26 April 2024
Facilities by ADF
plc
("Facilities by ADF", "ADF", the "Company" or the
"Group")
Full
year results for the year ended 31 December 2023
Facilities by ADF, the leading
provider of premium serviced production facilities to the UK film
and high-end television industry ("HETV") announces its audited final results for the year ended 31 December 2023
("FY23").
Financial highlights
£M
|
31 Dec
2023
|
31 Dec
2022
|
31 Dec
2021
|
Group revenue
|
34.8
|
31.4
|
27.8
|
*Adjusted EBITDA
|
7.3
|
8.0
|
7.7
|
*Adjusted EBITDA %
|
21.0%
|
25%
|
28%
|
Profit/(loss) before tax
|
0.6
|
4.6
|
2.8
|
Earnings per share
|
0.99p
|
6.1p
|
3.2p
|
Operational highlights
·
|
Robust financial performance with
revenue of £34.8m and adjusted EBITDA of £7.3m, reflecting a record
first half of the year, working on larger and longer
productions.
|
·
|
In the second half of FY23,
several large productions that ADF was working on stopped filming
due to the Hollywood writers and actors strike (the "Strikes"),
immediately impacting revenue levels for the remainder of the
year.
|
·
|
The Group took several mitigating
actions in response to the Strikes to maximise profitability in
H2-FY23, including securing shorter duration domestic productions,
and cutting the use of more expensive agency drivers.
|
·
|
ADF supported 84 high-profile
productions in FY23 with an average revenue per production of
£385k.
|
·
|
Notable productions worked on
include The Crown season 6, Slow Horses, Star Wars Andor, The
Gentleman, Rivals and The Diplomat.
|
·
|
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, acquired in November
2022, opened new branches at Longcross, Bridgend, and Glasgow,
alongside ADF.
|
Outlook
·
|
Following the end of the Strikes
in November 2023, and the continued growth in demand for ADF's
services as evidenced by the current order book, the Company
expects the financial performance of H1-FY24 to be significantly
ahead of the H2-FY23.
|
·
|
Although the impact of the Strikes
on the film and HETV industry has carried on into the first few
months of 2024 with producers having to reorganise the schedules of
all relevant parties, ADF expects the situation will continue to
normalise as the first half of the year progresses before returning
to a full second half, more in line with pre-Strike
levels.
|
·
|
Underlying market drivers still
provide high confidence that the demand for ADF's services will
continue to expand over the medium to long
term.
|
·
|
The Group remains committed to
growth and will continue to review acquisition opportunities in
line with its strategy.
|
Commenting, Marsden Proctor, CEO, said:
"Our FY23
performance showcased the Group's resilience, marked by a robust
first half tempered by the unprecedented joint Strike by Hollywood
actors and writers, the first of its kind in over six decades. As
previously announced, the impact of these Strikes has carried into
the first half of the year, however, we are committed to prudently
managing our cost structure during this period. Despite these
challenges, the long-term market outlook remains highly favourable
for ADF, buoyed by sustained high levels of investment in the UK
HETV industry. The Board maintains confidence in the long-term
prospects of the Group as market conditions stabilise."
*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.
For further enquiries:
Facilities by ADF plc
Marsden Proctor, Chief Executive
Officer
Neil Evans, Chief Financial
Officer
John Richards, Chairman
|
via Alma
|
Cavendish Securities (Nominated Adviser and
Broker)
Ben Jeynes / George Lawson -
Corporate Finance
Michael Johnson / Sunila de Silva
/ George Budd - Sales / ECM
|
Tel: +44 (0)20 7220
0500
|
Alma Strategic Communications
Josh Royston
Hannah Campbell
Robyn Fisher
|
Tel: +44 (0)20 3405
0205
facilitiesbyadf@almastrategic.com
|
OVERVIEW OF FACILITIES BY ADF PLC
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.
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.
Chairman's statement
Overview
Facilities by ADF PLC (''ADF'')
delivered a robust financial performance in FY23, despite the
challenging operating environment across the film and TV industry
starting in the second half of the year. These results demonstrate
the Group's resilience and strong position in a market that was
overshadowed, during the period, by the first joint Strike of
Hollywood actors and writers in over 60 years.
The Group delivered a record first
half, working on larger, longer productions compared to the prior
year, following strong demand for its services from global
streaming providers. The Group had the full financial benefit in
H1-FY23 of Location One, acquired in November 2022, alongside a
significant increase in sales withing the core ADF business.
However, with the onset of the Strikes in May 2023, several large
productions that ADF was working on stopped filming immediately
impacting revenue levels in H2-FY23, as documented in the Group's
interim results.
In response to the Strikes, the
Group took several mitigating actions to maximise profitability in
H2-FY23, including securing shorter duration domestic productions,
and also cutting the use of more expensive agency drivers which
enabled the Group to respond quickly to more price sensitive market
conditions and win a larger share of available business.
As a result, revenue and margins
were lower in H2-FY23 than the first half. However, the Group
delivered revenue of £34.8m and adjusted EBITDA of £7.3m for
FY23.
Despite the significant period of
market disruption, experienced during the year, we did experience
continued demand for our services from global streaming brands
including Netflix, Amazon, Apple and Disney and supported 84
high-profile productions across FY23, reinforcing the Group's
position as the UK's leading facilities provider.
Whilst the Strikes ended after six
months in November 2023, the impact on the film and
high end TV (''HETV'')
industry has continued and carried on into H1-FY24. Actor
availability and the securing of studio space have created
scheduling difficulty for film and TV producers, who are seeking to
both complete pre-Strike productions as well as start new
productions. Presently, we anticipate the financial performance in
H1-FY24 to be significantly ahead of the second half of FY23 based
on the Group order book, with the market situation continuing to
normalise in the first half of the year.
The cost and cash management measures implemented in H2-FY23 have
remained in place into the new financial year.
Despite the Strikes impact,
momentum remains strong, and the underlying market drivers
alongside the Group's leading industry position, continue to
provide the Board with confidence that demand for ADF's services
will accelerate as production levels normalise.
Impact of the Strikes
The Strikes, from May to November
2023, impacted productions around the globe and several large
productions that ADF was working on stopped filming immediately.
Furthermore, all the 'US' led productions that ADF had in the
pipeline for the second half of the financial year were also
suspended, creating capacity for the Group to win alternative
business. ADF also implemented cost saving measures to ensure the
business was well positioned for when market conditions returned to
normal. Mitigating actions included working with clients and
partners to understand the available pipeline and opportunities for
ADF for the remainder of the year and, implement appropriate
measures including a reduction in headcount, predominantly across
the Group's base production teams, and the introduction on a freeze
on all non-essential consultant services in H2-FY23.
Strategy
The Group remains committed to
growth with an ambition to increase our revenue to over £100
million and intends do this through organic means by both investing
in revenue generating fleet equipment, as well as through
appropriate acquisitions.
In FY23, ADF officially opened its
flagship central hub at Longcross, Surrey, highlighting the Group's
commitment to its growth strategy and added 133 units to its fleet,
predominantly in the first half of the year, bringing the total to
703 units by the end of the financial year.
Location One, acquired by ADF in
November 2022, opened new branches at Longcross, Bridgend, and
Glasgow during the year. The enlarged Group is now cross-selling to
an increasing number of HETV and film companies in the UK,
delivering services in a more efficient way, and moving the Group
closer to its goal of becoming a one stop shop for film and HETV
production. The success of this acquisition indicates that we have
the right set of parameters when seeking to invest and confirms the
benefits we can bring to businesses looking to scale in the
industry. We will continue to review opportunities for
complementary additions as they arise and are in discussion with
several parties presently.
People
We have continued to invest in the
expansion of our senior leadership team, including the appointment
of a Chief Operating Officer, to ensure we have the depth and
breadth of management to deliver our growth strategy and have been
encouraged by the immediate positive contribution that the new team
members have made.
In November 2023, Jo Goodson was
appointed as an independent Non-Executive
Director to the Company, bringing over 25 years' experience working
with high growth businesses across both the public and private
sectors. She has held several senior roles across the entertainment
and technology industries and is already proving to be a valuable
additional voice to the Board as we work together to deliver on our
growth ambitions and capitalise on our strong market
position.
ESG
As a Board and a business, ADF is
committed to high standards within all areas of ESG. In FY23 we
launched our ESG strategy, focusing on sustainability, innovation,
knowledge and being a 'great place to work'.
This includes developing
initiatives that have a positive impact on society and our
employees, as well as supporting our staff with accessibility,
inclusion, and diversity, and reducing our environmental impact
through collaborating with stakeholders towards a low carbon
production industry.
In support of this strategy, we
commissioned a third-party specialist agency (Creative Zero) to
carry out an operational and supply chain emissions audit for ADF
for 2022. The output of this audit identified the total operational
carbon footprint for the business, with the majority of emissions
generated coming from the use of the vehicles we hire out, followed
by staff commuting. We aim to decarbonise our operation by tackling
our emissions at source and only offset what we are not able to
remove. We intend to do this by transitioning to green energy,
focusing on energy reduction and increasing efficiency and positive
behavioural change These opportunities
will be maximised moving forward and the carbon footprint and
carbon reduction plan exercise that is underway will provide the
data required for the SECR submission to be prepared in respect of
the 2024 financial year.
As an example of these initiatives
to transition towards greener and more efficient energy usage, last
year ADF launched its new EcoBase offering in conjunction with
Location One. This innovative solution is set to redefine unit base
operations by offering a sustainable infrastructure that minimises
environmental impact, maximises production efficiency, and sets a
new standard for eco-friendly practices. EcoBase is
designed to provide production teams with an eco-friendly unit base
that embraces resource conservation, waste reduction, renewable
power integration, and sustainable water supply and wastewater
treatments. A key feature of the EcoBase is its site wide power
monitoring and hybrid power solution, combining battery and HVO
fuel generated power to lower production emissions. Results from
one of our production case studies in 2023 have shown that this
innovative power solution was able to silent-run for as much as 70%
of the time, reduce overall fuel usage by 30%, and the use of HVO
fuel instead of diesel enabled the reduction in overall fuel
emissions by as much as 90%. By prioritising sustainability, we aim
to reduce the industry's environmental footprint and spark positive
change.
In terms of our people practices,
due to the challenges caused by the Strikes, in H2-FY23 we focused
on protecting the employment status of our teams as best as
possible during this turbulent period.
We also continued to move forward
with low-cost initiatives that promoted a greater awareness of the
key company objectives to the wider business as this was an area
that was highlighted in the 2023 Employee Survey results. We
launched the quarterly Company Update Call in December 2023 where
all the teams were invited, and we gave an overall update along
with a "spotlight" focus on a specific department. These calls will
continue in 2024 to further strengthen the internal communications
processes.
We delivered "Displaying Positive
Behaviours" training to the management team and have started
cascading those messages to the other teams to ensure that we
promote a positive working environment and company
culture.
Post-period end, our second
Employee Satisfaction survey launched in February 2024 to measure
the results against the previous year and identify where we should
focus our next areas. Highlights were an improved focus on
management training and coaching, more positive feedback on line
management and team-working and increased scores relating to
understanding goals and objectives. Areas to focus on included
opportunities for development and pay, and benefits was once more
highlighted as a key issue.
In addition to wellbeing, the
health & safety (H&S) of our staff as well as our customers
and contractors, is a key focus for ADF. We have an established
H&S framework and resources in place to ensure that the conduct
of the business ensures the lowest level of risk, supported by an
external specialist, Safety Forward. The Group has a full-time
H&S Coordinator, reporting to the CFO, who in turn reports
H&S matters to the Board. Detailed accident reporting is
maintained, all incidents are investigated, and procedures changed
where necessary. Training continued across the year for managers
and supervisors in accident reporting and accident management, and
a hazard spotting campaign began in Q4 FY23.
As a Board, we are dedicated to
maintaining our strong corporate governance framework. Following
our IPO, we have chosen to adopt the QCA Corporate Governance Code,
which will help to inform the evolution of our governance approach
in future. The appointments we have made to the Board to date are a
clear demonstration of this commitment and we will continue to
ensure this remains as we grow as a listed business.
Outlook
While market challenges stemming
from the Strikes impacted our performance in H2-FY23 and have
continued to impact the first few months of FY24, we remain poised
to capitalise on the significant opportunities awaiting us as the
Film and HETV industry returns to its regular
trajectory.
Our financial results and
operational advancements throughout FY23 underscore our resilience
and capability. The underlying market dynamics, coupled with our
expanding partner network and proven offerings, including the
successful integration of Location One, reinforce the Board's
confidence in our ability to achieve sustainable growth over the
medium to long term.
The Group expects that the market
situation will continue to normalise as the first half of the year
progresses, and order visibility for H2-FY24 and beyond is expected
to be in line with pre-Strike levels.
John Richards
Chairman of the Board
CEO
review
Overview
Our performance in FY23
demonstrates the resilience and commitment of the ADF team and I am
incredibly proud of how each employee operated against a backdrop
of the Strike. I would like to thank all ADF employees for their
commitment and hard work that has enabled the Group to strengthen
its position and to capitalise on the opportunities in the market
as previous productions level return.
Financial performance
The Group delivered an outstanding
first half, with high levels of fleet utilisation. We achieved
revenue growth of 73% and adjusted EBITDA growth of 117% compared
to H1-FY22, evidencing the ongoing high level of demand for our
products and services, before the Strikes ensued. The growth in the
first half was the result of the a combination of the inclusion of
Location One performance within the Group, and also significant
organic growth achieved within the core business. 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. Consequently, overall
gross margins rose from 33.0% in H1-FY22 to 38.8% in H1-FY23. In
H2-FY23, the reduced levels of revenue due to the Strike led to
lower margins which averaged 29.7%. Whilst margins were lower in
H2-FY23, the Group delivered revenue of £34.8m and adjusted EBITDA
of £7.3m for FY23, in line with revised market
expectations.
Notwithstanding the Strikes, the
Group supported 84 high-profile productions across FY23 (FY22: 76)
with an average revenue per production for FY23 of £385K (FY22:
£388K).
