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Facilities by ADF Plc
Earnings Release • Sep 16, 2024
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Earnings Release
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National Storage Mechanism | Additional information 
RNS Number : 2088E
Facilities by ADF plc
16 September 2024
The information contained within this announcement is deemed by the Company to constitute inside information pursuant to Article 7 of EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended. Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.
16 September 2024
Facilities by ADF plc
("Facilities by ADF", "ADF", the "Company" or the "Group")
Half year results for the six months ended 30 June 2024
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 2024 (H1-FY24).
Financial highlights
| £m | H1-FY24 | H1-FY23 | Change | H2-FY23 | Change |
| Group revenue | 15.2 | 21.8 | (30%) | 13.0 | 17% |
| Adjusted EBITDA* | 2.5 | 5.8 | (57%) | 1.5 | 67% |
| Adjusted EBITDA % | 17% | 27% | (37%) | 12% | 42% |
| (Loss)/ profit Before Tax | (0.8) | 2.7 | (130%) | (2.1) | 62% |
| (Loss)/ earnings per share - basic | (0.75) pence | 3.2 pence | (124%) | (2.2) pence | 66% |
| Interim dividend per share | 0.5 pence | 0.5 pence | - | 0.9 pence | - |
Operational highlights
| · | Despite disruptions in the Film and HETV industry due to the Hollywood writers and actors strike (the "Strikes"), which ran from 2 May 2023 to 9 November 2023, the Group delivered a resilient performance as market conditions began to normalise with revenue up 17% to £15.2m from H2-FY23. |
| · | Continued successful integration of Location One Ltd into the Group leading to a significant increase in joint production activity, validating ADFs One-Stop-Shop approach. |
| · | ADF officially opened its flagship Longcross site with a ceremony for its customers, suppliers and investors, enabling the Group to deliver greater transport efficiencies for its customers and ongoing operational benefits to the business. |
| · | Supported 38 high-profile productions across H1-FY24 including Legacy, The Diplomat, Wolf Hall Season 2, Slow Horses, Silent Witness, The Witcher, Signal and Call the Midwife. |
Post period end
| · | Successfully completed the acquisition of Autotrak Portable Roadways ("Autotrak"), one of the UK's leading portable roadway suppliers, on 10 September, raising £10m from an oversubscribed placing and a further £0.5m from a retail offer. |
| · | The acquisition is a further step in delivering on ADF's strategy to be a One-Stop-Shop and endorses the Group's aspirations of generating £100m revenue in the medium term. |
Outlook
| · | The UK film and TV industry remains robust, with approximately £9.5bn expected to be invested in production over the next five years, driven by continued global demand. |
| · | ADF's established market position, high-quality vehicle fleet, and excellent customer service position the Group well for further growth and capturing market share. |
| · | Trading at the end of H1-FY24 finished strongly, with the order book for the second half of the year building well across the summer months as momentum returns across the market following the Strikes. |
| · | Continued to develop and progress a pipeline of other complimentary acquisitions to further support delivery of the Group's medium term growth aspirations. |
| · | Continued confidence in the Group's delivery of performance in the full year in line with market expectations. |
Commenting, Marsden Proctor, CEO, said:
"We are proud of the performance delivered in H1-FY24, demonstrating the Group's resilience and leading market position as the Film and HETV industry continues to recover from the impact of last year's strike disruptions. With the market normalising, we continue to be well-positioned to achieve our goal of becoming a One-Stop-Shop, which is further strengthened by our strategic acquisition of Autotrak post-period end. This most recent acquisition allows us to bring further compelling and enhanced product and service offerings to all our customers; on behalf of the Board, I would like to thank both new and existing shareholders for their support in making this possible.
"As we continue to invest in our fleet and explore further acquisition opportunities, alongside the increased investment anticipated across the industry in the UK in the coming years, we remain confident in achieving our aim of generating £100m revenue in the medium-term."
*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.
For further enquiries:
| Facilities by ADF plc Marsden Proctor, Chief Executive Officer Neil Evans, Chief Financial Officer John Richards, Chairman |
via Alma |
| Cavendish Capital Markets (Nomad and Broker) Ben Jeynes / George Lawson / Hamish Waller - Corporate Finance Michael Johnson / Sunila de Silva / George Budd - Sales / ECM |
Tel: +44 (0)20 7397 8900 |
| Alma Strategic Communications Josh Royston Hannah Campbell Robyn Fisher |
Tel: +44 (0)20 3405 0205 [email protected] |
OVERVIEW OF FACILITIES BY ADF PLC
The Facilities by ADF Group is the leading provider of premium serviced production facilities along with location services and ground protection equipment to the UK film and high-end television (HETV) industry.
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.
Facilities by ADF production fleet is made up of more than 700 premium mobile make-up, costume and artiste trailers, production offices, mobile bathrooms, diners, school rooms and technical vehicles.
To strengthen its position as a One-Stop-Shop for the Film and HETV industry, ADF acquired Location One Ltd, the UK's largest TV and film location service provider, in November 2022, and then further expanded in September 2024 by acquiring Autotrak Portable Roadways Ltd, a market leader in portable roadway solutions, diversifying the Group's offerings and customer base.
Chief Executive Officer's review
Overview
The Group delivered a good performance in H1-FY24 as the business ramps back up following the disruption to the film and HETV industry caused by the now resolved strike action in FY23. As market conditions normalise through H2-FY24, and regular business resumes, we are able to continue to execute on our goal of becoming a One-Stop-Shop, demonstrating the resilience of the Group.
Delivering against growth strategy
The Group has ambitions to continue to grow organically through further investment into its revenue-generating vehicle fleet, and also through appropriate acquisitions. We remain focused on improving our planning, sales and financial systems through a bespoke planning system (BMS) with our external IT partner ITCS, streamlining our booking system, and helping to ensure we can provide our customers with the very best level of customer service.
Acquisition of Autotrak Portable Roadways Limited
In September 2024, ADF acquired one of the UK's market-leading portable roadway suppliers, Autotrak, for a maximum consideration of £21.3 million. This acquisition marks a significant step in the Company's strategy to diversify its product offerings and expand its customer base beyond the film and HETV industry. We raised a £10.0 million by way of an oversubscribed placing to part-fund the acquisition. A further £0.5 million was also raised from an oversubscribed retail offer which has provided ADF with additional capital to continue to execute upon the Group's growth strategy. We are grateful to all new and existing shareholders that took part, enabling ADF to accelerate our growth plans and deliver for our shareholders. Autotrak is one of the largest suppliers of portable roadway panels to the film and TV industry in the UK. The temporary roadway market is experiencing substantial growth, driven by infrastructure projects, events, and industrial activity.
