Facilities by ADF plc ($ADF)

Good morning, and welcome to the Facilities by ADF plc Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Nicola Pearcey, CEO. Good morning to you.

Good morning, and thank you for joining us as we share our FY '25 results and outlook for Facilities by ADF. I'll start with sharing the annual highlights, will then run through our financials, and I'll then conclude with the strategic direction and outlook. By way of introduction, my name is Nicola Pearcey. I'm the new CEO of Facilities by ADF. I'm delighted to have joined the business in January, so very much new to the company. And likewise, Will, our new CFO, has been with us just three weeks. So we're very excited looking forward. Having spent the majority of my career across film and TV, I'm incredibly passionate about content creation in the same way that our producing clients of ADF are. What really attracted me to the business was its brilliant reputation, strong foundations and the really significant opportunity ahead. Throughout my career, I've operated across the full spectrum of business environments from founder-led family run businesses, which is very much my up bringing in my early years, through to independent producing and then right through to the major studios. And because of this, the origins of the ADF family of companies and where the group is today and that scope of growth, it really felt like a natural fit for me.

[indiscernible] Good morning, everybody. So Nicola is the new CEO. I'm a very new CFO at facilities by ADF. Before joining the company, I spent 4 years on the Board at -- Everyman Cinemas. And prior to that, I built my career across the hospitality and predominantly facility sectors. And I was really drawn to ADF for a few reasons. Firstly, it's got foundations of a strong business and a great reputation in the sector. But more candidly, I think there's still a lot to go after, which is exciting. I think there's a real opportunity to build on the strong foundations and drive stronger returns for shareholders. And also having spent the last 2 years very close to the film and TV industry, a space I really enjoy working in, and I'm excited to continue to be a part of.

Okay. So looking forward then and taking a look at our overview. I'm really proud, as I know all of our staff or the fact that facilities by ADF really demonstrates the best-in-class in physical production facilities and services. That's across the entirety of the film and TV industry, including expert on- location hire services from our Location One business and likewise in our excellent portable roadway solutions company, Autotrak. We trusted by global content players and independent producers alike, having delivered services for major globally viewed productions in the past year alone, including Black Doves, Ted Lasso, The Witcher, Gentlemen, Rivals, Young Sherlock, Marvel's Vision Quest and many, many more. I'm sure many of you will have watched at least one of those or we'll be looking forward to seeing them in the near future. Across the group, we operate a modern premium fleet of around 800 vehicles, so make-up, costume, artiste trailers, production offices, technical vehicles and many more. What was really impressive to me when I was first introduced to the business was our NPS score. We have an exceptional score of 89. And if you think about the measurement of that from minus 100 to a 100 to be set at 89, really reflects our customer-facing operational excellence. We have a number of touch points with our clients across each production and each one of those really counts as much as the other, whether it's early in the stage of the quoting process, our account management team or onset with our HODs. Our real ambition is to be a One Stop shop across our family of companies, helping to simplify the production process where it really matters for a client and as such, creating a great competitive advantage for ourselves. Okay. So let's take a quick look at the FY '25 highlights. We helped 311 productions realize their full potential in 2025. That was up year-on-year 5% for us. When dig into the detail, I established that very interestingly, we were only on 20 of those together as three companies. So that really demonstrates great growth potential. Our utilization at 56% improved year-on-year also, very much thanks to our experienced Chair, Russell Down, who made great steps to improve the fleet efficiencies. I think what's probably important to note at this point that this is an ADF scoring. It's very much our goal to ensure that we include this metric across the whole of the business and incorporate it as a key metric for us moving forward, which will be measured and monitored by our recently promoted and excellent group COO, James Long. Our revenue hit GBP 41.3 million, that was up 17%, reflecting the positive performance also of Autotrak in its first full year. Another really interesting stat for me is that our revenue outside of film and TV rose to GBP 3.9 million in the year, that was up 96% year-on-year. That was based at large to the full year of business for Autotrak, but really demonstrates a very interesting potential for us moving forward. Adjusted EBITDA was GBP 9.2 million, up 28%, and I'll defer to Will to talk more to that in a moment. We've mentioned the NPS score, up again, 89. It's an exceptional score, one we're really, really proud of. And I think that's really reflective of my introduction into the company and meeting the staff and just how passionate they really all are in terms of delivering the best service possible. That truly demonstrates that customer loyalty and satisfaction also. Okay. So Will, if you will, to give us more of a financial review.