The market opportunity
The UK's film and HETV production
spend reached £4.23bn in 2023, 32% down on a record breaking 2022,
with UK production heavily impacted by the Strike. This was still
the third highest annual spend since the tax reliefs were
introduced in 2013, reflecting the varying dynamics at play across
our sector and whilst a level of disruption occurred, the industry
continues to contribute billions and support a high number of jobs
across the UK.
Demand for film and TV studio
space remains very strong. A CBRE survey in May 2023 across 450
major business involved in the industry, reported a 30% increased
in the requirement for studio space to meet demand. This is backed
up by the many large scale studio developments in progress across
2023 including:
· Shinfield
Studio, Reading- 13 stages built with a further 5 planned in 2024
making it one of the largest studios in the UK once complete with a
total of 1 million square feet.
· Pinewood - the iconic West London studio, announced plans for
a £800 million development of 21 stages, making it, once complete,
the largest studio in the world.
· Crown Works Studio, Sunderland - announced a £450 million
development.
In February 2024, FilmLA issued
its sixth Sound Stage Study, updating its ongoing survey of Los
Angeles area studio developments, and releasing new stage occupancy
and use data for calendar year 2022. Since FilmLA's last sound
stage update in March 2023, both the UK and Georgia State, USA have
added more than one million square feet of stage inventory to their
existing supply. Now comparable to Los Angeles, the UK currently
has around 6.6 million square feet of stage space, with plans to
add dozens of new facilities.
We are confident that as
production returns to previous levels to meet the pent-up demand
for film and HETV productions, ADF is well placed to benefit given
its market leading position.
Competitive strength
We remain the provider of choice
for many in the UK for large scale and quality productions. This
has allowed us to benefit from high valued productions and
customers, which was particularly crucial during the Strike. This
market position has taken many years to establish, enabling high
barriers to entry, and we have the right infrastructure in place to
support continued successful customer delivery and further
expansion.
To deliver such a high quality of
service to our customers and successfully compete at this level,
the quality, and more importantly compliance of a supplier's
vehicle fleet needs to be incredibly high. ADF prides itself upon
the strength of its vehicle fleet and excellent customer service,
which allows ADF 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.
We supported 84 high-profile
productions across FY23 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.
The strength of our reputation and the professional integrity we
exhibit in all we do was particularly important during the Strikes
as we worked with our customers and suppliers to review our
remaining available pipeline and how to protect the business until
normal production levels resumed.
We report our Net Promotor Score
(''NPS''), an internationally recognised customer service
measurement, throughout the year which did not drop below 82, 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.
Delivering against growth strategy
The Group has ambitions to grow
organically through further investment into its revenue-generating
vehicle fleet, and also through appropriate
acquisitions.
During FY23, the Group
successfully executed on our organic growth strategy, adding 133
units to the fleet, predominantly in the first half, bringing the
total to 703 units at the end of the year. We also officially
opened our new flagship central hub at Longcross, Surrey. A key
focus in FY23 was to ensure we improved our planning, sales and
financial systems. This included developing 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.
At IPO, we emphasised our
intention to also grow through acquisitions which we approach with
a robust set of criteria. The acquisition of Location One met all
the criteria such as having an experienced, well regarded
management team, leaders in their sector, excellent record
regarding health and safety and employee practises and common
customers to ADF. The Location One team is now fully integrated
into the Group. During 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. The enlarged
Group is now cross-selling to an increasing number of HETV
companies in the UK, delivering services in a more efficient way,
strengthening the enlarged Group's position across the UK, moving
the Group closer to becoming a one stop shop for film and HETV
production.
People
We will always maintain that our
employees are the most essential asset of ADF and are key to the
Group's long-term success. In August 2023, we welcomed James Long
to the business as Chief Operating Officer, to strengthen the
Executive team. James has over 20 years' leadership experience in
senior commercial roles, including Managing Director at Radio
Times, and Commercial Director at Bounty. The Group is already
benefiting from his operational expertise and highly collaborative
approach.
In November 2023, Jo Goodson
joined the Board as an independent Non-Executive Director, bringing
over 25 years' experience working with high growth businesses
across both the public and private sectors. She has held several
senior roles across the entertainment and technology industries we
look forward to her guidance as we continue on our journey as a
listed business.
Outlook
I am incredibly proud of what the
ADF team has achieved against the challenging market backdrop in
FY23. The effects of the Strike will continue to be felt through
the first half of the current year, but we will carefully manage
our cost base during this time and the long-term market dynamics
remain very much in ADF's favour with continued high levels of
investment in the UK HETV industry and continued, and recently
enhanced government support in terms of grants and tax credits. The
Board is confident that we will return to pre-Strike order levels
and beyond as market conditions normalise.
Marsden Proctor
Chief Executive Officer
CFO Review
Summary
The financial results for the 12
months ended 31 December 2023 reflect a challenging year for the
business, and the film and HETV industry in general with the onset
of the Strike in May 23, which continued until November 23. This
had the effect of arresting the great start the business had in the
first 6 months of the year as outlined below.
Group P&L
|
H1-FY23
|
H2-FY23
|
FY23
|
H1-FY22
|
H2-FY22*
|
FY22
|
CAD Services
|
£16.6
|
£9.8
|
£26.4
|
£12.6
|
£18.1
|
£30.7
|
Location One
|
£5.2
|
£3.2
|
£8.4
|
£0.0
|
£0.7
|
£0.7
|
Total Sales
|
£21.8
|
£13.0
|
£34.8
|
£12.6
|
£18.8
|
£31.4
|
Cost of Sales
|
£13.4
|
£9.1
|
£22.5
|
£8.4
|
£11.3
|
£19.7
|
Gross Margin
|
£8.4
|
£3.9
|
£12.3
|
£4.2
|
£7.5
|
£11.7
|
%
|
39%
|
30%
|
35%
|
33%
|
40%
|
37%
|
Overheads
|
£2.6
|
£2.3
|
£4.9
|
£1.5
|
£2.2
|
£3.7
|
Adjusted EBITDA
|
£5.8
|
£1.6
|
£7.4
|
£2.7
|
£5.3
|
£8.0
|
%
|
27%
|
12%
|
21%
|
21%
|
28%
|
25%
|
Non recurring expenses
|
£0.0
|
£0.3
|
£0.3
|
£0.0
|
£0.1
|
£0.1
|
Share based payments
|
£0.0
|
£0.1
|
£0.1
|
£0.0
|
£0.1
|
£0.1
|
EBITDA
|
£5.8
|
£1.2
|
£7.0
|
£2.7
|
£5.1
|
£7.8
|
Depreciation &
amortisation
|
£2.4
|
£2.6
|
£5.0
|
£1.1
|
£1.4
|
£2.5
|
EBIT
|
£3.4
|
(£1.4)
|
£2.0
|
£1.6
|
£3.7
|
£5.3
|
Finance expenses
|
£0.6
|
£0.8
|
£1.4
|
£0.3
|
£0.4
|
£0.7
|
Profit before tax
|
£2.8
|
(£2.2)
|
£0.6
|
£1.3
|
£3.3
|
£4.6
|
Taxation charge /
(credit)
|
£0.2
|
(£0.4)
|
(£0.2)
|
£0.1
|
(£0.1)
|
£0.0
|
Profit after tax
|
£2.6
|
(£1.8)
|
£0.8
|
£1.2
|
£3.4
|
£4.6
|
|
|
|
|
|
|
|
Dividends - £000's
|
|
|
£1,130,004
|
|
|
£349,600
|
Undiluted EPS - pence
|
|
|
£1.40
|
|
|
£0.44
|
*NB Location One acquired
Dec-22
H1- FY23
The first half of FY23 shows
record levels of revenue at £21.8 million, which was 73% ahead of
the same period in FY22 (£12.6 million), and ahead of the Board's
expectations. The increase in sales is partly due to the addition
of Location One to the Group (+41%) and also to organic growth in
the core business (+32%).
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.
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.
H2-FY23
Prior to the onset of the Strike,
the order book for H2 FY23 was very strong, however the
Strikes significantly
reduced the Groups existing work programme and pipeline for the
remainder of the year, with the majority of the larger productions
planned for H2 being put on hold, or in some cases
cancelled.
With the immediate and ongoing
reduction in film and TV productions, the focus for the business
was therefore to:
· establish which of the active and planned productions were
being effected by the Strikes;
· secure as much of the work available in the market - this
meant some discounting and undertaking work on smaller &
shorter productions;
· reduce operating costs and overheads;
· defer any major capital spend until the Strikes were resolved
to preserve cash and working capital;
· all
non-essential costs such as training, travel, overtime, weekend
working etc was put on hold. It also meant many of the production
base staff, that are predominantly on flexible working contracts,
had larger breaks between productions; and
· suspended the block-hiring of agency HGV drivers.
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 FY23 was £7.3M (21.0%)
compared to FY22 at £8.0M (25.4%)
A reconciliation of Adjusted
EBITDA is shown below:
Adjusted EBITDA £000's
|
|
FY23
|
FY22
|
Revenue
|
|
34,796
|
31,414
|
Profit before tax
|
|
615
|
4,615
|
Add back:
|
|
|
|
Finance expenses
|
|
1,396
|
702
|
Depreciation
|
|
4,978
|
2,510
|
Amortisation
|
|
18
|
3
|
Non-recurring expenses
|
|
258
|
78
|
Share based payments
|
|
59
|
59
|
Adjusted EBITDA
|
|
7,324
|
7,967
|
Adjusted EBITDA %
|
|
21.0%
|
25.4%
|
The tax charge/(credit) for FY23
is £(179,000), and is deferred tax only as the group currently has
excess capital allowances and tax losses to cover its taxable
profits, hence profit after tax was £0.8M (FY22: £4.6M).
ADF greatly accelerated its capex
plans during H1-FY23 to take advantage of the final months of the
Capital Allowance Super-Deduction regime (''CASD'') which was due
to end in March 2023 but was extended by Jermey Hunt, in a new
format, in the Spring Budget. Overall, the CASD programme has led
to a very large tax loss carried forward which will mitigate ADF's
tax charges for a number of years.
Revenue
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-FY23
|
H2-FY23
|
FY23
|
FY22
|
Facilities - Main
packages
|
|
£10.1
|
£6.4
|
£16.5
|
£18.5
|
Facilities - Additional
sales
|
|
£6.4
|
£3.3
|
£9.7
|
£11.9
|
Facilities - Other income
|
|
£0.1
|
£0.1
|
£0.2
|
£0.3
|
Facilities - Total
|
|
£16.6
|
£9.8
|
£26.4
|
£30.7
|
Location Equipment hire (Location
One)
|
£5.2
|
£3.2
|
£8.4
|
£0.7
|
Total Revenue
|
|
£21.8
|
£13.0
|
£34.8
|
£31.4
|
Uplift on main packages %
|
64%
|
54%
|
60%
|
66%
|
Uplift is an important metric
being the increase in total facilities sales from the initial main
packages. This reduced in H2-FY23 due to the Strike and smaller
scale productions ADF was working on.
Revenue Mix
ADF worked on 46 productions in
H1-FY23, the same number as in H1-FY22. In the second half of FY23,
ADF worked on a further 38 productions (H2-FY22: 30) taking the
total for the year to 84 (FY22: 76). However, there was a small
reduction in the average revenue per production from £388K in FY22
to £385K in FY23. This was due to the impact of the Strikes and
having to take production with less equipment and of shorter
duration than normal. Netflix remained the
Group's single largest customer in FY23, however the level of
diversification across broadcasters increased during the year, with
ITV and Disney in particular significantly increasing their share
of the Group's overall revenue.
|
FY-23
|
FY-22
|
Broadcaster
|
Total £M's
|
%
|
Total £M's
|
%
|
Amazon
|
£1.22
|
3.5%
|
£2.93
|
9.3%
|
Apple
|
£2.70
|
7.8%
|
£2.20
|
7.0%
|
BBC
|
£5.93
|
17.0%
|
£4.67
|
14.9%
|
C4
|
£0.73
|
2.1%
|
£0.00
|
0.0%
|
Disney
|
£4.55
|
13.1%
|
£2.36
|
7.5%
|
HBO
|
£0.78
|
2.2%
|
£0.00
|
0.0%
|
Hulu
|
£0.39
|
1.1%
|
£0.87
|
2.8%
|
ITV
|
£4.92
|
14.1%
|
£3.00
|
9.5%
|
NBC Universal
|
£0.23
|
0.7%
|
£1.45
|
4.6%
|
Netflix
|
£5.27
|
15.2%
|
£7.34
|
23.4%
|
Paramount
|
£1.45
|
4.2%
|
£2.37
|
7.6%
|
Sky
|
£1.95
|
5.6%
|
£2.31
|
7.4%
|
Independent
|
£1.01
|
2.9%
|
£0.00
|
0.0%
|
Studiocanal
|
£1.26
|
3.6%
|
£0.00
|
0.0%
|
Other / Cross Hire / Misc
|
£2.41
|
6.9%
|
£1.91
|
6.1%
|
|
£34.80
|
100.0%
|
£31.41
|
100.0%
|
Split
|
|
|
|
|
ADF
|
£26.42
|
75.9%
|
£30.70
|
97.7%
|
Location One
|
£8.37
|
24.1%
|
£0.72
|
2.3%
|
|
£34.79
|
100.0%
|
£31.41
|
100.0%
|
|
|
|
|
|
ADF main productions
|
84
|
|
76
|
|
ADF average per
production
|
£385
|
|
£388
|
|
The split of productions across
the revenue bands is shown below:
Production value
|
FY23
|
FY22
|
£0 - £500k
|
72
|
54
|
£500k - £1.0m
|
7
|
16
|
£1.0m - £1.5m
|
3
|
4
|
£1.5m - £2.0m
|
1
|
1
|
£2.0m - £2.5m
|
1
|
0
|
£2.5m - £3.0m
|
0
|
1
|
|
84
|
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 adjustments to the carrying value
of goodwill and provisions for deferred consideration payments
relating to the acquisition of Location One.
Dividend & EPS
The Company paid a final dividend
of 0.90 pence per share in June 2023 in relation to the year ended
31st 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 31st 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).