The initial consideration for the acquisition comprised £10.0 million payable in cash and the issue of 5,915,357 consideration shares. Contingent consideration deferred over three years from completion of an aggregate of up to £4.2 million is payable in cash in equal annual tranches contingent on maintenance of forecasted levels of adjusted EBITDA performance from FY 2025 to FY 2027. In addition, earnout consideration of up to £4 million in aggregate is payable in cash in FY28 based on growth in adjusted EBITDA performance from FY 2025 to FY 2027.
The acquisition is a further endorsement of ADF's aspirations of generating £100m revenue in the medium-term and it is anticipated to be significantly Earnings Per Share (EPS) accretive following Autotrak's full integration into the Group.
Autotrak is a well-managed business and will operate as a subsidiary of ADF, whilst sharing our industry contacts and streamlining our operational processes to ensure best practice is adopted across the Group.
ADF already enjoys an excellent working relationship with Autotrak whose customer base and strong financial metrics speak to the high quality of its offering and people behind it. I am pleased to report that joint customer conversations are already underway, with positive initial feedback from customers and prospects for our new Group. Alongside Location One, this acquisition will further enable us to provide the very best services the industry has to offer under one roof and moves us towards becoming a One-Stop-Shop to the UK film and HETV industry, as well as diversifying our customer base into the events industry.
The Group continues to have a strong pipeline of further potential complimentary acquisition opportunities, and these will remain under consideration in our ongoing discussions.
The market opportunity
Although the impact of the FY 2023 strikes on the film and HETV industry carried on into the start of FY 2024, with producers having to reorganise the schedules of all relevant parties, the underlying market drivers remain strong which underpin the long-term growth opportunities for the Group.
The UK continues to receive substantial investment with global production companies increasingly choosing the region's state of the art studios and facilities. Over the next five years, approximately £9.5 billion is expected to be invested in UK film and television in London alone (Film London). The BFI also recently reported UK film and HETV production spend for the quarter to June 2024 of £2.9 billion, a threefold increase from the £0.9 billion spend of the previous quarter. This trend is attributable to the gradual return to production following the US writers' and actors' strikes.
In its quarterly report to June 2024, Pinewood Studios also pointed to a recovery from the strikes. The studio, which owns Shepperton Studios, recorded £49 million in revenue for the quarter ended June 2024 a 38% annual increase on the prior year, driven by expanded studio space. Annual turnover reached £147 million, with adjusted EBITDA rising to £86 million.
Further studio expansion in the UK includes Amazon Prime/MGM which acquired Bray Studios, where "The Lord of the Rings: The Rings of Power" is filmed. The Berkshire site includes substantial sound stage, workshop, office, and backlot space. Disney also plans to invest $5 billion over the next five years in UK and European productions, following the success of recent films like "Inside Out 2" and "Deadpool & Wolverine."
Government support including tax incentives and funding for film and TV production in the UK also highlight the long-term opportunities in the industry and we expect the UK's new labour government to continue supporting this industry. The UK government has enhanced tax incentives for film and high-end TV productions, making the country an even more attractive location for streamers. Additionally, a 40% reduction in business rates for film studios through to 2034 is expected to support new developments, addressing concerns about a shortage of studio space. The UK will need an additional 2.6 million square feet of studio space by 2028 to meet industry demand.
Competitive strength
We remain the provider of choice for many in the UK for large scale and quality productions as evidenced by the Group's current order book. This position, has taken many years to establish, enabling high barriers to entry, and allowing us to benefit from high valued productions and customers. Our growth strategy means we have been able to implement the right infrastructure to support continued successful customer delivery and sustained strategic expansion.
To deliver such a high quality of service to our customers and successfully compete at this level, the quality, and more importantly compliance of a supplier's vehicle fleet needs meet the highest applicable standards. ADF prides itself upon the strength of its vehicle fleet and excellent customer service, which allows the Company to have positive and pro-active dialogue with its customers which include 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. With the addition of Location One's services, including waste and water management, power and lighting and fencing, we have become better equipped to support large scale productions. Now, with Autotrak part of the Group and providing complementary products and services, including ground protection and matting, to existing and new markets, the enlarged Group is better placed than ever, with the ability to deliver high volumes of equipment under one roof.
During H1-FY24, ADF was pleased to officially open its flagship Longcross site. The management team have been working extremely hard over the past year on this project, and to have finally realised our objective in securing the site with planning approval for further development, this is a significant achievement, and huge credit must be given to them. The five-acre site is close to the key intersection of the M25 and M3 which is ideally situated for servicing Longcross Studio (1.5 miles) along with all the major studios London, including Shepperton (7 miles), Pinewood (16 miles), Leavesden (26 miles) and Elstree (40 miles). Being based at Longcross has many advantages and enables us to deliver great transport efficiencies to the business and our customers and importantly helps reduce scope 3 carbon emissions.
We supported 38 high-profile productions across H1-FY24 including Legacy, The Diplomat, Wolf Hall Season 2, Slow Horses, Silent Witness, The Witcher, Signal and Call the Midwife. Our performance in the half, which was ahead of H2-FY23 levels, reflects the continued appetite for ADF's services to support large scale productions.
We report our Net Promotor Score (NPS), an internationally recognised customer service measurement. Throughout the period our score did not drop below 85 (82 in FY23), 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 remain the market leader.
Sustainability
Our clients entertain the world, and our mission is to support them with unparalleled service delivered by our exceptional team, all while prioritising sustainability and responsibility. To achieve this, we launched our 'Eco Set' ESG strategy in FY23, focusing on four key areas: climate and net zero, innovative client solutions, growth through learning, and making ADF a great place to work. We believe this approach will pave the way for a future where excellence and sustainability go hand in hand.
In our commitment to reducing emissions, we aim to be certified as Carbon Neutral from 2024 onwards. We're aligning with science-based targets to achieve a 50% reduction in carbon emissions per head by 2030, with a goal of reaching Net Zero by 2050.
