PHTM.L Regulatory News (PHTM)

17 Dec 2007 07:01

Photo-Me International PLC17 December 2007 Monday 17 December 2007 PHOTO-ME INTERNATIONAL PLC - INTERIM ANNOUNCEMENT Photo-Me, the digital imaging company, announces its results for the half yearto 31 October 2007. Key Points - Financial • Revenue down 3% at £107.1m (2006: £110.9m) • Adjusted+ EBITDA down 6% at £24.4m (2006: £26.0m) • Adjusted+ pre-tax profit down 39% at £7.3m (2006: £11.9m), reflecting £2.2m of increased depreciation and £1.5m of adverse movement in exchange differences • Reported pre-tax profit of £1.6m (2006: £12.9m) • Interim dividend maintained at 1.00p per share, reflecting the quantum of the Group's adjusted+ EBITDA and operating profit • Present intention to resume share buy-back programme when the Company's distributable reserves permit, which is expected to be in February 2008 + Adjusted disregards exceptional items (see Note 4) and a business discontinued in April 2007. Key Points - Commercial • Vending, the principal Division, continued to trade robustly, generating an EBITDA of £22.4m. Manufacturing's adjusted+ EBITDA was £3.7m • Vending operating profit was down 21% at £10.9m (2006: £13.8m) on revenue down 1% at £79.1m (2006: £80.3m), 74% (2006: 72%) of the Group total. The profit decrease mainly reflected £2.1m of increased depreciation, principally of photobooths, and £0.5m of adverse movement in exchange differences • Manufacturing made a pre-exceptional operating loss of £0.5m (2006: profit of £1.0m) on revenue down 8% at £28.0m (2006: £30.6m). The profit decrease was shared between minilabs and wholesale labs, the latter reflecting a delayed product launch Key Points - Board • On 14 December 2007, Thierry Barel, since 3 December 2007 also Group Chief Executive, was appointed a Director following signature of detailed contractual terms • The constitution of the Board and its Committees is now fully compliant with best corporate governance standards David Young, Chairman, stated: "In the half year to 31 October 2007, Photo-Mewas faced with the distraction engendered by the Vending Division disposalprocess (which was terminated in September) and the proposed corporaterestructuring. It also had to contend with the unsettling effect on customers,staff and suppliers of the related uncertainty and also of the unsoughtprominence of the Group's corporate affairs. In these circumstances, thepre-exceptional result for the half year, whilst lower than that for the halfyear to 31 October 2006, is disappointing but understandable. Group revenue and EBITDA suffered a small decrease relative to the 2006comparative period and their quantum remains substantial. The revenue and EBITDAof Vending, the Group's principal Division, declined marginally, in an adversevending environment, and this activity both maintained its footprint in allthree major territories and remains strongly cash generative. Proportionately,Manufacturing did less well, its pre-exceptional operating result reflecting areduced average selling price for minilabs and reduced unit sales for wholesalelabs. When preparing the interim financial statements, the Group also reviewed itsestimates for the full year to 30 April 2008. Following this review, the Boardnow believes that the Group is unlikely to be profitable in the second half,which is traditionally its weaker half". Legal Disclaimer: Certain statements made in this announcement are forward looking statements.Such statements are based on current expectations and are subject to a number ofrisks and uncertainties that could cause actual events or results to differmaterially from these forward looking statements. Presentation: A presentation to investors and brokers' analysts will be given from 09.00 toapproximately 10.00 today in the Madrid Room at Regus, CityPoint, 1 RopemakerStreet, London EC2 (approximately 200 yards from Moorgate Station). Enquiries:Photo-MeInternational 01372-453 399David Young (Chairman) 020-7367 8889 from 10.30 to 12.30 on Monday 17 December 2007Jean-Luc Peurois (CFO) Bankside ConsultantsCharles Ponsonby 020-7367 8851 / 07789-202 312 INTERIM BUSINESS AND FINANCIAL REVIEW In the half year to 31 October 2007, Photo-Me was faced with the distractionengendered by the Vending Division disposal process (which was terminated inSeptember) and the proposed corporate restructuring. It also had to contend withthe unsettling effect on customers, staff and suppliers of the relateduncertainty and also of the unsought prominence of the Group's corporateaffairs. In these circumstances, the pre-exceptional result for the half year,whilst lower than that for the half year to 31 October 2006, is disappointingbut understandable. Group revenue and EBITDA suffered a small decrease relative to the 2006comparative period and their quantum remains substantial. The revenue and EBITDAof Vending, the Group's principal Division, declined marginally, in an adversevending environment, and this activity both maintained its footprint in allthree major territories and remains strongly cash generative. Proportionately,Manufacturing did less well, its pre-exceptional operating result reflectingboth a reduced average selling price for minilabs and reduced unit sales forwholesale labs. When preparing the interim financial statements, the Group also reviewed itsestimates for the full year to 30 April 2008. Following this review, the Boardnow believes that the Group is unlikely to be profitable in the second half,which is traditionally its weaker half. FINANCIAL REVIEW Figures in this paragraph disregard exceptional items and a businessdiscontinued in April 2007. On revenue down 3.4% at £107.1m (2006: £110.9m),EBITDA was 6.2% lower at £24.4m (2006: £26.0m), representing 22.8% (2006: 23.5%)of revenue. Operating profit reduced by 31.4% to £8.3m (2006: £12.1m) andpre-tax profit, after an increased net finance cost of £1.1m (2006: £0.2m, aftercrediting a £0.7m put option revaluation), amounted to £7.3m (2006: £11.9m).These profit reductions reflected a £2.2m increase in the depreciation charge,following substantial expenditure on photobooths in the past two years, and a£1.5m adverse movement in exchange differences. Exceptional items comprised, in the current period, a £5.7m charge for StrategicReview and restructuring costs (see Note 4) and, in the 2006 comparative period,a £1.0m credit from the write-back of part of a provision for restructuring.After exceptional items, operating profit amounted to £2.7m (2006: £13.2m) andthe pre-tax profit was £1.6m (2006: £12.9m). The tax charge of £2.4m (2006:£4.4m) was unusually high, relative to Group pre-tax profit, principally as aconsequence of non-tax deductible exceptional Strategic Review costs. Takingthis into account, the result after tax from continuing operations was a loss of£0.7m (2006: profit of £8.5m). On a per share basis, the loss from continuing operations was 0.25p (2006:earnings of 2.27p). Disregarding exceptional items, earnings per share fromcontinuing operations were 1.09p (2006: 2.08p). Total shareholders' equity of £85.8m was lower than the 30 April 2007 figure of£98.3m as a result of the payment of the previous year's £3.6m interim dividend,the provision for the previous year's final dividend of £5.1m and expenditure of£3.8m on share buy-backs. Net debt of £33.6m compared with £27.7m at 30 April2007 and £14.5m at 31 October 2006. Consequently, gearing (defined as net debtas a percentage of total equity) was 38% (30 April 2007: 28%; 31 October 2006:14%). The £5.9m increase in net debt in the period was the net of cash flows of £25.1m(2006: £26.3m) and uses of cash flow of £31.0m (2006: £23.9m). The principalcash flow elements were depreciation of £16.1m (2006: £13.9m) and a positiveworking capital movement of £6.3m (2006: £0.3m). The principal uses of cash flowwere capital expenditure of £17.4m (2006: £19.0m) - much of it on the latterstages of a programme to update the photobooth estate - together with dividendsand share buy-backs of £7.5m (2006: £3.6m) and tax of £4.7m (2006: £0.4m).Accordingly, the Group remains fundamentally cash generative, the VendingDivision substantially so. BUSINESS