Capex
During FY23, ADF acquired new
equipment with a cost of £11.9 million (£4.4 million included as
property, plant, and equipment, and the remaining relating to
leased assets of £7.5m). The majority of this spend (£9.0 million)
occurred in H1-FY23 to ensure maximum claims under the
super-deduction capital allowance regime. 133 assets were added
across the year (FY22: 106 units) taking the total to 703 units at
the end of the year. The average cost of assets purchased in FY23
was £72K (FY22: £67K).
Group Capex - £000's
|
Units
|
Capex
|
Per Unit
|
2 way trailer
|
28
|
£2,298
|
£82
|
3 way trailer
|
22
|
£2,005
|
£91
|
Costume
|
5
|
£268
|
£54
|
Diners
|
8
|
£262
|
£33
|
Generator
|
4
|
£337
|
£84
|
Honey wagon
|
7
|
£183
|
£26
|
Make up
|
4
|
£418
|
£104
|
Production office
|
9
|
£1,084
|
£120
|
School room
|
3
|
£54
|
£18
|
Single artist trailer
|
11
|
£973
|
£88
|
Tech truck
|
6
|
£548
|
£91
|
Tractor unit
|
25
|
£1,139
|
£46
|
Van
|
1
|
£43
|
£43
|
|
133
|
£9,611
|
£72
|
Movement in assets under
construction
|
|
(£315)
|
|
Other - P&M, software
etc
|
|
£709
|
|
|
|
£10,005
|
|
Location One Capex
|
|
£1,889
|
|
Total Capex
|
|
£11,894
|
|
Cash Flow, Funding & Net Debt
During FY23, ADF financed capex of
£7.3 million by hire purchase, and the balance of £4.6 million was
paid for out of cash. The majority of the funding was with 2
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 7.5% across
FY23 (FY22: 5.0%). Total hire purchase repayments including
interest were £4.8 million. In addition, new property leases with
an inception value of £1.1 million were capitalised under IFRS 16,
being the renewal of the lease at the factory unit in Brynmenyn,
Wales, additional space at the corporate Head Office in Bridgend,
and additional capacity at Location One's main operational base in
Barking.
Net debt, excluding IFRS 16
leases, at the end of FY23 was £12.8 million (FY22: £3.4 million)
with hire purchase liabilities increasing from £12.9 million at the
end of FY22 to £16.3 million at the end of FY23, and cash reducing
from £9.5 million to £3.5 million.
During the year a dividend of £1.1
million was paid, being the only other significant cash flow
item.
Financial Reporting Council (FRC) Review
The FRC raised a number of queries
in November 2023 in relation to the accounting of the acquisition
of Location One in the FY22 accounts. We acknowledge that the
review was conducted by staff of the FRC who have an understanding
of the relevant legal and accounting framework based on our annual
report and accounts but not with detailed knowledge of our business
or an understanding of the underlying transactions entered into.
However, we worked closely with the FRC so that their queries were
satisfactorily addressed, and their findings are reported on the
FRC website. We appreciate the very thorough review of our
financial statements, and the observations and recommendations
provided.
Neil Evans FCA
Chief Financial Officer
Consolidated statement of comprehensive
income
All amounts relate to continuing
operations.
|
Note
|
|
Year
ended
31 December
2023
£'000
|
|
Year
ended
31 December
2022
£'000
|
|
|
|
|
|
|
Revenue
|
3
|
|
34,796
|
|
31,414
|
Cost of sales
|
|
|
(22,399)
|
|
(19,742)
|
Gross profit
|
|
|
12,397
|
|
11,672
|
|
|
|
|
|
|
Administrative expenses
|
|
|
(10,069)
|
|
(6,218)
|
Non-recurring expenses
|
5
|
|
(258)
|
|
(78)
|
Share based payment
expense
|
23
|
|
(59)
|
|
(59)
|
Operating profit
|
|
|
2,011
|
|
5,317
|
|
|
|
|
|
|
Finance expense
|
9
|
|
(1,396)
|
|
(702)
|
Profit before taxation
|
|
|
615
|
|
4,615
|
Taxation
|
10
|
|
179
|
|
(3)
|
Profit for the year
|
|
|
794
|
|
4,612
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
Other comprehensive income for the
year
|
|
|
-
|
|
-
|
Total other comprehensive income
|
|
|
794
|
|
4,612
|
|
|
|
|
|
|
Earnings per share for profit attributable to the
owners
|
|
|
|
|
|
Basic earnings per share
(Pence)
|
12
|
|
0.99
|
|
6.1
|
Diluted earnings per share
(Pence)
|
12
|
|
0.93
|
|
5.4
|
|
|
|
|
|
|
Consolidated statement of financial
position
|
Note
|
|
As at
31 December
2023
£'000
|
|
As at
31 December
2022
£'000
|
Assets
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Inventories
|
13
|
|
576
|
|
417
|
Trade and other
receivables
|
18
|
|
1,710
|
|
3,045
|
Cash and cash
equivalents
|
19
|
|
3,533
|
|
9,518
|
Total current assets
|
|
|
5,819
|
|
12,980
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Property, plant and
equipment
|
15
|
|
12,638
|
|
10,680
|
Right-of-use assets
|
16
|
|
31,527
|
|
25,901
|
Intangible assets
|
14
|
|
6,262
|
|
7,289
|
Total non-current assets
|
|
|
50,427
|
|
43,870
|
|
|
|
|
|
|
Total assets
|
|
|
56,246
|
|
56,850
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Trade and other
payables
|
20
|
|
2,941
|
|
6,322
|
Lease liabilities
|
16
|
|
5,624
|
|
3,705
|
Total current liabilities
|
|
|
8,565
|
|
10,027
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
Other provisions
|
17
|
|
40
|
|
38
|
Lease liabilities
|
16
|
|
19,584
|
|
17,524
|
Contingent
consideration
|
21
|
|
60
|
|
878
|
Deferred tax
liabilities
|
10
|
|
3,030
|
|
2,966
|
Total non-current liabilities
|
|
|
22,714
|
|
21,406
|
|
|
|
|
|
|
Total liabilities
|
|
|
31,279
|
|
31,433
|
|
|
|
|
|
|
Net Assets
|
|
|
24,967
|
|
25,417
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Called up share capital
|
23
|
|
809
|
|
794
|
Share premium
|
24
|
|
15,547
|
|
15,492
|
Share based payment
reserve
|
24
|
|
1,459
|
|
1,652
|
Merger reserve
|
24
|
|
(400)
|
|
(400)
|
Retained earnings
|
24
|
|
7,552
|
|
7,879
|
Total equity
|
|
|
24,967
|
|
25,417
|
The financial statements were
approved and authorised for issue by the Board on 25 April 2024 and
signed on its behalf by:
Neil Evans
Director
Company statement of financial position
|
Note
|
|
As at
31 December
2023
£'000
|
|
As at
31 December
2022
£'000
|
Assets
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Trade and other
receivables
|
18
|
|
307
|
|
307
|
Amounts due from
subsidiaries
|
18
|
|
11,588
|
|
12,959
|
Total current assets
|
|
|
11,895
|
|
13,266
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Investment in
subsidiary
|
22
|
|
14,799
|
|
15,534
|
Deferred tax assets
|
10
|
|
861
|
|
752
|
Total non-current assets
|
|
|
15,660
|
|
16,286
|
|
|
|
|
|
|
Total assets
|
|
|
27,555
|
|
29,552
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Trade and other
payables
|
20
|
|
65
|
|
1,161
|
Total current liabilities
|
|
|
65
|
|
1,161
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
Contingent
consideration
|
21
|
|
60
|
|
878
|
Total non-current liabilities
|
|
|
60
|
|
878
|
|
|
|
|
|
|
Total liabilities
|
|
|
125
|
|
2,039
|
|
|
|
|
|
|
Net Assets
|
|
|
27,430
|
|
27,513
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Called up share capital
|
23
|
|
809
|
|
794
|
Share premium
|
24
|
|
15,547
|
|
15,492
|
Share based payment
reserve
|
24
|
|
1,459
|
|
1,652
|
Merger relief reserve
|
24
|
|
7,947
|
|
7,947
|
Retained earnings
|
|
|
1,668
|
|
1,628
|
Total equity
|
|
|
27,430
|
|
27,513
|
|
|
|
|
|
|
The Company has elected to take
exemption under section 408 of the Companies Act 2006 from
presenting the Company statement of comprehensive income. The
profit for the Company for the year ended 31 December 2023 was
£1,161,162.
The financial statements were
approved and authorised for issue by the Board on 25 April 2024 and
signed on its behalf by:
Neil Evans
Director
Consolidated statement of changes in equity
|
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
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
|
23
|
300
|
14,700
|
-
|
-
|
-
|
15,000
|
Costs of issue of shares on AIM
listing
|
|
-
|
(1,457)
|
-
|
-
|
-
|
(1,457)
|
Exercise of options
|
23
|
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
|
10
|
-
|
-
|
-
|
-
|
295
|
295
|
Business acquisition
|
|
34
|
1,846
|
-
|
-
|
-
|
1,880
|
Costs of issue of shares
|
|
-
|
(123)
|
-
|
-
|
-
|
(123)
|
Dividends
|
23
|
-
|
-
|
-
|
-
|
(350)
|
(350)
|
Balance at 31 December
2022
|
|
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
|
|
-
|
-
|
-
|
-
|
794
|
794
|
Transactions with
owners
|
|
|
|
|
|
|
|
Exercise of options
|
23
|
15
|
55
|
(252)
|
-
|
252
|
70
|
Share based payment charge on long
term incentive program
|
|
-
|
-
|
59
|
-
|
-
|
59
|
Deferred tax on share
options
|
10
|
-
|
-
|
-
|
-
|
(243)
|
(243)
|
Dividends
|
23
|
-
|
-
|
-
|
-
|
(1,130)
|
(1,130)
|
Balance at 31 December
2023
|
|
809
|
15,547
|
1,459
|
(400)
|
7,552
|
24,967
|
Company statement of changes in equity
|
Note
|
Share
Capital
£'000
|
Share
Premium
£'000
|
Share Based Payment
Reserve
£'000
|
Merger Relief
Reserve
£'000
|
Retained
Earnings
£'000
|
Total
Equity
£'000
|
|
|
|
|
|
|
|
|
Balance at 01 January
2022
|
|
455
|
787
|
1,332
|
7,947
|
(2,655)
|
7,866
|
Comprehensive Income
|
|
|
|
|
|
|
|
Profit for the year
|
|
-
|
-
|
-
|
-
|
4,338
|
4,338
|
Transactions with owners
|
|
|
|
|
|
|
|
Issue of shares on AIM
listing
|
23
|
300
|
14,700
|
-
|
-
|
-
|
15,000
|
Costs of issue of shares on AIM
listing
|
|
-
|
(1,457)
|
-
|
-
|
-
|
(1,457)
|
Exercise of options
|
23
|
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
|
10
|
-
|
-
|
-
|
-
|
295
|
295
|
Business acquisition
|
|
34
|
1,846
|
-
|
-
|
-
|
1,880
|
Costs of issue of shares
|
|
-
|
(123)
|
-
|
-
|
-
|
(123)
|
Dividends
|
11
|
-
|
-
|
-
|
-
|
(350)
|
(350)
|
Balance at 31 December
2022
|
|
794
|
15,492
|
1,652
|
7,947
|
1,628
|
27,513
|
Balance at 01 January
2023
|
|
794
|
15,492
|
1,652
|
7,947
|
1,628
|
27,513
|
Comprehensive
Income
|
|
|
|
|
|
|
|
Profit for the year
|
|
-
|
-
|
-
|
-
|
1,161
|
1,161
|
Transactions with
owners
|
|
|
|
|
|
|
|
Exercise of options
|
23
|
15
|
55
|
(252)
|
-
|
252
|
70
|
Share based payment charge on long
term incentive program
|
|
-
|
-
|
59
|
-
|
-
|
59
|
Deferred tax on share
options
|
10
|
-
|
-
|
-
|
-
|
(243)
|
(243)
|
Dividends
|
11
|
-
|
-
|
-
|
-
|
(1,130)
|
(1,130)
|
Balance at 31 December
2023
|
|
809
|
15,547
|
1,459
|
7,947
|
1,668
|
27,430
|
Consolidated statement of cashflows
|
Note
|
|
Year
ended
31 December
2023
£'000
|
|
Year
ended
31 December
2022
£'000
|
Cash flows from operating activities
|
|
|
|
|
|
Profit before taxation from continuing
activities
|
|
|
615
|
|
4,615
|
Adjustments
for non-cash/non-operating items:
|
|
|
|
|
|
Depreciation of property, plant and
equipment
|
15
|
|
1,751
|
|
611
|
Amortisation of right-of-use
assets
|
16
|
|
3,227
|
|
1,899
|
Amortisation of intangible
assets
|
14
|
|
18
|
|
3
|
Impairment of goodwill
|
14
|
|
1,019
|
|
-
|
(Profit)/ loss on disposal of property, plant
and equipment
|
15
|
|
(84)
|
|
52
|
Loss on disposal of right of use
assets
|
16
|
|
75
|
|
-
|
Share based payment
charge
|
23
|
|
59
|
|
59
|
Fair value gain on deferred
consideration
|
21
|
|
(818)
|
|
-
|
Finance expense
|
9
|
|
1,396
|
|
702
|
|
|
|
7,258
|
|
7,941
|
Increase in inventories
|
13
|
|
(159)
|
|
(417)
|
Decrease in trade and other
receivables
|
|
|
1,335
|
|
259
|
Decrease in trade and other
payables
|
|
|
(3,381)
|
|
(3,517)
|
Net cash generated from operating
activities
|
|
|
5,053
|
|
4,266
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Purchase of property, plant and
equipment
|
15
|
|
(4,437)
|
|
(4,056)
|
Purchase of intangible
assets
|
14
|
|
(10)
|
|
(81)
|
Purchase of right-of-use
assets1
|
|
|
(90)
|
|
(964)
|
Proceeds from sale of property,
plant and equipment
|
|
|
434
|
|
-
|
Increase in amounts due from
directors
|
|
|
-
|
|
(180)
|
Cost of business
acquisition
|
|
|
-
|
|
(3,595)
|
Net cash used in investing
activities
|
|
|
(4,103)
|
|
(8,876)
|
|
|
|
|
|
|
Cash flows
from financing activities
|
|
|
|
|
|
Proceeds from ordinary share
issue
|
23
|
|
70
|
|
15,005
|
Cost of share issue
|
|
|
-
|
|
(1,580)
|
Repayment of borrowings
|
29
|
|
-
|
|
(342)
|
Payments on lease
liabilities
|
16
|
|
(4,479)
|
|
(2,890)
|
Interest paid on lease
liabilities
|
9,
16
|
|
(1,335)
|
|
(695)
|
Interest on deferred consideration
|
9
|
|
(57)
|
|
-
|
Other interest paid
|
9
|
|
(4)
|
|
(7)
|
Dividends paid
|
11
|
|
(1,130)
|
|
(350)
|
Net cash used in financing
activities
|
|
|
(6,935)
|
|
9,141
|
|
|
|
|
|
|
Net (decrease)/ increase in cash and cash
equivalents
|
19
|
|
(5,985)
|
|
4,531
|
Cash and cash equivalents at beginning of
year
|
19
|
|
9,518
|
|
4,987
|
Cash and cash
equivalents at end of year
|
19
|
|
3,533
|
|
9,518
|
1The 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
16.
