (H1 2018), the operating profit for Continental Europe is stable.
Excluding an exchange gain in H1 2018 (GBP0.9 million), the UK operating profit is down (-28%), due to large order lags in B2B and third-part sales activities which will be widely recovered in the second half.
Underlying Asian operating profit before restructuring is up 14.5% (H1 2019: GBP2.7 million compared with H1 2018: GBP2.4 million up 15%).
Vending units in operation
As at As at Change year
31 October 2018 31 October 2017 on year
------------------------- ------------------------- ------------
No of units % of total No of units % of total
Continental Europe 24,787 53% 24,229 51% +2%
UK & Republic of
Ireland 11,909 26% 12,951 27% -8%
Asia 10,037 21% 10,145 22% -1%
------------ ----------- ------------ ----------- ------------
46,733 100% 47,325 100% -1%
As at 31 October 2018, the Group's estate comprised 46,733 units, broadly flat compared with the same period last year due to several factors.
In Continental Europe, units in operation increased by 2%, reflecting continued Laundry expansion and the installation of photobooths.
In the UK & Republic of Ireland, the number of Revolution machines increased significantly whilst the overall number of units in operation decreased due to the removal of Speedlab kiosks related to the restructuring of Photo-Me Retail in H2 2018. These machines will be relocated to other geographies, and unprofitable photobooths and children's rides have also been removed and sold to third parties. This decline in units was partially offset by an increase in the installation of Revolution machines at highly profitable sites.
In Asia, operated units declined slightly compared with same period last year, due to the removal of certain unprofitable machines during the restructuring programme in Japan.
Continental Europe
Continental Europe remains our main revenue growth territory, up 7% compared with the same period last year, driven by the expansion of Laundry services. Excluding the favourable litigation outcome in H1 2018, operating profit was stable at GBP20.7 million in H1 2019 compared with GBP20.9 million in H1 2018. EBITDA was up 1%.
The Group remains in discussions with the French government regarding the extension of its secure photo ID transfer technology to include photo ID for new passports and identification cards. Advanced discussions continued with the Dutch government regarding deployment of this technology for use in driving licences in the Netherlands.
The Laundry business continued to perform well, including a first-time contribution from La Wash Group, which was acquired in May 2018 for a consideration of GBP4.75 million. Expansion of Revolution laundry operations in Portugal, France and Spain has continued and the Group continues to assess the German market.
At 31 October 2018, 53% of the Group's total units in operation were situated in Continental Europe (H1 2018: 51%).
UK & Republic of Ireland (including Corporate)
As expected, the restructuring of Photo-Me Retail in H2 2018 had a negative impact on revenue in this geography, which declined by GBP5.3 million. In addition, there was some impact on revenue from the removal of unprofitable children's rides in H1 2018.
Excluding the one-off operations (GBP3.3 million), operating profit was up 8.2%.
In this geography, the Group has successfully diversified its photobooth services with the roll out of secure digital upload technology for Irish Online Passport renewal and British Passport renewals. In total, 2,950 photobooths are now enabled for UK passport renewals with a target of 4,000 enabled photobooths by the end of December 2018.
The Group continues to increase its Laundry presence in the Republic of Ireland, with Laundry revenues now accounting for 75% of the country's total revenue (H1 2018: 70%). In the UK, the group continue to install Revolutions on very profitable sites (187 units).
At 31 October 2018, 26% of the Group's total units in operation were situated in the UK & Republic of Ireland (H1 2018: 27%).
Asia
Revenue in Asia reduced by 3%, which was a good performance given that the extent of the challenges in the Japanese market was not evident until H2 2018. The Board took swift action in H2 2018 to address the highly competitive market conditions. In line with the previously announced restructuring plan, administrative functions were streamlined, low revenue machines were relocated, and unprofitable units removed. The business has recovered faster than initially expected and is now performing well. Trading in the other countries in Asia remains strong.
Excluding the GBP1.2 million one-off restructuring cost incurred in H1 2019, operating profit increased by 14.5% to GBP2.7 million. In the second half, the Group will see the full benefit of this restructuring programme. In FY 2019, the total restructuring cost for Japan is expected to be between GBP1.5 to GBP2.0 million.
Whilst the photo identification market in Japan remains highly competitive, the Board continues to believe there are growth opportunities given Photo-Me's dominant market position in the country. As a result, the Group intends to commence the deployment of its new units which have a significantly lower production cost than the units deployed previously and will offer a 35% faster return on investment.
At 31 October 2018, 21% of the Group's total units in operation were situated in Asia (H1 2018: 22%).
Statement of Financial Position
Shareholders' equity as at 31 October 2018 totalled GBP133.2 million (30 April 2018: GBP143.3 million), equivalent to 35.3 pence (30 April 2018: 37.9 pence) per share.
The Group's net financial position remains strong, with a net cash balance of GBP32.4 million as at the 31 October 2018 (31 October 2017: GBP47.1 million, 30 April 2018: GBP26.7 million).
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 and so 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
Economic
Global economic conditions Economic growth has a The Group focuses on
major influence on consumer maintaining the characteristics
spending. A sustained and affordability of
period of economic recession its needs-driven products
could lead to a decrease
in consumer expenditure
in discretionary areas.
Volatility of foreign The majority of the Group's The Group hedges its
exchange rates revenue and profit is exposure to currency
generated outside the fluctuations on transactions,
UK, and the Group results as relevant. However,
could be adversely impacted by its nature, in the
by an increase in the Board's opinion, it
value of sterling relative is very difficult to
to those currencies. hedge against currency
fluctuations arising
from translation in
consolidation in a
cost-effective manner.
Regulations
Centralisation of In many European countries The Group has developed
production of ID where the Group operates, new systems that respond
photos if governments were to to this situation,
implement centralised leveraging 3D technology
image capture, for biometric in ID security standards,
passport and other applications and securely linking
or widen the acceptance our booths to the administration
of self-made or home-made repositories (solutions
photographs for official in place in France,
document applications, Ireland, Germany, Switzerland
the Group's revenues and and the UK, discussions
profits could be affected. in Belgium and Holland).
Furthermore, the Group
also ensures that its
ID products remain
affordable and of high
quality.
Brexit The UK's referendum decision The Board is keeping
to leave the EU ("Brexit") the potential impacts
will most probably lead of the referendum decision
to changes in regulations to leave the EU on
in the UK as well as modifications all the Group's operations
to numerous arrangements under review.
between the UK and other
members of the EU, affecting Any potential developments,
trade and customs conditions, including new information
taxation, movements of and policy indications
resources, etc. from the UK government
and the EU, will be
looked at carefully
on a continual basis
with a view to enhancing
the ability to take
appropriate action
targeted at managing
and where possible
minimising any adverse
repercussions of Brexit.
The specific impact
of Brexit on the Group
will depend on the
details of the conditions
of the break-up to
be negotiated between
the UK and the European
Union.
The Board foresees
that in the short term
the negative impact
of the uncertainty
overshadowing the general
UK economy could also
spill over into the
Group's UK operations.
In the long term, potential
're-nationalisation'
of UK identity documents
(including the conversion
of the EU burgundy
passports to the navy
blue British version)
as well as strengthened
immigration regulations,
could lead to increased
requests for the Group's
secure identification
products.
