Good morning, everybody, and welcome to the Smart Parking Results Presentation for the FY 'twenty one Half Year Results. This morning, I have Paul Galesti, CEO and Richard Ludwig, CFO, joining us. The format of today's presentation will be that Paul and Richard will present an overview. And if I can ask you please to remain on mute during the main presentation, that would be appreciated. And then following our presentations, we'll be pleased to take questions.
Thank you again for joining us. And on that, I'll hand over the call. Thank you, Michael. Good morning, everybody, and thank you for joining me for Smart Parking's FY 'twenty one first half results call. I'm here in Melbourne.
I'm joined by our group CFO, Richard Lubbock, Lubbock, community in Auckland. Today, I'll take you through the H1 performance, business updates and provide you with our outlook for the second half and beyond. However, before we move forward, I want to focus on 3 key points. The business is performing well in this environment. There are clearly challenges in today's climate.
However, I'm not here to make COVID excuses for the business. I'm pleased to say we're focused on controlling what we can control and maintaining a key focus on our recovery and growth strategy. I'm proud to say we've done that until the results reflect this positive approach. The second point I'd like to make, we're delivering key milestones in our growth strategy. We've added 27% of our installed portfolio with 576 sites under management at December 31.
We continue to bring the lead to customers like KFC and Gatwick Airport and this demonstrates we're getting on with the job of executing our plan. And 3, we're significantly expanding our future earnings potential. We reaffirm our target of 1,000 sites under management by June 2023. We're blind of sight on this number with a clear plan of execution and we're confident that the stakes on delivery will continue to grow our earnings well into the future. If we turn now to Slide 3.
Clearly, there's a lot of negativity coming out of the UK with lockdowns and high transmission rates and large cases reported daily. Despite this, we're performing well. There's a lot of green arrows on this slide, all pointing in the right direction, please to say. As I mentioned a moment ago, we've grown our UK estate by a further 85 sites in the half and adjusted EBITDA margin is up 2 10 basis points on PCP. PVAs are up 40% on carried loans and we have cash for $9,300,000 Added to this, we've set up a long running VAT dispute with HMRC, which means we're getting further $2,900,000 of cash refunded to us in the second half.
Moving to Slide 4. We saw a strong recovery in the UK during the half, and we believe we're past the late point of this pandemic. We grew our managed service and business in both installations and revenue from the COVID low points. We won new business across the group with a clear path to our long term growth target of 1 plan in sites on the management by June 2023, as I mentioned earlier. With a strong pipeline for the second half, we're on track to achieve our growth objectives.
As well as services, we continue to win new business projects in the technology business with over 2,500 sensors being sold to new customers. And staying with technology, we've completed new development projects to get a new IP that will strengthen our technology offering, benefit new and existing customers and of course drive future earnings. In New Zealand, our newly established services business is gaining momentum. We're winning new contracts and installing new sites. This project is in the early stages of growth, but we're happy with the progress to date and excited about what we can achieve in this market.
As I mentioned earlier, we've resolved the long awaited the AT dispute with HMRC. This has been frustrating for me, our team and of course shareholders, and we're pleased with this favorable outcome. We will be right back $6,900,000 for the P and L, again a cash refund of $2,900,000 This is a pleasing result.
So after some challenges in
the last year, we are expecting a strong Q4 performance, particularly as the UK vaccine rollout continues. We add new sites and customers and we gain the positive impact of seasonality through the spring and summer. And finally, before I hand over to Richard, as a signal to the Board's confidence and given the settlement of proceeds from the resolution of the VAT dispute, we are announcing today an on market share buyback. The program can commence in mid March once the regulatory requirements are complete. We will be steady and disciplined in our purchases and remember there are trading blackout periods when we won't be active.
We expect the buyback to be earnings accretive. Put simply, we believe the share price is undervalued and are committing capital to enhancing earnings per share is a good thing for all shareholders. I will now hand over to Richard, who will take you to the final slides.