Company statement of cashflows
|
Note
|
|
Year
ended
31 December
2023
£'000
|
|
Year
ended
31 December
2022
£'000
|
Cash flows from operating activities
|
|
|
|
|
|
Profit before taxation from
continuing activities
|
|
|
808
|
|
3,881
|
Adjustments for non-cash/non-operating
items:
|
|
|
|
|
|
Impairment of
investment
|
|
|
735
|
|
-
|
Fair value gain on deferred
consideration
|
21
|
|
(818)
|
|
-
|
Share based payment
charge
|
23
|
|
59
|
|
59
|
|
|
|
784
|
|
3,940
|
Decrease in trade and other
receivables
|
18
|
|
-
|
|
508
|
(Decrease)/ increase in trade and
other payables
|
20
|
|
(1,096)
|
|
998
|
Cash from operations
|
|
|
(312)
|
|
5,446
|
Net cash generated from operating
activities
|
|
|
(312)
|
|
5,446
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Acquisition of investment in
subsidiary
|
|
|
-
|
|
(4,430)
|
Receipts from/ (funds advanced to)
subsidiary
|
18
|
|
1,372
|
|
(13,911)
|
Increase in amounts due from
directors
|
|
|
-
|
|
(180)
|
Net cash used in investing
activities
|
|
|
1,372
|
|
(18,521)
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
Proceeds from ordinary share
issue
|
23
|
|
70
|
|
15,005
|
Cost of share issue
|
|
|
-
|
|
(1,580)
|
Dividends paid
|
11
|
|
(1,130)
|
|
(350)
|
Net cash used in financing
activities
|
|
|
(1,060)
|
|
13,075
|
|
|
|
|
|
|
Net movement in cash and cash
equivalents
|
|
|
-
|
|
-
|
Cash and cash equivalents at
incorporation
|
|
|
-
|
|
-
|
Cash and cash equivalents at end of period
|
|
|
-
|
|
-
|
|
|
|
|
|
|
Facilities by ADF Plc does not
hold its own bank account, the cash flow has been presented as if
the Group bank account had a protected Company cell in order to
present meaningful cash flow information.
Notes to the financial statements
1 Accounting
policies
1.1 Basis of
preparation
Facilities by ADF PLC (the
"Company'') and its subsidiaries (together, the "Group'') is a
public company limited by shares, incorporated, domiciled and
registered in England and Wales in the UK. The registered number is
13761460 and the registered address is Ground Floor 31 Oldfield
Road, Bocam Park, Pencoed, Bridgend, United Kingdom, CF35
5LJ.
The consolidated and Company
financial statements are for the year ended 31 December 2023. They
have been prepared in accordance with UK-adopted international
accounting standards in conformity with the requirements of the UK
Companies Act 2006.
The financial statements have been
prepared in accordance with International Financial Reporting
Standards (''IFRS'') under the historical cost convention, as
modified by the use of fair value for financial instruments
measured at fair value. The financial statements are presented in
thousands of pounds sterling ("£'000") except where otherwise
indicated.
The principal accounting policies
adopted in the preparation of the financial statements are set out
below. These policies have been consistently applied to both the
Company and the Group where applicable. The policies have been
consistently applied to all the periods presented, unless otherwise
stated.
For the year ending 31 December
2023 the following subsidiaries of the parent company are entitled
to take exemptions from audit under Section 479A of the Companies
Act 2006 relating to subsidiary companies.
Subsidiary
|
Company registered number
|
CAD Services Limited
|
04533535
|
Location 1 Group
Limited
|
11786214
|
Location One Limited
|
05949293
|
The Company has provided a
guarantee for all outstanding debts and liabilities to which the
subsidiary companies listed above are subject at the end of the
financial year, in accordance with Section 479C of the Companies
Act 2006.
1.2 Going concern
The Group has continued to invest
in growth throughout the financial year, with the Group continuing
to trade throughout in a net asset position.
The Directors are pleased with the
progress of trading to date, and in particular, the progress made
relative to the challenges of the film and television industry,
whereby the USA Writers (Writers
Guild of America (WGA)) and Actors (Screen Actors Guild - American
Federation of Television and Radio Artists (SAG-AFTRA)) Strikes
impacted productions around the globe, from July 2023 through to
late Autumn 2023. The Strikes caused film and TV productions in the
UK, on which ADF were engaged, to stop or delay productions that
were scheduled to start filming in autumn 2023 and pushing these to
early 2024. The Directors note that the
Strikes were a short-term impact on the business and are confident
the Group is in a robust position to capitalise on the opportunity
ahead once previous production levels resume, underpinning
confidence in the long-term success of the Group.
The Directors are continuing to
identify acquisitions as well as focussing on the continuation of
the organic growth experienced in recent years. The Company
acquired a new a business in the previous financial period and
significant synergies are expected to continue to be achieved over
the coming 12 months from this.
The financial statements have been
prepared on the going concern basis which the Directors believe to
be appropriate for the following reasons. The Directors have
prepared cash flow forecasts for a 12-month period from
the date of approval of these
financial statements. They have applied a range of sensitivities to
these forecasts and such forecasts and analysis have indicated that
sufficient funds should be available to enable the Group to
continue in operational existence for the foreseeable future by
meeting its liabilities as they fall due for payment.
1.3 New standards, amendments, and
interpretations
The following amendments to
standards have become effective for the first time for annual
reporting periods commencing on 1 January 2023 and have been
adopted in preparing these financial statements:
- Amendments to IAS 1 and IFRS Practice Statement 2 -
Disclosure of Accounting Policies;
- Amendments to IAS 8 - Definition of Accounting Estimates;
and
- Amendments to IAS 12 - Deferred Tax related to Assets and
Liabilities arising from a Single Transaction.
The adoption of these amendments
had no material impact on the financial statements.
At the date of approval of these
financial statements, the following amendments to IFRS which have
not been applied in these financial statements were in issue, but
not yet effective, until annual periods beginning on 1 January
2024:
- Supplier Finance Arrangements (Amendments to IAS 7 and IFRS
7);
- Non-current Liabilities with Covenants (Amendments to IAS
1);
- Amendments to IFSR 16 - Lease liability in sale and
leaseback;
- Amendments to IAS 1 Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current;
and
- Amendments to IAS 21 Lack of Exchangeability*.
*Subject to endorsement by the
UK
The adoption of these amendments
is not expected to have a material impact on the consolidated and
Company financial statements.
1.4 Basis of
consolidation
The consolidated financial
statements incorporate the results of the Company and all of its
subsidiary undertakings. The Group applies the acquisition method
in accounting for business combinations. The consideration
transferred by the Group to obtain control of a subsidiary is
calculated as the sum of the acquisition-date fair values of assets
transferred, liabilities incurred, and the equity interests issued
by the Group, which includes the fair value of any asset or
liability arising from a contingent consideration arrangement.
Acquisition costs are expensed as incurred. Assets acquired and
liabilities assumed are generally measured at their
acquisition-date fair value.
Where necessary, adjustments are
made to the financial statements of subsidiaries to bring the
accounting policies used in line with those used by other members
of the Group.
Subsidiaries
Subsidiaries are all entities over
which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control
is transferred to the Group until the date that control
ceases.
Transactions eliminated on consolidation
Intra-group balances, and any
gains and losses or income and expenses arising from intra-group
transactions, are eliminated in preparing the financial
information. Losses are eliminated in the same way as gains, but
only to the extent that there is no evidence of
impairment.
1.5 Revenue
recognition
IFRS 15 "Revenue from Contracts
with Customers" is a principle-based model of recognising revenue
from contracts with customers. It has a five-step model that
requires revenue to be recognised when control over goods and
services are transferred to the customer.
Revenue includes facilities rental
incomes, fees from the provision of services incidental to
facilities and fuel. Revenue is measured at the fair value of
consideration received or receivable, net of discounts, VAT, and
sales taxes.
Revenue from all other services
rendered is recognised proportionally over the period in which the
facilities are rented out based on the terms of the contract. The
stage of completion is assessed on the basis of the actual service
provided (number of days of rental in the accounting
period).
Fuel income was recognised at the
point of time of delivery. Revenue from sale of fuel cards ceased
in the period ending 31 December 2022.
1.6 Employee benefits: Pension
obligations
The Group operates a defined
contribution plan for its employees. A defined contribution plan is
a pension plan under which the Group pays fixed contributions into
a separate entity. Once the contributions have been paid the Group
has no further payment obligations.
The contributions are recognised
as an expense in the Statement of Comprehensive Income when they
fall due. Amounts not paid are shown in accruals as a liability in
the Statement of Financial Position. The assets of the plan are
held separately from the Group in independently administered
funds.
1.7 Net finance
costs
Finance expense
Finance expense comprises of
interest payable and lease interest which are expensed in the
period in which they are incurred and reported in finance costs.
Debt issue costs are capitalised and amortised over the life of the
associated facility.
Finance income
Finance income relates to interest
on bank deposits.
1.8 Foreign currency
translation
Transactions in foreign currencies
are translated to Sterling (the currency of the primary economic
environment in which the Group operates) at the foreign exchange
rate ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies at the statement of
financial position date are retranslated to the functional currency
at the foreign exchange rate ruling at that date. Non-monetary
assets and liabilities that are measured in terms of historical
cost in a foreign currency are translated using the exchange rate
at the date of the transaction. Foreign exchange differences
arising on translation are recognised in the Statement of
Comprehensive Income, within interest receivable and interest
payable.
The consolidated and Company
financial statements are presented in GBP, which is the Group's and
Company's presentational currency. The
functional currency of the Company is GBP.
1.9 Current and deferred
taxation
The tax expense for the period
comprises current and deferred tax. Tax is recognised in the
consolidated statement of comprehensive income, except that a
charge attributable to an item of income or expense recognised as
other comprehensive income or to an item recognised directly in
equity is also recognised in other comprehensive income or directly
in equity, respectively.
The current income tax charge is
calculated on the basis of tax rates and laws that have been
enacted or substantively enacted by the reporting date in the UK
where the Group and Company operates and generate taxable
income.
Deferred tax balances are
recognised in respect of all temporary differences that have
originated but not reversed by the balance sheet date,
except:
- The recognition of deferred tax assets is limited to the
extent that it is probable that they will be recovered against the
reversal of deferred tax liabilities or other future taxable
profits;
- Any deferred tax balances are reversed if and when all
conditions for retaining associated tax allowances have been met;
and
- Where timing differences relate to interests in subsidiaries,
associates, branches and joint ventures and the Group and Company
can control their reversal and such reversal is not considered
probable in the foreseeable future.
Deferred tax balances are not
recognised in respect of permanent differences except in respect of
business combinations, when deferred tax is recognised on the
differences between the fair values of assets acquired and the
future tax deductions available for them and the differences
between the fair values of liabilities acquired and the amount that
will be assessed for tax. Deferred income tax is determined using
tax rates and laws that have been enacted or substantively enacted
by the reporting date.
1.10 Property plant and
equipment
Property, plant and equipment is
stated at historical cost less accumulated depreciation and any
accumulated impairment losses. Historical cost includes expenditure
that is directly attributable to bringing the asset to the location
and condition necessary for it to be capable of operating in the
manner intended by management.
Depreciation is charged so as to
allocate the cost of assets less their residual value over their
estimated useful lives, using the reducing balance and
straight-line methods.
Depreciation is provided on the
following basis:
Plant and machinery
|
25% reducing balance and 1 - 10
years straight-line
|
Motor vehicles
|
10% reducing balance and 5 years
straight-line
|
Computer equipment
|
25% reducing balance
|
Hire fleet
|
10% reducing balance
|
Leasehold improvements
|
25% reducing balance
|
The assets' residual values, useful lives and depreciation
methods are reviewed, and adjusted prospectively if appropriate, or
if there is an indication of a significant change since the last
reporting date.
Gains and losses on disposals are
determined by comparing the proceeds with the carrying amount and
are recognised in the Statement of Comprehensive Income.
Assets under construction are
those that are being built or developed with the intention of being
used in the business operations of the Group. These assets are not
depreciated until they are completed and ready to be used. Once an
asset is completed, it is transferred to a separate class of asset
in property, plant and equipment or right-of-use assets and is then
subject to depreciation. This transfer is made at the point of time
the asset is completed and is ready for use.
The cost of the asset under
construction includes all costs directly attributable to bringing
the asset to the condition necessary for it to be used for its
intended purpose. These costs may include direct labour, direct
materials, and other expenses incurred during the construction
period.
