Smart Parking Limited (SPZ) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to Smart Parking's First Half FY '26 Results Investor Conference Call. Thank you for joining us. On the call today, I have Richard Ludbrook, CFO; and Paul Gillespie, Managing Director. Paul and Richard will present the results this morning referring to the slide pack we've released to ASX. Following the call, we'll open the line for questions. I'll explain how to ask the question at that point. Thanks again for joining us, and I'll now hand over to Paul. Thank you.

Thank you, Michael, and good morning, everyone. Thanks for joining today's call of first half results and Investor Conference Call. Today, we're in Melbourn. I'm joined by our Group CFO, Richard Ludbrook, as Michael highlighted, I'll present our record results for the first I'll give a positive update on our U.S. acquisition peak parking, which is exceeding our expectations and prior report on other markets where we're growing strongly. Richard will now take you through the numbers in more detail. And following the presentation, we will go over the line for some questions. So if we can start now with Slide #2 and our record results, please. We've given 96% revenue growth compared to PCP. Adjusted EBITDA was up 85% and the other pattern at GBP 6.5 million is up 16%. We've effectively done the size of our business in the last 12 months. Last February, we acquired Peetparking and entered the U.S. with worldwide parking management markets. We completed our latest ever equity capital raise to fund the acquisition. These results validate our bold strategy. The original investment case at the time of the acquisition will speak up into the part EPS by 25%. We've seen that and accretion is expected to be over 30%. EBITDA for the period was up 24% to $4.5 million in the U.S., attributing the total earnout payments. Since we took on sheet we strengthened the platforms, enhance our service offerings, implements our market-leading technology and won new clients in previously untapped markets, and we're growing while maintaining 30% EBITDA margins. These results strengthen our results become the leading AMDR parking management provider in our selected states in the U.S. and deliver years and years. Is a perfect beta and a scope for further M&A activity across the U.S.A. It's pleasing to see that while they are busy in the U.S., we're also considering growth in every other market that we operate. The number of sites at the end of the year increased by 18% over PCP. These are encouraging results, demonstrating SP's competitive strength and share execution averages. Our free cash flow and balance sheet are also highlights. We generated $10.4 million of free cash flow, an increase 89% once again showing a cat-like nature of our model. We closed the period with 31% increase in cash to $15.3 million. As I said many times before, we generate high levels of free cash and we can sell fund our organic growth while maintaining a strong match. Moving to Slide 3. This in execution of our growth strategy continues to drive our performance. We delivered ongoing organic growth across our markets, and Pete is exceeding our expectations, as I highlighted on the last slide. We issued a record number of PBMs in half or $560,000, growth of 9% on PCP. Across the group, we closed the year with 1,852 of APR sites under management. We added 200 gross new sites in the first half with 114 of these in the U.K. As we flagged with the Q1 update, we closed 71 sites in Queensland during the half. We have successfully redeployed this equipment into the growing New Zealand markets. We did good slight growth in the U.K. with 1,397 sites at the end of the half and 77%. -- this asset base is driving strong revenue growth up 64%. I will say at France, the number of PBs we issued in the U.K. was flat in the prior period. We did see cost delivering pressures reduced 2x on some of the U.K. stats, which has impacted our issues. Despite this, the business had a very strong product result with EBITDA although the margin was a bit lower at 29.3%. This small reduction is a direct result of the greater focus on the debt resolution and legal activity, which in turn has increased our yield of PBM significantly by 44% throughout the group. Encouragingly, we're seeing early signs of the issuance recovery in the U.K. We've implemented some new technology measures to our client dashboard processes that will continue to improve our performance and deliver a positive customer experience. We continue to strategically diversify our revenues beyond the U.K. In FY '19, the year pan about 100% of the group's Ben, that contribution was 69%, making SPs a more resilient business with a long growth runway ahead. We selectively add new sites across our territories and new territories, in the first half, sites in new territories increased by 54%. Selectively, is an important word. We are disciplined around payback periods and sign RIO. If the site is outperforming to benchmark, and we will redeploy the equipment for new sites that way. So to summarize, we're delighted with the performance in the U.S. and we continue to build scale across markets in which we operate. We look now at Page 4. Let me recap on our growth strategy and execution process. We are leveraging core technologies and capabilities across new and existing markets. As I mentioned, we delivered 64% revenue growth in the U.K. and 46% more EBITDA. Improved net resolution processes continue to make a difference in the U.K. We'll continue to enhance the debt process, driving higher yields and deliver great returns to every breach issue. Since we took actions to change and improve our debt process, we've seen the average ticket volume increased by 44% across the group. This has been a successful initiative. I sometimes get our finest is that recovery plan of one-off benefits. The answer is no, those all. There was a significant back book of HF of over 1.2 million PBMs, but these yield-enhancing strategies can be applied to and that's growing every mark as we continue to grow new states up issue more PBS. We have 3 service providers, coupled with our technology. This is clearly helping improve the debt recovery yields. The legal cost of collecting at are higher given the core process involved, but we see this benefit assisting our results for a significant time to come. New Zealand continues to perform well that are in both the fastest growth in PBNs and the highest EBITDA margins in the group at 44.5%. It's reasonable to ask if this performance is sustainable or to us, yes -- let's drivers. First, New Zealand is not a congested market. Competitive intensity is like. We are already the largest MBR parking site manager in the country with its first newer advantage. And today, a significant proportion of our addressable market is untapped. Most of the major cities, especially Auckland, have limited public transport systems with little infrastructure. So as a result, carotid levels are very high. The population is growing. And just as we see in many countries, there is growing pressure on private land owners and site managers to ensure they are genuine customers who find a place to park which is exactly what we do. We also understand the clear benefits of scale and incumbency in our business. The first 1 drives operating leverage in our high incremental margins and the second will expand the most. To drive these benefits, we've decided to accelerate our go-to-market in 2 new markets, Germany and Switzerland. This has involved a modest increase in investments. In Germany, revenue increased by $2.6 million -- increased to $2.6 million, up 74%. Post investments, EBITDA was maintained at a negative 513k, which is I will hit the business in Germany turned EBITDA positive in January of 2026. This is a significant milestone for our business. Germany should be our largest European market, and a focus on accelerating scale and profitability there. In Denmark, as highlighted previously, the government uncharacteristic switched to many operations from the first of July. The new policy requires the first PBM must be mainly based on the gas Windstream, then we can deploy our technology solution. This change has affected revenues and costs. We are confident the policy will be reversed. We have strong industry representation and support that. Regardless, the mark has been an attractive market for us. prices are high at SEK 910 and the payment ratio is over 70%. The key to generating high margins is to have sites logistically close together and we have work to do to cruise to site density. Finally, we established our business in Switzerland in July of 2025. It is also a potentially high-return market, ticket prices, PGM prices of CHF 65 and the payment ratio is in excess of 75%. In majority of the 25 Swisscanto access to data is either free or our minimum costs. Furthermore, we see exactly the same pressure on site managers as we see in New Zealand, which is our underlying tail. The investment in fixed cost infrastructure is now complete and the operation structure has been put in place. We've recruited an impressive team. I'm delighted to say in our first contract in December. The new signing is expected to generate revenues in the coming weeks. It is early days, I like we can build a high-quality business here and grow to over 1,000 locations over time. In conclusion, we remain laser focused on leveraging our technologies into new and existing opportunities. We can grow profitably in all our markets, and we are well placed to self-fund our graphs into a strong position to be. I'll now hand over to Richard, who can talk you through some of the financials in more detail.

