Photo-me International (LON:PHTM) WWW.STOCKWATCHUK.COM


PHOTO-ME (£329m market cap) released 1H results to 31/10 this morning. Not a well attended meeting.

The strong laundry performance kept underlying revenues moving, being up 0.4% to £120.3m. The EBITDA, excluding IFRS 16, was £43.3m (£39m) with adjusted PBT £28.5m versus £26.7m in 1H18. The cash generated from the three activities of identification, laundry and kiosks was £41m, up 13.7%. EPS was 6p and the dividend held at 3.7p for the 1H. The full year dividend is set to be 8.44p, giving the stock a 10% yield. 54% of revenue was from continental Europe (33% margin, profits +22% to £25m), 24% UK/RoI ( 7.5% margin, profits -61% to £1.8m) and Asia ( China, Japan mainly ) responsible for 21% revenues ( 15% margin up from 7% with profits at £3.4m, up 126%). Should cash be needed for an acquisition then the dividend could be reduced, the CEO stated to me though they had £25m of cash at the period end and cash generation was £41m in the 1H. Over the last 18 months FY20 forecasts have reduced by 16% though the share price has fallen by 50% as various concerns hit the spreadsheet such as Japan profitability and the UK Brexit. The P/E and yield have converged.

Today’s results highlighted the removal of underperforming booth units from the UK, due to Brexit travel concerns / British Gov allowing photo selfies for ID (EU regulations ban this) and the reposition of these units to France, so improving profitability. Adding to this management action, the return of profit from Japan after a period of restructuring as the Japanese Government back tracked on a proposed compulsory national ID card/payment system (110m population) was also helpful. The CEO hinted at opportunities in Japan to strengthen their position as the rival operators have all suffered from the Japanese MyID reversal as a compulsory ID card is no longer on the agenda. Citizens did not the plan as it was to become big brother like. The presentation pointed to FY result estimates being in line.

The Laundry expansion is being financed by the cash flow from the venting units (photobooths/ kiosks) which is responsible for around 70% PLC vending units in France, 55% in UK/RoI but 97% in Asia. Laundry is a key component to future investment and profits. Laundry units were up 16%…

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