We recognise that access to the film industry has been challenging for people with disabilities, and we are working closely with our clients to improve accessibility through bespoke accessible trailers, in partnership with UHC (Underlying Health Condition) and TAP (TV Access Project). The film industry has historically also lacked diversity, and we are dedicated to creating inclusive opportunities at ADF for all individuals. To further this commitment, we recently launched an inclusivity-focused campaign, driven by colleagues passionate about fostering a more diverse environment.
Our newly integrated ESG approach is led by our Chairman, John Richards, with the Board overseeing progress and embedding the strategy across the business.
I am deeply grateful to the ADF and Location One teams for their contributions to this strategy and for their passion in making a difference through the services we offer.
Outlook
Whilst the effects of the strikes continued into the first half of the current financial year, the Group's adjusted EBITDA performance in H1-FY24 was significantly ahead of H2-FY23, evidencing the continued growth in demand for ADF's services. The underlying market drivers still provide high confidence that demand will continue to expand over the medium term, underpinning our aspirations to generate £100m of revenue in this timeframe. To do this, we will continue to grow organically through continued investment in our revenue-generating fleet and appropriate investment in our healthy acquisition pipeline, in line with our strategy and robust evaluation criteria.
Trading in H2-FY24 continues to improve and over the course of the period we expect market conditions will return to be more in line with pre-strike levels, providing us confidence in delivering results for FY24 in line with market expectations.
Marsden Proctor
Chief Executive Officer
Financial performance
Summary
The financial results for the six months ended 30 June 2024 reflect the ongoing recovery following the US strikes, the effects of which continued to be felt into the first half of 2024. Revenue in H1-FY2024 of £15.2 million was 17% ahead of H2-FY23 (£13.0 million), but down 30% when compared with H1-FY23 (£21.8m) which was a period largely unaffected by the strikes, and indeed a record period for the business following the addition of Location One Ltd.
Sales performance was in line with ADF's budget and forecast for H1-FY24. The order book for the second half of FY24 has developed well through the summer as momentum continues to build across the market.
Profit margins also improved in H1-24 when compared with H2-23 (16.7% EBITDA margin vs. 11.9% in H2-FY23) as we supported larger productions which were more geographically centred around the main London studios and other studios close to our operational hubs in Wales, Manchester and Glasgow making them more efficient from a transport and mobilisation perspective. We have also continued to limit our use of Agency HGV drivers, avoiding unnecessary block bookings and fully utilising ADF drivers, all of which has contributed to an improved EBITDA margin.
Nevertheless, overall direct labour costs did increase as a percentage of revenue (37% vs. 29% in H1-FY23) which was in part a result of the continued market competitiveness, with the effects of price discounting lingering well into the summer. In addition, following the increase in the National Living Wage in April 2024 we increased rates of pay, particularly with our Base staff, to ensure our basic pay is in excess of the National Living Wage.
More broadly, the senior management team continued to monitor costs closely through the period, as we limited non-essential expenses to bring Overheads in under budget. Overall, core overheads were 18.4% of revenue, up on H1-FY23 of 12.3%.
Net interest expense increased from £625K in H1-FY23 to £682K in H1-FY24. The increase is a result of additional HP interest from new HP leases to fund organic growth of our fleet. Interest rates on HP leases are not variable and fixed at the date the leases are taken out.
Location One continues to integrate into ADF's systems and processes with all expected efficiencies having been delivered through consolidation of IT, sales, CRM and reporting systems. The additional services within the Group, including waste and water management, power and lighting, and fencing, means we have become better equipped to support large scale productions. Furthermore, having one integrated platform for sales has led to successful joint bids for 29 productions in H1-FY24, up from nine in H1-FY23.
As a result of the above, the loss before tax for H1-FY24 was £0.8 million, (H1-FY23: profit of £2.7 million).
The taxation credit for H1-FY24 of £186k represents deferred tax only as the Group currently has excess (super deduction) capital allowances to cover its current taxable profits.
EBITDA
The Group measures 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, EBITDA approximates the underlying operating cash flow by eliminating depreciation and amortisation. Adjusted EBITDA adds back any non-recurring or exceptional costs.
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. Adjusted EBITDA for H1-FY24 was £2.5 million (16.72% EBITDA margin) compared to H1-FY23 at £5.77 million (26.5%).
A reconciliation of Adjusted EBITDA is shown below:
| Adjusted EBITDA £000's | H1-FY24 | H1-FY23 | H2-FY23 | FY-23 |
| Revenue | 15,186 | 21,777 | 13,019 | 34,796 |
| Profit/ (loss) before tax | (796) | 2,737 | (2,122) | 615 |
| Add back: | ||||
| Finance expenses | 682 | 625 | 771 | 1,396 |
| Depreciation | 2,557 | 2,350 | 2,628 | 4,978 |
| Amortisation | 12 | 9 | 9 | 18 |
| Non-recurring expenses | - | 23 | 235 | 258 |
| Share based payments | 84 | 29 | 30 | 59 |
| Adjusted EBITDA | 2,539 | 5,773 | 1,551 | 7,324 |
| Adjusted EBITDA % | 16.7% | 26.5% | 11.9% | 21.0% |
Revenue
ADF's overall revenue increased by 17% in H1-FY24 to £15.2m when compared with H2-FY23 (£13.0m), as the market began to build momentum following resolution of the US strikes in November 2023.
The table below shows the revenue between the two main facilities hire categories, being main packages (pre-agreed before filming) and additional sales (during the course of filming), plus other miscellaneous sales. Revenue for Location One is shown separately.
| Turnover £M's | H1-FY24 | H1-FY23 | % Change | H2- FY23 | FY23 |
| Facilities - Main packages | £7.5 | £10.1 | (26%) | £6.4 | £16.5 |
| Facilities - Additional sales | £4.0 | £6.4 | (37%) | £3.3 | £9.7 |
| Facilities - Other income | £0.1 | £0.1 | ~100% | £0.1 | £0.2 |
| Facilities - Total | £11.6 | £16.6 | (30%) | £9.8 | £26.4 |
| Location Equipment hire (Location One) | £3.6 | £5.2 | (31%) | £3.2 | £8.4 |
| Total Revenue | £15.2 | £21.8 | (30%) | £13.0 | £34.8 |
| Uplift on main packages % (see explanation below) | 54% | 74% | 52% | 60% |
The reduction in uplift in H1-FY24 vs. H1-FY23 is due to the impact of the strikes, having worked on productions with less equipment and of shorter duration as the market continued its recovery during the period.