Thanks, Paul. So I'll start with Slide 8, where you will see the underlying net profit after tax before amortization of customer relationships of $6.5 million is up 163% compared to H1 FY '25. And the NPAT also excludes foreign exchange gains and losses and normalizes the tax expense. Earnings per share using unpaid of $0.0156 per share is up 121% on the prior year. Revenue of $62.6 million, excluding interest income, is up 96% on the prior year, and this is a result of a $13.5 million contribution for the 6-month period related to Peak Park in USA, which was acquired in February 2025, a 9% increase in parking bridge notices driven by organic growth in sites and the impact from enhanced resolution procedures in the U.K. And there's further detail on the revenue increase later in the deck. Overheads are up 42% compared to the prior period. This is a result of increased activity, ongoing investment in annuity territories, including Switzerland and the acquisition of Peak Parking. Adjusted EBITDA of $15.6 million rose 85% on H1 FY '25, driven by organic growth and through disciplined M&A. The adjusted EBITDA margin decreased 140 basis points to 24.9% as a result of the enhanced debt resolution processes in the U.K., which generate incremental revenues and gross profit but with a greater marginal cost and investment in Switzerland, which is margin dilutive. If you exclude both of these, the underlying adjusted EBITDA margin of 29.2% is up 300 basis points compared to the prior period. You can see on this slide, there are $1.1 million of adjustments to EBITDA, which are foreign exchange losses. This is a $1.9 million unfavorable swing in effects compared to the prior comparative period. Depreciation and amortization, excluding the amortization of acquired customer relationships, increased following an increase in the number of AMPS sites and following the acquisition of Peak Parking. The company incurred a tax expense of $2.8 million compared to a tax expense of $0.7 million in H1 FY '25. The U.K. or U.S.A. businesses are in a taxpaying position and New Zealand is consuming previously recognized deferred tax assets. The statutory net profit after tax increased 10%. We remain optimistic about the outlook for the remainder of FY '27, because we have the benefit of new AMP sites previously added, revenue from new AMP to be added in the second half of this year and, of course, a full year of earnings from Peak Parking. Slide 9 shows the breakdown of the 96% increase in revenue. Peak Parking U.S.A. was acquired in February 2025, so the results include $13.5 million contribution for the 6-month period, and this is up 6% on the pre-acquisition comparative period. At 31 December, there were 7 live U.S. AMPR sites that have generated PBM revenue of approximately $90,000. We are very early on in the rollout of AMPR and have a small sample of sites. However, the metrics are encouraging with PBMB sites being significantly higher than other territories we operate in. Revenue from the managed services business, excluding the U.S., was 51% compared to H1 FY '25, and revenue per PBM for the group was up 44%. Revenue from the U.K. of $41.6 million was up 64% and benefiting from the enhanced debt resolution procedures. Revenue in New Zealand of $4.2 million, increased 23% on the prior period, with Germany contributing revenue of $2.6 million, up 38%. And revenue in demat was down following the change to menu operations, whereby the initial breach notice needs to be placed on the 1 screen of a car. The company continues with its strategy of expanding into countries where there is a suitable regulatory framework. The company established operations in Switzerland in July 2025, and this will generate revenue in the second half of this year. And Paul will talk more about the substantial runway we have in all markets, which will drive future growth. Slide 10 shows the group has cash on hand of $15.3 million. The company generated adjusted free cash flow of $10.4 million, up $119 on H1 FY '25. The company continues to make a substantial investment in future growth with $4.7 million spent on CapEx and intangible assets and $1.8 million invested in Switzerland. Just a reminder that 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 generation, cash reserves and debt facilities enable it to continue to explore new opportunities. Slide 11 shows the movement in the group's operating expenses. Overheads of $18.9 million includes $2.7 million for the 6 months related to Peak Parking. There will be an increase in U.S. overheads in H2 as we ramp up the ANPR business. Overheads increased in Denmark after the business moved to put in the initial PBM on the car windscreen with the business hiring parking attendance to do this. Total headcount for the group stands at 334. Slide 12 shows the group maintains a strong balance sheet and is well placed to fund organic growth, expansion into new territories and further acquisitions. You may recall that in FY the company established deep facilities with a USD 10 million revolving credit facility and a further $10 million accordien facility, available on request and satisfaction of seated conditions. That facility was paid down during July. A major highlight was the achievement of the U.S. earnout for the 225 calendar year. You'll recall, as part of the acquisition of Vendor of Peak Parking receipt USD 26 million in cash, $6 million and Smart Parking scope and under the year now a further AUD 4 million of SPZ script will be issued, and that will be described for 1 year. I'll now hand back to Paul to discuss the business update.