Thank you, Nicola. So just starting with some key financial KPIs. And I think of this slide as a financial health check of the business and includes some of the key KPIs that we should now focus on as a business. And I think hopefully, it demonstrates that we're starting from a good place. So I'll run through these and then by and large will come to the detail as we review the primary statements over the next few slides. So revenue of GBP 41.3 million, as Nicola mentioned, up 17% on the prior year from GBP 35.2 million. Adjusted EBITDA GBP 9.2 million, up 28% from GBP 7.2 million. Profit after tax reached breakeven versus a GBP 3 million loss in the prior year and net debt fell to GBP 12.3 million, 11% reduction from GBP 13.8 million in the previous year. Leverage was at 1.3x, falling from 1.9x in the prior year and between our target of 1x and 1.5x. And we were free cash flow generative at GBP 0.6 million, down from GBP 3 million in the prior year, which we'll come on to talk about when we go through the cash flow statement. Utilisation, as Nicola mentioned, at 56%, up 50% on the prior year and return on capital employed at 5.9%, up from 3.4% in 2024. So now moving on to the P&L, just running through the key points. Group revenue increased to GBP 41.3 million, an increase of 17% on '24, which was driven mainly by stronger H2 trading, mainly due to the phasing of productions as well as stronger utilisation with H2 revenue of 39% ahead of H1, stronger non-film and HETV revenue, as Nicola alluded to earlier, and the full year impact of the Autotrak business, which was acquired by the group in September 2024. You can see from the breakdown of the core facilities by ADF business was broadly flat year-on-year in terms of revenue with Location One down by GBP 0.5 million, mainly due to the transfer of that business's portable roadways offering to Autotrak. So moving down to gross profit despite pressures on people costs driven by the well-publicized increases to National Living Wage and NICEIC, the group achieved a gross profit margin of 38%, which was a 1% improvement on the prior year. That was driven by the full year impact of the higher-margin Autotrak business and the impact of cost-saving initiatives, including around GBP 300,000 from more active fleet management, generating a reduction in vehicle inspection and maintenance costs. Adjusted EBITDA rose to GBP 9.2 million, an increase of 28% on the prior year and an increase in margin of 2% from 20% to 22%. This was driven by the increases to gross profit margin mentioned previously and further cost-saving initiatives delivered in this part of the P&L, including business rate reductions and management team restructuring. Operating profit increased to GBP 1.1 million from a GBP 1.3 million loss in the prior year, mainly driven by stronger EBITDA and a reduction in exceptional costs and profit after tax reached breakeven, driven by stronger operating profit and a GBP 0.8 million tax credit, primarily driven by the add-back for tax purposes of the revaluation of contingent consideration, which we'll come to shortly when we talk about the balance sheet. So moving on to the balance sheet now, which finished the year in a net asset position of GBP 33.2 million and just to run through some of the key points. Net debt, which is represented by motor vehicles and fleet on higher purchase agreements and is included in lease liabilities less cash at bank, fell by 11% to GBP 12.3 million. Leverage being the ratio of net debt to adjusted EBITDA was 1.3x falling from 1.9x in the prior year. And return on capital employed was 5.9%, up from 3.4% in the prior year, reflecting stronger utilisation of the group's asset base and improved profitability driven by the acquisition of Autotrak and cost savings delivered. And just to touch on that movement in contingent consideration, which has fallen from GBP 6.5 million last year to GBP 3.5 million this year, predominantly due to a downward revaluation of the Autotrak earnout. That business continues to perform in line with expectations, but that initial earn-out was based on stretch targets. And just a final point on funding, post year-end, the group has entered into a new GBP 5 million revolving credit facility with HSBC as announced in early April, and this will support our working capital requirements as the group continues to grow. And now moving on to the cash flow statement. So the group generated operating cash of GBP 9.5 million, down from GBP 11.5 million in 2024. But pre-working capital movements, operating cash flow increased from GBP 6.6 million last year to GBP 8.3 million this year with the large GBP 4.2 million working capital movement in 2024 relating to the Autotrak acquisition. The business generated positive free cash flow of GBP 0.6 million compared to GBP 3 million last year. But again, last year's figure was inflated by the GBP 4.2 million working capital movement relating to the Autotrak acquisition. We saw a net decrease in cash and cash equivalents of GBP 0.1 million, resulting in cash at bank at the end of the year of GBP 2.2 million. And just to recap on net debt, which was down on the prior year at GBP 12.3 million, comprised of those GBP 14.5 million higher purchase agreements, less that GBP 2.2 million cash at bank balance. And finally, just to touch on the Board are not recommending the payment of a final dividend to supporting the group's strategic priorities through organic growth and potential acquisition opportunities. And to talk more about our strategy going forward, I'll pass you back to Nicola.