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 and during 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 38 productions in H1-FY24, the same number as in H2-FY23. However, there was a reduction in revenue per production in H1-FY24 to £304k, a 16% decrease when compared with H1-FY23 (£361k).
The BBC became the largest share of revenue in the period as the available work all gravitated to their shows, with streamers effectively offline during the strikes.
| H1-FY24 | H1-FY23 | |||
| Revenue by Platform | £000's | % | £000's | % |
| Amazon | £223 | 1.5% | £747 | 3.4% |
| Apple | £2,626 | 17.3% | £2,378 | 10.9% |
| BBC | £4,011 | 26.4% | £3,059 | 14.1% |
| Disney | £515 | 3.4% | £3,037 | 13.9% |
| Fox | £0 | 0% | £0 | 0% |
| ITV | £852 | 5.6% | £2,671 | 12.3% |
| Marvel | £0 | 0% | £0 | 0% |
| Netflix | £3,355 | 22.1% | £4,578 | 21.0% |
| Other Productions | £2,395 | 15.7% | £4,265 | 19.6% |
| Sky | £1,209 | 8.0% | £607 | 2.8% |
| Total invoiced | £15,186 | 100.0% | £21,342 | 98.0% |
| Cross Hire & Other | £0 | 0% | £435 | 2.0% |
| Total revenue | £15,186 | 100.0% | £21,777 | 100.0% |
| Split | ||||||
| ADF | £11,548 | 76% | £16,617 | 76% | ||
| Location One | £3,638 | 24% | £5,160 | 24% | ||
| £15,186 | 100% | £21,777 | 100% | |||
| ADF Productions (No.) | 38 | 46 | ||||
| ADF Ave Rev Per Production | £304 | £361 | ||||
The split of productions across the revenue bands is shown below:
| Production value | H1-FY24 | H1-FY23 | FY23 |
| £0 - £500k | 31 | 37 | 72 |
| £500k - £1.0m | 5 | 4 | 7 |
| £1.0m - £1.5m | 1 | 2 | 3 |
| £1.5m - £2.0m | 0 | 2 | 1 |
| £2.0m - £2.5m | 1 | 0 | 1 |
| £2.5m - £3.0m | 0 | 1 | 0 |
| 38 | 46 | 84 |
Share Based Payments & Non-Recurring Expenses
The share-based payments relate to certain options granted to the two current Executive Directors along with members of the Senior Management Team. The non-recurring expenses in the prior period relate to adjustments to the carrying value of goodwill and provisions for deferred consideration payments relating to the acquisition of Location One in 2022.
On 4 March 2024, the Company awarded a total of 1,001,225 options under its LTIP to Marsden Proctor (571,429 options) and Neil Evans (429,796 options). The awards are over ordinary shares of £0.01 in the form of options to acquire ordinary shares at nominal value.
The LTIP Awards will vest not earlier than the third anniversary of grant subject to meeting the performance conditions applied to the awards measured over the three-year period ending 31 December 2026. 50% of the award is subject to an EBITDA growth performance target and 50% is subject to a total shareholder return growth target with vesting commencing at 6% CAGR rising on a straight line to full vesting at 10% CAGR. The LTIP Awards are subject to a two-year post-vesting holding period.
Awards of a further 566,329 options were made to other senior employees on similar terms.
Dividend & EPS
Reflecting confidence in the Group's performance for the full year, the Board has declared an interim dividend of 0.5 pence per share in respect of the six months ended 30 June 2024 (the "Interim Dividend"). The Interim Dividend will be paid on 25 October 2024, with a record date of 4 October 2024 and an ex-dividend date of 3 October 2024.
The Interim Dividend, over an increased number of ordinary shares in issue following the successful placing approved by shareholders on 9 September 2024, is reflective of the Group's progressive dividend policy.
The Company declared a final dividend of 0.90 pence per share in April 2024 in relation to the year ended 31 December 2023. This took the total dividend for that year to 1.40 pence per share, with the interim dividend of 0.50 pence per share in October 2023.
Basic earnings per share for H1-FY24 was a loss of 0.75 pence per share compared with earnings of 3.20 pence per share in H1-FY23.
The Company paid a final dividend of 0.90 pence per share in June 2023 in relation to the year ended 31 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. The Company also paid an interim dividend in October 2023 of 0.50 pence per share in relation to the year ended 31 December 2023. The dividend policy is progressive with growth in earnings. Basic earnings per share for FY23 was 0.99 pence per share, (FY22: 6.1 pence per share).
Cash Flow & Net Debt
During H1-FY24, ADF financed capex of £0.8 million by hire purchase, and the balance of £0.5 million was paid for out of the Company's own cash. The majority of the hire purchase funding was with two providers, PACCAR Finance, the in-house finance company for DAF vehicles, and HSBC. Interest rates have increased in line with the Bank of England base rate and averaged 6.9% across H1-FY24 (FY23: 7.5%). The interest rate being paid across all HP contracts averages 4% to 30 June 2024. Total hire purchase repayments including interest were £2.8 million. No new property leases were added in the period.
Net current liabilities increase to £3.9 million from £2.7 million at the 31 December 2023, largely due to the timing of HMRC liabilities and a slight increase in trade payables offset by a reduction in trade receivables.
Net debt, excluding IFRS 16 leases, at the end of June 2024 was £13.0 million (31 December 2023: £12.8 million) with hire purchase liabilities decreasing from £16.3 million at the end of FY23 to £14.7 million at the end June 2024, and cash reducing from £3.5 million to £1.7 million. During the period a dividend of £0.7 million was paid, being the only other significant cash flow item.
