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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 : 2806W
Photo-Me International PLC
10 December 2019
10 December 2019
Photo-Me International plc
("Photo-Me" or "the Group")
INTERIM RESULTS FOR THE SIX MONTHSED 31 OCTOBER 2019
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 2019.
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
2019 2018 2018(1)
Revenue GBP123.9m GBP119.8m 3.3% GBP122.0m 1.8%
Underlying revenue(4) GBP120.3m GBP119.8m 0.4% GBP122.0m (1.4)%
EBITDA GBP45.9m GBP39.1m 17.4% GBP39.8m 15.3%
EBITDA excluding IFRS 16
impact GBP43.3m GBP39.1m 10.7% GBP39.8m 8.8%
Profit before tax(3) GBP28.3m GBP26.0m 8.8.% GBP26.5m 6.8%
Profit before tax excluding
IFRS 16 impact GBP28.4m GBP26.0m 9.2% GBP26.5m 7.2%
Adjusted profit before
tax(3) GBP28.5m GBP26.7m 6.7% GBP27.1m 5.2%
Cash generated from operations GBP41.1m GBP36.1m 13.7%
Net cash(2) GBP25.2m GBP32.4m (22.2%)
EPS (diluted) 6.0p 5.3p 13.2%
Adjusted EPS 6.0p 5.5p 9.1%
Interim dividend per Ordinary
share 3.7p 3.7p -
(1) For constant currency comparatives, average rates of exchange used were GBP/EUR 1.129 (H1 2019: 1.122), GBP/Yen 145.171 (H1 2019: 135.00)
(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 profit before tax is adjusted with the UK restructuring cost (GBP0.2m)
(4) Underlying revenue excludes Sempa revenue
Financial summary
-- Revenue was up 3.3% to GBP123.9 million (up 1.8% at constant currency).
-- Underlying revenue (excluding Sempa) up 0.4% to GBP120.3 million (down 1.4% at constant currency).
-- EBITDA improved by 17.4% to GBP45.9 million. Excluding IFRS16 impact, EBITDA improved by 10.7% to GBP43.3 million. This reflects profit growth through laundry expansion, the acquisition of Sempa and a higher depreciation than in the prior year period. At constant currency, EBITDA was up 8.8%.
-- Profit before tax increased by 8.8% to GBP28.3 million and adjusted profit before tax improved 6.7% to GBP28.5 million (up 5.2% at constant currency). Excluding IFRS16 impact, profit before tax increased by 9.2% to GBP28.4 million.
-- Net cash position of GBP25.2 million (H1 2019: GBP32.4 million), following the distribution of GBP31.9 million to shareholders in dividend payments, GBP29.3 million in investments and the GBP10.2 million net cash consideration relating to the acquisition of Sempa.
-- Interim dividend maintained at 3.71 pence per Ordinary share, in line with the stated dividend policy (H1 2019: 3.71 pence per Ordinary share).
Operational summary
-- Continued focus on Laundry expansion, with total laundry units deployed (owned, sold and as a result of acquisitions) up 9.1% and total revenue from laundry operation was up 6.9%.
-- Revenue from Revolution laundry operations increased by 25.2% and number of Revolution units in operation increased by 13.8%. Revolution now accounts for 6.3% of the total Group vending estate (H1 2019: 5.0%).
-- Excluding the UK, Identification revenue increased 0.8%. Including the UK, Identification revenue declined by 3.3% reflecting the challenging market conditions in UK.
-- Entry into the fresh fruit and vegetable juice market through the acquisition of Sempa Sarl ("Sempa") which completed in April 2019. In H1 2020, Sempa contributed GBP3.5 million of revenue and GBP1.8 million of profit before tax to the Group. This new business area called 'KIS Food' is expected to contribute GBP3.2 million profit before tax in FY 2020.
Serge Crasnianski, CEO, said:
"The first half of the year saw robust performance despite a number of challenging headwinds. the Group remains focused on further expanding our Laundry market presence across a number of the core geographies in which we operate and across our product offering, from 24/7 self-service machines and laundrettes to B2B laundry services. Our Identification business remains resilient and looking ahead, we expect to benefit from the introduction of mandatory renewal for ID cards in France from 2021 onwards. Our entry into the food market earlier in the year also provides the Group with a new additional platform for growth and will become an important component of our future growth strategy.
"The Group remains highly cash generative with GBP41.1 million of cash generated during the period, reflecting EBITDA margin improvement. The Board remains confident that the Group will continue to perform in line with market expectations for the current financial year."
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 46,900 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
The Group entered the self-service fresh fruit juice equipment market in April 2019, with the acquisition of Sempa. This will become a key business area ('KIS Food') alongside Identification, Laundry and Kiosks, and will be a significant part of the Group's future growth strategy.
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
The Group's first half performance was in line with expectations, delivering further revenue and profit growth and further expansion of the Laundry business. Total revenue increased by 3.3% to GBP123.9 million and by 0.4% to GBP120.3 million on an underlying revenue basis.
Expansion of laundry operations remained a key growth driver, with total revenue from Revolution machines up 25.2% to GBP17.4 million. Excluding the UK, Identification revenue increased by 0.8% but overall declined by 3.3% to GBP76.5 million, reflecting lower activity in the UK photobooth market. As previously announced, the UK photobooth market was challenging due to uncertainty around the UK's exit from the EU and the Government's policy to accept photos taken at home for passport identification. Together these factors resulted in lower consumer activity which impacted overall performance of this business area. Kiosks revenue increase by 6.1% to GBP7.0 million.
Reported EBITDA excluding IFRS16 impact increased by 10.7% to GBP43.3 million, driven by laundry expansion in France Portugal and Ireland, a contribution from the acquisition of Sempa and a higher depreciation charge compared with H1 2019. This resulted in EBITDA margins expanding to 37.0% of revenue, a 13.5% increase (H1 2019: 32.6% excluding the impact of one-off items). On a constant currency basis, EBITDA was up 15.3% from GBP39.8 million.
Profit before tax increased by 8.8% to GBP28.3 million, and at constant currency by 6.8%. Adjusted profit before tax increased by 6.7% to GBP28.5 million, reflecting prior year adjustments for discontinued operations and exceptional items detailed in the table below (Adjusted profit before tax H1 2019: GBP26.7 million).
Reconciliation of Reported Profit Before Tax to Adjusted Profit Before Tax
Six months Six months
to to
31 October 31 October
2019 2018
------------ ------------
Reported profit before tax GBP28.3m GBP26.0m
Discontinued operations
- GBP3.2m
* Profit on disposal of Stilla Technologies SA
- (GBP2.7m)
* Loss of Max Sight Holding investment
Exceptional items - restructuring costs GBP0.2m GBP1.2m
Adjusted profit before tax GBP28.5m GBP26.7m
The Group remains highly cash generative, with cash generated from operations of GBP41.1 million in the period, an increase of 13.7% year-on-year, reflected in the improvement in EBITDA.