Business rates Since early 2015, the The Company has engaged
Valuation Office Authority advisers to reduce
has been issuing significantly its exposure to business
increased assessments rates. The Company
for some of the Company's has received advice
estate, mainly photobooths that the vast majority
and printing kiosks, and of the affected estate
in some instances applying should not be subject
rates that the Company to business rates,
considers unreasonable. and therefore it has
The census campaign led systematically appealed
by the Government is part before the Valuation
of the well-publicised Tribunal the assessments
strategy to systematically received, while negotiating
increase the amount of with the authorities
tax collected through to reduce that exposure.
business rates. The business The Company believes
tax risk is limited to that following the
the Company's operations latest decision by
in the UK. The Company the Upper Tribunal
has expensed the cost on 12 April 2017 in
of the tax charge as reasonably the ATM case, the risk
estimated. should be capable of
successful mitigation.
Discussions are ongoing
with the Valuation
Office Agency on this
matter.
Strategic
Identification of Failure to identify new Management teams constantly
new business opportunities business areas may impact review demand in existing
the ability of the Group markets and potential
to grow in the long term. new opportunities.
The Group continues
to invest in research
in new products and
technologies.
Inability to deliver The realisation of long-term The Group regularly
anticipated benefits anticipated benefits monitors the performance
from the launch of depends mainly upon the of its entire estate
new products continued growth of the of machines. New technology
laundry business and enabled secure
the successful development ID solutions are heavily
of integrated secure trialled before launch
ID solutions. and the performance
of operating machines
is continually monitored.
Market
Commercial relationships The Group has well-established The Group's major key
long-term relationships relationships are supported
with a number of site-owners. by medium-term contracts.
The deterioration in the We actively manage
relationship with, or our site-owner relationships
ultimately the loss of, at all levels to ensure
a key account would have a high quality of service.
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 1% of Group
turnover.
To maintain its performance The Group continues
the Group needs to have to monitor the situation
the ability to continue in both the French
trading in good conditions and UK markets.
in France and the UK,
taking into account the
situation in these two
countries.
Operational
Reliance on foreign The Group sources most Extensive research
manufacturers of its products from outside is conducted into quality
the UK. Consequently, and ethics before the
the Group is subject to Group procures products
risks associated with from any new country
international trade. 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 The Group currently buys The Board has decided
supplier of consumables all its paper for photobooths to hold a strategic
from one single supplier. stock of paper, allowing
The failure of this supplier for 6 to 10 months'
could have a significant worth of paper consumption,
adverse impact on paper to allow enough time
procurement. to put in place alternative
solutions.
Reputation The Group's brands are The protection of the
key assets of the business. Group's brands in its
Failure to protect the core markets is sustained
Group's reputation and by products with certain
brands could lead to a unique features. The
loss of trust and confidence. appearance of the machine
This could result in a is subject to high
decline in the customer maintenance standards.
base. Furthermore, the reputational
risk is diluted as
the Group also operates
under a range of brands.
Product and service The Board recognises that The Group continues
quality the quality and safety to invest in its existing
of both its products and estate, to ensure that
services is of critical it remains contemporary,
importance and that any and in constant product
major failure will affect innovation to meet
consumer confidence. customer needs. The
Group also has a programme
in place to regularly
train its technicians.
Technological
Failure to keep up The Group operates in The Group mitigates
with advances in fields where upgrades this risk by continually
technology to new technologies are focusing on R&D.
mission-critical.
Cyber risk: third The Group operates an The Group performs
party attack on our increasing number of an ongoing assessment
secure ID data transfer photobooths capturing of the risks and ensures
feeds ID data and transferring that the infrastructure
these data it directly meets the security
to governmental databases requirements.
GROUP CONDENSED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 October 2018
Unaudited Unaudited Audited
6 months to 6 months Year to
31 October to 31 October 30 April
2018 2017 2018
Total Total Total
Notes GBP '000 GBP '000 GBP '000
----------------------------------- ----- ------------ --------------- ---------
Revenue 3 119,761 122,228 229,814
Cost of Sales (84,587) (84,387) (168,070)
----------------------------------- ----- ------------ --------------- ---------
Gross Profit 35,174 37,841 61,744
Other Operating Income 788 748 1,686
Administrative Expenses (10,309) (5,822) (17,518)
Share of Post-Tax Profits
from Associates 30 136 194
----------------------------------- ----- ------------ --------------- ---------
Operating Profit 3 25,683 32,903 46,106
----------------------------------- ----- ------------ --------------- ---------
Analysed as:
Operating profit before specific
items 26,890 31,504 46,416
Profit on sale of land & buildings - 2,320 2,320
Restructuring costs (1,207) (921) (2,630)
Operating profit after specific
items 25,683 32,903 46,106
----------------------------------- ----- ------------ --------------- ---------
Other net gains 3 560 - 3,708
Finance Revenue 10 126 658
Finance Cost (238) (147) (297)
----------------------------------- ----- ------------ --------------- ---------
Profit before Tax 3 26,015 32,882 50,175
Total Tax Charge 4 (5,808) (8,589) (9,889)
----------------------------------- ----- ------------ --------------- ---------
Profit for the year 20,207 24,293 40,286
----------------------------------- ----- ------------ --------------- ---------
GROUP CONDENSED STATEMENT OF COMPREHENSIVE INCOME (continued)
for the six months ended 31 October 2018
Unaudited Unaudited Audited
6 months to 6 months Year to
31 October to 31 October 30 April
2018 2017 2018
----------------------------------------- ------------ --------------- ---------
Other Comprehensive Income
----------------------------------------- ------------ --------------- ---------
Items that are or may subsequently
be classified to Profit and Loss:
Exchange Differences Arising on
Translation of Foreign Operations 1,482 629 16
Taxation on exchange differences (11) (2) (12)
----------------------------------------- ------------ --------------- ---------
Total Items that are or may subsequently
be classified to profit and loss 1,471 627 4
----------------------------------------- ------------ --------------- ---------
Items that will not be classified
to profit and loss:
Remeasurement (losses)/gains in
defined benefit obligations and
other post-employment benefit
obligations - - 150
Deferred tax on remeasurement
(losses)/gains - - (23)
----------------------------------------- ------------ --------------- ---------
Total Items that will not be classified
to Profit and Loss - - 127
----------------------------------------- ------------ --------------- ---------
Other comprehensive income for
the year net of tax 1,471 627 131
----------------------------------------- ------------ --------------- ---------
Total Comprehensive Income for
the Year 21,678 24,920 40,417
----------------------------------------- ------------ --------------- ---------
Profit for the Year Attributable
to:
Owners of the Parent 20,140 24,216 40,134
Non-controlling interests 67 77 152
----------------------------------------- ------------ --------------- ---------
20,207 24,293 40,286
----------------------------------------- ------------ --------------- ---------
Total comprehensive income attributable
to:
Owners of the Parent 21,593 24,784 40,205
Non-controlling interests 85 136 212
----------------------------------------- ------------ --------------- ---------
21,678 24,920 40,417
----------------------------------------- ------------ --------------- ---------
Earnings per Share
----------------------------------------- ------------ --------------- ---------
Basic Earnings per Share 6 5.33p 6.43p 10.64p
Diluted Earnings per Share 6 5.33p 6.40p 10.60p
----------------------------------------- ------------ --------------- ---------
All results derive from continuing operations.
The accompanying notes form an integral part of these condensed consolidated financial statements.
