Smart Parking Limited (SPZ) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to the Smart Parking FY '24 Results Investor Conference Call. As usual, I have Paul Gillespie, CEO; and Richard Ludbrook, CFO, with me. Paul and Richard are going to present to the slides we've released to ASX this morning, and then we'd be very happy to take Q&A. Thank you for joining us. And on that note, I'll hand over to Paul.

Thank you, Michael, and good morning, and thank you for joining us for Smart Parking's full year results FY '24 call. Today, as Michael just said a moment ago, I'm here with our CFO, Richard Ludbrook, and so will take you through the highlights of the presentation that we've released to the ASX this morning. So if we can kick off and go to Slide 2, please, and let's start with some key points. First, we're pleased to deliver another set of record results. We delivered 28% growth in adjusted EBITDA and a 40% rise in free cash flow. We delivered strong growth in our U.K., New Zealand and German operations. We completed 2 acquisitions to build scale, and we expand into a new -- into a new attractive territory, which, of course, is Denmark. As I said before now, SPZ is a fast-growing, profitable and cash flow positive company that can scale in large markets and self-fund its organic growth strategy. So if we compare with the PCP, revenue is up 21% to $54.3 million; adjusted EBITDA was up 28% to $14.7 million; and margins have expanded by 150 basis points to 27%. We're managing our profitability. We're driving margin expansion and self-funding our growth investments. We generated $12.2 million of free cash flow, including acquisitions, CapEx and technology investments, we spent $13.5 million and closed the year with cash on hand of $7.2 million. The growth investments included $600,000 of setup costs in Denmark, where we start to generate revenues soon after setup due to some early contract wins through some great hires. We spent $5.2 million on growth CapEx to support our organic expansion and a further $7.7 million on 2 acquisitions in the U.K. and Germany that added scale and earnings. It is a heavy investment year, which will set us up well for the FY '25 and beyond. We look now to Slide 3, it's easy to ask or you might ask, what's driving these record results? Well, but simply, it's a continued disciplined execution of our growth strategy. We've said for many years that we know what we want to achieve as Smart Parking, the team gets the job done and everyone pushes the business forward in the same direction. Our strategy is to drive strong organic growth in existing territories, build scale in new regions and complement this with selective acquisitions at accretive prices. We delivered revenue growth across the group, with the U.K. up 21%, New Zealand up 56% and Germany, up 519%. The increase in sites under management is a key revenue driver. We closed FY '24 with 1,424 sites under management -- 1,424 ANPR sites under management, which was a growth of 28% compared to the PCP. The estate of sites has grown at a CAGR of 31% since June 2018, and we have a clear line of sight on achieving our target to have over 1,500 sites under management by December of this year. This target seemed very ambitious when we set it, but it's now a very strong prospect for us to everyone this number well ahead of time. So what's next, you might ask? We certainly expect further growth across all of our operating territories, but we're also enable to look to optimize our portfolio in order to enhance our yield. PBNs increased by 22% on PCP. We averaged 214,000 PBNs per quarter this year, which is an average increase of 22% on last year. U.K. accounts for 78% of our PBNs with 15% in New Zealand and 8% in Germany. We expect the mix will continue to balance, as the new territories expand. During the year, we integrated the Local Parking Security acquisition in the U.K. and the ParkInnovation deal, which was completed