REVIEW Divisional analysis of revenue and profit Revenue Operating Profit + Half year to 31 October 2007 2006 2007 2006 £m £m £m £mVending 79.1 80.3 10.9 13.8Manufacturing 28.0 30.6 (0.5) 1.0Group overheads - - (2.1) (2.7) 107.1 110.9 8.3 12.1 + Pre-exceptional Vending accounted for 74% (2006: 72%) of Group revenue and the entirety (2006:93%) of Group operating profit (before Group overheads). Geographical analysis of revenue and profit (by origin) Revenue Operating Profit + Half year to 31 October 2007 2006 2007 2006 £m £m £m £mContinental Europe 60.7 62.0 6.5 8.8UK & Republic of Ireland 33.1 33.5 1.7 1.8Asia & Australia 12.6 14.1 0.6 1.8USA 0.7 1.3 (0.5) (0.3) 107.1 110.9 8.3 12.1 + Pre-exceptional Continental Europe, which includes the great majority of Manufacturing revenue,contributed 57% (2006: 56%) of Group revenue and 78% (2006: 73%) of Groupoperating profit (after deducting the losses in the USA). Vending Vending comprises the operation of photobooths (as to approximately 82% ofrevenue), digital media kiosks and other vending equipment, notably amusementmachines. During the period, the total number of vending sites worldwideincreased by 500 to 42,300, following substantial increases, mainly in othervending equipment, over the previous two years. PMI's Vending business is global, operating in 16 industrialised countries.However, 86% of sites are located in three territories - the UK & Ireland,France and Japan. By area, Continental Europe accounted for 17,300 (2006:16,100) sites; the UK & Ireland for 17,300 (2006:15,500) sites; Asia & Australiafor 7,400 (2006: 6,400) sites; and the USA for 300 (2006: 500) sites. In the half year, Vending generated an EBITDA of £22.4m, down 3%. The £1.2mreduction in Vending revenue reflected the £1.3m translation difference arisingfrom the weaker Yen. The £2.9m reduction in Vending operating profit reflected£2.1m of increased depreciation, following substantial expenditure in the lasttwo years on facilitating customer compliance with the passport regulations ofthe International Civil Aviation Organisation ("ICAO"), and £0.5m of adversemovement in exchange differences. Photobooths Following a review of less profitable sites, the number of photobooths siteddecreased marginally to 21,300 (2006: 21,400), of which Continental Europe 9,500(2006: 9,400), the UK & Ireland 5,500 (2006: 5,800), Asia & Australia 6,000(2006: 5,700) and the USA 300 (2006: 500). Photobooths are an efficient and competitively-priced provider of ID photographsand represent a mature cash generative business. The 1% reduction in photobooth revenue to £65m was essentially in Japan andreflected currency translation differences. Revenue benefited from the upgradingof the photobooth estate. Digital Media Kiosks The number of digital media kiosks sited was unchanged from a year ago at 4,500.Of these, Continental Europe remained at 3,700, with France by far theprincipal territory with 2,800, followed by Switzerland with 400. Revenue from digital media kiosks increased by 5% to £6m. Other Vending Equipment Units of other vending equipment sited increased to 16,500 (2006: 12,600), ofwhich 6,400 (2006: 5,700) were kiddie rides, the balance comprising mainlyamusement machines, copiers and card machines. The vast majority of kiddie ridesare sited in the UK & Ireland. Other vending equipment benefits from beinglocated alongside photobooths and serviced by the same personnel, resulting inoperational efficiencies. Revenue from other vending equipment increased by 2% to £8m. Manufacturing Manufacturing revenue primarily derives from the sale to third parties ofphoto-processing equipment manufactured by PMI or by sub-contractors on itsbehalf. PMI has a unique and comprehensive range, covering all market segmentsfrom wholesale labs, to minilabs and self-service digital media kiosks, withoutputs of between 500 and 20,000 prints per hour. Digital media kiosks andkiddie rides are mainly manufactured for operation by the Group, but some aresold to third parties. The £2.6m reduction in Manufacturing revenue and £1.5m deterioration in thepre-exceptional Manufacturing result principally reflected a reduced averageselling price for minilabs and reduced unit sales for wholesale labs. Minilabs Minilabs are designed and developed by Photo-Me's subsidiary, KIS, in France,with volume production sub-contracted to specialist manufacturers in low costterritories, currently in Asia. A substantial majority of Manufacturing revenue is represented by the sale ofminilabs, machines with an output ranging from 800 to 2,000 prints per hour, andof related equipment, spares and consumables. Typically, minilabs are sited inspecialist photographic outlets, supermarkets and pharmacies. Historically, minilabs are a second-half weighted business, as retailers preferto install new machines in advance of the summer. In the period, minilab revenuereduced by 5% to £19.9m and a loss was incurred, representing a deterioration onthe 2006 comparative period. Whilst minilab units sold increased slightly on thecomparative period, their average selling price reduced, reflecting competitiveprice pressures and a large order priced in US$. The PhotoBook-Pro has been well received by retailers who are keen to developthe added value parts of their business. Its profit potential, however, is lessthan that for minilabs, with their associated spares and consumables. In these market conditions, a cost reduction programme has been put in place. Following the resignation of the existing sub-contractor with effect from 30April 2008, well before that date, the Group will appoint a new sub-contractorto manufacture minilabs in Asia. Wholesale Labs The Group's wholesale lab business, Imaging Solutions, based in Switzerland, isinvolved in the development, manufacture, sale and technical support ofequipment and systems for high volume photo-finish laboratories (up to 20,000prints per hour). In the period, revenue reduced by 19% to £7.5m, translating into a profit whichwas substantially behind the 2006 comparative period. The reduction is mainlyexplained by reduced unit sales of the FastPrint machine. It had been expectedthat initial sales of the Purus photo-album making machine would compensate forthis, but launch delays intervened, caused by problems with glue technology. Thelate launch of the Purus machine also disadvantaged sales of the relatedWidePrint machine, which had been launched in May 2007. The Purus machine will now not be fully ready in time to have a significantimpact on the result for the current year. BOARD The half year and subsequently have seen considerable Board changes. Theconstitution of the Board and its Committees is now fully compliant with bestcorporate governance standards. In May, Roger Partington and David Young joined the Board as non-executiveDirectors. Following these appointments, and effective from 30 May 2007, themembership of the Audit, Nomination and Remuneration Committees was revised, soas to become fully compliant with the Combined Code. In July, three long-standing Directors - Riccardo Costi and Francois Giuntini,executive Directors, and Francis Wahl, a non-executive Director - resigned fromthe Board. In September, Vernon Sankey, non-executive Chairman, resigned from the Board andDavid Young was appointed non-executive Chairman in the interim. On 30 November, Serge Crasnianski resigned as Group CEO, being replaced byThierry Barel, following a search both externally and internally by outsiderecruitment consultants. Thierry Barel, aged 46, is a French national and hadbeen in charge of the Group's minilab manufacturing activity since April 2007.Previously, he was at Staeubli Group from 1984 to 2006, latterly as ChiefExecutive Officer from 2005 to 2006 and as Corporate Development Officer and amember of the Group Executive Committee from 2001 to 2004. Staeubli is aSwiss-based manufacturer of textile machinery, robotics and industrialconnectors, with a 2006 turnover of SFR 1bn. On 14 December, Thierry Barel wasappointed a Director, following signature of detailed contractual terms. On 7 December, Serge Crasnianski notified the Board of his resignation as