GROUP CONDENSED STATEMENT OF FINANCIAL POSITION
as at 31 October 2018
Unaudited Unaudited Audited
31 October 31 October 30 April
2018 2017 2018
Notes GBP'000 GBP'000 GBP'000
------------------------------------ ----- ---------- ---------- --------
Assets
Non-current assets
Goodwill 7 17,962 13,415 13,435
Other intangible assets 7 13,815 14,030 13,960
Property, plant & equipment 7 93,895 81,223 92,556
Investment property 7 676 684 676
Investment in - associates 429 1,927 1,583
Financial instruments held at
FVTPL 1,623 - -
Financial assets held at amortised
cost 982 - -
Other financial assets - held
to maturity 8 - 1,829 1,710
Other financial assets - available
for sale - 219 4,286
Deferred tax assets 1,706 3,670 1,935
Trade and other receivables 2,188 2,061 2,116
------------------------------------ ----- ---------- ---------- --------
133,276 119,058 132,257
------------------------------------ ----- ---------- ---------- --------
Current assets
Inventories 20,355 22,684 22,902
Trade and other receivables 16,809 22,765 20,613
Current tax - 3,691 4,480
Cash and cash equivalents 8 88,573 63,123 58,657
------------------------------------ ----- ---------- ---------- --------
125,737 112,263 106,652
------------------------------------ ----- ---------- ---------- --------
Total assets 259,013 231,321 238,909
------------------------------------ ----- ---------- ---------- --------
Equity
Share capital 1,888 1,884 1,887
Share premium 10,499 9,384 10,366
Translation and other reserves 14,646 13,817 13,193
Retained earnings 106,175 101,701 117,811
------------------------------------ ----- ---------- ---------- --------
Equity attributable to owners
of the Parent 133,208 126,786 143,257
Non-controlling interests 1,638 1,477 1,553
------------------------------------ ----- ---------- ---------- --------
Total equity 134,846 128,263 144,810
------------------------------------ ----- ---------- ---------- --------
Liabilities
Non-current liabilities
Financial liabilities 8 45,620 14,248 27,540
Post-employment benefit obligations 5,523 5,478 5,524
Deferred tax liabilities 2,741 3,729 2,671
Trade and other payables - 1,725 224
------------------------------------ ----- ---------- ---------- --------
53,884 25,180 35,959
------------------------------------ ----- ---------- ---------- --------
Current liabilities
Financial liabilities 8 11,518 3,620 6,139
Provisions 92 601 196
Current tax 4,708 10,634 8,307
Trade and other payables 53,965 63,023 43,498
------------------------------------ ----- ---------- ---------- --------
70,283 77,878 58,140
------------------------------------ ----- ---------- ---------- --------
Total equity and liabilities 259,013 231,321 238,909
------------------------------------ ----- ---------- ---------- --------
The accompanying notes form an integral part of these condensed consolidated financial statements.
GROUP CONDENSED STATEMENT OF CASH FLOWS
for the six months ended 31 October 2018
Unaudited Unaudited Audited
6 months 6 months Year to
to to
31 October 31 October 30 April
2018 2017 2018
Notes GBP'000 GBP'000 GBP'000
--------------------------------------------- ------ ---------- ---------- --------
Cash flow from operating activities
Profit before tax 26,015 32,882 50,175
Finance cost 238 147 297
Finance revenue (10) (126) (658)
Other gains (560) - (3,708)
----------------------------------------------------- ---------- ---------- --------
Operating profit 25,683 32,903 46,106
Share of post tax profit from associates (30) (136) (194)
Amortisation of intangible assets 1,372 1,267 2,768
Depreciation of property, plant and
equipment 12,059 10,698 22,301
Profit on sale of property, plant and
equipment 8 (2,195) (2,361)
Exchange differences 508 (689) (836)
Other items (90) (34) (318)
Changes in working capital:
Inventories 2,910 (2,376) (2,613)
Trade and other receivables 2,714 (3,033) (927)
Trade and other payables (8,756) 5,070 (1,064)
Provisions (267) (1,579) (1,905)
----------------------------------------------------- ---------- ---------- --------
Cash generated from operations 36,111 39,896 60,957
Interest paid (238) (147) (297)
Taxation paid (4,808) (4,948) (8,318)
----------------------------------------------------- ---------- ---------- --------
Net cash generated from operating activities 31,065 34,801 52,342
----------------------------------------------------- ---------- ---------- --------
Cash flows from investing activities
Acquisition of subsidiaries net of cash
acquired (4,019) (1,354) (1,398)
Payment of deferred consideration (225) - -
Cash received on disposal of associate 4,437 - -
Repayment of loans advanced to associate 1,612 - -
Investment in intangible assets (1,314) (1,581) (3,218)
Proceeds from sale of intangible assets 1 - 201
Purchase of property, plant and equipment (12,811) (15,722) (40,378)
Proceeds from sale of property, plant
and equipment 770 2,799 4,689
Purchase of available for sale investments - (134) (134)
Dividends received from investments
held at FVTPL - - 285
Interest received 10 126 144
Dividends received from associates 12 304 304
----------------------------------------------------- ---------- ---------- --------
Net cash generated from investing activities (11,527) (15,562) (39,505)
----------------------------------------------------- ---------- ---------- --------
GROUP CONDENSED STATEMENT OF CASH FLOWS (continued)
for the six months ended 31 October 2018
Unaudited Unaudited Audited
6 months 6 months
to to Year to
31 October 31 October 30 April
2018 2017 2018
Notes GBP'000 GBP'000 GBP'000
Cash flows from financing activities
Issue of Ordinary shares to equity
shareholders 134 387 1,372
Repayment of borrowings (3,617) (1,961) (3,695)
Repayment of capital element of finance
leases (86) (87) (118)
Increase in borrowings 26,679 8,795 26,382
Decrease in assets held to maturity 719 573 687
Dividends paid to owners of the Parent (14,005) (11,633) (26,478)
Net cash utilised in financing activities 9,824 (3,926) (1,850)
------------------------------------------- ----- ---------- ---------- --------
Net increase in cash and cash equivalents 29,362 15,313 10,987
Cash and cash equivalents at beginning
of year 58,657 47,505 47,505
Exchange loss on cash and cash equivalents 554 305 165
------------------------------------------- ----- ---------- ---------- --------
Cash and cash equivalents at end
of year 8 88,573 63,123 58,657
------------------------------------------- ----- ---------- ---------- --------
The accompanying notes form an integral part of these condensed consolidated financial statements
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 October 2018
Attributable
to owners
Share Share Other Translation Retained of the Non-controlling
capital premium reserves reserve earnings Parent interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
At 1 May 2017 1,882 8,999 1,781 11,468 103,831 127,961 1,341 129,302
Profit for year - - - - 24,216 24,216 77 24,293
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
Other comprehensive
income/(expense)
Exchange differences - - - 570 - 570 59 629
Tax on exchange - - - (2) - (2) - (2)
Translation reserve
taken to income
statement
on disposal of
subsidiaries - - - - - - - -
Transfers between
reserves - - - - - - - -
Remeasurement gains
in defined benefit
pension scheme and
other post-employment
benefit obligations - - - - - - - -
Deferred tax on
remeasurement
gains - - - - - - - -
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
Total other
comprehensive
income/(expense) - - - 568 - 568 59 627
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
Total comprehensive
income/(expense) - - - 568 24,216 24,784 136 24,920 --------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------- Transactions with owners of the Parent Share options exercised in the period 2 385 - - - 387 - 387 Share options - - - - 132 132 - 132 Dividends - - - - (26,478) (26,478) - (26,478) --------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------- Total transactions with the Parent 2 385 - - (26,346) (25,959) - (25,959) --------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------- At 31 October 2017 1,884 9,384 1,781 12,036 101,701 126,786 1,477 128,263 --------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY (continued)
for the six months ended 31 October 2018
Attributable
to owners
Share Share Other Translation Retained of the Non-controlling
capital premium reserves reserve earnings Parent interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
At 1 May 2017 1,882 8,999 1,781 11,468 103,831 127,961 1,341 129,302
Profit for year - - - - 40,134 40,134 152 40,286
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
Other comprehensive
income/(expense)
Exchange differences - - - 158 - 158 60 218
Tax on exchange - - - (12) - (12) - (12)
Translation reserve
taken to income
statement
on disposal of
subsidiaries - - - (202) - (202) - (202)
Transfers between
reserves - - - - - - - -
Remeasurement gains
in defined benefit
pension scheme and
other
post-employment
benefit obligations - - - - 150 150 - 150
Deferred tax on
remeasurement
gains - - - - (23) (23) - (23)
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
Total other
comprehensive
(expense)/income - - - (56) 127 71 60 131
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
Total comprehensive
(expense)/income - - - (56) 40,261 40,205 212 40,417
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
Share options
exercised
in the year 5 1,367 - - - 1,372 - 1,372
Share options - - - - 197 197 - 197
Deferred tax on share
options - - - - - - - -
Dividends - - - - (26,478) (26,478) - (26,478)
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
Total transactions
with the Parent 5 1,367 - - (26,281) (24,909) - (24,909)
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
At 30 April 2018 1,887 10,366 1,781 11,412 117,811 143,257 1,553 144,810
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY (continued)
for the six months ended 31 October 2018 continued
Attributable
to owners
Share Share Other Translation Retained of the Non-controlling
capital premium reserves reserve earnings Parent interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
At 1 May 2018 1,887 10,366 1,781 11,412 117,811 143,257 1,553 144,810
Profit for year - - - - 20,140 20,140 67 20,207
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
Other comprehensive
income/(expense)
Exchange differences - - - 1,464 - 1,464 18 1,482
Tax on exchange - - - (11) - (11) - (11)
Total other
comprehensive
income/(expense) - - - 1,453 - 1,453 18 1,471
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
Total comprehensive
income/(expense) - - - 1,453 20,140 21,593 85 21,678
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
Transactions with
owners of the Parent
Share options
exercised
in the period 1 133 - - - 134 - 134
Share options - - - - 85 85 - 85
Dividends - - - - (31,861) (31,861) - (31,861)
--------------------- -------- -------- --------- ------------ --------------- ---------
Total transactions
with the Parent 1 133 - - (31,776) (31,642) - (31,642)
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
At 31 October 2018 1,888 10,499 1,781 12,865 106,175 133,208 1,638 134,846
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
The accompanying notes form an integral part of these condensed consolidated financial statements.