in Germany in July of 2023. We will continue to make disciplined acquisitions to supplement our strong organic growth. Added to this, we are in advanced negotiations to establish a $10 million debt facility to provide additional capital as and when these opportunities present themselves. We commenced operations in Denmark in February and have already started issuing PBNs and generating revenue. I will talk more of this case study later in the deck. However, it's a great example of how we can leverage our market-leading technology, deep domain expertise and execution capabilities to quickly and successfully enter new territories. It sets us up very well for entering potential new markets in the near future. And since we last reported our results in the half year, we've made good progress on researching and evaluating some of these new opportunities in Europe and the U.S. We spent a lot of time on estates, in particular. We've invested in understanding the regulatory frameworks with site owners and their needs and the incumbent provide us. There is more work to do on this, but I will say, we have significant interest, and we are firming up the business case for a carefully controlled market entry. Finally, on this slide, I'll call out that we've started FY '25 strongly. July revenues up is $5.5 million, which is up 34% on the prior year. We have many more sites generating revenues and a higher quality of revenues given the broader geographic mix across the estate. We expect FY '25 to be another year of profitable growth and positive cash flow. So it's encouraging. We started the year with a record month. On Page 4, we highlight our progress in building scale in our selected markets. Our focus is on building our business in existing territories and then from this strong base, leverage our core technology and capability into new territories. 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. We have growing businesses in all territories outside of Australia. Revenue in the U.K. increased by 21% to $44 million. We issued 14% more PBNs and closed the year with 1,124 sites under management, an increase of 21% on the PCP. More sites under management will create increased PBNs, and in turn, generate higher revenues. Our financial model is simple. The U.K. is clearly our largest market. It accounts for 80% of our sites under management and 81% of the group's revenue total. However, our New Zealand business is performing very strongly. Revenue was $4.6 million for the year, a lift of 53%. Our compelling offer is resonating in the market. And I've said before, we are displacing and disrupting the industry there. We have 162 sites under management, which is up 93% on the PCP, and we delivered 70% growth in PBNs. We've captured less than 1% of our addressable market. There is enormous upside for the future. As some of you will remember, we suspended our Australian operations last year. There have been constructive developments on the regulatory front, which I'll talk to later in this deck. In Germany, we're making good progress, the largest market in which we operate today. Revenues for the year increased by 519% to $2.8 million. PBNs increased by 477% and the number of ANPR sites under management was up to 67. The team over there is operating well, and we've a brand that stands for quality and compliance. Our priority is to drive scale and operating leverage. And finally, as mentioned a moment ago, in February, we started operations in Denmark. This is another constructive market for our ANPR technology and operational processes. We have the sales team and structure in place. We have 5 sites under management, and we've signed 11 contracts to date. Revenue generation has commenced and with the market potential of 10,000 sites, it's over 3x the addressable market in New Zealand, so we expect growth for many years to come. I'll now hand over to Richard, he can talk you through some of the financial detail.

