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Good to see the share price rising.
The new Harry Potter TV series is planned by HBO to be filmed over the next 10 years! It would be a great continuing stream of income if both/either of ADF or Location One were involved:
Https://deadline.com/2023/04/harry-potter-tv-series-max-release-date-cast-1235323284/
It's worth noting all the various tax breaks being introduced as they're not all mentioned in the articles I featured:
- film and TV tax relief has increased by 0.5% and been reformed in structure (instead of being reduced as feared)
- in addition, the animation and children’s TV sector will receive a new 39% expenditure credit
- soon the minimum episode length of a TV show that can qualify for tax relief is likely to be reduced from 30 minutes to 20 minutes
- and the high-end TV tax relief minimum expenditure threshold is being maintained at £1m (again allaying producer fears that it may be raised)
- plus the government also plans to allow high-end documentaries to claim for relief
Which is a pretty decent package of measures, and boosts confidence in the sector for the long-term.
There had been fears that tax allowances etc would be reduced (I wonder if this had to some extent held back the share price?) - in fact tax breaks for film and TV investment have been INCREASED:
Https://www.hollywoodreporter.com/business/business-news/britain-film-tv-tax-credit-increase-raise-1235353030/
Https://deadline.com/2023/03/uk-film-and-tv-tax-credit-raised-1235300050/
"Ben Roberts, CEO of the BFI, said the reformed incentives are “a testament to how crucial they are to the U.K.’s economy and growth.” He added: “Combined with our extraordinary talent, infrastructure and technical and creative expertise the screen sector Tax Reliefs, now remodeled as expenditure credits, have super-charged our industry on an unprecedented scale.” His conclusion: “The news today will ensure the U.K. remains a truly globally competitive production hub, giving us economic recovery and growth, creating thousands of jobs for people up and down the country and enabling creative talent and storytelling to thrive.”
But it’s funny all the Companies Cenkos are brokers for have dropped in price!!!
Harry,
Cenkos are house broker but their share price performance has absolutely no connection to ADF's price action.
A few sellers in this market slump would be reason for the fall.
Cenkos are taking a hammering today down 20%. They are taking a lot of stick on VAL as they act for them as well . Obviously that’s why AFD has suffered today! Thanks CENKOS!
Very quiet at least no sells today with all the good news about this share it should be at 68p to 73p. Only about 2months away from 2022 year end published and good news on bookings for this financial year there’s only one way for this share and that’s up.
Here's a selection of three news stories from the last week as examples of the current investment boom in the creative industries.
Pinewood are to spend a whopping £800m expanding their studios to become the "biggest studio complex in the world" and create 8,000 jobs.
The group also said it would "inject £640m a year into the UK economy":
Https://www.bbc.co.uk/news/uk-england-beds-bucks-herts-64676914
Canal+ are to spend €1bn on film over the next five years, including a number of English-language titles:
Https://www.screendaily.com/news/canal-pledges-1bn-investment-in-film-over-next-five-years-unveils-2023-slate/5179261.article
And Banijay UK are to invest £50m in focusing on "scripted, reality, premium documentaries and factual entertainment":
Https://www.banijay.com/blog/2023/02/08/banijay-uk-creates-50-million-fund-to-further-drive-growth/
New tip for ADF on i.i.i as a stock to buy and hold for the long term:
Https://www.ii.co.uk/analysis-commentary/five-aim-stocks-inheritance-tax-isa-2023-ii526984
"Facilities by ADF
64p
ADF was the first AIM new admission of 2022 and it won the best newcomer at last year’s AIM awards. The company provides vehicles and services to the film and TV industry, and it is investing the £15 million raised from its stock market listing at 50p a share to grow the vehicle fleet.
Facilities by ADF has also acquired Location One, which also provides services to the TV and film industry. The initial cash payment is £4.5 million with a further £1.7 million of deferred consideration in shares. The other £2.7 million is dependent on achieving earnings targets over a three-year period.
Clients include Netflix, HBO and Disney. Investment in content for streaming platforms is leading to increasing demand for services, and visibility of work is good. Profit was lower in the first half, but the second half was much better. That is because there were more series with longer filming times, rather than short projects.
A strong order book underpins expectations for this financial year. Pre-tax profit is forecast to rise from £4.3 million to £6.6 million on a 50% increase in revenues to £47.6 million in 2023. The share price has risen following the recent trading statement and the prospective multiple is 10. The strong demand for content makes the shares attractive without the risks of direct investment in the content."