Thanks, Paul. I'll start with Slide 6, where you will see revenue of $10,200,000 is down 20% on H1 FY 'twenty due to the impact of COVID-nineteen. However, the company saw a strong recovery with revenue in H1 FY 'twenty one, up 35% compared to H2 FY 'twenty as the volume of activity rebounded. Despite the fall in revenue, the group adjusted EBITDA profit of $1,400,000 was down $200,000 as a result of cost saving initiatives in FY 'twenty and up $3,600,000 on H2 FY 'twenty. More detail on the cost reductions is included on Slide 8.
As Paul said, the company settled its long running VAT dispute with HMRC, resulting in a one off benefit of $6,900,000 in the first half. The VAT settlement will also result in increased profitability in the future periods given the lower input VAT restriction related to issuing parking beach notices. The pretax profitability in FY 'twenty would have been $1,700,000 higher as the methodology agreed on the settlement applied during FY 'twenty. Moving to Slide 7. Revenue in the parking management division decreased 25% to $8,700,000 on the back of reduced parking beach notices.
While parking beach notices were down 28% for H1 FY 'twenty one, they were up 40% compared to H2 FY 'twenty as the division experienced a strong recovery. Sites under management increased by 27% compared to a year ago. A restructure of the U. K. Management team and field based staff in December 2019, combined with the changes made in H2 FY 'twenty resulted in a $0.28 reduction in personnel costs compared to the prior comparative period.
EBITDA of $2,800,000 was up from a loss of $400,000 in H2FY 'twenty with the recovery in activity levels and cost saving initiatives. We will see growth accelerating as the U. K. Restrictions are eased, the impact of sites that have been disputed during the pandemic come online and from the 226 new sites that have been installed during the last 18 months. Paul will talk to recovery later in more detail.
Technology revenue of $2,300,000 was down $1,100,000 due to projects being delayed. The company implemented a cost reduction program with personnel costs reducing 39% compared to prior period, and this resulted in a 61% reduction in the EBITDA loss compared to prior comparative period. The outlook for this provision is for revenue to recover, and the company has firm orders for installations of 3,900,000 dollars The timing of recognition for this is uncertain given the evolving situation. Slide 8 shows the 29% reduction in costs. Staff costs comprising 70% of total overheads were down 27% following the reduction in the group's headcount in the last 12 months.
The services headcount reduced by 24%, and the technology and R and D headcount was down 36% combined. Other costs including travel and motor vehicle costs were down as a result of lower activity and due to the restrictions in place. Moving on to Slide 9. This shows the group maintains a strong balance sheet and is well placed to fund growth strategies. The group has $9,300,000 of cash.
And as Paul said, we'll receive another $2,900,000 in H2 from HMRC as part of the VAT settlement. The company drew down the U. K. Coronavirus business interruption loan for $2,700,000 Term of the line is 4 years and its interest rate for the 1st year. Principal and interest repayments commenced in September.
And as Paul already mentioned, the group has announced a share buyback today of $5,000,000 Slide 10 shows the group has free cash flow of $1,400,000 up 136% on prior comparative period. The group incurred $800,000 of capital investment, primarily related to the deployment of camera technology in the U. K, which will contribute to future earnings growth. Just a reminder on how the business model for the U. K.
Parking Management division works. Each site costs approximately £8,000 to install. On a pre COVID basis, each site generates 18 new parking rich notices per month, generating revenue of £2,300 per month per site, and an incremental EBITDA margin of 65%. We give a payback of 5 to 6 months and this has increased 7 to 9 months with COVID. Contracts are typically for 3 years.
I'll now hand back to Paul to provide a business update.
Thank you, Richard. Okay. So if we look now to Slide 12, please. As our reference to the top of the deck, we're bullish in our recovery. This chart shows the impact of COVID and how the drop in car counts and PBNs impacted the business in March, April May of last year.
