Smart Parking Limited (SPZ) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to the Smart Parking First Half FY '25 Results Investor Call, where we've also announced the acquisition of Peak Parking and an equity raise. I've got Paul Gillespie, CEO; and Richard Ludbrook, CFO, with me on the screen. The format of today will be Richard and Paul will present the pack we released to ASX, and then we'll be happy to open the line for questions. If you could all keep yourself on mute during the presentation that would be appreciated. Thank you again for joining us. And on that, I will hand over to Paul.

Thank you, Michael, and good morning to everybody, and thank you for joining today's Smart Parking investor conference call. I'm joined today by our Group CFO, Richard Ludbrook. We are both here in Sydney before heading on the road to see some of our shareholders. So, on the call today, I'll present our exciting new acquisition in the U.S., Peak Parking and the equity raise as part of the purchase. After that, Richard will take you through the financials of the deal and also cover our strong results for the first half of FY '25. [Technical Difficulty] Thank you very much. We've released a presentation today to the ASX, which has lots of details for you to look at. And following the presentation, we will open the line for questions. But first of all, let's make a start on Slide 5, please. Thank you. Today, we announced the acquisition of 100% of Peak Parking, a boutique private parking operator based in the United States. We have been flagging our growth intentions in the U.S. for some time, so I'm pleased to announce this purchase. Peak provides a comprehensive portfolio of parking services to businesses and clients across 134 locations, predominantly in Texas, Georgia, Washington State and Florida. Founded in 2016, Peak has quickly become one of the fastest-growing parking operators in the country. It delivered over USD 9 million of revenue in calendar year 2024 with a CAGR of 45% since 2022. It has a consistent track record of profitability with calendar year '24 EBITDA of USD 3.3 million, up from $1 million in calendar year '22. And at over 35% last calendar year, its EBITDA margins are in great shape. The key point I would like to emphasize is this acquisition is firmly in line with our growth strategy. Our strategy is to complement strong organic growth with disciplined, selective, accretive acquisitions. We are committed and on track to deliver our recently upgraded organic target of 3,000 ANPR sites under management by December 2028, after effectively doubling the business over the next 4 years through organic growth. We then complement this strong organic growth with strategic acquisitions. We've made 4 successful acquisitions in the last 3 years. And whilst these deals have been small, we've been diligent and thorough in making sure we execute well. They are all fully integrated and performing to plan and we've delivered the full identified benefits to shareholders. So, why do we make acquisitions? Well, we have the capacity, the capability and capital to execute these deals and enhance the value for shareholders. Disciplined acquisitions accelerate our growth. They increase our scale and expand our addressable market. Acquisitions can help us enter a new territory like the United States, which diversifies our portfolio, reducing reliance on any one jurisdiction and they provide opportunities to leverage our market-leading proprietary technologies, which provide a differentiated and superior offering for our customers. The acquisition of Peak Parking is firmly in line with our strategy. We can go to Slide 8. We've been very thorough in evaluating the U.S. market in granular detail. We have spent over a year understanding the competitive landscape and regulatory framework, both at the state and individual city levels. We've been engaging with Peak, getting to know the people, the business and the opportunities for over a year. I can say with great confidence, Peak is a fantastic opportunity for Smart Parking. The United States is the largest parking operations market in the world. We estimate the total market is around 2 billion parking spaces. Our immediate market opportunity is to expand in Peak's current operating territories of Texas, Florida, Georgia, Washington State and Tennessee. There are 24 million registered vehicles in these states alone. But we don't have to overstretch ourselves to generate strong returns. If we simply focus on Houston, Dallas-Fort Worth and the state of Florida, we can access a population 6x that of New Zealand. And while we're relatively recent entrant in New Zealand, we are already generating strong revenues