FACILITIES BY ADF PLC
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2024
| Note | Six months ended 30 June 2024 (unaudited) £'000 |
Six months ended 30 June 2023 (unaudited) £'000 |
|||
|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- |
| Revenue | 3 | 15,186 | 21,777 | ||
| Cost of sales | 4 | (9,825) | (13,332) | ||
| Gross profit | 5,361 | 8,445 | |||
| Administrative expenses | (5,391) | (5,031) | |||
| Non-recurring expenses | 5 | - | (23) | ||
| Share based payment expense | 11 | (84) | (29) | ||
| Operating (loss)/ profit | (114) | 3,362 | |||
| Finance expense | 8 | (682) | (625) | ||
| (Loss)/ profit before taxation | (796) | 2,737 | |||
| Taxation | 186 | (192) | |||
| (Loss)/ profit for the period | (610) | 2,545 | |||
| Earnings per share for (loss)/ profit attributable to the owners | |||||
| Basic (loss)/ earnings per share (£) | 6 | (0.0075) | 0.0320 | ||
| Diluted (loss)/ earnings per share (£) | 6 | (0.0075) | 0.0298 | ||
FACILITIES BY ADF PLC
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
| Note | As at 30 June 2024 (unaudited) £'000 |
As at 31 December 2023 (audited) £'000 |
||||
|---|---|---|---|---|---|---|
| Assets | ||||||
| Current assets | ||||||
| Inventories | 585 | 576 | ||||
| Trade and other receivables | 3,127 | 1,710 | ||||
| Cash and cash equivalents | 1,681 | 3,533 | ||||
| Total current assets | 5,393 | 5,819 | ||||
| Non-current assets | ||||||
| Property, plant and equipment | 7 | 12,300 | 12,638 | |||
| Right-of-use assets | 8 | 30,480 | 31,527 | |||
| Intangible assets | 9 | 6,287 | 6,262 | |||
| Total non-current assets | 49,067 | 50,427 | ||||
| Total assets | 54,460 | 56,246 | ||||
| Liabilities | ||||||
| Current liabilities | ||||||
| Trade and other payables | 4,528 | 2,941 | ||||
| Lease liabilities | 8 | 4,847 | 5,624 | |||
| Total current liabilities | 9,375 | 8,565 | ||||
| Non-current liabilities | ||||||
| Other provisions | 41 | 40 | ||||
| Lease liabilities | 8 | 18,427 | 19,584 | |||
| Contingent consideration | 60 | 60 | ||||
| Deferred tax liabilities | 2,844 | 3,030 | ||||
| Total non-current liabilities | 21,372 | 22,714 | ||||
| Total liabilities | 30,747 | 31,279 | ||||
| Net Assets | 23,713 | 24,967 | ||||
| Equity | ||||||
| Called up share capital | 11 | 809 | 809 | |||
| Share premium | 15,547 | 15,547 | ||||
| Share based payment reserve | 11 | 1,543 | 1,459 | |||
| Merger reserve | (400) | (400) | ||||
| Retained earnings | 6,214 | 7,552 | ||||
| Total equity | 23,713 | 24,967 |
FACILITIES BY ADF PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2024
| Note | Share Capital £'000 |
Share Premium £'000 |
Share Based Payment Reserve £'000 |
Merger Reserve £'000 |
Retained Earnings £'000 |
Total Equity £'000 |
|
| Balance at 01 January 2023 | 794 | 15,492 | 1,652 | (400) | 7,879 | 25,417 | |
| Comprehensive Income | |||||||
| Profit for the year | - | - | - | - | 794 | 794 | |
| Transactions with owners | |||||||
| Exercise of options | 11 | 15 | 55 | (252) | - | 252 | 70 |
| Share based payment charge on long term incentive program | 11 | - | - | 59 | - | - | 59 |
| Deferred tax on share options | - | - | - | - | (243) | (243) | |
| Dividends | - | - | - | - | (1,130) | (1,130) | |
| Balance at 31 December 2023 (audited) | 809 | 15,547 | 1,459 | (400) | 7,552 | 24,967 | |
| Balance at 01 January 2024 | 809 | 15,547 | 1,459 | (400) | 7,552 | 24,967 | |
| Comprehensive Income | |||||||
| Loss for the period | - | - | - | - | (610) | (610) | |
| Transactions with owners | |||||||
| Share based payment charge on long term incentive program | 11 | - | - | 84 | - | - | 84 |
| Dividends | - | - | - | - | (728) | (728) | |
| Balance at 30 June 2024 (unaudited) | 809 | 15,547 | 1,543 | (400) | 6,214 | 23,713 |
FACILITIES BY ADF PLC
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
| Note | Six months ended 30 June 2024 (unaudited) £'000 |
Year ended 31 December 2023 (audited) £'000 |
|||
| Cash flows from operating activities | |||||
| (Loss)/ profit before taxation from continuing activities | (796) | 615 | |||
| Adjustments for non-cash/non-operating items: | |||||
| Depreciation of property, plant and equipment | 7 | 941 | 1,751 | ||
| Amortisation of right-of-use assets | 8 | 1,617 | 3,227 | ||
| Amortisation of intangible assets | 9 | 12 | 18 | ||
| Impairment of goodwill | 9 | - | 1,019 | ||
| Profit on disposal of property, plant and equipment | 7 | (85) | (84) | ||
| Loss on disposal of right of use assets | 8 | 113 | 75 | ||
| Share based payment charge | 11 | 84 | 59 | ||
| Fair value gain on deferred consideration | - | (818) | |||
| Finance expense | 8 | 682 | 1,396 | ||
| 2,568 | 7,258 | ||||
| Increase in inventories | (9) | (159) | |||
| (Increase)/ decrease in trade and other receivables | (1,417) | 1,335 | |||
| Increase/ (increase) in trade and other payables | 1,587 | (3,381) | |||
| Cash from operations | 2,729 | 5,053 | |||
| Net cash generated from operating activities | 2,729 | 5,053 | |||
| Cash flows from investing activities | |||||
| Purchase of property, plant and equipment | 7 | (516) | (4,437) | ||
| Purchase of intangible assets | 9 | (37) | (10) | ||
| Purchase of right-of-use assets 1 | 8 | (132) | (90) | ||
| Proceeds from sale of property, plant and equipment | 180 | 434 | |||
| Net cash used in investing activities | (505) | (4,103) | |||
| Cash flows from financing activities | |||||
| Proceeds from issue of shares | - | 70 | |||
| Cash movements on lease liabilities | 8 | (2,666) | (4,479) | ||
| Interest paid on lease liabilities | 8 | (682) | (1,335) | ||
| Interest on deferred consideration | - | (57) | |||
| Other interest paid | - | (4) | |||
| Dividends paid | (728) | (1,130) | |||
| Net cash used in financing activities | (4,076) | (6,935) | |||
| Net decrease in cash and cash equivalents | (1,852) | (5,985) | |||
| Cash and cash equivalents at beginning of period | 3,533 | 9,518 | |||
| Cash and cash equivalents at end of period | 1,681 | 3,533 |
1 The purchase of right-of-use assets relates to cash additions made to improve assets held on hire purchase, included in right -of-use assets as detailed in note 8.