However, you'll also see the recovery that took place from April to July with PBNs issued increasing 6 fold. This period of time is also impacted by positive seasonality, which we expect to see in the second half, particularly in Q4 as restrictions begin to ease. Added to this, as the vaccinations continue to be rolled out, we're up to over 18,000,000 people now, the positive impact of seasonality and the greater number of sites under management, we are confident we'll see a stronger recovery than that of last year. Looking at Slide number 13, you'll see our site reconciliation. This is data we update for the market on a regular basis, given the importance of new sites to our business.
On the slide, you can see how we are growing the estate, but just as important, we're reaffirming our long term growth target of 1,000 sites under management by 2023. We are on track to meet this number. We also continue to diversify our portfolio as we operate across many sectors, in particular, retail, transportation, healthcare, leisure, land agents and residential markets. I also need to remind you that the total addressable market in the UK is a potential 45,000 up street parking sites. We believe we have great people, best of breed technology, excellent customer service and a focused team.
This mix will allow us to beat the competition and grow market share and take us to 1,000 sites and beyond. On Slide 14, you'll see here we have multiple drivers for growth as the UK returns to pre COVID world. As retail, leisure and hospitality open up again and with positive impacts of seasonality, we believe we will see a return to higher numbers of cards listing on sites and to return to average stay times across the estate, which is very important. As this occurs, we will see a growth in PBMs issued. Our current average PBMs issued per site per month is 54.
Pre COVID, as Richard pointed out, this was over 80. As sites come back online and life returns to normal, we'll have an additional 100 sites under management and this will translate to revenue. Added to this, we've worked incredibly hard on our cost base. We have $3,000,000 of annualized savings. When you put this together with positive seniority, vaccine rollout and greater sites under management, it's clear to see why we're positive on Q4.
On Slide 15, while COVID dominates the headlines, the structural move to smart cities has continued. We're well placed to benefit from this trend. We're also leveraging our technology into new customer groups to expand our addressable market with many of our customers still being local authorities and now doing more and more infrastructure, transportation and retail. The winning new business produces best of breed technology and customers seeing the true value of the information our technology can generate and also how they can use this to manage their business. We have over $3,500,000 of booked orders and we have delivered new innovative products to market, particularly our new enforcement and compliance management system that's gaining market momentum.
You can see more detail on this product on Slide 16. Moving to Slide 17 and in conclusion, we're encouraged by the first half results. To deliver growth and improve margins through a period of operational challenges highlights and strength best be led. We have multiple drivers of growth and have a bullish outlook for Q4. Vaccine programs will generate more activity and our earnings power is also greatly enhanced by the growth insights and the management.
And we have the resources both in terms of capital and capability to execute. I believe our results show that. I'd like to thank the whole team and SPJ for their dedication and commitment and look forward to keeping you all up to speed as we make more progress. That now concludes my presentation. Now I'd like to open the lines for Q and A.
Thank you. Hi, guys. Since everyone's been so shy, I'll ask one. How are you, fellas? Good.
How are you? Not bad. So the buyback, just go through the kind of what's the logic of putting that in? You can all see the share prices where it is, but are there other factors that's where in the element that the business was approached a little while ago about being acquired. Is there a reason why they need to get the share price up?
That would be one sort of question. And then the second one is, let's talk about your ability to accelerate site additions because I'm assuming just like in hold on a second. Guys, I'm just asking a question. Sorry, I'm in office. We I'm assuming that certain sectors will have seen competition diminish aggressively because of COVID factors and maybe that's happened in your end market.
Maybe you could give us a sense of your relative ability to go away and acquire sites and grow compared to your competition. So those are your questions. I think I'll handle that one first, and that's all I can. I mean, what we've seen and what we saw after sort of lockdown, 1.0, they're calling it in the UK back in March, April, May last year. We took an aggressive decision to work very hard on our cost base as we talked about in some detail.
But we brought the sales team back quite early from furlough, right? Because I believe that's giving some first mover advantage. And also, I was able to understand what was happening with our competition. A lot of our competition didn't want to mobilize as quickly. So I saw that as an opportunity for us to get out there and essentially knock more doors and windows this, okay.