with a long runway for growth ahead of us. If we drive 6x that revenue from these specific U.S. markets and the acquisition will have been tremendously successful and it provides a base for further expansion in the U.S. On Slide 9, I think we need to be clear. Peak is a high-performing business with high-quality revenues and growing earnings. This is not a broken asset at a cheap price. It's a fast-growing, consistently profitable, high-quality market leader with an impressive leadership team. Success in the U.S. requires local leadership and a great team on the ground. We are delighted to welcome Peak Parking's Founder and Managing Director, Will Spielhagen and his management team to SPZ. Will, is staying on and will continue to lead the business. He is highly motivated to continue to successfully grow the business for many years to come. Will is escrowed on the consideration and earnout shares, cementing our joint alignment. You can move to Slide 12 now, please. So, what can we bring to Peak? These are some of the questions I always ask when we consider an acquisition. Can we make this business better? This is where we see clear and compelling synergies. Please ask everyone to go to mute, please. Thank you. This is where we see clear and compelling synergies. SPZ can leverage proprietary parking management technology and superior -- with its superior recognition, reporting and analytics to help Peak Parking target larger customer groups and [indiscernible] that historically were beyond them. We can supercharge growth. Peak does not have important revenues today. So, as we deploy our technology, we can provide a superior differentiated offering in the market that can build new revenue streams. We are excited by what we can do together. And where can we take this business? Well, our long-term plan to grow the U.S. is becoming SPZ's largest business, outsizing our operations in the U.K. I'm not going to put a time frame on this ambition, but clearly, there is a tremendous pathway for long-term growth in this exciting market. On Slide 13, does this acquisition stop us from exploring new markets elsewhere, such as Scandinavia and other mainland European countries. We clearly intend to grow further and capitalize on our technology advantage. But first, we'll focus on fully integrating Peak and delivering the anticipated benefits. We have a good execution track record and a clear and detailed plan of what we need to do. This is certainly my #1 priority and I'll be spending a great deal of time in the U.S. with Will and his team to drive and support this business. If we move to Slide 15 now, please, and let me take you through the highlights of the deal. We're paying acquisition price of USD 36 million with upfront consideration of $32 million, $26 million in cash and $6 million in SPZ scrip. There is a sliding scale earnout capped at USD 4 million based on achieving calendar year '25 EBITDA of USD 4.5 million, which will be paid in SPZ's scrip. The purchase of business on an implied calendar year '25 EBITDA multiple of 8x. It's a reasonable price for a high-quality business with great growth prospects. The multiple assumes calendar year '25 EBITDA of USD 4.5 million achieved. Of course, if the earnings are higher, the valuation multiple will decrease. As I mentioned, the upfront and earnout shares are escrow for 12 months post issuance. This is effectively 2 years on the earnout component. We expect the acquisition to deliver over 25% EPS accretion on a pro forma basis in FY '25 pre-revenue synergies. We can see significant growth, significant scope for revenue growth and efficiencies through the implementation of Smart Parking technology platform. But we're not including this in our model. To fund the deal, we're launching a fully underwritten $45 million placement and an accelerated non-renounceable entitlement offer. We'll use the proceeds of the raise, coupled with our debt facility and the consideration shares to fully fund this acquisition. The new shares issued under the offer will be issued at $0.88 per share. I'd like to thank all of the existing and new shareholders for supporting our strategy and this exciting acquisition. So, to conclude before I hand over to Richard, we're very pleased with this acquisition. It is absolutely in line with our growth strategy and our stated plan to enter the U.S. market. While we've been cautious and conservative in determining the opportunity, we are delighted to partner with Will and his team to take this business to new levels of growth and success. I'll now hand over to Richard, who can take you through the results for the half year, which we released today and the pro forma balance sheet for the year.