Thanks, Paul. I'll start with Slide 7, where we will see the group achieved record adjusted EBITDA of $14.7 million, up 28% on FY '23. This was a result of an increase in revenue from organic site growth and revenue contribution from acquisitions during the year. Revenue of $54.3 million excluding revenue in the new Denmark territory and interest income is up 21% on the prior year. This was the result of a 22% increase in parking breach notices driven by organic growth in sites under management across all territories, with the exception of Australia, where the Queensland operations are currently paused and the contribution from acquired businesses. Further detail on the revenue increases included later in the deck. Overheads are up 16% compared to PCP. This is a result of increased activity, ongoing expansion into the new territories and the acquisition of ParkInnovation and Local Parking Security. The adjusted EBITDA margin increased 150 basis points to 27%, which is pleasing given the newest territories are margin dilutive. You can see on the slide, there are $1.7 million of adjustments to EBITDA, and these are detailed in the supplementary information on Page 25. The amounts excluded from adjusted EBITDA include, firstly, foreign exchange losses of $0.2 million, and this is a gain of $1.2 million in FY '23. Secondly, $0.7 million of expenses comprising $0.4 million of professional fees related to valuation of 3 acquisition opportunities in the U.K. and Germany and 2 of these into that proceeding and $300,000 of professional fees related to regulatory matters in both the U.K. and Queensland, and Paul will provide a regulatory update later in the presentation. Thirdly, the $0.6 million EBITDA loss related to the new Denmark business, which was launched in early 2024. While its early days, Denmark is performing in line with our expectations. There was also $0.2 million of spend related to evaluate the new territories, including the USA, Scandinavia and other European countries. On the back of this research, we launched the Denmark. We will continue to look at new territories that are suitable for the SPZ commission model and have the right regulatory framework. Depreciation and amortization increased following the installation of an additional 302 organic sites and D&A related to acquired businesses. The company incurred a tax expense of $1.9 million compared to a tax benefit of $0.2 million in FY '23. FY '23 included the benefit of tax losses for the U.K. companies and New Zealand and the U.K. business is now in a tax paying position. The company has a further unrecognized deferred tax assets of $2 related to losses in New Zealand, which we will recognize in the future. The net profit after tax and the basic earnings per share were impacted by the adjustment to EBITDA, as detailed earlier, the higher D&A and a $2.1 million increase in the tax expense. Slide 8 shows the breakdown of the 21% increase in revenue driven by the 22% increase in parking breach notices issued. The U.K. parking management revenue increased by $6.4 million or 21%. The U.K. company restructured the sales team in early FY '24 with a benefit that they're showing in H2. The U.K. business added 75 sites in H1 and 109 sites in H2, bringing the total U.K. sites to 1,124 at 30 June 2024. The strategy of growing the number of customers with multiple sites is proving beneficial. The site portfolio will continue to be optimized to increase yields. The company continues with its strategy of expanding into countries, where there is a suitable regulatory framework. The company established operations in Denmark in early 2024. And in the last 3.5 years, the company has established parking management operations in New Zealand and Germany. Both of these businesses are growing strongly. Revenue in New Zealand of $4.6 million increased 36% on PCP, with Germany, excluding the acquisition, contributing revenue of $1.4 million, up 215% on PCP. The rate of site growth in these territories is accelerated with New Zealand and Germany, adding 118 sites in FY '24 compared to 89 in FY '23. Historically, the majority of New Zealand's parking management contract is for 3 years, and maybe that the company increased the term for new contracts from 3 years to 5 years and approximately 30% of the New Zealand's estate is now on 5-year contracts. The New Zealand business has increased its PBN charges for new sites from $65 per PBN to $85 per PBN, and we've also been transitioning the existing estate from $65 to $85 and approximately 70% of the New Zealand estate is now at the higher breach value. Australia up until the cause and February 2023 was growing strongly, while the company continues to enforce manually on Queensland site, revenue reduced from $1.4 million in the PCP to $70,000 in FY '24. The 2 acquisitions contributed revenue of $2.6 million in FY '24. Just to remind you that we acquired ParkInnovation in July 2023, which is a manually operated German parking management business and Local Parking Security, a U.K. parking management business that includes 68 ANPR sites and a portfolio of mainly the operated sites. July 2024 revenue is a record of $5.5 million, up 35% on July 2023, and obviously, this doesn't include the business of new sits to be installed in FY '25. Paul will talk more about the substantial runway we have on markets, which will drive future growth. Slide 9 shows the group had cash on hand of $7.2 million. The group generated record adjusted free cash flow of $12.2 million, up 40% on FY '25. The strong cash generation and cash reserves have enabled the business to invest, which will lead to future revenue and earnings growth. The company made a substantial investment in future growth with $12.9 million spend on CapEx and intangible assets and the 2 acquisitions I referred to. Just a reminder, CapEx isn't included in the free cash flow, as it relates to future growth rather than maintenance CapEx. The company's strong cash flow enables us to continue to explore new growth opportunities. Slide 10 shows the movement in the group's operating expenses. Overheads of $22.8 million includes $1.3 million related to businesses acquired during the year. Staff previously engaged in the technology business were redeployed during the year into the fast-growing New Zealand parking entry business. Excluding the 2 acquisitions and the Denmark's data [indiscernible] by 5% in FY '24, and total head count is now 231 and that includes head count from acquisitions and in Denmark. Slide 11 shows the group maintained a strong balance sheet and is well placed to fund organic growth, expansion into new territories and further acquisitions. As of August, the company is debt free. Annual repayments, including interest, were $1.1 million. SPZ is in advanced negotiations to establish debt facilities to fund international expansion and complementary M&A. We remain optimistic about the [ outcome of the ] business given the potential in the core markets and continued expansion into new markets. I'll now hand back to Paul to discuss the business update.