The Group's net cash position at 31 October 2019 was GBP25.2 million, compared to a net cash position of GBP32.4 million at 31 October 2018 and a net cash position of GBP16.3 million as at 30 April 2019. The reduction compared with 31 October 2018 is due to the GBP10.2 million net consideration paid for the Sempa acquisition, as well as GBP31.9 million paid out by the Group in dividends and GBP31.7 million in investments.
In the first half, there was a GBP0.2 million restructuring cost in the UK compared with a GBP1.2 million restructuring cost related the Group's Japanese subsidiary in H1 2019. The Group does not anticipate any restructuring costs in H2 2020.
Strategy update
The Group has continued to make strategic and operational progress in line with its strategy to diversify its range of products and services, driven by the expansion of its laundry business and the acquisition of Sempa, as announced in April 2019.
Overall Group trading has been in line with the Board's expectations, underpinned by continued growth in Continental Europe and Asia, led by the Laundry business, and despite trading in the Identification division in the UK remaining challenging. This has been due to continued uncertainty around the UK's European Union exit negotiations, leading to continued lower consumer activity. Furthermore, the UK is the only European country where photos taken on a smart device or camera at home can legitimately be used for passport photo identification.
The acquisition of Sempa represented the launch of a new growth initiative for Photo-Me, under the new business area KIS Food. To date, Sempa has performed well and in line with management's expectations. Good progress has been made on integrating the Sempa operations within the Group and on the expansion of this juicing machine estate both through acquisition and development in house. Trials are already underway.
Details of strategic progress by business area are set out in the Business Review.
Appointment of Non-Executive Director
On 18 July 2019, the Group announced the appointment of Mr Jean-Marc Janailhac as an Independent Non-executive Director, effective from 22 July 2019. Mr. Janailhac is a seasoned entrepreneur with a wealth of experience, including being a senior adviser of Macquarie Capital (Europe) Limited and a Non-executive Director of Athena Investments A/S.
Dividends
The Board is declaring a maintained interim dividend of 3.71 pence per Ordinary Share (H1 2019: 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 2020.
The interim dividend will be paid on 11 May 2020 to shareholders on the register on 14 April 2020. The ex-dividend date will be 9 April 2020.
Outlook
The Group remains focused on its strategy to further diversify its product offering both organically through innovation, and through smaller bolt-on acquisitions.
Expansion of Laundry, particularly in new markets such as Germany, Austria and Switzerland, remains a key priority, including increasing the Group's presence in the B2B and the laundrette markets, which continue to represent a material opportunity for the Group. Looking ahead, this business area will continue to account for an increasing proportion of the Group's total revenue in the medium term.
KIS Food is an important component of the Group's future growth strategy and we will continue to progress with the development and rollout of the offer in this business area. Our initial focus will remain within French supermarkets, whilst the Group looks to expand into other Pan-European geographies in the future.
Whilst consumer uncertainty continues to weigh on our business in the UK, we remain confident that the Group will continue to perform well during the coming period, and in line with market expectations, in the current financial year.
CHIEF EXECUTIVE'S BUSINESS AND FINANCIAL REVIEW
BUSINESS REVIEW
Photo-Me has three principal areas of business; Identification, Laundry and Kiosks.
The Group has recently announced the establishment of a new business area to further diversity operations, KIS Food. This business is expected to form a core part of the Group's growth strategy in the future.
In addition, the Group operates 9,912 Other Vending Equipment, such as children's rides and, photocopiers. Whilst these are not principal business areas or core to the growth strategy, these machines are profitable and benefit from synergies relating to other areas of the business, such partnerships with site owners and the Group's network of field engineers and account for 5.6% of the Group's total vending estate's revenue.
In the first half, the Group remained focused on driving the growth of its Laundry operations, identifying and accessing growth opportunities in KIS Food, and the deployment of secure photo ID upload technology in its Identification business.
Identification
Photobooths and integrated biometric identification solutions
31 October 31 October Change
2019 2018
----------- ----------- -------
Number of units in operation 28,439 28,421 0.1%
Percentage of total Group vending estate
(number of units) 61.0% 61.0%
Revenue GBP76.5m GBP79.1m (3.3%)
Capex GBP5.4m GBP3.9m 38.5%
Outside of the UK, revenue from Identification remained stable at +0.8% year-on-year, underpinned by a robust performance in France (the Group's largest market) and Japan. There continues to be strong opportunities for the Group to work with governments and deploy secure upload photo ID technology, particularly in Continental Europe where, under European regulations, ID photos taken at home are not permitted for official documents due to security risks.
The Group now has more than 12,000 photobooths connected to government organisations for the secure upload of photo ID in the UK and Continental Europe, and it is anticipated that this number will continue to grow as discussions with governments to deploy this technology progress.
During the first half, we have invested in Identification, specifically in Japan and the UK to strengthen our position in high-footfall sites and consolidate our leading market position.
Laundry
Unattended Revolution laundry services, launderettes, business-to-business laundry services
31 October 31 October Change
2019 2018
----------- ----------- -------
Total laundry units deployed (owned,
sold and as a result of acquisitions) 5,179 4,636 11.7%
Total revenue from laundry operations GBP25.6m GBP21.9m 16.9%
Revolution (excludes Launderettes and
B2B):
Number of Revolutions in operation 2,995 2,527 18.5%
Percentage of total Group vending estate
(number of units) 6.4% 5.0%
Total revenue from Revolutions GBP17.4m GBP13.9m 25.2%
Revolution capex GBP6.5m GBP4.3m 51.2%
*There were 2,732 full time units in operation during H1 2020 compared with 2,232 in H1 2019.
The expansion of Laundry operations remains a key driver of growth and further good progress has been made during the period, with an average growth rate of 50 machines in operation per month.
The number of Revolution machines in operation has increased by 18.5% as the rollout in Continental Europe and the UK & Republic of Ireland continued. In the first half total revenue from Revolutions was up 25.2% compared with H1 2019. The expansion strategy has included building further Laundry presence in newer markets such as Germany, Austria, the UK and Switzerland.
In the UK, there has been an improving trend in B2B activity, albeit this remains at an early stage of recovery. The Group still expects to report growth for the full year.
During the period, Revolution capex increased by 51.2% to GBP6.5 million to support Laundry expansion and Revolution machine upgrades. Revolution installations increased by 23% year on year to 263 machines in H1 2020. The machine upgrades are almost complete which will lead to a decrease in capex requirement in H2 2020.
Revolution machines now account for 6.4% of Group's total vending estate. As anticipated, year-on-year, the Laundry business has continued to contribute an increasing proportion of the Group's revenue and profits.
The Group continue to seek accretive smaller bolt-on acquisitions that will further enhance its Laundry market presence.
