RESULTS FOR THE YEAR ENDED 30 APRIL 2018 10 July 2018 SERGE - - PowerPoint PPT Presentation

RESULTS FOR THE YEAR ENDED 30 APRIL 2018

10 July 2018

SERGE CRASNIANSKI

C h i e f E x e c u t i ve O f f i c e r & D e p u t y C h a i r m a n

OVERVIEW

Overview

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• Good financial performance
• Continued progress on execution of the Group’s growth strategy
• Revenue growth in all of Photo-Me’s territories, except Japan
• Laundry business revenue growth of almost 70% year-on-year, contributing 16% of total Group revenue
• Strategy in place to return Japanese subsidiary to profit, the very early stages have been positive
• Restructuring of Photo-Me Retail now complete and delivering profitability
• Remained highly cash-generative, supporting innovation in future growth and high returns to shareholders

Agenda

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• OUR BUSINESS MODEL
• FINANCIAL HIGHLIGHTS
• OPERATIONAL HIGHLIGHTS
• FINANCIAL OVERVIEW
• BUSINESS REVIEW
• GROWTH STRATEGY AND INNOVATION

Our business model

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• 46,710 instant-service units focused on three principal areas
• Investment in new technologies and complementary products and services
• Leverage scale of operations to rapidly deploy new products at low incremental cost, providing rapid return on investment

Our key strengths

Financial highlights

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Reported revenue

+7.1% to £229.8m

At constant currency Revenue +5.9% Profit before tax +2.5%

• Another year of good progress
• Expansion of the laundry business remains the primary growth driver (organic and by acquisition)
• Further deployment of identification technology in key markets

Cash generated from

• perations

£61.0m

Reported EBITDA

+2.8% to £71.0m

EBITDA margin

30.9%

Profit before tax

+4.4% to £50.2m

Net cash position

£26.7m

Earnings per share

+14.2% to 10.60p

Total ordinary dividend per share +20.1% to 8.44p

Operational highlights

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• Continued investment in R&D
• Banking Booth and 3D Enrolment Kiosk awarded at TRUSTECH
• Continued focus on new opportunities to extend our biometric and 3D capture

technology EXPANDING IDENTIFICATION PARTNERSHIPS WITH GOVERNMENTS

• Continued profit growth and strong cashflow
• Rollout of secure photo ID upload technology for passport applications launched

with HMPO in the UK

• Continued rollout of secure photo ID upload technology in France, Ireland,

Germany, and discussions ongoing with the Dutch government

• Plan in place to restructure Japanese business, delivering positive results

CONTINUED RAPID GROWTH OF HIGHER MARGIN LAUNDRY BUSINESS

• Total Laundry revenue growth 69%
• Total revenue from Revolution units up 49%
• Good contribution from UK B2B bolt-on laundry acquisitions
• Post-period acquisition of a leader in the high-growth potential Spanish

launderette market KIOSKS CONTINUE TO DELIVER REVENUE GROWTH

• Revenue growth of 23.8%
• Refocus of Photo-Me Retail completed, with improved profitability already

achieved FOCUSED INVESTMENT IN INNOVATION FOR FUTURE GROWTH

STEPHANE GIBON

C hief Financial Of f icer

FINANCIAL REVIEW

Key financials

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195.6 186.6 177.2 184.0 214.7 229.8

50 100 150 200 250 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

REPORTED REVENUE £m

• Reported revenue +7.1%
• At constant currency1 +5.9% to £216.9m

44.3 47.8 51.8 56.7 69.0 71.0

0% 5% 10% 15% 20% 25% 30% 35% 10 20 30 40 50 60 70 80 FY 2013 FY 2014 FY 2015* FY 2016 FY 2017 FY 2018

EBITDA

(excluding associates) EBITDA EBITDA Margin

£m

• EBITDA +2.8%
• At constant currency1 +1.0% to £70.4m
• EBITDA margin was 30.9%

12017 trading results of overseas subsidiaries converted at 2018 exchange rates

Key financials

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24.3 30.1 35.0 40.1 48.0 50.2

0% 5% 10% 15% 20% 25%

10 20 30 40 50 60 FY 2013 FY 2014 FY 2015* FY 2016 FY 2017 FY 2018

REPORTED PROFIT BEFORE TAX

PBT PBT Margin

£m

46.6 45.6 48.1 51.4 61.3 61.0

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

CASH GENERATED FROM OPERATIONS £m

• Reported profit before tax +4.4%
• Underlying profit before tax2 +0.3% to £46.8m, at

constant currency1 was £47.5m, down 1.6%

• Profit after tax +14.7% to £40.3m, due to reduction in

effective tax rate

2Underlying profit before tax is 2018 profit before tax adjusted to exclude the gain on the Group’s

shareholding in Max Sight Group Holdings Limited, the profit on disposal of the former head

