REG - Facilities by ADF - Final Results
02/05/2023 07:00
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RNS Number : 9796X Facilities by ADF plc 02 May 2023
2 May 2023
Facilities by ADF plc
("Facilities by ADF", "ADF", the "Company" and together with its subsidiaries
the "Group")
Final results for the year ended 31 December 2022
Facilities by ADF, the leading provider of premium serviced production
facilities to the UK film and high-end television industry ("HETV"), is
pleased to announce its audited final results for the year ended 31 December
2022.
Financial highlights
£M's 31 Dec 2022 31 Dec 2021 31 Dec 2020
Group revenue 31.4 27.8 8.0
*Adjusted EBITDA 8.0 7.7 0.8
*Adjusted EBITDA % 25% 28% 10%
Profit/(loss) before tax 4.6 2.8 (0.5)
Earnings per share 6.1p 3.2p (0.1)p
Operational highlights
· ADF supported 76 productions (FY21 39 productions), including The Crown season
5, Slow Horses, Everything I know about Love, The Sandman, Sex Education and
Happy Valley.
· H1-FY22 saw a larger number of shorter productions more geographically spread
than in H2-FY22, resulting in additional budgeted transport costs but H2
productions were larger and more clustered around London resulting in improved
margins. The Group generated an average revenue value of £386k per
production.
· £15m was raised for expansion capital at IPO (January 2022) and to date
£9.2m has been invested in new revenue generating vehicles. During FY22, ADF
added 136 vehicle units, bringing the total vehicle fleet to 632 by year end.
· Successfully acquired Location One, the UK's largest integrated TV and film
location service and equipment hire company, providing expanded growth
opportunities across the UK and bringing highly complementary services to ADF.
· ADF opened a new office at Pioneer Films studio in Scotland; and doubled
capacity at its Bridgend manufacturing facility, expanded ADF's UK
geographical reach.
· ADF opened its new flagship five-acre operational hub at Longcross, Surrey
which is perfectly located to serve several major studios.
· A final dividend of 0.90 pence per share, reflecting the Group's strong cash
position and confidence in trading, is proposed to be paid (subject to
shareholder approval at the 2023 AGM) on 30 June 2023 to shareholders who are
on the register at the close of business on 16 June 2023.
Outlook
· Underlying market drivers continue to provide confidence that the demand for
ADF's services will continue to expand for the foreseeable future.
· The Group remains committed to growth and will continue to review further
acquisition opportunities in line with its strategy.
· Healthy underlying growth of the newly enlarged Group provides the management
team with confidence to invest further in its people and service offerings,
while continuing to manage the impacts of inflationary environment presently
faced.
· The FY23 order book is strong, indicating a continuation of the H2-FY22
profile, with larger productions generating higher revenue per job. The Group
is presently taking orders for Q1 and Q2 FY24 providing strong levels of
revenue visibility for the year.
· Trading in the current year is in line with expectations and management is
confident in delivering FY23 financial results in line with current market
expectations(1).
Commenting on the results, Marsden Proctor, CEO, said:
"Our first full year as a listed business has been one of operational and
financial success, and I am incredibly proud of what the ADF team has achieved
in the current difficult economic backdrop. We have continued to successfully
execute our growth strategy through continued investment in our revenue
generating fleet, the acquisition of Location One, and through our geographic
expansion across the UK.
"Following a strong end to FY22, we have continued to trade positively in the
new financial year, with an expanding order book and considerable momentum
across the whole business. We have a growing addressable market, an expanding
network of contacts and a high-quality business model driving growth in Group
revenue. Alongside positive market drivers, where demand for film and HETV in
the UK continues to accelerate, I am confident in the Group's ability to
deliver on its strategy and plans in FY23."
1. Current market expectations are revenue of £47.6 million and
adjusted EBITDA of £12.3 million.
This announcement contains inside information for the purposes of the UK
Market Abuse Regulation and the Directors of the Company take responsibility
for this announcement.
For further enquiries:
Facilities by ADF plc via Alma PR
Marsden Proctor, Chief Executive Officer
Neil Evans, Chief Financial Officer
John Richards, Chairman
Cenkos (Nominated Adviser and Broker) Tel: +44 (0)20 7397 8900
Ben Jeynes / Max Gould / George Lawson - Corporate Finance
Alex Pollen - Sales
Alma PR (Financial PR) Tel: +44 (0)20 3405 0205
Josh Royston facilitiesbyadf@almapr.co.uk (mailto:facilitiesbyadf@almapr.co.uk)
Hannah Campbell
OVERVIEW OF FACILITIES BY ADF Group
Facilities by ADF plc is the leading provider of premium serviced production
facilities to the UK film and high-end television industry ("HETV"). Its
production fleet is made up of over 600 premium mobile make-up, costume and
artiste trailers, production offices, mobile bathrooms (known as honey
wagons), diners, school rooms and technical vehicles. The Group provides these
production facilities and additional services after a planning process with
its customers held in advance of filming. In servicing productions, ADF staff
are available on site and each production is allocated an account manager who
acts as a single lead point of contact during filming.
In December 2022, ADF acquired Location One Ltd, the UK's largest integrated
TV and film location service and equipment hire company, bringing highly
complementary services and providing cross selling opportunities to the
enlarged Group, as well as delivering efficiencies through central services.
The Group serves customers in an industry that has experienced significant
growth in recent years, with additional demand driven by a material rise in
the consumption of film and HETV content via streaming platforms such as
Netflix, Disney, Apple and Amazon Prime. The UK film and TV industry has
directly benefited during this growth due to the quality of its production
facilities and studios, highly skilled domestic workforce, geography,
accessibility to Europe, English language environment and strong governmental
support. Major US streaming companies have now set up permanent bases in the
UK, with the UK now Netflix's third largest operation after the USA and
Canada.
Chairman's statement
Overview
Facilities by ADF PLC (Hereinafter referred to as ADF) has delivered another
year of solid growth, fuelled by high levels of fleet utilisation, an
increased number of larger productions in H2-FY22, and the successful
acquisition of Location One, to strengthen the Group's position as the leading
provider of premium serviced production facilities to the UK film and HETV
industry.
The Group's strong financial performance during our first full year as a
listed business is evident by the revenue growth of 13% to £31.4m (FY21
£27.7m) and adjusted EBITDA growth to £8.0m (FY21 £7.7m) reflecting the
continued positive momentum across the business in H2-FY22.
Despite the current macro-economic environment, demand for our products remain
strong as the UK's film and HETV market continues to accelerate through studio
space expansion and inward investment from global production companies. As a
result, the Group's order book remains strong as we continue to find ourselves
at the forefront of increasing competition for subscribers amongst the leading
global streaming companies.