Thank you, Richard. Okay. So I will need shares to read the patient the deck at your leisure or close to some growth priorities on Page 18, but who step through the slide in the way. We clearly had a strong set of results for the first half of the year, and we entered the second half with significant momentum. Execution is always key. We will continue to drive organic growth across all our markets while optimizing the portfolio for performance. We have a superior and unique offering market rate and pipeline operate in and the pipeline of new sites are excellent. Peak is performing very well, and we expect to increase sites under management of both new and existing U.S. markets. We've set up a dedicated team that focused on securing new APR patients and leverage our market-leading technologies. The leadership team at Peak are highly noticed and they spent a great of my time over there supporting -- and we'll continue to selectively add complementary acquisitions to accelerate our growth and enhance our earnings. Acquisitions provide opportunities to leverage our market-leading proprietary technologies, and offer customers differentiated and superior service. We are well on way to our site target of 3 APR sites under management by December 28. I'll remind you though, even this target represents less than 1% of our enlarged TAM. Finally, I'll reaffirm what I said in August. In FY '26, we will continue to grow and strengthen the foundations for growth. We've developed a market-leading technology and have over a decade demand expertise in understanding customers' needs and appliance and regulatory frameworks in the markets in which we operate. Smart Parking Parkes bulk-based to continue to grow in existing and new territories for many years to come. Thank you. That concludes our presentation. We can now open the line for some questions. Michael?

You can ask a question either using the chat function or put up the yellow hand on the screen. And we have people in the queue already. Good to see people keen, so let's make a start. First question is from Michael Holland, -- how are you managing the reputational and/or political risk of pushing harder on U.K. PBN debt recovery in a market that is sensitive to affordability and Stella Wang has added a rider to that, which is the 100 AUD revenue per PBM in the U.K. sustainable given cost of going pressures and the debt recovery operators earning high margins. All I'll drag back to me, please.

