Ten Lifestyle Group Plc (TENG) Earnings Call Transcript & Summary

Afternoon, ladies and gentlemen, Welcome to the Ten Lifestyle Group Plc Full Year Results Investor Presentation. [Operator Instructions]. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your Investor Meet Company dashboard. And we'll notify you by e-mail when they are ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll. And I'm sure that the company will be most grateful for your responses. And I'd now like to hand over to Alan Donald, CFO; and Alex Cheatle, CEO from Ten Lifestyle Group. Good afternoon.

Thank you very much, Mark. Well, good afternoon, everybody, and thanks very much for coming along to listen to our results for the year to the end of August 2021. And what we're going to do is run through what we're about, a short reminder there, run through the results and then talk about the outlook moving forward. So as most of you will know, we are all about becoming the world's most trusted service business. We want to earn and deserve the trust of our members. And we do that by organizing being the best place for them to organize travel, dining, lifestyle, other lifestyle needs, music, theater and sport, helping them buy rare items, expensive items and organizing events for themselves as well. That market being the best place for high net worth and mass affluent to organize the things in their social life, in their entertainment, life in their travel life is a huge market opportunity, a multitrillion pound opportunity. Now to date, what we've done is we've become the best lifestyle concierge service in the world, which we've become the established market leader in that market. We win the vast majority of contracts that come up for tender, and we win those contracts on multiyear periods, whereby large companies pay us to look after their top customers, those people become our members and we then serve them in the areas that we talked about before. Over the last few years, we've generally seen sustained growth, the pandemic aside, but we -- even during the pendant, we've seen growth in our profit margins and in our profit before tax figures as well. And as we grow and develop the business, we invest more into our proposition. We proved the proposition to our members. Because they get more from the service, they use the service more -- more of them use service more, that drives value for our corporate partners who give us more money to spend on their customers, our members, and we invest that into improving our proposition. But we also use it to invest into our technology and into our supplier base. So our business becomes more efficient and high quality as well. That's what it really is our investment case is that we are a tiny fraction of the size of the business that will become as we go through that growth engine and have several more turns of that. So here's a metaphor for how we feel after 18 months of COVID. And this guy in the middle of this slide is Tom Dean. Some of you will know him. He's a swimmer, Tom won 2 golds in the Olympics in Tokyo in the 2020 Olympics in Tokyo. Now what's interesting is if those Olympics had been held in 2020, he wouldn't have been expected to have won any gold and at best might have got a bronze. Now as it is, when COVID -- meant that Tokyo got moved back, this 20-year-old guy spent an extra year training. Just as we spent an extra year investing in our technology and improving our processes and improving our proposition. And he also adapted. He had to stop swimming at Bath University pool and start swimming in the [ tents ] near [ Malo ] because they shut the pull down because of COVID. Now for us during COVID, many of our members couldn't travel. For periods, people couldn't eat out in restaurants, people certainly couldn't go and see music theater and sport. Like him, he swam in the [ tents ] terms, we invented virtual events. We invented home deliveries, benefits we could bring with that. We invented book clubs, we did all sorts of other things. We've massively improved our investment in content to make ourselves relevant, keep ourselves relevant, keep ourselves generating revenue from our membership base. And so just as Tom in the end of 2019, had a good future, a very good future ahead of him for 2020, today, he's got an even better future ahead of him. He's looking forward to the European Championships in Rome. And then the Paris 2024 Olympics, and let's hope in a few more golds. For us, our focus from here on in is to build on the successes of the last year. And in the last year, we retained not most but every single one of our corporate clients, and we won new contracts. We've got more eligible members than we had before the pandemic. We've got better tech because we carried on investing in it. We've got a better proposition as measured by our record service levels. We've got a stronger competitive position and we've got a great pipeline of new business, too. So our focus -- his focus is Paris 2024. Our focus is to continue to drive our growth engine, to continue to improve that proposition and service levels so that we grow our revenues, increase our buying power that allows us to invest more into our technology, improve our proposition and service levels still further. So that's a kind of overview of our business in the last year with that metaphor. And I'll hand over to Alan to talk about the business overall and the financials within the business.