The Group anticipates approaching 6,000 owned, sold and acquired laundry units by the end of calendar year 2020, subject to macro-economic factors outside of its control.
Kiosks
High-quality digital printing services
31 October 31 October Change
2019 2018 %
----------- ----------- --------
Number of units in operation 5,508 5,533 (0.5%)
Percentage of total Group vending estate
(number of units) 12.0% 12.0% -
Revenue GBP7.0m GBP6.6m 6.1%
Capex GBP1.1m GBP1.8 (38.9%)
The Kiosk business has performed as expected in the period. Revenue was up 6.1% due to the good performance of the kiosks relocated in the prior year from Photo-Me Retail shops in the UK to France.
Kiosks continued to represent 12.0% of the total number of units in the Group's total vending estate, the majority of which are located in France.
Capex reduced by 38.9%, in line with the Group's strategy to restrict investment in kiosks to premium sites with high footfall, and channel investment into Laundry expansion.
KIS Food
Following the acquisition of Sempa in April 2019, which marked the Group's entry to the fresh fruit and vegetable juice market, the Group has formed a new segment, called "KIS Food".
In the first half, Sempa contributed GBP3.5 million of revenue to the Group and GBP1.8 million of profit before tax.
Going forward, the Group anticipates that this business will be a significant part of the Group's future growth strategy, alongside Laundry and Identification. This business area is in early stage development and in the financial year to date has performed in line with expectation.
Photo-Me's intention is to become one of the global leaders in the distribution of self-service fresh fruit juice machines, and its strategy to achieve this is two-fold, aimed at the B2B and B2C markets.
The Group's initial growth strategy for KIS Food is to roll out juice vending machines in selected countries in Europe. Competition within the self-service juice market is relatively limited and, by leveraging the Group's existing network of field engineers, the Board believes this market presents a significant growth opportunity for the Group in the medium to long term.
B2B market
The Group sells self-service juice machines to organisations such as restaurant, hotels, supermarkets, offices and small businesses.
Most machines are sold under lease finance contracts, with approximately 70% of these lease agreements renewing every 12-months on average. Almost all of the current juice vending machine estate is B2B.
The Group has already made good progress in establishing a juice offer with its existing commercial partners. The Group has installed 234 new machines over the last six months in Belgium and Switzerland.
B2C market
The Group sells freshly-squeezed orange juice drinks direct to consumers via self-service juice vending machines, in locations such as railway stations. In September, Photo-Me acquired 150 juice vending machines from L'Orangerie de Paris, enabling the Group to run a larger scale trial to test the market prior to deploying vending machines across other geographies.
Investment in innovation
Extending Food offer
In the KIS Food business, the Group's R&D team is working on extending its B2B and B2C product range over time to include juice options alongside its orange juice offer. Photo-Me is developing a professional apple juice machine, a world first. A prototype has been developed and is currently undergoing testing.
Furthermore, a new pineapple juice machine for restaurants and hotels (commercial only) has been developed and a trial of the machine will commence in the second half of the current financial year. This market is smaller than apple juice but could be very profitable.
'ME' concept
The Group is developing a concept of grouping its vending offer in one place, in prime locations such as a supermarket and train stations. This would create a one-stop-shop for Photo-Me services, including launderette, photobooth, copier, kiosks, juice vending machines (service centre). The first trial is underway with a French supermarket retailer, Monoprix. We will provide a further update on the trial in due course.
REVIEW OF PERFORMANCE BY GEOGRAPHY
Commentaries 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.
Revenue Operating profit(7)
Six months Six months
ended 31 October ended 31 October
-------------------- ------------------------------------ --------------------------------------
2019 2018 Change(6) 2018(5) 2019 2018 Change(6) 2018(5)
GBPm GBPm GBPm GBPm GBPm GBPm
Continental Europe 77.0 70.4 9.4% 70.1 25.3 20.7 22.2% 20.9
UK & ROI 24.1 27.5 (19.6%) 28.5 1.8 4.6 (60.9%) 4.6
Asia 22.8 21.9 4.1% 23.4 3.4 1.5 126.7% 1.7
------ ------ ---------- -------- ------ ------ ---------- --------
Corporate costs (1.5) (1.1) 36.4% (1.1)
------ ------ ---------- -------- ------ ------ ---------- --------
Total 123.9 119.8 3.3% 122.0 29.0 25.7 12.8% 26.1
-------------------- ------ ------ ---------- -------- ------ ------ ---------- --------
(5) 2018 trading results of overseas subsidiaries converted at 2019 exchange rates. For constant currency comparatives, average rates of exchange used were GBP/EUR 1,129 (H1 2019: 1,12), GBP/Yen: 145.17 (H1 2019: 135.00)
(6) Refers to change compared to reported results.
(7) Operating profit exclude results of associate
Total Group revenue grew by 3.3%, driven by a continued strong performance in Continental Europe, particularly in the Group's largest market France, as well as the resilience of the Photobooth business in France and Japan. Operating profit grew by 12.8%, primarily due to a significant improvement in profitability of the Group's operations in Japan following the restructuring of this subsidiary in the prior financial year (H1 2019: included a GBP1.2 million one-off restructuring cost).
Vending units in operation
As at As at Change year
31 October 2019 31 October 2018 on year
------------------------- ------------------------- ------------
No of units % of total No of units % of total
Continental Europe 25,436 54.0% 24,787 53.0% 2.6%
UK & Republic
of Ireland 11,357 24.0% 11,909 26.0% (4.6%)
Asia 10,061 21.0% 10,037 21.0% 0.2%
------------ ----------- ------------ ----------- ------------
46,854 100.0% 46,733 100% 0.3%
As at 31 October 2019, the Group's estate comprised 46,854 units. The number of units in Continental Europe continued to grow strongly, reflecting continued Laundry expansion, however this was offset by a significant decline in machines in operation in the UK, as unprofitable machines were removed from the estate. Overall, the size of the estate remained stable in the period.
Continental Europe
At 31 October 2019, 54.0% of the Group's total units in operation were situated in Continental Europe (H1 2019: 53.0%) and was once again the best performing region for the Group. expansion.
Revenue increased by 9.4% and operating profit by 22.2% reflecting a better than expected photobooth performance in France as well as the continued rollout of Laundry in the region.
This region contributed more than 62.2% of Group revenues in the period (H1 2019: 58.8%) and 87.2% of Group operating profit before Corporate costs (H1 2019: 80.5%).
UK & Republic of Ireland (including Corporate)
As discussed above, the uncertain macroeconomic environment, and the challenging photobooth market conditions in the UK, resulted in lower consumer activity which significantly impacted the performance of the region as a whole. Revenue declined by 19.6% and operating profit before corporate costs reduced by 60.9%.
The Laundry business in the region has continued to perform well.