Strategy
The Group has ambitions to grow our revenue to over £100 million and we
intend do this through organic means by investing in revenue generating fleet
equipment, as well as inorganically through appropriate acquisitions and I am
pleased to report that Location One represented ADF's first successful
acquisition in delivering this strategy.
Location One is the UK's largest integrated TV and film location service and
equipment hire company. Its integration is progressing as planned and is
performing in line with the Board's expectations. The acquisition will enable
further expansion across the UK and brings highly complementary services to
ADF which provide a wealth of cross selling opportunities to the enlarged
Group, as well as deliver efficiencies through central services. As a Board,
we believe this is a significant step in becoming the premium one-stop-shop
for film and HETV.
Having raised £15.0m at IPO in January 2022, to date we have invested £9.2m
in new revenue generating fleet, £4.0m of which was spent on Hire Purchase
assets and invested an initial cash consideration of £4.4m for the
acquisition of Location One in November 2022. Going forward, the Group will
continue to invest wisely seeking to meet customer demand and drive further
business growth.
Market opportunity
UK market growth continues to be buoyed by a highly skilled workforce, strong
Government support, a long history of film and TV production, favourable tax
treatment and the unprecedented levels of investment in UK studio space and
content, which bodes well for the Group's future growth ambitions. HETV has
been in the vanguard of this growth and ADF has been and continues to be well
positioned to capitalise on this opportunity.
Apple at Aylesbury, Disney at Pinewood, Netflix at Shepperton and Longcross,
and Sky at Elstree, along with many others, have added significant additional
capacity to UK film and HETV production capacity. The Group's five-acre hub at
Longcross became fully operational in Q4 FY22. This new site is perfectly
located to serve all these production sites. The Group also opened a new
office in Glasgow, set in Pioneer Film Studios' campus, Scotland's newest and
largest film studio. The office was opened to capitalise on the growing market
as global production companies are increasingly choosing Scotland for its
natural landscapes and to utilise its strong creative sector.
People
We have continued to invest in the expansion of our senior leadership team to
ensure we have the depth and breadth of management to deliver our growth
strategy and have been encouraged by the immediate positive contribution that
the new team members have made.
In May 2022, we appointed Alexandra Innes to the Board as an independent
Non-Executive Director. Following a career in banking, Alexandra has already
proven to be a valuable addition to our Board as we seek to drive the business
forward in its next phase of growth.
In the current macro-economic environment, our priority continues to be the
wellbeing of our teams around the UK, providing them with the best environment
to continue to deliver the high-quality service that our customers expect of
ADF. On behalf of the Board, I would like to take this opportunity to thank
all members of staff for their dedication and commitment to making Facilities
by ADF what it is today.
ESG
Like many businesses, Facilities by ADF is committed to activities that have a
positive impact on our employees and society, and we aim to reduce our
environmental impact through collaborating with stakeholders towards a low
carbon production industry. As a Board, we are proud to have been the first
facilities provider in Europe that is approved by Albert, the authority on
environmental sustainability for the film and television industry, which is a
clear endorsement of the Group's ESG strategy. Being approved by Albert is
becoming ever more important as studios will only allow approved vehicles on
site. Location One is also an approved Albert supplier and on a journey to
net-zero with impressive sustainability credentials.
As we embark upon a journey to ultimately become a carbon-neutral operator in
the future, we have partnered with Creative Zero, a sustainability
organisation, to undergo a carbon audit to better understand our impact on the
environment. We are also working with our clients and suppliers to reduce the
footprint of our operations, helping to deliver an environmentally sustainable
media industry.
Working with Creative Zero, we aim to report against SECR guidelines.
Facilities by ADF and Location One's footprints are currently separate with no
shared energy usage and emissions across the organisations, but there is a
real opportunity to reduce carbon emissions across the Group in an integrated
way. These opportunities will be maximised moving forward and the carbon
footprint and carbon reduction plan exercise that is underway will provide the
data required for the SECR submission to be prepared by April 2024.
Post period end, we launched our first Employee Satisfaction Survey to measure
and improve employee wellbeing. We are in the process of re-launching our
Company Values and Mission Statement, to ensure our employees can reach their
full potential. As part of this, we are launching a wellbeing policy to
provide guidance and advice to staff on the support that is available,
including support for financial wellbeing.
The Company already offers an Employee Assistance Programme via an external
provider and has also invested in the training of three Mental Health First
Aiders to support and signpost employees to professional assistance if
required.
In addition to wellbeing, the health & safety (H&S) of our staff as
well as our customers and contractors, is a key focus for ADF. We have an
established H&S framework and resources in place to ensure that the
conduct of the business ensures the lowest level of risk. The Group has a
full-time H&S Coordinator, reporting to the CFO, who in turn reports
H&S matters to the Board. Detailed accident reporting is maintained, all
incidents are investigated, and procedures changed where necessary.
The Company appointed Safety Forward, external H&S consultants and
auditors, in 2022 to assist with the development of our H&S framework. Our
12-month plan outlines the key areas of focus for 2023 to include H&S
structure, training and development, risk management, audit, and review.
We have worked on a number of projects with our production clients to improve
the safety and accessibility on site. ADF joined forces with the TV Access
Project (TAP), created to actively work towards achieving a more inclusive
television production sector for disabled talent. The TV Access Project is an
alliance of 11 Broadcasters and Streamers led by the BBC and Channel 4 working
alongside creative talent with disabilities in the industry to create
sustainable change.
As a Board, we are dedicated to maintaining our strong corporate governance
framework. Following our IPO, we have chosen to adopt the QCA Corporate
Governance Code, which will help to inform the evolution of our governance
approach in future. The appointments we have made to the Board are a clear
demonstration of this commitment and we will continue to ensure this remains
as we grow as a listed business.
Outlook
This year ADF has become a more robust business, with a greater ability to
capture the growing opportunity within the UK Film and HETV industry, through
investment in our vehicle fleet and the acquisition of Location One. We are
successfully delivering against our growth strategy to move ADF closer to
becoming a 'one-stop shop' for film and TV producers and we are excited about
the opportunities that lay ahead.
The prospects for ADF are increasingly positive and we have entered FY23 in a
very strong position with considerable momentum across the business, managing
inflationary pressures, with trading in the first few months of the year in
line with the Board's expectations. The supportive market dynamics, expanding
partner network and proven offering, underpin the Board's confidence of
delivering sustainable revenue growth and is confident in delivering FY23
financial results in line with current market expectations.
John Richards
Chairman of the Board
CEO review
Overview
I am incredibly proud of the successes achieved during our first full year as
a listed business by our fantastic team, against a challenging economic
backdrop. We made our first acquisition, expanded into Scotland and opened our
new operational hub at Longcross, demonstrating our continuing delivery of our
growth strategy. We experienced increased demand for our services, resulting
in revenue growth of 13% year on year, and have continued to invest wisely in
our business. The successes delivered during the year have moved the business
closer to becoming a one-stop-shop for film and TV producers as we strengthen
our position as the leading provider of premium serviced production facilities
to the UK film and HETV industry.
