Photo-Me (PHTM.L), the instant-service equipment group, announces the following trading update for the year ended 30 April 2018, ahead of its full year results which will be published on Tuesday 10 July 2018, and provides guidance for the year ending 30 April 2019.
The Group continued to deliver on its growth strategy in the second half of the financial year. Good operational progress has been made in diversifying its operations, through the deployment of secure photo identification technology and the expansion of its laundry operations.
For the financial year ended 30 April 2018, the Board expects the Group will achieve turnover growth of approximately 6% versus the prior year on a constant currency basis, with the Group’s profit before tax expected to be broadly in line with market expectations, including a one-off investment gain of £3.7 million relating to the Group’s shareholding in Max Sight Group Holdings Limited. As at 30 April 2018, net cash was approximately £26 million, reflecting capital expenditure slightly ahead of the prior year, investment in laundry acquisitions and the restructuring of Photo-Me Retail.
The photo identification business continued to perform well except in Japan, which has remained a very difficult market due to an oversupply which has put pressure on commissions across the industry.
In the UK, rollout of the Group’s encrypted passport photo ID upload technology commenced in mid-December 2017. At the financial year end, 2,200 photobooths had been upgraded with this technology, which enables direct and secure transmission of ID photos and data to Her Majesty’s Passport Office for British Passport renewals.
This secure digital upload technology is also installed in 200 photobooths in Ireland for Irish Passport Online Application Service, and 5,700 photobooths in France for ANTS driving licence applications.
The Group is also in preliminary discussions with the Dutch government regarding deployment of this technology in the Netherlands.
The laundry business has continued to perform well, with strong expansion remaining a key growth driver for Photo-Me. Revenue from laundry operations increased by 49% to £32.3 million for the year ended 30 April 2018 (30 April 2017: £21.7 million).
Production capacity of the Revolution machine increased following the transfer by the Group’s manufacturing partner of production from Hungary to Poland. This increase in
volume will support an acceleration in laundry expansion in the longer term, the early benefits of which started to come through towards the end of the financial year.
In May 2018 (post the financial year end), the Group acquired La Wash Group, a leader in the Spanish business-to-business laundry services market based in Barcelona, for a consideration of €4.75 million. The business, which is a franchise model, consists of two companies with a combined annual revenue of €3.7million for the year ended 31 December 2017, along with a profit before tax of €796,000 for the same period. In line with its strategy, the Group remains focused on identifying further complementary bolt-on laundry acquisitions.
The operations of Photo-Me Retail have been successfully refocused to provide unattended digital printing kiosk services. As previously announced, this action, which will boost the profitability of the UK digital printing business, has resulted in a one-off restructuring cost, which is now confirmed to be £2.6m in the financial year ended 30 April 2018.
Outlook for financial year ending 30 April 2019
The Group remains mindful of the macroeconomic environment, currency movements and consumer disposal income.
The Japanese photo identification market continues to be highly competitive, with the highest density of photobooth units per person of any country worldwide. The number of photobooths increased significantly following the launch of the Japanese government’s My Number ID card programme. However, this card programme is not compulsory and has not gained the momentum photobooth operators initially anticipated. During the current financial year, the Group will invest in a thorough restructuring of its Japanese subsidiary which is expected to boost profitability in FY19 and beyond.
Taking this into account, the Board now believes that profit before tax for the year ending 30 April 2019 will be at least £44 million, which includes the reorganisation cost in Japan, and is below current market expectations. This excludes any potential revaluation gains pertaining to the Group’s investment in Max Sight Group Holdings.
As a result, the Board anticipates underlying profit before tax (excluding one-off items) for the financial year ending 30 April 2019 is likely to be at a similar level to financial year ended 30 April 2018, excluding a one-off investment gain and proceeds from the sale of the Group’s head office buildings.
Although no final decision has yet been made, the Board currently expects that it will maintain the Group’s existing dividend policy at the full year results.
This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.
+44 (0) 1372 453 399
Stephane Gibon, Group Chief Financial Officer
Fiona Bird, Investor Relations and International Tax Manager
+44 (0) 20 7796 4133
Wendy Baker/Emily Dillon
NOTES TO EDITORS
Photo-Me International plc (LSE: PHTM) operates, sells and services a wide range of instant service vending equipment, primarily aimed at the consumer market.
The Group operates approximately 47,000 vending units across 18 countries and its technological innovation is focused on three principal areas:
• Identification: photobooths and integrated biometric identification solutions
• Laundry: unattended laundry services, launderettes, B2B services
• Kiosks: high-quality digital printing
In addition, the Group operates vending equipment such as children’s rides, amusement machines and business service equipment.
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 fully-listed on the London Stock Exchange since 1962.