Yes. So I'll cover the reputation of the aroma. It's fair to say we get a large amount of scrutiny rightly so from the sort of marketplace from, whether it be the industry bodies like the British Parking Association or the Catalao these industry associations of which members of cases. We have to operate at a very high level of a canoe held to high accounts and operate to high standards that are put in place by the code of practice by both of those trade associations, which we do today. So provided we continue to operate in line with those codopractices then we are absolutely everything correcting, and we're not setting out in. If we look at the kind of PR, pushback or those kind of things that we get. The majority of those, what I see is not that many that come up if we compare ourselves with parking Europe to others. The majority of those tend to be -- somebody who hasn't appeared there for each nosestraight to the press that hits the press story to be parking company. But ultimately, if you read right through the article, you'll see that the response always come to us, which is we operate a correct process to high levels of patent standard is fully placed by the British Parking Association, this particular metric in both roles. So therefore, we issue the bridge directly. That is 9.9x out of 10. That is the way the way it has. I mean in terms of political risk, clearly, there's always a conversation we're having with government the cover practice through Mato associations. That's been running for many, many years. But like I said, we operate a very high level, very high standards. We don't deviate from that. The only way to manage the particularly -- particular risk that you highlight is to operate correctly, which we did. And so from that perspective, it doesn't concern. To sales point on sustainability, absolutely sustainable. Clearly, we're continuing to with new patches we sites, issuing the breaches, and that's -- we've already seen that turn start to grow again as teatime. But the enhanced set recovery process is actually not a new process. We've just -- we added more providers to it to help us, right? And we've added a third step, which is the legal process, which whilst we were taking some of the motocross Avengers support, we're just making sure we highlight that process further to all do capture the most we can. I don't see it being pushed back on at this point in time because like I say, it's not a particularly new process. We're just much better and we've a lot more focus on -- we brought in additional suppliers to assist us, and we believe will be I'm very comfortable where it is today. And by the way, it's totally in line with everything the contract we have with the BLA, we drive as Agency, the process we have with the British Parking Association and also the IPC. So that's completely in line with all of those rules and regulations.

Thank you, Paul. Let's say the U.K. question here from Francis. Have you modeled downside scenarios under potential PBM cap assumptions in the U.K. consultation and if implemented, -- how sensitive would U.K. EBITDA margins be? Given the yield per PBLs increased but hasn't translated into margin expansion, is cost inflation or recovery expense structurally offsetting the uplift.

Well, I'll cover the first thing, and I think Christian can cover the second bit. We don't see that changing at this stage. All the feedback in a in gone so far in turn not just on a British Market Association of IPC. These are the people that are lobbying our behalf and talk to get on a weekly basis. We're not seeing -- they're not seeing the feedback at the price or the value of the ticket will change, okay? So that we believe that is off the table. There may be some changes in the debt recovery side of things at this stage, but that's -- we think that the industry has put forward a very good is very strong representation that shows the value of the debt recovery process should remain in place to ensure that people actually didn't follow the books. But so yes, no, I don't believe that there's going to be a -- if there's a cap that cap which is where we're at today.

Okay. So in terms of the margin, so obviously, as Paul said, we had 3 debt recovery providers, and the margin for each of those providers is slightly different because obviously, the order data is more expected to choice. And then as Paul said, the legal part is particularly expensive because it's legal costs and court costs. So for relatively new debt, we get sort of 80% gross margins, and then it can be as low as 25% for the legal piece. But that is money that we would not have received in the past. So it's all incremental gross profit.

Thanks, Richard. I'm going to stay on the U.K. theme with a question from Owen Humphreys. U.K. PBM volumes were flat despite site ongoing growth. Can you talk through the drivers of this and expectations of growth in CY and views on a site growth will match volume growth in future periods given this appears to be a driver of margin expansion. Paul, do you want to take that?

Yes, I can say that. So I guess what we saw -- what we noticed, obviously, we analyze the site performance very closely, as you can imagine. And what we noticed is towards the back end of the summer or August, September time in the U.K. was the average dwell times -- so the time a motorable is coming down. We saw that in the spend less time in the location the last time on the parking side. And the only real kind of feedback on the only real answer we can put to that is cost of living things have been pretty tough in the U.K. We've had a very good look at how we apply the business rules for every particular location, how we apply the customer dashboard as in the -- this is a smart hub where our land area can actually access information on sites going on, how we implement the business role, how you implement the exemption listing or what we call it -- and we've made sure that, that has been absolutely set up correctly, absolutely held to the right level contract, right level of customer expectation. And I think what we've seen already post Christmas is that start to return that issuance. So I can say probably not January was a better January than January 2025, for example, in terms of is again seeing those drill times start to recover as such. So those are things that we wanted very, very closely. I believe that as we increase the number of locations under management, yes, you will see the PBN issuance grow. And I think we'll get back to that -- those 2 lines borrowing units and if you like. But again, we launched these things incredibly closely. You can see changes very quickly. We're able to make some changes and moves that include move some of the technology and to so that customers get what they need, but also we're still seeing that level of issuance grow. But yes, very early, just after the summer when we saw that the train strand we can imply that to things. But we shall do a trial. We can't control how long on spends in a location, but we can control all the other things around it, but the installations correct. There can protect the business was correct, the half that you set up correctly with customers gaining the right service and all those things are now in place, we're happy place, and we're confident that we'll see a return. We're only seeing it happen in January, February.

Paul. That's very clear. A question from Stella here just moving countries. Congrats on driving EBITDA in Germany. On Swiss entry, you originally expected investing GBP 1.5 million in FY '26 and become EBITDA positive in FY '27. 1H alone already saw a $1.8 million loss -- should we now expect Swiss breakeven later than FY '27.