Thank you, Richard. Okay. So we now look to Slide 13, please. At Smart Parking, we're planning for long-term growth. We have a great opportunity, significant competitive strengths, a highly capable team and the ambition to succeed. As we show on this slide, we have multiple growth drivers. We feel we're at the forefront of driving industry change, raising standards and delivering better solutions to site owners. Our opportunity is to scale quickly and entrench ourselves the 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 our CAC systems. We're demonstrating that capability in the U.K. and New Zealand. We can leverage this expertise into new territories such as Denmark. We look for a constructive regulatory environment, legacy-style competitors and the ability to deploy our technology advantage. There is scope for many years of growth in Germany and Denmark alone. We can take these capabilities, learnings and expertise into new markets. I have to say, the more time we spent in research and new opportunities, the more IT markets that are open and viable for us. For example, there are around 40 states in the U.S. that are potential growth options for us. If we just look at 2 of those states, Texas and Florida, for example, each one is a significant market with huge opportunity. Our task is to be careful, considered and selective and to manage execution risk well. We have a track record of doing that, so that we will stay true to our playbook that has worked so well for us in the past. And we can supplement this growth with accretive acquisitions. It's a question of capital deployment, speed to market and risk-adjusted returns. We have a capital-light model, a good balance sheet, and we'll continue to ensure expansions, low cost and risk averse. Ideally, we've entered the U.S. market with a small acquisition to prove -- provide a base that we can grow from. We will be patient and careful. We'll continue to evaluate the opportunity and how best to add value for shareholders. Let's look now to Slides 15, 16 and 17 that show the operating metrics that we update shareholders regularly with. As highlighted earlier in the presentation, we're seeing growth across all metrics. To me, these slides highlight the importance of an effective sales strategy and execution-focused operational teams. As mentioned earlier in the presentation, the business model is simple. We win the sites. We operate them effectively to create the PBNs, generate revenue and manage costs carefully to drive operating leverage. We can then reinvest the cash flows at a high rate of return in order to maintain our market position and our technology advantage. Slide 16 shows that we can generate consistent growth and succeed in multiple markets. We have the ability to open a new territory and generate revenue relatively quickly. We're conscious of not overextending ourselves and risking execution. We have built operating systems, infrastructure and bench strength to manage this risk. We are well placed to scale. Page 17 shows the scalability coming through and the increasing geographic diversification of our revenue mix. This reduces the risk to any one regulatory environment and improves the quality of our revenues. If we look to Slide 18, this shows more detail on Denmark and provides somewhat of a case study. It's fair to say we're pleased with the start we've made in this territory, and we're looking forward to discussing the progress in more detail later in the year. However, as mentioned many times, Denmark has a good regulatory and commercial environment for SPZ, and we're confident this will be success -- confident this will be a successful market for us for a long period of time. Slide 19 provides an update on the regulatory situation in both the U.K. and Queensland. We take Queensland first. After a round table discussion with the Minister and the Department of Transport and Main Roads or TMR, there is a commitment to draft a code of practice based on the U.K. code, which will be reviewed by the minister in September. As we've said many times, we're committed to work with the Queensland government and the TMR to support the implementation of the code of practice that will raise standards, as soon as possible. In the U.K., we're having positive ongoing dialogue with the new ministers and the department responsible for parking. From the 1st of July, the British Parking Association or the BPA and the international Parking Community, the IPC, have come together to provide a single code of practice. We strongly support this code. It is designed to raise standards and bring both industry associations into line. The new code has been well received by the department, has also attracted some significant positive media interest. We will, of course, keep shareholders informed about the developments, as they evolve, but it's fair to say the regulatory outlook is positive and constructive. We move now to the final slide on Slide 20, I'll wrap up with some comments on our FY '25 priorities. As I said, we expect another year of profitable and positive growth -- profitable growth and positive cash flows. We started FY '25 strongly with 34% revenue growth in July versus the PCP. As of today, we have 1,465 ANPR sites under management. So you can see we have continued our growth momentum since the end of the financial year. Our short-term focus is to deliver the 1,500 sites by the end of the year. We want to demonstrate again that we do what we say we will do. We have good forecast and clarity in the business, and we execute well. Reflecting on the bigger picture, we are at something of an inflection point in the business, and the board and management team recognize we are entering a new and larger growth chapter, as well as continuing to grow in our existing territories, we are well placed to selectively expand into new larger markets. Building scale in multiple markets will significantly broaden our base, strengthen our business and increase our earnings power. With less than 1% capture of our total addressable market today and the timely opportunity to expand the TAM elsewhere, we have years of growth ahead of us. And finally, we will continue to complement our organic growth with disciplined and selective acquisitions. We can consolidate the industry, raise compliance standards, improve outcomes to site owners and generate good returns to shareholders. With our balance sheet and positive cash flow, we are well capitalized to take advantage of organic and inorganic opportunities, as they arise. So that concludes our presentation today. Thank you for joining. We'll now open the lines for some questions. You can ask questions via the Zoom chat, or you can unmute yourself and ask a question, but I think we have -- yes, so yes.