1.11 Impairment of assets
Assets that are subject to
depreciation or amortisation are assessed at each reporting date to
determine whether there is any indication that the assets are
impaired. Where there is any indication that an asset may be
impaired, the carrying value of the asset (or cash‑generating unit
to which the asset has been allocated) is tested for impairment. An
impairment loss is recognised for the amount by which the asset's
carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset's (or CGU's) fair value less costs
to sell and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there
are
separately identifiable cash flows
(CGUs). Non‑financial assets that have been previously impaired are
reviewed at each reporting date to assess whether there is any
indication that the impairment losses recognised in prior periods
may no longer exist or may have decreased.
1.12 Leased assets
The Group assesses whether a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration at inception of a
contract.
To assess whether a contract
conveys the right to control the use of an identified asset, the
Group assesses whether: an identified physically distinct asset can
be identified; and the Group has the right to obtain substantially
all of the economic benefits from the asset throughout the period
of use and has the ability to direct the use of the asset over the
lease term being able to restrict the usage of third parties as
applicable.
All leases are accounted for by
recognising a right-of-use asset and a lease liability except
for:
-
Leases of low value assets; and
-
Leases with a duration of 12 months or
less.
Lease liabilities are measured at
the present value of the contractual payments due to the lessor
over the lease term, with the discount rate determined by reference
to the rate inherent in the lease unless (as is typically
the
case) this is not readily
determinable, in which case the Group's incremental borrowing rate
on commencement of the lease is used.
On initial recognition, the
carrying value of the lease liability also includes:
-
amounts expected to be payable under any residual
value guarantee;
-
the exercise price of any purchase option granted
in favour of the Group if it is reasonably certain to access that option;
and
-
any penalties payable for terminating the lease,
if the term of the lease has been estimated on the basis of the
termination option being exercised.
Right of use assets are initially
measured at the amount of the lease liability, reduced for any
lease incentives received, and increased for:
-
lease payments made at or before commencement of
the lease;
-
initial direct costs incurred; and
-
the amount of any provision recognised
where the Group is contractually required to dismantle, remove, or restore
the leased asset.
Subsequent to initial measurement
lease liabilities increase as a result of interest charged at a
constant rate on the balance outstanding and are reduced for lease
payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease or over the remaining
economic life of the asset if, rarely, this is judged to be shorter
than the lease term.
1.13 Cash and cash equivalents
Cash and cash equivalents comprise
cash at bank and in hand and short term highly liquid deposits
which are subject to an insignificant risk of changes in value.
Bank overdrafts that are repayable on demand and form an integral
part of cash management are included as a component of cash and
cash equivalents for the purpose only of the cash flow
statement.
1.14 Financial Instruments
Financial instruments are all
financial assets and financial liabilities that comprise a contract
that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity and are detailed
in notes to the accounts.
Financial assets and financial
liabilities are recognised when the Group becomes party to the
contractual provisions of the instrument. Financial assets and
financial liabilities are initially measured at fair value.
Transaction costs that are directly attributable (other than
financial assets or liabilities at fair value through profit or
loss) are added to or deducted from the fair value as appropriate,
on initial recognition.
Financial assets and financial
liabilities are offset, and the net amount reported in the
consolidated statement of financial position if, and only if, there
is a currently enforceable legal right to offset the recognised
amounts and there is an intention to settle on a net basis, or to
realise the assets and settle the liabilities
simultaneously.
Financial assets
The Group and Company's financial
assets held at amortised cost comprise trade and other receivables
and cash and cash equivalents in the consolidated statement of
financial position.
These assets are non-derivative
financial assets with fixed or determinable payments that are not
quoted in an active market. They arise principally through the
provision of goods and services to customers (e.g., trade
receivables), but also incorporate other types of financial assets
where the objective is to hold their assets in order to collect
contractual cash flows and the contractual cash flows are solely
payments of the principal and interest.
They are initially recognised at
fair value plus transaction costs that are directly attributable to
their acquisition or issue and are subsequently carried at
amortised cost using the effective interest rate method, less
provision for impairment.
Impairment of financial assets
Impairment provisions for trade
receivables are recognised based on the simplified approach within
IFRS 9 using the lifetime expected credit losses. During this
process the probability of the non-payment of the trade receivables
is assessed. This probability is then multiplied by the amount of
the expected loss arising from default to determine the lifetime
expected credit loss for the trade receivables.
Impairment provisions for other
receivables are recognised based on the general impairment model
within IFRS 9. In doing so, the Group follows the 3-stage approach
to expected credit losses. Step 1 is to estimate the probability
that the debtor will default over the next 12 months. Step 2
considers if the credit risk has increased significantly since
initial recognition of the debtor. Finally, Step 3 considers if the
debtor is credit impaired, following the criteria under IFRS
9.
The Group's financial liabilities
held at amortised cost comprise trade payables and other
short-dated monetary liabilities, and other borrowings in the
consolidated statement of financial position.
Trade payables and other
short-dated monetary liabilities are initially recognised at fair
value and subsequently carried at amortised cost using the
effective interest rate method.
Other borrowings are initially
recognised at fair value net of any transaction costs directly
attributable to the issue of the instrument. Such
interest-bearing liabilities are subsequently measured at amortised
cost using the effective
interest rate method, which
ensures that any interest expense over the period to repayment is
at a constant rate on the balance of the liability carried in the
consolidated statement of financial position.
For the purposes of each financial
liability, interest expense includes initial transaction costs and
any premium payable on redemption, as well as any interest or
coupon payable while the liability is outstanding.
Unless otherwise indicated, the
carrying values of the Group's and Company financial liabilities
measured at amortised cost represents a reasonable approximation of
their fair values.
Financial liabilities
The Group and Company measures its
financial liabilities at amortised cost. All financial
liabilities are recognised in the statement of financial position
when the Group and Company becomes a party to the contractual
provision of the instrument.
1.15
Share based payments
The Group issues equity-settled
share-based incentives to certain employees in the form of share
options. Equity-settled share-based payments are measured at fair
value at the date of grant. The fair value determined at the grant
date is expensed in the Group's financial statements on a
straight-line basis over the estimated vesting period, based on the
estimate of shares that will eventually vest.
Employee share scheme
Share options that have been
issued by the Group have been reviewed under the Black Scholes
model to evaluate any provision that may be required to set against
the reserves of the Group. The share-based payment expense has been
calculated and detailed per the notes to the financial
statements.
Equity-settled share-based payments
to employees are measured at the fair value of the equity
instrument at the grant date. The fair value determined at grant
date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of equity instruments that will eventually vest. At each
reporting date, the Group revises its estimate of the number of
equity instruments expected to vest as a result of the effect of
non-market based vesting conditions. The impact of the revision of
the original estimates, if any, is recognised in the profit or loss
such that the cumulative expense reflects the revised estimate,
with a corresponding adjustment to equity
reserves.
Long-term incentive
plan
The Group has a long-term
incentive plan.
Long term incentive options that have been issued by the Group have
been reviewed under the Monte Carlo model to evaluate any provision
that may be required to set against the reserves of the Group. The
share-based payment expense has been calculated and detailed per
the notes to the financial statements. There are conditions
associated with the long-term incentive options issued which
requires the fair value charge associated with the options to be
allocated over the minimum vesting period.
1.16
Provision
Provisions are charged as an
expense to the Statement of Comprehensive Income in the year that
the Group becomes aware of the obligation and are measured at the
best estimate at the Statement of Financial Position date of the
expenditure required to settle the obligation, taking into account
relevant risks and uncertainties. When payments are eventually
made, they are charged to the provision carried in the Statement of
Financial Position.
Provisions are made where an event
has taken place that gives the Group a legal or constructive
obligation that probably requires settlement by a transfer of
economic benefit, and a reliable estimate can be made of the amount
of the obligation.
1.17
Dividends
Equity dividends are recognised
when they become legally payable. Interim equity dividends are
recognised when paid. Final equity dividends are recognised when
approved by the shareholders at an annual general
meeting.
1.18
Operating segments
Operating segments are reported in
a manner consistent with the internal reporting provided to the
chief operating decision-maker ('CODM'). The CODM, who is
responsible for allocating resources and assessing performance of
the operating segments, has been identified as the Board of
Directors of the Group. The Group had 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) during the year ending 31
December 2023. The Group previously report fuel cards by ADF as a
separate operating segment, during the prior year ending 31
December 2022 the Group ceased trading of fuel cards.
1.19
Investments
Investments are stated at their
cost less impairment losses.
1.20
Inventories
Inventories are stated at the
lower of cost or net realisable value. Net realisable value is the
amount that can be realised from the sale of the inventory in the
normal course of business after allowing for the costs of
realisation. An allowance is recorded for obsolescence and
slow-moving items.
Inventories held consist of stored
goods to be used in the support of production vehicles and
maintenance.
1.21
Intangible assets
Goodwill is recorded as an
intangible asset and is the surplus of the cost of acquisition over
the fair value of identifiable net assets acquired. Goodwill is
reviewed annually for impairment. Any impairment identified as a
result of the review is charged in the statement of profit or loss
and other comprehensive income.
Intangible assets, including
software, acquired separately from a business are capitalised at
cost. They are subsequently accounted for at cost less depreciation
and impairment. The useful life of software is estimated to be 10
years.
Intangible assets acquired on
business combinations are capitalised separately from goodwill at
fair value on initial recognition. Intangible assets are amortised
on a straight-line basis over their useful lives.
The estimated useful lives,
residual values, and depreciation method are reviewed at the end of
each period.
2
Critical accounting judgements and estimates
The preparation of the financial
information in compliance with IFRS requires the use of certain
critical accounting estimates. It also requires the Group
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
financial information are reasonable and prudent critical
accounting judgements and estimates.
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 financial
information is discussed below:
Key accounting estimates and
judgements
The following are the areas
requiring the use of estimates and judgements that may
significantly impact the financial information.
Judgements
Hire of equipment revenues constitute
leases
Any arrangement that is dependent
on the use of a specific asset or assets should be accounted for as
a lease under IFRS 16. The Directors have concluded that none of
the Group contracts with customers include the use of an asset as
substantive substitution rights exist throughout the period of use,
whereby substitution would be economically beneficial to the Group.
All revenues therefore are classified within the scope of IFRS
15.
Estimates
Discount rates
IFRS 16 states that the lease
payments shall be discounted using the lessee's incremental
borrowing rate where the rate implicit in the lease cannot be
readily determined. Accordingly, all lease payments have been
discounted using the incremental borrowing rate (IBR). The IBR has
been determined by management using a range of data including
current economic and market conditions, review of current debt and
capital within the Group, lease length and comparisons against
seasoned corporate bond rates and other relevant data points.
Significant changes in IBR would cause changes to both the value of
the right-of-use assets and corresponding lease liabilities.
Sensitivity analysis has been performed on IBR rates in note 16 of
these financial statements.
Impairment of intangible assets
Following the assessment of the
recoverable amount of goodwill allocated to Location 1 Group
Limited to which goodwill of £7,211,397 was allocated on completion
of the acquisition in the year ended 31 December 2022, the
Directors consider the recoverable amount of goodwill allocated
Location 1 Group Limited to be most sensitive to the achievement of
the Group's long-term budget and projected forecasts. Budgets
comprise forecasts of costs, and capital expenditure based on
current and anticipated market conditions that have been considered
and approved by the Board. Approved budgets cover the next
thirty-six months, whilst the forecasted period extends to five
years. The recoverable amount of the Location 1 Group Limited (a
singular cash-generating unit) is determined based on a value in
use calculation which uses cash flow projections based on the
financial budgets and forecasted five-year period, using a pre-tax
discount rate of 18 per cent per annum.
Whilst the Group is able to manage
most of the costs, the revenue projections are uncertain, in the
short term, due to the current challenges
which the film and television industry in the year ended 31
December 2023. The WGA and SAG-AFTRA
Strikes impacted productions around the globe, from July 2023
through to late Autumn 2023. The Strikes caused film and TV
productions in the UK, on which ADF were engaged, to stop or delay
productions that were scheduled to start filming in autumn 2023 and
pushing these to early 2024. The Directors
note that the Strikes were a short-term impact on the business and
are confident the Group is in a robust position to capitalise on
the opportunity ahead once previous production levels resume,
underpinning confidence in the long-term success of the Group. Due
to the timing of any rescheduled productions, it is possible that
further differences between forecast and actual results may differ
into early 2024.
The sensitivity analysis in
respect of the recoverable amount of Location 1 Group Limited
goodwill is presented in note 14. The Group recorded an impairment
charge of £1,019,080 recorded in the current year ended 31 December
2023.
Deferred consideration
On completion of the acquisition
of 100% of the share capital of Location 1 Group Ltd the payment of
contingent consideration was valued at £60,474 (2022: £877,892).
The contingent consideration value was estimated by management
using a range of probabilities to determine the potential payment
of earn out over the consideration period and the expected results
of Location 1 Group Limited. The maximum value of contingent
consideration payable, based on meeting all the earn out criteria,
would be a liability due of £2,657,788 (2022: £4,059,788). Further
if none of the criteria is met then no payment of consideration
would be due, giving no liability to the Company. No payments were
made in respect of deferred consideration in the year (2022: £Nil).
The reduction in valuation in the year resulted as the deferred
consideration is based on a cumulative earn out target, whereby due
to the WGA and SAG-AFTRA strikes impacting productions, from July
2023 through to late Autumn 2023, management have estimated it is
unlikely that the earn out will be met.
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 £314,323 (2022: £557,911) which
were generated in the European Union. 4 platform customers make up
10% or more of revenue in the year ending 31 December 2023 (2022:
2). During the year management considered revenue derived
from one business stream (2022:
Two), being the
'hire of facilities'. As at 31 December
2022 the Group had ceased trading of fuel cards. Fuel cards by ADF
was still identified as a separate reporting segment up until this
date.