I think it's fair to say we've got a bit harder in Switzerland as it to and to the market faster, if you like. So we hired -- we've got a very impressive team there. I'm very pleased to how it all we today. The pipeline is very nicely in line with our expectations. As I said a moment ago, the average ticket value there is high at CHF 65, the paying ratio is high. We just need to measure that we go on site. I think by building the sales team to where we are today, having the rights of the operational support in place I think we'll see some of those costs come down in the second half because we've got some start-up costs in there recruitment costs and legal surpass all those kind of things that come into the first half and when you set it business up. So I think we will see that come back with in the second half. In terms of breakeven, clearly, it comes down to how quickly we in these sites. We're still confident we can win a lot of locations in that market and see it's a very profitable pace to be a very exciting market to be in an extension of the German business and building a that region, if you like. So yes, are we expecting the breakeven 27a comes down to amortize. Clearly, the focus now is to really roll out the locations we can to see that get to the formula need to be. So I think we'll be challenged to make 2027 breakeven not far.

Thanks, Paul. I'll move to James has a verbal question. Go ahead, Jen.

Thank you, Michael. I thank you, Richard. Thank you, Paul, James Dresserom Blue Ocean. A bit of a longer-term question really just around the jaws of operating leverage you're seeing them come through. So you've got 60% gross profit growth year-over-year, 40% operating cost growth, which has resulted in 85% EBITDA growth. Clearly, there's the acquisition in there. But notwithstanding that, you've got a target to go to 3,000 sites from 200-odd currently. So what is your level of confidence around that operating leverage continuing into the future -- and what are the potential drivers that you see as being most relevant?

Yes. Look, we're very confident, James. I mean if you strip out the legal placement in Switzerland, the underlying EBITDA margin is actually up 300 basis points on last year. So whereas countries like Switzerland, Demat Germany, that margin dilutive at the moment. So we would absolutely expect continued margin increase. And on top of that, obviously, we're very early in stages of rolling out AMP in the U.S. And we know that AMP is high incremental margins.

And just a quick follow-up on that are you able to give some illustrative economics of the impact of ANPR on the profitability of a typical site in the U.S.

Look, it's still very early. We've got a very small sample of sites. What we are seeing is there a substantially higher number of tickets per site than we see in other territories. I mean in excess of double. But look, I'm very conscious it's a small number of sites. So as we grow, we're going to give you some more data general on average. Not just U.S. and can you see an uplift of 4x, from manual to automated.

Absolutely. Okay. And then just 1 very quick question. You mentioned some sort of tactical measures that you've employed in the U.K. to improve the ticket growth and make it closer to the site growth. Could you just explain what they are, just so I can understand how you can influence customers to get more tickets to customers in a way?

I'm not sure I call it tactical, James. That says a little bit on the hand is not -- but what I would say is ensuring that we -- that every single site or every single customer dashboard, we provide -- and they're quite unique in this, right, not really of our competitors do anything similar to this where we in a high level of control to the customer with Smart Hub, that's what they go, they can add today a wiener exemption listing. They can cancel breaches, they can they can ask us to adjust business all those sorts of things. And I think what we've done is just to make retighten up some of those promises to ensure that as further contract and customer gets x amount of people in the white, example, when they want to add someone else to have to remove it up a pledge of 100, you do the 10, they're going to take to some for us. These are the basic account management team, ensuring that we tighten I'm sure that the key keep driving those businesses to keep the customers on it because everyone was to keep adding lots of things but that they obviously can potentially impact our issue terms. So of course, it's a high level of engagement with the customer, how you can manage with the customer and a high level of focus on this key business or business -- business sites. I think, yes, it's something that we've be doing for many years, and we've got a deep understanding is a deeper level of respective of the customer and customer relationship that these things go very, very well. It's not like you turning not to try and issue more tickets. The bank is sure that we deliver the best possible service to the customer. and that is also in line with contracts. So those sorts of things, you put a very handy focus on as well as the technology focus, right, ensuring that all the cameras are operating correctly. It sounds really simple, but we've got whatever is in just under 1,400 locations in the U.K. So there's like 3,000 cameras and that we're monitoring on the investor than on our technology, ensuring that they're all for core ensure that we get the best possible capture range, employing the new technology tools to AI that's ensuring that we get the best possible capture rate and a match rates. All these things have we done was hourly basis, ensure we do that correctly, ensuring we keep a really high standard is what drives issues, right? So we've just ensure that we've gone back through all that information, don't check that data, they'll check our practices, they'll check contracts to make sure that we are doing things correctly. -- which we are. And of course, now we're seeing things improve again. We're seeing dwell times increase. It's more -- there's more traffic going through the state, and we're seeing that start to win. So it's a multiple level of a number of technology and service provision adjustments that we've made to make sure that we growth actually to gain. And of course, things that we can't control things like the average all-time their customers, those sorts of things, the motors. These are things that we just keep a very close eye on and make sure we're delivering the best possible service.