1. Corporate information
The condensed consolidated interim financial statements of Photo-Me International plc (the "Company") for the six months ended 31 October 2018 ("the Interim Report") were approved and authorised for issue by the Board of Directors on 7 December 2018. These condensed consolidated interim financial statements comprise the Company and its subsidiaries (together the "Group") and are presented in pounds sterling, rounded to the nearest thousand.
The Company is a public limited company, incorporated and domiciled in England, whose shares are quoted on the London Stock Exchange, under symbol PHTM. Its registered number is 735438 and its registered office is at Unit 3B, Blenheim Rd, Epsom, KT19 9AP, Surrey.
Photo-Me's principal activity is the operation of non-food, unattended vending equipment aimed primarily at the consumer market. The largest part of the estate comprises photobooths and digital printing kiosks, with the remainder including laundry units, amusement machines and business service equipment. The Group manages these on a geographical basis with the principal operations of the Group in the United Kingdom and Ireland, Continental Europe, and Asia.
2. Basis of preparation and accounting policies
This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU. As required by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, the condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 30 April 2018. The condensed consolidated interim financial statements comprise the unaudited financial information for the six months ended 31 October 2018 and 31 October 2017, together with the audited results to 30 April 2018. They do not include all of the information and disclosures required for full annual financial statements, and should be read in conjunction with the Group's financial statements for the year ended 30 April 2018. The condensed financial statements do not constitute statutory accounts within the meaning of section 434 of the UK Companies Act 2006.
The consolidated financial statements of the Group as at and for the year ended 30 April 2018 are available at www.photo-me.com or upon request from the Company's registered office at Unit 3B, Blenheim Rd, Epsom, KT19 9AP, Surrey.
The Interim Report is unaudited but has been reviewed by the auditors and their report to the Company is included in the Interim Report. The comparative figures for the financial year ended 30 April 2018 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors (i) was unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
Accounting policies and estimates
The accounting policies applied by the Group in this Interim Report are the same as those applied in the Group's financial statements for the year ended 30 April 2018, except as indicated below.
New standards adopted in the period:
The Group has implemented, for the first time IFRS 9: Financial Instruments and IFRS 15: Revenue from Contracts with Customers for the financial year beginning on 1 May 2018. Neither standard had a material impact on the Group's financial position or performance, therefore no restatement of the comparative figures has been required.
IFRS 9 - Financial Instruments
IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments: Recognition and Measurement for annual periods beginning on or after 1 January 2018, bringing together all three aspects of the accounting for financial instruments: classification and measurement; impairment; and hedge accounting.
Changes to the classification of financial assets on transition is shown in note 12.
Changes in accounting policies resulting from the adoption of IFRS 9 will generally be applied retrospectively, except as described below:
The Group has taken advantage of the exemption allowing it not to restate comparative information for prior periods with respect to classification and measurement (including impairment) changes. Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of IFRS 9 will generally be recognised in retained earnings and reserves as at 1 May 2018.
The following assessments have to be made on the basis of the facts and circumstances that exist at the date of initial application.
-- The determination of the business model within which a financial asset is held.
-- The designation and revocation of previous designations of certain financial assets and financial liabilities as measured at FVTPL.
-- The designation of certain investments in equity instruments not held for trading as at FVOCI.
IFRS 15 Revenue from contracts with Customers
IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.
The Group has adopted IFRS 15 using the cumulative effect method, with the effect of initially applying this standard recognised at the date of initial application (i.e. 1 May 2018). As a result, the Group will not apply the requirements of IFRS 15 to the comparative period presented.
There are a number of new and revised standards and interpretations, not all of which are applicable to the Group, which have been issued and are effective for the year 2019 and future reporting periods. The most significant standards and interpretations which are likely to have a more material impact on the Group's financial statements were listed in the Group's 2018 Annual Report. The effect of adopting new standards for the 2019 year end has not had a material impact on this Interim Report. Accordingly, not transition note is included.
Significant new standards not yet effective
In January 2016 the IASB issued IFRS16 Leases which is effective for annual reporting periods beginning on or after 1 January 2019. Under this standard all leases, both finance and operating will be included on the balance sheet. The Group is currently studying the impact of IFRS 16 on its operating leases, implementing software systems and examining the extent to which commission arrangements meet the definition of a lease under IFRS 16.
Estimates and significant judgements
The preparation of the condensed consolidated financial information requires management to make estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and the disclosure of contingent liabilities at the date of the condensed consolidated financial information. Such estimates and assumptions are based on historical experience and various other factors that are believed to be reasonable in the circumstances and constitute management's best judgement at the date of the financial statements. In future, actual experience may deviate from these estimates and assumptions, which could affect the financial statements as the original estimates and assumptions are modified, as appropriate, in the period in which the circumstances change.
In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were in the same areas as those that applied in the consolidated financial statements as at and for the year ended 30 April 2018.
Use of non-GAAP profit measures
The Group measures performance using earnings before interest, tax, depreciation and amortisation ("EBITDA"). EBITDA is a common measure used by a number of companies, but is not defined in IFRS.
The Group measures cash on a net cash basis as explained in note 8.
The directors consider it necessary to present certain large and unusual items (Specific items) separately in the income statement in order to show the long-term performance trend of the group more clearly. The presentation of Specific items, as described above is also a non-GAAP measure.
For those years where Specific items are shown in the Group statement of Comprehensive Income an alternative earnings per share is shown in the earnings per share note. Alternative earnings per share and alternative diluted earning per share are shown and are calculated on earnings available to Ordinary shareholders excluding Specific items.
