Smart Parking Limited (E8Q.F) Earnings Call Transcript & Summary

Welcome to Smart Parking's FY '25 Results Investor Conference Call. With me this morning, we have CEO, Paul Gillespie; and CFO, Richard Ludbrook. The format of today's presentation will be Paul and Richard will take you through the results, referring to slides that we've released to ASX. Following the presentation, we'll be pleased to open the line for questions. Thank you again for joining us. And on that note, I'll hand over to Paul.

Thank you, Michael, and good morning, everybody, and thanks for joining us today for Smart Parking's FY '25 Results Investor Conference Call. As Michael highlighted, I'm joined today by our CFO, Richard Ludbrook, here in Melbourne. And on the call, I'll present our strong results for FY '25, a positive progress report on Peak Parking, the U.S. acquisition we completed in February of this year and an update on our growth strategies across our key markets. After that, Richard will take you through the numbers in more detail. And then as Michael highlighted, we will open the line for some questioning later on. But first of all, if we can go to Slide 2, please. And I'll start with some key highlights from the year. I'm pleased to -- well, first, I'm pleased to announce another set of record results. We delivered 47% growth in adjusted EBITDA and a 37% rise in EPS. We generated $9.5 million of adjusted EBITDA in the first half of the year and $11 million in the second half. I will call out the second half includes 4 months of ownership of Peak Parking. We had a strong finish to the year, which boosted our results and sets us up well as we enter FY '26. So compared to the PCP for '25, revenue is up 42% to $77.2 million. For the first time, we issued over 1 million PBNs, which is a milestone for us and up 21%. Adjusted EBITDA is up to $20.5 million and adjusted margins have expanded 110 basis points to 26.6%. We generated $13.3 million of free cash flow. We are growing strongly, expanding margins and delivering cash flow and earnings. Also, having raised $45 million in February to fund the Peak Parking acquisition, we closed the year with cash on hand of $12.7 million. This means we're well placed to fund technology investments and execute our growth strategy. If we turn to Page 3 now, please. And looking back on the year, what pleased me most about our performance was the disciplined execution of our plan. We invested for growth and delivered higher earnings. We closed the year with 1,799 ANPR sites, that's growth of 26%. Including our non-APR sites in the U.S., our total estate at 30 June is 1,938 sites. We've grown the estate by a CAGR of 31% since 2018 and accelerated this growth to 36% this year. The growth in the estate provides momentum into the new financial year, long-term revenue streams over the life of contracts and higher incremental margins as we scale. I'll remind you, our financial model is very simple. More sites under management will create increased PBMs and in turn, generate higher revenues. We issued over 1 million PBNs in total with strong growth over the PCP in every quarter. The quarterly average number of PBNs is now 260,000. That's up 21% on the PCP. In 2019, the U.K. generated 100% of the group's PBNs. As we've expanded into new territories, the U.K. now generates 73% of the total. SPZ is clearly now a stronger and more diversified company. In FY '25, we delivered good growth in our existing markets with 437 new site additions in the U.K., New Zealand, Denmark and Germany. That's an increase of 45% on PCP. We also continue to invest in our technology leadership. Our priorities are to improve the customer experience and drive efficiencies. We are a technology company at heart. We're enhancing recognition capabilities and reducing the cost of hardware. With our proprietary ANPR and SmartCloud technologies, we believe we have the best parking management offer in the market. We also increased our liquidity. We secured a new 3-year debt facility in November to fund our growth and selective acquisitions. It includes a USD 10 million line of credit and a AUD 10 million accordion facility. With our positive cash flow and strong balance sheet, we are well placed to fund our growth. So overall, we can continue to grow across all of our markets. We are focused on leveraging our technologies into new and existing opportunities, and we are well placed to self-fund our growth. It's a good and strong position to be in. On Slide 4, the successful expansion into the U.S. with Peak Parking was a standout for us in FY '25. Peak is performing well, and we're very pleased with the acquisition. Revenue for the last 4 months of FY '25 is up 16% versus the PCP and EBITDA up 19%. The business is on track to achieve the stretched earnout target of USD 4.5 million by the end of the calendar year. Peak is exceeding the acquisition investment case. The 25% earnings accretion on a pro forma basis that we expected back in February is being delivered. I'll remind you, Peak is an ideal beachhead for us in the world's largest parking management market. It provides a comprehensive portfolio of parking services to businesses and clients across 139 locations, predominantly in Texas, Georgia and Washington State. Since completion in February, we've been busy integrating the business, deploying ANPR technology to upgrade sites and expanding the places where we operate such as Indiana. The ANPR rollout is progressing and the SmartCloud implementation is complete. Add to this, we've recently opened 7 new locations in Indianapolis and continue to look at new states for expansion. Slide 5 is a new slide. We show you the group's high-level results for July 1 month into FY '26 compared to the PCP. As you can see, we've started FY '26 well with ongoing strong growth. Revenues in July were up 