Thanks, Paul. So, the pro forma balance sheet includes the company's stand-alone balance sheet as at 31 December. Funding of the transaction includes the drawdown of $4.8 million of the HSBC debt facility and a $45 million equity raising lease associated costs. The acquisition column includes the unaudited Peak Parking balance sheet as at 31 December 2024, and the company will adopt IFRS post acquisition. The company will complete a purchase price allocation exercise following the acquisition to determine the split between goodwill and other intangible assets. Cash outflows for the acquisition of $43.3 million, which includes the USD 26 million for the acquisition and other acquisition-related costs. On a pro forma post-acquisition basis, the company will have a strong balance sheet that includes cash of $13.4 million, along with $11.2 million of undrawn debt facilities and a $10 million accordion facility available upon request and the satisfaction of certain conditions. The strong balance sheet means the company is well placed to accelerate organic growth. And following the integration of Peak Parking, look at expansion into new territories and further acquisitions in line with the company's core growth strategy. Turning to Slide 20. The company has today announced a fully underwritten equity raising of $45 million, comprising an institutional placement to raise approximately $32.2 million, a pro rata accelerated non-renounceable entitlement offer to existing shareholders to raise approximately $12.8 million. The pro rata entitlement offer is strongly supported by directors. The offer price was $0.88, which is a discount of 7.2% compared to the 5-day VWAP. Smart Parking includes the acquisition to deliver in excess of 25% EPS accretion in FY '25 on a pro forma basis with future identified revenue and margin expansion opportunities through the implementation of Smart Parking's technology platform. Slide 22 shows the sources and use of funds. The total source of funds is $65.8 million, which includes the equity raising, partial drawdown of the HSBC debt facility and the scrip consideration at closing and the earnout. The use of funds includes the USD 26 million cash at closing and the $6 million of scrip at closing and the earnout is achieved with a $4 million of scrip, which in total is roughly AUD 57.5 million. The schedule includes costs related to the acquisition and equity raising with the balance being for working capital. The HSBC debt facility we announced in November has been amended from a AUD 10 million revolving credit facility to a USD 10 million facility. Moving to the FY '25 half year results. If we look at Page 24 of the presentation, H1 FY '25 was another successful period for Smart Parking. We made significant progress in all territories and delivered record results. Since H1 FY '21, we have grown revenues by over 200% and we've added well over 1,000 ANPR sites to the portfolio that we manage. We've demonstrated that we can scale profitably in multiple international markets through a combination of organic growth and selected acquisitions. Let's make a start with some of the key highlights. First, we're pleased to deliver another set of strong results. We delivered 26% growth in adjusted EBITDA and a 60% rise in free cash flow. SPZ is a fast-growing, profitable and cash flow positive company that can scale in large markets. So, compared to the prior comparative period, EPS of $0.0112 per share is up 70% on the prior period. Revenue is up 20% to $31.9 million. Adjusted EBITDA is up 26% to $9.5 million and margins have expanded 139 basis points to 29.8%. We generated $6.4 million of free cash flow and closed the half with cash on hand of $8.5 million. The growth investments included a $900,000 EBITDA loss in Denmark, where we are seeing some good contract wins. We spent $3.1 million on growth CapEx to support our organic expansion and the remaining debt facility was fully paid down. On Page 27, 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've been growing businesses in all territories outside of Australia. Revenue in the New Zealand business of $3.4 million was up 61% on the PCP. This was on the back of a 64% increase in sites and a 34% increase in parking breach notices. There was strong margin growth in New Zealand with the adjusted EBITDA margin of 41%, up from 26% in the prior comparative period. This was a result of the growth in sites, increasing the parking breach notice charges from $65 to $85 and demonstrates the operating leverage in the business. Our compelling offer is resonating in the New Zealand market and we're displacing and disrupting the industry. Revenue in the U.K. increased by 17% to $25.4 million. We issued 18% more parking breach notices and closed the year with -- half year with 1,194 sites under management, an increase of 22% on the prior comparative period. More sites under management will create increased PBNs and in turn, generate higher revenues. The U.K. is clearly our largest market. It accounts for 76% of our sites under management and 80% of the group's total revenue. In Germany, we are making good progress. Revenues for the half year increased by 83% to $2 million. Profitability continues to improve with the adjusted EBITDA loss in Germany of $0.5 million for the half year. This compares to the full year loss in FY '24 of $1.7 million. We started operations in Denmark in February 2024. At 31 December, we had 21 sites generating revenue and in excess of 30 signed contracts. We are pleased with the progress in Denmark. Moving to Slide 29, where you will see the group achieved record adjusted EBITDA of $9.5 million, up 26% on H1 FY '24. This was a result of an increase in revenue from organic site growth and revenue contributions from the LPS acquisition. Revenue of $31.9 million is up 20% on the prior year. This was the result of a 22% increase in parking bridge 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 contributions from the acquired businesses. Further detail on the revenue increase is included later in the deck. Overheads are up 7% compared to the prior comparative period. This is a result of increased activity, ongoing expansion into new territories and the acquisition of Local Parking Security. The adjusted EBITDA margin increased 139 basis points to 29.8%, which is really pleasing given the newer territories are margin dilutive. The amount excluded from adjusted EBITDA include foreign exchange gains of $0.7 million and this is a loss in the previous period of $0.3 million. Secondly, a $0.9 million EBITDA loss related to the new Denmark business, which was launched in early 2024. This has been excluded to enable comparison on a like-for-like basis given that Denmark launched in January 2024. While early days, Denmark is performing in line with our expectations. Depreciation and amortization increased following the installation of an additional 183 organic sites and D&A related to acquired businesses. The company incurred a tax expense of $0.7 million compared to a tax expense of $1 million in H1 FY '24. H1 FY '25 included the benefit of tax losses for New Zealand. The company has a further unrecognized deferred tax asset of $1.2 million related to losses in New Zealand, which will recognize in the future. EPS grew 70% to $0.0112 per share. Slide 32 shows the group has cash on hand of $8.5 million as at 31 December. The company generated record adjusted free cash flow of $6.4 million, up 60% on H1 FY '24. 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 $3.7 million spent on CapEx and intangible assets. Now, just a reminder that CapEx isn't included in the free cash flow as it relates to future growth rather than maintenance CapEx. So, the company is well capitalized to fund future growth. Slide 33 shows the group maintains a strong balance sheet. Obviously, the balance sheet will change following the equity raising and the U.S. acquisition as previously highlighted on the pro forma balance sheet. During the year -- during the half, the company fully paid off the coronavirus business interruption loan and established debt facilities with HSBC, which were undrawn at 31 December 2024. I'll now hand back to Paul to discuss the business update.