aDirector with effect from 13 December 2007. Serge Crasnianski, who is aged 65,founded KIS in 1963. He was elected to the Board of Photo-Me in 1990 and wasappointed Chief Executive Officer in 1998. Over 44 years, he has made a massivecontribution to what is now the Photo-Me Group. STRATEGY From November 2006 until September 2007, the Board and its advisors were heavilyengaged in examining options for the Group's three principal businesses -Vending, minilab manufacturing and wholesale lab manufacturing - and ways ofrestructuring the Group so as to permit a significant return of capital toshareholders. This represented a huge, multi-faceted and complex projectinvolving several leading expert advisors. As part of this process, the Boardsought to dispose of the Vending Division. In September, the Board decided toterminate the Vending Division disposal process, as the indicative offersreceived had not translated into firm offers at an acceptable level, in partreflecting turbulence in the debt markets. It remains the intention to restructure the Group, so as better to enable thetransfer of distributable reserves to the Company and thereby facilitatingdistributions to shareholders. As the newly-appointed Group CEO, Thierry Barel will be reviewing strategy inthe light of challenging market conditions. PROSPECTS Historically, Photo-Me's principal activity, Vending, is first-half weighted,whilst Manufacturing, in particular its principal constituent, minilabs, issecond-half weighted. In the absence of an outstanding Manufacturing result inthe second half, the first half tends to be much the stronger of the two for theGroup. Whilst Vending is trading fairly well, the Board does not anticipate astrong second half for Manufacturing. Accordingly, the Board now believes thatthe Group is unlikely to be profitable in the second half. The move from analogue to digital in photography has inevitably had bothfavourable and unfavourable influences on the Group, and this will continue.Amongst the benefits are an opportunity for diversification and the improvedefficiency, reliability and ease of maintenance of the equipment. One possibledevelopment that the Board is monitoring is the potential move in someterritories towards centralisation of biometric data collection, which could, incertain circumstances, materially impact the Group's Vending business. INTERIM DIVIDEND Having regard to the quantum of pre-exceptional EBITDA and operating profit, theBoard has declared a maintained Interim dividend of 1.00p per share. Thedividend will be paid on 3 May 2008 to shareholders on the register on 29February 2008, with an ex-dividend date of 27 February 2008. The level of final dividend to be proposed for the year to 30 April 2008 will beconsidered by the Board at the time of the Preliminary Announcement in the lightof the result of the year, prospects at that time, and the financialrequirements of the strategy developed by Thierry Barel. SHARE BUY-BACKS It is the present intention of the Board to resume the Company's share buy-backprogramme as soon as the Company's distributable reserves permit, which isexpected to be in February 2008. David Young 14 December 2007Chairman GROUP INCOME STATEMENT (unaudited) for the six months ended 31 October 2007 Notes 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000---------------------- -------- -------- -------- -------- Revenue 3 107,082 110,868 214,919Cost of sales (88,956) (87,854) (177,659)---------------------- -------- -------- -------- --------Gross profit 18,126 23,014 37,260Other operating income 574 480 1,096Administrative expenses (10,282) (11,403) (23,490)Share of post-tax(losses)/profits from associates (71) 59 41---------------------- -------- -------- -------- --------Operating profit beforeexceptional items 8,347 12,150 14,907Strategic review costs 4 (3,950) - -Restructuring costs 4 (1,707) 1,019 1,109---------------------- -------- -------- -------- --------Operating profit afterexceptional items 3 2,690 13,169 16,016---------------------- -------- -------- -------- --------profit before finance items andtax 2,690 13,169 16,016Finance revenue 6 1,026 1,099 1,848Finance cost 6 (2,085) (1,325) (3,101)---------------------- -------- -------- -------- --------profit before tax 1,631 12,943 14,763---------------------- -------- -------- -------- --------Taxation - UK 718 (1,671) (1,063)Taxation - overseas (3,074) (2,749) (4,134)---------------------- -------- -------- -------- --------Total tax charge 7 (2,356) (4,420) (5,197)---------------------- -------- -------- -------- --------(Loss)/profit for the period -from continuing operations (725) 8,523 9,566Loss for the period - fromdiscontinued operations 5 - (835) (2,165)---------------------- -------- -------- -------- --------(Loss)/profit for the period -from continuing and discontinuedoperations (725) 7,688 7,401---------------------- -------- -------- -------- -------- Attributable to:- Equity shareholders of theParent 12 (890) 7,763 7,804- Minority interests 12 165 (75) (403)---------------------- -------- -------- -------- -------- (725) 7,688 7,401 ---------------------- -------- -------- -------- -------- DividendsProposed dividend (£'000) 8 3,594 3,646 5,100Proposed dividend per share 8 1.00p 1.00p 1.40p Paid in the period (£'000) 8 3,659 3,646 8,751Paid in the period per share 8 1.00p 1.00p 2.40p Earnings per share (total)Basic (loss)/earnings per share 9 (0.25p) 2.13p 2.14pAlternative basic earnings pershare 9 1.09p 1.94p 1.76p Diluted (loss)/earnings pershare 9 (0.25p) 2.11p 2.12pAlternative diluted earnings pershare 9 1.09p 1.93p 1.75p Earnings per share (continuingoperations)Basic (loss)/earnings per share 9 (0.25p) 2.27p 2.51pAlternative earnings per share 9 1.09p 2.08p 2.13p Diluted (loss)/earnings pershare 9 (0.25p) 2.25p 2.49pAlternative diluted earnings pershare 9 1.09p 2.07p 2.12p GROUP BALANCE SHEET (unaudited) as at 31 October 2007 Notes 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000--------------------------- -------- -------- -------- -------- AssetsNon-current assetsGoodwill 10 9,728 9,673 9,347Other intangible assets 10 22,785 24,015 22,565Property, plant and equipment 10 86,288 80,784 84,243Investment property 10 3,004 3,373 3,192Investments in associates 516 343 99Financial assets - held tomaturity 328 - 327- available-for-sale 109 109 109Deferred tax asset 852 351 382Trade and other receivables 1,577 1,723 1,266--------------------------- -------- -------- -------- -------- 125,187 120,371 121,530 --------------------------- -------- -------- -------- --------Current assetsInventories 30,742 35,718 32,387Trade and other receivables 32,720 34,650 41,574Financial assets - held tomaturity 64 344 64- available-for-sale 406 7 307Current tax 1,882 650 160Cash and cash equivalents 11 27,808 31,059 31,340--------------------------- -------- -------- -------- -------- 93,622 102,428 105,832 --------------------------- -------- -------- -------- --------Total assets 218,809 222,799 227,362--------------------------- -------- -------- -------- --------EquityTotal shareholders' equity 12 85,810 98,706 98,301Minority interests 12 2,313 2,570 2,135--------------------------- -------- -------- -------- --------Total equity 88,123 101,276 100,436--------------------------- -------- -------- -------- --------LiabilitiesNon-current liabilitiesFinancial liabilities 13 14,466 22,017 17,868Post-employment benefitobligations 15 3,862 2,752 2,736Provisions 4 25 6Deferred tax liability 10,577 11,163 12,083Derivative financial liabilities - 650 -Trade and other payables 961 1,701 963--------------------------- -------- -------- -------- -------- 29,870 38,308 33,656 --------------------------- -------- -------- -------- --------Current liabilitiesFinancial liabilities 13 47,877 24,538 42,174Provisions 2,326 2,590 2,380Current tax 5,586 7,257 4,284Trade and other payables 45,027 48,830 44,432--------------------------- -------- -------- -------- -------- 100,816 83,215 93,270 --------------------------- -------- -------- -------- --------Total equity and liabilities 218,809 222,799 227,362--------------------------- -------- -------- -------- -------- GROUP