REG - Facilities by ADF - Half year results
18/09/2023 07:00
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RNS Number : 6813M Facilities by ADF plc 18 September 2023
18 September 2023
Facilities by ADF plc
("Facilities by ADF", "ADF", the "Company" or the "Group")
Half year results for the six months ended 30 June 2023
Facilities by ADF, the leading provider of premium serviced production
facilities to the UK film and high-end television industry ("HETV") announces
its unaudited half year results for the six months ended 30 June 2023
("H1-FY23").
Financial highlights
£Ms H1-FY23 H1-FY22 Change FY-22
Group revenue 21.8 12.6 +73% 31.4
Adjusted EBITDA* 5.8 2.6 +117% 8.0
Adjusted EBITDA % 27% 21% +540bps 25%
Profit Before Tax 2.7 1.3 +118% 4.6
Earnings per share - basic 3.20 pence 1.52 pence +111% 6.1 pence
· Interim dividend proposed of 0.5 pence per share (H1-FY22 - 0.46 pence per
share) to be paid on 27(th) October to shareholders on the register on close
business on 6(th) October 2023.
Percentages are based on underlying, not rounded, figures.
Operational highlights
Client Relationships:
· Experienced increased demand for ADF's services from global streaming brands
such as Netflix, Apple, Disney and Amazon, re-enforcing ADF's position as the
UK's leading facilities provider.
· Supported 46 high-profile productions including The Crown season 6, Slow
Horses, Star Wars Andor, The Gentleman, Rivals, The Diplomat, Industry, Paris
Has Fallen, The Famous Five, Back to Black and Sex Education.
Continued Growth:
· Officially opened ADF's new flagship central hub at Longcross, Surrey,
highlighting the Company's commitment to its growth strategy.
· Added 108 units to the fleet in H1-FY23, bringing the total to 700 units,
fully leveraging the current enhanced super-deduction capital allowance
regime.
Location One Integration:
· Acquired in Nov-22, Location One is now fully integrated into the Group.
During H1-FY23, Location One opened new branches at Longcross, Bridgend, and
Glasgow.
· The enlarged Group is cross-selling to an increasing number of HETV companies
in the UK, delivering services in a more efficient way, and moving the Company
closer to its goal of becoming a one-stop shop for film and HETV production.
Margin Improvement:
· ADF worked on larger, longer productions in H1-FY23 compared to H1-FY22, which
were more geographically centred around the main London studios making them
more efficient from a transport and mobilisation perspective. A sustained
effort was also made in H1-FY23 to increase the number of 'employed' HGV
drivers, as opposed to relying on more costly agency HGV drivers.
· Overall gross margins rose from 33.0% in H1-FY22 to 38.8% in H1-FY23.
Outlook
· Underlying market drivers still providing high confidence that the demand for
ADF's services will continue to expand over the medium to long term.
· As announced by the Company on 3 August 2023, the Group remains strongly
positioned in its markets with high quality UK productions to sustain the
business through the current USA Writers (Writers Guild of America (WAG)) and
Actors (Screen Actors Guild - American Federation of Television and Radio
Artists (SAG-AFTR)) strikes which have been impacting productions around the
globe.
· The Group remains committed to growth and will continue to review acquisition
opportunities in line with its strategy.
Commenting, Marsden Proctor, CEO, said: "The Group delivered a strong first
half, building on momentum from FY22. Whilst the Writers Guild of America and
Screen Actors Guild strikes are causing a short-term impact on the business,
we are confident the Group is in a robust position to capitalise on the
opportunity ahead once previous production levels resume."
*Adjusted EBITDA is the adjusted profit before tax, prior to the addition of
finance income and deduction of depreciation, amortisation, and finance
expenses. The adjusted EBITDA measurement removes non-recurring, irregular and
one-time items that may distort EBITDA. Adjusted EBITDA provides a more
normalised metric to make comparisons more meaningful across the Group and
other companies in the same industry.
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.
Change of Name of Nominated Adviser and Broker
The Company also announces that its Nominated Adviser has changed its name to
Cavendish Securities plc following completion of its own corporate merger.
For further enquiries:
Facilities by ADF plc via Alma PR
Marsden Proctor, Chief Executive Officer
Neil Evans, Chief Financial Officer
John Richards, Chairman
Cavendish Securities (Nominated Adviser and Broker) Tel: +44 (0)20 7220 0500
Ben Jeynes / Charlie Combe / George Lawson - Corporate Finance
Michael Johnson / George Budd - Sales
Alma PR (Financial PR) Tel: +44 (0)20 3405 0205
Josh Royston facilitiesbyadf@almapr.co.uk (mailto:facilitiesbyadf@almapr.co.uk)
Hannah Campbell
Robyn Fisher
OVERVIEW OF FACILITIES BY ADF
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 700 premium mobile make-up, costume and artiste
trailers, production offices, mobile bathrooms, diners, school rooms and
technical vehicles. The Group provides these production facilities and
additional services after a planning process with the customer held well 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 November 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 TV+ 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 the film and TV industry's second largest operation after
North America.