Thank you very much. Okay. So if we can move along, please, to Slide 38. Thank you. I'll conclude our presentation by outlining our priorities for the second half of FY '25 and also beyond. First, it's important to remind shareholders that H1 has been a record result across the group, as Richard just highlighted. We've expanded the footprint of our ANPR site, delivered growth in our new territories and continue to develop our technology in order to keep it ahead of the competition. This level of execution gives us complete confidence in reaffirming our site growth target of 3,000 ANPR sites under management by December 2028, essentially doubling the business from where we are today. Second, in line with our expansion strategy, we are delighted to announce the acquisition of Texas-based Peak Parking. Entering the largest parking operator market in the world has been an objective of SPZ for some time and we're focused on making this transaction a huge success. Finally, with the equity raise we have announced today, the expanded debt facility with HSBC, existing cash and of course, a strong cash-generative business, we've strengthened our balance sheet and positioned SPZ for future growth that will continue to deliver for our team, our customers and our shareholders well into the future. And that concludes my presentation. We'd like to open the line for questions. Michael, would you like to kick things off.

Yes. Thank you, Paul. That's very kind of you. Let's open up Q&A session. [Operator Instructions] Our first question today comes from Owen Humphries.

Well done on the first half result, obviously, strong growth. So, just a couple of questions for me. Just to understand the last couple of years, Peak Parking has had a pretty strong step-up in the site growth. Can you just talk through some of the drivers there? Have there been greenfield expansion? Have there been taking off a competitor, some of the secret sauce there? Can you just -- that's number one. Number two, can you talk a bit about the CapEx within this business? How capital intensive is this business? I've got a couple more, but just start there.

Okay. I mean, yes, I think it's fair to say, Will and his team have -- Will founded the business 8 years ago, right? So, you can see site profile growth. They gained confidence, they delivered -- what they said we're going to do, delivered against their plan. And of course, customers hear about that. So, like anything, people want to be part of a winning team. He -- Will, did a great job in delivering a fantastic service to his clients. And the majority of the customers today tend to be commercial real estate property owners, property agents, those sorts of people. And some of them have multiple locations, some of them obviously talk to one another. And I think he's really driven -- the success he had has come from delivering and doing what he said, delivering a great service, and that's led to more project wins. In terms of CapEx, you want to talk to.

Yes. So, a lot of these management contracts mean that landowners paid for the CapEx and that will continue as we roll out the enforcement model in the U.S.

So, CapEx is 0 basically in the business at the moment?

Correct. Yes.

Can we talk about a little bit around the working capital. There's an investment in the working capital you put through as part of the uses of funds. So, $5.4 million working capital. I'm guessing that's just the capacity post the raise relative to the debt facility of $4.8 million. Does that -- just to clarify, there's no working capital investment required inside Peak Parking?

Correct, Paul, a nominal amount. Yes, that's absolutely correct. Yes.

Got you. And how long does it take now to roll out your enforcement technology now that that's part of the accretion story if you can do the upside case here? Is there regulatory hurdles to get through?