Underlying results are reported results adjusted to exclude the effect of Specific items.
Risks and uncertainties and cautionary statement regarding forward looking statements
The principal risks and uncertainties affecting the business activities of the Group are set out in the "Risks and Uncertainties" section of the Interim Management Report, contained within this Interim Report. The cautionary statement regarding forward looking statements is shown below.
Going Concern
The Annual Report for the year ended 30 April 2018 provided a full description of the Group's business activities, its financial position, cash flows, funding position and available facilities together with the factors likely to affect its future development, performance and position. It also detailed risks associated with the Group's business. This interim report provides updated information on these subjects for the six months to 31 October 2018.
The Group has at the date of this Interim Report, sufficient financing available for its estimated requirements for at least the next twelve months. Together with the proven ability to generate cash from its trading performance, this provides the Directors with confidence that the Group is well placed to manage its business risks successfully in the context of the current financial conditions and the general outlook in the global economy.
After reviewing the Group's annual budgets, plans and financing arrangements, the Directors consider that the Group has adequate resources to continue operating for the foreseeable future and that it is therefore appropriate to continue to adopt the going concern basis in preparing this Interim Report.
3. Segmental analysis
IFRS8 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 monitors performance at the adjusted operating profit level before special 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.
Seasonality of operations
Historically, the first half of the financial year is seasonally the strongest for the Group in terms of profits, and this is expected to be the case again for the current year ending 30 April 2019.
United
Kingdom Corporate
Asia Europe & Ireland costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------- -------- ---------- --------- ---------
Six months to 31 October
2018
Total revenue 21,861 73,292 28,432 - 123,585
Inter segment sales - (2,868) (956) - (3,824)
------------------------------ -------- -------- ---------- --------- ---------
Revenue from external
customers 21,861 70,424 27,476 - 119,761
------------------------------ -------- -------- ---------- --------- ---------
EBITDA 3,879 28,401 7,600 (796) 39,084
------------------------------ -------- -------- ---------- --------- ---------
Depreciation and amortisation (2,354) (7,733) (3,067) (277) (13,431)
------------------------------ -------- -------- ---------- --------- ---------
Underlying operating
profit 2,732 20,668 4,533 (1,073) 26,860
------------------------------ -------- -------- ---------- --------- ---------
Specific items (1,207) - - - (1,207)
------------------------------ -------- -------- ---------- --------- ---------
Operating profit excluding
associates 1,525 20,668 4,533 (1,073) 25,653
Share of post tax profits
from associates 30
------------------------------ -------- -------- ---------- --------- ---------
Operating profit 25,683
Other gains 560
Finance Revenue 10
Finance costs (238)
------------------------------ -------- -------- ---------- --------- ---------
Profit before tax 26,015
Tax (5,808)
Profit for year 20,207
------------------------------ -------- -------- ---------- --------- ---------
Capital expenditure 1,166 9,651 3,206 206 14,229
------------------------------ -------- -------- ---------- --------- ---------
Specific items
Operating profit UK & Ireland Segment in the period to 31 October 2018 includes restructuring costs of GBP1,207,000 relating to the Group's Japanese operations.
Other net gains of GBP560,000 in the period to 31 October 2018 includes the gain of GBP3,223,000 on the disposal of Stilla Technologies SA, previously accounted for as an associate, and the mark to market loss of GBP2,663,000 arising on the fair valuation of Max Sight Holdings Limited at reporting date.
United
Kingdom Corporate
Asia Europe & Ireland costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------- -------- ---------- --------- ---------
Six months to 31 October
2017
Total revenue 22,609 71,578 33,669 - 127,856
Inter segment sales (3) (5,423) (202) - (5,628)
------------------------------ -------- -------- ---------- --------- ---------
Revenue from external
customers 22,606 66,155 33,467 - 122,228
------------------------------ -------- -------- ---------- --------- ---------
EBITDA 4,707 29,152 10,097 776 44,732
------------------------------ -------- -------- ---------- --------- ---------
Depreciation and amortisation (2,323) (6,671) (2,804) (167) (11,965)
------------------------------ -------- -------- ---------- --------- ---------
Operating profit 2,384 22,481 7,293 609 32,767
------------------------------ -------- -------- ---------- --------- ---------
Specific items - - - - -
------------------------------ -------- -------- ---------- --------- ---------
Operating profit excluding
associates 2,384 22,481 7,293 609 32,767
Share of post tax profits
from associates 136
------------------------------ -------- -------- ---------- --------- ---------
Operating profit 32,903
Other gains -
Finance Revenue 126
Finance costs (147)
------------------------------ -------- -------- ---------- --------- ---------
Profit before tax 32,882
Tax (8,589)
Profit for year 24,293
------------------------------ -------- -------- ---------- --------- ---------
Capital expenditure 3,499 10,100 3,426 327 17,352
------------------------------ -------- -------- ---------- --------- ---------
Specific items
Operating profit UK & Ireland Segment in the period to 31 October 2017 includes restructuring costs of GBP921,000 relating to the Photo-Me Retail Limited business unit and in Corporate, a profit of GBP2,320,000 arising on the disposal of the former head office building in Bookham.
United
Kingdom Corporate
Asia Europe & Ireland costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------- --------- ---------- --------- ---------
Year ended 30 April 2018
Total revenue 44,979 131,064 65,432 - 241,475
Inter segment sales (6) (9,930) (1,725) - (11,661)
------------------------------ -------- --------- ---------- --------- ---------
Revenue from external
customers 44,973 121,134 63,707 - 229,814
------------------------------ -------- --------- ---------- --------- ---------
EBITDA 10,289 45,967 16,194 (1,469) 70,981
------------------------------ -------- --------- ---------- --------- ---------
Depreciation and amortisation (4,879) (14,027) (5,794) (369) (25,069)
------------------------------ -------- --------- ---------- --------- ---------
Underlying operating
profit 5,410 31,940 13,030 (4,158) 46,222
------------------------------ -------- --------- ---------- --------- ---------
Specific items - - (2,630) 2,320 (310)
------------------------------ -------- --------- ---------- --------- ---------
Operating profit excluding
associates 5,410 31,940 10,400 (1,838) 45,912
Share of post tax profits
from associates 194
------------------------------ -------- --------- ---------- --------- ---------
Operating profit 46,106
Other gains 3,708
Finance Revenue 658
Finance costs (297)
------------------------------ -------- --------- ---------- --------- ---------
Profit before tax 50,175
Tax (9,889)
Profit for year 40,286
------------------------------ -------- --------- ---------- --------- ---------
Capital expenditure 5,248 26,429 11,410 590 43,677
------------------------------ -------- --------- ---------- --------- ---------
Specific items
Operating profit UK & Ireland Segment in the period to 30 April 2018 includes restructuring costs of GBP2,630,000 relating to the Photo-Me Retail Limited business unit and in Corporate, a profit of GBP2,320,000 arising on the disposal of the former head office building in Bookham.
Other net gains of GBP3,708,000 in the year to 30 April 2018 includes the gain on the deemed disposal of the Group's interest in Max Sight Limited and Fullwise Limited.
4. Taxation
6 months 6 months
to 31 October to 31 October Year to 30
2018 2017 April 2018
GBP '000 GBP '000 GBP '000
Profit before tax 26,015 32,882 50,175
Total taxation charge (5,808) (8,589) (9,889)
-------------------------- -------------- -------------- -----------
Effective tax rate 22.3% 26.1% 19.7%
-------------------------- -------------- -------------- -----------
Of which:
Tax on underlying profit (5,528) (8,414) (9,389)
Tax on Specific items (280) (175) (500)
-------------------------- -------------- -------------- -----------
(5,808) (8,589) (9,889)
------------------------- -------------- -------------- -----------
The tax charge in the Group Income Statement is based on management's best estimate of the full year effective tax rate based on expected full year profits to 30 April 2019.