CEO review
Overview
The Group delivered an outstanding first half, with high levels of fleet
utilisation. We achieved revenue growth of 73% to £21.8 million (H1-FY22
£12.6 million) and adjusted EBITDA of £5.8 million, growth of 117% (H1-FY22
£2.6 million). This evidences the ongoing high level of demand for our
products and services, the contribution of Location One since its acquisition
in November 2022, and the higher value productions worked on in H1-FY23.
More recently however, the widely published USA Writers (Writers Guild of
America (WAG)) and Actors (Screen Actors Guild - American Federation of
Television and Radio Artists (SAG-AFTR)) strikes have been impacting
productions around the globe. Since July 2023, several film and TV productions
in the UK, on which ADF was engaged, have seen stoppages or delays to
production, and several others that were scheduled to start filming in Autumn
2023 have now been pushed into early 2024 commencement.
Notwithstanding, the Group's unaffected productions and pipeline are expected
to generate revenues for the full year ending 31 December 2023 of no less
than £35 million. This assumes there is no resolution to the strikes in
H2-FY23. We are continuing to assess the impact on our planned work programme
for the remainder of the financial year in conjunction with our production
company contacts. Any alleviation of the prevailing strike action may provide
the potential for further upside in the current financial year, assuming
productions are able to recommence filming relatively soon thereafter.
The Board is confident there will be significant levels of pent-up demand for
film and high-end television productions as the situation normalises and with
Location One now fully embedded into the Group, we are well placed to benefit
given our scale and market leading position.
Market opportunity
We operate in an industry that has experienced significant growth and
investment in recent years, underpinned by the success of HETV. Whilst the
industrial action has caused a short-term impact, the Board is confident that
the underlying market drivers will continue to accelerate once the situation
normalises and there will be significant levels of pent-up demand for film and
HETV productions akin to that seen after the lifting of the lockdowns imposed
during the COVID-19 pandemic. The Group is well placed to benefit given its
market leading position.
The significant rise of global streaming platforms such as Apple TV+, HBO Max,
Netflix, Disney +, Sky TV and Amazon Prime has culminated in a material
increase in the consumption of films and HETV. It is estimated that paid-for
streaming services from these companies will exceed £4.2 billion in the UK by
2025 and will overtake, for the first time, traditional paid-for TV packages
from Sky, BT, Virgin etc (Source: KPMG). In comparison, streaming spend in the
UK was less than £1 billion in 2018.
Investment in new infrastructure in the UK to support demand continues at pace
with a number of new studio developments in 2023. Developments at some of the
studios where ADF frequently works include:
· Shinfield Studios, Berkshire - 5 new stages were added plus
workshop and production offices.
· Pioneer Studios, Glasgow - where ADF has already established a
joint base with Location One, are opening more studios.
· Pyramid Studios, Edinburgh - new studio development.
· Sky Studios, Elstree - continued development of an already major
complex.
Industry Performance
In terms of the overall performance of film and TV production in the UK, the
British Film Institute ("BFI") recently reported for the first half of 2023,
the following facts:
· The combined total spend on film and HETV production in the UK for
H1-2023 was £2.5 billion from 188 productions.
o 85 films started shooting during H1-2023. The total UK production spend
for these films was £0.8 billion.
o 103 HETV productions began principal photography in H1-2023 with a total
UK spend of £1.7 billion.
· The combined total UK spend on film and HETV productions for the 12
months from July 2022 to June 2023 was £5.4 billion. This is the third
highest figure seen since records began. Inward investment productions
accounted for £4.5 billion or 83% of the total.
In the first six months of 2023 government tax credits for HETV production in
the UK exceeded those for film for the first time since the credits were
introduced.
The total production across film and HETV was down on the (record) comparative
period in 2022 due in part to the availability of studio space at the start of
2023 with a number of large overruns. In addition, there were some uncertainty
over reforms to the tax credit regime for film and TV production at the end of
last year. These were however, allayed by Jeremey Hunt in his Spring budget in
March 2023 when he re-affirmed the UK government's total commitment to the
sector by increasing the overall rate of relief.
Competitive strength
We are already the provider of choice in the UK for large scale and quality
productions. This, in the main, has allowed us to select the highest value
production contracts available. This market position has taken several years
to build, and we have the right infrastructure in place to support continued
expansion. The addition of Location One has also made us strategically
stronger, evidenced by our financial performance in H1-FY23 and has positioned
us well to capture a growing proportion of the expanding market.
The Group experienced an increase in the average revenue per production in
H1-FY23 of 32% to £361k (H1-FY22 £274k). ADF's forward order book and
pipeline, prior to the onset of the strikes, was full of high value projects,
and hence we were very confident of achieving our forecast revenue for the
year.
With the onset of the strikes, we have drawn on our strong relationships with
both customers and suppliers, and this has been vital during this period of
industrial action to understand the impact on our planned programme of work
for the remainder of the year.
Notwithstanding the current headwinds, we continue to have a relentless focus
on doing the basic things well. Our net promoter score (NPS) continues to be
at an exceptional level and is currently at +87, up from +83 at the date of
the January 2022 IPO.
The Group continued to support several premier productions throughout H1-FY23,
including Black Mirror, Star Wars, Celebrity Bake off, Industry and Slow
Horses. Having visibility on such highly acclaimed projects is imperative as
we grow and whilst the industrial action has temporarily impacted a number of
productions, we still have good visibility of the number of opportunities
available to us. Whilst timing is unclear, there have been more positive signs
recently from the parties involved in the disputes.