No, no. We can start right away. I mean we -- obviously, today we signed. So, we're finding agreement where we're up and running, if you like. But there's still some work to do, Owen, right, in terms of setting this up. But clearly, we're introducing something that this team has not done before. So, there's going to be a period of integration, a period of training. I can say we are going to [indiscernible] our team from the U.K. in particular to assist with the process to make sure we set that up and of course, the training on the smart cloud solution. All these things need to happen. So, there is a bit of time going to take to get that done, it's not like throw some cameras off and let out, but it's a -- it's not that straightforward even though I may make it sound that way at times. But no, there is a lot of work to do. We're conscious of that. But yes, there's a great opportunity ahead of us and we're excited about it and the team are ready to go.

And just the last question for me. Just to understand the earn-out structure here, you put in there about $4.5 million that is to get the earnout. Is it a bullet earnout? Or is it around upside, downside? And just to understand how much of a stretch target that is, like what's the site growth going from 130 or thereabouts to what number needs to get to, to hit that?

Yes. So, it's a sliding scale, Owen. So, it's capped at $4 million. So obviously, if the EBITDA is more than $4.5 million, then the effective multiplier will be lower. The business should achieve that just based on historical run rates. And then obviously, on top of that, we're overlaying our enforcement technology, our enforcement offering, but also looking to turbocharge sales and expanding into the likes of Houston and Florida as Paul talked to earlier.

Okay. Got you. And just the earnout, just is it the price today, $0.88? Or is it strike of the future VWAP when it gets issued?

It's based on future VWAP, yes.

Our next question comes from Larry Gandler.

Just continuing on the U.S. Paul, can you -- you mentioned something that's kind of interesting about the customer paying the CapEx. I don't think that's the case in your other markets. Is the business model the same in the U.S. for enforcement where maybe in other instances, you'll be paying the CapEx? How does that work in the U.S. again?

So you're right, it is different, Larry. So, the way it works today, remember, they are more of a traditional parking operator today. So, they all go to a particular car park and talk to land owner or the property agent in order to get the contract to manage that site. Now of course, the way they operate right now is they might say, well, actually, for this particular location, we think you should use [ simply a gate ] or something like that. And of course, if that is the case, then they'll price up to the customer, they'll do installation, but they'll say, that's the bill, you pay that and then, of course, you pay the management fee afterwards. So that's why there's no CapEx today. Now of course, moving forward, where we're talking about implementing the enforcement opportunity, enforcement capability, it's really for us to talk to the customer first. I mean I believe going with our current model that we have in the U.K. and elsewhere where we provide CapEx solution, I think that is completely unique in the U.S., right? It doesn't happen today. So that's one particular area that we're looking to exploit. But of course, also there might be cases where the customer does want to cover the CapEx. And so these are conversations that we're not going to keep it to one particular thing, Larry, I say it has to be this model or nothing. We're taking a flexible approach because it's a new market, a new area for us. And right now, what we're seeing with the existing sites that Will has or that he can, he has already lined up 20 of his customers who want the enforcement solution. So of course, that's getting to a point where an extension to the contract and extend the contract where we can provide these services. And that's really going to be the acid test, which we believe is going to be fantastic where we can open up a whole segment of customers that Peak can't talk to you today. They just can't have the technology, the process and the understanding, the experience to deliver that service. And that's what we offer. And that's the exciting, Larry, it's a massive market out there today that's totally untapped.

Okay. Got it. So, it's still maybe a hybrid with regards to CapEx. And then with regards to unit economics in these various jurisdictions in the U.S. Can you give us a feel for what it would cost to access keeper data in some of these markets? Just is it order of magnitude?

Yes, sure. I mean that can vary by state. But on average, because we found to use today, we can use a third party to access that data on our behalf. And it's a sliding scale depending on volume, which is sort of similar to Germany. But today, the price that we've already gained is USD 1.25, of course, to access the detail. We believe there will be a lower ticket value. We're actually very mindful of the fact that in some areas, this is might be quite new. So, we want to be attacking this in a way that's going to be more accessible, if you like. The research we've done, I think coming in under that local authority number is the right thing to do in terms of value parking reached out. But what I'd say is these are things that we're going to be starting off at this level. And of course, we evaluate it in a step-by-step process. So very mindful of this approach, very mindful of the area we're in and starting off in territories, as I mentioned in my briefing around Houston, for example, or Dallas Fort Worth has got very good, very positive regulatory frameworks in place, local law, cities allow these things as well as the state of Florida, which has got state law that's allowing private party operators to operate in this fashion. These are the areas we will start. That's the sort of start.

Are most of the areas you're going to be targeting regulated by case law or by state law? Case precedent or state law?