In Ireland, the Group added a further 19 Revolution units to its estate in the first half, an increase of 5.7% year-on-year. The Group strategy to expand its Laundry in the country has radically changed the portfolio mix with Laundry revenue now accounting for 80.0% of revenue in the country compared with 1.0% in 2014.
In the first half, UK Laundry expansion was at an average rate of seven new machines per month, however we expect this to accelerate to 15 to 20 Revolutions per month in the second half of the current financial year.
At 31 October 2019, 2.0% of the Group's total units in operation were situated in the UK & Republic of Ireland (H1 2019: 26.0%).
Asia
Revenue in Asia increased by 4.1% and operating profit before corporate costs increase by 126.7%. Excluding the one-off restructuring cost of GBP1.2 million in H1 2019, operating profit increased by 26.0% year-on-year.
The turnaround plan to address challenges in the Japanese market implemented in H2 2018 has proven highly effective and the country has returned to profitable growth. Trading in the other countries in Asia remained strong.
The Japanese photobooth market remains very competitive and the Group is well-positioned to participate in market consolidation which will build market share.
The Group plans to continue expansion of its Laundry operation in Japan, with two new launderettes due to open in early 2020.
At 31 October 2019, 21.5% of the Group's total units in operation were situated in Asia (H1 2019: 21.5%).
Statement of Financial Position
Shareholders' equity as at 31 October 2019 totalled GBP134.4 million, equivalent to 35.6 pence per share.
Net cash balance of GBP25.2 million as at the 31 October 2019 (31 October 2018: GBP32.4 million, 30 April 2019: GBP16.3 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 the
Netherlands).
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
this data directly to meets the security
governmental databases requirements.
GROUP CONDENSED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 October 2019
Unaudited Unaudited Audited
6 months 6 months Year to
to 31 October to 31 October 30 April
2019 2018 2019
Total Total Total
Notes GBP '000 GBP '000 GBP '000
---------------------------------------- ----- -------------- -------------- ---------
Revenue 3 123,861 119,761 228,118
Cost of Sales (86,363) (84,587) (164,637)
---------------------------------------- ----- -------------- -------------- ---------
Gross Profit 37,498 35,174 63,481
Other Operating Income 592 788 1,601
Administrative Expenses (9,152) (10,309) (22,393)
Share of Post-Tax Profits from
Associates 53 30 50
---------------------------------------- ----- -------------- -------------- ---------
Operating Profit 3 28,991 25,683 42,739
---------------------------------------- ----- -------------- -------------- ---------
Analysed as:
Operating profit before specific
items 29,162 26,890 44,564
Profit on sale of land & buildings - - -
Restructuring costs (171) (1,207) (1,825)
Operating profit after specific
items 28,991 25,683 42,739
---------------------------------------- ----- -------------- -------------- ---------
Other net gains 3 - 560 361
Finance Revenue 66 10 20
Finance Cost (714) (238) (527)
---------------------------------------- ----- -------------- -------------- ---------
Profit before Tax 3 28,343 26,015 42,593
Total Tax Charge 4 (5,804) (5,808) (11,314)
---------------------------------------- ----- -------------- -------------- ---------
Profit for the year 22,539 20,207 31,279
---------------------------------------- ----- -------------- -------------- ---------
Other Comprehensive Income
---------------------------------------- ----- -------------- -------------- ---------
Items that are or may subsequently
be classified to Profit and
Loss:
Exchange Differences Arising
on Translation of Foreign Operations 152 1,482 (860)
Taxation on exchange differences 12 (11) 3
---------------------------------------- ----- -------------- -------------- ---------
Total Items that are or may
subsequently be classified to
profit and loss 164 1,471 (857)
---------------------------------------- ----- -------------- -------------- ---------
Items that will not be classified
to profit and loss:
Remeasurement (losses)/gains
in defined benefit obligations
and other post-employment benefit
obligations - - (216)
Deferred tax on remeasurement
(losses)/gains - - 42
---------------------------------------- ----- -------------- -------------- ---------
Total Items that will not be
classified to Profit and Loss - - (174)
---------------------------------------- ----- -------------- -------------- ---------
Other comprehensive income for
the year net of tax 164 1,471 (1,031)
---------------------------------------- ----- -------------- -------------- ---------
Total Comprehensive Income for
the Year 22,703 21,678 30,248
---------------------------------------- ----- -------------- -------------- ---------
Profit for the Year Attributable
to:
Owners of the Parent 22,492 20,140 31,226
Non-controlling interests 47 67 53
---------------------------------------- ----- -------------- -------------- ---------
22,539 20,207 31,279
---------------------------------------- ----- -------------- -------------- ---------
Total comprehensive income attributable
to:
Owners of the Parent 22,657 21,593 30,228
Non-controlling interests 46 85 20
---------------------------------------- ----- -------------- -------------- ---------
22,703 21,678 30,248
---------------------------------------- ----- -------------- -------------- ---------
Earnings per Share
---------------------------------------- ----- -------------- -------------- ---------
Basic Earnings per Share 6 5.95p 5.33p 8.27p
Diluted Earnings per Share 6 5.95p 5.33p 8.26p
---------------------------------------- ----- -------------- -------------- ---------
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 2019
Unaudited Unaudited Audited
31 October 31 October 30 April
2019 2018 2019
Notes GBP'000 GBP'000 GBP'000
------------------------------------ ----- ---------- ---------- --------
Assets
Non-current assets
Goodwill 7 27,063 17,962 26,594
Other intangible assets 7 14,550 13,815 15,222
Property, plant & equipment 7 114,224 93,895 95,353
Investment property 7 640 676 648
Investment in - associates 409 429 415
Financial instruments held at
FVTPL 1,473 1623 1387
Financial assets held at amortised
cost 8 983 982 982
Deferred tax assets 877 1,706 912
Trade and other receivables 1,734 2,188 1,764
------------------------------------ ----- ---------- ---------- --------
161,953 133,276 143,277
------------------------------------ ----- ---------- ---------- --------
Current assets
Inventories 23,072 20,355 22,339
Trade and other receivables 22,293 16,809 20,917
Current tax - - 876
Cash and cash equivalents 8 84,794 88,573 84,591
------------------------------------ ----- ---------- ---------- --------
130,159 125,737 128,723
------------------------------------ ----- ---------- ---------- --------
Total assets 292,112 259,013 272,000
------------------------------------ ----- ---------- ---------- --------
Equity
Share capital 1,889 1,888 1,889
Share premium 10,588 10,499 10,588
Translation and other reserves 12,534 14,646 12,369
Retained earnings 107,785 106,175 117,131
------------------------------------ ----- ---------- ---------- --------
Equity attributable to owners
of the Parent 132,796 133,208 141,977
Non-controlling interests 1,618 1,638 1,870
------------------------------------ ----- ---------- ---------- --------
Total equity 134,414 134,846 143,847
------------------------------------ ----- ---------- ---------- --------
Liabilities
Non-current liabilities
Financial liabilities 8 57,715 45,620 53,385
Post-employment benefit obligations 5,688 5,523 5,635
Deferred tax liabilities 5,585 2,741 5,430
Trade and other payables 331 - -