Delivering against growth strategy
The Group continued to successfully execute on our organic growth strategy
through further investment into revenue-generating fleet equipment. We added
108 assets to our fleet, bringing the total to 700.
We continue to work closely with our key suppliers, including General Coach
Canada, who supply the artists trailers and production offices, DAF, who
supply our technical vehicles, tractor units & generators, and Expandable
NL, who provide our flagship double expandable production offices, costume and
make-up vehicles, thus ensuring that we continue to deliver the high-quality
level of service to our customers.
At IPO, we also emphasised our intention to grow through acquisitions. We
approach acquisitions with a robust set of criteria, working within demanding
multiples having an element of the consideration that is both deferred and
contingent, and, in most circumstances, retaining the management and keeping
the brand name unchanged as it serves its customer base.
The acquisition of Location One met all of these criteria and the team is now
fully integrated into the Group. During H1-FY23, Location One opened branches
at the Group's new operational base in Longcross, Surrey, and also depots in
Bridgend, South Wales and Pioneer Studios, Glasgow. It therefore now provides
the enlarged Group with both the ability to cross-sell our services to the
increasing number of HETV companies with sites in the UK, and also to deliver
services in a more efficient way. These new branches have expanded Location
One's geographic reach and logistical capabilities, strengthened the enlarged
Group's position across the UK, moving the company closer to becoming a one
stop shop for film and HETV production.
The IPO raised the Group's profile, and we are now seeing more acquisitive
opportunities. We are in discussions with several parties and will continue to
review opportunities for complementary additions as they arise.
ESG
ADF is committed to activities that have a positive impact on our employees
and society, and we aim to reduce our environmental impact through
collaboration with stakeholders towards a low carbon production industry. To
achieve this, we are now developing our own ESG strategy, led by our Chair,
John Richards, along with the rest of the ADF Board. This is being achieved
through the development of a new ESG Governance structure. An external
consultant, EthicallyBE, has been retained to assist with the refinement and
implementation of the strategy developed by the Board. They will be taking a
commercial approach to sustainability and the ESG strategy provides an
opportunity to use sustainability as a differentiator and to align our brand,
values and purpose - and effectively integrate future acquisitions into the
Group.
As part of our journey to ultimately become a carbon-neutral operator in the
future, last year we partnered with Creative Zero, a sustainability
organisation, to undergo a carbon audit to better understand our impact on the
environment. Internal interviews and research are almost complete and Creative
Zero has presented the results of the Carbon Audit. This sets out our impact
as a business across Scopes 1 and 2, and some of 3, and makes recommendations
on potential areas of focus for our path to net zero. These opportunities will
be maximised moving forward and the carbon audit footprint will provide the
data required for the SECR submission to be prepared by April 2024.
We were proud to have been the first facilities provider in Europe that was
approved by Albert, the authority on environmental sustainability for the film
and television industry, a clear endorsement of the Group's ESG strategy.
Maintaining our Albert approval is as important as ever with many studios only
allowing Albert approved vehicles on site. Location One is also an approved
Albert supplier.
In H1-FY23, we launched our first Employee Satisfaction Survey to measure and
improve employee wellbeing. As part of our ESG strategy, we are in the process
of re-launching our Company Values and Mission Statement, to ensure our
employees can reach their full potential.
The ESG strategy will drive high levels of compliance across environmental,
social and governance factors, and set out where ADF also has the opportunity
to lead the market in key areas. Our early strategic focus is on the
environment, most specifically the carbon footprint of our business and the
drive to net zero; the continuing development of innovative client solutions;
health and wellbeing, and an increased focus on knowledge, training, and
upskilling.
The Group intends to finalise its ESG strategy in H2-FY23 and will provide an
update on progress in due course.
Outlook
The Group delivered an outstanding H1-FY23 performance, with encouraging
revenue growth and margin improvement, where we supported a record number of
premium productions across the UK.
Whilst the widely publicised writers and actors strike is impacting the
Group's H2-FY23 performance, as the filming of several ADF productions have
now been delayed until 2024, we believe the impact will only be short-term,
and the Group is ready to capitalise on the pent-up demand once the situation
normalises.
Marsden Proctor
Chief Executive Officer
Financial performance
Summary
The financial results for the 6 months ended 30 June 2023 reflect a
continuation of the strong performance in the second half of FY22. Revenue in
the first half of the FY23 of £21.8 million was 73% ahead of the same period
in 2022 (£12.6 million), coming in slightly ahead of the Board's
expectations.
The revenue of £21.8 million includes £5.2 million from location equipment
hire specialist, Location One Limited, our new acquisition in November 2022.
Like-for-like sales for the core facilities business, excluding Location One
Ltd, were 32% ahead of the same period in 2022.
With the continued high level of revenue visibility from our pipeline and
order book, we had forecast, and budgeted, sales for H1-FY23 to be broadly in
line with what we achieved. The order book for the second half of FY23 was
similarly very strong, however the announcement of USA Writers (Writers Guild
of America (WAG)) and Actors (Screen Actors Guild - American Federation of
Television and Radio Artists (SAG-AFTR)) strikes has reduced our work
programme and pipeline for the remainder of the year.