Our progress in the year was supported by the acceleration of both the film
& HETV markets, which was a record year for the industry, and we
anticipate this growth will continue for a number of years in the future. We
have seen a huge influx of investment in recent years, with additional demand
driven by a rise in the in the consumption of film HETV content via global
streaming platforms such as Apple TV+, Netflix, Disney +, Sky TV and Amazon
Prime. The UK film and TV industry has directly benefited due to the quality
of its production facilities and studios, a highly skilled domestic workforce,
geography, accessibility to Europe, English language environment and strong
governmental support and, ADF continues to be the provider of choice for many
global production companies filming in the UK.
The prospects for ADF and its Group are increasingly positive and we have
entered FY23 in a very strong position. We have a growing addressable market,
an expanding network of contacts, an enhanced offering and a high-quality
business model driving growth in Group revenue. These factors, coupled with a
strong order book, underpin management's confidence in the long-term success
of ADF.
Financial performance
The strong financial performance in the year reflects the ongoing demand for
the Group's services. We raised £15m of growth capital at IPO (January 2022)
and to date have invested £9.2m in new revenue generating vehicle fleet, £4m
of which were spent on Hire Purchase assets. We expect capital expenditure to
be at a similar level in FY23 as we look to keep up with demand and drive
further growth.
In 2022, we achieved Group revenues of £31.4m (FY21 £27.7m) and adjusted
EBITDA of £8.0m (FY21 £7.7m) with continued positive momentum across the
business in H2-FY22. The distribution of productions in H1-FY22 saw a larger
number of shorter productions more geographically spread than in H1-FY21 with
a greater need for mobilisation of our vehicle fleet to service our jobs which
caused a rise in our cost base, but as anticipated, we delivered the growth
opportunities in H2-FY22 through larger productions with higher revenue per
job. The larger productions were clustered around the main studios close to
London, and as a result, the EBITDA margin for H2-FY22 was 28% compared with
21% in H1-FY22 (delivering 25% across the year).
Overall, from the 76 productions for FY22 (FY21 39 productions) the Group
generated an average revenue value of £386k per production compared to £682K
in FY21. The typical lead time for booking productions remains at seven months
and our FY23 order book continues to be strongly populated.
Growing market opportunity in an expanding industry
We operate in an industry that has experienced significant growth and
investment in recent years, underpinned by the success of HETV. The rise of
global streaming platforms has culminated in a material increase in the
consumption of films and HETV.
There continues to be an influx of inward investment and co-production spend
in the UK, as we see the demand for content reaching record levels. The UK has
become a major hub for international clients, with the UK being Netflix's
third largest operation after the USA and Canada, which bodes well for our
growth ambitions.
As part of the UK's Spring Budget in March 2023, the Chancellor of the
Exchequer revealed that the Government is raising film and HEVT tax credits
and keeping the qualifying threshold in place. This was a welcome move for the
TV production community and clearly demonstrates Government's recognition of
and commitment to the continued growth and success of the UK's film and HE-TV
sector.
Recent studio projects in the UK include Stage Fifty's third studio. The
UK-based studio operator & owner is building an eight stage 295,000sq ft
studio in High Wycombe, Buckinghamshire. In the North, property developers
CAPITAL&CENTRIC alongside Twickenham Studios are planning to build a major
filming destination at the old Littlewoods headquarters in Liverpool. The
£50m project will feature two new 20,000sq. ft sound stages, supporting
workshops, prop storage and offices, and support over 2,000 industry jobs
across the city.
In Q4 FY22, we opened our first office in Scotland, set at Pioneer Film
Studios, the country's largest film studio, in response to the recent growth
in the film and HETV market in the region. Films including Aftersun, 1917, My
Old School and television shows such as Guilt, Good Omens and Vigil, have all
originated or benefited from Scotland's production sector in recent years as
global productions increasingly choose the country's natural landscape and
utilisation of its strong creative sector. Screen Scotland has predicted that
the value of the Scottish screen sector could reach £1 billion by 2030
provided that the current levels of investment, infrastructure and talent
development remain maintained. As such, our new base at Pioneer will not only
strengthen the Group's regional presence alongside global production
companies, with the support of Pioneer Films Studio, ADF will also be able to
capitalise on the growing activity in one of the largest emerging markets
within the UK Film and TV industry. I am also pleased to share that Location
One has also now opened a branch at the studio alongside ADF to enable the
enlarged group to offer its complementary services to the range of productions
scheduled to be filmed at Pioneer.
In terms of the overall performance of film and TV production in the UK, the
British Film Institute ("BFI") recently reported for the year ended 31
December 2022 that the combined total spend on film and HETV production in the
UK for 2022 was £6.27 billion from 415 productions. This is the highest
combined film and HETV spend reported for a year. The statistics which are
reported on further in the financial review, demonstrate the strength and
ongoing resilience of the UK's screen sectors, reinforcing the industry's
globally recognised position as a first-class production centre and underpins
management's confidence in the prospects for ADF.
Competitive strength
We are already the provider of choice for many in the UK for large scale and
quality productions, which has allowed us to benefit from high valued
productions and customers. This market position has taken many years to
establish, and we have the right infrastructure in place to support continued
successful customer delivery and further expansion. To deliver such a high
quality of service to our customers and successfully compete at this level,
the quality of a supplier's vehicle fleet needs to be incredibly high. ADF
prides itself upon the strength of its vehicle fleet and customer service,
which has led to ADF having positive direct relationships with some of the
world's largest traditional and on-demand production companies and positions
us well to capture a growing proportion of the expanding market. ADF has won
several contracts for future productions through its existing customers and
being able to retain these valued customers we recognise is critical element
of our future success.
We worked on 76 productions this year, including Slow Horses, Everything I
know about Love, The Sandman, Marvels Secret Invasion, I Hate Suzie, Sex
Education, Happy Valley, Troubled Blood and A Spy Amongst Friends to name a
few. Delivering an excellent service and maintaining strong relationships with
all our customers we recognise is essential in our ability to meet and deliver
their future projects and grow our business.
Our flagship five-acre operational hub at Longcross, Surrey was officially
opened in Q4 FY22. The site is perfectly located to serve all major studios
near Longcross, including Shepperton Studios, Pinewood Studios, Leavesden
Studios, and Elstree studios and demonstrates commitment to our growth
strategy.
We also expanded the capacity of ADF's Bridgend depot as part of our expansion
plans. The workspace was expanded with a new 5,400 sq. ft factory unit,
bolstering our current 9,000 sq. f. of available floor space currently
available, and will employ key personnel from the local area, encouraging
strong regional relationships within the Welsh Film Industry and helping to
further facilitate sales.
