Photo: Clive Cowley, Chief Executive Officer of ADNH Catering
ADNH Catering plc (the “Company” or “ADNH Catering”), a leading food and support services provider in the UAE, has announced its unaudited financial results for the three-month and nine-month periods ended 30 September 2024. On a pro forma basis, ADNH Catering reported revenue of AED 1.2 billion during the first nine months of 2024, resulting in EBITDA of AED 167 million at an EBITDA margin of 13.7%. Pro forma net profit of AED 110 million at a robust net profit margin of 9.0% reflected ADNH Catering’s efficient supply chain management, operational efficiencies and proactive contract management.
Commenting on the results, Clive Cowley, CEO of ADNH Catering, said:
“We are pleased to report our first set of results since listing on ADX, with a solid revenue base, sound EBITDA margins and robust free cash flow for the nine months ended September 2024. Over the course of this period we have achieved healthy growth in contracts, particularly for our support services segment, underscoring our commitment to strategic expansion across key verticals and geographies. As we continue to focus on diversifying our service offering to meet client needs, driving value, and deepening our market presence in high-growth sectors, we are pressing ahead with our plans to grow and consolidate our presence both in Saudi Arabia and the UAE. We remain focused on building on this strong foundation to deliver exceptional client service, profitable growth and sustainable shareholder value creation.”
Strategy Execution and Growth Drivers
ADNH Catering’s growth strategy is centered on both organic and inorganic expansion to drive long-term growth.
The core focus on winning new business and retaining key clients through active tender participation has delivered 37 new contracts and 20 clients over the last nine months, with 15 new contracts and seven new clients secured in the most recent quarter, with a retention rate of over 97% on average for the last 12 months. The Company is also actively pursuing inorganic growth through targeted bolt-on acquisitions outside its core catering operations, aimed at broadening service offerings and expanding into high-potential sectors and underserved regions, including in education and energy. ADNH Catering is also actively pursuing growth opportunities in Saudi Arabia, where it is in talks to increase its stake in its existing joint venture, and where it sees compelling opportunities in the Eastern Region, Jeddah and Riyadh, particularly in private healthcare. ADNH Catering is also committed to driving margins by enhancing efficiency, improving productivity, and implementing strategic pricing initiatives to strengthen its market position.
Key Financial Indicators
Revenue: On a pro forma basis, revenue for the nine-month period ended 30 September 2024 (9M 2024) stood at AED 1.2 billion, supported by a focus on strategic business selection and operational scale-up. While 9M 2024 base revenue increased by 12.1% year-on-year due to proactive business selection in tandem with scaling of operations, actual revenue fell on a comparative basis due to a change in its revenue recognition model for part of its support services business and as a result of a voluntary decision in 2023 to de-risk the business by opting out of a contract that did not deliver on ADNH Catering’s strict profitability requirements. As such, resources were reallocated to focus on more profitable areas and to reduce reliance on large contracts. With growing diversification in its contract base, the Company’s dominant catering business is well balanced across sectors.
Profitability: Despite a high inflationary period, the Company’s stable base of contract profitability continued to see higher costs mitigated by effective supply chain management, operational efficiencies and proactive contract management. For 9M 2024, EBITDA stood at AED 167 million at an industry-leading double-digit margin of 13.7%, with EBIT of AED 120 million at an EBIT margin of 9.9%. Net profit for the period stood at AED 110 million at a margin of 9.0%.
Dividend policy: ADNH Catering has implemented a dividend policy that aligns with its financial performance, with semi-annual cash dividend payments. For the financial year 2024, the Company intends to distribute a cash dividend of AED 60 million in April 2025. In 2025, the Company aims to pay a total cash dividend of AED 180 million. In 2026, ADNH Catering plans to increase the annual dividend by at least 5% over the previous year, demonstrating management and the Board’s confidence in its future earnings and cash flow generation. From 2027 onwards, the Company intends to maintain a progressive dividend policy linked to financial performance, with semi-annual cash dividend distributions.
Management Outlook
ADNH Catering maintains a positive outlook on its growth prospects, as its expanding addressable market offers compelling opportunities to increase market share. The Company’s focus continues to be on maintaining high client retention rates above 95% over the near- and medium-term, as it strengthens its position in key sectors. With a disciplined approach to scaling operations, ADNH Catering aims to drive revenue growth by 5-7% annually from 2025 over the near- and medium-term, while achieving an EBITDA margin of 13-14% over the same periods.
Note Regarding Pro Forma Financials
ADNH Catering plc was incorporated in the Abu Dhabi Global Market on 22 June 2024. On 30 June 2024, ownership of the catering and support services businesses in the UAE and the Kingdom of Saudi Arabia were contributed by ADNH Catering’s parent company, Abu Dhabi National Hotels PJSC (“ADNH”), into the Company as part of a reorganisation (the “Reorganisation”) using the Business Combination method. This method requires the Company to adopt the history of the entity it acquires for reporting purposes. The statutory accounts of ADNH Catering published on 7 November 2024 therefore correspond to the 12-month period ending 30 Sept 2024, and comprise:
- A D N H CATERING L.L.C.-O.P.C (“ADNH Catering Abu Dhabi”) for the full 12-month period;
- A D N H Catering L.L.C. (“ADNH Catering Dubai”) and A D N H Compass L.L.C SP (“ADNH Catering Sharjah”) trading from 1 April 2024, the first day of full ownership by ADNH of ADNH Catering Dubai and ADNH Catering Sharjah; and
- 30% shareholding of Compass Arabia from 1 July 2024, the date the shareholding was acquired by ADNH Catering Abu Dhabi
The prior year comparative financial information for the 12 months ending 30 Sept 2023 only reflects the performance of ADNH Catering Abu Dhabi.
Given this series of acquisitions by ADNH Catering throughout the year, the Company believes that presenting unaudited unreviewed Proforma Combined Income Statements is the most effective and informative way of communicating its financial results. Unaudited, unreviewed Proforma Combined Income Statements are therefore used in this document showing the impact of the Reorganisation as if it had taken place on 1 October 2023. These additional unaudited and unreviewed income statements have been prepared for illustrative purposes only and are based on available information and certain assumptions and estimates that the Company believes are reasonable.