Profit margins also improved in H1-FY23. The productions ADF worked on in the
period were more geographically centred around the main London studios and
other studios close to our operational hubs in Wales, Manchester and Glasgow
which therefore made them more efficient from a transport and mobilisation
perspective.
Furthermore, a sustained effort was made over H1-FY23 to increase the number
of employed HGV drivers as opposed to relying on agency HGV drivers. This is
reflected in agency driver costs reducing to 9.6% of revenue in H1-FY23
compared to 16.0% in H1-FY22.
Nevertheless, overall direct labour costs remained relatively static at
approximately 29% of revenue in both periods. There was some upwards pressure
on pay rates at the start of the 2023, and some (below inflation) pay awards
were made at that time for a number of employee groups including HGV drivers,
mechanics and trailer manufacturing staff. Overheads remained in line with
expectation at 12.3% of revenue, slightly up on H1-FY22 of 11.9%.
Net interest expense increased from £284K in H1-FY22 to £625K in H1-FY23.
The increase is made up of three elements - additional HP interest of £122K
from new HP leases to fund organic growth, £58K from Location One's existing
and new HP leases, and £161K interest from the capitalisation of the
Longcross lease under IFRS16. Interest rates on HP leases are not variable and
fixed at the date the leases are taken out.
Location One continue to integrate into ADFs systems, processes and operating
model with the consolidation of IT systems, insurances, HR support, finance
procedures and reporting, sales and CRM systems, thus delivering the expected
efficiencies. Having one integrated platform for sales has led to successful
joint bids for nine productions in H1-FY23. Location One also expanded their
geographical footprint with three new locations - two at existing ADF sites
(Wales and Longcross) and one at a new site in Glasgow, alongside ADF.
As a result of the above, profit before tax for H1-FY23 was £2.7 million, an
increase of 118% over the same period one year earlier (H1-FY22: £1.3
million).
The taxation charge for H1-FY23 of £192k is deferred tax only as the Group
currently has excess (super deduction) capital allowances to cover its current
taxable profits.
EBITDA
We also measure performance based on EBITDA and Adjusted EBITDA. 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 before tax for the period, a direct
comparable IFRS measure, to Adjusted EBITDA, is set out below.
Adjusted EBITDA £000's H1-FY23 H1-FY22 FY-22
Revenue 21,777 12,620 31,414
Profit before tax 2,737 1,253 4,615
Add back:
Finance expenses 625 284 702
Depreciation 2,350 1,093 2,510
Amortisation 9 0 3
Non-recurring expenses 23 0 78
Share based payments 29 29 59
Adjusted EBITDA 5,773 2,659 7,967
Adjusted EBITDA % 26.5% 21.1% 25.4%
Revenue
ADF's overall revenue increased by 73% in the first half of 2023 compared to
2022. This includes a full 6 months' sales for our new group member Location
One Limited. Adjusting for this, ADF's like-for-like facilities sales
increased by 32% the first half of 2022.
The table below shows the revenue between the two main facilities hire
categories, being Main Packages and Additional Sales, plus other miscellaneous
sales. Revenue for Location One is shown separately. The table also shows the
percentage uplift in facilities revenue from post-main package 'additional'
sales, which has remained relatively consistent at approximately 75% over the
relevant periods shown. This is further explained in the following sections.
Turnover £M's H1-FY23 H1-FY22 % Inc FY22
Facilities - Main packages £10.1 £7.2 40% £18.5
Facilities - Additional sales £6.4 £5.3 21% £11.9
Facilities - Other income £0.1 £0.1 0% £0.3
Facilities - Total £16.6 £12.6 32% £30.7
Location Equipment hire (Location One) £5.2 £0.0 0% £0.7
Total Revenue £21.8 £12.6 73% £31.4
Uplift on main packages % (see explanation below) 73.7% 73.9% 75.2%
Main Package sales
Main packages are agreed with ADF's clients, in most cases several months in
advance for the hire of specific items of equipment over a set timeframe. Each
type of equipment has a set daily hire rate. The cost of ADF staff required to
be onsite to manage and service the equipment is also calculated by reference
to a set daily hire rate. The rate card is set and adjusted annually. Main
packages are purely to secure and 'pre-book' the equipment and staff. These
packages are split into equal fortnightly payments beginning two weeks before
commencement of principal filming.
Additional sales
ADF's trailers and staff are typically booked six or more months in advance,
and client requirements invariably change in the run up to filming. Often, at
the time of booking, scripts have not been finalised and locations have not
been agreed. Any additional equipment and staff required closer to and during
the filming period, plus the labour & transport cost to move equipment,
are then charged out weekly during the filming period. Additional sales
include such items as:
· Labour recharges - this is the largest component of
additional revenue (typically more than half) and is principally payments for
drivers to move trailers and equipment around the various locations on each
production.
· Additional trailer hire - incremental ad-hoc vehicles
required during the project.
· Fuel recharges - ADF recharges fuel used on productions (with
a c.10% admin fee).
· Sundry recharges - consumable products, hand sanitisers,
toiletries etc.
Revenue Mix
ADF worked on 46 productions in H1-FY23, the same number as in H1-FY22.