Thank you, Alex. I'll just take you through the key financial highlights of the year. So the group managed to remain relevant to our clients and members throughout the year as Alex said, and we maintain profitability despite the challenging conditions of COVID. As you can see, net revenue of GBP 45 million was down 21.6% versus 2020 with corporate revenues, either revenue we earned from our corporate clients, down 22% and supplier revenue, which is predominantly travel, health commissions down 15%. Our supplier revenue did start to improve in the last quarter of the year, principally in Europe as travel opened back up. And I've got a slide on that later I can go through. To offset the net revenue shortfall, operating expenses reduced by GBP 9.1 million, and I'll go into that in more detail. And that resulted in adjusted EBITDA, just slightly below last year at GBP 4.4 million. However, we did actually improve our margin by 2 percentage points to 12.8%. And the improvement in EBITDA flowed through to our loss before tax improving by GBP 0.4 million. Our net cash did reduce by GBP 3.3 million year-on-year, and that's primarily due to our -- we continue invest in our technology investment, and I'll go through that in a slide further on. In relation to our income statement, I'll cover off net revenue in the next slide, but our operating expenses where we reduced costs. While with continuing operational efficiencies in the business, we also took action around salary and bonus, and we froze those, and we did make some redundancies and reduced the headcount in the business. We also implemented a salary sacrifice scheme in exchange for share options for employees who sacrifice salary for share options, and that was probably a cash saving measure, but it did actually improve our EBITDA and the charge that came through in our share-based payment charge fall down in the P&L, as you'll see. We did take government support across all regions, amounting to GBP 2 million this year as opposed to GBP 1.6 million in the prior year. This included furlough in the U.K., Kurzarbeit in Europe and other similar government schemes across a number of countries. In addition, we did take out a U.S. government-backed PPP loan where we took out last financial year, and that was fully forgiven in the year. So that came through in our other income, GBP 1 million. Our depreciation did reduce by GBP 1.2 million. Other actions we took was that because our right-of-use asset, the property that we lease has reduced in the year as we downsized across the world and also renegotiated our lease costs and that's reduced depreciation charge to our P&L. Share-based payment charge in line with last year with the salary sacrifice schemes in both years. Then with a small exceptional cost charge of GBP 0.6 million, GBP 0.4 million of which was an impairment charge on some of our content that we capitalized and also some exceptional project costs of GBP 0.2 million in the year. As I said, that led to a loss before tax of GBP 5.5 million. If you move on to the -- this is the net revenue slide, and this is looking at the bridge between '20 and '21. As you can see, we didn't lose any clients during the pandemic, but our base business did go down by GBP 7.9 million due to pandemic. Supplier revenue were down by GBP 0.5 million to GBP 2.8 million. And we did have 1 contract change with Revolut, went through a large contract to a small affiliate contract in September 2020. But we did manage to win 2 medium contracts in the year, which contributed GBP 0.5 million. The next slide is basically our analysis of our supplier revenue. And let us look at the impact of COVID on our supply revenue. Remember, this is predominantly travel and hotel commissions. The left-hand side of the graph shows the full year of revenue that we earn. So pre-COVID, we earned GBP 5.5 million. As COVID hit, it went down GBP 3.3 million in 2020 and down to GBP 2.8 million in 2021. If you split that by half year. So H1 2020, which was pre-COVID have met GBP 2.5 million. You can see the impact of COVID down to GBP 0.8 million in H2 '20, a slow recovery in H1 '21 and then a strong recovery in H2 '22 -- '21, and that was basically Europe coming back and traveling starting. So we're getting back to pre-COVID levels. And that has continued into our new financial year, September, October and November. This is just our net revenue split by region, and this is basically showing the impact of the pandemic across all regions. EMEA down 18%. Americas declined 28% and APAC, 21%. And within EMEA already have the Revolut contract change and supply revenue recovery in the last quarter. The next slide is just our adjusted EBITDA by region, and that is looking at -- and you can see EBITDA in EMEA reduced by GBP 2 million. However, we maintained a strong margin there at 34%, only a decline of 3%. And that's our most mature region in the group. Americas loss decreased by GBP 1.7 million, and that's where we manage costs and also maintained our key resources using the PPP loan, which was forgiven in the year. APAC EBITDA slightly improved and that was the cost and operational efficiencies coming through. This is an important slide for us, and this is looking at our technology investment, and we continue to invest in our technology. We invested GBP 11.5 million, and that to our digital platform, TenMAID, which is our internal CRM system, content and our IT infrastructure and communications. And we continue to spend that through COVID. We could have cut that we wanted to. Why? Because it creates competitive advantage. It drives efficiency, it drives service levels and it drives ultimate revenues. As we come out of COVID that will put us in a strong position. And then the next slide is basically our cash flow, and we did generate GBP 4 million of operating cash flow in the year. We -- as I said, we continue to invest in technology, investment in intangibles of GBP 5.4 million is probably our technology investment. We did receive some cash proceeds of GBP 0.9 million that was exercising some share options through the year. And then the net, as I said, net decrease in cash with that investment technology of GBP 4.3 million through the year. Moving on, I'll just touch on the business model. And this is basically -- this first slide shows where we make our revenue. The pie chart shows that 92% of our revenue in FY '21 was from our corporate revenue, i.e., corporates paying us to look after their members and supply revenue was 8% of revenue, which normally pre-COVID was around 12%, and that's only travel and hotel commissions. The right-hand side looks at the typical contract and how that's made up. We get paid by request, be it high touch. We've talk to our lifestyle manager, either through e-mail or phone or through WhatsApp. And we also charge per digital request, which is self-serving and that's a lower fee. And these contracts are normally 3 to 5 years in length and about 60% of them agreed guaranteed minimums within them. This is a new KPI that we brought out in the business, and this is looking at the number of eligible members in our base business and also the number of active members who use our service. Definition of active is if you've used our service leads once in the last 12 months. So the left-hand side of the graph is our eligible base for what we categorize as our very high-value clients and our high-value clients. And then on the right-hand side, active members, we are very high and high but also of our medium value clients. So what do I mean by very high, high and medium. So very high as we have our contractor bank, so a really premium bank, private bank, they have clients and our members who have high assets under management or a premium credit card. So the bank can afford to spend more money with those customers, and we can spend -- and span an average concierge revenue per member more for us in that segment. In the high segment, I will be working with the retail bank directly with a premium credit card, and that will be -- and that will be slightly below the very high-value segment. In a medium that is where we're probably contracting through our network of Visa and MasterCard and dealing with the banks through there, and that is a high -- a lower average concierge revenue per member because the bank -- the credit card company, banks cannot afford to spend as much money on that segment. And that's really looking at the penetration in each of these segments. And as an example, in our very high value, we've got about 0.5 million of eligible members. And in 2021, 57,000 used the service, which is just over 10%. And we've got a various variation in that segment of mature contracts being over 30% penetration and other contracts that are 5, 6 could grow to that as well. So it's looking at the opportunity we have to grow the business from the client base. The next slide is just looking at the concierge revenue by value segment and looking at just showing that 62% of our concierge revenue comes from that very high and high-value segments. And that's been fairly consistent through COVID, as you can see in the bar charts. And I'll hand you back to Alex to go through the operational update.