We report our Net Promotor Score (NPS), an internationally recognised customer
service measurement, throughout the year, with an overall NPS score of 88, a
figure which Bain & Company, the creators for NPS, has described as 'world
class'. We continue to perform extremely well, reflecting the skills,
knowledge and expertise of our staff that enables us to be a market leader.
Delivering against growth strategy
The Group has ambitions to grow organically through further investment into
its revenue-generating vehicle fleet, and inorganically through appropriate
acquisitions, and I am pleased to report we have successfully executed on both
during the year, with the key highlight being the acquisition of Location One,
which completed in December 2022.
The acquisition of an integrated equipment hire company provide complementary
services to that of ADF, having worked together since 2008. Location One's
customer base includes Amazon Studios, Netflix, Warner Brothers and the BBC
and together, we have worked on a number of productions including, The Crown,
Top Boy, Lazarus, Becoming Elizabeth, Slow Horses, My Lady Jane, and The
Gentleman. Given the excellent track record of working together on productions
across the UK, the programme of integration is already underway and
progressing as planned. The main commercial benefit of the acquisition is
sharing our industry contacts and moving Location One into our advanced
production network pipeline which is already bearing fruit with a number of
successful joint bids. We are also working on streamlining our processes to
ensure best practice across several departments, including HR and Finance.
With both businesses committed to providing high-quality equipment and
customer service levels, along with having similar cultural values and
impressive sustainability credentials, we are particularly excited by the
strategic fit of the two organisations.
This acquisition will enable us to provide the very best services the industry
has to offer under one roof, and I believe it moves us towards becoming a
one-stop-shop to the UK TV and HETV industry.
Our IPO raised the Group's profile across our industry and as a result has
presented us a number of acquisition opportunities worthy of consideration for
our Group and I would like to thank shareholders for their continued support
in allowing us the opportunity to help the business to grow in line with our
strategy.
People
We will always maintain that our employees are the most essential asset of ADF
and are key to the Group's long-term success. We have made a successful start
as a listed business and our employees are at the centre of that success. We
made several key senior management appointments in the year, including Andrea
Browning as the Head of HR, Rhys Thomas as Head of Fleet, Ross McDiarmid as
Deputy Chief Financial Officer and Janis Arents as IT Manager. In May 2022 we
also announced the appointment of Alexandra Innes as an independent
Non-Executive Director. Alexandra's executive career spanned investment
banking, global capital markets, and investment management across several
sectors, which will be invaluable to us, as we continue to grow. Currently,
Alexandra is a Non-Executive Committee Member at the Bank of England, a member
of the Group Executive Board at Knight Frank LLP, and a Non-Executive Director
of Dowlais Group plc, Waverton Investment Management Group Ltd, Securities
Trust of Scotland plc, and Schroder Real Estate Investment Trust Ltd.
ESG
Both Location One and ADF continue to work with pivotal organisations to
support the next generation of crew talent across the industry. Location One's
Managing Director Crispin Hardy helped facilitate the Barking & Dagenham
'Skills for Screen' Careers Day at Eastbrook Studios during the year which was
attended by over 700 secondary school children and their parents. Alongside
Location One, we are also currently supporting the Film Skills and NFTS
Teaching Programme by delivering modules on unit base operation, including how
to further reduce carbon emissions and achieve zero waste.
We have also continued our support of Screen Alliance Wales (SAW), which is
the gateway between the industry and its workforce to grow and promote local
talent, crew and services of the film and TV industry in Wales. We are working
with SAW and Cardiff and Vale college to establish a fully funded HGV training
programme designed to specifically address the current national shortage of
HGV drivers and to help generate a much-needed pipeline of new HGV drivers
into the Creative Industries sector in Wales. We already have a number of
current employees who have signed up for a Personal Learning Account (PLA) in
order to progress their qualification.
We have also continued to strengthen our relationship with The Production
Guild of Great Britain (PGGB) to increase their reach across the UK and we
have introduced PGGB to both national and regional committees, and we are
proud to sponsor the Wales & Southwest regions. This is proving valuable
for local talent pipelines and production services, while the work of our
'Diversity and Inclusion Action Group' (DIAG) underpins all that they do.
We are also working closely with Underlying Health Conditions (UHC), a
pressure group for disabled representation in the TV & Film Industry and
have started to manufacture, supply wheelchair access Honey wagons as well as
adapted American 2-ways.
In 2022, we also joined forces with the TV Access Project (TAP), created to
actively work towards achieving a more inclusive television production sector
for disabled talent. The TV Access Project is an alliance of 11 Broadcasters
and Streamers led by the BBC and Channel 4 working alongside disabled
creatives in the industry to create sustainable change. It has been formed in
response to the campaign by UHC. ADF will continue to work with UHC and TAP to
listen, learn and make changes that will make a difference, such as our
Wheelchair Accessible Honey wagon and bespoke adaptions to artiste trailers
depending on the user's requirements. TV and production manager Katie Player
noted that "ADF have created an exceptional asset. By thinking about
accessibility throughout the design process everything is integrated so
brilliantly. UHC are delighted to be supporting ADF in their efforts to bring
about change the industry requires".
Cost of living
We are mindful of the challenging economic environment in 2022 and the impact
that this has had, and continues to have, on our workforce. To support our
colleagues, we have conducted a market review of pay rates on a regular basis,
increasing the salaries of those that fell below the market rate. We have also
identified our lowest paid employees and increased salaries of those employees
by at least 10% over the National Minimum Wage levels set in April 2023.
Furthermore, all employees are eligible to participate in the informal Reward
Scheme where they are nominated by their line manager or peers for going above
and beyond in their role. We are also launching our Wellbeing policy which
provides guidance and advice to employees on the support that is available,
including support for Financial Wellbeing. This policy also links into various
events and awareness campaigns throughout the year.
Outlook
I am incredibly proud of what the ADF team has achieved against the continued
challenging economic backdrop. We have delivered growth through investment in
our revenue generating vehicle fleet, the acquisition of Location One and
through geographic expansion across the UK. We continue to secure new business
through our expanding network of contacts and with a very encouraging market
backdrop, we are confident that the demand for our services will continue to
accelerate.
Following a strong conclusion to FY22, we have continued to trade positively
in FY23, with strong order book and customer pipeline, lending considerable
momentum across the business. We remain in a robust position and look to the
future with confidence as the UK continues to establish itself as a major hub
for our industry, presenting a significant opportunity for ADF to capitalise
on this expanding market.
Marsden Proctor
Chief Executive Officer
CFO Review
ADF's results for the year reflect our strong market position and the
continued growth within the Film & HETV in the UK in 2022, which was a
record year for the industry following the previous record year set in 2021.
In our first year as a listed company, ADF made its first major acquisition,
of Location One, the UK's largest integrated TV and film location service and
equipment hire company and opened its brand new flagship operational Hub at
Longcross, Surrey, which is perfectly located to serve several major studios.