Okay. So the first question is to Paul. Will SPZ's direct focus from the future U.K. acquisitions to other markets and the interest of avoiding further concentration of lining stores to the U.K.

I think ultimately, we evaluate every deal on its merits, okay? And I've said this many times that we look at acquisitions to see what is it actually going to do for us? Is it going to make our business better or can we make that particular business better? If the answer to those questions are yes, then we have a closer look and try to go ahead, regardless of where it is. Clearly, a big part of what we're trying to do is build a portfolio of territories in which we operate. Obviously, we have 5 today. We have a focus of where we want to get to. But the more we spread that portfolio, and of course, lower the risk. Some time ago, I would have said, yes, we need to probably diverse away sort of diversify ourselves away from the U.K. because of regulatory, some regulatory challenges. But they seem to be under control, and we have very positive ongoing dialogue, as I mentioned a moment ago, around the regulatory environment. So it really doesn't matter where these are. Clearly, we want to grow into new territories. But if there's an opportunity in the U.K., that is a good one for us. it's positive, is going to make our business better, and we're going to make that particular business better than we would clearly look at it. But like I say, it's each deal, each opportunity on its merits.

Yes. So the next question is from [ Stella Wang ] says, since the launch of the U.K. new private parking code of practice, has the company seen much positive or negative impact operationally. For example, the new grace period may be easy supported by offenders. There's a few observations that the U.K. per site EBITDA are slightly down end of H2?

I think first of all, the new code, I think, is incredibly positive. Let's start there. Having both the trade associations working together to deliver a single code of practice is really what the government has been talking about for some years, and the industry has delivered it. So from that perspective, it's positive. In terms of the 10-minute grace period, I mean, we've had a 10-minute grace period on our sites for many, many years, and most of our competitors do the same thing. I think there's very few [ competitors, who run at a lower grace period for different reasons. So I think that's somewhat of a misnomer that has gone out into the media. But yes, most larger operators, people like ourselves, will operate at that 10-minute period, and we've been doing that for many years. So no, we haven't seen anything change from an operational perspective, Stella. In terms of the EBITDA question, do you want to cover that?

Yes. And any change with margin potentially is skewed slightly by obviously the acquisition of LPS back in March.

Yes, plus the seasonality in the second half. The third quarter, Stella, in the U.K. is always the most challenging. In fact, [ Stacey ] (sic) [ Stella ], if we can go to Slide 15, I think it is or 16 maybe you'll see the way the PBNs fall [indiscernible] are perfect. You can see by quarter, clearly, Q3 is the lowest quarter. And that's heavily -- heavily weight towards the U.K. because January, February, March in England, for those who don't know, is pretty dark, pretty wet and pretty cold. So you don't get as many car journeys or car movements in that 3-month period, as you do say, for example, in Q4, which you can see here, which is significantly higher coming into the summer months. So no, I think what you're seeing is probably more of a seasonal adjustment, as opposed to any change from the code, which I see is only positive, and we've had really good positive feedback from MPs, from the ministry, as well as some good positive media coverage, which makes a change, which is good.

Okay. So another question from Stella, thanks for the comments on the key control that we see through. Regarding the plan for the year entry, how much of that can be covered by the $10 million debt facility that's planned?

It really depends. I mean, look, I guess, Stella, we're telling people we're keen to do this. We won't do it, and we're going to be careful about it. Right now, we don't know, it's still quite early days. We don't have an opportunity on our desk, so to speak, that's going to open up for us there. We're keen to look at entering that market through a potential acquisition because we believe we want to sort of retain some good local knowledge. Entering that environment organically is going to be challenging, but we're still evaluating and tossing opportunity to do what's the best way forward. But yes, I mean, look, the reason for trying to have a debt facility on hand is gives us optionality for as and when these opportunities arise, that we're looking to use debt to fund our growth rather than just equity. So from that perspective, I think at this stage, it's still very early days, Stella. Like I say, we're being careful, we're being considered, and we're just looking at this in a measured way to find the best possible opportunity. But of that money, let's wait and see to see what comes up.