Great. Thanks very much, Alan. So operational update. We're delighted to say that we launched Westpac at the beginning of the financial year. We won Credit Saison and launched it just after the financial year. And Credit Saison are like a very premium Barclay card or Capital One type organization in Japan. They're one of the top issuers of credit cards in Japan. And that Credit Saison contract is worth in this current financial year, more than GBP 2 million a year and will be worth that ongoing. It's on a long-term contract. We are delighted that we retained all of our material contracts. So real evidence that we've provided real value to our corporate clients before COVID, during COVID and that they see value continuing after COVID as well. Continue to invest in tech. It would have been very easy for us to panic at the start of COVID and cut our investment in tech but tech is one of the things that drives our competitive advantage, it makes us more efficient. So actually, our investment intake over time actually makes us money, wins us contracts, improves our service and helps the whole growth engine flow. We've improved the member proposition. We've got record member satisfaction, and we've -- I'm very pleased to say we've hung on to every member of our senior leadership team, have stayed very loyal, connected, engaged. And the reason I'm happy about that is I think they're doing a great job. We've also continued to invest into our Lifestyle managers and our managers to make sure that we've got better management throughout the business and a higher service quality. And of course, the fact that we've actually grown our EBITDA margin during the toughest time over the last 12 months is really impressive. Can we just play a video to remind people, Mark, about how we explain our service to people here in the U.K.? [Presentation]