------------------------------------ ----- ---------- ---------- --------
69,319 53,884 64,450
------------------------------------ ----- ---------- ---------- --------
Current liabilities
Financial liabilities 8 18,927 11,518 15,850
Provisions 222 92 218
Current tax 8,725 4,708 6,753
Trade and other payables 60,505 53,965 40,882
------------------------------------ ----- ---------- ---------- --------
88,379 70,283 63,703
------------------------------------ ----- ---------- ---------- --------
Total equity and liabilities 292,112 259,013 272,000
------------------------------------ ----- ---------- ---------- --------
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 2019
Unaudited Unaudited Audited
6 months 6 months Year to
to to
31 October 31 October 30 April
2019 2018 2019
Notes GBP'000 GBP'000 GBP'000
------------------------------------------- ----- ---------- ---------- --------
Cash flow from operating activities
Profit before tax 28,343 26,015 42,593
Finance cost 714 238 527
Finance revenue (66) (10) (20)
Other gains - (560) (361)
------------------------------------------- ----- ---------- ---------- --------
Operating profit 28,991 25,683 42,739
Share of post-tax profit from associates (53) (30) (50)
Amortisation of intangible assets 1,592 1,372 2,992
Depreciation of property, plant and
equipment 15,653 12,059 24,024
Profit on sale of property, plant
and equipment (99) 8 165
Exchange differences (850) 508 (707)
Other items (59) (90) 354
Changes in working capital:
Inventories (733) 2,910 511
Trade and other receivables (1,376) 2,714 (597)
Trade and other payables (1,744) (8,756) (5,604)
Provisions (249) (267) 108
------------------------------------------- ----- ---------- ---------- --------
Cash generated from operations 41,073 36,111 63,935
Interest paid (333) (238) (527)
Taxation paid (2,719) (4,808) (6,223)
------------------------------------------- ----- ---------- ---------- --------
Net cash generated from operating
activities 38,021 31,065 57,185
------------------------------------------- ----- ---------- ---------- --------
Cash flows from investing activities
Acquisition of subsidiaries net of
cash acquired (753) (4,019) (13,528)
Payment of deferred consideration - (225) (225)
Cash received on disposal of associate - 4,437 4,437
Repayment of loans advanced to associate - 1,612 1,612
Investment in intangible assets (883) (1,314) (2,167)
Proceeds from sale of intangible
assets 43 1 155
Purchase of property, plant and equipment (15,658) (12,811) (28,169)
Proceeds from sale of property, plant
and equipment 602 770 2,282
Purchase of available for sale investments - - -
Dividends received from investments
held at FVTPL - - -
Interest received 8 10 18
Dividends received from associates 53 12 36
------------------------------------------- ----- ---------- ---------- --------
Net cash generated from investing
activities (16,588) (11,527) (35,549)
------------------------------------------- ----- ---------- ---------- --------
Cash flows from financing activities
Issue of Ordinary shares to equity
shareholders - 134 224
Repayment of borrowings (7,886) (3,617) (8,397)
Repayment of capital element of finance
leases (90) (86) (167)
Increase in borrowings 17,053 26,679 43,748
Decrease in assets held to maturity
/ held at amortised cost - 719 741
Dividends paid to owners of the Parent (14,015) (14,005) (31,873)
Net cash utilised in financing activities (4,938) 9,824 4,276
------------------------------------------- ----- ---------- ---------- --------
Net increase in cash and cash equivalents 177 29,362 25,912
Cash and cash equivalents at beginning
of year 84,591 58,657 58,657
Exchange loss on cash and cash equivalents 26 554 22
------------------------------------------- ----- ---------- ---------- --------
Cash and cash equivalents at end
of year 8 84,794 88,573 84,591
------------------------------------------- ----- ---------- ---------- --------
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 2019
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 --------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------- At 1 May 2018 1,887 10,366 1,781 11,412 117,811 143,257 1,553 144,810 Profit for year - - - - 31,226 31,226 53 31,279 --------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------- Other comprehensive income/(expense) Exchange differences - - - (827) - (827) (33) (860) Tax on exchange - - - 3 - 3 - 3 Remeasurement gains in defined benefit pension scheme and other post-employment benefit obligations - - - - (216) (216) - (216) Deferred tax on Remeasurement gains - - - - 42 42 - 42 --------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------- Total other comprehensive (expense)/income - - - (824) (174) (998) (33) (1,031) --------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------- Total comprehensive (expense)/income - - - (824) 31,052 30,228 20 30,248 --------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------- Share options exercised in the period 2 222 - - - 224 - 224 Share options - - - - 141 141 - 141 Deferred tax on share options - - - - - - - - Dividends - - - - (31,873) (31,873) - (31,873) --------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------- Total transactions with the Parent 2 222 - - (31,732) (31,508) 297 (31,211) --------------------- -------- -------- --------- ----------- --------- ------------ --------------- --------- At 30 April 2019 1,889 10,588 1,781 10,588 117,131 141,977 1,870 143,847 --------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 October 2019 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 2019 1,889 10,588 1,781 10,588 117,131 141,977 1,870 143,847
Profit for year - - - - 22,492 22,492 47 22,539
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
Other comprehensive
income/(expense)
Exchange differences - - - 153 - 153 (1) 152
Tax on exchange - - - 12 - 12 - 12
Total other
comprehensive
income/(expense) - - - 165 - 165 (1) 164
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
Total comprehensive
income/(expense) - - - 165 22,492 22,657 46 22,703
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
Transactions with
owners of the Parent
Share options - - - - 57 57 - 57
Dividends - - - - (31,895) (31,895) - (31,895)
--------------------- -------- -------- --------- ------------ --------------- ---------
Total transactions
with the Parent - - - - (31,838) (31,838) (297) (32,135)
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
At 31 October 2019 1,889 10,588 1,781 10,753 107,785 132,796 1,618 134,414
--------------------- -------- -------- --------- ----------- --------- ------------ --------------- ---------
The accompanying notes form an integral part of these condensed consolidated financial statements.
NOTES
1. Corporate Information
The condensed consolidated interim financial statements of Photo-Me International plc (the "Company") for the six months ended 31 October 2019 ("the Interim Report") were approved and authorised for issue by the Board of Directors on 9 December 2019. 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 unattended vending equipment aimed primarily at the consumer market. The largest part of the estate comprises photo booths 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 2019 The condensed consolidated interim financial statements comprise the unaudited financial information for the six months ended 31 October 2019 and 31 October 2018, together with the audited results to 30 April 2019. 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 2019. 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 2019 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 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 2019, except as indicated below.
New standards adopted in the period:
IFRS 16- Lease Accounting specifies how leases for annual periods beginning on or after 1 January 2019 are measured, recognised and presented.