The successes seen this year demonstrate our commitment to continue to deliver
on our growth strategy.
Revenue
ADF's revenue increased by 13% in FY22 compared to FY21, despite FY21 being a
record year with - significant pent-up demand for content following the
prolonged studio closures in 2020 owing to the COVID-19 pandemic. The table
below shows the revenue split out between the 3 main headings, being main
packages, additional sales, plus other miscellaneous income.
Turnover £M's 2022 2021 Inc. %
Main packages £18.5 £15.6 18.9%
Additional sales £12.6 £11.8 6.4%
Other income £0.3 £0.4 -22.2%
Total £31.4 £27.8 13.0%
Uplift % 75.2% 75.6% -0.2%
Main Package Sales
Main packages comprise of the pre-booking of the base level of equipment
required for the duration of a production with each asset being charged at a
set daily hire rate for the number of days of filming. Main packages also
include the hire of ADF staff to manage and service the equipment - this is
also calculated by reference to a set daily hire rate. The daily hire charges
for equipment and staff are set annually and incremented in line with market
rates.
Additional Sales
The main package will not include the cost of the planned (or unplanned) moves
for a production. Any additional equipment and staff required during the
filming period, and the labour cost of all equipment moves are then charged
out weekly during the filming period. Fuel for moves and consumables are also
part of the additional sales. In FY22, the value of these additional sales was
in excess of 75% and in line with the levels seen in FY21.
UK Film & HETV
The British Film Institute (BFI) recently reported that for the year ended 31
December 2022:
· The combined spend by film and high-end television production
(HETV) during 2022 reached £6.27 billion, the highest ever reported and
£1.83 billion higher than for the pre-pandemic year 2019.
· The lion's share of the total £6.27 billion spend was
contributed by HETV production with £4.30 billion, or 69%; with feature
film production contributing £1.97 billion, or 31% of the total spend.
· Inward investment films and HETV shows delivered £5.37
billion, or 92% of the combined production spend underlining the UK's global
reputation as the world-leading centre for film and TV production.
90% of ADF's sales in 2022 were in HETV (2021: 92%).
The table below shows the progression of spend in the TV & Film Industry
in the UK since 2018. The drop off in 2020 was due to the 3-4 months that the
industry was closed for the first national COVID-19 lockdown. The red line
shows the number of film and TV productions in the year.
UK Film & HETV Spend 2018 2019 2021 2022
Spend £Bn £3.6 £4.4 £6.1 £6.3
No. of productions 518 544 525 415
Revenue Seasonality
In FY22, consistent with previous years there is a degree of seasonality with
a steady build up to the key summer months when outdoor filming on location is
more reliable, typically with improved weather conditions. December is a quiet
month for trading as productions wind down for Christmas. However, unlike the
last 3 years, revenue remained at a higher level than recorded before in Q4,
in line with forecast productions.
Quarterly Sales £M's 2019 2020 2021 2022
Q1 £3.3 £2.4 £5.3 £5.9
Q2 £3.8 £0.0 £6.2 £6.8
Q3 £4.1 £1.8 £9.0 £8.6
Q4 £4.7 £3.9 £7.2 £10.2
£15.9 £8.1 £27.8 £31.4
Revenue Mix
In FY21, ADF worked on just 39 productions with an average revenue value of
£682k and average duration of 22 weeks, which was a significant increase on
the pre-Pandemic average. However, most productions were studio based with the
ongoing disruptions from COVID-19, and hence with limited movement across
locations in the UK.
In FY22 ADF worked on 76 productions - on average these were shorter length
productions than 2021 at 15 weeks, hence with a lower average revenue value of
£38kK. The majority of the shorter length productions occurred in the first
half of the year and were more spread around the UK. The second half of the
year saw a return to longer and higher revenue generating projects.
Production Value FY22 FY21
£0 - £500K 54 19
£500K - £1.0M 16 13
£1.0M - £1.5M 4 4
£1.5M - £2.0M 1 1
£2.0M - £2.5M - 1
£2.5M - £3.0M 1 1
Total productions 76 39
Direct Costs & Gross Profit
Direct costs comprise a number of significant elements.
· Direct payroll which includes ADF staff based at production sites
(studios and on location) who manage and service the equipment, together with
HGV drivers to move equipment between locations, and staff employed in our
workshops, body shop and trailer manufacturing plants. Direct payroll costs
in FY22 were 27.9% of revenue, compared with 28.2% in FY21.
· Repair & running costs for motor vehicles & trailers
which comprise 4.8% of revenue (FY21: 4.6%)
· Fuel for transport between productions, which experienced
significant increases across FY22, comprised 7.3% of sales (FY21:5.4%). Fuel
costs for production moves are charged out on a cost plus basis.
· Agency driver costs - ADF relies on agency partners to supplement
location moves and its general transport requirements. Costs were 15.0% of
revenue in FY22 (12.5% in 2021). This was in line with budget, with agency
rates having undergone some industry-wide increases in late 2021 due to a
well-publicised shortfall of HGV drivers as we came out of the COVID-19
pandemic. These agency rate increases have since levelled off as HGV driver
shortfalls have eased.
The overall gross margin for - FY22 was 37.3% (FY21: 39.1%).
Administrative Costs
Administrative costs comprise payroll for executives, management and
office-based staff, rent & facility related costs for the sites that the
company operates from, depreciation & amortisation, and various other
overheads.
Administrative expenses in FY22 were 11.9% of revenue (FY21: 11.2%) including
the significant additional costs of operating as a publicly listed company
which were absent in 2021 and prior to the Company's admission to trading on
AIM.
Share Based Payments & Non-Recurring Expenses
The share-based payments relate to certain options granted to the 2 current
executive directors. The non-recurring expenses relate to the advisory costs
in relation to the acquisition of Location One Group.
Adjusted EBITDA
In addition to measuring financial performance of the Group, we also measure
performance based on EBITDA and Adjusted EBITDA. EBITDA is defined as the
Group's profit or loss before interest, taxation, depreciation, and
amortisation. Adjusted EBITDA is defined as EBITDA, before specific items;
non-recurring expenses, and share based payment expenses. EBITDA is a common
measure used by investors and analysts to evaluate the operating financial
performance of companies.
We consider EBITDA and Adjusted EBITDA to be useful measures of operating
performance because they approximate the underlying operating cash flow by
eliminating depreciation and amortisation. EBITDA and Adjusted EBITDA are not
direct measures of our liquidity, which is shown by our cash flow statement,
and need to be considered in the context of our financial commitments.
A reconciliation of reported profit for the period, the most direct comparable
IFRS measure, to EBITDA and Adjusted EBITDA, is set out below.