Thank you very much, Mark. And I think we're back to the presentation. So that's how we explain our service typically to a high net worth or mass affluent customer member here in the U.K. Obviously, we change that around the world depending on what -- which parts of our services are most attractive. Over the last year, we've had another year of record Net Promoter Score, and that's how we measure the quality of the service that we're delivering. Now that can look like quite a dry number, but it's absolutely essential. Every Lifestyle manager in our business can tell you what their current Net Promoter Score is on the request that they've been doing for the members they've been looking after. It's how we run the service quality in our business alongside a few other measures as well, but this one is dominant. And the better that is, the more likely people are to reuse our service, report back that they love their bank because of the concierge service they get with their banking product or their card product, it's only a good thing to see that number strong and healthy. And because our service is so good, our corporates have been talking about it more than ever. So although recently, we've been talking more about virtual events and staycations rather than physical events and international travel, we have been doing more engagement with clients than ever before. We've also been engaging more with our corporates. So historically, we were completely obsessed and still are obsessed with the member, the person that uses our service. We've got a lot smarter though in terms of how we explain to the sponsoring banks, credit card businesses and other luxury brands that pay us to deliver our service. We've got much better at explaining to them why they should do that typically using their own data. So we can prove that we -- they get a very positive return on their investment. And on our website at tenlifestylegroup.com or tengroup.com, you can see all of these under case studies, and they're worth looking through to see quite how compelling our rationale is. Now case studies are for why banks and others should invest into our service. That's one of the reasons why we've got 100% corporate success in retention and why we've won new contracts even at the height of COVID. Our corporate client base as well are very, very strong. They're strong. They're solvent, and we look after the clients that are good for them in good times and bad, Asset-rich, cash-rich customers are always a good thing for a bank. They make money on cash in the bank as well as when they're selling some of the investment products or a mortgage or a credit product. And across our portfolio, we've got some of the most extraordinary brands and the most solid blue chip organizations in the world. Over the last year, we've actually got better. Like Tom Dean got better at swimming, we've got better at quite a few ingredients in our model. So we've invested into an onboarding journey, so that when people first get invited to our service, we're twice as effective as engaging new customers than we were before because we now don't just send them an e-mail with some nice images in it and a good bunch of narrative, we do a series that involve video, which involve personalization, which really do connect with you as an individual and explain how our service can help you. And then as people use our service, we learn more about them as an individual, them and their families and how they live their life. And we can then come back to you and say, how we can help you about your own particular needs. We've also automated parts of our service. So if you fly to New York and you've booked a flight for July, we'll get in touch with you in the middle of August. And we'll point out things that are going on in New York, restaurants you might want to visit, et cetera, during your stay personalized to you that you can book on our digital platform. We've also put chat functionality into our service. So in many parts of the world, starting with Russia, but then we've launched it in Latin America, in some markets on some programs in the U.K. We've launched chat and WhatsApp as well. And because we've got a chat functionality in the platform now, we can automate some of those chat responses. Now not most chats we still need a live human being to deal with them, but some questions are highly predictable and we can answer them very effectively with a chat bot, which makes us a little bit more efficient. Things like that will grow the efficiency of the service over time, although we'll only roll out chat bots where they really are as good as a human being. We've also got smarter at how we match Lifestyle managers with the right member and with the right request. So that if you're halfway through a holiday booking, when you call the generic number, you automate go through the Lifestyle manager that's organizing that booking for you. If you call out from a particular postcode as a first-time user, you should be talking to a Lifestyle manager that is more likely to know your area. So things like that is what we call bullseye call routing. We've also put in things like abandoned basket automation. So if on our digital platform, you get halfway through booking a 5-star hotel in the Maldives and then you pull out, we can reach out and say, would you like more information about that because we'd obviously like to help our members book that. And the person that might call them back or not call them back, but actually just offer to call them back, would be a Lifestyle manager who understands the Maldives and is one of our Maldives experts, for instance. Now investment in tech doesn't just improve our service quality, but it does that. And it doesn't just speed up our service, which members love. It also makes us more profitable because our Lifestyle managers can manage more requests when they use our technology. And of course, when a member uses our technology that doesn't need any human intervention, that's also a really good thing for our profitability as well as the member experience. So it's great to see the orange part of the bar chart here shrinking, the gray growing and the green growing as well. Because we want more of our service to be automated, more of it to be partially automated where technology is helping the Lifestyle manager deliver service very efficiently. We are not trying to become a pure technology business. I don't believe that at any time in the foreseeable future, we won't have really expert Lifestyle managers organizing requests in our business. And as the business grows, there will be opportunities for us to grow the number of Lifestyle managers that we recruit. However, we will have a growing proportion that are fully automated or partially automated. And that will continue to drive our margins and service quality and competitive advantage. On top of that, once you've got a digital platform, that becomes a wonderful place to put content. And so we've grown the number of magazines and up-to-date destination guides that are on our digital platform. And we also ask our corporate clients to send those out to the eligible customer base, many of whom won't have yet become active members. So if somebody reads our DINE magazine, which is all about eating out and enjoying restaurants, that creates a -- it's a great read in itself. I recommend that you do enjoy those, but it also creates desire to use our service. And through every DINE magazine that we explain why we're better at booking restaurants than you are on your own. And because that's ceded through these magazines, whether it's explore for travel, DINE for cooking -- sorry, DINE for eating out and so on, that brings our service alive to people that might not know they love concierge yet, but they do know they're interested in eating out. Then they use our service, then they discover it. We've got another active member that grows our revenues and helps us take a few more steps towards becoming the most trusted service in the world. I mentioned before, we continue to invest not only in our tech but at our people as well. So we've improved our global communications. We had a very successful move to hybrid working and homeworking, entirely homeworking for large parts of the last 18 months. And that led to record scores in our employee engagement survey that we did earlier this year. Plus, we've continued to invest into the Ten Academy, which is our in-house training program. And one of our programs on that is the Global Leadership Program, which really helps line managers manage their people better, inspire them better, lead them better. And that, in the end, makes for a better service and happy Lifestyle managers and happy Lifestyle managers to deliver a better service as well. I'll just put out 2 things on this chart, which is really a summary of some of the improvements we've made in tech over the last 12 months. One thing is API integrations. So with HSBC in Hong