Revenue from customers1
|
Year
ended
31 December
2023
£'000
|
Year
ended
31 December
2022
£'000
|
Hire of facilities
|
|
|
Customer 1
|
5,929
|
7,338
|
Customer 2
|
5,273
|
-
|
Customer 3
|
2,704
|
4,674
|
Customer 4
|
4,917
|
-
|
Customer 5
|
4,547
|
-
|
All other customers
|
11,426
|
19,224
|
Fuel by ADF
|
-
|
178
|
|
34,796
|
31,414
|
Timing of transfer of goods or services
|
Year
ended
31 December
2023
£'000
|
Year
ended
31 December
2022
£'000
|
Services transferred over
time
|
34,796
|
31,236
|
At a point in time
|
-
|
178
|
|
34,796
|
31,414
|
The following table provides
information about contract liabilities with customers, there were
no contract assets as at 31 December 2023 (2022: None):
|
Year
ended
31 December
2023
£'000
|
Year
ended
31 December
2022
£'000
|
Deferred income
|
33
|
576
|
Revenue recognised in the year
that was deferred from the previous year was £575,697 (2022:
£518,555). The contract liabilities relate to the deferred income
in respect of facilities rented. Revenue is being recognised across
the actual service provided (number of days of rental in the
accounting period).
(1) Revenue has been disaggregated by platform
commissioned productions, rather than at a invoiced special purpose
vehicle company level, for the purpose of alignment with the
Director's reporting in the Strategic Report.
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 CODM 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 in note 3. All non-current assets
are located in the UK.
As at 31 December 2022 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 year to 31 December 2022.
|
Year
ended
31 December
2023
£'000
|
Year
ended
31 December
2022
£'000
|
Revenue
|
|
|
Hire of facilities
|
26,425
|
30,518
|
Location One
|
8,371
|
718
|
Fuel by ADF
|
-
|
178
|
|
34,796
|
31,414
|
|
|
|
Cost of sales profit
|
|
|
Hire of facilities
|
17,146
|
19,144
|
Location One
|
5,253
|
433
|
Fuel by ADF
|
-
|
165
|
|
22,399
|
19,742
|
Gross
Profit
|
12,397
|
11,672
|
|
|
|
5
Expenses by nature
Operating profit is stated after
charging:
|
Year
ended
31 December
2023
£'000
|
Year
ended
31 December
2022
£'000
|
Depreciation of property, plant and
equipment
|
1,751
|
611
|
(Profit)/ loss on disposal of property, plant
and equipment
|
(84)
|
52
|
Amortisation of right-of-use assets
|
3,227
|
1,899
|
Loss on disposal of right-of-use
assets
|
75
|
-
|
Non-recurring expenses:
|
|
|
Impairment of goodwill
|
1,019
|
-
|
Gain on deferred consideration
|
(818)
|
-
|
Social security costs in respect of options
exercised
|
57
|
-
|
Expenses in respect of acquisitions
|
-
|
78
|
Non-recurring expenses relate to
one off fee expenses charged to the statement of comprehensive
income.
6 Auditor
remuneration
|
Year
ended
31 December
2023
£'000
|
Year
ended
31 December
2022
£'000
|
Fee payable for the audit of the
Group's financial statements
|
68
|
71
|
Fees relating to tax
services
|
3
|
-
|
Fees relating to other services
|
11
|
57
|
|
82
|
109
|
|
|
|
£11,000 of other services
relating to auditor remuneration has been recognised in the year
ended 31 December 2023, in respect of due diligence fees. Fees
incurred in the year ended 31 December 2022 of £57,000, were in
respect of business acquisition due diligence.
7 Employee
benefit expenses
For the Group employee benefit expenses (including
directors) comprise:
|
Year
ended
31 December
2023
£'000
|
Year
ended
31 December
2022
£'000
|
Wages and salaries
|
12,730
|
9,591
|
Social security contributions and similar
taxes
|
1,222
|
1,118
|
Share based payment expense
|
59
|
59
|
Pension costs
|
235
|
170
|
|
14,246
|
10,938
|
Average number of people (including directors) employed
by activity for the Group are:
|
Year
ended
31 December
2023
|
Year
ended
31 December
2022
|
Drivers and transport
|
107
|
35
|
Head office and senior
management
|
46
|
40
|
Workshop, yard, and base
staff
|
172
|
128
|
|
325
|
203
|
The Group's subsidiary CAD
Services Limited bears all the employee benefit expenses on behalf
of Facilities by ADF PLC, apart from the share-based payment
charges which are born by Facilities by ADF PLC. There were 6
(2022: 5) Directors employed by the Company as at 31 December
2023.
8 Director
emoluments
Director emoluments comprise:
|
Year
ended
31 December
2023
£'000
|
Year
ended
31 December
2022
£'000
|
Remuneration for qualifying
services
|
619
|
858
|
Share based payment
expense
|
59
|
59
|
Pension costs
|
3
|
3
|
|
681
|
920
|
Directors participating in money
purchase pension schemes as at the period end 2023 was
2 (2022: 2).
Key management personnel include
all Directors of the Company and the
Directors of CAD Services Limited, the Group's principal trading
subsidiary, who together have authority
and responsibility for planning, directing, and controlling the
activities of the Group's
business. There are no key management personnel
other than the Directors.
Remuneration disclosed above
include the following amounts paid to the highest paid
Director:
|
Year
ended
31 December
2023
£'000
|
Year
ended
31 December
2022
£'000
|
Wages and salaries
|
250
|
379
|
Share based payment
expense
|
33
|
33
|
Pension costs
|
1
|
1
|
|
284
|
413
|
9 Finance
expense
|
Year
ended
31
December 2023
£'000
|
Year
ended
31 December
2022
£'000
|
Interest on bank loans &
overdrafts
|
4
|
7
|
Interest on lease
liabilities
|
1,335
|
695
|
Interest on deferred
consideration
|
57
|
-
|
|
1,396
|
702
|
10
Taxation
Analysis of expense in year
|
Year
ended
31 December
2023
£'000
|
Year
ended
31 December
2022
£'000
|
Current tax on profits for the year
|
-
|
-
|
Adjustments in respect of previous
years
|
-
|
-
|
Total current tax
|
-
|
-
|
Deferred
tax
|
|
|
Origination and reversal of temporary
differences
|
(62)
|
683
|
Adjustments in respect of change in deferred
tax rate
|
(117)
|
(680)
|
Total deferred tax
|
(179)
|
3
|
Tax expense
per statement of comprehensive income
|
(179)
|
3
|
The tax credits for the periods
presented differ from the standard rate of corporate tax in the UK.
The differences are explained below:
|
Year
ended
31 December
2023
£'000
|
Year
ended
31 December
2022
£'000
|
Profit on ordinary activities before
tax
|
615
|
4,612
|
Tax using the Group's domestic tax
rates
|
145
|
876
|
Effects of:
|
|
|
Expenses not deductible for tax
purposes
|
29
|
34
|
Deductions in respect of share
options
|
(157)
|
-
|
Changes in contingent consideration not
taxable
|
(205)
|
-
|
Effect of changes in tax rates
|
(4)
|
165
|
Adjustments in respect of change in deferred
tax rate
|
(117)
|
(680)
|
Additional deductions for capital
allowances
|
189
|
(392)
|
Share based payment adjustment
|
(59)
|
-
|
Total tax charge
|
(179)
|
3
|
Corporation tax for the year ended
31 December 2023 was calculated using a marginal tax rate of 23.5
per cent. (2022: 19%). The UK corporation
tax was set at the main rate of 25% from 1 April 2023.
Current tax assets and liabilities
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Income tax payable
|
-
|
-
|
|
-
|
-
|
The following is the analysis of
the deferred tax balances for financial reporting
purposes:
Group
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Accelerated capital allowances and
other temporary differences
|
2,966
|
5,222
|
Losses
|
(179)
|
(1,659)
|
Share based payments
|
243
|
(597)
|
Deferred tax liability
|
3,030
|
2,966
|
Deferred tax liabilities of
£3,029,677 consists of losses totalling £3,384,284 and share based
payments totalling £(354,607).
Company
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Accelerated capital allowances and
other temporary differences
|
(752)
|
(155)
|
Losses
|
(352)
|
-
|
Share based payments
|
243
|
(597)
|
Deferred tax asset
|
(861)
|
(752)
|
Movement in the year
Group
|
£'000
|
Liability at 1 January
2022
|
2,714
|
Charge to profit and loss
|
683
|
Charge to equity
|
(295)
|
Arising on business
acquisitions
|
544
|
Adjustments in respect of change in
deferred tax rate
|
(680)
|
Liability at 31 December
2022
|
2,966
|
|
|
|
|
Liability at 1 January
2023
|
2,966
|
Charge to profit and loss
|
(62)
|
Charge to equity
|
243
|
Adjustments in respect of change in
deferred tax rate
|
(117)
|
Liability at 31 December
2023
|
3,030
|
Company
|
£'000
|
Asset at 1 January 2022
|
-
|
Charge to profit and loss
|
(124)
|
Charge to equity
|
(295)
|
Adjustments in respect of prior
years
|
(333)
|
Asset at 31 December 2022
|
(752)
|
|
|
Liability at 1 January
2023
|
(752)
|
Charge to profit and loss
|
(352)
|
Charge to equity
|
243
|
Asset at 31 December 2023
|
(861)
|
11
Dividends
|
Year
ended
31 December
2023
£'000
|
Year
ended
31 December
2022
£'000
|
Dividends paid on ordinary
shares
|
1,130
|
350
|
|
1,130
|
350
|
The Company declared a final
dividend of 0.90 pence per share in June 2023 in relation to the
year ended 31st 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.
It was decided that an interim
dividend of 0.50 pence per ordinary share was to be paid to
shareholders for the year ended 31 December 2023.
During the year the Company
discovered that the interim dividends paid during the year ended 31
December 2022 were made otherwise than in accordance with the
Companies Act 2006. This occurred as the Company's latest set of
filed accounts, at the time of the dividend payment, did not show
relevant distributable reserves to make such payment. This
principally resulted from the failure to identify the requirement
to post interim financial statements of the Company showing the
required distributable reserves prior to such payment. Prior to
payment of the dividend the Company did have distributable reserves
of £1.5m available to pay the dividend of £0.35m. Prior to payment
of the dividend, additional dividends were paid by the subsidiaries
totalling £4.5m to the parent Company.
As a result, the Company could
have had claims against shareholders who received the relevant
dividends and the Directors of the Company. The Company did not
purse any such claim. Instead, the Company proposed certain
resolutions to shareholders at its AGM held on 26 June 2023 to
rectify the technical breaches of the Companies Act 2006 in this
regard through the entry of deeds of release in favour of all
shareholders who received such dividends for any and all claims the
Company may have in respect of the payment of the relevant dividend
(the "Shareholders' Deed of Release") and a dead of release in
favour of persons who were Directors of the Company at the time of
the relevant dividend pursuant to which the Company waived any
rights to make claims against such Directors (the "Directors' Deed
of Release and together with the "Shareholders' Deed of Release"
the "Deeds of Release"). The Company also released interim
financial statements as at 30 September 2022 showing distributable
reserves prior to payment.
As set out in the notice convening
the Company's AGM posted to shareholders on 16 May 2023, the entry
by the Company into the Deeds of Release following approval by the
Company's shareholders at the 26 June 2023 AGM constituted related
party transactions (as defined in the AIM Rules for Companies).
Accordingly, and as all of the Company's Directors were
beneficiaries of the Directors' Deed of Release and/or the
Shareholders' Deed of Release, Cenkos Securities plc, then the
Company's nominated adviser and acting in that capacity, confirmed
that it considered the terms of such related party transactions are
fair and reasonable insofar as the Shareholders are
concerned.
12 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.
|
Year
ended
31 December
2023
|
Year
ended
31 December
2022
|
Basic
|
|
|
Profit attributable to owners of the
parent (£)
|
793,528
|
4,611,797
|
Weighted average shares in
issue
|
80,228,514
|
75,714,054
|
Basic profit per ordinary share (pence)
|
0.99
|
6.1
|
|
|
|
Diluted
|
|
|
Profit attributable to owners of the
parent (£)
|
793,528
|
4,611,797
|
Shares in issue
|
80,907,418
|
79,407,418
|
Shares options
outstanding
|
4,590,000
|
6,090,000
|
Value of number of shares that could
be repurchased (£)
|
238,774
|
344,440
|
Diluted weighted average number of
shares
|
85,258,644
|
85,152,978
|
Diluted profit per ordinary share (pence)
|
0.93
|
5.4
|
13
Inventories
|
Year
ended
31 December
2023
£'000
|
Year
ended
31 December
2022
£'000
|
Stored goods held
|
576
|
417
|
|
576
|
417
|
Inventories held consist of stored
goods to be used in the support of production vehicles and
maintenance.
14 Intangible
assets
Group
|
Software
£'000
|
Goodwill
£'000
|
|
Total
£'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
|
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
|
|
|
|
|
|
Net
book amount
|
|
|
|
|
At 31 December 2023
|
70
|
6,192
|
|
6,262
|
At 31 December 2022
|
78
|
7,211
|
|
7,289
|
Software incorporates the cost and
build of the Group's timesheet system. The initial cost of the
system plus any additional capital expenditure is to be amortised
over a ten-year period.
On 30 November 2022, the Group
completed the acquisition of 100% of the share capital of Location
1 Group Limited, creating £7,211,397 of Goodwill.
In accordance with the Group's
accounting policies, an annual impairment test is applied to the
carrying value of other intangible assets with indefinite useful
economic life. Impairment recognised for the year totalled
£1,019,080 (2022: £Nil). The impairment
loss has been included in the Statement of Comprehensive Income
within non-recurring expenses.
Location 1 Group Limited
is considered a separate operating segment as per
note 4 (Location One), as it generates cash inflows (revenues and
cost of sales) that are largely independent of the cash inflows
from Facilities by ADF's Hire of Facilities, and as such has been
measured as its own individual cash generating unit (''CGU'') by
management, being the Location One CGU.
The recoverable amount of the
Location One CGU is determined based on a value in use calculation
which uses cash flow projections based on Group's long-term budget
and projected forecasts covering a five-year period, and a pre-tax
discount rate of 18 per cent per annum. The key assumptions used by
management in setting the financial budgets for the initial
five-year period were as follows:
Revenue growth rates
Revenue growth rates are based on
past experience adjusted for changes in the Company's long term
order book, and industry wide implications such as the WGA and
SA-AFTR Strikes, and its future impact on revenue. These rates do
not exceed the long-term average growth rate of the Group's
industry, for year's four and five of the cash flow model which are
projected beyond the Group's long-term budget. A growth rate of 2%
has been used for these periods. Years one to three growth rates
(16.1%, 17.7%, and 17.7%, respectively) are taken from management
reviewed budgets, based on known order book data and estimates,
along with short term expectation changes in the industry, Group
strategy, and comparisons to prior year budgets and analysis. Prior
year budgets and assessment of change year on year were reviewed
based on adjusted outcomes due to the FY23 Strikes.
