Photo-Me has issued a trading update ahead of the publication of full year results in July. The Group expectations for turnover and PBT for FY2018E are in-line with our forecast. The statement does, however, highlight difficulties in trading in Photo ID in Japan which will result in a lowering of our PBT forecast for FY2019E to £44m from £53m. The board has taken steps to resolve the issues and expects the Japanese Photo ID business to return to profitability following the restructuring in FY2019E.
Revenues for FY2018E are expected to grow at approximately 6% on a constant currency basis, which is in-line with our expectations. PBT is also expected to be in-line with our forecast of £50.2m for FY2018E. This includes restructuring cost associated with the UK Retail business of £2.6m, a gain on disposal of the head office of £2.4m and a gain on investments of £3.7m.
The Photo ID business, except for Japan, continues to perform in line with previous expectations. In Japan there have been difficulties due to oversupply in the market, meaning declining market share and a resultant reduction in average revenue per machine as well as upward pressure on commissions payable. The Board intends to re-structure the Japanese business to facilitate a return to profitability. For FY2019E we are lowering our forecast trading PBT for Japan by £5m and anticipate a restructuring cost of £4m.
The Laundry business continues its expansion and remains a key growth driver. Revenue from Laundry operations in FY2018E grew 49% to £32.3m. Following relocation to Poland, an increase in manufacturing capacity will fuel an acceleration in the deployment of machines.
Post year-end the Group acquired La Wash Group, a leading Spanish laundry provider, for €4.75m. La Wash Group had turnover of €3.7m for the year ended 31 December 2017 and corresponding PBT of €0.8m. This acquisition highlights the Group’s commitment to making complimentary bolt-on Laundry acquisitions.
Photo-Me Retail in the UK has been successfully restructured to provide unattended digital printing kiosk services. This will boost the profitability of the UK digital printing business with an associated re-structuring cost of £2.6m in FY2018E.