Thank You, Will. Okay. So taking a look at our strategic priorities. Before we dig into those, I thought it was really important to take a quick look at the market overview, which obviously helps to shape our strategic priorities. So U.K. production spend for the year was up GBP 6.8 billion, that was up GBP 1 billion year-on-year, a truly impressive number and the third highest on record. Inward spend actually represented 85% of this number. I think what's important to note is that these numbers are the first reported numbers from February 2026 by BFI, and they will be further updated later as the year progresses because it takes time to catch up all productions. So if anything, the numbers would improve. HETV represented GBP 4 billion in value, that's up 17% and film was GBP 2.8 billion, up 31%. That is, in fact, the highest spend on record. This really reiterates the U.K. is a leading global hub for production spend, strong tax incentives, world-class infrastructure and incredible crew without a doubt. Further enhanced tax credits formalized in 2025, including the VFX cap and then likewise, the IFTC, the independent film tax credit, provide an increased incentive to spend in the U.K., coupled with new regional funding incentives also. Okay. So let's take a look at our strategic priorities. So first and foremost, our integrated proposition. Our goal, as highlighted earlier on, is to be a One-Stop shop. We are building an integrated group strategy to unify pipeline, sales, our customer proposition and efficiencies. Just one example of that is that as of the start of April, we've already realigned staff members to move into group roles, including a group head of sales operations, who is already helping to combine our pipeline efforts across the group, and it's already having a great impact. This integration will enable us to be more impactful in the industry without a doubt, underpinned by a national to local approach, as you'll see from the map on the right, enabling us to utilize our regional expertise where it really matters most for our production partners. Having been on the other side of the production cycle, I know well how valuable it is to have that local production support. Sustainability is another important factor for many of our key customers. And so we work really hard to ensure we're representing their needs in our approach to be more conscious in our behaviors. For example, let's take a look at location 1. Their fleet is 100% powered by HVO fuel, which is virtually emission-free. We offer sustainability, support and offset a reduced -- sorry, this offset our carbon footprint by 33% over 3 years. Likewise, it's really key for us to ensure that our fleet is accessible to meet the needs of all cast and crew. I wanted to share the next slide with you quickly just to demonstrate how we present our integrated offering to our clients. By offering our roadway solutions, power, water, what else can you see the lighting kits, recycling, in addition to all the battrailers and the management of them, we're really helping to simplify the production process for our core clients, where it really matters most for them. Diversification is a key opportunity for us to target new revenue opportunities, and it's something we're really excited by as a business. Outdoor live events represents -- representing really significant value of the U.K. We plan to tap into our existing client base at Autotrak to monetize our existing assets and capabilities across the rest of the business. This revenue stream will help us to provide increased certainty around seasonal opportunities. So if you remember, I highlighted that nearly GBP 4 million delivery last year for non-film and TV. That demonstrates the opportunity for us across the rest of the business. We're building out strategic partnerships along the production vertical to create more winning ways in addition to evaluating complementary business for acquisition and key growth. These strategic priorities give you an idea of our core focus areas for growth over the year and beyond. And I'm truly excited about our outlook. Our Q1 FY '26 trading is in line with expectations. The year is expected to have a similar weighting to FY '25 with a flurry of productions coming into flow. And that's demonstrated with our combined order book and pipeline combined. So to the 1st of April, we're at GBP 21 million, and that's 4% up year-on-year. It's really clear to see that the U.K. continues to attract strong global investment, world-class studios, facilities and as I've mentioned, phenomenal crews. Our revolving credit facility will also support capital requirements as the business grows. So the strategic priorities focus on customer-centric growth, business diversification and broadening our client base. In conclusion, we feel we are really well positioned with our revitalized team to capitalize on the underlying industry drivers and the diversified marketing -- market opportunities. Thank you so much for your time. That concludes the formal part of the presentation. And at this time, I'll now pause to run a Q&A session.

[Operator Instructions] As you can see, we have received a number of questions throughout today's presentation. And if I may just start off with the first question here, which reads as follows. While there will be no final dividend in respect of last year's revenues to aid further investment, how long are you planning for this policy to continue?