CASH FLOW STATEMENT (unaudited) for the six months ended 31 October 2007---------------------------- -------- -------- -------- -------- Notes 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000---------------------------- -------- -------- -------- -------- Cash flows from operatingactivitiesOperating profit from continuingoperations 2,690 13,169 16,016Operating loss from discontinuedoperations - (759) (2,453)Share of post-tax loss/(profits)from associates 71 (59) (41)Amortisation, impairment anddepreciation 16,077 13,917 30,165Loss/(profit) on sale ofproperty, plant and equipment 277 (22) (125)Exchange differences 216 (434) (251)Other items (537) 158 411Changes in working capital 6,328 345 (3,487)---------------------------- -------- -------- -------- --------Cash generated from operations 25,122 26,315 40,235Interest paid (2,085) (1,401) (3,219)Taxation paid (4,677) (429) (2,639)---------------------------- -------- -------- -------- --------Net cash generated fromoperating activities 18,360 24,485 34,377---------------------------- -------- -------- -------- --------Cash flows from investingactivitiesAcquisition of subsidiaries, netof cash acquired 304 - (152)Proceeds from disposal ofsubsidiaries - - 1,300Purchase of intangible assets (3,626) (3,295) (6,843)Proceeds from sale of intangibleassets 20 - 199Purchase of property, plant andequipment (14,085) (17,251) (33,668)Proceeds from sale of property,plant and equipment 298 1,607 3,162Interest received 493 449 998Dividends received fromassociate 54 37 37---------------------------- -------- -------- -------- --------Net cash utilised in investingactivities (16,542) (18,453) (34,967)---------------------------- -------- -------- -------- --------Cash flows from financingactivitiesIssue of Ordinary shares toequity shareholders 5 1 516Purchase of treasury shares (3,835) - (1,089)Repayment of capital element offinance leases (59) (86) (387)Proceeds from borrowings 1,510 23,856 33,196Repayment of borrowings (3,965) (17,473) (24,579)Decrease /(increase) in monetaryfunds 11 (5) (67)Dividends paid to equityshareholders (3,659) (3,646) (8,751)Dividends paid to minorityinterests - - (4)---------------------------- -------- -------- -------- --------Net cash (utilised in)/generatedfrom financing activities (9,992) 2,647 (1,165)---------------------------- -------- -------- -------- --------Net (decrease)/increase in cashand cash equivalents (8,174) 8,679 (1,755)Cash and cash equivalents atbeginning of the period 11,573 14,143 14,143Exchange gain/(loss) on cash andcash equivalents 31 (679) (815)---------------------------- -------- -------- -------- --------Cash and cash equivalents at endof the period 11 3,430 22,143 11,573---------------------------- -------- -------- -------- -------- GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE (unaudited) for the six months ended 31 October 2007--------------------------------- -------- -------- -------- 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000--------------------------------- -------- -------- -------- Income and expense recognised directly inequityActuarial loss on defined benefit pensionscheme (478) - (50)Exchange differences 1,311 (5,128) (5,516)--------------------------------- -------- -------- -------- 833 (5,128) (5,566) Taxation on items taken directly to ortransferred from equityTax on actuarial loss on defined benefitscheme 137 - 12--------------------------------- -------- -------- --------Net income/(expense) recognised directlyin equity 970 (5,128) (5,554)(Loss)/profit for the period (890) 7,688 7,401--------------------------------- -------- -------- --------Total recognised income and expense forthe period 80 2,560 1,847--------------------------------- -------- -------- -------- Attributable to:- Equity shareholders of the Parent (98) 2,724 2,359- Minority interests 178 (164) (512)--------------------------------- -------- -------- -------- 80 2,560 1,847 --------------------------------- -------- -------- -------- NOTES TO THE INTERIM REPORT 1 Corporate information. The interim consolidated financial statements of Photo-Me International plc (the"Company" or "Photo-Me") for the six months ended 31 October 2007 (the Group'sInterim Report) were approved and authorised for issue by the Board of Directorson 17 December 2007. The Company is a public limited company incorporated in England whose shares arequoted on the London Stock Exchange, under symbol PHTM. Photo-Me is a specialist digital imaging company focused on professionallaboratories and end-user vending solutions. The Group has two main businesssegments, Vending and Manufacturing..Photo-Me manufactures a unique and completerange of photo-processing equipment covering all market segments, from wholesalelaboratories, to minilabs, to end-consumer vending kiosks. Vending comprises theoperation of photobooths and other vending equipment (including digital mediakiosks children's rides, photocopiers, card printing machines and amusementmachines). 2 Basis of preparation and accounting policies The Interim Report for the six months ended 31 October 2007 has been prepared inaccordance with IAS 34 Interim Financial Reporting and International FinancialReporting Standards ("IFRS") as adopted for use in the European Union ("EU") andin accordance with the Disclosure and Transparency Rules of the UK FinancialServices Authority. The Interim Report does not include all the information and disclosures requiredin annual financial statements, and should be read in conjunction with theGroup's annual financial statements for the year ended 30 April 2007. The Interim Report is unaudited but has been reviewed by the auditors and theirreport to the directors will be included in the Interim Report which will besent to shareholders. It does not comprise statutory financial statements withinthe meaning of Section 240 of the Companies Act 1985 (as amended). Thecomparative figures for the year ended 30 April 2007 have been extracted fromthe 2007 annual financial statements, prepared in accordance with IFRS, asadopted for use in the EU and as applied in accordance with the provisions ofthe Companies Act 1985, which have been filed with the Registrar of Companies.The auditor's report on those financial statements was unqualified and did notcontain an emphasis of matter paragraph or a statement under Section 237(2) or(3) of the Companies Act 1985. Accounting policies The Group will be adopting in its April 2008 financial statements those newstandards which are effective for that accounting period, and which have beenendorsed by the EU. The more significant standards are discussed below. TheGroup does not consider that these new standards will have a significant impacton the results and financial position of the Group. Apart from these changes, the accounting policies adopted are consistent withthose adopted in the Group's consolidated financial statements for the yearended 30 April 2007. IAS 1 Presentation of Financial StatementsAn amendment to this standard was issued in August 2005 and is effective foraccounting periods commencing on or after 1 January 2007. The amendment requiresadditional disclosures on the objectives, policies and processes for managingcapital. These disclosures will appear in the 2008 Annual Report. IFRS 7 Financial Instruments DisclosuresThis standard applies to accounting periods commencing on or after 1 January2007 and mainly affects, as far as the Group is concerned, with narrativedisclosures. These disclosures will appear in the 2008 Annual Report. IFRIC 10 Interim Financial Reporting and ImpairmentThis standard applies to accounting periods beginning on or after 1 November2006. The interpretation requires that the Group must not reverse an impairmentloss recognised in a previous interim period in respect of an investment ineither an equity instrument or a financial asset carried at cost. IFRIC 11 Group and Treasury Share TransactionsThis standard applies to accounting periods commencing on or after 1 March 2007.The interpretation addresses whether certain share-based payment transactionsinvolving group entities should