Capital expenditure
Capital expenditure projections
are based on expected estimated requirements and readily available
assets for investment. Capital expenditure projections are
extrapolated based on expected demand and turnover of historic
assets, increasing at a steady rate year on year. Years one to
three of the cash flow forecast, conclude capital expenditure rates
based on management budgets (16%, 16%, and 13% of sales revenue,
respectively) which are based on known contract expenditure, and
estimates, along with short term expectation changes in the
industry, Group strategy, and comparisons to prior year budgets and
analysis. Years four and five are forecast at capital expenditure
of 13% of revenue year on year. Prior year budget and assessment of
change has been adjusted for the FY23 Strikes.
The Group has conducted an
analysis of the sensitivity of the impairment test to changes in
the key assumptions used to determine the recoverable amount of the
CGU to which goodwill is allocated. As part of the review,
management conducted different sensitivity analysis to stress test
the impairment review. The assumed sensitivities included
decreasing the revenue growth by 7% after year 3 and increasing the
capital expenditures growth by an average of 31% from year 3. The
Directors believe that any reasonable possible change in the key
assumptions of the sensitivity analysis, on which the recoverable
amount could be calculated, would have a material impact on the
balance of Goodwill.
Therefore, whilst the Group is
still able to manage most of the costs, the revenue projections are
uncertain, in the short term. The WGA and SAG-AFTRA Strikes
impacted productions around the globe, from July 2023 through to
late Autumn 2023. The Strikes caused film and TV productions in the
UK, on which ADF were engaged, to stop or delay productions that
were scheduled to start filming in autumn 2023 and pushing these to
early 2024. The Directors note that the
Strikes were a short-term impact on the business and are confident
the Group is in a robust position to capitalise on the opportunity
ahead once previous production levels resume, underpinning
confidence in the long-term success of the Group. Due to the timing
of any rescheduled productions, it is possible that further
differences between forecast and actual results may differ into
early 2024.
15 Property, plant and
equipment
Depreciation is charged to
administrative expenses within the statement of comprehensive
income.
|
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 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
|
875
|
419
|
223
|
509
|
2,336
|
4,437
|
Transfers[1]
|
-
|
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
|
|
|
|
|
|
|
|
|
Net
book amount
|
|
|
|
|
|
|
|
At 31 December 2023
|
124
|
9,869
|
1,633
|
217
|
446
|
349
|
12,638
|
|
|
|
|
|
|
|
|
At 31 December 2022
|
82
|
8,259
|
1,525
|
5
|
-
|
809
|
10,680
|
Leasehold improvements in the year
to 31 December 2023, are in respect of improvements made to
Kitsmead, Kitsmead Lane, Longcross KT16 0EF.
16
Leases
The Group leases a number of assets, all assets are leased from the UK,
which is the main jurisdiction the Group operates in. All lease
payments, in-substance, are fixed over the lease term. All expected
future cash out flows are reflected within the measurement of the
lease liabilities at each year end.
Nature of leasing activities
|
As at
31 December
2023
|
As at
31 December
2022
|
Number of active leases
|
132
|
115
|
The Group leases include leasehold properties for commercial and head
office use, motor vehicles and equipment. The leases range in
length from 4 to 15 years and vary in length depending on lease type. Leasehold
properties holding the longest-term length of up to
15 years, motor leases
up to 4 years,
hire fleet up to 7 years, and equipment of up to 5 years. All leases are held with
the Group's subsidiaries.
Extension, termination, and break options
The Group sometimes negotiates extension, termination, or break clauses
in its leases. In determining the lease term, management considers
all facts and circumstances that create an economic incentive to
exercise an extension option, or not exercise a termination option.
Extension options (or periods after termination options) are only
included in the lease term if the lease is reasonably certain to be
extended (or not terminated).
On a case-by-case basis,
the Group will consider
whether the absence of a break clause would expose
the Group to excessive
risk. Typically, factors considered in deciding to negotiate a
break clause include:
-
The length of the lease term;
-
The economic stability of the environment in
which the property is located; and
-
Whether the location represents a new area of
operations for the Group.
Incremental borrowing rate
The Group has adopted a rate with
a range of 3.1% - 4.65% as its incremental borrowing rate, being
the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment with similar
terms, security and conditions. This rate is used to reflect the
risk premium over the borrowing cost of the Group measured by
reference to the Group's facilities.
The Group performed a sensitivity analysis where incremental borrowing
rates have been used and identified if the incremental borrowing
rate was 5% for all assets there would be a decrease in the
carrying amount of the right-of-use asset at 31 December 2023 of
£199,977 (2022: Decrease £88,483); there would be a subsequent
decrease in the lease liability of £30,022 (2022: Decrease
£62,047). If the incremental borrowing rate decreased to 1% for all
assets there would be an increase in the carrying amount of the
right-of-use asset at 31 December 2023 of £2,229,752 (2022:
£203,628) and there would be a consequent increase in the lease
liability of 2,382,156 (2022: £276,897).
Sensitivity analysis is not
performed on hire purchase leases as interest is inherent within
these lease agreements.
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 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 1 January 2022
|
1,091
|
95
|
3,473
|
14
|
-
|
4,673
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
At 1 January 2023
|
9,068
|
161
|
20,506
|
109
|
730
|
30,574
|
Additions
|
1,081
|
-
|
1,572
|
118
|
5,778
|
8,549
|
Transfers
|
-
|
-
|
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 period
|
896
|
53
|
2,237
|
41
|
-
|
3,227
|
Disposals
|
(17)
|
-
|
(3)
|
(26)
|
-
|
(46)
|
At 31 December 2023
|
1,970
|
148
|
5,707
|
29
|
-
|
7,854
|
|
|
|
|
|
|
|
Net
book amount
|
|
|
|
|
|
|
At 31 December 2023
|
8,162
|
13
|
22,359
|
118
|
875
|
31,527
|
|
|
|
|
|
|
|
At 31 December 2022
|
7,977
|
66
|
17,033
|
95
|
730
|
25,901
|
Lease liabilities
|
Leasehold Property
£'000
|
Motor
Leasehold
£'000
|
Hire
Fleet and Motor Vehicles
£'000
|
Equipment
£'000
|
Total
£'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
|
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
|
Reconciliation of minimum lease payments and present
value
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Within 1 year
|
6,453
|
4,542
|
Later than 1 year and less than 5
years
|
16,473
|
12,506
|
After 5 years
|
7,393
|
8,759
|
Total including interest cash
flows
|
30,319
|
25,807
|
Less: interest cash
flows
|
(5,111)
|
(4,578)
|
Total principal cash
flows
|
25,208
|
21,229
|
Reconciliation of current and non-current lease
liabilities
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Current
|
5,624
|
3,705
|
Non-current
|
19,584
|
17,524
|
Total
|
25,208
|
21,229
|
Short term or low value lease expense
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Total short term or low value lease
expense
|
137
|
28
|
|
137
|
28
|
17 Other
provisions
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Amounts falling after one year:
|
|
|
Lease dilapidations
liability
|
40
|
38
|
|
40
|
38
|
Lease dilapidations
liability
|
Leasehold Property
£'000
|
|
|
At 1 January 2022
|
37
|
Interest expense
|
1
|
At 31 December 2022
|
38
|
|
|
At 1 January 2023
|
38
|
Interest expense
|
2
|
At 31 December 2023
|
40
|
As part of the Group's property leasing
arrangements there is an obligation to repair damage which occurs
during the life of the lease, such as wear and tear. These costs
have been shown separately to the lease obligation liability. The
provisions are expected to be utilised by 2029 as the leases terminate. The
dilapidations provision is considered a source of estimation. The
provision has been calculated using historical experience of actual
expenditure incurred on dilapidations and estimated lease
termination dates.
18 Trade and other
receivables
Group
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Amounts falling due within one year:
|
|
|
Trade receivables
|
895
|
1,761
|
Director's loan accounts
|
307
|
307
|
Other receivables and
prepayments
|
508
|
977
|
|
1,710
|
3,045
|
Company
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Amounts falling due within one year:
|
|
|
Director's loan accounts
|
307
|
307
|
Amounts due from
subsidiaries
|
11,588
|
12,959
|
|
11,895
|
13,266
|
Trade receivables are amounts due
from customers for services performed in the ordinary course of
business. They are generally due for settlement within 30 days and
therefore are all classified as current. Trade receivables are
non-interest bearing. The carrying amount of trade and other
receivables approximates fair value.
Analysis of trade receivables based on age of
invoices:
|
< 30
£'000
|
31 - 60
£'000
|
61 -90
£'000
|
> 90
£'000
|
Total
Gross
£'000
|
ECL
£'000
|
Total Net
£'000
|
31 December 2022
|
1,724
|
12
|
(1)
|
26
|
1,761
|
-
|
1,761
|
31 December 2023
|
583
|
169
|
93
|
50
|
895
|
-
|
895
|
The Group applies the IFRS 9 general
approach to measuring expected credit losses (ECL) which uses a
lifetime expected loss allowance for all trade receivables.
Historically there have been no material default levels giving rise
to a specific provision. In determining the recoverability of
accounts receivable, the Group considers any changes in the credit
quality of the accounts receivable from the date credit was
initially granted up to the reporting date. The accounts
receivables that are neither past due nor impaired relate to
customers that the Group has assessed to be creditworthy based on
the credit evaluation process performed by management, which
considers both customers' overall credit profile and its payment
history with the Group. Having considered the impact of IFRS 9 the
Directors concluded that the ECL balance has been determined as
£7,201 (2022: £Nil) based on historical data available to management in addition
to forward looking information utilising management knowledge. The
aging of trade receivables over 30 days as at 31 December related
to 35% (2022: 2%) of the total trade debtor balance, the nature in
change from 31 December 2022 is due to the impact of the
Strikes.
The Company makes assumptions when
implementing the forward-looking ECL model. This model is used to
assess intercompany loans for impairment. As at the 31 December
2023 the Company is due £11,586,833
(2022: £12,958,823) from subsidiaries.
Estimates are made regarding the
credit risk and the underlying probability of default in credit
loss scenarios. The Directors make judgements on the expected
likelihood and outcome of scenarios, and these expected values are
applied to the loan balances. Receivables due from Group
undertakings are net of cumulative ECLs of £Nil (2022: £Nil).
19 Cash and cash
equivalents
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Cash at bank available on
demand
|
3,533
|
9,518
|
|
3,533
|
9,518
|
20 Trade and other
payables
Group
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Amounts falling due within one year:
|
|
|
Trade payables
|
877
|
1,932
|
Other payables
|
18
|
1,055
|
Taxation and social
security
|
1,127
|
1,298
|
Accrued expenses
|
886
|
1,461
|
Deferred income
|
33
|
576
|
|
2,941
|
6,322
|
Company
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Amounts falling due within one year:
|
|
|
Other payables
|
-
|
849
|
Taxation and social
security
|
-
|
33
|
Accrued expenses
|
65
|
279
|
|
65
|
1,161
|
The Directors consider that the
carrying value of trade and other payables approximates to their
fair value. Trade payables are non-interest bearing and are
normally settled monthly.
Revenue recognised in the year
that was deferred from the previous year was £575,697 (2022:
£518,555).
Included in other payables in the
Company and Group as at 31 December 2023 is amounts payable of £Nil
(2022: £848,582) in respect of employer social security costs due
on M Proctor share options exercised in 2021 and additionally in
respect of the Group, alone, a pension payable liability of £Nil
(2022: £202,699).
21 Contingent
Consideration
Group
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Contingent
Consideration
|
60
|
878
|
Company
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Contingent
Consideration
|
60
|
878
|
Contingent consideration is
payable up to maximum value of £2,657,788 (2022: £4,059,788)
payable in cash, over a two-year period (2022: three), based on set
performance criteria. Performance criteria is set against adjusted
EBITDA targets of Location 1 Group Limited, each period. The
contingent consideration is payable on a scaling basis based on the
level of Adjusted EBITDA gained. The minimum payment of contingent
consideration is £Nil. The fair value of the contingent
consideration has been discounted to present value and adjusted
based on management expectation of probability of outcome of
reaching Adjusted EBITDA targets.
The payment of contingent
consideration was valued at £60,474 (2022: £877,892) as at 31
December 2023. The reduction in valuation in the year resulted as
the deferred consideration is based on a cumulative earn out
target, whereby due to the WGA and SAG-AFTRA Strikes impacting
productions, from July 2023 through to late Autumn 2023, management
have estimated it is unlikely that the probability of an earn out
payment will be met.
22
Investments
Subsidiary undertakings
The Company owns directly or indirectly the whole of the issued and fully
paid ordinary share capital of its subsidiary
undertakings.
Subsidiaries
|
Principal activity
|
Country of
incorporation
|
Registered address
|
Ordinary shares held
|
CAD Services Limited
|
Supply of mobile facilities for
television and film productions
|
UK
|
Ground Floor 31 Oldfield Road,
Bocam Park, Pencoed, Wales, CF35 5LJ
|
100% (2022: 100%)
|
Location 1 Group Limited
|
Intermediate holding
company.
|
UK
|
Ground Floor 31 Oldfield Road,
Bocam Park, Pencoed, Wales, CF35 5LJ
|
100% (2022: 100% from 30 November
2022)
|
Location One Limited
|
Supply of key location facilities
for television and film productions
|
UK
|
Ground Floor 31 Oldfield Road,
Bocam Park, Pencoed, Wales, CF35 5LJ
|
100% (2022: 100% from 30 November
2022)
|
The subsidiary undertakings
of the Company are presented below:
|
Shares in group
undertakings
£'000
|
|
Cost
|
|
|
At 01 January 2022
|
8,347
|
|
Additions through business
combinations
|
7,187
|
|
At 31 December 2022
|
15,534
|
|
|
|
|
At 01 January 2023
|
15,534
|
|
Impairment
|
(735)
|
|
At 31 December 2023
|
14,799
|
|
|
|
|
CAD Services Limited and Location
1 Group Limited are direct investments of the Company. Location One
Limited is held indirectly.