The UK 2016 Finance Act was enacted in September 2016 and confirmed the basic rate of UK Corporation tax at 19% for the financial years 2018 and 2019 and 17% for the financial year 2020.
5. Dividends
Dividends paid and proposed
31 October 31 October
2018 2017 30 April 2018
------------------- ------------------- -------------------
pence pence pence
per share GBP'000 per share GBP'000 per share GBP'000
----------------------------- ---------- ------- ---------- ------- ---------- -------
Interim
2018 paid on 11 May 2018 3.71 14,005
2017 paid on 11 May 2017 3.09 11,633 3.09 11,633
Final
2018 approved at AGM held on
24 October 2018 4.73 17,856
2017 approved at AGM held on
25 October 2017 3.94 14,845 3.94 14,845
8.44 31,861 7.03 26,478 7.03 26,478
----------------------------- ---------- ------- ---------- ------- ---------- -------
Period ending 31 October 2018
The Board declared an interim dividend of 3.71p per share for the year ending 30 April 2018, paid on 11 May 2018 to shareholders on the register on 6 April 2018. The Board proposed a final dividend of 4.73p per share for the year ending 30 April 2018 which was approved by shareholders at the Annual General Meeting held on 24 October 2018 and paid on 9 November 2018.
Period ending 31 October 2017
The Board declared an interim dividend of 3.09p per share for the six months ended 31 October 2017, which was paid to shareholders on 11 May 2018.
The Board proposed a final dividend of 3.94p per share for the year ended 30 April 2018 which was approved by shareholders at the Annual General Meeting held on 25 October 2017. Accordingly the amount is included in dividends in transactions with owners of the parent in the Group Statement of Changes in Equity and in current liabilities - trade and other payables in the Group Statement of Financial Position. The final dividend was paid on 10 November 2017.
Financial year ended 30 April 2018
The Board declared an interim dividend of 3.09p per share for the six months ended 31 October 2017, which was paid to shareholders on 11 May 2018.
The Board proposed a final dividend of 3.94p per share for the year ended 30 April 2018 which was approved by shareholders at the Annual General Meeting held on 25 October 2017 and paid on 10 November 2017.
6. Earnings per share
The earnings and weighted average number of shares used in the calculation of earnings per share are set out in the table below:
Six months Six months Year
to 31 October to 31 October to 30 April
2018 2017 2018
------------------------------------- ------------- ------------- -----------
Basic earnings per share 5.33p 6.43p 10.64p
Diluted earnings per share 5.33p 6.40p 10.60p
------------------------------------- ------------- ------------- -----------
Earnings available to shareholders
(GBP'000) 20,140 24,216 40,134
Weighted average number of shares in
issue in the period
- basic ('000) 377,563 376,572 377,190
- including dilutive share options
('000) 378,017 378,160 378,745
------------------------------------- ------------- ------------- -----------
Alternative earnings per share
Management assess the performance of the Group using a variety of performance measures. Internally management reviews the Group's performance on an "adjusted basis", that is to say taking into accounts "other items". The Group's income statement and segmental analysis show operating profit before and after other items. The presentation and use of other items are a non-GAAP measure and the use of this measure may not be comparable to similarly titled measures used by other companies. Other items are those that in management's judgement need to be disclosed separately by virtue of their size, nature and or incidence. Management determines whether an item is classified as other and warrants separate disclosure by considering both qualitative and quantitative factors, such as the nature, frequency and predictability of occurrence. This is consistent with the way operating performance is presented and reported to management.
The directors believe that the presentation of the Group's results in this way is relevant to an understanding of the Group's performance, as other items are identified by their size, nature or incidence.
6. Earnings per share (continued)
The impact of other items on operating profit is detailed in note 3, segment analysis.
Consistent with the above, management also calculate earnings per share (EPS) and diluted earnings per share (DPS). Management uses this as one factor in determining dividend policy.
The tables below reconcile EPS and DPS before and after other items. Details of Specific items are shown in note 3.
Alternative earnings per share
GBP'000 EPS pence DPS pence
--------------------------------------------- ------- --------- ---------
October 2018
Earnings available to shareholders (GBP'000) 20,140 5.33 5.33
Specific items net of tax 927 0.25 0.25
Other gains (560) (0.15) (0.15)
--------------------------------------------- ------- --------- ---------
Earnings after specific items 20,507 5.43 5.43
--------------------------------------------- ------- --------- ---------
October 2017
Earnings available to shareholders (GBP'000) 24,216 6.43 6.40
Specific items net of tax (745) (0.20) (0.20)
--------------------------------------------- ------- --------- ---------
Earnings after specific items 23,471 6.23 6.20
--------------------------------------------- ------- --------- ---------
April 2018
Earnings available to shareholders (GBP'000) 40,134 10.64 10.60
Specific items net of tax (190) (0.05) (0.05)
Gain on financial assets classified as
available for sale (3,708) (0.98) (0.98)
--------------------------------------------- ------- --------- ---------
Earnings after specific items 36,236 9.61 9.57
--------------------------------------------- ------- --------- ---------
7. Non-current assets - intangibles, property, plant and equipment and investment property
Property,
Other Intangible plant & Investment
Goodwill assets equipment property
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------- ---------------- ---------- ----------
Net book value at 1 May 2017 11,812 13,451 74,989 662
Exchange adjustment 87 265 1,633 30
Additions
- photobooths & vending machines - - 13,469 -
- research & development - 1,265 - -
- other additions - 316 2,302 -
New subsidiaries -net book value 1,516 - 28 -
Transfers - - - -
Depreciation provided in the
period - (1,267) (10,690) (8)
Net book value of disposals - 0 (508) -
--------------------------------- -------- ---------------- ---------- ----------
Net book value at 31 October
2017 13,415 14,030 81,223 684
--------------------------------- -------- ---------------- ---------- ----------
Net book value at 1 May 2017 11,812 13,451 74,989 662
Exchange adjustment 69 260 1,596 30 Additions - photobooths & vending machines - - 35,588 - - research & development - 2,510 - - - other additions - 708 4,871 - New subsidiaries- net book value 1,554 - 29 - Transfers - - - - Depreciation provided in the period - (2,768) (22,285) (16) Transfer to asset sheld for sale - - - - Net book value of disposals - (201) (2,232) - --------------------------------- -------- ---------------- ---------- ---------- Net book value at 30 April 2018 13,435 13,960 92,556 676 --------------------------------- -------- ---------------- ---------- ---------- Net book value at 1 May 2018 13,435 13,960 92,556 676 Exchange adjustment 117 160 1,167 8 Additions - photobooths & vending machines - - 11,345 - - research & development - 1,061 - - - other additions - 253 1,570 - New subsidiaries- net book value 4,410 20 31 - Depreciation provided in the period - (1,372) (12,051) (8) Net book value of disposals - (267) (723) - --------------------------------- -------- ---------------- ---------- ---------- Net book value at 31 October 2018 17,962 13,815 93,895 676 --------------------------------- -------- ---------------- ---------- ----------
Included in additions for property, plant & equipment are the following amounts under finance leases.
