REG - Facilities by ADF - Trading Update

Facilities by ADFAnnouncement

12/11/2024 07:00

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RNS Number : 7945L  Facilities by ADF plc  12 November 2024

The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. The information is disclosed in accordance with Cavendish's obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain. 

 

12 November 2024

 

Facilities by ADF plc

 

("Facilities by ADF", "ADF", the "Company" or the "Group")

 

Trading Update

 

Facilities by ADF, the leading provider of premium serviced production
facilities to the UK film and high-end television industry ("HETV"), today
provides an update on trading in respect of the full year ended 31 December
2024 ("FY24").

 

As previously announced, following the USA Writers (Writers Guild of America)
and Actors (Screen Actors Guild - American Federation of Television and Radio
Artists) strikes from May to November 2023 (the "Strikes"), the Group took
several mitigating actions to maximise profitability during this period. This
included securing shorter duration domestic productions and cutting the use of
more expensive agency drivers, which enabled the Group to price services more
competitively and win a larger share of available business.

 

The Company went on to report in its interim results for the six months ended
30 June 2024 ("H1-FY24") that the impact of the strikes continued to be felt
with lower levels of film and HETV production activity in the UK and a
resultantly competitive market for the Group's services. This competitive
market for business with cost conscious customers remains. Nevertheless, the
Group delivered a resilient H1-FY24 performance as market conditions slowly
began to normalise with revenue of £15.2m, an increase of 17% compared to the
preceding six months (H2-FY23: £13.0m). Since the end of H1-FY24, ADF
acquired the entire issued share capital of Autotrak Portable Roadways Limited
("Autotrak"), and the integration of this acquisition is well advanced and
significant progress has already been made in respect of future sales and
operational synergies.

 

As the effect of the Strikes slowly began to recede, and whilst prevailing
uncertainty in both the UK from the Budget on 30 October 2024 and the US given
the Election on 5 November 2024 had seen customers in both geographies
delaying production commitment decisions, the Group's sales pipeline for the
latter part of FY24 began to increase in line with expectations in the first
half of H2-FY24.

 

However, following the conclusion of macro-economic events on both sides of
the Atlantic, it is now clear that a significant number of the productions
that ADF had in its sales pipeline for H2-FY24 will have start dates pushed
out into FY25, and some will not proceed at all. One of the Company's
responses to the Strikes, to secure shorter duration domestic productions for
FY24, will also result in lower than historical levels of revenue "add-ons"
during productions for the remainder of FY24. It is currently anticipated that
the Group will continue to see lower "add-on" revenue rates in the near term.
 

 

As a result, the Company now expects to report FY24 revenue and adjusted
EBITDA* in line with that of FY23, with revenues of approximately £35m,
adjusted EBITDA* in the range of £7.3m to £8.0m and the Group approximately
breakeven at a net income level.

 

At 31 October 2024, the Group held unaudited cash balances of approximately
£3.3m and, with the Company entering FY25 with a pipeline which provides
significant levels of confidence, the Company currently expects to continue
with its existing dividend policy in respect of the full year FY24.

 

Outlook

 

The sales pipeline for FY25 has been steadily building across the Summer and
supports what many in the industry believe will be a full return to previous
activity levels of film & HETV production. Adding the deferred work from
the back end of FY24, for which the Group has the fleet capacity to deliver
alongside the pre-existing FY25 pipeline, will ensure ADF begins FY25 with a
significant pipeline. ADF is in discussion with several new customers for
large, multi-series productions with Netflix, Apple and Marvel.

 

Marsden Proctor, CEO, said:

 

"ADF has worked incredibly hard across the year to win work, in a challenging
market and deliver exceptional customer service. However, the impact on
funding and greenlighting of productions across the remaining part of the
second half of the year, following the speculation around the Autumn Budget
and US Elections, has been extremely frustrating. Whilst the high level of
deferred work has impacted our results for FY24, some of this will push into
FY25, in addition to all the other exciting productions we are in discussions
with."

 

 

*Adjusted EBITDA is the adjusted profit before tax, prior to the addition of
finance income and deduction of depreciation, amortisation, and finance
expenses. Adjusted EBITDA is therefore stated prior to the FY24 impact of
amortization of acquired intangibles in respect of the Group's acquisition of
Autotrak Portable Roadways Limited at an annualised amount of approximately
£0.5m.

 

For further enquiries:

 

 Facilities by ADF plc                                                via Alma

 Marsden Proctor, Chief Executive Officer

 Neil Evans, Chief Financial Officer

 John Richards, Chairman

 Cavendish Capital Markets (Nomad and Broker)                         Tel: +44 (0)20 7220 0500

 Ben Jeynes / George Lawson / Hamish Waller - Corporate Finance

 Michael Johnson / Sunila de Silva / George Budd - Sales / ECM

 Alma Strategic Communications                                        Tel: +44 (0)20 3405 0205

 Josh Royston                                                         facilitiesbyadf@almastrategic.com (mailto:facilitiesbyadf@almastrategic.com)

 Hannah Campbell

 Sarah Peters

 

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