Okay. So the next question is from [ Maxell ]. While the number of sites and PBN issued continues to grow, PBNs per site has declined albeit at a slower pace. Is there a particular reason behind this, smaller sites, timing of acquisitions or a cautious impact with the parliamentary review. So I can answer that. So in terms of the U.K., we're not really seeing any change in terms of the PBN issued per site. You've got to remember that we did take on 68 sites, as part of the LPS acquisition, so that might skewed about it slightly. We had seen a reduction in the average tickets per site in New Zealand. That's more a reflection that in FY '23, we had a relatively small portfolio site, and we had a couple of very good [indiscernible] sites. And obviously, we've added a lot more sites in the last 12 months. And so, the average has gone down. Okay. Yes. Okay. James Tracey has a question. Do you want to unmute [ yourself ] James?

Yes. Thanks, Richard. Thanks, Paul. It's James from Blue Ocean. I just wanted to get a bit of color around the acceleration in revenues that you've seen. You talked about 34% growth in July, that's the 21% over the full year. Could you just contextualize that around the rate of site openings?

Yes. I mean, I think we talked a lot at the half year about how we restructured the U.K. sales team early in FY '24. We brought in new Sales Director in June of '23. So obviously, come July or start of financial year is making some changes. And so, we've definitely restructured that team, and that had an impact on us, I would say, in Q2 of our site acquisition. However, since then, we've seen a real uptick in growth in sales and sites, and so much so, we had a record -- record installation months in both May and June, both doing 29 new sites installs and gone live in the months in both May and June. So that is sort of validated the changes we've made, so to speak, and was the right thing to do. And I think Richard pointed out, we did 75 sites in the first half in the U.K. and 109 in the second half. So again, the changes we've made have really sort of come to the fall. So I guess, what you're seeing there, James, is, again, the sales strategy working, right? The sales team doing what we said we're going to do and us executing on that plan. So yes, really, it's a -- and that's really what's seen us going to July with a good revenue, a record month, $5.5 million of revenue, as I say, up 34% on the PCP. So it's that continued disciplined execution of the sales strategy that's going to see us continue to grow. That's the biggest part of our strategy, of course, in the new territories and the acquisitions off the back of that. But it really is what we expect to see over the next 12 months across all territories is another further expansion of that organic growth.

And is that -- you mentioned 29 sites, I think, per month over the past 2 months in the U.K. If you multiply that by 12, it's close to 350 sites. I think you did 184 organic sites last year. What's the sort of annualized run rate of U.K. sites do you think you could do?

Again, these things obviously can fluctuate, right? Because your sales have a good month and some not so good months. But what I would say to you is that the team are focused on exceeding that 200-site number, right? That's the key focus for that sales team in the U.K. In New Zealand, we're looking at somewhere between 80 and 100 sites, yes. And in Germany, I expect to see more. We saw some significant change in Germany that we believe we'll see a higher level of sales performance. And already, Denmark has opened up really quite well since February, right? We've signed 11 deals or 11 contracts. We're generating revenue. Only 5 in the live so far. So again, as that operational execution gets up to speed, you'll see -- I think the sales will go a bit quicker. So from that perspective, you're probably looking somewhere between 350 to 400 sites across the group with the new territories really starting to come into their own and get that sales momentum going. And let's not forget, we're going to places, where we're building a brand, right? So whilst we're -- if you talk to a German customers and Danish customers, they don't really care too much about what you've done in the U.K., they want to know what you've done in country and location. They want to look for some sort of track record. So proving that out is challenging, but we're doing it. And the teams are doing it very well. We're starting to see that really start to come through. So it's a pleasing result to see that the sales strategy coming to pass, so to speak, and actually we see some real fruit from our [ levers ].

And just a final question for me. How close are you to break even in Germany?