The Group has implemented IFRS 16, Lease Accounting for the financial year beginning on 1 May 2019. Due to the transition approach adopted, no restatement of the comparative figures has been required.
In compliance with IAS 8:28, a description of the transitional provisions for the current period, to the extent practicable, including the amount of the adjustment for each financial statement line item affected and Earnings per Share for basic and diluted earnings per share have been included in a summarised version of the table detailed at the end of the 12.Note transition to IFRS 16 section. The table shows the Statement of Comprehensive Income, Earnings per Share and the Statement of Financial Position with the IFRS 16 impact adjustment.
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 2019
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 earnings 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.
Going Concern
The Annual Report for the year ended 30 April 2019 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 2019.
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 2020.
United
Kingdom Corporate
Asia Europe & Ireland costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- --------------- ---------- --------- ---------
Six months to 31 October
2019
Total revenue 22,760 81,150 25,150 - 129,059
Inter segment sales - (4,121) (1,077) - (5,198)
-------------------------------- -------- --------------- ---------- --------- ---------
Revenue from external customers 22,760 77,029 24,073 - 123,861
-------------------------------- -------- --------------- ---------- --------- ---------
EBITDA 5,687 35,554 4,962 (327) 46,876
-------------------------------- -------- --------------- ---------- --------- ---------
Depreciation and amortisation (2,303) (10,248) (4,667) (27) (17,245)
-------------------------------- -------- --------------- ---------- --------- ---------
Specific items 0 0 171 0 171
Operating profit excluding
associates 3,384 25,966 (5) (354) 28,991
Share of post-tax profits
from associates -
-------------------------------- -------- --------------- ---------- --------- ---------
Operating profit 28,991
Other gains -
Finance Revenue 66
Finance costs (714)
-------------------------------- -------- --------------- ---------- --------- ---------
Profit before tax 28,343
Tax (5,804)
Profit for year 22,539
-------------------------------- -------- --------------- ---------- --------- ---------
Capital expenditure 1,536 15,957 14,078 160 31,731
-------------------------------- -------- --------------- ---------- --------- ---------
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
------------------------------ -------- -------- ---------- --------- ---------
United
Kingdom Corporate
Asia Europe & Ireland costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------- --------- ---------- --------- ---------
Year ended 30 April 2019
Total revenue 44,538 138,935 54,962 - 238,435
Inter segment sales - (8,274) (2,043) - (10,317)
------------------------------ -------- --------- ---------- --------- ---------
Revenue from external
customers 44,538 130,661 52,919 - 228,118
------------------------------ -------- --------- ---------- --------- ---------
EBITDA 9,350 49,267 13,167 (2,079) 69,705
------------------------------ -------- --------- ---------- --------- ---------
Depreciation and amortisation (4,673) (15,727) (6,119) (497) (27,016)
------------------------------ -------- --------- ---------- --------- ---------
Underlying operating profit 6,502 33,540 7,048 (2,576) 44,514
------------------------------ -------- --------- ---------- --------- ---------
Specific items (1,825) - - - (1,825)
------------------------------ -------- --------- ---------- --------- ---------
Operating profit excluding
associates 4,677 33,540 7,048 (2,576) 42,689
Share of post-tax profits
from associates 50
------------------------------ -------- --------- ---------- --------- ---------
Operating profit 42,739
Other gains 361
Finance Revenue 20
Finance costs (527)
------------------------------ -------- --------- ---------- --------- ---------
Profit before tax 42,593
Tax (11,314)
Profit for year 31,279
------------------------------ -------- --------- ---------- --------- ---------
Capital expenditure 2,755 19,893 7,493 379 30,520
------------------------------ -------- --------- ---------- --------- ---------
As IFRS 15 impact is not material, we did not disclose the disaggregation of revenue
4. Taxation
6 months 6 months Year to
to 31 October to 30 April
2019 31 October 2019
2018
GBP '000 GBP '000 GBP '000
Profit before tax 28,343 26,015 42,593
Total taxation charge (5,804) (5,808) (11,314)
-------------------------- -------------- ----------- ---------
Effective tax rate 20.5% 22.3% 26.6%
-------------------------- -------------- ----------- ---------
Of which:
Tax on underlying profit (5,804) (5,528) (10,829)
Tax on Specific items (280) (486)
-------------------------- -------------- ----------- ---------
(5,804) (5,808) (11,314)
------------------------- -------------- ----------- ---------
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 2020. In addition, French tax rate has decreased since 1 January 2019 from 33% to 31%.
The UK 2016 Finance Act was substantively enacted in September 2016 and confirmed the basic rate of UK Corporation tax at 19% for the financial years 2018 and 2019 and 18% for the financial year 2020.
5. Dividends
Dividends paid and proposed
31 October 31 October
2019 2018 30 April 2019
------------------- ------------------- -------------------
pence pence pence
per share GBP'000 per share GBP'000 per share GBP'000
----------------------------- ---------- ------- ---------- ------- ---------- -------
Interim
2019 paid on 10 May 2019 3.71 14,015
2018 paid on 11 May 2018 3.71 14,005 3.71 14,005
Final
2019 approved at AGM held on
03 October 2019 4.73 17,880
2018 approved at AGM held on
24 October 2018 4.73 17,856 4.73 17,868
8.44 31,895 8.44 31,861 8.44 31,873
----------------------------- ---------- ------- ---------- ------- ---------- -------
Period ending 31 October 2019
The Board declared an interim dividend of 3.71p per share for the year ending 30 April 2019, paid on 11 May 2019 to shareholders on the register on 6 April 2019.
The Board proposed a final dividend of 4.73p per share for the year ending 30 April 2019 which was approved by shareholders at the Annual General Meeting held on 03 October 2019. The final dividend was paid on 05 November 2019.
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.
The Board proposed a final dividend of 4.73p per share for the year ended 30 April 2018 which was approved by shareholders at the Annual General Meeting held on 24 October 2018. The final dividend was paid on 06 November 2018.
Financial year ended 30 April 2019
The Board declared an interim dividend of 3.71p per share for the year ended 30 April 2019, which was paid on 11 May 2019.
The Board proposed a final dividend for the year ended 30 April 2019 of 4.73p per share which was subject to shareholder approval at the Annual General Meeting to be held on 3 October 2019.
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 30
to 31 October to 31 October April
2019 2018 2019
----------------------------------- ------------- -------------- -------
Basic earnings per share 5.95p 5.33p 8.27p
Diluted earnings per share 5.95p 5.33p 8.26p
----------------------------------- ------------- -------------- -------
Earnings available to shareholders
(GBP'000) 22,492 20,140 31,226
Weighted average number of shares
in issue in the period
- basic ('000) 378,061 377,563 377,190
- including dilutive share options
('000) 378,139 378,017 378,745
----------------------------------- ------------- -------------- -------
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.