73% versus the PCP and adjusted EBITDA is 10% higher. The purpose of showing these results for 1 month is not to annualize the performance to set new higher full year estimates. Remember, our performance is seasonal with the Northern Hemisphere summer being one of our strongest periods. But we do want to demonstrate the earnings power of the expanded estate and momentum from Q4 into FY '25 has continued through into the new financial year. There's still 11 months to go before we close the year and much to do, but the larger estate does have higher earnings power and good momentum, which you can see on this slide. It's a pleasing start to FY '26. On Page 6, we recap on our growth strategy and how we are building scale and leveraging our core technologies and capabilities across new and existing markets. All of our operating territories delivered growth in sites, PBMs, revenues and earnings. The U.K. continued to grow strongly and the contribution from new territories is impressive. Revenue in the U.K. was up 19% to GBP 52.5 million, driven by the new site additions and a broad base of new business wins. Our largest territory continues to grow at strong double-digit rates. We issued 13% more PBMs, which is consistent with the year before and closed the year with 1,355 sites under management, an increase of 19% on PCP. EBITDA increased by 17% to GBP 16.7 million. These are solid results in the U.K. Our U.K. business has a long growth runway. We estimate the town is around 45,000 sites with our market share of less than 3%. We have plenty of scope for growth in our largest business as well as in new territories. There is also a good development on the regulatory front in the U.K. In July, the government released a new industry consultation paper. It's a positive step in the process of setting higher industry compliance standards and which we've been advocating for, for many years. Without preempting the results, the paper is significantly more positive and favorable towards SPZ and the private parking marketplace. We will continue to actively participate in shaping the settings and standards for our industry. As I mentioned, growth in new territories, excluding the U.K., was impressive. In these new territories, we increased sites under management by 72%. We issued over 156,000 PBNs, a rise of 57%, and we generated 77% revenue growth. These results validate the strategy that we can drive growth in the U.K. and successfully scale in our new markets. So what's driving growth in new territories? Our New Zealand business is a highlight. It continues to perform strongly. We're building scale and driving operating leverage. Revenue was $7.4 million for the year, up 62%. Adjusted EBITDA increased by 128% to $3.2 million and margins here are the highest in the group at just under 43%. We now have 238 sites under management in New Zealand. That's up 47% on the PCP, and we delivered 48% growth in PBMs. The business has more than doubled in 2 years. Once again, there is substantial scope for long-term growth. With a TAM of 3,000 sites, we have less than 1% of our addressable market and scope for long enduring growth. In Germany, growth is accelerating. Revenues for the year increased by 60% to over $4 million. PBNs were up 37% and the number of sites under management is now over 100 at 107. It's a good milestone. While we continue to invest, scale is building and it will deliver higher profitability. Adjusted EBITDA for the year was a negative $1.5 million in the year. However, we expect our German business to turn profitable this calendar year and the margins trend upwards towards group levels over time. In February 2024, we started operations in Denmark. The business has performed strongly and generated revenues of $1.3 million in the period. We have the sales team and structure in place. We have 48 sites under management and a strong pipeline in place to convert. In Denmark, there has been some changes in the regulations around PBN issuance since we last spoke. After some discussion with the transport department, they have decided the first notice to keeper or the PBN in the enforcement process should be placed on the car windscreen. Whilst this will add some costs in the early stages, SPZ is well positioned to respond with proprietary technology to the updates and adjust our processes as required. Added to this, we still have access to the driver details database to facilitate the debt recovery process. This is an important point as it drives payment ratio and also provides us with the optimism that the process of the initial PBN issuance will revert back in the near future. This update does not change our growth strategy or ambition in the region as the commercial environment is still very positive. Last month, we established a new business in Switzerland. We see Switzerland as a constructive market and a natural extension of our growing European operations. We've recruited a well-qualified Managing Director to lead the business on the ground and are busy setting up our operational structures to support scale. These are the foundations we build from in every market we operate. We've started to recruit sales and operational people so we can win customers and commence revenue generation. We expect to invest around $1.5 million in this new market in FY '26 and start to generate positive EBITDA contribution during FY '27. So in conclusion, why are we winning in these markets? We provide market-leading solutions and the industry's best practice compliance standards to drive improved outcomes for parking site owners and landlords. We deliver increased compliance, revenue growth and an improved customer experience for our clients. That's why we are growing so strongly in these nascent markets. I'll now hand over to Richard, who can take you through the financials in some detail.

