“Facilities by ADF” ipo-ed today on AIM with a MC of £37.7 mil and it looks interesting. They hire out film production facilities to the likes of Netflix, BBC,ITV, Disney, etc and the sector is going through a period of high growth due to US streaming providers increasing their UK operations in recent years. This has led to ADF having bookings for their kit 6-12 months in advance, FY 2022 being fully booked already. So the business looks quite simple: they buy trailers for actors on lease at 2-4% interest rates with an average duration of 4-7 yrs and then rent them out to production co’s providing auxiliary services on top of that. They currently have c 500 units (vehicles) with an average age of 2.5 yrs/unit which in turn has an average lifespan of 10 years, so quite a young fleet. ADF have their own repair, maintenance and upgrading workshop as well.
Revenue has grown from 12.6 mil in 2018 to c £22 mil in 2021 ( my own guesstimate based on reported H1 rev to 30/6/21 of £11.5 mil with an ebitda of £4.1 mil so I reckon it trades at roughly 20-25x EPS for FY to 31/12/21 with c £13 mil in ipo cash. The directors hold c 46% of the shares and stated an ambition to grow rev to c £100 mil firstly organic by expanding the fleet with the ipo money and secondly via acquiring smaller independent players in UK then expanding into Europe. They currently have 20-25% of the UK market according to the ipo doc.
It looks the sort of boring, predictable business that’s easy to understand and I like it when management puts out an ambitious growth target to a nice, round number of £100mil rev !(although no time frame was given) Time will tell.