Kong and Singapore, if you have got there -- if you bank with HSBC and you're a Jade customer, you can now go to your Jade banking app. And as you're transferring money or checking your bank balance, you can also see how to get the most from your concierge service. And when you then go to use our concierge service inside the HSBC banking app, you don't need to sign in separately. It's a seamless service experience. Now that is really valuable because again, lots of HSBC Jade members haven't discovered concierge yet. Part of our job is to get HSBC Jade up to a really good penetration, up 20%, 30%. Today, it will be far less than 10%. And because if we can double, triple the penetration, very crudely, we'll get paid twice as much, 3x as much, and we'll engage more members around the world of HSBC. That's a very good thing. So getting into that banking app is a good thing for our business and for our service. It's also a colossal vote of confidence in our technology. The CTO, the Chief Technology Officer of HSBC would not have allowed that if they weren't committed to us as a partner and our service is a really important hero benefit of their banking proposition. Another thing I would point out is just the fact that we are now in 27 brands around the world, and that's the majority of our medium, large and extra large contracts, the vast majority now have got our digital platform out in front of their members. And we've never lost a contract where we've launched our digital platform. In terms of outlook, where from here. So we've come through COVID, and we've come through COVID with our revenues understandably down 20%, 21%, but with improved profitability and an improved proposition, record service levels, great tech. What about from here on in? So firstly, I just want to remind you that when we launch a new program, a new corporate contract, it's either brand new in which case we start from zero or we're taking over from a competitor. Normally, we take over from a competitor because they think our service, and we think they're right, we'll do a much better job. So you can conclude from that, that when we take over and replace a competitor, they've normally got fairly low penetration levels. So our job over those first 12 months, and sometimes it takes up to 3 years, is to just replace the competitor, deliver great service and prove to that corporate client the impact that we have with their customer group. That then gives us data to prove that the more money they spend with us, the more money they make as a business. And that means we've become a more important partner. They spend more with us. It grows until we become a hero benefit, really an important part of their proposition and at best, integrate with their technology as well. So the reason that's important for outlook is we've got a whole raft of corporate contracts which are still in that first stage the contracts that we won pre-COVID, but they haven't developed as much as they would have done if we hadn't had COVID for the last couple of years. So for us, some other kind of things to point out here in terms of our outlook, some current clients increased the number of active members. Two examples, SwissCard in Switzerland, have provided our service to tens of thousands more Credit Suisse customers who they've given an American Express Platinum Card too, and that leads to higher usage and more active members in our portfolio, driving our revenues. And that really has been happening over the last few couple of months and over the next couple of months. Most of you would not have been watching Switzerland play Bulgaria the other day when they quantified ahead of Italy in their World Cup qualifiers. But if you had, at the side of every football pitch, or the football pitch, the advert that came up most often was for CSX, which is the Credit Suisse product with which you get the platinum card. They're making a big deal about it, very good news. Here in the U.K., Barclays have taken our product that was attached to Home Pack that wasn't on sale, very frustrating for us over the last few years, and they've moved it to Travel Pack Plus. Good news, there are lots, lots more customers that have got Travel Pack Plus, so we get paid more from the middle of December. And we've got the opportunity for more Barclays customers to actually buy that product because it's on sale. It's a product that Barclays want you to buy and that you can buy. Similarly, we've won extra engagement with new banks through Visa or Mastercard around the world, and we've won new contracts. Credit Saison in Japan, Westpac, and we've got others in the pipeline, a healthy pipeline, a fantastic pipeline, a stronger pipeline than I think we've had in the history of Ten. And then we've got opportunity to launch into new verticals as well. Albeit, during COVID, we really focused on our major vertical today, financial services, private banks, retail banks, credit cards. That's really where we focused over the last 18 months. As we come out and we generate cash that we can spend back on sales and marketing, we will move into other verticals as well that will lead to more revenue and more members. And coming out of COVID, a bit of background. Our corporate clients need us more than ever because we've proven that we can engage during COVID, and we can engage when things are more normal as well. And during COVID, other benefits are nowhere near as useful. So for instance, corporate face-to-face entertainment doesn't really happen when people can't do things face-to-face. Airport lounge access isn't much use if you're not traveling. Whereas, we stayed relevant all the way through, and that's allowed us to really create more relationships at senior levels amongst our banks, and that will do good things for us as we come out. Hotels need us more, restaurants need us more, airlines need somebody to fill the front of the plane that isn't going to be full of business travelers anytime soon. And we believe that we've continued to invest into our tech and into our proposition when our competitors have done that to a far lesser degree, if at all. But it's not just our direct competitors that we've been competing against. It's also travel agents, tour operators, and sometimes, the individual organizing travel themselves. Individuals that in 2019, organized their travel themselves for summer 2020, very often regretted it and swore they wouldn't organize it themselves in the future. That's an opportunity for us that we're capitalizing on right now. And similarly, many travel agents and tour operators didn't deliver the service that their loyal customers expected in 2020. And that gives us in 2021. And that means that we've got more people using us for the first time. We do a good job, we hang on to those members. And I think has already mentioned that we've got benefits in our cost base as well. Moving forward, rents reduced around the world, and T&E also reduced. So where from here? So we are seeing demand for our core services increase as pandemic eases, as lockdown restrictions ease, we see a very rapid growth in core services coming out of that. So across October, November, December, demand for travel, for instance, around the world of Ten was up 40%, 4-0% against pre-COVID 2019. Now that was led by Europe and the U.S. Actually, travel in Asia is still incredibly unusual and travel in Latin America, which is one of our biggest markets, is still very, very much subdued. But on top of that, as we come out, core services reinflate our business, but we still will maintain the book clubs and many of the virtual events that we've done that have been very successful. Some of the virtual events will go. Chefs don't want to do cookalongs when their restaurants are open. However, many will remain, and they've stayed very popular despite lockdown restrictions easing. Because of things like travel, supply revenue is doing very well. We're trading -- certainly trading in line with the Board's expectations. And as I say, I'd expect us to convert more of our pipeline of opportunities in the coming months and beyond. So then that will grow net revenue, grow adjusted EBITDA and EBITDA generally, keep us in a positive net cash position. We scale up the operations and that growth engine continues to kick in. And like Tom Dean, we come out of COVID, come into 2022 stronger than we were going into 2020 before the whole pandemic started. Now we go into 2022 with record contract retention, highest ever service levels, strong and growing supply revenue, decent and growing margins and we've continued to invest into our technology and our people and our proposition that grows our business and grows the health and strength of that business and future growth. And that's why we're positive looking forward. So that's a very quick run through about where we're at. And we'd love to take questions. We've got some already come in. And we will talk through from there. Thank you very much.