However, there was a significant increase in revenue per production during the
period, with the average revenue per production (excluding Location One) in
H1-FY23 being £361k, a 32% increase over H1-FY22 (£274k), which reflects
working on a number of specific higher value productions with Netflix (Crown
season 6), Disney+ (Star Wars Andor) and Apple TV+ (Slow Horses) during
H1-FY23.
H1-FY23 H1-FY22
Revenue by Platform £000's % £000's %
Amazon £747 3.4% £686 5.4%
Apple TV+ £2,378 10.9% £234 1.9%
BBC £3,059 14.0% £2,431 19.3%
Disney+ £3,037 13.9% £1,449 11.5%
Fox £0 0% £315 2.5%
ITV £2,671 12.2% £2,246 17.8%
Marvel £0 0% £952 7.5%
Netflix £4,578 21.0% £2,614 20.7%
Other Productions £4,265 19.5% £714 5.7%
Sky £607 2.7% £702 5.6%
Total invoiced £21,342 98.0% £12,343 97.8%
Cross Hire & Other £435 1.8% £277 2.2%
Total revenue £21,777 100.0% £12,620 100.0%
Split
ADF £16,617 76% £12,620 100%
Location One £5,160 24% £0 0%
£21,777 100% £12,620 100%
ADF Productions (No.) 46 46
ADF Ave Per Production £361 £274
The split of productions across the revenue bands is shown below:
H1-FY23 H1-FY22 FY22
Production value
£0 - £500k 37 39 54
£500k - £1.0m 4 6 16
£1.0m - £1.5m 2 1 4
£1.5m - £2.0m 2 0 1
£2.0m - £2.5m 0 0 0
£2.5m - £3.0m 1 0 1
46 46 76
Share Based Payments & Non-Recurring Expenses
The share-based payments relate to certain options granted to the two current
executive directors. The non-recurring expenses relate to the advisory costs
in relation to the acquisition of Location One Limited.
Dividend & EPS
The Company declared a final dividend of 0.90 pence per share in June 2023 in
relation to the year ended 31(st) December 2022. This took the total dividend
for that year to 1.36 pence per share, with the interim dividend of 0.46 pence
per share in October 2022.
Basic earnings per share for H1-FY23 was 3.20 pence per share, an increase of
111% over H1-FY22 (1.52 pence per share).
The Group proposes to pay an interim dividend of 0.5 pence per share in
relation to FY-23 (0.46 interim dividend FY-22) to be paid on 27(th) October
2023 to shareholders on the register on close business on 6(th) October 2023
Cash Flow & Net Debt
Net cash generated from operating activities was £4.5 million in H1-FY23
compared to £0.3 million in H1-FY22.
Trade and other receivables increased by £0.5 million due to the inclusion of
the balances in Location One Ltd, which has a much broader client base.
During the 6 months to 30 June 2023, ADF spent £9.4 million on new equipment,
of which £6.0 million was financed by hire purchase and £3.4 million was
paid for with cash. This comprised the majority of our planned capital
expenditure for FY23 which was accelerated to maximise claims under the very
favourable super deduction capital allowance regime. There was a risk this
capital allowance regime would be withdrawn from April 2023, but it was
extended on a similar but slightly lower level by the Chancellor in his Spring
budget. The Company now has significant excess capital allowances to offset
its corporation tax liabilities.
At 30 June 2023, the Group had committed, un-delivered capex orders of £6.2
million for FY-23. Some £1.0 million of this was delivered in Jul-23, however
the remaining £5.2 million has been put on hold, in agreement with our
suppliers, for delivery after the writers and artist strikes have been
resolved.
In addition, new property leases with an inception value of £0.8 million were
capitalised under IFRS16, being the renewal of the lease at the factory unit
in Brynmenyn, additional space at the corporate Head Office in Bridgend, and
additional capacity at Location One's main operational base in Barking.
Since the onset of the WAG and SAG-AFTR strikes all further capital
expenditure has been put on hold until this is resolved.