Location 1 Group Limited and its
100% owned subsidiary Location One Limited were acquired by the
Company on 30 November 2022.
|
In accordance with the Company's
accounting policies, an annual impairment test is applied to the
carrying value of investments. Impairment recognised for the
year totalled £734,935 (2022: £Nil). The
impairment loss has been included in the Statement of Comprehensive
Income within non-recurring expenses, and details of this
impairment are detailed in note 14.
23 Share
capital
Ordinary Shares of 1p each
|
£'000
|
Allotted, called up and fully paid
|
|
At 01 January 2022
|
455
|
30 million issued Ordinary Shares
of 1p in respect of AIM listing
|
300
|
0.5 million issued Ordinary Shares of 1p in
respect of exercised options
|
5
|
3.407 million issued Ordinary Shares of 1p in
respect of business acquisition
|
34
|
At 31 December 2022
|
794
|
|
|
At 01 January 2023
|
794
|
1.5 million issued Ordinary Shares of 1p in
respect of exercised options
|
15
|
At 31 December 2023
|
809
|
All classes of shares have full
voting, dividends and capital distribution rights.
On 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 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 initial public
offering ("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.
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 held 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 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.
The Group has 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.
The terms and conditions of the
grants outstanding as at the 31 December 2023 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
|
|
4,590,000
|
|
|
|
|
|
|
|
|
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 31
December 2022
|
WAEP
|
As at 31
December 2023
|
WAEP
|
Outstanding at beginning of
period
|
4,500,000
|
0.05
|
6,090,000
|
0.14
|
Granted during the
period
|
2,090,000
|
0.29
|
-
|
-
|
Forfeited/lapsed during the
period
|
-
|
-
|
-
|
-
|
Exercised during the
period
|
(500,000)
|
(0.01)
|
(1,500,000)
|
(0.05)
|
Outstanding at year end
|
6,090,000
|
0.14
|
4,590,000
|
0.16
|
Employee schemes
As of December 31, 2020, all
options with the same exercise conditions based on an exit
criterion were considered valid. No expenses were recorded in the
statement of comprehensive income for outstanding options because
the Directors of the Group believed it was not highly probable that
the exit criteria for the share option awards would be met in the
foreseeable future. However, following the share for share exchange
and the crystallisation of the rollover shares, new vesting
conditions meant that the options could vest immediately.
Consequently, the Directors believed that the exercise of options
was highly probable, leading to the recognition of a charge for
share-based payments in the statement of comprehensive income for
options outstanding as of December 31, 2021.
The fair value of options granted
was determined using the Black-Scholes option pricing model, deemed
appropriate due to the short contractual lives of the options and
the requirement to exercise them shortly after the employee becomes
entitled to the shares. Management adjusted the expected life used
in the model for non-transferability, exercise restrictions, and
behavioural considerations. The fair value of the option at the
grant date
also took into account non-vesting
conditions and market conditions, with adjustments made for service
conditions and non-market performance conditions at each reporting
date. No additional employee options have been granted since this
date.
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 and ending on 31 December 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
M Proctor and N Evans hold
Options.
The following shares were in issue
on 31 December 2023:
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
|
Valuation of
Options
Valuations were performed by
Pegasus Capital 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
|
EBITDA target return
probability
|
Total shareholder return target
probability
|
Risk-free rate
|
Expected term (years)
|
5 January 2022
|
M Proctor
|
Ordinary Shares
|
50%
|
40.19%
|
33.73%
|
1.0175%
|
3
|
5 January 2022
|
N Evans
|
Ordinary Shares
|
50%
|
40.19%
|
33.73%
|
1.0175%
|
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. The model
incorporates a range of probabilities for the likelihood of EBITDA
and total shareholder return.
Expense related to
Options
An expense of £58,691 (2022: £58,691) has been recognised in the Statement
of Comprehensive Income in respect of the Options issued during the
year. 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.
24
Reserves
Called up share capital
Called up share capital represents
the nominal value of shares that have been issued.
Share Premium
The premium on issue of equity
shares, net of any issue costs.
Share based payment reserve
The cumulative amount recognised
in relation to the equity-settled share-based payment schemes in
place.
Merger reserve
The difference between the nominal
value of shares issued in the share exchange and the book value of
the shares obtained, in line with merger accounting
principles.
Retained earnings
Retained earnings relate to
cumulative net gains and losses less distributions made.
Merger relief reserve
Merger relief reserve represents
the difference between the nominal value of the shares issued as
part of the share exchange and the net assets acquired.
25 Retirement
benefit scheme
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Defined contribution schemes:
|
|
|
Charge to income
statement
|
235
|
170
|
A defined contribution pension
scheme is operated for all qualifying employees. The assets of the
scheme are held separately from those of the Group in independently
administered funds.
Outstanding pension contributions
at the year ended 31 December 2023, included within other creditors
of the Group amounted to £50,448 (2022: £53,799).
26
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.
The Group has committed to new
fleet capital expenditure orders of approximately £5,683,935 for
2024.
The Group held no other additional capital, financial and or other
commitments at 31 December 2023.
27 Financial
Instruments
Financial
assets
Financial assets are not measured
at fair value and due to their short-term nature, the carrying
value approximates their fair value. They comprise trade
receivables, other receivables, and cash.
It does not include prepayments.
Group
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Trade receivables
|
895
|
1,761
|
Other receivables
|
333
|
909
|
Cash at bank
|
3,533
|
9,518
|
|
4,761
|
12,188
|
Company
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Other receivables
|
308
|
307
|
Amounts due from
subsidiaries
|
11,587
|
12,959
|
|
11,895
|
13,266
|
Financial liabilities
Financial liabilities measured at
amortised cost comprise trade payables, lease liabilities and
accruals. It does not include other taxation and social security
and deferred income.
Group
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
|
Trade payables
|
877
|
1,932
|
|
Other payables
|
18
|
1,055
|
|
Accrued expenses
|
886
|
1,461
|
|
|
1,781
|
4,448
|
|
|
|
|
|
Company
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Other payables
|
-
|
849
|
Accrued expenses
|
65
|
279
|
|
|
65
|
1,128
|
|
|
|
| |
Financial risk management
The Group is exposed through its operation to the following financial
risks: credit risk, interest rate risk, foreign exchange risk and
liquidity risk. Risk management is carried out by the Directors
of the Group. The Group uses financial instruments to provide flexibility regarding
its working capital requirements and to enable it to manage
specific financial risks to which it is exposed.
The Group finances its operations through a mixture of debt finance,
cash and liquid resources and various items such as trade debtors
and trade payables which arise directly from the Group's operations.
Credit risk
Credit risk is the risk of
financial loss to the Group if a customer or counterparty to a
financial instrument fails to meet its contractual obligations. In
order to minimise the risk, the Group endeavours only to deal with
companies which are demonstrably creditworthy and this, together
with the aggregate financial exposure, is continuously monitored.
The maximum exposure to credit risk is the carrying value of its
financial receivables, trade and other receivables and cash and
cash equivalents as disclosed in the notes to the financial
information.
The receivables' age analysis is
evaluated on a regular basis for potential doubtful debts,
considering historic, current and forward-looking information. No
material impairments to trade receivables, have been made to date.
Further disclosures regarding trade and other receivables are
provided within the notes to financial information.
Credit risk also arises on cash
and cash equivalents and deposits with banks and financial
institutions. For banks and financial institutions, only
independently rated parties with minimum rating "AA-" are accepted.
Currently all financial institutions whereby the Group holds
significant levels of cash are rated from AA- to A+.
Interest rate risk
As at 31 December 2023, the Group
had no current borrowings and used no finance facilities or debt
structures to coordinate business. Therefore, interest rate risk
exposure for the Group is minimal. The Group's policy aims to
manage the interest cost of the Group within the constraints of its
financial borrowings.
The Group have entered into
significant leases for various assets, namely hire facilities,
under fixed interest rate terms. This means that the interest rate
charged on these leases is fixed for the entire term of the lease,
regardless of changes in market interest rates.
If market interest rates rise, the
Group's fixed-rate leases will become less attractive to potential
lessors, as they would be able to obtain better rates elsewhere. On
renewal of these leases this could result in the Group having to
renew or renegotiate these leases at higher rates, which would
increase its operating costs and potentially reduce its
profitability.
The Group look to mitigate this
risk by committing to lease agreements in respect of hire
facilities over 6 months in advance, ensuring management can manage
and plan for interest rate change.
Foreign exchange risk
Foreign exchange risk arises when
the Group enters into transactions in a currency other than their
functional currency. The Group's policy is, where possible, to
settle liabilities denominated in a currency other than its
functional currency with cash already denominated in that
currency.
The Group operates primarily in
the UK and as such transactions are substantially denominated in
Sterling (GBP). As such the Group is exposed to minimal transaction
foreign exchange risk. The mix of currencies and terms of trade
with its suppliers are such that the Directors believe that the
Group's exposure is minimal and consequently they have not, to
date, specifically sought to materially hedge that exposure. Most
of the Group's funds are in GBP with only sufficient funds held in
foreign currencies to meet local costs.
Liquidity risk
The Group seeks to maintain
sufficient cash balances. Management reviews cash flow forecasts on
a regular basis to determine whether the Group has sufficient cash
reserves to meet future working capital requirements and to take
advantage of business opportunities.
A maturity analysis of the Group's
trade and other payables is shown below:
|
As at
31 December
2023
£'000
|
As at
31 December
2022
£'000
|
Less than 1 year:
|
|
|
Lease liabilities
|
6,453
|
4,542
|
Trade and other
payables
|
897
|
2,987
|
Accrued expenses
|
886
|
1,461
|
|
8,236
|
8,990
|
Between 1-5 years:
|
|
|
Lease liabilities
|
16,473
|
12,506
|
|
16,473
|
12,506
|
More than 5 years:
|
|
|
Lease liabilities
|
7,393
|
8,759
|
|
7,393
|
8,759
|
Total including interest cash
flows
|
32,102
|
30,255
|
|
|
|
Less interest cash flow:
|
|
|
Lease liabilities
|
(5,111)
|
(4,578)
|
Total principal cash
flows
|
26,991
|
25,677
|
Capital Disclosures
The capital structure of the
business consists of debt and equity. Equity comprises share
capital, share premium, share based payment reserve, and
accumulated reserves and is equal to the amount shown as 'Equity'
in the balance sheet. Debt comprises various items which are set
out in further detail above and in the notes to the
accounts.
The Group's current objectives
when maintaining capital are to:
- Safeguard the Group's ability as a going concern so that it
can continue to pursue its growth plans;
- Provide a reasonable expectation of future returns to
shareholders; and
- Maintain adequate financial flexibility to preserve its
ability to meet financial obligations, both current and long
term.
The Group sets the amount of
capital it requires in proportion to risk. The Group manages its
capital structure and adjusts it in the light of changes in
economic conditions and the risk characteristics of underlying
assets. In order to maintain or adjust the capital structure, the
Group may issue new shares or sell assets to reduce debt. During
the period covered the Group's business strategy remained
unchanged.
28 Related party
transactions
The CAD Services Pension Scheme
owns properties leased by CAD Services Ltd. In total CAD Services
Ltd paid the CAD Services Pension Scheme as at 31 December 2023
£30,000 (2022:
£30,000) in lease
payments.
Dividends were paid to M Proctor,
a director of the Company, during the year
ended 31 December 2023 of £19,600
(2022: £6,440). Dividends were paid to J Richards, a director of the
Company, during the year ended 31 December
2023 of £33,600 (2022: £11,040). Dividends were paid to K James, a
director of the Company, during the year
ended 31 December 2023 of £3,500
(2022: £1,380).
Included in other payables as at
31 December 2023 is amounts payable of £Nil (2022: £848,582) in
respect of employer social security costs due on M Proctor share
options exercised in 2021.
On 3 December 2021 J Richards was
granted 2,000,000 Ordinary Shares. An amount payable was due to the
Company in respect of this transaction of £20,000 (2022: £20,000),
residing in other receivables as at the 31 December 2023.
Additionally, a further amount was payable by J Richards in respect
of the PAYE balance due on the Ordinary Shares granted, paid by the
Company, amounts due at 31 December 2023 were £286,684 (2022:
£286,684). The amounts due from J Richards are interest free and
repayable on the earliest of 5 years or the sale of their shares
owned in Facilities by ADF PLC.
29 Changes in
liabilities from financing activities
|
At 1 January
2022
£'000
|
Financing cash
flows
£'000
|
Interest
£'000
|
New borrowings non -
cash
£'000
|
New borrowings business
acquisition
£'000
|
At 31 December
2022
£'000
|
|
|
|
|
|
|
|
Lease liabilities
|
12,265
|
(3,585)
|
695
|
10,935
|
919
|
21,229
|
Other financing activities and
borrowings
|
342
|
(349)
|
7
|
-
|
-
|
-
|
Total liabilities from financing
activities
|
12,607
|
(3,934)
|
702
|
10,935
|
919
|
21,229
|
|
At 1 January
2023
£'000
|
Financing cash
flows
£'000
|
Interest
£'000
|
New borrowings non -
cash
£'000
|
New borrowings business
acquisition
£'000
|
At 31 December
2023
£'000
|
|
|
|
|
|
|
|
Lease liabilities
|
21,229
|
(5,814)
|
1,335
|
8,458
|
-
|
25,208
|
Total liabilities from financing
activities
|
21,229
|
(5,814)
|
1,335
|
8,458
|
-
|
25,208
|
|
|
|
|
|
|
|
| |
30 Ultimate
controlling party
The Directors do not consider
there to be one ultimate controlling party.
31 Post balance sheet
events
On 4 March 2024, the Company
awarded 1,001,225 options under its LTIP Awards to Directors M
Proctor (571,429 options) and N 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.
There are no other post balance
sheet events to disclose.