Thanks Rivaldo for posting very interesting information.
Good to see Paul Scott giving ADF the thumbs up on Stockopedia:
"Facilities by ADF - TU (in line) - Paul - GREEN - in line expectations update for FY 12/2022. Sounds perky about the outlook for 2023. Quite nice company I think."
"Full year trading update
Facilities by ADF, the leading provider of premium serviced production facilities to the UK film and high-end television industry, today provides an update on trading for the full year ended 31 December 2022 (“FY22?).
Strong trading delivering on all areas of growth strategy
Key points from today’s update -
FY 12/2022 results in line with market expectations.
Revenue up 13% to £31.4m
Adj EBITDA up 3% to £7.9m
The reason why increased revenues didn’t flow directly through to EBITDA is because (previously announced) smaller individual contracts meant more down-time as equipment had to be moved around between jobs. So this mix effect does show the flaw in the business model – gaps between jobs, which could get a lot worse the next time the industry has a recession (no sign of that at the moment though).
Cenkos (many thanks!) publishes an update note today, showing that the £7.9m EBITDA becomes £4.3m PBT. As it’s an equipment hire business, we cannot just ignore the depreciation charge.
Basic adj EPS is 4.6p, so the PER is 12.7x which seems reasonable to me.
Capex – it spent £8.9m enlarging the hire fleet in 2022, with similar spend expected in 2023. Which raises the obvious question as to whether this is value for money, given that the big capex barely moved the dial on EBITDA in 2022?
Expansion in the UK is continuing, more detail in the announcement. It sounds as if things are going well. There was previous talk about expanding into Europe through acquisitions, which I’m not at all keen on. Better to stick to its knitting in the UK, I reckon.
Outlook - we’re told several times that the order book is strong, but no figures are provided.
Cenkos is forecasting a big increase of 50% in revenues for FY 12/2023, and EPS rising from 4.6p (FY 12/2022) to 6.3p. This type of equipment hire business should probably be valued on a PER of about 12, so I make that a share price target of 76p, a useful 30% ahead of the current share price.
My opinion – I’ve always quite liked this share – it floated at a reasonable valuation, and raised fresh money for the business in its IPO (unlike so many companies which float so that a private equity backer can exit at a premium).
The UK seems to be a popular destination for big TV/film productions, so there seems to be plenty of work available for ADF, and it sounds upbeat about the future.
It’s a cyclical business, so at some stage there’s likely to be a downturn, hence why I wouldn’t over-pay for this type of share. But right now, it looks to be in a good spot, and the shares seem reasonably-priced, hence I have to give it a thumbs up as things currently stand."
Excellent coverage in today's press for a realtively small company like ADF.
First the Mail:
Https://www.thisismoney.co.uk/money/markets/article-11750143/MARKET-REPORT-Traders-fall-love-telecom-stocks-merger-hopes.html
Second the Times:
Https://www.thetimes.co.uk/article/6debc800-ac92-11ed-9cb3-80326348937b?shareToken=9dbfab6b8ea106bd5682fe4cd39c8b5b
"Trailer provider plays a blinder
An Aim-listed company whose production trailers have been used on the sets of The Crown and Peaky Blinders has hailed a “strong performance” in its first full year as a listed business.
Bosses at Facilities by ADF, which has a fleet of more than 600 vehicles ranging from portable lavatories to trailers for actors to rest in, expects to unveil revenues of £31.4 million for the 12 months to the end of December. Last year it had sales of £27.7 million.
The company worked on 76 productions last year, including Netflix’s Sex Education and the BBC’s Happy Valley, with each production generating an average revenue value of £390,000. Its 2023 order book indicates sustained demand for its services, noting bigger productions and higher revenues per production.
ADF, which is based in Bridgend, south Wales, started life as Andy Dixon Facilities in 1991 with an old bus that Andy Dixon, its founder, turned into a dining trailer.
Last year ADF acquired Location One, a film and television location service and equipment hire company based in Barking, east London, that will enhance its expansion. The shares rose 4p, or 7.3 per cent, to 58½p."
FYI here's the rest of Cenkos's summary today:
"Delivering on Everything and More
ADF has released a positive trading update for the period ending December 2022. FY22E revenues of £31.4m and Adj EBITDA of £7.9m are in-line with our expectations and we leave forecasts unchanged. FY22E has been a transformational first year for ADF as a listed business which has seen fleet growth, site enlargement, geographic expansion, and an acquisition of a complementary business. It has set the stage for further growth in FY23E and years to come, both organically and acquisitively. ADF trades on an inexpensive FY23E P/E of 8.4x compared to equipment hire peers on 10.2x, especially given the superior earnings growth.