Thanks, Paul. Thanks, Richard. Thanks, James. Let's move to Denmark, a question here from Drew Times. In Denmark, the manual issuance is affecting profitability due to PBN numbers. Could you elaborate on the efforts you're taking in that market? And if the government does not revert to automated PBN issuance for the first notice, will you need to consider exiting that market similar to Queensland. -- what for you?

Yes, I'll take that. And I guess I'll start with Quentin. Firstly, we need to understand every really on some school. This is not like the very, very different situation. So what the government has said to us in Denmark is they actually don't mind us access in deeper details. And we've still got our access to the eBoxsystem, right, which allows us to get and see in post, but that has to be the second action. In the past, it was the first action, right, which is what makes our technology work in carry will. In the first action the first business we have to put the PD on the Windstream clearly, that's different at this stage. Now what have we done? How are we going to go? So what we've done is actually created a new trade association in Denmark where there's already 1 there, a very new 1 because the legacy provides the very operating technology. So this doesn't really follow the where for us and 1 or 2 others, it is an issue that clearly we've created a new eTrade association, and we also got membership association with Danish industry. Danish industry -- they represent 50,000 companies across Denmark and the Nordics. And a lot of real estate businesses are involved as industry. So they take our pace on. They've been lobbying with the government particularly the transport biter. They have a very high level of confidence, this will be reversed and they will find a new way forward about how can we -- the first action be the use of the NPR. And the answer there is that we're using APR right away across the country, right, on toll roads, on bridges, the bridges to Sweden back and a number of areas for local government use to wind up with private land and to also keep traffic moving on track for the private industry. Already, that's been reasonably well received and the datacom government is positive. We can't really draw any similarities to cut that because despite having met 3 transport positions pro they basically pulled them as just said, you're not doing what you're going to do, you have to send people out there. And even a reminder, you can't access to. So it's a very different situation to create we feel positive that we're taking the right steps to engage positively with the transport ministry through Danish industry, which is a much, much bigger piece than we've ever had in value for us in Queen -- so we think it's a very different environment. And regardless of that, it was a great place to be. It's a INR 910 crores per ticket. That's over 2 in Australia, right? Average -- the average payment ratio was 70% in excess of. So what we need to do is build density, build to scale density of sites close together. So when we are using tubing to put teams on this screen, they can get to site easier and quicker. Obviously, today, because we're using NPRsitesaquite tecoey're around the country. So we don't have that density. So we're working on a new sales strategy to actually build sites all around that base period of copayment to try and raise issues. So I still believe it's a good place to be a gateway into the rest of Scandinavia, which we're interested in building in that region to the future. So we weren't believing the market.

Thanks, Paul. Let's combine a couple of questions focusing on the upside potential in Denmark. A question from Mark Yarwood and also from Stella. What gives you confidence that the government policy may be reversed -- and can you elaborate on the timing of that? And given that ANPR is used across Denmark for other reasons, what would the potential uplift on ticket volumes be if the policy was reversed, and it was turned back on.

Well, I'll take the second 1 first. So what would happen? I mean, you tend to get a 4 to 5x uplift you go to mainly to technology. So we're seeing a significant uplift in tickets. And of course, we -- we've already got 60-plus locations in place, all right? So the uplift of when this gets reversed, I think, significantly goes profitability quite quickly -- annual possible growing business, right? So that happens actually it's also overnight. What do I think you said you reverse? The asset, I believe it will. And I was recouple of weeks ago. I had several meetings there, obviously get deals to customers. But we also met with our lawyers over there for different regions. They then also finance this -- and I actually have a competitor to talk through what they're doing about the same thing in the same trade association. And everybody -- so the same thing, which is this is a characteristic of the government to operate in this way. This just does not happen with them. They see things different. They're much more consultative, let's find a better way they do in these introduced technology to make things easier and better for people. And that is what they all came back to. And they said, look, as soon as the dust gets involved, it will take some time but they think you'll get it fixed. And so when? I can't give you a definitive answer. It certainly won't be before the end of this financial year. There's a good chance it could be $4 million. Provided we keep an interaction, keeping the taste. They do their job were and as we pass at. What I will say on top of this, which can be a positive, it's a positive for us. There is an election can as well, in Denmark. So there will be changed, all right? And I think that's very positive for us as well. So in short, I think it will go back when that does, yes, you can switch on the PR issue, get back to where we were a negotiation a lot more tickets and lower proxy business.

Thank you, Paul. I can see that Olivia has his hand up. Olivia. Let's move to you.

Congrats on a great result, by the way. There's a couple of written questions that kind of touch on the same thing. -- in the U.S. ANPR business. I suppose my question is not so much the unit economics, but what's the -- you mentioned that you stood up a team. So what's the, I guess, hurdle to profitability of that incremental gross margin from NPR sites like how many sites do you think you need before you -- the AMPR business, so to speak, as a segment within peak is profitable?

I'd say -- I mean, look, it's really early days, right? So we don't have really good data in terms of what the long-term average issuance and long-term payment ratios are going to be, but I would expect it to be less than 50 sites, not a huge number. And we're targeting to get to between 30 and 50 by 30 June, right? So we could get profitable pretty quickly.