It's state law, state law. And in some cases, Larry, it's -- there's different rules or local laws in the cities or counties. And the research we've done tells us this. So which is why I mentioned those 2 cities in Texas in particular, but also the state of Florida, which had a positive regulatory change last year, which is like a rules of engagement or a code of practice almost in that state.

Might we prompt for more questions, please.

There's a couple of questions in the chat room. So firstly, Germany sites growth slowed down. Are you still confident calendar year 2025 EBITDA breakeven for this segment? Yes, we are. So Stella, good to hear from you. You might remember, Stella at the full year, we talked about and also at the AGM, we talked about we changed leadership in our German business. We felt prior -- we've made some really good progress, but things have slowed down. Of course, the site growth wasn't what we like. And so we've made a change in that area. And the gentleman we've taken on has got a fantastic track record of sales in the parking industry. And already, we're seeing new sites coming and obviously the pipeline growing, which is pleasing to see. So yes, we're confident of that. There's another question here from you, Stella, which is regarding Peak Parking acquisition. Was that a competitive process? The answer of course, is no. Is 8x EBITDA what we should expect for further acquisition in U.S.? Are Peak sites mostly manual or ANPR? How many questions do you want? Let's start with competitive process. No, it was not a competitive process. But what we've done over the last 12 months is through an advisor who we've met and have contact with met a number of potential opportunities. Some really interesting, some not so interesting. Peak Parking for us was the best, I believe, the best asset because it met all our criteria being in terms of the location where they're based, the fact that they have no proprietary technology and we have a real impact with our technology. It's the management team who are high quality who want to stay with the business and we're prepared to be escrowed on scrip, things like that. All those things stacked up. They had a number of other people approaching about selling. But of course, that was all from other U.S.-based companies, some private equity, which would have meant the management team would have been a synergy. And of course, for them, they want to stick around. They will be part of this journey. They understand the vision, they share the same point of view on where this market could go and how large it could be. And so as a result, that's why they went with us. And in terms of the valuation, U.S. is expensive. What can I say? I mean we've been -- I would say we've been quite fortunate in some cases, we've done a great job negotiating previous deals. but they are all much smaller. This is a much larger asset that we're dealing with a much bigger addressable market. And other acquisitions, there was one early last year, which we had a look at, was a bit early for us with a company called Platinum Parking based out of Dallas and that went for 8.5x. It' a bigger asset. So, I think we've done well with what we've got and I think we need to expect probably similar pricing for others in the future. The sites are manual, yes, there's no ANPR at the moment. Has it grown by acquisition organically? It's growing organically. You must have got about 15 questions in there, Stella. Okay. We've got another one here from [ Peter Lindberg ]. Some of the components of the acquisition are different to SPZ core business. Will SPZ be looking to incorporate these services into other countries or selling only in the U.S.? Good question, Peter. Yes, they've got a diverse range of products and services they offer. And this is really interesting to us. Now, are we going to start doing valet parking in the U.K.? No, we're not. That's just -- culturally, doesn't work. But of course, in the U.S., culturally valet parking is a [indiscernible] thing, right? And we need to maintain that service. And as I said during my briefing, I don't want to stop Peak Parking to do what they are doing. I want them to continue to grow on this trajectory whilst we also have the ability to open up a much larger customers with the enforcement platform. So that's really what we're looking to do. You have another question here. How many individual parking sites will be added to SPZ and capable of documenting the technology? Well, we won't add any of the 134 Peak sites to our graph to start with because none of them are ANPR. We never count the ANPR sites. So as a result, none of them get added to start with. But as we add things we can add them in the future. That was it through the -- Michael. Another one from Paul, actually. Okay. Another question here from [indiscernible]. Slide 14. Peak Parking customers tripled in '23 from [ 43 ]. What happened? So, the customer base didn't triple there. What's happening that is the net additions each year, okay? So, what you're seeing is and they've -- as they've grown and added more customers, they've got more referrals, they can point to more reference sites and that's what you like during the pipeline. Michael, do you want to keep managing things?

A question from [ Julian Mojsiak ].

Paul, can I -- which of the 20 sites that we've identified, is that part of their 134 or these are extra sites?

Yes, part of the 134. They've got pipeline off the back of that as well. But in the short term, from their existing customer base, they've already got 20 customers who want to go ahead with enforcement.

So, what sort of sites that require something like that? Are they already -- are they free sites currently or they're paid?