• ffice building, and restructuring fees relating Photo-Me Retail. 2017 profit before tax is adjusted

to exclude the translation reserve taken to profit on disposal of subsidiaries

• Remain highly cash generative
• Ongoing investment in innovation

12017 trading results of overseas subsidiaries converted at 2018 exchange rates

EPS and dividends

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2.00 2.50 3.00 3.75 4.88 5.86 7.03 8.44 3.00 2.00 2.815

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

2011 2012 2013 2014 2015 2016 2017 2018

DIVIDEND HISTORY

Ordinary dividend Special dividend

3.74 3.95 4.76 5.70 6.70 7.72 9.27 10.60

0.00 2.00 4.00 6.00 8.00 10.00 12.00

2011 2012 2013 2014 2015 2016 2017 2018

DILUTED EPS

• Diluted earning per share +14.2%
• Total ordinary dividend per share +20.1%
• £26.2m cash returned to shareholders by way
• f dividends in the year
• Total dividend to be maintained for FY2019

Pence per share Pence per share

Results by geographic area

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CONTINENTAL EUROPE UK & IRELAND

ASIA

COUNTRIES

Austria, Belgium, France, Germany, Netherlands, Poland, Portugal, Spain and Switzerland United Kingdom and Ireland (Including Corporate) China, Japan, Singapore, South Korea, Vietnam

VENDING UNITS % OF THE GROUP

24,550 units 52.6% 12,055 units 25.8% 10,105 units 21.6% REVENUE 2018 £121.1m 2017 £111.7m Change +8.5% 20171 £116.3m 2018 £63.6m 2017 £53.6m Change +18.8% 20171 £53.8m 2018 £45.0m 2017 £49.4m Change

• 8.8%

20171 £46.8m OPERATING PROFIT £31.9m £33.9m

• 5.8%

£35.3m £10.4m £7.3m +42.5% £7.3m £5.4m £8.4m

• 35.7%

£8.0m MARGIN 26.3% 28.8%

• 13.2%

30.3% 16.4% 13.6% +19.9% 13.5% 12% 17.4%

• 31.0%

17.5%

1 2017 trading results of overseas subsidiaries converted at 2018 exchange rates

• Continental Europe
• Steady revenue growth driven by continued rollout of Revolution units
• Operating profit decline reflected investments in long-term research and development projects
• UK & Ireland
• Operating profit growth includes acquisitions, a benefit from the sale of the head office, and a one-off charge of

£2.6 million, relating to the restructuring of the Photo-Me Retail business.

• Asia
• Revenue decline reflected an oversupply of photobooths in the Japanese market

Net cash

13 FY 2018 investments comprise: Laundries £15.2m Kiosks £3.4m Photobooth £13.4m

Others £3.5m

£m

39.2 26.7 (0.2) 61.3 (0.3) (35.5) (3) (1.4) (25.1) (8.3)

• 20.0

40.0 60.0 80.0 100.0 120.0 140.0

Opening cash at 30 April 2016 FX Operating CF Interest paid and Financing Investment in Estate and infrastructure (Net) Capitalised R&D and SW Acquisitions Dividends Tax Closing cash at 30 April 2017

Opening Net Cash at 30 April 2017 Closing Net Cash at 30 April 2018 FX Operating cash flow Interest paid and financing Investment estate and infrastructure Capitalised R&D and SW Acquisitions Dividends Tax

Revenue and profit bridges

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Revenue Profit before tax

FY2017

FX Acquisitions Laundry Price My Number SG&A Finance Other NIM Other

FY2018 214.7 2.3 5.8 9.2 2.8 (5) 229.8 180 190 200 210 220 230 240 48 0.9 0.8 3.5 (1.1) (0.7) (2.9) (1.1) 3.7 (0.9) 50.2 38 40 42 44 46 48 50 52 54 56

£m

ERIC MERGUI

C hief Operat ing Of f icer

BUSINESS REVIEW

Vending units in operation

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• Steady growth driven by continued

deployment of Revolution units

22,800 23,751 24,550

21,500 22,000 22,500 23,000 23,500 24,000 24,500 25,000 2016 2017 2018

CONTINENTAL EUROPE

12 500 13,287 12,055

11,000 11,500 12,000 12,500 13,000 13,500 2016 2017 2018

10,200 10,908 10,105

9,600 9,800 10,000 10,200 10,400 10,600 10,800 11,000 2016 2017 2018

UK & IRELAND ASIA

Number of vending units in operation

Children's rides Photobooth Kiosk Laundry Other

• Decline in units reflects restructuring
• f Photo-Me Retail, which is now

delivering profitability

• Photobooth estate +3.9%, while

the decline in overall vending units reflected the removal of old sticker machines

Number of vending units in operation (% of estate) 1.0% 18.5% 53.6% 19.1% 7.8% 28.3% 10.8% 51.7% 3.8% 5.3% 95.3% 3.4% 0.9% 0.4%