The impact of other items on operating profit is detailed in note 3, segment analysis.
Consistent with the above, management also calculate alternative 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 2019
Earnings available to shareholders (GBP'000) 22,492 5.95 5.95
Specific items net of tax - - -
Other gains - - -
--------------------------------------------- ------- --------- ---------
Earnings after specific items 22,492 5.95 5.95
--------------------------------------------- ------- --------- ---------
October 2018
Earnings available to shareholders (GBP'000) 20,140 5.33 5.33
Specific items net of tax 367 0.10 0.10
--------------------------------------------- ------- --------- ---------
Earnings after specific items 20,507 5.43 5.43
--------------------------------------------- ------- --------- ---------
April 2019
Earnings available to shareholders (GBP'000) 31,226 8.27 8.26
Specific items net of tax 1,825 0.48 0.48
Gain on financial assets classified
as available for sale (361) (0.10) (0.10)
--------------------------------------------- ------- --------- ---------
Earnings after specific items 32,690 8.65 8.64
--------------------------------------------- ------- --------- ---------
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 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 -
Transfers - - - -
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
--------------------------------- -------- ---------------- ---------- ----------
Net book value at 1 May 2018 13,435 13,960 92,556 676
Exchange adjustment (71) (63) (358) (12)
Additions
- photobooths & vending machines - - 28,353 -
- research & development - 1,631 - -
- other additions - 536 - -
New subsidiaries- net book
value - 2,543 1,019 -
Transfers - - - -
Depreciation provided in the
period - (2,992) (24,008) (16)
Transfer to assets held for
sale - - - -
Net book value of disposals - (393) (2,209) -
--------------------------------- -------- ---------------- ---------- ----------
Net book value at 30 April
2019 26,594 15,222 95,353 648
--------------------------------- -------- ---------------- ---------- ----------
Net book value at 1 May 2019 26,594 15,222 95,353 648
Exchange adjustment 25 81 612 -
Additions
- photobooths & vending machines - 14,077 -
- research & development - 62 - -
- other additions - 1 17,591 -
New subsidiaries- net book
value 444 819 2,824 -
Depreciation provided in the
period - (1,592) (15,645) (8)
Net book value of disposals - (43) (588) -
--------------------------------- -------- ---------------- ---------- ----------
Net book value at 31 October
2019 27,063 14,550 114,224 640
--------------------------------- -------- ---------------- ---------- ----------
8. Net Cash
31 October 31 October 30 April
2019 2018 2019
GBP'000 GBP'000 GBP'000
---------------------------------------- ---------- ---------- ---------
Cash and cash equivalents per statement
of financial position 84,794 88,573 84,591
Financial assets held to maturity - - -
Financial assets held at amortised
cost 983 982 982
Non-current instalments due on bank
loans (45,558) (45,393) (52,322)
Current instalments due on bank loans (14,600) (11,368) (15,071)
Leases (376) (376) (1,842)
Net cash 25,243 32,417 16,338
----------------------------------------- ---------- ---------- ---------
Following the adoption of IFRS 9, Financial assets - held to maturity was reclassified as Financial assets held at amortised cost.
At 31 October 2019, GBP983,000 (31 October 2018: GBP982,000, 30 April 2019: GBP982,000) 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 2019, period ended 31 October 2018 and year ended 30 April 2018 include transfers between non-current and current and new finance leases taken out in the period.
1 May Exchange Other 31 October
2018 difference 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 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
---------------------------- -------- ----------- ---------- --------- ----------
1 May Exchange Other 30 April
2018 difference movements Cash flow 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- ----------- ---------- --------- ----------
Cash and cash equivalents
per statement of financial
position 58,657 22 - 25,912 84,591
Financial assets - held
at amortised cost 1,710 13 - (741) 982
Non-current loans (27,319) 532 18,213 (43,748) (52,322)
Current loans (6,006) 117 (17,579) 8,397 (15,071)
Leases (354) (28) (1,627) 167 (1,842)
Net cash 26,688 656 (993) (10,013) 16,338
---------------------------- -------- ----------- ---------- --------- ----------
1 May Exchange Other 31 October
2019 difference movements Cash flow 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- ----------- ---------- --------- ----------
Cash and cash equivalents
per statement of financial
position 84,591 250 - (47) 84,794
Financial assets - held
amortised cost 982 - - 1 983
Non-current loans (52,322) (13) 7,360 (583) (45,558)
Current loans (15,071) (4) (7,360) 7,835 (14,600)
Leases (1,842) 1,478 (101) 90 (376)
Net cash 16,338 1,711 (101) 7,296 25,243
---------------------------- -------- ----------- ---------- --------- ----------
8. 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, Fair Value through Other Comprehensive Income (FVOCI) 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 and available for sale investments which are valued at level 3. Level 1 financial instrument are derived from reclassification of investments in associates (Max Sight Limited, Hong Kong) into financial instruments held at fair value through profit and loss.
Financial Instruments by category
The tables below show financial instruments by category
31 October 2019 Loans and Financial
receivables instruments Total
GBP'000 GBP'000 GBP'000
------------------------------------------------- --------------- ------------ --------
Assets as per statement of financial
position
Financial instruments held at FVTPL - 1,473 1,473
Financial assets held at amortised cost 983 - 983
Trade and other receivables 20,559 - 20,559
Cash and cash equivalents 84,794 - 84,794
------------------------------------------------- --------------- ------------ --------
Total 106,336 1,473 107,809
------------------------------------------------- --------------- ------------ --------
Other financial
liabilities
at amortised
cost Total
GBP'000 GBP'000
------------------------------------------------- --------------- ------------ --------
Liabilities as per statement of financial
position
Borrowings 60,158 60,158
Leases 376 376
Trade and other payables excluding non-financial
liabilities 37,856 37,856
------------------------------------------------- --------------- ------------ --------
Total 98,390 98,390
------------------------------------------------- --------------- ------------ --------
31 October 2018 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 0 1,623 1,623
Other financial assets - available for
sale 982 - 982
Trade and other receivables 14,497 - 14,497
Cash and cash equivalents 88,573 - 88,573
------------------------------------------------- --------------- --------- -------
Total 104,052 1,623 105,675
------------------------------------------------- --------------- --------- -------
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
------------------------------------------------- --------------- --------- -------
30 April 2019 Loans and Available
receivables for sale Total
GBP'000 GBP'000 GBP'000
------------------------------------------------- --------------- --------- -------
Assets as per statement of financial
position
Other financial assets - held at amortised
cost 982 - 982
Other financial assets - held at FVTPL - 1,387 1,387
Trade and other receivables 17,800 - 17,800
Cash and cash equivalents 84,591 - 84,591
------------------------------------------------- --------------- --------- -------
Total 103,373 1,387 104,760
------------------------------------------------- --------------- --------- -------
Other financial
liabilities
at amortised
cost Total
GBP'000 GBP'000
------------------------------------------------- --------------- --------- -------
Liabilities as per statement of financial
position
Borrowings 67,393 67,393
Leases 1,842 1,842
Trade and other payables excluding non-financial liabilities 37,366 37,366 ------------------------------------------------- --------------- --------- ------- Total 106,601 106,601 ------------------------------------------------- --------------- --------- -------
10. Related parties
The Group's significant related parties are disclosed in the 2019 Annual Report and include its associates, its pension funds and the Company's Directors. During the 6 months ended 31 October 2019, 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 2019 Annual Report.