FACILITIES BY ADF PLC
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2023
Six months ended Six months ended
30 June 2023 (unaudited) £'000 30 June 2022 (unaudited) £'000
Note
Revenue 3 21,777 12,620
Cost of sales (13,332) (8,454)
Gross profit 8,445 4,166
Administrative expenses (5,031) (2,600)
Non-recurring expenses 5 (23) -
Share based payment expense (29) (29)
Operating profit 3,362 1,537
Finance expense 8 (625) (284)
Profit before taxation 2,737 1,253
Taxation (192) (112)
Profit for the period 2,545 1,141
Earnings per share for profit attributable to the owners
Basic earnings per share (£) 6 0.0320 0.0152
Diluted earnings per share (£) 6 0.0298 0.0141
FACILITIES BY ADF PLC
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Note As at As at
30 June 31 December 2022
2023 (audited)
(unaudited) £'000
£'000
Assets
Current assets
Inventories 475 417
Trade and other receivables 3,577 3,045
Cash and cash equivalents 7,251 9,518
Total current assets 11,303 12,980
Non-current assets
Property, plant and equipment 7 11,901 10,680
Right-of-use assets 8 32,341 25,901
Intangible assets 9 7,280 7,289
Total non-current assets 51,522 43,870
Total assets 62,825 56,850
Liabilities
Current liabilities
Trade and other payables 5,464 6,322
Lease liabilities 8 5,732 3,705
Total current liabilities 11,196 10,027
Non-current liabilities
Other provisions 39 38
Lease liabilities 8 20,221 17,524
Contingent consideration 878 878
Deferred tax liabilities 3,388 2,966
Total non-current liabilities 24,526 21,406
Total liabilities 35,722 31,433
Net Assets 27,103 25,417
Equity
Called up share capital 11 806 794
Share premium 15,547 15,492
Share based payment reserve 1,681 1,652
Merger reserve (400) (400)
Retained earnings 9,469 7,879
Total equity 27,103 25,417
FACILITIES BY ADF PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2023
Share Based Payment Reserve
£'000
Share Capital Share Premium Merger Reserve Retained Earnings Total Equity
£'000 £'000 £'000 £'000 £'000
Note
Balance at 01 January 2022 455 787 1,332 (400) 3,322 5,496
Comprehensive Income
Profit for the year - - - - 4,612 4,612
Transactions with owners
Issue of shares on AIM listing 11 300 14,700 - - - 15,000
Costs of issue of shares on AIM listing - (1,457) - - - (1,457)
Exercise of options 11 5 - - - - 5
Share based payment charge on AIM listing - (261) 261 - - -
Share based payment charge on long term incentive program - - 59 - - 59
Deferred tax adjustment 295 295
Business acquisition 34 1,846 - - - 1,880
Costs of issue of shares - (123) - - - (123)
Dividends - - - - (350) (350)
Balance at 31 December 2022 (audited) 794 15,492 1,652 (400) 7,879 25,417
Balance at 01 January 2023 794 15,492 1,652 (400) 7,879 25,417
Comprehensive Income
Profit for the year - - - - 2,545 2,545
Transactions with owners
Issue of share capital 11 12 55 - - - 67
Share based payment charge - - 29 - - 29
Share based payment deferred tax charge - - - - - (230) (230)
Dividends - - - - (725) (725)
Balance at 30 June 2023 (unaudited) 806 15,547 1,681 (400) 9,469 27,103
FACILITIES BY ADF PLC
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
Note Six months ended Year ended
30 June 31 December 2022
2023 (audited)
(unaudited) £'000
£'000
Cash flows from operating activities
Profit before taxation from continuing activities 2,737 4,615
Adjustments for non-cash/non-operating items:
Depreciation of property, plant and equipment 7 879 611
Depreciation of right-of-use assets 8 1,471 1,899
Amortisation of intangible assets 9 9 3
Loss on disposal of property, plant and equipment and right-of-use assets 7/8 183 52
Share based payment charge 29 59
Finance expense 8 625 702
5,933 7,941
Increase in inventories (58) (417)
(Increase)/decrease in trade and other receivables (532) 259
(Decrease)/increase in trade and other payables (858) (3,517)
Cash from operations 4,485 4,266
Net cash generated from operating activities 4,485 4,266
Cash flows from investing activities
Purchase of property, plant and equipment 7 (2,455) (4,056)
Purchase of intangible assets - (81)
Purchase of right-of-use assets (972) (964)
Increase in amounts due from directors - (180)
Cost of business acquisition - (3,595)
Net cash used in investing activities (3,427) (8,876)
Cash flows from financing activities
Proceeds from issue of shares 67 15,005
Cost of share issue - (1,580)
Repayment of borrowings - (342)
Cash movements on lease liabilities 8 (2,042) (2,890)
Interest paid on lease liabilities 8 (625) (695)
Other interest paid - (7)
Dividends paid (725) (350)
Net cash used in financing activities (3,325) 9,141
Net (decrease)/increase in cash and cash equivalents (2,267) 4,531
Cash and cash equivalents at beginning of period 9,518 4,987
Cash and cash equivalents at end of period 7,251 9,518
FACILITIES BY ADF PLC
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
1 General Information
The principal activity of Facilities by ADF Plc (the "Company") and its
subsidiaries (together, the "Group") is the supply of mobile facilities and
location equipment hire for television and film productions.
The Company 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.
2 Summary of significant accounting policies
2.1 Basis of preparation
The unaudited interim financial information presents the financial results of
the Group for the six-month period to 30 June 2023. This financial information
has been prepared in accordance with UK-adopted International Accounting
Standards and are presented on a condensed basis. All values are rounded to
the nearest thousand (£'000) except where otherwise indicated.
The financial information presented in this interim financial report for the
period ended 30 June 2023 does not constitute statutory accounts, within the
meaning of section 434 of Companies Act 2006. These interim financial
statements do not include all of the information required for a complete set
of financial statements prepared in accordance with IFRS Standards. However,
selected explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in the Group's
financial position and performance since the last annual consolidated
financial statements.
The Annual Report and Financial Statements for the year ending 31 December
2022 have been filed with the Registrar of Companies. The Independent
Auditor's Report on the Annual Report and Financial Statement ended 31
December 2022 was unqualified.
2.2 Accounting policies
The accounting policies are consistent with those followed in the preparation
of the Annual Report and Financial Statements for the year ending 31 December
2022, which are filed with the Registrar of Companies.
2.3 Going concern
The interim 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 interim financial statements and such
forecasts 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.
Furthermore, the Directors have considered the ongoing impact of the current
macro-economic factors on the Group's forecast cashflows and liabilities,
concluding that these have no material impact on the Group due to the nature
of its operations.