That's one for me to pick up, I think. So in respect to 2025, the Board has proposed no final dividend, and that's to support ongoing investment in our strategic priorities, including organic growth as well as potential acquisition opportunities. Looking ahead to 2026 and beyond, as a Board, we've yet to confirm our dividend policy, but we will communicate this to shareholders as soon as something has been agreed.

The next question we have here reads, how likely are the Trump tariffs to be implemented?

Good question. I think the first thing of note is that the statement relates to film only. We operate very much across film and TV. But the view of the industry -- the industry feeling at large, I would say, is that it's very hard to legally and practically implement 100% tariffs on that global scale. We operate in a global business. If we're talking about film at large and the success of film, we're talking about the global business. We're talking about the global box office. When we're producing, we need one another as territories, you know depending on your story direct, you -- the interest and the joy of filmmaking comes from the benefit of shooting in different locations. I think they really need one another really for that broad spread of great content creation, not to mention, of course, the financing backup provided to get these films and series into production in the first place. Perhaps what's more likely would be a tax credit -- so the introduction of tax -- new tax credits in any one territory is something to be very mindful of. And that's why for the U.K., we just you know need to very much stay on our toes in terms of the attraction of our tax incentives and all of the other components I've mentioned, such as infrastructure, crews, et cetera, et cetera, to make sure that we're as ahead of the curve as possible.

How are you dealing with the rise in fuel prices and the impact of the war in the Middle East?

I think that's probably another one for me. I think, firstly, probably important to say we've not seen any disruption in terms of diesel supply. But that said, our fleet, as Nicola mentioned, can run on HVO, i.e., vegetable oil or diesel. And we have secured a large amount of HVO at a fixed rate, which we can use across three businesses. On pricing, clearly, there has been price pressure, it's quite hard to say, on diesel, but the majority of increases are passed through to customers across the business, which they are understanding and supportive of. And final point, I suppose, we do also have a number of hybrid generators and batteries across our fleet, which have helped to limit fuel usage and reduce costs to some degree.

Yes, that's really where [indiscernible] comes into play.

[indiscernible]

Are you aiming to improve utilisation? And if so, how?

Yes, absolutely. Our utilisation was 56% for the year for our active vehicles in the fleet. I should note that this refers to the ADF core business. So it really is a focus of us to ensure that we're measuring utilisation across the whole of the group, and this will be a key metric for us moving forward. We actively disposed of 5% of the fleet and continue to seek further opportunities to do so as well, especially where it means we can dispose of the least utilised vehicles and ultimately release that cash to be able to help continue to improve the fleet and the core fleet where it really, really matters as well to ensure that we're satisfying customer demand.

With a positive outlook and increasing market demand, but deflated share price and so few players in the U.K. market, what plans and if any, does the company have to take greater market share, find new markets or accelerate growth?

Okay. I'll take that one. So hopefully, the presentation has demonstrated this to a large extent. We do have plans. We do want to improve market share. There are areas which we are quickly identifying as I'm getting to know the business better and certainly will do so over the forthcoming weeks and months, where we feel we can tap more into the business, both across that film and TV spread. I mentioned that we were on 311 productions -- of that 20 were where we were across all three companies and 90 for the 2 of our companies. There's absolutely scope to build our business, therefore, with our existing client base. And so that's something that we're working on just being more intelligent with right from the outset. And that's an area where we absolutely see that potential for growth. Coupled with that is that component I mentioned where we have this really interesting growing client base within the Autotrak business, which has identified areas outside of film and television as well, which we will be exploring. So that we see as another opportunity in addition to other areas which we are evaluating at this time.

You've highlighted a strong pipeline and improving utilisation. What specific indicators give you confidence this recovery is sustainable into FY '27 and beyond?

Good question. Another one for me. Yes, strong pipeline and that obviously is indicative of the ability and the amount of quotes that we are retaining and how much visibility we have of what's happening in the marketplace as well. We're working harder than ever, which is why we identified that new role to make sure that we are on top of it ahead of the curve as possible in terms of understanding pipeline. With my background as well, obviously, having worked in the industry for many years and worked with many producers over the past 10, 15 years, working and building -- further building those relationships in addition to at a wider level with the streamers and studios. That understanding of what we can see coming through is keeping us busy in terms of that pipeline and ability to quote. I think the other thing is that content is king, no matter what the streamers and the studios want their success. Even if we look at the potential consolidation with the Paramount deal, for example, there is a commitment within that, that there will be 30 theatrical films a year. That's a really great number. And that's something that gives you that continued confidence despite the constant changes in the industry.

Is there potential for geographic expansion beyond the U.K?