Thanks, Paul. I'll start with Slide 12, where you will see the basic earnings per share of $0.45 per share is up 37% on the prior year. Adjusted EBITDA of $20.5 million rose 47% on FY '24, driven by a significant organic growth and through disciplined M&A. Revenue of $77.2 million, excluding interest, is up 42% on the prior year. And this was a result of a 21% increase in parking breach notices driven by organic growth in sites under management across all territories with the exception of Australia. The revenue includes a $10.2 million contribution for a 4-month period related to the acquisition of Peak Parking. Further detail on the revenue increase is included later in the deck. Overheads are up 24% compared to PCP. This is a result of increased activity, ongoing investment in the newer territories and of course, the acquisition of Peak Parking. The adjusted EBITDA margin increased 110 basis points to 26.6%, which is pleasing given that Germany and Denmark are margin dilutive. You can see on this slide that there are $1.7 million of adjustments to EBITDA, which are nonoperating costs and they relate to the acquisition of Peak Parking. Depreciation and amortization increased following a 26% increase in the number of AP sites and the amortization of intangibles following from acquisitions increased following the acquisition of Peak Parking. The company incurred a tax expense of $1 million compared to a tax expense of $1.9 million in FY '24. The U.K. business is in a tax paying position, and this was partially offset by the recognition of deferred tax asset of $1 million related to losses in New Zealand, which will be consumed in the future. the net profit after tax increased 46%. So we remain optimistic about the outlook for FY '26 given we'll get the full year benefit of new sites added in FY '25. We'll get the revenue from new sites to be added in FY '26 and we'll get a full year of earnings from Peak Parking. The Peak Parking acquisition is on track to deliver greater than 25% EPS accretion on a pro forma basis as was outlined in the February acquisition and capital raising presentation. Slide 13 shows the breakdown of the 42% increase in revenue driven by the 21% increase in parking bridge notices issued. Total PBNs issued for the first time exceeded $1 million in the 12-month period. Revenue from organic growth in the Managed Services business was up $13.8 million, making up 25% of the revenue increase from FY '24. This was from a full year contribution of sites added in FY '24 and a part year contribution from sites added in FY '25. The company added 437 new sites, up 45% on FY '24, taking total AMC sites to 1,799, up 26% on the prior year. We saw an acceleration in the rate of site wins across all territories. Average revenue per parking breach notice for the group increased 2% over the year. In the U.K., there was a reduction in the average revenue per PBN following the adoption of the industry code in October 2024. However, this was fully offset by enhancements in debt recovery processes in H2 FY '25. Peak Parking contributed revenue of $10.2 million related to a 4-month period, and this is up 16% on the pre-acquisition prior comparative period. The company continues with its strategy of expanding into countries where there is a suitable regulatory framework, and the company has recently established operations in Switzerland in early July 2025. Over the last 4.5 years, the company has established parking management operations in New Zealand, Germany and Denmark. All of these businesses are growing strongly. Revenue in New Zealand of $7.3 million increased 62% on the prior period. The New Zealand business has experienced strong inbound inquiry as a consequence of achieving scale in the New Zealand market and has achieved multisite wins for iconic global and New Zealand brands. Germany contributed revenue of $4 million, up 43% on the prior period. The company is seeing an acceleration in growth in sites. And in late FY '25, the business won a multisite contract with 25 new Burger King sites. Revenue in Denmark was $1.3 million, up from $0.1 million in FY '24, and Denmark ended the year with 48 ANPR sites. July revenue was a record at $9.8 million, up 73% on July 2024. And this includes the benefit of sites installed in FY '25 and the acquisition of Peak Parking, which happened on the 28th of February 2025. And Paul will talk more about the substantial runway we have in all markets, which will drive future growth. Slide 14 shows the group has cash on hand of $12.7 million. The company generated adjusted free cash flow of $13.3 million, up 15% on FY '24. The company made a substantial investment in future growth with $8.8 million spent on CapEx and intangible assets. And just a reminder, CapEx isn't included in the free cash flow as it relates to future growth rather than maintenance CapEx. The acquisition of Peak Parking was funded by a successful equity raising of $45 million through a fully underwritten placement entitlement offer at $0.88 per share. The proceeds were used to fund the acquisition, related costs and working capital. The company's strong cash flow, cash reserves and debt facilities enable to continue to explore new growth opportunities. Slide 15 shows the movement in the group's operating expenses. Overheads of $29.6 million include $1.6 million for 4 months related to Peak Parking. The Denmark operation commenced in February 2024 and incurred a full year of costs of $2.7 million in FY '25. U.K. cost increases included a 9.7% increase in the minimum wage in April 2024, further 6.7% increase in April 2025, and there were also increased national insurance contributions. Including the acquisition of Peak Parking, the headcount stands at 310. In FY '26, we'll also see additional costs related to the expansion into Switzerland. Slide 16 shows the group maintained a strong balance sheet and is well placed to fund organic growth, expansion into new territories and further acquisitions. During FY '25, established facilities with USD 10 million revolving credit facility and a further AUD 10 million accordion facility available on request and satisfaction of certain conditions. The facility was fully paid down during July. I'll now hand back to Paul to discuss the business update.

