Things went from bad to worse for the long-suffering shareholders in Photo-Me yesterday when the photography booth company warned it would not make a profit this year, sending its shares down by a quarter and sparking fresh speculation the company would be soon taken private.
Having previously predicted it would earn a pre-tax profit of £4m, the beleaguered company went back on that promise yesterday, informing investors that after reassessing the business it was now "unlikely to make a pre-tax profit".
Thierry Barel began a review of the business when he took over as chief executive in December from his predecessor Serge Crasnianski, who stepped down after a long campaign by activist shareholders. "With the old chief executive there was a series of disappointments," said a trader. "Now that the new guy is in there, it's not surprising that something else nasty has turned up in the wood shed."
The company also said that it had decided to not resume a share-buyback programme that it first suspended last year.
The latest jolt ignited fresh speculation that Photo-Me's days as a public company are numbered. Three former board members have in recent weeks built up a 48 per cent stake in the company. Philippe Wahl, who served on the board from 1969 through 2003, began buying shares last month and now owns 18 per cent. Dan David, who stepped down as a non-executive director at the end of last year, built up a 10 per cent stake through a series of transactions last month. Mr Crasnianski has a 20 per cent holding.
The company, which makes photo booths and mini-processing labs for retail locations, has seen its share price fall steadily in recent years as doubts have grown about its viability in a world where digital photography has become ubiquitous. "The problem it has is that it shouldn't be a quoted company," said the trader. "It has finite products and a finite lifespan. The best thing for shareholders would be for this company to be taken private, with a big dividend for investors, so that it can be gently phased into obscurity."
After yesterday's sell-off, Photo-me shares were down to 24.5p, giving it a market value of £88.1m. Five years ago, it was worth more than £500m. The company said: "The shortfall relative to market expectations for the full year can principally be attributed to reduced expected revenues and associated profit across the business."
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