Adjusted EBITDA (£000's) 2022 2021
Profit/(loss) before tax 4,615 2,794
Add back:
Finance expenses 702 358
Depreciation & amortisation 2,513 1,922
Non-recurring expenses 78 1,322
Share based payment expense 59 1,332
Adjusted EBITDA 7,967 7,728
Adjusted EBITDA % 25.4% 27.8%
Cash Flow and Net Debt
Operating cash flow before movements in working capital was £4.6M in FY22
(FY21 - £2.8M). Cash generated from operations was £4.3M in 2022 (2021 -
£8.6M).
At 31 December 2022, net debt (borrowings less cash, including IFRS16 property
'loans') was £11.7M, compared to £7.6M at the prior year end. The increase
is predominantly down to the application of IFRS16 to the new Operational Hub
at Longcross which is a substantial 15 year lease agreement.
Facilities by ADF Plc remains a highly cash-generative business.
Cash Flow & Net Debt (£M's) 2022 2021
Cash Flow:
Cash balances B/F 4,987 1,254
Movement 4,531 3,733
Cash balances C/F 9,518 4,987
Debt:
Hire Purchase 12,944 11,574
IFRS16 Leases 8,285 691
Bank loans 0 342
Total 21,229 12,607
Net Debt 11,711 7,620
Net Debt (excl. IFRS16) 3,426 6,929
Acquisition of Location One
ADF acquired Location 1 Group Limited on 30 November 2022 for £8.9m. A
program of integration is under way, streamlining process and jointly adopting
best practices in certain areas. We are also assessing the possibility of
merging one of their sites in London with ADF's operational hub at Longcross.
Consolidation of HR & Finance processes is already underway, along with
aggregating key insurance covers. However, the main commercial benefit of the
acquisition is the ability to share ADF's extensive industry contacts and
getting Location One into our production pipeline. With ADF's long lead times
this means much greater visibility of opportunities for Location One.
Dividends
A final dividend of 0.90 pence per share, reflecting the Group's strong cash
position and confidence in trading, is proposed to be paid (subject to
shareholder approval at the 2023 AGM) on 30 June 2023 to shareholders who are
on the register at the close of business on 16 June 2023.
In addition to the proposed final dividend to be put to shareholders for
approval at the 2023 AGM, and following the FY22 year end, the Directors have
become aware of two technical breaches of the Companies Act 2006 in respect of
the interim dividend of 0.46 pence per ordinary share historically paid by the
Company in October 2022. Accordingly, a resolution will be proposed at the
2023 AGM to resolve this issue.
Neil Evans FCA
Chief Financial Officer
Consolidated income statement
Profit & Loss - Y/E Dec (£m) FY20A FY21A FY22A
Revenue £8.0 £27.8 £31.4
Growth -49% 245% 13%
Cost of sales £(7.5) £(16.9) £(19.7)
Gross profit £0.6 £10.9 £11.7
Gross margin 7% 39% 37%
Admin expenses £(1.7) £(3.2) £(3.7)
Other income £1.9 £0.0 £0.0
Adj EBITDA £0.8 £7.7 £8.0
Adj EBITDA margin 10% 28% 25%
Non-recurring expenses £0.0 £(1.3) £(0.1)
Share based payments £0.0 £(1.3) £(0.1)
EBITDA £0.8 £5.1 £7.8
Depreciation & amortisation £(0.9) £(1.9) £(2.5)
EBIT £(0.1) £3.2 £5.3
Net interest expense £(0.4) £(0.4) £(0.7)
PBT £(0.5) £2.8 £4.6
Tax charge £0.1 £(1.5) £0.0
PAT £(0.4) £1.3 £4.6
Consolidated cashflow statement
Cash Flow - Y/E Dec (£m) FY20A FY21A FY22A
PBT £(0.5) £2.8 £4.6
Depreciation & amortisation £0.9 £1.9 £2.5
Working capital £0.6 £1.8 £(3.7)
Share based payments £0.0 £1.3 £0.1
Other items £0.4 £0.1 £0.1
Net Interest Expense £0.4 £0.4 £0.7
Corporation Tax (paid) / received £0.0 £0.4 £0.0
Net Cash Flow from Operating Activities £1.8 £8.6 £4.3
Purchase of property, plant and equipment and intangible assets £(0.1) £(0.8) £(4.1)
Purchase of right of use assets £(3.5) £(5.9) £(1.0)
Increase in amounts due from directors £0.0 £0.0 £(0.2)
Cost of business acquisition £0.0 £0.0 £(3.6)
Net Cash Flow from Investment Activities £(3.6) £(6.7) £(8.9)
Equity issuance and cost of issuance £0.0 £0.8 £13.4
Net Debt Borrowings / Repayments £3.5 £5.5 £(0.3)
Lease Payments £(1.3) £(3.1) £(3.5)
Dividends £(0.4) £(0.9) £(0.4)
Other items £0.0 £(0.5) £(0.1)
Net Cash Flow from Financing Activities £1.8 £1.8 £9.1
Net Increase / (Decrease) in Cash £0.0 £3.7 £4.5
Cash at Beginning of Year £1.3 £1.3 £5.0
Cash at End of year £1.3 £5.0 £9.5
Consolidated balance sheet
Balance Sheet - Y/E Dec (£m) FY20A FY21A FY22A
Property, plant and equipment £3.4 £4.1 £10.7
Right-of-use assets £11.1 £15.1 £25.9
Goodwill & other intangible assets £0.0 £0.0 £7.3
Total Non-Current Assets £14.5 £19.2 £43.9
Cash £1.3 £5.0 £9.5
Trade & other receivables £1.0 £1.7 £3.0
Inventories £0.0 £0.0 £0.4
Total Current Assets £2.3 £6.7 £12.9
Short term debt £0.5 £0.1 £0.0
Lease liabilities £2.1 £2.7 £3.7
Trade & other payables £2.3 £5.1 £6.3
Total Current Liabilities £4.9 £7.9 £10.0
Long term debt £0.4 £0.2 £0.0
Lease liabilities £7.3 £9.6 £17.5
Deferred tax £1.2 £2.7 £3.0
Contingent consideration £0.0 £0.0 £0.9
Other long term liabilities £0.1 £0.0 £0.0
Total Non-Current Liabilities £9.0 £12.6 £21.4
Net Assets £2.9 £5.4 £25.4
NOTES TO THE FINANCIAL INFORMATION
1. Accounting Policies
1.1 Basis of preparation
Facilities by ADF Plc (the "Group") is a public company limited by shares,
incorporated, domiciled and registered in England and Wales in the UK. The
registered number is 13761460 and the registered address is Ground Floor 31
Oldfield Road, Bocam Park, Pencoed, Bridgend, United Kingdom, CF35 5LJ.