No, they're paid sites. So, there'll be service lots, there'll be most through top up, but they're all paid sites. So you might remember, Julian, in the U.K., for example, 2/3 of the sites we manage are paid -- sorry, time limited parking, you've got maximum stay time and the other [ 1/3 ] are all paid. So, we're doing an awful lot of paid parking. New Zealand is the same. They have a number of paid parking sites.

Right. And also in the U.S., what's the sort of compliance rate typically for people actually paying their fines? I mean it does vary quite a bit across your group.

Yes, it does vary. I mean we believe it's going to be similar to the U.K. Yes, of course, time will tell. And I suspect to be different by state, by city for different areas. But these are things that we -- I mean, the information we've got doing our research from other competitors and also from the vendor itself, I think his experience is going to be around that 45% to 50%, maybe just over mark. But again, I think it just comes down to making sure we do things correctly, right? One thing we pride ourselves on is, in all of our areas is that we have the correct signage in place, right? It's very, very important that we do that correctly. It is administered correctly, that -- we treat customers is fair and reasonably in our appeals process. We have to make sure this gets implemented the same values, the same processes get implemented into our U.S. operations, which, of course, has got to happen, hasn't happened yet, right? So these are things we're going to be doing, implementing to ensure we operate in that same way. Those things will drive the compliance rate and drive the payment ratio.

Right. And finally, you mentioned that the -- you'll start with a lower ticket sort of price. So, what is that sort of number?

Well, at the moment I think because the first place we're going to be focusing on is the customer in Houston, right? It's going to be coming in around about $50, USD 50.

There's another question from Larry in the chat. What is it about Peak's core business that explains its success? Paul, one for you.

Well, for me, it's the service offering is first class. Will and his team have adopted a culture of -- I think the first e-mail I had from him has an e-mail put through of Founder, Managing Director and that, whatever it takes, which struck a chord with me because it means that you're not afraid to roll your sleeves up and get on with it, have a good crack at things and that's kind of what we're about. We're a pretty lean business. Richard and I are involved in the business day-to-day as well as the corporate side of things, which, of course, as we grow, that will change. But I guess what I'm getting to is the people, the service, doing what you say you're going to do, right, we're going to do and then doing it, do it to a great standard continually, consistently. And that really has helped his -- Will and his team with their growth aspirations, taking on new customers, being able to win new business, right, is having great reference sites, having great -- existing customers who are happy to act as a reference -- those sorts of things are very important. So that's been a big part of his success with him, which is why it's very important that he's aligned with our vision. why it's very important he stays with us for a long period of time. It's why it's very important his team stayed with us for a period of time. And we've taken the right steps to secure these individuals to motivate them and incentivize them in the way that they want to be. So yes, I would say very much service people and reputation.

Thanks. Let me prompt for more questions. [Operator Instructions]

If we got no more questions, I'm not sure if they happen any more or no one else has raised their hand, so I think if it's okay with you, Michael, so we will wrap up. So, before we do close out this call, first I want to thank everyone for joining. I think this is -- it's hard to see how many people actually joined. But I think I saw a number of over 100 people at one point, which is exciting for us. It's great to see the engagement getting on this phone call. However, before I do close, I just want to leave 3 points and just really reiterate to shareholders the importance of these issues, these points, which is first, number one, we need to remind people that the first half has been a record result across the group and we continue to deliver record results. And we've done that by expanding the ANPR footprint of the estate. We delivered growth in all our territories and continue to develop our technology that keeps us well out of the competition. And as I pointed out earlier, this execution gives us complete confidence in reaffirming our high growth target of 3,000 ANPR sites under management by December 2028, which is [Technical Difficulty]. The second point, obviously in line with our expansion strategy, we are delighted with this acquisition of Peak Parking in Texas. Entering this market, the largest parking operations market in the world has been one of our objectives for a long time. And we focus on making -- and we will focus on making this transaction a huge success for our shareholders. Finally, with this raise, we actually announced today, raised today the expanded debt facility with HSBC. And of course, we have a good cash-generative business. We have strengthened our balance sheet and positioned ourselves for growth well into the future that continue to deliver for our staff, our team, our customers and of course, for our shareholders. And with that, I'll say thank you very much again. I appreciate every taking the time to join us. And I'm sure there'll be more questions as we go along in the future. But Richard and I are on the road this week and next week seeing shareholders. So, thank you very much and speak to you again soon.