be accounted for as equity settled or cashsettled under IFRS2. IFRIC 14 IAS19 The Limit on a Defined Benefit Asset, Minimum FundingRequirements and their InteractionThis interpretation has been adopted in the current period, as noted in note 15. The Group continues to monitor and assess the impact of new standards andinterpretations which the IASB periodically issues. This includes IFRS 8Operating Segments, which will apply to the Group's 2009 financial statements.Initial considerations indicate that this standard will have a minimal impact onthe Group's financial statements. Discontinued operations On 30 April 2007, the Group disposed of its investment in Deith Group Ltd("Deith Group"). Accordingly, the results of Deith Group are presented asdiscontinued operations for the periods ended 31 October 2006 and 30 April 2007. Use of non-GAAP profit measures Underlying profit Exceptional items, due to their significance and special nature which do notreflect the Group's underlying performance, are excluded from underlying profitand performance. These items may be gains or losses and can have a significantimpact on both absolute profit and profit trends. The directors believe that underlying profit (referred to as adjusted profit)and underlying diluted earnings per share measure (referred to as alternativeearnings per share) provide additional useful information to shareholders onunderlying trends and performance. These measures are used internally and maynot be directly comparable to other companies' adjusted profit measures, asunderlying profit is not defined under IFRS. Risks and uncertainties The principal risks and uncertainties affecting the business activities of theGroup remain those detailed on pages 11 and 15 of the 30 April 2007 AnnualReport, a copy of which is available from the Company. The Interim Business andFinancial Review contained within this Interim Report includes a commentary onthe outlook for the Group for the remaining six months of the financial year. Responsibility statement We confirm that to the best of our knowledge: - the condensed set of financial statements has been prepared in accordancewith IAS 34 Interim Financial Reporting as adopted by the EU;- the interim management report includes a fair review of the informationrequired by:a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication ofimportant events that have occurred during the first six months of the financialyear ending 30 April 2008 and the impact on the condensed set of financialstatements; and a description of the principal risks and uncertainties for theremaining six months of the year; andb) DTR 4.2.8R of the Disclosure and Transparency Rules, being related partytransactions that have taken place in the first half of the financial yearending 30 April 2008 and that have materially affected the financial position orperformance of the entity during that period and any changes in the relatedparty transactions described in the last annual report that could do so. By order of the Board David Young (Chairman) Jean-Luc Peurois (Group Finance Director) 14 December 2007 3 Segmental analysis The Group has two main business segments: Vending and Manufacturing. Thesesegments have been identified as the primary segments, as the Group organisesand manages its business in accordance with these activities. Vending comprises the operation of photobooths and other vending equipmentincluding digital media kiosks and children's rides. Manufacturing comprises themanufacture and sale of photo-processing equipment. This equipment ismanufactured by both the Group and by subcontractors. The segment results are as follows: Manufacturing Vending Group Sub-total Discontinued Total overheads operations £'000 £'000 £'000 £'000 £'000 £'000 -------------------- -------- ------ ------- ------ -------- ------- Six months to 31October 2007Total revenue 41,723 79,130 - 120,853 - 120,853Inter-segmentsales (13,771) - - (13,771) - (13,771)-------------------- -------- ------ ------- ------ -------- -------Revenue 27,952 79,130 - 107,082 - 107,082-------------------- -------- ------ ------- ------ -------- -------Operatingprofit/(loss)beforeexceptionalitems andshare ofpost-taxprofits fromassociates (463) 10,976 (2,095) 8,418 - 8,418Exceptionalitems (1,215) (144) (4,298) (5,657) - (5,657)-------------------- -------- ------ ------- ------ -------- -------Operatingprofit/(loss)afterexceptionalitemsexcludingassociates (1,678) 10,832 (6,393) 2,761 - 2,761Share ofpost-tax lossfromassociates (33) (38) - (71) - (71)-------------------- -------- ------ ------- ------ -------- -------Operatingprofit/(loss) (1,711) 10,794 (6,393) 2,690 - 2,690Profit on disposal - - - - - --------------------- -------- ------ ------- ------ -------- -------profit/(loss)before financeitems andtaxation (1,711) 10,794 (6,393) 2,690 - 2,690Finance costs- net (1,059) - (1,059)-------------------- -------- ------ ------- ------ -------- -------profit beforetax 1,631 - 1,631Taxationexpense (2,356) - (2,356)-------------------- -------- ------ ------- ------ -------- -------(Loss) for theperiod (725) - (725)-------------------- -------- ------ ------- ------ -------- ------- Manufacturing Vending Group Sub-total Discontinued Total overheads operations £'000 £'000 £'000 £'000 £'000 £'000 -------------------- -------- ------ ------- ------ -------- ------- Six months to 31October 2006Total revenue 45,101 80,269 - 125,370 2,089 127,459Inter-segmentsales (14,502) - - (14,502) - (14,502)-------------------- -------- ------ ------- ------ -------- -------Revenue 30,599 80,269 - 110,868 2,089 112,957-------------------- -------- ------ ------- ------ -------- -------Operatingprofit/(loss)beforeexceptionalitems andshare ofpost-taxprofits fromassociates 971 13,778 (2,658) 12,091 (759) 11,332Exceptionalitems 1,019 - - 1,019 - 1,019-------------------- -------- ------ ------- ------ -------- -------Operatingprofit/(loss)afterexceptionalitemsexcludingassociates 1,990 13,778 (2,658) 13,110 (759) 12,351Share ofpost-taxprofits fromassociates 35 24 - 59 - 59-------------------- -------- ------ ------- ------ -------- -------Operatingprofit/(loss) 2,025 13,802 (2,658) 13,169 (759) 12,410Profit on disposal - - - - - --------------------- -------- ------ ------- ------ -------- -------profit/(loss)before financeitems andtaxation 2,025 13,802 (2,658) 13,169 (759) 12,410Finance costs- net (226) (76) (302)-------------------- -------- ------ ------- ------ -------- -------profit /(loss)before tax 12,943 (835) 12,108Taxationexpense (4,420) - (4,420)-------------------- -------- ------ ------- ------ -------- -------profit/(loss)for the period 8,523 (835) 7,688-------------------- -------- ------ ------- ------ -------- ------- Manufacturing Vending Group Sub-total Discontinued Total overheads operations £'000 £'000 £'000 £'000 £'000 £'000 -------------------- -------- ------ ------- ------ -------- ------- Year to 30 April2007Total revenue 99,124 145,033 - 244,157 3,677 247,834Inter-segmentsales (29,238) - - (29,238) - (29,238)-------------------- -------- ------ ------- ------ -------- -------Revenue 69,886 145,033 - 214,919 3,677 218,596-------------------- -------- ------ ------- ------ -------- -------Operatingprofit/(loss)beforeexceptionalitems andshare ofpost-taxprofits fromassociates 5,135 14,205 (4,474) 14,866 (2,453) 12,413Exceptionalitems 1,109 - - 1,109 - 1,109-------------------- -------- ------ ------- ------ -------- -------Operatingprofit/(loss)afterexceptionalitemsexcludingassociates 6,244 14,205 (4,474) 15,975 (2,453) 13,522Share ofpost-taxprofits fromassociates 13 28 - 41 - 41-------------------- -------- ------ ------- ------ -------- -------Operatingprofit/(loss) 6,257 14,233 (4,474) 16,016 (2,453) 13,563Profit ondisposal - - - - 310 310-------------------- -------- ------ ------- ------ -------- -------profit/(loss)before financeitems andtaxation 6,257 14,233 (4,474) 16,016 (2,143) 13,873Finance costs- net (1,253) (118) (1,371)-------------------- -------- ------ ------- ------ -------- -------profit/(loss)before tax 14,763 (2,261) 12,502Taxationexpense (5,197) 96 (5,101)-------------------- -------- ------ ------- ------ -------- -------profit/(loss)forthe period 9,566 (2,165) 7,401-------------------- -------- ------ ------- ------ -------- ------- Seasonality of operations Historically, Vending has shown greater revenue and profits in the first half ofthe year than the second, whilst Manufacturing has shown greater revenue andprofits in the second half. For the current year ending 30 April 2008, it isexpected this pattern will continue for Vending but for Manufacturing revenue isexpected to increase but,owing to continuing difficult trading conditions,trading profit may reduce. A review of the Group by the new Chief Executive Officer may result in furtherrestructuring costs in the second half of the year. 4 Exceptional items Six months ended 31 October 2007 Strategic review costs totalled £3,950,000 (mainly, accounting, commercial,investment banking, legal and tax advice incurred in the proposed disposal ofthe Vending division) with a tax credit of £ 256,000. Restructuring costs in the UK and Continental Europe totalled £1,707,000, with atax credit of £559,000. Six months ended 31 October 2006 and year ended 30 April 2007 The provision for restructuring in Continental Europe made at 30 April 2006 hasbeen settled, resulting in a write-back of £1,109,000 at 30 April 2007, with atax charge of £381,000. At 31 October 2006 the process had been substantiallycompleted, resulting in a write-back of £1,019,000 with a tax charge of£340,000. 5 Discontinued operations The discontinued operation relates to the disposal on 30 April 2007 of DeithGroup, details of which were disclosed in the April 2007 Annual Report. The results of the discontinued operation are summarised in the table below. 6 months to Year to 31 October 30 April 2006 2007 £'000 £'000Revenue 2,089 3,677----------------- ------------------- -------------------Operating loss (759) (2,453)Net finance costs (76) (118)----------------- ------------------- -------------------Loss before tax (835) (2,571)Taxation expense - 96----------------- ------------------- -------------------Loss after tax (835) (2,475)Profit on sale - 310----------------- ------------------- -------------------Loss for period (835) (2,165)----------------- ------------------- ------------------- During the six months ended 31 October 2007, the discontinued operationcontributed cash flows of £253,000 from operating activities, £936,000 frominvesting activities and an outflow of £576,000 from financing activities. During the year ended 30 April 2007, the discontinued operation contributed cashflows of £227,000 from operating activities, £1,348,000 from investingactivities and an outflow of £596,000 from financing activities. 6 Finance revenue and costs 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000--------------------------------- -------- -------- -------- Finance revenueBank interest 78 60 129Interest from available-for-sale andother investments 415 372 811Other finance revenue 533 17 258Revaluation of put option over minorityinterest - 650 650--------------------------------- -------- -------- -------- 1,026 1,099 1,848 --------------------------------- -------- -------- --------Finance costsBank loan and overdraft interest 2,010 1,275 2,872Other loan interest 41 24 172Finance lease interest 26 17 39Preference share dividend 8 9 18Other finance charges - - ---------------------------------- -------- -------- -------- 2,085 1,325 3,101 --------------------------------- -------- -------- -------- Finance costs for the discontinued operation were £76,000 for the period to 31October 2006 and £118,000 for the year ended30 April 2007. 7 Taxation The major components of tax expense in the Group income statement are: 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000--------------------------------- -------- -------- -------- Current tax (credit)/charge - UK (165) 1,694 40Prior year tax (credit)/charge - UK (364) 3 1,110Current tax charge - overseas 3,701 4,292 4,781Prior year tax charge/(credit) - overseas 1,000 182 (17)--------------------------------- -------- -------- -------- 4,172 6,171 5,914 --------------------------------- -------- -------- --------Deferred tax relating to origination andreversal of temporary differencesDeferred tax credit - UK (221) (26) (87)Deferred tax change in rate - UK 32 - -Deferred tax credit - overseas (1,573) (1,725) (630)Deferred tax change in rate - overseas (54) - ---------------------------------- -------- -------- -------- (1,816) (1,751) (717) --------------------------------- -------- -------- --------Total taxation charge 2,356 4,420 5,197--------------------------------- -------- -------- -------- Effective tax rate 144.5% 34.1% 35.20%--------------------------------- -------- -------- -------- There was no taxation charge for the discontinued operation for the six monthsended 31 October 2006. The year ended 30 April 2007 included a UK current tax credit of £42,000 and aUK deferred tax credit of £54,000, the two credits totalling £96,000. The taxation expense is recognised based on management's best estimate of thetax rate expected for the full financial year. The variation in tax rates can be explained as follows:The significantly higher effective tax rate for the six months to 31 October2007 arises from a combination of certain exceptional strategic review costswhich are not deductible for tax in the UK, an overseas adverse prior yearadjustment and no tax relief being taken for losses arising overseas. 8 Dividends Pence per share 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000----------------------------- ------- ------- ------- ------- Dividends declared and paidduring the periodInterim dividend forthe year ended 30April 2006 1.00 3,646 3,646Final dividend for theyear ended 30 April2006 1.40 5,105 Interim dividend for the year ended 30 April 2007 1.00 3,659----------------------------- ------- ------- ------- ------- 3,659 3,646 8,751----------------------------- ------- ------- ------- -------Dividends declared but notapproved - not recognised asa liabilityInterim dividend forthe year ended 30April 2007 1.00 3,646 Final dividend for the year ended 30 April 2007 1.40 5,100 Interim dividend for the year ending 30 April 2008 1.00 3,594----------------------------- ------- ------- ------- ------- 3,594 3,646 5,100----------------------------- ------- ------- ------- -------Dividends approved -recognised as a liabilityFinal dividend for theyear ended 30 April2006 1.40 5,105Final dividend for theyear ended 30 April2007 1.40 5,031----------------------------- ------- ------- ------- ------- 5,031 5,105 ------------------------------ ------- ------- ------- ------- The final dividends are approved by shareholders at the Annual General Meetingand as such are liabilities at 31 October in each of the years under review. Theamounts are included in current liabilities - trade and other payables in thebalance sheet. The final dividend for the year ended 30 April 2006 was paid on 2 November 2006.The final dividend for the year ended 30 April 2007 was approved by theshareholders on 17 October 2007 and paid on 2 November 2007. Interim dividends are not recognised as a liability. The interim dividend forthe year ended 30 April 2006 of 1.00p per share was paid on 3 May 2006. Theinterim dividend for the year ended 30 April 2007 of 1.00p per share was paid on3 May 2007 to shareholders on the register at 2 March 2007. The Directors propose an interim dividend for the year ending 30 April 2008 of1.00p per share to be paid on 3 May 2008 to shareholders on the register at 29February 2008. 