The consolidated and Company financial statements are for the year ended 31
December 2022. The Company's prior period was from incorporation on 23
November 2021 to 31 December 2021 and was the first period of accounts for the
Company. They have been prepared in accordance with UK-adopted international
accounting standards in conformity with the requirements of the UK Companies
Act 2006.
1.2 Going concern
The Group has continued to invest in growth throughout the financial year,
with the Group continuing to trade throughout in a net asset position. The
Directors are pleased with the progress of trading to date, and in particular,
the progress made relative to the challenges of the film and television
industry. On the 5 January 2022 the shares of the Company were admitted to the
London Stock Exchange trading on the UK AIM market. As part of the listing,
and on this date, 30,000,000 new ordinary shares were placed at a price of
50p, raising significant cash funds for the business.
The Directors are continuing to identify acquisitions as well as focussing on
the continuation of the organic growth experienced in recent years. The
Company acquired a new a business in the current financial period and
significant synergies are expected to be achieved over the coming year from
this. The Directors expect continued growth in 2023.
The financial statements have been prepared on the going concern basis which
the Directors believe to be appropriate for the following reasons. The
Directors have prepared cash flow forecasts for a 12-month period from the
date of approval of these financial statements. They have applied a range of
sensitivities to these forecasts and such forecasts and analysis have
indicated that sufficient funds should be available to enable the Group to
continue in operational existence for the foreseeable future by meeting its
liabilities as they fall due for payment.
2. Earnings Per Share
The calculation of the basic earnings per share (EPS) is based on the results
attributable to ordinary shareholders divided by the weighted average number
of shares in issue during the year. Diluted EPS includes the impact of
outstanding share options.
For the period ending 31 December 2020 there was a loss for the year
recognised of £402,259, as such diluted EPS is identical to the basic loss
per share as the exercise of warrants and options would be anti-dilutive.
Year ended Year ended
31 December 2022 31 December 2021
£ £
Profit used in calculating basic diluted EPS 4,611,797 1,305,886
Weighted average number of shares 75,714,054 40,245,204
Diluted weighted average number of shares 81,939,807 46,686,026
Earnings per share 0.061 0.032
Diluted earnings per share 0.054 0.028
3. Property, plant and equipment
Plant and machinery Motor vehicles Total
£'000 £'000 £'000
Computer equipment Assets under construction
Hire Fleet £'000 £'000
£'000
Cost
At 1 January 2021 122 4,592 263 74 - 5,051
Additions 31 486 294 10 - 821
Transfers - 496 25 - - 521
Disposals (27) (5) (90) (73) - (195)
At 31 December 2021 -126 5,569 492 11 - 6,198
Depreciation
At 1 January 2021 60 1,508 56 49 - 1,673
Charge for the year 17 318 27 5 - 367
Transfers - 127 12 - - 139
Disposals (19) (2) (47) (50) - (118)
At 31 December 2021 58 1,951 48 4 - 2,061
Cost
At 1 January 2022 -126 5,569 492 11 - 6,198
Additions 33 1,984 221 - 1,818 4,056
Additions on acquisition - 2,524 560 - 69 3,153
Transfers - 677 401 - (1,078) -
Disposals - (91) (58) - - (149)
At 31 December 2022 159 10,663 1,616 11 809 13,258
Depreciation
At 1 January 2022 58 1,951 48 4 - 2,061
Charge for the year 19 516 74 2 - 611
Disposals - (63) (31) - - (94)
At 31 December 2022 77 2,404 91 6 - 2,578
Net book amount
At 31 December 2021 68 3,618 444 7 - 4,137
At 31 December 2022 82 8,259 1,525 5 809 10,680
Depreciation is charged to administrative expenses within the statement of
comprehensive income.
4. Leases
The Group leases a number of assets, all assets are leased from the UK, which
is the main jurisdiction the Group operates in. All lease payments,
in-substance, are fixed over the lease term. All expected future cash out
flows are reflected within the measurement of the lease liabilities at each
year end.
Nature of leasing activities
As at As at
31 December 2022 31 December 2021
Number of active leases 115 61
The Group leases include leasehold properties for commercial and head office
use, motor vehicles and equipment. The leases range in length from 3 to 15
years and vary in length depending on lease type. Leasehold properties holding
the longest-term length of up to 15 years, motor leases up to 4 years, hire
fleet up to 7 years, vehicles up to 7 years, and equipment of up to 5 years.
All leases are held with the Group's subsidiaries.
Extension, termination, and break options
The Group sometimes negotiates extension, termination, or break clauses in its
leases. In determining the lease term, management considers all facts and
circumstances that create an economic incentive to exercise an extension
option, or not exercise a termination option. Extension options (or periods
after termination options) are only included in the lease term if the lease is
reasonably certain to be extended (or not terminated).
On a case-by-case basis, the Group will consider whether the absence of a
break clause would expose the Group to excessive risk. Typically, factors
considered in deciding to negotiate a break clause include:
- The length of the lease term;
- The economic stability of the environment in which the property
is located; and
- Whether the location represents a new area of operations for the
Group.
Incremental borrowing rate
The Group has adopted a rate with a range of 3.3% - 8.7% as its incremental
borrowing rate, being the rate that the individual lessee would have to pay to
borrow the funds necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment with similar terms,
security and conditions. This rate is used to reflect the risk premium over
the borrowing cost of the Group measured by reference to the Group's
facilities.
The Group performed a sensitivity analysis where incremental borrowing rates
have been used and identified if the incremental borrowing rate was 5% for all
assets there would be a increase in the carrying amount of the right-of-use
asset at 31 December 2022 of £88,483 (2021: Decrease £32,393); there would
be a subsequent increase in the lease liability of £62,047 (2021: Decrease
£23,834). If the incremental borrowing rate decreased to 1% for all assets
there would be an increase in the carrying amount of the right-of-use asset at
31 December 2022 of £203,628 (2021: £96,512) and there would be a consequent
increase in the lease liability of £276,897 (2021: £67,841).
Sensitivity analysis is not performed on hire purchase leases as interest is
inherent within these lease agreements.
