PHTM.L Regulatory News (PHTM)

15 Nov 2006 07:02

Photo-Me International PLC15 November 2006 Wednesday 15 November 2006 PHOTO-ME INTERNATIONAL PLC Important US Contract Win, Trading Update and Outcome of Strategic Review The Board of PMI (PHTM.L), the digital imaging company, provides shareholderswith an update on the US contract win, current trading and its strategic review. US CONTRACT WIN PMI and CVS Pharmacy have now signed a contract to extend the exclusive sale ofminilabs into 2007. PMI will supply CVS with the third generation DKS 3 model.Production has commenced, for delivery starting in January 2007. CVS is the largest retail pharmacy in the USA, operating about 6,200 retail andspeciality pharmacy stores in 43 states. In the period December 2005 toSeptember 2006, PMI supplied to CVS 700 second generation DKS 15xx seriesminilabs, the bulk of these in the period to 30 April 2006. Serge Crasnianski, PMI's Chief Executive, stated "This repeat business with CVSrepresents a further measure of success for PMI's minilabs, whichunprecedentedly have won DIMA (Digital Imaging Marketing Association) awards forthe quality of its minilabs - the world's most prestigious - in each of the pastfour years." PMI continues to be in discussion with other large US chains. TRADING UPDATE Trading in the second quarter, to 31 October 2006, continues to be broadlyconsistent with the Chairman's AGM statement of 20 September 2006. In theVending Division, trading has been similar to last year. In the ManufacturingDivision, as expected, trading has remained subdued, mainly because of initialdelays in delivery of the new DKS 3 minilabs. As a result and although thesecond quarter was much stronger than the first quarter, PMI expects its resultfor the half year to 31 October 2006 to be below the adjusted profit before tax(before the £5.4m non-operating exceptional credit) of £15.9m reported for thehalf year to 31 October 2005. In the second half, as indicated in the AGM Statement, the ManufacturingDivision will benefit substantially from growing unit sales as a result of thetransition to the new DKS 3 series and the new contract with CVS. Awell-received new product, the Photobook Pro (a machine producing photo albums),is also expected to start contributing to the result. The Imaging Solutionswholesale labs business continues to trade successfully. While the Board believes that a pre-tax profit for the year to 30 April 2007broadly in line with market expectations remains achievable, this outcome isconditional on the attainment of demanding minilab production schedules by oneof the Group's subcontractors, following the initial delays referred to above. STRATEGIC REVIEW In response to press speculation, PMI announced on 5 June 2006 that it wasconducting a strategic review which may or may not lead to an offer being madefor the whole of the Company. Whilst the Board received several indications of interest for the Company as awhole and engaged in detailed discussions, it has concluded that an outrightsale of the Company as a single entity would not maximise value forshareholders. The Board has therefore terminated these discussions. This strategic review process has highlighted the different nature of theindividual businesses within PMI. As a consequence, the Board believes thatpursuing strategic options for the individual businesses will maximiseshareholder value. In addition, the Board has assessed PMI's existing capital structure, futurecapital requirements and anticipated cash flows and has decided to effect asignificant return of surplus capital to shareholders. The various options forreturning capital to shareholders are being reviewed with PMI's advisors andbankers. The Company will circulate proposals to shareholders as soon aspracticable. The Board believes this two-pronged strategy is likely to realise the full valueof the Company in the medium-term whilst optimising its capital structure in theshort term. Major shareholders have indicated their support for this action plan. Notes for Editors: In the year to 30 April 2006, PMI reported revenue of £230.0m and a pre-taxprofit of £28.5m. If the £2.3m net exceptional credit is excluded, EBITDA was£53.3m and pre-tax profit amounted to £26.2m. Enquiries: Photo-Me International 01372-453 399Vernon Sankey (Chairman) JPMorgan Cazenove 020-7588 2828Malcolm Moir Bankside Consultants Charles Ponsonby 020-7367 8851/07789-202 312 This information is provided by RNS The company news service from the London Stock Exchange