? Financial Update: FY22E revenue is expected to be £31.4m and Adj EBITDA is forecast to be £7.9m, in-line with our forecasts. As we highlighted at the interim results, the second half of the year was expected to show a large jump in Adj EBITDA as H1/22A had been tilted towards shorter, less profitable productions. This was indeed the case with H2/22E Adj EBITDA of c£5.3m compared to c£2.6m in H1/22A.
There is significant revenue visibility given the c12 month lead times for many bookings and the Company has positively guided to FY23E seeing a continuation of the high value productions seen in H2/22E.
? Operational Highlights: Management have set the stage for a strong FY23E with a forecast top-line growth of c50% and Adj EBITDA growth of c55%. This is supported by the following operational developments over the past year:
? Capex of c£9m invested in new fleet vehicles to drive organic growth, with a similar amount expected in FY23E.
? Expansion of its manufacturing facilities in Bridgend and moving to a new larger operational base at Longcross, which is conveniently located near major customers.
? Opening a new office and base at Pioneer Studios in Scotland to tap into growing filming demand there.
? Acquisition of Location One Ltd to build-out highly complementary filming equipment hire services to become the premium one-stop-shop for the industry."
Be very interesting to see what Genkos now value the shares at was previously 93p.
Nice one Harry.
Acker
ADF made £5.3m EBITDA in the last H2. Annualised and assuming this continues, with no organic growth at all, that's £10.6m EBITDA for this year. Then add in a full year of the Location One acquisition which made £2.08m prior to acquisition, again not allowing any organic growth at all, and you get to almost £12.7m for 2023.
That's well above Cenkos' forecast £12.3m for this year, with no organic growth at all in either ADF or Location One revenues despite the increased fleets, and allows some leeway for a return for a while to shorter productions at lower margins.
This also ignores the potential for growth from cross-selling and synergies with Location One.
Given the high order books, and visibility of continued longer-term contracts at higher margins, one would therefore hope that the forecast 6.3p EPS is entirely realistic and can perhaps be beaten.
Excellent news.....ADF have delivered a very good H2, and 2022 results are therefore nicely in line with expectations of 4.6p EPS.
The £7.9m EBITDA is actually slightly ahead of expectations (£7.8m).
Most importantly, the outlook is very confident and supports the 6.3p EPS forecast for this year.
In which case the current 54.5p share price appears to offer extremely good value:
"The Group is currently taking orders for Q4 FY23, and looking ahead the order book remains strong with increasing revenue visibility.
With a healthy sales pipeline, growing network of contacts, and positive market backdrop, the Board is confident that the Group's progress over the last year is set to continue in the coming year."
And the CEO is equally bullish:
"The prospects for ADF are increasingly positive and we have entered FY23 in a very strong position with considerable momentum across the business. We have a growing addressable market, an expanding network of contacts, an enhanced offering and a high-quality business model driving growth in Group revenue. These factors, coupled with a strong order book, underpin the Board's confidence in the long-term success of ADF."
Holding well this week but could be moving towards CENKOS valuation of around 93p with all the good news of late.
Hi Hebridean .Wow, That's a big new facility. At what discount do you think the upcoming placement will be to pay for it.
Moving staff to existing premises is hardly an “expansion”
Video streaming subscriptions fall by two million in 2022 Https://www.bbc.co.uk/news/business-64450202
More Location One expansion announced today with new branches at ADF's baes in Longcross and Bridgend, which should help with cross-selling, operational synergies etc:
Https://uk.advfn.com/stock-market/london/facilities-by-adf-ADF/share-news/Facilities-by-ADF-plc-Location-One-opens-Longcross/90106694
Hopefully a trading update coming soon, perhaps the week commencing 13th February given last year's update on 11th February. The acquisition of Location One on 1st December will have complicated matters as regards the year end figures, so may have pushed back the finalisation somewhat.
The acquisition of Location One was given the accolade of 'Deal Of The Month' for December by Insider Media.
It is good to see the presence of ADF in Glasgow, it's a great filming location.
Good to see ADF's Location One expanding into Scotland's "newest and largest film studio", where ADF are already established:
Https://uk.advfn.com/stock-market/london/facilities-by-adf-ADF/share-news/Facilities-by-ADF-plc-Location-One-joins-ADF-at-Pi/90041500
Great report.
Acker