FACILITIES BY ADF PLC
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
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 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 2024. 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 2024 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 2023 have been filed with the Registrar of Companies. The Independent Auditor's Report on the Annual Report and Financial Statement ended 31 December 2023 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 2023, 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 long-term 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 2023 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. In the period ending 30 June 2023, revenue of £314,371 was generated in the European Union relating to the hire of facilities. 3 customers make up 10% or more of revenue in the period ending 30 June 2024 (2023: 5 ). Management considers revenue is derived from one business stream being that of hire of facilities.
Revenue from customers
| Six months ended 30 June 2024 (unaudited) £'000 |
Six months ended 30 June 2023 (unaudited) £'000 |
|
|---|---|---|
| Hire of facilities | ||
| Customer 1 | 4,011 | 3,059 |
| Customer 2 | 3,355 | 4,578 |
| Customer 3 | 2,626 | 2,378 |
| Customer 4 | 515 | 3,037 |
| Customer 5 | 852 | 2,671 |
| All other customers | 3,827 | 6,054 |
| 15,186 | 21,777 |
| Timing of transfer of goods or services | Six months ended 30 June 2024 (unaudited) £'000 |
Six months ended 30 June 2023 (unaudited) £'000 |
|---|---|---|
| Services transferred over time | 15,186 | 21,777 |
| 15,186 | 21,777 |
4 Segmental reporting
The Group has two reporting segments, being the hire of facilities and Location One (which represents all revenues and cost of sales generated from Location 1 Group Limited and Location One Limited). No non-GAAP reporting measures are monitored. Total assets and liabilities are not provided to the chief operating decision maker in the Group's internal management reporting by segment and therefore are not presented below, information on segments is reported at a gross profit level only. Information about geographical revenue is disclosed below. All non-current assets are located in the UK.
| Six months ended 30 June 2024 (unaudited) £'000 |
Six months ended 30 June 2023 (unaudited) £'000 |
|
|---|---|---|
| --- | --- | --- |
| Revenue | ||
| Hire of facilities | 11,548 | 16,617 |
| Location One | 3,638 | 5,160 |
| 15,186 | 21,777 | |
| Cost of sales profit | ||
| Hire of facilities | (7,619) | (10,305) |
| Location One | (2,206) | (3,027) |
| Gross Profit | 5,361 | 8,445 |
| Six months ended 30 June 2024 (unaudited) £'000 |
Six months ended 30 June 2023 (unaudited) £'000 |
|
|---|---|---|
| United Kingdom | 15,186 | 21,463 |
| EU | - | 314 |
| 15,186 | 21,777 |
Revenue by geographical destination
5 Non-recurring expenses
The Group incurred £Nil non-recurring expenses during the period to 30 June 2024 (2023: £23,023). The costs in the comparative period relate to additional expenditure in respect of the acquisition of Location 1 Group Limited.
| Six months ended 30 June 2024 (unaudited) £'000 |
Six months ended 30 June 2023 (unaudited) £'000 |
|
| Non-recurring expenses | - | 23 |
6 Earnings per share
The calculation of the basic EPS is based on the results attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.
| Six months ended 30 June 2024 (unaudited) £ |
Six months ended 30 June 2023 (unaudited) £ |
|
| Profit/ (loss) used in calculating basic EPS | (609,938) | 2,315,376 |
| Weighted average number of shares | 80,907,418 | 80,607,418 |
| Diluted weighted average number of shares | 80,907,418 | 85,497,418 |
| Earnings per share | (0.0075) | 0.0320 |
| Diluted earnings per share | (0.0075) | 0.0298 |
7 Property, plant, and equipment
| Plant and machinery £'000 |
Hire Fleet £'000 |
Motor vehicles £'000 |
Computer equipment £'000 |
Leasehold improvement £'000 |
Assets under construction £'000 |
Total £'000 |
|
| Cost | |||||||
| At 1 January 2023 | 159 | 10,663 | 1,616 | 11 | - | 809 | 13,258 |
| Additions | 75 | 875 | 419 | 223 | 509 | 2,336 | 4,437 |
| Transfers2 | - | 2,293 | 124 | - | - | (2,796) | (379) |
| Disposals | - | (858) | (452) | - | - | - | (1,310) |
| At 31 December 2023 | 234 | 12,973 | 1,707 | 234 | 509 | 349 | 16,006 |
| Depreciation | |||||||
| At 1 January 2023 | 77 | 2,404 | 91 | 6 | - | - | 2,578 |
| Charge for the year | 33 | 1,370 | 274 | 11 | 63 | - | 1,751 |
| Disposals | - | (670) | (291) | - | - | - | (961) |
| At 31 December 2023 | 110 | 3,104 | 74 | 17 | 63 | - | 3,368 |
| Cost | |||||||
| At 1 January 2024 | 234 | 12,973 | 1,707 | 234 | 509 | 349 | 16,006 |
| Additions | - | 82 | 19 | 9 | 182 | 224 | 516 |
| Transfers2 | - | 725 | - | - | - | (339) | 386 |
| Disposals | (27) | (115) | (196) | - | - | - | (338) |
| At 30 June 2024 | 207 | 13,665 | 1,530 | 243 | 691 | 234 | 16,570 |
| Depreciation | |||||||
| At 1 January 2024 | 110 | 3,104 | 74 | 17 | 63 | - | 3,368 |
| Charge for the period | 14 | 687 | 143 | 26 | 71 | - | 941 |
| Transfers [2] | - | 207 | - | - | - | - | 207 |
| Disposals | (20) | (82) | (144) | - | - | - | (246) |
| At 30 June 2024 | 104 | 3,916 | 73 | 43 | 134 | - | 4,270 |
| Net book amount | |||||||
| At 30 June 2024 | 103 | 9,749 | 1,457 | 200 | 557 | 234 | 12,300 |
| At 31 December 2023 | 124 | 9,869 | 1,633 | 217 | 446 | 349 | 12,638 |
Depreciation is charged to administrative expenses within the statement of Comprehensive Income.