That's great. Alex, Alan, thank you very much indeed for updating investors this afternoon. [Operator Instructions] Just want Alex and Alan take a few moments to review the questions submitted already. I'd like to remind you that the recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via your Investor Meet Company dashboard. You will be notified as well by e-mail and it's really for your review. I'd also like to remind you that your feedback is important to the company. And immediately answer this presentation ended, we'll redirect you for the opportunity so that you can provide your thoughts and expectations back to the company. Alex, Alan, that's not all of the time to take onboard some of the questions that have come through. But perhaps if I may, investors did have the ability to presubmit questions, and we've received a number during today's call. So thank you to those who have submitted questions. But perhaps if I could hand back to you to read out the questions and give a response where it's appropriate to do so.

Sure. Thanks very much, Mark. So the first one, I'm going to pass it over to Alan. Alan, when will the company reach profitability and cash generation?

Okay. Yes. So under our current plans, and I think you highlighted in the outlook is that for this year in H1, which is from September to February, from a cash perspective, we will still burn some cash as we continue to invest in technology. However, our revenue run rate coming into fancier has gone up. Just as Alex explained, we won credit new clients like Credit Saison, we've got extensions on existing contracts as well. And also we've seen travel come back strongly to supply revenue stronger at the moment. So that helps us. And so every month going on through this current financial year, the cash burn is getting smaller. And then as we -- the forecast in the second half of the year as we generate cash coming out of COVID, and that means year-on-year, we will have a cash inflow in the whole year with a cash outflow H1, cash inflow flow H2. And from a profitability point of view, we are EBITDA profitable, as you can see by the numbers. I think from a PBT point of view, that would start to happen at the end of our '22 year into a '23 year as the business goes out. I was hopeful that answers that question.

Alan. So the next question I'll cut to is how will Ten respond to the new COVID variant if it takes hold and discourages people from traveling? And that's in Australia. And that's a question that's come from somebody in Australia. So they know something -- a thing 2 about lockdowns for sure. So we are clearly thinking very hard about this. So when we went into lockdown last time, we were able to maintain revenues at a really good level and actually improve cash in the business and profitability. But how we're thinking about it this time is if it's the worst case and that life does go back into a lockdown around the world, so an absolute worst case, here's how we think about it. Firstly, Asia, our biggest markets in Asia are Japan, China, Hong Kong, Singapore and Australia. And those are -- and Hong Kong and Mainland China. And those markets, travel has never really restarted in those markets. So we're not expecting that to affect our travel business very much. And in fact, our APAC business will be bigger anyway because we've got some business coming in from Westpac and we've got a very large contract coming in, which is all domestic request today through a Credit Saison in Japan. So today, actually, our APAC business, it's more about if COVID doesn't -- it does recede, then there's a lot of upside. But if there is a ban on travel, there's not any more downside than we've already got in that area. However, the U.S. and Europe would be affected if travel wasn't allowed. We would certainly reduce supply revenue for sure, and we would have a reduction in travel as a core category. However, most of our contracts are underpinned with the contract minimum. And that's certainly true for our business in Switzerland, our business in the U.K. Not all of our contracts, we've got a contract minimum, but enough of them that, that keeps those geographies in a pretty good shape. And of course, we would then kick in with lots of our pandemic measures. Our support that we give people when they are at home when they can't travel. And if they are at home, they can't travel internationally, but they can do things locally, we can organize and we did last summer. And throughout the last 18 months, organized a hell of a lot of staycations and things that are relevant for people in their home country. That's something that a normal travel agent can't do, but we're very well set up to do that. In the Americas, Canada is still quite locked down. And Latin America, although many of them are allowed to travel by their governments, their #1 destination for well off Latin America is the U.S. and it's incredibly difficult to get a visa to the U.S. at the moment for those Latin Americans that don't have a repeat entry visa. So our business in Canada and Latin America is already affected very much by COVID. And most of the requests that we're doing in Canada and Latin America are domestic requests. Travel is a small part of it today. So it's in a similar position to Asia. However, the U.S. We are doing a fair amount of travel, domestic and international. And that would be affected. But the U.S. is a relatively small proportion of our total business. So the biggest impact would be in Europe where we've got minimum contracts. So we would -- if it was -- if it looked like it was going to be really tough as well, we would reintroduce another salary sacrifice pretty promptly. That's an action that we can take immediately that normally saves us, like for the last couple of years, it saved us very roughly GBP 1 million in cash very immediately, and that's if it's done on a voluntary level, even before coming to something that we do require in our people if things got really tough. So as a last resort, there are obviously costs in the business that we've continued to invest in, but we've made it this far without reducing our investment in tech, and we are fully expecting to be able to continue to invest in our tech. We're very happy with the quality of our teams and what they're producing. So that is not a cost that we want to reduce. Clearly, if there was a complete lockdown, we would want to take advantage of government opportunities as well. What then happens is if you do need to furlough or lots of people on Kurzarbeit, the Swiss equivalent, what you can then do is maintain your revenues at a decent level, propped up with the minimum contract values and actually lose more cost than you lose in revenue. So ironically, that can actually help your profitability and cash position. That's a long answer because that question is really important. And I know that COVID, new variant is on top of lots to people's minds right now. Alan, I've got one for you, if you take this one, why do we spend so much money on technology?