2.4 Critical accounting judgements and estimates
The preparation of the interim financial information requires the use of
certain critical accounting estimates. It also requires management to exercise
judgement and use assumptions in applying the Group's accounting policies. The
resulting accounting estimates calculated using these judgements and
assumptions will, by definition, seldom equal the related actual results but
are based on historical experience and expectations of future events.
Management believe that the estimates utilised in preparing the interim
financial information are reasonable and prudent.
Estimates and judgements are continually evaluated based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions.
The judgements and key sources of estimation uncertainty that have a
significant effect on the amounts recognised in the interim financial
information are consistent with those followed in the preparation of the
Annual Report and Financial Statements for the year ending 31 December 2022
which are filed with the Registrar of Companies.
3 Revenue from contracts with customers
All of the Group's revenue was generated from the provision of services in the
UK, apart from hire of facilities revenues totalling £314,371 (2022: £Nil)
which were generated in the European Union. Five customers make up 10% or more
of revenue in the period ending 30 June 2023 (2022: 4). Management considers
revenue is derived from one business stream being that of hire of facilities.
As at 30 June 2023 the Group had ceased trading of fuel cards. Fuel cards by
ADF was still identified as a separate reporting segment up until this date,
as fuel cards were sold in the period to 30 June 2022.
Revenue from customers
Six months ended Six months ended
30 June 2023 (unaudited) £'000 30 June 2022 (unaudited) £'000
Hire of facilities
Customer 1 3,059 2,431
Customer 2 4,578 2,614
Customer 3 2,378 234
Customer 4 2,671 2,246
Customer 5 3,037 1,449
All other customers 6,054 3,646
21,777 12,620
Timing of transfer of goods or services Six months ended Six months ended
30 June 2023 (unaudited) £'000 30 June 2022 (unaudited) £'000
Services transferred over time 21,777 12,530
At a point in time - 90
21,777 12,620
4 Segmental reporting
The Group has one reporting segment, being the hire of facilities. During the
comparative period, the Group had another reporting segment, being fuel cards
by ADF. At 30 June 2023 the Group had ceased trading of fuel cards. Fuel cards
by ADF was still identified as a separate reporting segment up until this
date. Total assets and liabilities are not provided to the Chief Operations
Decision Maker (CODM) in the Group's internal management reporting by segment
and therefore are not presented below and information on segments is reported
at a gross profit level only. All non-current assets are held in the UK.
Six months ended Six months ended
30 June 2023 (unaudited) £'000 30 June 2022 (unaudited) £'000
Revenue
Hire of facilities 21,777 12,530
Fuel by ADF - 90
21,777 12,620
Cost of sales profit
Hire of facilities (13,332) (8,372)
Fuel by ADF - (82)
(13,332) (8,454)
Gross Profit 8,445 4,166
Revenue by geographical destination
Six months ended Six months ended
30 June 2023 (unaudited) £'000 30 June 2022 (unaudited) £'000
United Kingdom 21,463 12,620
EU 314 -
21,777 12,620
5 Non-recurring expenses
The Group incurred £23,023 non-recurring expenses during the period to 30
June 2023 (2022: £Nil). The costs in the period relate to additional
expenditure in respect of the acquisition of Location 1 Group Limited.
Six months ended Six months ended
30 June 2023 (unaudited) 30 June 2022 (unaudited)
£'000 £'000
Non-recurring expenses 23 -
6 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.
Six months ended Six months ended
30 June 2023 (unaudited) 30 June 2022 (unaudited)
£ £
Profit used in calculating basic diluted EPS 2,545,160 1,142,573
Weighted average number of shares 79,546,645 74,964,087
Diluted weighted average number of shares 85,497,418 80,910,717
Earnings per share 0.0320 0.0152
Diluted earnings per share 0.0298 0.0141
7 Property, plant, and equipment
Plant and machinery Motor vehicles Assets under construction Total
£'000 £'000 £'000 £'000
Computer equipment Leasehold improvement
Hire Fleet £'000 £'000
£'000
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
Cost
At 1 January 2023 -159 10,663 1,616 11 - 809 13,258
Additions 75 1,098 180 5 95 1,002 2,455
Transfers - 1,114 368 - - (1,666) (184)
Disposals - (485) (173) - - - (658)
At 30 June 2023 234 12,390 1,991 16 95 145 14,871
Depreciation
At 1 January 2023 77 2,404 91 6 - - 2,578
Charge for the year 15 683 172 1 8 - 879
Disposals - (349) (138) - - - (487)
At 30 June 2023 92 2,738 125 7 8 - 2,970
Net book amount
At 31 December 2022 82 8,259 1,525 5 - 809 10,680
At 30 June 2023 142 9,652 1,866 9 87 145 11,901
Depreciation is charged to administrative expenses within the statement of
comprehensive income.
Leasehold improvements in the period to 30 June 2023, are in respect of
improvements made to Kitsmead, Kitsmead Lane, Longcross KT16 0EF. These have
been depreciated using a 25% reducing balance rate.