Standards in effect in 2019
IFRS 16 'Leases' has come into effect from January 1, 2019 and has been adopted by the Group. The impact of the adoption of the leasing standard is disclosed in Note 12
Policy:
Leases
IFRS 16 Leases was issued in January 2016 and was implemented by the Group from 1 May 2019.
The Standard replaces IAS 17 and requires lease liabilities and 'right of use' assets to be recognized on the balance sheet for almost all leases. The adoption methodology of IFRS 16 is the cumulative catch-up method, and the impact of adoption was to recognize a right of use asset of GBP18 582k and a lease liability of GBP16 109k on 1 May, 2019.
11. CHANGES IN ACCOUTING POLICIES
The group has adopted IFRS 16 retrospectively from 1 May 2019, but has not restated comparatives for last period, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognized in the opening balance sheet on 1 May 2019.
On adoption of IFRS 16, the group recognized lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 May 2019. The weighted average lessee's incremental borrowing rate applied to the lease liabilities on 1 May 2019 was 10.88 %. The Management have chosen an individual rate per company, depending on the borrowing rate of the Group combined with the country risk adjustment and size risk premium. However, the management could forsake the size risk premium before the year end if it is not deemed relevant.
The Group assesses whether a contract is or contains a lease at inception of the contract. The Group recognizes a right-of-use assets and corresponding lease liabilities at the lease commencement date, except for short term leases and leases of low value. For these leases, the lease payments are recognized as an operating expense on a straight-line basis over the term of the lease.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liabilities adjusted for any lease payments made at or before the commencement date, plus any initial costs incurred. The right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses. The right-of-use assets are from the commencement date depreciated over the shorter period of lease term and useful life of the underlying asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use assets are periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liabilities, e.g. revised discount rate, change in the lease term or change in future lease payments resulting from a change in an index.
The lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate determined by the Group's borrowing rate.
GBPm
Operating lease commitments disclosed under
IAS17 as at 30 April 2019 21.9
-----
Less low value and short term leases recognized
in a straight-line basis as an expense 5.8
-----
Remaining lease commitments discounted using
the Group's incremental borrowing rate as at
the date of initial application 16.1
Lease Liability recognised ad at 1 May 2019
-----
Of which:
-----
Current lease liabilities 4.2
-----
Non-current lease liabilities 11.9
-----
The associated right-of-use assets for all leases were measured at the amount equal to the lease liability.
The recognised right-of-use assets relate to the following types of assets:
GBPm 31 October 2019 1 May 2019
Cars 2.2 2.2
---------------- -----------
Head office 1.2 1.2
---------------- -----------
P.P.E 15.2 15.2
---------------- -----------
Total right-of-use
assets 18.6 18.6
---------------- -----------
No Practical expedients are applied.
There are no variable leases.
Extensions of contracts are treated as modification events.
12. IFRS16 Impact
Impact on Statement of Comprehensive Income at 31st October
2019
Profit and IFRS16
Loss Impact Total
------------- --------- ---------
Revenue 123,861 123,861
------------- --------- ---------
COST OF SALES -86,394 32 -86,363
------------- --------- ---------
GROSS PROFIT 37,466 32 37,498
------------- --------- ---------
ADMINISTRATION COSTS -9,437 285 -9,152
------------- --------- ---------
Other operating income 645 645
------------- --------- ---------
Restructuring provisions -171 -171
------------- --------- ---------
OPERATING PROFIT 28,991 28,991
------------- --------- ---------
Finance Revenue 66 66
------------- --------- ---------
FINANCE COST -343 -371 -714
------------- --------- ---------
Profit Before Tax 28,397 -54 28,343
------------- --------- ---------
TAXATION -5,804 -5,804
------------- --------- ---------
Profit for the Year 22,593 -54 22,539
------------- --------- ---------
Impact on Statement of Financial Position at 31st October 2019
Financial Position IFRS16 Impact Total
------------------- -------------- --------
Goodwill 27,063 27,063
------------------- -------------- --------
Other Intangible Assets 14,550 14,550
------------------- -------------- --------
Property, Plant & Equipment 98,169 16,055 114,224
------------------- -------------- --------
Investment Property 640 640
------------------- -------------- --------
Investment in Associates 409 409
------------------- -------------- --------
Financial Assets Held to Maturity-Non
Current 983 983
------------------- -------------- --------
Financial instruments held at
FVTPL 1,473 1,473
------------------- -------------- --------
Deferred Tax Debtors 877 877
------------------- -------------- --------
Debtors Non-Current 1,734 1,734
------------------- -------------- --------
Non-Current Assets 145,898 16,055 161,953
------------------- -------------- --------
Total Inventories 23,072 23,072
------------------- -------------- --------
Trade and Other Receivables 22,293 22,293
------------------- -------------- --------
Cash & Cash Equivalent 84,794 84,794
------------------- -------------- --------
130,159 130,159
------------------- -------------- --------
TOTAL ASSETS 276,057 16,055 292,112
------------------- -------------- --------
Total Capital & Reserves 150,729 53 150,676
------------------- -------------- --------
Minority 1,618 1,618
------------------- -------------- --------
EQUITY 152,347 152,294
------------------- -------------- --------
Non-Current Liabilities
------------------- -------------- --------
Financial liabilities 45,791 11,924 57,715
------------------- -------------- --------
Employment Benefit Obligation 5,688 5,688
------------------- -------------- --------
Deferred Income Tax liability 5,585 5,585
------------------- -------------- --------
331 331
------------------- -------------- --------
TOTAL NON CURRENT LIABILITIES 57,395 11,924 69,319
------------------- -------------- --------
Current Liabilities
------------------- -------------- --------
Total Borrowing Current 14,743 4,184 18,927
------------------- -------------- --------
Provision 222 222
------------------- -------------- --------
Tax 8,725 8,725
------------------- -------------- --------
Trade & Other payables 42,625 42,625
------------------- -------------- --------
66,315 4,184 70,499
------------------- -------------- --------
TOTAL EQUITY & LIABILITY 276,057 16,055 292,112
------------------- -------------- --------
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 has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
-- 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)
8 December 2019
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 2019 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.
MAZARS LLP LONDON
Statutory Auditor, Chartered Accountants
London
December 2019
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 2019. 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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