Operating photo-booths may be a mature business but it does produce excellent cash flow. So as Photo-Me’s results for the six months to end-October 2011 met best expectations, with cash generation the powerhouse of the business.
Over the past three half year ends, the company’s net cash balances have increased from £29.4m to £40.7m and again to £51.1m at end-0ctober - and are likely to continue to rise. That’s because Photo-Me is not interested in share buy-backs. Its three priorities are increasing dividends, capital spending of around £20m a year (new photo-booths cost less and last longer than older ones) - and acquisitions.
In the latest trading period, the star performer was the main division operating photo-booths, principally in France, the UK and Japan. Photo-me is also the largest operator of kiddie rides in Britain. On near static turnover of £98m, operating profit advanced from £15.4m to £18.3m thanks largely to buoyant French demand for photo-IDs in September and October. Over the half year the number of photo-booths rose by 600 to almost 23,000. In contrast sales and servicing only reported moderate profits because a number of clients delayed orders. Features of the latest results are sizeable cuts in both sales costs and administration expenses.
The second half is traditionally much weaker. For the full year broker finnCap forecasts sales unchanged at £220m but a rise in profits to £20.5m. On that basis earnings advance a tad to 4p.
PHOTO-ME INTERNATIONAL (PHTM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 55p | MARKET VALUE: | £199m | |
| TOUCH: | 53.75-57p | 12-MONTH HIGH: | 71.25p | LOW: 39.5p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 27p* | NET CASH: | £48.8m | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 118 | 14.0 | 2.34 | 1.00 |
| 2011 | 116 | 17.0 | 3.25 | 1.25 |
| % change | -2 | +21 | +39 | +25 |
Ex-div: 28 Mar Payment: 8 May *Including £20.1m intangibles, or 6p a share | ||||