8 Leases
Right-of-use assets
Leasehold Property Motor Leasehold Hire Fleet and Motor Vehicles Assets under construction Total
£'000 £'000 £'000 Equipment £'000 £'000
£'000
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
Cost
At 1 January 2023 9,068 161 20,506 109 730 30,574
Additions 760 - 1,094 - 5,885 7,739
Transfers - - 5,005 - (4,821) 184
Disposals (17) - (14) - - (31)
At 30 June 2023 9,811 161 26,591 109 1,794 38,466
Depreciation
At 1 January 2023 1,091 95 3,473 14 - 4,673
Charge for the period 433 30 985 23 - 1,471
Disposal (17) - (2) - - (19)
At 30 June 2023 1,507 125 4,456 37 - 6,125
Net book amount
At 31 December 2022 7,977 66 17,033 95 730 25,901
At 30 June 2023 8,304 36 22,135 72 1,794 32,341
Lease liabilities
Leasehold Property Hire Fleet and Motor Vehicles Total
£'000 Motor Leasehold £'000 £'000
£'000 Equipment
£'000
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
At 1 January 2023 8,095 90 12,948 96 21,229
Additions 759 - 6,007 - 6,766
Interest expense 224 1 399 1 625
Lease payments (including interest) (425) (32) (2,186) (24) (2,667)
At 30 June 2023 8,653 59 17,168 73 25,953
9 Intangible assets
Goodwill Total
Software £'000 £'000 £'000
Cost
At 1 January 2022 - - -
Additions through business acquisitions - 7,211 7,211
Additions 81 - 81
At 31 December 2022 81 7,211 7,292
Amortisation
At 1 January 2022 - - -
Charge for the year 3 - 3
At 31 December 2022 3 - 3
Cost
At 1 January 2023 81 7,211 7,292
At 30 June 2023 81 7,211 7,292
Amortisation
At 1 January 2023 3 - 3
Charge for the period 9 - 9
At 30 June 2023 12 - 12
Net book amount
At 30 June 2023 69 7,211 7,280
At 31 December 2022 78 7,211 7,289
10 Capital commitments and contingencies
Capital and financial commitments
The Group commits to lease agreements in respect of hire facilities over six
months in advance, this is due to the nature of the facilities leased.
As at 30 June 2023 the Group committed to new fleet capital expenditure orders
of £6.2 million for 2023 and £0.6 million for 2024.
The Group held no other additional capital, financial and or other commitments
at 30 June 2023.
11 Share capital
As at As at
30 June 31 December
2023 2022
(unaudited) (audited)
£'000 £'000
Allotted, called up and fully paid
Ordinary Shares of 1p each (2023: 79.4m; 2022: 45.5m) 794 455
30 million issued Ordinary Shares of 1p in respect of AIM listing - 300
1.2 million issued Ordinary Shares of 1p in respect of exercised options 12 5
(2022: 0.5 million)
3.407 million issued Ordinary Shares of 1p in respect of business acquisition - 34
Ordinary Shares of 1p each 806 794
All classes of shares have full voting, dividends, and capital distribution
rights.
On the 5 January 2022 the shares of the Company were admitted to the London
Stock Exchange trading on the UK AIM market. Admission and dealings of the
ordinary shares of Facilities by ADF Plc became effective on this date. As
part of the listing, and on this date, 30,000,000 new ordinary shares were
placed at a price of 50p.
On 4 April 2022 500,000 new ordinary share were issued in respect of options
exercised. The options exercised were outstanding prior to the Company's
January 2022 IPO, as detailed in the Company's Admission Document, with the
majority having been issued in 2016 as part of the Company's Enterprise
Management Incentive ("EMI") scheme.
On 30 November 2022, 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 Plc. The shares were issued at the share price on the day of
the transaction being £0.55p, resulting in an issue of 3,407,400 Ordinary
Shares of 1p.
On 9 June 2023 1,200,000 new ordinary shares were issued in respect of options
exercised. The options exercised were outstanding prior to the Company's
January 2022 IPO, as detailed in the Company's Admission Document, with the
majority having been issued in 2020 as part of the Company's Enterprise
Management Incentive ("EMI") scheme.
No other options were issued, exercised, or forfeited during the period ending
30 June 2023.
12 Post balance sheet events
On 5 July 2023, a total of 300,000 share options over new Facilities by ADF
ordinary shares of £0.01 each were exercised. The options exercised were
outstanding prior to the Company's January 2022 IPO, as detailed in the
Company's Admission Document, with the majority having been issued in 2020 as
part of the Company's Enterprise Management Incentive ("EMI") scheme.
The USA Writers (Writers Guild of America (WAG)) and Actors (Screen Actors
Guild - American Federation of Television and Radio Artists (SAG-AFTR))
strikes have continued post the interim period end to impact productions
around the globe. As the strikes have drawn on, several film and TV
productions in the UK, on which ADF is currently engaged, have seen stoppages
or delays to productions that were scheduled to start filming in autumn 2023,
having now been pushed into early 2024 commencement.
Notwithstanding the above effects on productions affected by the USA strikes,
revenues from the Group's unaffected productions and pipeline are expected
to generate revenues for the full year ending 31 December 2023 of no less
than £35 million, assuming there is no resolution to the strikes in the
current financial year. ADF continues to assess the impact on its planned work
programme for the remainder of the financial year in conjunction with its
production company contacts. Any alleviation of the prevailing strike action
will provide the potential for further upside in the current financial year.
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