Photo-Me Interim Statement – Promising start to the financial period

Photo-Me (PHTM.L), the instant service equipment group, issued its Interim Management Statement, which covers the period from 1 May 2013. This statement coincided with Photo-Me’s AGM.

The Group reported that the year started well, helped by the recent formal launch of its laundry machines (branded Revolution) in France.
As anticipated, Group turnover is slightly lower year to date principally due to lower revenues in its Sales and Servicing division as well as an adverse translation in the revenue of its Japanese subsidiary due to a sharp decline of 18% in the yen against sterling compared with the same period last year.  Despite the lower turnover, profits for the Group are once again ahead,by over 10%, and in line with expectations.
The star performer was the European business, in particular Photomaton in France with profits significantly ahead of the same period last year, as the recently launched laundry business began to make a contribution. The European business also benefited from an increase in photobooth numbers of 7.5% year-on-year and the progressive rollout of its higher margin Starck photobooths.
UK profits were little changed year on year.  Asian profitability declined some 15% in sterling terms, however the underlying performance was strong and in local currency it was ahead by some 10%.   The Group’s Chinese operation, though still relatively small in the context of the Group, made good progress with turnover up by 30% and was only marginally loss-making because of the heavy investment in both R&D and new photobooths being made in that market.
Laundry division
The Group has commenced the expansion of its laundry division, with the addition of 52 machines (either operating or sold) in the 3-month period to 31 July resulting in a profit greater than £0.5m. Average EBITDA on an operated laundry unit continues to exceed 50% of turnover. 
The Group is anticipating an increasing contribution as the expansion of the division progresses, and as it reduces the cost of manufacture in future by increased sourcing from Eastern Europe. 
The Group’s net cash position remains little changed from the year end despite increased investment in the photobooth and laundry estate as well as the payment of the interim dividend in May 2013.
Overall, the Group has begun the year well and remains confident for the balance of the year, given the success in the Group’s laundry division to date and the planned expansion of this business, combined with growth in the Starck booth estate and lower anticipated photobooth manufacturing costs when outsourcing production to China in January 2014.
The Board will provide a further update on trading and outlook at the time of the Company’s Interim announcement in December 2013.