Thank you, Richard. We'll pick up on Page 17, please. Thank you. So many of you have seen this page before, but the consistency of our growth strategy is key to good execution. Our strategy is consistent. We aim to drive organic growth in existing territories, build scale in new countries and complement this with selective acquisitions at accretive prices. We have multiple growth drivers. As I said earlier, our market is nascent. We feel we're at the forefront of driving industry change, raising standards and delivering better solutions to [indiscernible]. Our opportunity is to scale quickly and entrench ourselves as a leading technology provider of parking management solutions across major markets. We can scale through these 3 growth vectors. We can build share in our existing territories by displacing legacy providers with archaic systems. We are demonstrating that capability in the U.K., New Zealand and Germany. We can leverage this expertise into new territories such as Switzerland. We look for a constructive regulatory environment, legacy style competitors and an ability to deploy our technology advantage. We can then take these capabilities, learnings and expertise into new markets and build scale. Our proprietary technologies are highly scalable, and we have proven our ability to buy and integrate well in order to augment our organic growth. Our model is capital-light, cash flow positive with high return on investments. And we will continue to supplement this growth with accretive acquisitions. It's a question of capital deployment, speed to market and risk-adjusted returns. Peak is a great example. We have a good balance sheet, and we'll continue to ensure expansion is low cost and risk averse. On Page 18, I'd like to highlight our execution strength. It's the key to how we scale and transport the business model. This new page lays out the key pillars of our process from site origination and conversion through to technology implementation and regulatory expertise. You can see the depth of the domain expertise we have developed over decades across these pillars. These strengths are a competitive advantage. They create moats around our business and enable us to scale. I'll close on Page 19 with our outlook and priorities and then open up to your questions. In FY '26, we have a positive outlook and expect another year of profitable growth. We have good momentum, as you've seen, and we've started the new financial year well. What are the key growth drivers? Well, there are several that should deliver irrespective of any wider macro volatility. First, we have a full year contribution from the 437 new organic sites we added to the estate last year. That's captive growth. We will get a full year's contribution from Peak, which is growing strongly. That's an additional 8 months of earnings this year. We see further margin expansion from technology implementation in the North American market. The opportunity to upgrade site performance with our proprietary ANPR technology is a key part of the opportunity. We will continue to add new sites. The pipelines are strong. Sales execution will deliver a significant uplift in sites under management across all our major markets. And we will continue to selectively add further acquisitions to accelerate our growth and enhance our earnings. Acquisitions provide the opportunities to leverage our market-leading proprietary technologies and offer customers a differentiated and superior service. What excites me and the team most though about Smart Parking is the opportunity to build a strong international business that can deliver enduring results over the long term. In FY '23, we became a multi-territory business. In FY '24, we proved we could successfully scale in multiple countries and expand our addressable market opportunities. In FY '25, we successfully entered the U.S., the world's largest parking management market and converted growth into higher earnings. In FY '26, we will continue to grow and strengthen the foundations for future growth. We have developed market-leading technology and have over a decade of domain expertise in understanding customers' needs and the compliance and regulatory frameworks in the markets which we operate. Smart Parking is well placed to continue to grow in exciting -- sorry, in existing and new markets for many years to come. We are executing well and on track to deliver our site target of having 3,000 ANPR sites under management by December 2028. That now concludes my presentation or our presentation. Thank you very much for joining. We can now open the lines for some questions. Michael?