Leasehold improvement additions in the period ended 30 June 2024 and in the year to 31 December 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 £'000 |
Motor Leasehold £'000 |
Hire Fleet and Motor Vehicles £'000 |
Equipment £'000 |
Assets under construction £'000 |
Total £'000 |
|
| Cost | ||||||
| At 1 January 2023 | 9,068 | 161 | 20,506 | 109 | 730 | 30,574 |
| Additions | 1,081 | - | 1,572 | 118 | 5,778 | 8,549 |
| Transfers2 | - | - | 6,012 | - | (5,633) | 379 |
| Disposals | (17) | - | (24) | (80) | - | (121) |
| At 31 December 2023 | 10,132 | 161 | 28,066 | 147 | 875 | 39,381 |
| Depreciation | ||||||
| At 1 January 2023 | 1,091 | 95 | 3,473 | 14 | - | 4,673 |
| Charge for the year | 896 | 53 | 2,237 | 41 | - | 3,227 |
| Disposals | (17) | - | (3) | (26) | - | (46) |
| At 31 December 2023 | 1,970 | 148 | 5,707 | 29 | - | 7,854 |
| Cost | ||||||
| At 1 January 2024 | 10,132 | 161 | 28,066 | 147 | 875 | 39,381 |
| Additions | - | - | 310 | - | 552 | 862 |
| Transfers2 | - | - | (142) | - | (244) | (386) |
| Disposals | - | (51) | (149) | - | - | (200) |
| At 30 June 2024 | 10,132 | 110 | 28,085 | 147 | 1,183 | 39,657 |
| Depreciation | ||||||
| At 1 January 2024 | 1,970 | 148 | 5,707 | 29 | - | 7,854 |
| Charge for the period | 463 | 6 | 1,131 | 17 | - | 1,617 |
| Transfers2 | - | - | (207) | - | - | (207) |
| Disposal | - | (51) | (36) | - | - | (87) |
| At 30 June 2024 | 2,433 | 103 | 6,595 | 46 | - | 9,177 |
| Net book amount | ||||||
| At 30 June 2024 | 7,699 | 7 | 21,490 | 101 | 1,183 | 30,480 |
| At 31 December 2023 | 8,162 | 13 | 22,359 | 118 | 875 | 31,527 |
2 Transfers are made between Property, Plant, and Equipment, and Right-of-Use-Assets whereby the amounts transferred between asset type are identical.
Lease liabilities
| Leasehold Property £'000 |
Motor Leasehold £'000 |
Hire Fleet and Motor Vehicles £'000 |
Equipment £'000 |
Total £'000 |
|
| At 1 January 2023 | 8,095 | 90 | 12,948 | 96 | 21,229 |
| Additions | 1,080 | - | 7,312 | 66 | 8,458 |
| Interest expense | 458 | 2 | 872 | 3 | 1,335 |
| Lease payments (including interest) | (896) | (62) | (4,807) | (49) | (5,814) |
| At 31 December 2023 | 8,737 | 30 | 16,325 | 116 | 25,208 |
| At 1 January 2024 | 8,737 | 30 | 16,325 | 116 | 25,208 |
| Additions | - | - | 732 | - | 732 |
| Interest expense | 223 | - | 457 | 2 | 682 |
| Lease payments (including interest) | (477) | (21) | (2,832) | (18) | (3,348) |
| At 30 June 2024 | 8,483 | 9 | 14,682 | 100 | 23,274 |
9 Intangible assets
| Software £'000 | Goodwill £'000 |
Total £'000 |
|
| Cost | |||
| At 1 January 2023 | 81 | 7,211 | 7,292 |
| Additions | 10 | - | 10 |
| At 31 December 2023 | 91 | 7,211 | 7,302 |
| Amortisation | |||
| At 1 January 2023 | 3 | - | 3 |
| Charge for the year | 18 | - | 18 |
| Impairment | - | 1,019 | 1,019 |
| At 31 December 2023 | 21 | 1,019 | 1,040 |
| Cost | |||
| At 1 January 2024 | 91 | 7,211 | 7,302 |
| Additions | 37 | - | 37 |
| At 30 June 2024 | 128 | 7,211 | 7,339 |
| Amortisation | |||
| At 1 January 2024 | 21 | 1,019 | 1,040 |
| Charge for the period | 12 | - | 12 |
| At 30 June 2024 | 33 | 1,019 | 1,052 |
| Net book amount | |||
| At 30 June 2024 | 95 | 6,192 | 6,287 |
| At 31 December 2023 | 70 | 6,192 | 6,262 |
10 Capital commitments and contingencies
Capital and financial commitments
The Group commits to lease agreements in respect of hire facilities over 6 months in advance, this is due to the nature of the facilities leased.
As at 30 June 2024 the Group committed to new fleet capital expenditure orders of £2.7 million for the remainder of the year.
The Group held no other additional capital, financial and or other commitments at 30 June 2024.
11 Share capital
| Ordinary Shares of 1p each | £'000 |
| Allotted, called up and fully paid | |
| At 01 January 2023 | 794 |
| 1.5 million issued Ordinary Shares of 1p in respect of exercised options | 15 |
| At 31 December 2023 | 809 |
| At 01 January 2024 | 809 |
| At 30 June 2024 | 809 |
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.
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.
On 5 July 2023, 300,000 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 EMI scheme.
No options were exercised or forfeited during the period ending 30 June 2024.
Share Options
The Group has two separate share option schemes in place, those being the Long-Term Incentive Plan ("LTIP"), and an Enterprise Management Incentive Share Scheme.
CAD Services Ltd operated two equity-settled share-based remuneration schemes for employees, under Enterprise Management Incentive Share Schemes. These options were to lapse if the individual leaves within 10 years from the date of grant if all vesting conditions had not been met earlier. These options were superseded, and all options were rolled over into new options issued by Facilities by ADF PLC as part of the acquisition transaction that took place 3 December 2021. The exercisable options held were rolled over to equivalent options.
The Group has additionally put in place a Long-Term Incentive Plan ("LTIP"), to ensure alignment between Shareholders, and those responsible for delivering the Group's strategy and attract and retain the best executive management talent. The LTIP will only reward the participants if shareholder value is created. This ensures alignment of the interests of management directly with those of Shareholders. On 5 January 2022, the Company issued 500,000 and 390,000 new ordinary share options to M Proctor and N Evans, respectively. The options hold an exercise price of 1p and will vest after 3 years subject to specific performance measurement criteria.