Yes. I think, as I said in the presentation, it does -- it's a real competitive advantage for us because we believe that we have competitors out there who help some technology but not as good as ours and ours a transactional platform. I think it really does -- we call it a good to great investment. So we had good technology. I think through COVID, we're going to great. And I think personally I'm in the business for 2 years, and I think where we've come from the last 2 years, the front-end platform that the member sees has improved in the end, and we've got some more improvements coming through in the coming year. And so that really creates a competitive advantage for us and drives a better member experience that inspires members as well. So all the content we have on our platform now that will inspire them to book through the platform or pick up before we talk to Lifestyle managers. So it gives us a lot of ends in terms of our marketing point of view, and it improves our service levels as well as efficiencies through that and ultimately revenues and profit. So it's a key differentiator, we believe. And that's why we've continued to invest in it through COVID period.

And actually, just to add to that, when our annual report gets published in a couple of weeks' time, it'd be worth clicking through that. There's some really good vignettes in there and examples about where technology does improve member satisfaction and speed and quality of our service and also personalization, which is a huge part of becoming the most trusted service in the world is about personalizing to the individual. Another question we've got here is what's more important to the company now, winning new mandates or upselling within the existing customer base? Gosh, that's a choice happily we don't need to make. I am super confident that we can grow business from inside our existing customer base. Alan earlier on talked about eligible customer members and active members. And even on our very high customer value contracts, where typically people should be expecting and wanting our corporate clients generally do want and expect to pay for penetration levels were of 30%, 40%, 50%, quite a few of our contracts because they're immature, are down at 10%. Growing those -- if you grow a contract from 10% penetration to 20%, very roughly, you're going to double the size of that contract. If you go to 30%, you're tripling the size of that contract. We've got plenty of contracts, which are very immature. A great example is Westpac, who launched us to so that we're now available for hundreds of thousands of new eligible members, but they haven't really done anything very much to market the service so far because they've been so affected by COVID. As we come out of COVID, they will market that they moved to us because they wanted to activate more members and market our digital platform and our service. That is just a real good opportunity to grow an existing mandate. There's plenty like that. But also new mandates get easier for us to win, easier certainly as we come out of COVID, but also as we're winning Westpac will help us win some of the other Australian banks. Winning Royal Bank of Canada no doubt helped us win Scotiabank in Canada. Obviously, winning Coutts helped us win Barclays, certainly helped us win NatWest part of the same group and on it goes. So as we grow, we have more case studies, more evidence of what our service can do, that helps us grow more. And new mandates will remain really important for us, for sure. Another question from Michael. Who do we see as our competition as our offering seems fairly unique? Yes, that's a really interesting question. So our immediate competition in the U.K. Quintessentially, still have contracts out there that we want and that we've had a good track record of winning those contracts from them, and we will continue to do that. We hope to continue to do that but not make guaranteed promises as a listed business. But we've also got contracts in -- or competitors in France. There's one owned by Accor hotels. We've got a good competitor in Asia as well. It's got a good business in the States. But we believe our digital platform and our commitment to how well engineered our high-touch services means that we've got a very, very compelling reasons why people should want to work with us. Now what then tends to happen is when people go out and do a proper tender, we tend to win the vast majority of those tenders. And that's just going to show that it's not just us saying that we think we're better, it's the market saying that as well. But on top of that, because our digital platform is so good, some of the world's biggest brands have awarded us contracts without going through a tender process because you can get a carve-out permission to not go through a tender process, if your competition can't offer what you can offer. So our uniqueness and the uniqueness of our digital platform allows us to win contracts in the market without going through a really kind of big procurement process because we are unique. But I think that, that competitive moat, what makes us unique, our commitment to innovation and tech, our member focus is -- and our approach to how we join up travel, dining, content, live entertainment is quite unique and it's something that we're going to make stronger and stronger so that people today who book their travel on Expedia or book their travel with a top tour operator will come to us. People that today will book their dining to a top restaurant on open table and get disappointed when they can't get a peak time table will use us, not for all their dining requests, but when it's a great top restaurant and so on. So there's a lot more uniqueness that we can build in over the coming years. Another question here. If you go to our private website, website in the U.K. that sells private membership Living x Ten. You can reach it from our corporate site tengroup.com. What we -- what the investor here is pointing out is that it's focused on U.K.-based members. It absolutely is. We, today, are not investing anything in winning private members, members who pay us to become a member, that is essentially a U.K.-only service today. We will launch that internationally, but don't expect us to spend millions on that until and unless we can see that we get a very strong return on investment on that ourselves. At the moment, when we sell harder into financial services, we win more contracts and they're very profitable. So right now, if we had an extra few hundred thousand, we would spend it on extra sales to banks and credit card businesses, and that means we're not spending it today on growing private membership around the rest of the world. Having said that, we do see the advantages in doing that, and we may well do that more as we get a better return on investment in the U.K. Probably the next market, we launched that in would be the U.S., where we know there are some really good opportunities to launch our private membership, but they're not developed yet. It wouldn't cost us very much to launch a U.S. version of that site. Another question we've got from Thomas. What can we say about the pipeline for 2022? How are clients feeling today? Are they closer to the finish line in terms of decision-making? So certainly, we've seen a lot of banks are very worried about losing parts of their customer base and products from their customer base to fintechs and to other banks. And increasingly, top banking chief execs are saying we've got 1 huge competitive advantage, which is that they've all got vast and very strong embedded customer bases. But if they're only connected to those customer bases with financial products, they'll gradually get unpicked. And so what an increasing number of senior bankers, including Jamie Dimon, JPMorgan Chase, who's made a big play on this in -- over the last 12 months is what they're concluding is that they need to use lifestyle services and travel services to connect with those customers and grow loyalty. So they don't lose them at the kind of rate that they might otherwise to competitors and particularly to fintechs. So we've got a kind of a real growth and understanding of that. And then it's a question of when is the right time to move. And it's normally as we come out of COVID, apart from people that want to move to us from a competitor, so that transition's been managed so that then they can promote it more as we come -- clients are more engaged with us than ever in our clients in our pipeline as well, and it's a really healthy pipeline. Sometimes daily, we're selling. But quite often, people are getting in touch with us and say, "I liked what you're doing with Bank XY or Z, we want to talk about launching with us." [Technical Difficulty]