Very close. Not far off at all, James. We expect to be breakeven quite soon. Germany is a -- like I said, it's a challenging market, but it's absolutely where we want to be because of the size of the opportunities and the size of the market there. Like I said, we've made some personnel changes there recently, which I think is very positive or will be very positive for the business. I think we're going to see an uptick in our sales performance in that part of the world because of the changes we've made. But yes, I'm excited about what we can achieve there. And like I say, it's the right place to be because of the size and the opportunity that's presented to us that allow -- that will allow us to grow for many, many years. So that's the reason why we're there.

Okay. Question from Annabelle. Can you talk historically about franchise opportunities, how much of the organic U.K. site growth is from an existing expansion versus new customers?

Yes. Good question. I mean, the majority is new customers, and we really focus on new business. Having said that, I think I've talked a lot at the half year about acquiring a customer by the name Evri. Evri are a parcel delivery business, kind of like DHL or another sort of large delivery company. They have over 500 locations around the country, and 140 of those have parking facilities they want managed. Now we've already got, I think, 15 sites installed with them. Obviously, won the contracts late last year. But that's a customer that we will be growing for a long period of time. By the same token, we've managed to access successfully McDonald's in a couple of locations, in particular the U.K., in Germany and also in New Zealand. So I do see a number of sites coming from that particular customer. I mean, that fast-food area, we've obviously done well with KFC in the past. With Burgerking doing well in Germany, we've got 7 sites of Burgerking there. So from that side of things, I do think we'll see a bit more expansion from those sorts of customers, which is pleasing. So -- but again, the focus that's our [ current ] management team, they grow -- they work on growing that customer, those individual customers. But the majority of the sales team, the direct sales team, they're out there winning new business. And that's the focus together with new customers, longer contracts and signed up for a long period of time. Do we have any more questions?

Just one more for me, Paul, as well. Could you talk about Queensland. You've got the comment in there that you're talking about a draft code of practice modeled on the U.K., the government has indicated, that's what they want to do. Does that mean that you'll be able to resume ANPR and if so, what's the timing of it?

That's the objective, yes, James. So I guess, the positive thing, as I highlighted in the presentation, the government and the TMR, Transport and Main Roads department, invited us to a round table meeting. So there was TMR, the ministry in charge, as well as representatives from the industry, so ourselves, 1 or 2 of our competitors were there, as well as some of our customers, in fact, came along, which was incredibly positive and productive. And off the back of that, they've committed saying, we understand the code of practice that you have in the U.K. and they basically wanted to implement something similar into Queensland, right? In order to raise the standards to ensure there's a essentially rules of engagement of how parking operators will run car parks or run these private parking areas. Now of course, ANPR is a big part of that. And of course, for us, we're obviously really pushing that because that's our core business, it's the ANPR technology and the ability to provide lots of different products off the back of that to our customers and the benefits that come with it. Timelines, I mean, they've committed to well, getting that code of practice to the Minister in September for review. So I suspect them to do what they said, said they were going to do, which is provide that to Minister. Will we get something before the election, which happens in October, I don't know, probably not. But I think certainly before Christmas sort of a much better idea of whether we're going to be open up there or operating again accessing that database and whether it's going to happen before Christmas or just after. But I feel, it's an incredibly positive step forward. The information put forward, it's incredibly positive that they want to adopt same code of practice or essentially something similar to the U.K. because that's a mature market. It works. It keeps operators honest about how they operate, how they're going to manage car parks. So I'm positive about a good outcome for us. Timing is unsure at this stage, James. But I think we'll know a lot more before -- just before Christmas.

Sorry. Just on Denmark as well. I understand you're issuing digital tickets instead of [indiscernible] in the mail, is that having any impact as well?