On 4 March 2024 the Group awarded a further 429,796 and 571,429 new ordinary share options to N Evans and M Proctor, respectively under the LTIP, along with a further 566,329 for share options to other senior management employees.
The terms and conditions of the grants outstanding as at the 30 June 2024 are detailed below:
| Date of grant | No. of options | Exercise price £ | Vesting conditions | Contractual life of options |
| 3 December 2021 | 500,000 | 0.01 | Immediately | 10 years (Rollover) |
| 3 December 2021 | 2,000,000 | 0.06 | Immediately | 10 years (Rollover) |
| 5 January 2022 | 1,200,000 | 0.50 | Immediately | 3 years |
| 5 January 2022 | 890,000 | 0.01 | LTIP | 10 years |
| 4 March 2024 | 1,567,554 | 0.01 | LTIP | 10 years |
| 6,157,554 | ||||
Details of the number of share options granted, exercised, lapsed and outstanding at the end of each period as well as the weighted average exercise prices in £ ("WAEP") are as follows:
| As at 30 June 2024 | WAEP | As at 31 December 2023 | WAEP | ||
| Outstanding at beginning of period | 4,590,000 | 0.16 | 6,090,000 | 0.14 | |
| Granted during the period | 1,567,554 | 0.01 | - | - | |
| Exercised during the period | - | - | (1,500,000) | (0.05) | |
| Outstanding at period end | 6,157,554 | 0.12 | 4,590,000 | 0.16 |
LTIP
Grant date
The grant date of the Options is the date of issue.
Exercise
Unless otherwise determined and subject to the redemption conditions having been met, the Company and the holders of the Options have the right to exchange each Option for Ordinary Shares in the Company, which will be dilutive to the interests of the holders of Ordinary Shares. It is currently expected that in the ordinary course options will be exchanged for Ordinary Shares.
Vesting Conditions and Vesting Period
The Options will vest and become exercisable following the end of the Performance Period, being the 1 January 2022 to 31 December 2024 for options granted in January 2022 and 1 January 2024 to 31 December 2026 for options granted in March 2024.
The Options are subject to certain vesting Performance Conditions, the conditions are as follows:
i. 50% of the Options will be subject to EBITDA target over the Performance Period; and
ii. 50% of the Options will be subject to an absolute total shareholder return performance condition over the Performance Period.
If the Performance Conditions (or any element of it) is not satisfied in full at the end of the Performance Period any part of the Option that has not Vested as a consequence of the Performance Condition (or any element of it) not being satisfied in full shall lapse immediately on the Board's determination that the Performance Condition (or the applicable element of it) has not been satisfied in full.
Holding of Options
N Evans, M Proctor and other senior management hold the Options.
The following shares were in issue on 30 June 2024:
| Issue date | Name | Share designation at balance sheet date | Nominal Price | Issue price per share £'s |
Number of Ordinary shares | IFRS 2 Fair value £'s |
| 5 January 2022 | M Proctor | Ordinary Shares | £0.01 | 0.55 | 500,000 | 98,917 |
| 5 January 2022 | N Evans | Ordinary Shares | £0.01 | 0.55 | 390,000 | 77,156 |
| 4 March 2024 | N Evans | Ordinary Shares | £0.01 | 0.49 | 429,796 | 136,680 |
| 4 March 2024 | M Proctor | Ordinary Shares | £0.01 | 0.49 | 571,429 | 181,721 |
| 4 March 2024 | Senior Management | Ordinary Shares | £0.01 | 0.49 | 566,329 | 180,099 |
Valuation of Options
Valuations were performed using a Monte Carlo model to ascertain the fair value at grant date. Details of the valuation methodology and estimates and judgements used in determining the fair value are noted herewith and were in accordance with IFRS 2 at grant date.
There are significant estimates and assumptions used in the valuation of the Options. Management has considered at the grant date, the potential range of value for the Options, based on the circumstances on the grant date.
The fair value of the Options granted under the scheme was calculated using a Monte Carlo model with the following material inputs:
| Issue date | Name | Share designation at balance sheet date | Volatility | Risk-free rate | Expected term (years) |
| 5 January 2022 | M Proctor | Ordinary Shares | 50% | 1.0175% | 3 |
| 5 January 2022 | N Evans | Ordinary Shares | 50% | 1.0175% | 3 |
| 4 March 2024 | N Evans | Ordinary Shares | 47% | 4.12% | 3 |
| 4 March 2024 | M Proctor | Ordinary Shares | 47% | 4.12% | 3 |
| 4 March 2024 | Senior Management | Ordinary Shares | 47% | 4.12% | 3 |
The Options are subject to the Performance Conditions being achieved, which are market and non-market performance conditions, and as such has been taken into consideration in determining their fair value.
Expense related to Options
An expense of £83,832 (30 June 2023: £29,346) has been recognised in the Statement of Comprehensive Income in respect of the Options in issue during the period. There is a condition associated with the Options issued which requires the fair value charge associated with the Options to be allocated over the minimum vesting period. This vesting period is estimated to be 3 years from the date of grant.
12 Post balance sheet events
On 22 August 2024, the Group announced the proposed acquisition of Autotrak Portable Roadways Limited ('Autotrak'), one of the largest privately-owned suppliers of portable roadway panels to the Film & TV industry in the UK. The Company's acquisition of Autotrak completed on 10 September 2024.
With a client base of over 165 customers, Autotrak is a market leader delivering £8.3 million turnover in the year to 31 December 2023 and an adjusted EBITDA of £4.3 million. This marks the next step in the delivery of the Group's vision for ADF as a One-Stop-Shop for Film and HETV production, diversifying the product offering and customer base of the Group.
The initial consideration will be £10 million on a cash-free-debt-free basis and 5,915,357 consideration shares. Contingent consideration deferred over three years from completion of an aggregate of up to £4.2 million is payable in cash in equal annual tranches contingent on maintenance of forecasted levels of adjusted EBITDA performance from FY25 to FY27. In addition, earnout consideration of up to £4 million in aggregate is payable in cash in FY28 based on growth in adjusted EBITDA performance from FY25 to FY27.
[2] Transfers are made between Property, Plant, and Equipment, and Right-of-Use-Assets whereby the amounts transferred between asset type are identical.
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