Okay. Yes. So it will be a modest drag presumably in the second half of this at team that you put in place. And then you'd expect it to be pretty breakeven to profitable in the first half of next year? Thanks.

I like to follow up with a question from Michael Holland. With your early U.S. experience, how does the public behavior around PBNs compared with other markets, metrics like payment rates, time to pay percentage appealing, repeat offenders, et cetera.

Yes. As Richard said go, it's very, very early days. I mean, 1 I would say is that the behavior of this much more contravention, right? So a lot more people broke the rules in the U.S. than that we see elsewhere. And part of that is communication. We were signed everywhere that people aren't reading the overs partner being the contra appeals. But what I would say is we are starting to see the payments come through. They've been coming through quite well. Clearly, as we get more sites on board, more data and more information, we'll understand the pain ratio better. It certainly or of 35% at the moment. So paying to 40 plus. So I think my experience with time, I believe we're going to see a lot more issues and you're probably going to see 40% to 45% pain, which is not as soon as the U.K. And if you think about it right way across the group, the U.K. has been sort of a baseline is 50%, 55% plus then user comes in, just above that. And then you've got generally at 60% plus and in Denmark, and we believe far higher. So I think the pays are similar elsewhere that people contain the rules. They don't pay or the other say. And the appeals come in, which is to the -- Okay. But we're managing that very clean very carefully in the U.S. And I think we're pitching the value that we see in corrected. Some of our capacities are much higher value becoming lower. That team to do at the moment is whilst we've paid our sales into this market. And I think we're going to see a lot of success now. I'm excited by what we're going to achieve every time I go there. We've got new customers, new things happening, and also many more people to the team, have a new self-directive just for that APR business. Yes, we're looking forward to really accelerating the growth.

Richard, just a quick follow-up for you on that for Mark. Can you comment on the incremental margin on AMP in the U.S. given there's an existing cost structure?

Yes, yes. So it will be very high. You're absolutely right. We've already got infrastructure month already got infrastructure. So a little bit like New Zealand, we had some infrastructure there. And obviously, we're now getting in excess of 40% EBITDA margins for the New Zealand business.

Thanks, Richard. Larry Gandler, I can see you have your hand up. Let's move to you.

Paul, maybe just coming back to U.K., if you can comment on what the opportunity is to further develop those legal recoveries? I suspect you have a back book there. So maybe that's still an ongoing opportunity.

Absolutely. I mean, I think it's interesting. I highlighted earlier on in the presentation that a number of shareholders as this is 1 of our just going back overall HD just in and trying to let money, which is not technically right. We've been actually been running this process or started this practice 18 months ago. I mean it's taken quite a long time to get to the point where we're working regular outstanding debt, and we're taking it right way through the process right to legal press or a court process. And that does take time. And -- if we think about what's in the HD book, there's hundreds of bids of these, at least in there that we -- over the last 6 years have been tried to change, nothing's happened. And we just try trying to attack it again to recover the money is what people are. And we're still -- whilst what we've done so far is across the 2 debt recovery providers or second customer providers is actually given the run at 300 to 350 plus days in case each were been working some of that and others. But they're still well on 1.2 million cases that we've done nothing with yet, because this is -- you have to go through this process slowly in order to answer a question that came earlier about how do you manage the potential rise. If you were a glo reputation now, you hear this back book all in 1 go -- and you'd be on the front page of the sub right, or the mirror regarding something. We have to go at sensibly conservatively with the right kind of pace so that you actually target everything properly, correctly and in line with the rules and regulations which we follow. So I think...

The other key point is we're issuing more tickets every month in the U.K., right? So every month, there's more tickets go to debt recovery in man. So it's ongoing proceeds.

So it's not going to -- it's not a soda key thing. We're at a point now where we feel we're going to continue to grow on. And we take going with this particular asset book, which is going to keep growing as Rich has.

Okay. And just I guess from a consistency perspective in terms of projections, -- is there a lumpiness to this debt recovery piece? Or you're consistently going to be tapping into that back book and the yield should be somewhat similar over time? Or do you think there'll be some lumpiness period-to-period?

Well, we are consistent with the back book now. the target is going, right, and to make sure we hire the right partners. They actually look to the data for us and they approached their grades and stuff -- so it takes time to get this right. And of course, the process of going from the -- from when we issued it at 2 days ago to the first debt recovery provider right, which is the first place in the late and 12 months and 1 day, and you then go to your second 2 sets of debt resolution providers. And then after that process, you then go through a legal process. So setting that up is a time, we've built on our own technology to manage workflow because that's additional to what we already do. But it's been my investment to make it a year to look at the numbers and the cash is working, right? It's a strategy or an initiative when we already tested it years ago to then actually putting in place start to process hire the vendors and go for it. Yes, it's taken some time, but it's absolutely working right now, and it's something that's going to continue well into the future.