Identification - overview

PHOTOBOOTH ESTATE

• Established network of 29,015 photobooths, representing 62% of total vending estate
• Presence in 18 countries
• Integrated software to ensure conformity to ISO and ICAO photo ID regulations
• Dedicated support maintenance and remote telemetry
• Market-leading brands across all operating regions

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GROWTH DRIVERS

• Demand from governments for cheaper and more secure services
• Photo-Me’s major networks of photobooths can provide governments with

customer points of contact across the country

Identification – strategic progress

30 April 2018 30 April 2017 Change Number of units in operation 29,015 28,541 +1.7% Percentage of total Group vending estate (number of units) 62.0% 59.0% +5.1% Revenue £149.3m £152.2m

• 1.9%

Capex £13.4m £12.0m +11.6%

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• Continued expansion of estate and further deployment of ID solutions for governments
• Excluding Japan, identification revenue increased by 1.2%
• Launch of secure digital upload system for passport renewals in the UK with HMPO
• 2,200 photobooths upgraded at the year end
• Continued deployment of secure upload solution in partnership with governments
• 5,700 photobooths in France upgraded
• 300 units upgraded in Ireland for passport renewal, in line with plan
• Discussions ongoing with the Dutch government
• Plan in place to restructure Japanese subsidiary to return business to profit growth
• My Number ID card programme introduced in January 2016 was not made compulsory
• Oversupply in the photobooth market, which now has the highest density of photobooths per person
• As a global market-leader, Photo-Me remains strongly positioned in the Japanese market vs peers

Identification – execution of growth strategy

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ENCRYPTED DIGITAL PHOTO ID UPLOAD TECHNOLOGY FOR UK PASSPORT RENEWALS

• Positive conclusion of discussions with HMPO in late 2017
• Deployment of e-passport technology in the UK in mid-December 2017
• 2,200 photobooths upgraded as at 30 April 2018
• 4,000 photobooth upgrades planned by end of September 2018

BENEFITS OF THE TECHNOLOGY For consumers

• Great customer experience through an easy-

to-use, reliable, high-quality and value-for- money service For government

• Simplification of administrative process,

which provides a secure, easy and quick way to digitalise and transfer sensitive biometric data which cannot be corrupted (customer does not have access to the data)

Laundry - overview

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• Launched in 2012, our laundry business operates in three key areas

GROWTH DRIVERS

• Demand for high capacity laundry services
• Competitive pricing
• Convenience; prime locations, open 24/7
• Very limited competition

REVOLUTION

• Outdoor self-service laundry units
• 24-hour access to large capacity, rapid laundry services
• Located on easy access, high-footfall sites such as supermarket car parks or petrol forecourts

LAUNDERETTES

• Convenient, competitively priced, large capacity self-service launderette shops
• Typically positioned in or near to town centres
• Strategy to acquire and refit underperforming launderette businesses and open new launderettes

in attractive locations

• Currently operated in France, Spain, Belgium, Ireland and Japan

B2B LAUNDRY SERVICES

• B2B distribution and leasing of laundry and catering equipment to institutions such as

hospitals, care homes and universities, through FowlerUK.com Limited, Inox Equip Limited and Tersus Limited.

Laundry – strategic progress

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• Continued expansion of Laundry operations, focused on France, Belgium, Portugal, Ireland, UK, across Photo-Me’s three

laundry segments: Revolution, Launderette, and B2B

• Total Laundry revenue now contributing 16% of total Group revenue (2017: 10%)
• On track to deploy 6,000 owned, sold and acquired units by 2020
• Continued rollout of Revolution machine estate, now representing 5% of total Group vending estate
• Average takings per owned laundry unit (based on machines in France, Ireland and Portugal full month takings)

increased by 6.2% year on year, to €16,329 since 2016

• Further expansion of Launderette estate; La Wash Group, a leader in the attractive Spanish launderette market, acquired

in May 2018

• Good progress in expanding B2B laundry services, with two acquisitions in July 2017
• Pipeline of further B2B and launderette acquisition opportunities, looking specifically at Continental Europe

30 April 2018 30 April 2017 Change Total laundry units deployed (owned, sold & acquisitions) 4,449 3,251 +36.9% Total revenue from laundry operations (owned, sold & acquisitions) £36.7m £21.7m +69.1% Number of Revolution units in operation 2,313 1,750 +32.2% Revolution share of total Group vending estate (number of units) 5.0% 3.6% +38.9% Total revenue from Revolutions £21.2m £14.2m +49.3% Revolution capex £15.2m £10.5m +44.8%

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Laundry: strategy driving significant shift in revenue mix