Thank you, Paul. Thank you, Richard. Yes, let's start the Q&A session. [Operator Instructions] I can see our first question comes from Owen Humphries.

Just a couple of quick questions. So first one, just looking at your site growth, it looks like it's running at 500 to 600 per annum. Now just looking at the second half and then adding on the U.S. there. Just to kind of confirm, that's now running 6 to 12 months ahead of your plan for FY '28. Is that right or calendar year '28?

We're very pleased with the site acquisitions this year. Clearly, as we take on new territories, Germany started to pick up clearly, which is positive. We're seeing pickup in Denmark. We're seeing New Zealand perform strongly. And of course, the U.K., you can't forget, has had a great year, over 200 new installations. So these things are very positive for us. And that's obviously before we then start looking at Switzerland getting moving, which is only 6 weeks old. And of course, the U.S. to get the ANPR sites moving there. So yes, we're very pleased with where we're at, in terms of site acquisition, and it is accelerating. And provided we maintain that level of acceleration, yes, we will meet that target.

Just on the average PBNs in the U.K. So that benefit from the secondary debt recovery provider that you guys put in place during the year. I guess the question here is what will be the impact to PBNs in FY '26 from FY '25 levels, if that makes sense? What will be the delta on the average PBN?

I think what we're seeing is we highlighted this at the half year quite clearly and also again in May update we gave is that the change in the code of practice late last year in October, we did see a reduction in the average ticket value in the U.K. However, we did say with the new initiatives we've put in place early this year, we did see that we thought that would be offset somewhat. That's actually been more successful than anticipated, which is great, and it will be continuing on into the -- has continued on to the new financial year. So there's a number of initiatives we put in place around the debt resolution process and the debt recovery process which have been successful, and we see that continuing into the future. So in terms of the delta, I can't give you that right now, but it's positive. We see that, that average ticket value will be maintained from where it was as we obviously got it back to pre change of code levels and it's slightly better. We see that maintaining at that current level.

Okay. Good one. And in the past, you've talked about having -- not having too many loss-making regions at once. So obviously, Denmark was a $1.5 million call it drag in last year. Switzerland this year is now flagged for a $1.5 million investment. I guess the question here is, is Denmark expected to turn to -- it looks like there's more cost is going to be required in that region. I guess how many regions are you comfortable with having now given you've got the balance sheet and you're profitable? Just understanding more around the dynamics of how you're thinking about your level of investments in different regions.

I think the Swiss opening Switzerland for us is a kind of natural progression of that as we build out that DASH region, so Germany, Switzerland and potentially Austria in the future. And of course, what we can do in that area is utilize costs we've already built. So the processing team, for example, based out of Germany will also will service the processing requirements for Switzerland as well. So essentially, what we're building in Switzerland is a leader in that area as well as the sales capacity and installation capacity. But again, the installation team that we currently have operating in Germany will also be servicing the Swiss installations. So it's really part of a plan to build out that DASH region. And again, we would look at the same for Scandinavia as well. We're very keen to look at places like Sweden and Finland, but utilize the base we've already built in Copenhagen and Denmark for the processing element and that kind of management and administration. So a bigger picture of building out regions, if you like. Clearly, with the Australian or the Queensland operation that we went back, that's obviously going to save a significant amount of money this year and that we're not making that investment, we've rebound that back. So that opens up the ability to invest that money elsewhere into places like Switzerland and place like Denmark. So yes, I'm comfortable having the likes of Switzerland taking on board. Denmark, we still see that as a very exciting and very profitable area for us. Yes, a few changes, but that's -- we see that short term, and it's not concerning for us at this stage. But also we see Germany turning the corner. I've mentioned during the deck there, we see that breaking even this year and be profitable for the financial year. So I'm comfortable where it's at now. Yes, we have a stronger balance sheet. Yes, we can take on more, but it's a very measured approach. It's a very considered approach. And we only enter markets where we really feel like we've got the right people to do that.

And just a last one for me, more of an accounting question. What was Peak Parking revenue for FY '24 on the -- after the IFRS adjustment?