Well, just staying on that back book theme. Francis has a follow-up question. Given the U.K. parking depths are subject to a 6-year limitation period, can you provide the age profile of the back book and indicate what proportion of current recovery revenue is within 2 years of becoming a statute bar.

With it off the top of my head, prices, no, I can't tell you that. There's an awful lot of cases that we deal with. But what I can say is that 1.2-plus million cases that are in the A book today are absolutely within that period of time within the 6-year satiation A lot of it, clearly, once you start going through the process, these tend can happen quite quickly. And it's -- like I say, it's being added to on a daily basis. right? Because we're issuing 60, 70 next month in the U.K. And of course, they go through the first process second and then they're into that age at port. So every day, it's being added to -- so can't view of the ceiling. Isaacs a question on this point, too. Since debt recovery is going to be ongoing, -- is there a path to bringing debt recovery in-house as part of the follow-up process. Interesting question. There's no plans right now. And the reason I say that is that we are very good we are excellent at managers. Our focus is building technology that's going to deliver is going to monitor car parks and managed space for land our customers or the sense of everything we do is we ensure there's always a place to part it genuine customers. And that is what we're really good at. The recovery is in chronic specialist firms out there who do it all day on all day every day. And to me, you want to put the ACE in the right place to make sure that we hire someone, it's the right person for the job and the same with our fans. It's an interesting comment. It's an interesting thought process. It's something we have to about in the past that we can have that whole process. But in our DNA, we're not debt recovery agents. That's sort debt resolution change. That's not a -- that's what we had to. We provide a service to land loans, retail is property agents, so on, which was always the best erat January customers. And we want to hire the best end to help us for other ancillary services. I think we've done that. I don't treat angles. What I would say is just to expand on this point is, we're now control implemented this in other markets, New eat in Germany. And in Denmark as well, clearly, there's other opportunities there for this legal process or second close process. I think that's the thing that we -- a lot of people don't really see, which just looking at 1 market. But actually, we operate at 6 months yet. So let's think about how business can be rate across the group, not just in 1 area, which is a test has today that's gone or not well.

Thanks, Paul. Isaac had an earlier question, which I'll now move to, which is since SP technology leads to, I expect a majority of parking bridges being fined -- have you noticed increased compliance from customers once sites are installed and therefore, do less PBMs get issued or a time over the life of the site.

Well, I think it's important to recognize before sets want to recognize what we're there to do, right? We customers because we're there to solve a problem. That particular patient at customer sites is being abused for somebody -- people paper. You should be parking there to park in their waste is young, fuel market, they're not paying -- these are the problems that we solve. And we create footfall through that particular site that is what the landowner wants, right? They're a McDonald's franchisee or the sharp or hospitality or if they're a retail environment, they want footfall, who extra. So of course, when you do go into any of that cash this a few years and years, we've got a lot of bases that backs up. Clearly, you're going to see an uplift in number of tickets being issued early in the contract life cycle. And over time, you will see it drop to a center point and say that, which might be 2, 3, 5 year today, for example. -- might sell for 10 a day and it comes to 54. And that's still within our averages -- those are big sites we want and want to issue 2 or 3 things today, fantastic, low CapEx spend, generating broadens already range, that's perfect for us. We want lots of those, right? There are the big hitters and they stay there and they come hybrids. So yes, you do see a reduction at the time, but normally drops to a certain level in the state because that's what we had to remove the that to ensure there's always a place to park in January customers.

Thanks, Paul. That concludes the Q&A session. Thank you all for your questions. And I'll now hand back to Paul for closing remarks.

Thank you, Michael, and thank you, every for seeing around and listening. We do appreciate his time. But I will finalize we'll just finish the presentation just a few remarks just reiterate a couple of points I made earlier in the presentation, which is we've clearly had a strong set of results for the first half. And the more important thing is we've got great momentum going to second half. As always, execution is key. We continue to drive organic growth across all of our markets while optimizing the portfolio for greater sports -- we have a superior and a unique offer in the markets we operate in and the pipelines are looking fantastic. We're incredibly pleased with the Peak party acquisition is performing very well. and we are excited by the APR increases within a CEO for this half. We clearly have set up a day ATT, dedicated salespeople and the leadership in a higher against their targets. I'd also be selective about how we add complementary acquisitions to accelerate our growth and has our earnings Acquisitions provide opportunities to leverage our marketing and proprietary technologies and offer customers that differentiate it superior service. We are well on our way to achieving our tight target of 3,000 APR sites under management by December 2028, which, by the way, is only 1% of our largest time. So as I said early on today, as I reaffirm what I said in August last year -- in FY '26, we will continue to grow and strengthen the foundation for future growth. We've developed marketing technology how over a decade that the main expertise and understand customers' needs and the compliance and related frameworks in the market. We're well placed to continue to grow in existing. Thank you very much for joining us today. And there will be -- I suspect we'll be meeting a number of people on the road this week and to the first week of March. But again, if you have any questions, please say great. We're very happy to ask them. Thank you very much.