Absolutely. We've worked hard on our technology. And whenever we enter a new market, there's going to be some changes we have to make to the technology, and we've been able to move and do that quickly because it's how it's our IP. We have our own R&D team that can make these changes, and we can adapt to the markets as required. So as you may remember, we -- as part of the environment over there, you can issue the tickets via a digital portal called an [ eBox system ], which is the government system. So therefore, we don't have the printing and postage. So of course, that's saving money on the cost of sales. But really, the key thing there is if the information is coming to you via a government portal, then of course, the payment ratio is higher. And what we're seeing now from what's been issued, we do get a higher payment ratios, but also quicker payments. So in particular, the quickest payment we've seen to date from time of issuance is something like 46 minutes, right, from the moment the ticket is issued. So if someone's coming through that sort of digital portal, and we see tickets being paid faster then it's going to improve our cash. And that's why you're seeing a big change in our cash flow because we've made a number of changes in our back office process for how we issue the tickets and the speed at which we issue them from contravention, and then, of course, getting that to the motorist, the quicker you do that, the more likely you're going to get paid and the more likely you'll get paid quickly, which is why you're seeing the 40% uplift in cash or in free cash flow. So the environment in Denmark, yes, is positive. It's made us change a few things on our technology, which has had a big impact across the group. And we expect that to have better and even further positive impacts, as we grow in that territory.

Okay. So this question is from [indiscernible], any chance to repurchase shares. So I [ stand the best by that ] question. So in FY '24, we didn't do a share buyback. In the previous financial year, we did at an average price of $0.23 per share. And since you want to -- asked a bit about the future...

But at this stage, we're keen to -- obviously, the buyback we've done has been very successful. As we look at the way the price is today versus where we bought the shares, so that's positive. At this stage, we're focused on investment for growth. So we're probably going to put the money into obviously further organic expansion, new territory expansion and probably some additional accretive acquisitions. So I suspect that's where the investment is going to go to, right.

The next question from [indiscernible]. In your market review or research of the U.S. has the majority of operators still manual or the existing operators with some technology elements.

There is technology element and most of it is manual, but there are technology elements there that we've seen on recent research trips. Again, it depends where you go state by state is quite different. There are -- I mean, there's still lots of kind of, what I would say, traditional operations with boom gates or barriers in place, and some of these are operated by ANPR. So we have some interesting back office operations, very few kind of various barrier-less gateless environment, so that's obviously a big opportunity for us. And also, you tend to see a lot of the kind of what you -- at grade lots or outside lots. You don't tend to see a lot of those managed in the same way that we do, right? You often see a person wandering around or might be a car, an ANPR car that goes around taking pictures. Again, none of this is as effective or as efficient as a static ANPR camera on entry and exit watching everybody in and everybody out. So U.S. is a really interesting market to us. And I see a huge amount of opportunity there for the right opportunity if that makes sense. We just have to get our entry right. We're going to take our time, be careful and considered to make sure we get the right one. But once we're there, I see a big opportunity. Do we have any other questions to come? Well, this week, we're obviously on the road. We're seeing shareholders and giving a number of presentations in both Sydney and Melbourne this week. So I suspect I'll see many people that are on this call throughout the next few days, as we have a number of meetings that are lined up. But I guess, if there are no further questions, I'll just finally recap on I guess, our priorities for the year, which for us, clearly, we've -- if I just finalize, we started the year well, okay, as I mentioned a moment ago. We expect another year of profitable growth and positive cash flows. And as I say, we started FY '25 with a 34% growth in revenue on last year. As of today, we have 1,465 ANPR sites under management. So you can see we continued our growth momentum as into the new financial year, and we're very close to our 1,500 site target, which we set some time ago. And again, if we talk about the bigger picture, we are at an inflection point. We've talked a lot in the questioning around new territories, talked a lot in the questioning about the U.S. in particular, we see these new territories other than the U.S., in particular, is a much larger growth chapter for us, as well as continue to grow in our existing territories, well placed to selectively expand into these markets. We want to build scale in multiple markets and significantly broaden our base, strengthen our business and increase our earnings power. Let's not forget, we've only captured less than 1% of the total addressable market we're in, and it's obviously a timely opportunity to expand the TAM elsewhere, so we have years of growth ahead of us. As we keep saying, we will continue to complement our organic growth with disciplined and selective acquisitions. We can consolidate the industry, raise compliance standards, improve outcomes for site owners and generate good returns for our shareholders. We have a strong balance sheet with positive cash flow. We're well capitalized to take advantage of organic and inorganic opportunities, as they arise. I think that concludes, unless there's no further questions. Like I say, we'll be on the road for the next or until Thursday. So we're keen to see as many people as we can. Any other questions you have in the meantime, please do not hesitate to reach out. But thank you very much for joining. That concludes today's call.

Thank you.

Thank you.

Goodbye.