Right-of-use assets
Leasehold Property Assets under construction Total
£'000 Hire Fleet and Motor Vehicles £'000 £'000
£'000
Motor Leasehold
£'000 Equipment
£'000
Cost
At 1 January 2021 1,397 109 10,950 8 - 12,464
Additions - 28 5,882 14 - -5,924
Transfers - - (519) - - (519)
At 31 December 2021 1,397 137 16,313 22 - 17,869
Depreciation
At 1 January 2021 557 27 770 4 - 1,358
Charge for the period 283 30 1,240 2 - 1,555
Transfers - - (139) - - (139)
At 31 December 2021 840 57 1,871 6 - 2,774
Cost
At 1 January 2022 1,397 137 16,313 22 - 17,869
Additions 6,863 - 3,108 - 1,812 11,783
Business acquisitions 808 24 - 87 - 919
Transfers - - 1,085 - (1,082) 3
At 31 December 2022 9,068 161 20,506 109 730 30,574
Depreciation
At 1 January 2022 840 57 1,871 6 - 2,774
Charge for the period 251 38 1,602 8 - 1,899
At 31 December 2022 1,091 95 3,473 14 - 4,673
Net book amount
At 31 December 2021 557 80 14,442 16 - 15,095
At 31 December 2022 7,977 66 17,033 95 730 25,901
Lease liabilities
Leasehold Property Hire Fleet and Motor Vehicles Total
£'000 Motor Leasehold £'000 £'000
£'000 Equipment
£'000
At 1 January 2021 871 83 8,415 4 9,373
Additions - 28 5,458 15 5,501
Interest expense 30 3 311 - 344
Lease payments (including interest) (318) (23) (2,610) (2) (2,953)
At 31 December 2021 583 91 11,574 17 12,265
At 1 January 2022 583 91 11,574 17 12,265
Additions 6,770 - 4,165 - 10,935
Business acquisitions 808 24 - 87 919
Interest expense 106 3 585 1 695
Lease payments (including interest) (172) (28) (3,376) (9) (3,585)
At 31 December 2022 8,095 90 12,948 96 21,229
Reconciliation of minimum lease payments and present value
As at As at
31 December 2022 31 December 2021
£'000 £'000
Within 1 year 4,542 2,996
Later than 1 year and less than 5 years 12,506 9,727
After 5 years 8,759 987
Total including interest cash flows 25,807 13,710
Less: interest cash flows (4,578) (1,445)
Total principal cash flows 21,229 12,265
Reconciliation of current and non-current lease liabilities
As at As at
31 December 2022 31 December 2021
£'000 £'000
Current 3,705 2,658
Non-current 17,524 9,607
Total 21,229 12,265
Short term or low value lease expense
As at As at
31 December 2022 31 December 2021
£'000 £'000
Total short term or low value lease expense 28 3
28 3
5. Trade and other receivables
Group As at As at
31 December 2022 31 December 2021
£'000 £'000
Amounts falling due within one year:
Trade receivables 1,761 472
Director's loan accounts 307 127
Other receivables and prepayments 977 1,168
3,045 1,767
6. Trade and other payables
Group As at As at
31 December 2022 31 December 2021
£'000 £'000
Amounts falling due within one year:
Trade payables 1,932 1,831
Other payables 1,055 101
Taxation and social security 1,298 959
Accrued expenses 1,461 1,722
Deferred income 576 519
6,322 5,132
The Directors consider that the carrying value of trade and other payables
approximates to their fair value. Trade payables are non-interest bearing and
are normally settled monthly.
Included in other payables were Director loan accounts with a balance owed to
the Directors as at 31 December 2022: £Nil (2021: £297), all amounts were
non-interest bearing. Additionally including in other payables is amounts
payable of £848,582 in respect of employer social security costs due on M
Proctor share options exercised.
Revenue recognised in the year that was deferred from the previous year was
£518,555 (2021: £328,000).
7. Borrowings
As at As at
31 December 2022 31 December 2021
£'000 £'000
Current:
Bank loans - 100
Other loans - -
- 100
Non-current
Bank loans - 242
Other loans - -
- 242
Total borrowings - 342
A maturity analysis of The Group's borrowings is shown below:
As at As at
31 December 2022 31 December 2021
£'000 £'000
Less than 1 year - 100
Later than 1 year and less than 5 years - 242
- 342
Included in bank loans is a Coronavirus Business Interruption Loan Scheme
(CBILS) held with Barclays. The loan was taken out in May 2020 and originally
matured four years after this date. The loan incurs interest of 2.25% above
Bank of England base rate with a deferred payment start date as part of the
CBILS scheme of 12 months. Interest on the loan is payable by the UK
Government as part of the business interruption payment under the facility.
This loan was fully paid in the year ended 31 December 2022.
8. Business acquisitions
On 30 November, the Group completed the acquisition of 100% of the share
capital of Location 1 Group Ltd for consideration of an initial cash payment
of £4,429,646 and £1,879,575 consideration paid in shares, through
Facilities by ADF. A further payment of contingent consideration, up to
maximum value of £4,059,788, was valued on acquisition at £877,892, giving a
total consideration of £7,187,113.
The principal reason for the acquisition was to increase the Group's
synergies, to optimize the Group's coverage of the UK television and film
production market in which it operates.
In the period from 30 November 2022 to 31 December 2022, the acquired business
contributed £718,011 to Group revenues and a profit of £6,716 to the Group's
comprehensive profit. If the acquisition had taken place on 1 January 2022,
the acquired business would have contributed £9,436,502 to Group revenues and
a profit of £146,727 to the Group's comprehensive profit.
Location 1 Group Ltd latest financial year end, prior to acquisition, was 30
September 2021. On acquisition the Group extended the period ended due 30
September 2022 to 31 December 2022, to align with the Group accounting period
end. The results of have been consolidated as at 31 December 2022 for
inclusion in these consolidated annual financial statements.
The following table summarises the fair value of assets acquired, and
liabilities assumed at the acquisition date There were no differences
identified between the book cost and fair value of assets and liabilities
acquired:
Fair value £'000
Property, plant and equipment 3,153
Right of use assets 919
Trade and other receivables 1,337
Cash 835
Trade and other payables (1,362)
Hire purchase and loans (3,443)
Lease liabilities (919)
Deferred tax liability (544)
Total fair value (24)
Consideration 7,187
Goodwill 7,211
The goodwill of £7,211,397 comprises the potential value of additional
synergies which is not separately recognised. Acquisition costs totalled
£78,312 and are disclosed within the statement of comprehensive income within
non-recurring items, certain additional costs totalling £122,844, which were
directly attributable to the share raise, were recognised against Share
Premium.
Purchase consideration £'000
Cash 4,430
Share consideration 1,880
Contingent consideration 878
Total Consideration 7,187
Contingent consideration is payable up to maximum value of £4,059,788,
payable in cash, over a three-year period, based on set performance criteria.
Performance criteria is set against adjusted EBITDA targets of Location 1
Group Ltd, at each year, across a three-year period. The contingent
consideration is payable on a scaling basis based on the level of Adjusted
EBITDA gained. The minimum payment of contingent consideration is £Nil. The
contingent consideration has been discounted to present value and adjusted
based on management expectation of probability of outcome of reaching Adjusted
EBITDA targets.
The net cash sum expended on Acquisition in the year ended 31 December 2022 is
as follows:
Analysis of cash flows on acquisition £'000
Cash paid as consideration on acquisition (4,430)
Cash acquired at acquisition 835
Net cash outflow on acquisition (3,595)
9. Post balance sheet events
There are no post balance sheet events to disclose.
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. END FR ABMFTMTMMBIJRecent news on Facilities by ADF
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