9 Earnings per share Basic earnings per share are calculated by dividing net profit attributable toOrdinary shareholders of the Parent by the weighted average number of Ordinaryshares in issue during the period excluding those held as treasury shares, whichare excluded from the calculation of earnings per share. Diluted earnings per share amounts are calculated by dividing the net profitattributable to Ordinary shareholders of the Parent by the weighted averagenumber of Ordinary shares outstanding during the period plus the weightedaverage number of Ordinary shares that would be issued on conversion of all thedilutive potential Ordinary shares into Ordinary shares. The Group has only onecategory of dilutive potential Ordinary shares: the share options granted tosenior staff, including directors, where the exercise price is less than theaverage market price of the Parent's Ordinary shares during the period. The earnings and weighted average number of shares used in the calculation areset out in the table below: 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007--------------------------------- -------- -------- -------- Basic earnings per share (0.25p) 2.13p 2.14pDiluted earnings per share (0.25p) 2.11p 2.12p--------------------------------- -------- -------- --------Earnings available to Ordinaryshareholders (£'000) (890) 7,763 7,804Weighted average number of shares inissue in the period- basic ('000) 361,288 364,630 364,815- including dilutive share options ('000) 363,315 367,982 367,877--------------------------------- -------- -------- -------- As a non-GAAP, measure, the Group has decided to show on the face of the incomestatement those material one-off items of income and expense which, because oftheir nature and expected infrequency of the event giving rise to them, meritseparate disclosure to allow shareholders to better understand the underlyingperformance of the Group and to facilitate comparison with prior periods. As aresult, the Group also shows basic and diluted earnings per share on thisadjusted basis. Adjusted earnings per share calculations--------------------------------- -------- -------- -------- 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007--------------------------------- -------- -------- -------- Adjusted basic earnings per share 1.09p 1.94p 1.76pAdjusted diluted earnings per share 1.09p 1.93p 1.75p--------------------------------- -------- -------- --------Unadjusted earnings (£'000) (890) 7,763 7,804Strategic review costs (£'000) 3,950 - -Tax on strategic review costs (£'000) (256) - -Restructuring costs (£'000) 1,707 (1,019) (1,109)Tax on restructuring costs (£'000) (559) 340 381Revaluation of put option over minorityinterests (£'000) - - (650)--------------------------------- -------- -------- --------Adjusted earnings (£'000) 3,952 7,084 6,426--------------------------------- -------- -------- -------- In addition to showing on the face of the income statement total earnings pershare (from continuing and discontinued operations), the Group also shows on theface of the income statement earnings from continuing operations. 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007Basic earnings per share--------------------------------- -------- -------- --------Continuing (0.25p) 2.27p 2.51pDiscontinued - (0.14p) (0.37p)--------------------------------- -------- -------- -------- Total (0.25p) 2.13p 2.14p --------------------------------- -------- -------- -------- Alternative basic earnings per share--------------------------------- -------- -------- --------Continuing 1.09p 2.08p 2.13pDiscontinued - (0.14p) (0.37p)--------------------------------- -------- -------- -------- Total 1.09p 1.94p 1.76p --------------------------------- -------- -------- -------- Diluted earnings per share--------------------------------- -------- -------- --------Continuing (0.25p) 2.25p 2.49pDiscontinued - (0.14p) (0.37p)--------------------------------- -------- -------- -------- Total (0.25p) 2.11p 2.12p --------------------------------- -------- -------- -------- Alternative diluted earnings per share--------------------------------- -------- -------- --------Continuing 1.09p 2.07p 2.12pDiscontinued - (0.14p) (0.37p)--------------------------------- -------- -------- -------- Total 1.09p 1.93p 1.75P --------------------------------- -------- -------- -------- Where earnings are negative, diluted earnings per share are the same as basicearnings per share because the exercise of share options would have the effectof reducing the loss per Ordinary share and is therefore not dilutive under theterms of IAS 33. 10 Non-current assets - intangibles, property, plant and equipment andinvestment property--------------------------- -------- -------- -------- -------- Other Property, intangible plant and Investment Goodwill assets equipment Property £'000 £'000 £'000 £'000--------------------------- -------- -------- -------- -------- Net book value at 1 May 2007 9,347 22,565 84,243 3,192Exchange adjustment 33 295 665 62Additions- photobooths and vending - - 13,130 -machines- research and development costs - 3,522 - -- other additions - 104 955 -- subsidiaries acquired 348 - 94 -- transfers - 32 (102) -Depreciation provided in theperiod - (3,713) (12,114) (250)Disposals at net book value - (20) (583) ---------------------------- -------- -------- -------- --------Net book value at 31 October 9,728 22,785 86,288 3,0042007 -------- -------- -------- ----------------------------------- 11 Cash and cash equivalents --------------------------------- -------- -------- -------- 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 --------------------------------- -------- -------- -------- Cash at bank and in hand 26,039 27,475 27,859Deposit accounts 1,769 3,584 3,481--------------------------------- -------- -------- --------Cash and cash equivalents per the balancesheet 27,808 31,059 31,340Bank overdrafts (24,378) (8,916) (19,767)--------------------------------- -------- -------- --------Cash and cash equivalents per the cashflow statement 3,430 22,143 11,573--------------------------------- -------- -------- -------- 12 Reconciliation of movements in equity ---------------- -------- -------- -------- -------- -------- -------- Share Share Treasury Other Retained Total capital premium shares reserves earnings £'000 £'000 £'000 £'000 £'000 £'000 ---------------- -------- -------- -------- -------- -------- -------- Balance at 1 May2007 2,035 5,372 (1,967) (2,282) 95,143 98,301Exchangedifferences - - - 1,298 - 1,298Shares issued inthe period - 5 - - - 5Purchase oftreasury shares - - (3,835) - - (3,835)Loss for the - - - - (890) (890)periodShare options - - - - (38) (38)Actuarialmovementsin defined benefit - - - - (478) (478)pension scheme andother postemployment benefitobligationsDeferred tax onactuarial - - - - 137 137movementsTransfers and - - - - - -other movementsDividends - - - - (8,690) (8,690)---------------- -------- -------- -------- -------- -------- --------At 31 October 2007 2,035 5,377 (5,802) (984) 85,184 85,810---------------- -------- -------- -------- -------- -------- -------- ---------------- -------- -------- -------- -------- -------- -------- Share Share Treasury Other Retained Total capital premium shares reserves earnings £'000 £'000 £'000 £'000 £'000 £'000 ---------------- -------- -------- -------- -------- -------- -------- Balance at 1 May2006 2,029 4,862 (878) 832 97,732 104,577Exchangedifferences - - - (5,039) - (5,039)Shares issued inthe period - 1 - - - 1Purchase of - - - - - -treasury sharesProfit for theperiod - - - - 7,763 7,763Share options - - - - 155 155Transfers andother - - - 650 (650) -movementsDividends - - - - (8,751) (8,751)---------------- -------- -------- -------- -------- -------- --------At 31 October 2,029 4,863 (878) (3,557) 96,249 98,7062006 -------- -------- -------- -------- -------- ------------------------ ---------------- -------- -------- -------- -------- -------- -------- Share Share Treasury Other Retained Total capital premium shares reserves earnings £'000 £'000 £'000 £'000 £'000 £'000 ---------------- -------- -------- -------- -------- -------- -------- Balance at 1 May2006 2,029 4,862 (878) 832 97,732 104,577Exchangedifferences - - - (5,407) - (5,407)Shares issued inthe period 6 510 - - - 516Purchase oftreasury shares - - (1,089) - - (1,089)Profit for theperiod - - - - 7,804 7,804Share options - - - - 39 39Transfers andother - - - 2,293 (1,681) 612movementsDividends - - - - (8,751) (8,751)----------------- ------- -------- -------- -------- -------- --------At 30 April 2007 2,035 5,372 (1,967) (2,282) 95,143 98,301----------------- ------- -------- -------- -------- -------- -------- Treasury shares In accordance