Can you go to the last slide, please? Stacy Okay. So this shows pre and post conversion. So the pre-IFRS is obviously what we reported in the February capital raising deck. And then after you convert to IFRS, the revenue goes from $9.1 million to $16.3 million and the EBITDA goes from $3.3 million to $4.5 million. So there are some lease sites. So obviously, those costs now go below the line and included in depreciation costs.

You don't have an FY '24 number?

This is calendar year '24 because that's what we obviously presented in the capital raising presentation.

Larry, let's turn to you.

I wasn't sure if you call my name. Just following on from Owen's last question. Just in terms of that $4.5 million post-IFRS EBITDA for CY '24, how does that relate to the $4.5 million CY '25 target? Is that just a pre-IFRS comparison?

Correct. Yes. So it's exactly right. So it's been near USD 5.5 post IFRS conversion, exactly right.

Okay, 5.5. And while we're on the U.S. guys, I think, Paul, you've identified something like 20 sites where you can deploy enforcement. Maybe you could give us an update on to how that's progressing and what learnings you've got and maybe even take a stab at how that might augment revenue, 20%, 30%?

Yes, sure. I mean I think the -- clearly, we took ownership on the officially on the 1st of March of this year. And the initial work to do, Larry, is obviously integration, the finance side of things and getting the peak parking into being part of a public company from a private company. So that takes a bit of time. But you're right, we've highlighted a number of existing sites that we already manage that we can supplement or overlay our technology to try and supplement the income and grow a different revenue line through the issuance of PBNs. We've actually installed -- there's over 10 sites now that are operating. However, what we are doing is testing that system and stress testing the technology to ensure that we obviously access the DNB correctly. We can -- the appeals process up and running. Once we got SmartCloud implemented, we trained the team to actually understand how that process works. And I guess that takes a little bit of time to bed down and get correct. we look back at how this compares with other territory opened, I mean, it took us well over 6 months to issue our first tickets in Germany, a similar time line in Denmark to actually get the process up and running. So I think we're around about right in terms of our time to market and the time to actually install, train the team, recruit additional salespeople that's going to sell this product in the U.S. because it's quite different to what they do today. So I feel like we are on target to deliver a large number of NPR sites in that marketplace. But again, it's whilst we're stress testing the system and sending tickets through, we're actually not issuing them to Motus at this moment in time, but that day is very, very close.

Okay. Great. So we'll keep an eye on that. And a few other questions for me. Just coming back to the U.K. It sounds like you're indicating that the revenue per PBN should be maintained into F '26. Just to understand, can you just maybe go into detail about the specific changes you made in terms of debt recovery and how that lifted the average PBN like what weren't you doing before? And what did you change?

There's a number of things, a number of contributing factors. But I guess the key ones are really around the partners that we use. So as you know, Larry, when we issue a breach notice in the U.K., it's issued at GBP 100. It gets reduced to GBP 60 to paid in 14 days. And that's broadly those are the numbers because some are low and some are lower than that. At 28 days, if the motor still hasn't paid, we then pass that case to a debt recovery partner. They will then go through a process of sending certain letters, trying to encourage motors to pay and get payment from them. And they can -- under contract terms with that partner, they have 12 months to do that, okay, for that particular case. At 12 months and 1 day, we used to go through a process with them which is more legal and they would sort of take some legal action against certain motor -- but what we found was that wasn't that effective over time. And so we've now taken at 12 months of 1 day, we take those cases back and we distribute them to 2 other debt recovery partners. And it's what you call a second placement process. And that's been very successful. We have obviously different partners and different processes and how they go about engaging with motorist, -- there's different ways they can do that. And like I said, that's been more successful. So there's also a number of other areas with our current partner. We've changed the process with them. So that's -- I mean there's a lot of detail behind that, which I won't go into now. But I guess a combination of changing process with current partner, implementing a second placement process rather than a legal process through different partners, those and also going through the back book with the secondary partners has been very, very successful for us. So those are the 2 contributing factors.

Okay. That's great. Last question for me. Just on Germany, just kind of trying to understand the messaging here. breakeven in the second half or profitable for the full year. They're not necessarily contradictory or mutually exclusive. Just wondering if -- what you're thinking there?

We believe we'll be turning profitability in the first half in this calendar year, so first half of the financial year.

Okay, which then would mean that for the full year, you should be profitable as well?

That's correct. Correct.