31 October 31 October 30 April
2018 2017 2018
GBP'000 GBP'000 GBP'000
Property, plant & equipment additions
- finance leases 104 49 81
-------------------------------------- ---------- ---------- --------
8. Net Cash
31 October 31 October 30 April
2018 2017 2018
GBP'000 GBP'000 GBP'000
---------------------------------------- ---------- ---------- ---------
Cash and cash equivalents per statement
of financial position 88,573 63,123 58,657
Financial assets held to maturity - 1,829 1,710
Financial assets held at amortised
cost 982 - -
Non-current instalments due on bank
loans (45,393) (13,996) (27,319)
Current instalments due on bank loans (11,369) (3,479) (6,006)
Leases (376) (393) (354)
Net cash 32,417 47,084 26,688
----------------------------------------- ---------- ---------- ---------
Following the adoption of IFRS 9, Financial assets - held to maturity was reclassified as Financial assets held at amortised cost.
At 31 October 2018, GBP982,000 (31 October 2017: GBP1,829,000, 30 April 2018: GBP1,710,000) of the total net cash comprised bank deposit accounts that are subject to restrictions and are not freely available for use by the Group.
Cash and cash equivalents per the cash flow comprise cash at bank and in hand and short-term deposit accounts with an original maturity of less than three months, less bank overdrafts.
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 instalments on loans and other borrowings.
The tables below, which are not currently required by IFRS, reconcile the Group's net cash to the Group's statement of cash flows. Management believes the presentation of the tables will be of assistance to shareholders.
Other movements for loans and finance leases for the period ended 31 October 2018, period ended 31 October 2017 and year ended 30 April 2018 include transfers between non-current and current and new finance leases taken out in the period.
8. Net Cash (continued)
1 May Exchange 31 October
2017 difference Other movements Cash flow 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------- ----------- --------------- --------- ----------
Cash and cash equivalents per
statement of financial position 47,505 305 - 15,313 63,123
Financial assets - held to maturity 2,389 13 - (573) 1,829
Non-current loans (7,894) (356) 3,049 (8,795) (13,996)
Current loans (2,344) (47) (3,049) 1,961 (3,479)
Leases (444) 13 (49) 87 (393)
Net cash 39,212 (72) (49) 7,993 47,084
------------------------------------ -------- ----------- --------------- --------- ----------
1 May Exchange 30 April
2017 difference Other movements Cash flow 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------- ----------- --------------- --------- ----------
Cash and cash equivalents per
statement of financial position 47,505 165 - 10,987 58,657
Financial assets - held to maturity 2,389 8 - (687) 1,710
Non-current loans (7,894) (354) 7,311 (26,382) (27,319)
Current loans (2,344) (46) (7,311) 3,695 (6,006)
Leases (444) 47 (75) 118 (354)
Net cash 39,212 (180) (75) (12,269) 26,688
------------------------------------ -------- ----------- --------------- --------- ----------
1 May Exchange 31 October
2018 difference Other movements Cash flow 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------- ----------- --------------- --------- ----------
Cash and cash equivalents per
statement of financial position 58,657 554 - 29,362 88,573
Financial assets - held to maturity
/ amortised cost 1,710 (9) - (719) 982
Non-current loans (27,319) (307) 8,912 (26,679) (45,393)
Current loans (6,006) (68) (8,912) 3,617 (11,369)
Leases (354) (4) (104) 86 (376)
Net cash 26,688 166 (104) 5,667 32,417
------------------------------------ -------- ----------- --------------- --------- ----------
9. Fair Values
Fair values of financial instruments by class
There is no difference between the fair values and the carrying value of financial assets and financial liabilities held in the Group's Statement of financial position.
Held at fair value through profit and loss (FVTPL), amortised cost, to maturity, available-for-sale financial assets and derivatives
The fair value is based on quoted prices at the balance sheet date for quoted investments and other valuation techniques for unquoted investments. For restricted deposits accounts held to maturity, the fair value is estimated at the present value of future cash flows, discounted at the market rate of interest at the balance sheet date.
Trade and other receivables
The fair value of trade and other receivables is estimated at the present value of future cash flows, discounted at the market rate of interest at the balance sheet date if the effect is material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated at its carrying value where cash is repayable on demand. For short-term cash deposits and other items not repayable on demand, fair value is estimated at the present value of future cash flows, discounted at the market rate of interest at the balance sheet date.
Interest bearing borrowings
Fair value is calculated based on the present value of future principal and interest cash flows discounted at the market rate of interest at the balance sheet date. For finance leases the market rate of interest is determined by reference to similar lease agreements.
Trade and other payables
The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the market rate of interest at the balance sheet date if the effect is material.
FRS13 requires an analysis of financial instruments carried at fair value by valuation method as follows.
Level 1 - quoted prices in active markets for identical assets or liabilities
Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as process) or indirectly (that is derived from prices).
Level 3 - inputs for asset or liability that are not based on observable market data.
The Group's financial instruments are fair valued at level 1 with the exception of other financial assets available for sale investments which are valued at level 3.
Financial Instruments by category
The tables below show financial instruments by category
31 October 2018 Loans and Financial
receivables instruments Total
GBP'000 GBP'000 GBP'000
------------------------------------------------- --------------- ------------ --------
Assets as per statement of financial
position
Financial instruments held at FVTPL - 1,623 1,623
Financial assets held at amortised cost 982 - -
Trade and other receivables 14,497 - 14,497
Cash and cash equivalents 88,573 - 88,573
------------------------------------------------- --------------- ------------ --------
Total 104,052 1,623 104,693
------------------------------------------------- --------------- ------------ --------
Other financial
liabilities
at amortised
cost Total
GBP'000 GBP'000
------------------------------------------------- --------------- ------------ --------
Liabilities as per statement of financial
position
Borrowings 56,761 56,761
Leases 376 376
Trade and other payables excluding non-financial
liabilities 48,170 48,170
------------------------------------------------- --------------- ------------ --------
Total 105,307 105,307
------------------------------------------------- --------------- ------------ --------
31 October 2017 Loans and Held to
receivables maturity Total
GBP'000 GBP'000 GBP'000
------------------------------------------------- --------------- --------- -------
Assets as per statement of financial
position
Other financial assets - held to maturity 1,829 - 1,829
Other financial assets - available for
sale - 219 219
Trade and other receivables 21,256 - 21,256
Cash and cash equivalents 63,123 - 63,123
------------------------------------------------- --------------- --------- -------
Total 86,208 219 86,427
------------------------------------------------- --------------- --------- -------
Other financial
liabilities
at amortised
cost Total
GBP'000 GBP'000
------------------------------------------------- --------------- --------- -------
Liabilities as per statement of financial
position
Borrowings 17,475 17,475
Leases 393 393
Trade and other payables excluding non-financial
liabilities 46,138 46,138
------------------------------------------------- --------------- --------- -------
Total 64,006 64,006
------------------------------------------------- --------------- --------- -------
30 April 2018 Loans and Available
receivables for sale Total
GBP'000 GBP'000 GBP'000
------------------------------------------------- --------------- --------- -------
Assets as per statement of financial
position
Other financial assets - held to maturity 1,710 - 1,710
Other financial assets - available for
sale - 4,286 4,286
Trade and other receivables 17,676 - 17,676
Cash and cash equivalents 58,657 - 58,657
------------------------------------------------- --------------- --------- -------
Total 78,043 4,286 82,329
------------------------------------------------- --------------- --------- -------
Other financial
liabilities
at amortised
cost Total
GBP'000 GBP'000
------------------------------------------------- --------------- --------- -------
Liabilities as per statement of financial
position
Borrowings 33,325 33,325
Leases 354 354
Trade and other payables excluding non-financial
liabilities 40,376 40,376
------------------------------------------------- --------------- --------- -------
Total 74,055 74,055
------------------------------------------------- --------------- --------- -------
10. Related parties
The Group's significant related parties are disclosed in the 2018 Annual Report and include its associates, its pension funds and the Company's Directors. During the 6 months ended 31 October 2018, there were no new related parties and no additional related party transactions have taken place that have materially affected the financial position or performance of the Group. In addition there were no material changes in the nature and relationship of transactions with related parties to those identified in the 2018 Annual Report.