Alan, sorry, I think we might have just lost Alex momentarily.

Okay. Yes. I think he has frozen.

Indeed. I don't know if there's any questions there that you could pick up on. I think there's a couple that are left over. I wasn't quite sure if there's anything further there to add.

Yes. I think I'll go on from [ Quintin ]. As a follow-up to my previous question, is it time for Ten to make a bigger noise around the world? Advertising, what unique serves it provides? Will that be happening soon? I think, well, we have started to do some B2B marketing and also some -- to get our brand out, we're going through LinkedIn. We're going through Facebook. And we're just testing that now. And I think that's something we will do as we come into cash generation look to invest. But I think as Alex said, we'll invest in sales and we'll invest a bit in marketing as well. So that will definitely something we will look at to ramp up as we come out of COVID and into cash generation. Is that -- have we answered all questions now? I think we have.

Yes. So I certainly think there's -- we're coming up to the hour anyway, Alan. I'm just mindful of giving Alex an opportunity just to come back into the rooms. We did lose him, as I said, momentarily. And as I say, if any other questions are there for potentially Alex, to review, we'll make these available to you after the meeting so you can then add any responses. And as I say, we'll post those responses back. In fact, Alex is just coming back in, if you give us a couple of seconds. Let me just -- putting Alex back in. No, I think we're -- Just give me one more chance. If not, what I will propose is that we wrap up, if I can't get Alex back in now. Just one second. No. Can you hear us, Alex?

I can hear you fine.

Yes. Perfect. We can hear you, sir. So as I say, Alan has just taken a couple of the questions. There's a few remaining, if you do have the time, sir. Just to have a look through and then, as we say, we're coming up to the hour anyway, and we can look to wrap up. But there's a few more questions there if you do have a few moments.

Sure. Okay. And did we -- okay, I gather we had some technical glitch when I was talking away, did we?

We lost you for the -- for part of the final question, which we'll present back to you anyway, sir, so you can give a tech response to it if necessary.

Okay. That's what I do. So you have most of the last...

Indeed, sir.

Thank you very much. Thanks, Mark. And thank you, everybody, for coming today.

That's no problem. And Alex, I don't know if there's any further questions there. There's a few more that have come in from investors while you -- I don't know if you've seen it. If there's anything further there that you wish to add?

I have...

Just look on the Q&A.

A question from Australia. As a follow-up to, is it time for Ten to make a bigger noise around the world, advertising what other unique services service it provides? Yes. However, we want to get into cash generation. As we generate cash, we'll be spending that back, some of it on tech, but some of it as well on sales and marketing that will grow our sales pipeline, but also grow our awareness to private individuals as well for sure. And I guess I better wrap up there.

That is very kind of you. In fact, that was the one question but Alan very kindly gave a response to as well, which is exactly as you just put it. So look, what I do, Alex, if I may, is I'll present any of these other questions that have come in and give those to you for your review post today's meeting. I know investor feedback is really important to you, and I'll shortly redirect investors to give you their thoughts and expectations. But perhaps if I could just ask you for a few closing comments, just to wrap up with? And then as I say, I'll redirect the investors to give you their thoughts.

Yes. So for us, we're very excited about the next 12 months and beyond. Very committed to what we're trying to do. And actually, we've got far more ingredients in place to become the most trusted service in the world than we've ever had before. So I think it's an exciting time for the business. Inside the business, we've got a strategy based on what we rather cheesy call [ 10%, 20%, 30% ]. So plans to grow our business over the next 9 years. And some of you will be listening to us talking about the business in the years to come, and we hope you enjoy the ride as much as we expect to. Thank you very much.

Thank you.

Thank you, Alex. Thank you, Alan, for updating investors this afternoon. And sorry, we lost you momentarily earlier. Could I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide feedback and all the management team can better understand your views and expectations. This only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team at Ten Lifestyle Group Plc, we'd like to thank you for attending today's presentation. That now concludes today's session, and good evening to you all.