It's an interesting question. Being so new into the business, it's not something that we are -- it is top of the radar right now, but it is a consideration to the extent that productions are often coproductions or productions are often shot in multiple territories, as I mentioned. So it's not something that we should be blinkered on in terms of it being U.K. only. We're very aware that productions are international, as I referred to earlier. So mindful of and understanding that the world in which we operate is an international business.

The company had previously put excess fleet assets in storage and was undergoing a sales process for some of these where possible. Can you comment on the progress here and how close you are to the rightsizing the fleet asset base?

I think that's probably one for me. We are continuing to look at disposals where appropriate and a small part of the fleet is being actively marketed at the moment. But I think we also want to ensure that we've considered the opportunities for the fleet and in equal measure. So that's something that we'll be working on actively in our first few months in the business.

How much further optimization opportunity remains in the fleet and cost space?

Again, I think. I think it's very difficult to put numbers on it at this early stage. But what I would say is that there are certainly more opportunities in both of those areas. And I think hopefully, we'll be able to say a bit more about that when we speak to you at the interim.

What kind of opportunity are there vertically, music festivals, et cetera?

So this refers to one of our strategic priorities, in fact. So Autotrak already operates in this space. So as you can imagine, with some of the amazing locations you will find for music festivals, let's look also at sporting events. I mean any outdoor-based event essentially agricultural shows also. Those -- just those three combined demonstrate a whole wealth of production spend in the U.K. And as such, that's why Autotrak is active within it. If you look at those types of events also, there is absolutely a value for the Location One business in terms of that shoot hire expertise, that on location expertise coupled with the potential for ADF that is certainly something that we are driving forward as one of our strategic priorities. We don't have that extensive analysis having only just into the business. So it's just something that we know is an opportunity for us that we want to tap into as soon as possible.

Is Autotrak likely to continue to attract growth investment in priority to the rest of the business?

It's a great question and probably one that I would ask as well off the back of the margins that the business delivers. So it's a very strong business. The team that run it are a great business who originated it and have built it to what it is today and credit to them. I think that off the back of the success that they've achieved today and how well it integrates within the overall business, it is absolutely something that is something for us to further explore. I think perhaps probably just to highlight right now for Will and I been so new to the business that the core priority is obviously to get everything in a great place of what we have existing today, that organic growth is absolutely a key priority, but it's a great question if I -- if you're looking at it and exploring then makes total sense.

What are the key opportunities to accelerate Autotrak growth?

I think hopefully pretty much answered that. I suppose in terms of that extension of growth, it's working more closely with our sales team. It's looking at the utilisation levels as part of that as well. Are we capping out because we are -- all of our panels are out and on jobs. Are we effective with the jobs that we have? Certain jobs may bring more value than others. So it's being effective with the client base, which we already have, but then also looking at what else. So if our utilisation is incredibly high, what can we do about that to build that business further out. And just really expanding on our national reach as part of that.

And we've talked about the sort of growth in non-film and HETV fee revenue as well. And Autotrak is absolutely a key player in that part of the business. So I think that's another continuing opportunity for them.

Yes.

The last question we've got here reads, how was the premium star artist suite mentioned at previous meetings received?

Great question and very timely. It's about to launch it. In fact, I think it was suggested that it might be available slightly early, but I'm delighted that it's launching on my watch and really excited to get it out there. So we've introduced it to a couple of clients already who have been very joyous about it. So we cannot wait to get out there. I think it will be a storming success and that the talent on the other side will be very happy with what they receive.

We just had one final question come through. You continue to mention potential acquisition. How would these be financed bearing in mind existing levels of financial gearing?

It's a tricky question because it very much depends on the acquisition in question. I think maybe what we want to address here is that the new revolving credit facility that we took on in April is not designed for that purpose. We're not planning to fill that up with that and go and buy other businesses. That is really to service the group's working capital requirements as we go forward and we grow. But on a case-by-case basis, it will vary, I think.

That's great. Thank you both for answering all those questions you have from investors. And of course, you can -- the company can review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, Nicola, could I please just ask you for a few closing comments?

Yes, absolutely. Thank you so much for your time. It's great to be able to answer the questions that we've been put forward. And hopefully really demonstrates the excitement that Will and I have and the teams across the family of companies have in terms of wanting to grow the business. We've covered a lot of ground today. I'm really confident and hopeful that you will agree that we have a really truly exciting future ahead of us. Thank you so much for your time.

That's great. Thank you for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, and I'm sure it'll be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good morning to you all.