PORTUGAL

• First Revolution laundry machine installed

in May 2014

• Total of 188 units deployed as at 30 April

2018 (2017: 135), up 39%

• Laundry revenue was £1.4m as at 30 April

2018 (2017: £0.9m), up 55.6%

• Significant shift in revenue mix with

laundry now representing 68.9% of total revenue in Portugal (2017: 60.6%) IRELAND

• First Revolution laundry machine installed

in May 2014

• Total of 272 units deployed as at 30 April

2018 (2017: 179 units), up 52%

• Laundry revenue was £4.0m as at 30 April

2018 (2017: £2.3m), up 73%

• Significant shift in revenue mix with

laundry now representing 69.8% of total revenue in Ireland (2017: 63.1%)

20 40 60 80 100 120 140 160 180 200 2017 2018

Number of Revolutions

0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 2017 2018

Laundry revenue (£m)

50 100 150 200 250 300 2017 2018

Number of Revolutions

0.5 1 1.5 2 2.5 3 3.5 4 4.5 2017 2018

Laundry revenue (£m)

Kiosks - overview

UNATTENDED KIOSK ESTATE

• More than 5,400 digital printing kiosks in operation
• Key markets are France, UK and Switzerland
• Wide range of competitively priced print formats and personalised products
• Latest generation - Speedlab cube and Speedlab bio units - fully integrated with

all major social media networks

• Positioned in attractive high-footfall locations

GROWTH DRIVERS

• Increased use of smartphones for taking photographs
• Digital photo sharing across social media platforms
• Fragmented market, expansion opportunities across Europe, US and Asia

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Kiosks – strategic update

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• Kiosks revenue grew by 24.1% year-on-year
• Photo-Me Retail reorganised to focus on unattended machines
• Slightly reduced number of machines in operation
• Business is now profitable
• Continued to deploy Speedlab cube and Speedlab bio units set up

at high-footfall premises across territories 30 April 2018 30 April 2017 Change Number of units in operation 5,416 5,872 (7.8)% Percentage of total Group vending estate (number of units) 11.6% 12.2% (4.9)% Revenue £16.5m £13.3m 24.1% Capex £3.4m £6.9m (50.7)%

SERGE CRASNIANSKI, CEO GROWTH STRATEGY AND INNOVATION

Growth strategy (2017-2020)

• Continued diversification of operations focused on three key business areas:
• Target expansion into

high-footfall locations

• Penetrate new territories
• Grow revenue through

multiple-service offering

• Deploy proven

identification security technologies into existing and new territories

• Deploy 6,000 owned, sold

and acquired laundry units by 2020

• Identify and deliver

products to new high- demand markets

• Expand launderette

presence through the

• wned/operated model
• Extend B2B offering in the

UK and into new territories

• Increase presence on

high-footfall sites

• Through multi-service
• ffering
• Extend product

partnerships into new territories

• Capitalise on market

leading position and competitor landscape

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Innovation - overview

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• Continual investment in innovation is at the core of the business
• Four R&D centres globally; France, China, Vietnam, Japan
• 60 highly experienced engineers specialised in software development (3D, security standards, design and unit upgrades)
• Award-winning new product development
• New product industrialisation (pilot production and testing) prior to scaled production
• Continual investment in refurbishment and upgrade of existing estate
• Supply and logistics supporting European operations

RESEARCH & DEVELOPMENT PLATFORM KEY FOCUS AND OPPORTUNITIES

• Continual investment in refurbishment and upgrade of existing estate
• Further development and rollout of proprietary security biometric identification solutions
• Identification and development of complementary products and services
• Aim to achieve first year gross revenues equivalent to or greater than the cost of investment in any new product offering

Innovation – strategic update

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AWARD WINNING NEW PRODUCT DEVELOPMENT

• Banking booth technology won the 2017 Sesames

Award at TRUSTECH for Best eTransactions Solution

• 3D Enrolment Kiosk product was a finalist

BANKING BOOTH

• Front-end retail banking services via established

photobooth network, supporting fintech companies competing with traditional high street banks

• Leverage presence in high-footfall locations and ability

to deploy technology rapidly at low incremental cost to the business

• Discussions with financial institutions to provide front-

end retail banking services ongoing 3D ENROLEMENT

• 3D Enrolment Booth that can improve facial recognition

accuracy by more than 100% for applications such as access control, video surveillance, and secure payments

• Technology addresses increased government focus on

secure identification systems that comply with the latest standards of identity assurance and privacy protection

Conclusion

• Good financial performance
• Continued progress on execution of the Group’s growth strategy
• Revenue growth in all of Photo-Me’s territories, except Japan
• Laundry business revenue growth of almost 70% year-on-year, contributing 16% of total Group revenue
• Strategy in place to return Japanese subsidiary to profit, the very early stages have been positive
• Restructuring of Photo-Me Retail now complete and delivering profitability
• Remained highly cash-generative, supporting innovation in future growth and high returns to shareholders

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