with shareholders' resolutions passed at Annual General Meetings,the Company may purchase its own shares up to a maximum of 10% of the Ordinaryshares in issue. During April 2007, the Company purchased an additional1,600,000 shares at a combined cost of £1,089,000, resulting in a balance at 30April 2007 of 2,600,000. During the period to 31 October 2007, the Company haspurchased on various dates and at various prices an additional 4,905,000Ordinary shares at a combined cost of £3,835,000. At 31 October 2007, the numberof treasury shares held is 7,505,000, representing 2.05% of the Ordinary issuedshare capital. Other reserves Other reserves include the translation reserve, used to record exchangedifferences arising from the translation of the financial statements of overseassubsidiaries, associates and joint ventures, other reserves, mainly beingnon-distributable reserves in overseas subsidiaries in accordance with locallegislation, and fair value reserves, to record changes on hedges and otherderivatives. In the year to 30 April 2007, an amount of £1,300,000 was includedin other reserves, transfers and other movements which related to the write-backof the put option over minority interests in Deith Group which was sold duringthe year. Minority interests----------------------------------- ------- ------- ------- 6 months to 6 months to Year to 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 ---------------------------------- ------- ------- ------- At 1 May 2,135 2,734 2,734Exchange differences 13 (89) (109)Profit/(loss) for the period 165 (75) (403)Other movements - - 4Disposals - - (91)---------------------------------- ------- ------- -------At end of period 2,313 2,570 2,135---------------------------------- ------- ------- ------- 13 Financial liabilities ---------------------------------- -------- -------- ------- 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 ---------------------------------- -------- -------- ------- Non-current liabilitiesNon-current instalments due on bank loans 13,471 21,075 16,801Finance lease creditors 453 351 503Preference shares 542 591 564---------------------------------- -------- -------- ------- 14,466 22,017 17,868 ---------------------------------- -------- -------- -------Current liabilitiesBank overdrafts 24,378 8,916 19,767Current instalments due on bank loans 23,372 15,419 22,267Finance lease creditors 127 203 140---------------------------------- -------- -------- ------- 47,877 24,538 42,174 ---------------------------------- -------- -------- ------- 14 Net debt 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 Cash and cash equivalents per balancesheet 27,808 31,059 31,340Financial assets held to maturity 392 344 391Deposits available for sale 28 27 28Bank overdrafts (24,378) (8,916) (19,767)Non-current bank loans (13,471) (21,075) (16,801)Current instalments on bank loans (23,372) (15,419) (22,267)Finance leases (580) (554) (643)--------------------------------- -------- -------- --------Net debt (33,573) (14,534) (27,719)--------------------------------- -------- -------- -------- 15 Post-employment benefit obligations 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000-------------------------------- -------- -------- ------- Company defined benefit scheme 464 (27) 32Overseas employment benefit obligations 3,398 2,779 2,704-------------------------------- -------- -------- -------Amount shown as non-current liability 3,862 2,752 2,736-------------------------------- -------- -------- ------- The Company and its principal subsidiaries operate pension and other retirementschemes including both funded defined benefit schemes, whereby retirementbenefits are based on the employee's final remuneration and length of service,and defined contribution schemes, whereby retirement benefits reflect theaccumulated value of agreed contributions. The Group and the Company have a constructive obligation to fund the deficit inthe Company's defined benefit pension scheme and this has resulted in a chargeto equity of £478,000 shown as a movement in the Group statement of recognisedincome and expense. 16 Business Combinations On 1 July 2007, Imaging Solutions A.G. acquired 100% of Piazza ImagingProjekt-und Beteiligungs GmbH, subsequently renamed Imaging Management SolutionsGmbH (IMS) from a company owned by the Chief Executive Officer and minorityshareholder of Imaging Solutions. The net assets of this company at date ofacquisition are shown below. A 100% subsidiary company of IMS, now known as Imaging Postprocessing SolutionsGmbH (IPS) acquired on 1 July 2007 assets , on deferred consideration terms,from Albin Spitzke KG (GmbH & Co) and commenced trading in the manufacture ofmachines for cutting, packaging and sorting photofinishing orders. Certainassets cannot be separately identified and have been shown as goodwill. Theamount allocated to goodwill and deferred consideration are subject to change inaccordance with the terms of the purchase agreement. The value placed on assetsand liabilities shown in the table below are provisional as a detailedexamination of the assets and liabilities acquired is being performed and thenumbers may change by the year-end. Imaging Management Solutions GmbH £'000Purchase consideration 681Net assets acquired 333------------------------ ----------------------------Goodwill 348------------------------ ---------------------------- Purchase consideration- satisfied in cash 333- satisfied by deferred consideration 348------------------------ ---------------------------- 681 ------------------------ ---------------------------- Acquirees' carrying value and Fair value £'000 Property, plant and equipment 94Deferred tax 155Inventories 9Trade and other receivables 9Financial assets- available forsale 88Cash and cash equivalents 637-------------------------- --------------------------Total assets 992-------------------------- --------------------------Non-current liabilitiesPost-employment benefit obligations 575-------------------------- --------------------------Total non-current liabilities 575-------------------------- --------------------------Current liabilitiesTrade and other payables 84-------------------------- --------------------------Total current liabilities 84-------------------------- --------------------------Total liabilities 659-------------------------- --------------------------Net assets 333-------------------------- -------------------------- Goodwill 348-------------------------- -------------------------- The net cash (outflow)/inflow arising on acquisition was as follows: £'000Purchase consideration - cash consideration (333)Cash and cash equivalents acquired 637------------------------ ----------------------------Acquisition of subsidiaries net of cash acquired(per Group cash flow 304statement) ---------------------------------------------------- The acquired business contributed £171,000 in third party revenue and £56,000 inprofit after taxation from the date of acquisition. As assets were acquired, andthe acquisition did not occur at the beginning of the year, it is not possibleto indicate values for revenue and profit after tax. 17 Contingencies The Directors consider adequate provision has been made for legal disputes andthus they consider no contingent liability for litigation exists. There has been no material change since 30 April 2007 for other contingentliabilities. 18 Related party transactions The Group's significant related parties are disclosed in the 2007 Annual Reportand include its associates and companies in which certain directors havedeclared an interest and with which the Group has a trading relationship. Exceptfor the acquisitions referred to above (note 16), there were no materialdifferences in related parties or related party transactions in the period orprior period. 19 Copies of the Interim Report Copies of the Interim Report will be mailed to shareholders by 14 January 2008and from that date will be available from the Company's Registered Office atChurch Road, Bookham, Surrey KT23 3EU (Tel: 01372-453399). This information is provided by RNS The company news service from the London Stock Exchange