11. Business combinations
On 23 May 2018, the Group acquired the entire issued share capital of La Wash Group, consisting of Global Network Investment SL and Smart Real Estate & Refurbishment SL, for a consideration of up to EUR5 million, obtaining control of the group on that date. The La Wash Group is a leader in the Spanish business-to-business laundry services market based in Barcelona.
The acquisition was funded from the Group's cash resources.
The provisional fair values of the assets and liabilities acquired are as follows:
GBP '000
------------------------------------------------ --------
Intangible assets 20
Property, plant and equipment 31
-------------------------------------------------- --------
Total non current assets 51
Inventory 57
Trade and other receivables 492
Cash and cash equivalents 151
-------------------------------------------------- --------
Total current assets 700
-------------------------------------------------- --------
Total assets 751
-------------------------------------------------- --------
Trade and other payables (601)
Current tax (171)
-------------------------------------------------- --------
Total liabilities (772)
-------------------------------------------------- --------
Total identifiable net liabilities (21)
-------------------------------------------------- --------
Total net assets excluding net cash and cash
equivalents (172) -------------------------------------------------- -------- Goodwill 4,410 Goodwill and total identifiable net assets 4,389 -------------------------------------------------- -------- Cost of investment 4,389 Contingent consideration (219) -------------------------------------------------- -------- Initial cash outlay on purchase of subsidiaries 4,170 Net cash acquired with subsidiaries (151) -------------------------------------------------- -------- Net cash consideration per Group Statement of Cash flows (4,019) -------------------------------------------------- --------
Due to the proximity between the acquisition date and the interim reporting date, the acquisition accounting is on-going. For the purposes of this report the entire consideration in excess of acquired net assets has been treated as goodwill and will be allocated to separately identifiable intangible assets in the Annual Report for the year ending 30 April 2019.
Contingent consideration
A further GBP219,000 of consideration is payable to the vendor of the acquired businesses contingent on earnings performance in the 12 month period ending 30 April 2019. The directors consider it likely that the performance conditions will be met and have therefore recognised the maximum amount payable.
Acquired receivables
The provisional fair value of receivables acquired was GBP492,000. The gross contractual amounts receivable were GBP499,000 and at the acquisition date, GBP7,000 of contractual cash flows were not expected to be received.
The following amounts have been included in the Group's post acquisition results in respect of the acquired businesses:
GBP '000
------------------ --------
Revenue 1,477
Profit before tax 315
-------------------- --------
12. Transition to IFRS 9
The table below shows reclassification of assets and liabilities on transition to IFRS 9 and the initial effect on equity at 1 May 2018.
Of which
IAS 39 Remeasurement
IAS 39 IFRS 9 Carrying IFRS 9 Effect due to new
Classification Classification Amount Carrying on rules for
at30 April at 1 May 30 April Amount Equity classification
2018 2018 2018 1 May 2018 1 May 2018 and measurement
Financial
assets
Fair value
through
Available profit and
Equity investments for sale loss 4,286 4,286 - -
Cash restricted Amortised
in its use Held to maturity cost 1,710 1,710 - -
Trade and
other receivables Loans and Amortised
(non current) receivables cost 2,116 2,116 - -
Trade and
other receivables Loans and Amortised
(current) receivables cost 20,613 20,613 - -
Cash and cash Loans and Amortised
equivalents receivables cost 58,657 58,657 - -
------------------- ----------------- ---------------- --------- ----------- ----------- ----------------
Total financial
assets 87,382 87,382 - -
Non-financial
assets 151,527 151,527 - -
-------------------------------------------------------- --------- ----------- ----------- ----------------
Total assets 238,909 238,909 - -
-------------------------------------------------------- --------- ----------- ----------- ----------------
12. Transition to IFRS 9 (continued)
Of which
IAS 39 Remeasurement
IAS 39 IFRS 9 Carrying IFRS 9 Effect due to new
Classification Classification Amount Carrying on rules for
at30 April at 1 May 30 April Amount Equity classification
2018 2018 2018 1 May 2018 1 May 2018 and measurement
------------------ ---------------- ---------------- --------- ----------- ----------- ----------------
Financial
liabilities
Loans and
borrowings Amortised Amortised
(non current) cost cost (27,540) (27,540) - -
Trade and
other payables Amortised Amortised
(non current) cost cost (224) (224) - -
Loans and
borrowings Amortised Amortised
(current) cost cost (6,139) (6,139) - -
Trade and
other payables Amortised Amortised
(current) cost cost (43,498) (43,498) - -
------------------ ---------------- ---------------- --------- ----------- ----------- ----------------
Total financial
liabilities (77,401) (77,401) - -
Non-financial
liabilities (16,698) (16,698) - -
------------------------------------------------------ --------- ----------- ----------- ----------------
Total liabilities (94,099) (94,099) - -
------------------------------------------------------ --------- ----------- ----------- ----------------
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF-YEARLY FINANCIAL REPORT
We confirm that to the best of our knowledge:
-- The condensed set of financial statements which have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU, give and fair view of the assets, liabilities, financial position and profit or loss of the Group, as required by DTR 4.2.4R.
-- The Interim Management Report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six 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 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
By order of the Board
John Lewis (Non-executive Chairman)
Serge Crasnianski (Chief Executive Officer and Deputy Chairman)
7 December 2018
INDEPENT REVIEW REPORT TO PHOTO-ME INTERNATIONAL PLC
Introduction
We have reviewed the condensed set of financial statements in the half-yearly financial report of Photo-Me International Plc (the 'company') for the six months ended 31 October 2018 which comprises the Group Condensed Statement of Comprehensive Income, the Group Condensed Statement of Financial Position, the Group Condensed Statement of Cash Flows and the Group Condensed Statement of Changes in Equity and the related explanatory notes. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company, as a body, in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company as a body, for our review work, for this report, or for the conclusion we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note [2], the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express a conclusion to the company on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2018 is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
7 December 2018
Note:
a) The maintenance and integrity of the Photo-Me International plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
CAUTIONARY STATEMENT AND DISCLAIMERS
This Interim Financial Report is addressed to the shareholders of Photo-Me International plc and has been prepared solely to provide information to them. This report is intended to inform the shareholders of the Group's performance during the 6 months to 31 October 2018. It has been prepared to provide additional information to shareholders to enable them to access the Group's strategies, performance and the potential for those strategies to succeed. It should not be relied upon for any other purpose.
This Interim Financial Report contains certain forward-looking statements which are subject to risk factors associated with, among other things, the economic and business circumstances occurring from time to time in the countries and markets in which the Group operates. It is believed that the expectations reflected in this report are reasonable but they may be affected by a wide range of variables which could cause actual results to differ materially from those currently expected. No assurances can be given that the forward-looking statements in this Interim Financial Report will be realised. The forward-looking statements reflect the knowledge and information available at the date of preparation.
DISTRIBUTION OF REPORT
This Interim Report is released to the London Stock Exchange. It may be viewed and downloaded from the Company's Investor Relations section on the website www.photo-me.com.
Shareholders and others who require a copy of the report may obtain a copy by contacting the Company Secretary at the Company's registered office.
Photo-Me International plc
Unit 3B Blenheim Road
Epsom
Surrey KT19 9AP
Tel: +44 (0)1372 453399
Fax: +44 (0)1372 459064
e-mail: ir@photo-me.co.uk
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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