Now of course, through this period of lockdown, I see November was slightly different, but this period of lockdown has been as harsh, if you like, as the original one from an activity perspective, and you have a lot of people for that reason. But we have maintained the number of sales heads. And we're still seeing whilst the level of installations haven't been as the pace hasn't been as high as I would like certainly through this period of lockdown, but it's significantly higher than what we had in April May of last year where we had no installations happening. So from that perspective, I feel that we've got a good feel for where we're at with our competition. Lots of still signing contracts, we're winning contracts, the pace installation is safe for obvious reasons.
We're getting on to site and access to sites and restrictions in place, but we have to work around that and just do what we can. So there's still a lot of competition out there, Gary. I think we, as I said a moment ago, in my closing piece, we're great to help people. We spent money on beating up that sales team, and we can continue to do that and grow that sales team. So from that perspective, we're in good shape.
Competition is what it is. I mean, some are better than others. We can definitely see a week a few week links and we're trying to do what we can to capitalize on that. And in terms of the buyback, as I mentioned a moment ago, we've obviously got some good momentum in the UK in terms of insights going in. We're very positive about what's going to happen when things open up and certainly with vaccine rollout.
And we're already seeing that now in terms of our car counts through January through to where we are today, it's significantly growing as people get locked down, fatigue, but also vaccines kick in and also some positive news that came out of the government last week early this week, I should say. So from that perspective, the VAT, a few other positive things going our way, we believe that it's a good use of capital. And it's I believe it's good for the share price, good for all shareholders. So that's it's a good use of cash. I'll ask another one.
Technology business. There's that on its journey to, I guess, being, A, profitable and B, developing itself into sort of like a business that you want it to be a growth business and all that kind of stuff. Talk to us about what the position of that thing is now. Sure. I mean, clearly, there's been challenges with capital projects, right?
And you don't need to look too far from here in Melbourne and haven't been seen in the Melbourne airport. And how they've been impacted, that would be a great customer for us, right? We actually don't have them yet, but then that would be something that would be fantastic for us. But those kind of capital projects will slow down as businesses and customers have sort of turn the CapEx tax off, so to speak, that we would normally talk to. Having said that, we've seen a big uplift in tendering, some public tenders in particular, local government work.
So whilst we're still waiting on a lot of decisions, there is an awful lot of activity in quoting and tendering happening. I think we've worked very hard on our cost base in that business, certainly after COVID, in our development team in particular. But we are we believe we're on our way to profitability. We set ourselves a target being cash flow positive since we can. And I think the results show some first half that we've had a much better half in terms of profitability than we did in prior comparative period.
And should be better again in terms of the second half, if you like. So really, it's challenging with capital projects. That's the hardest bit, I would say, Gary. But on a positive note, we've got lots of activity, lots of tendering activity, particularly in the local government space. And to us, we have great products out there.
And obviously, you mentioned new products we have in recent months. That's getting good market momentum. So we are on that journey, as you know, Gary, towards what you want to get to. And I think we've set some pretty strong targets, and we're making good progress. Do we have any other questions?
Could I just ask a follow-up question about the buyback? If I understand it correctly, the company is in receipt of a COVID business support loan. Just in terms of the optics, is it proposed that the buyback would be in place before that's paid back?
So we plan to start the buyback within 14 days. That's a procedural restriction we have upon us. So you have to remember, we took that loan because we thought it was good. At the time, clearly, there was a lot of uncertainty around COVID and what was happening. And it was a good rate, a good interest rate.
So and we took that down because we wanted to make sure we've got the CapEx in place to go ahead and keep installing sites as a big part of our growth in the UK and make sure we've got the CapEx, let's do that. Now clearly, we've had the positive news about VAT. So we're using that money to some of that money to obviously help us with the buyback. So that's really the focus, Dave. We've got the loan taken down to really push our CapEx and keep driving sites in, hiring like team members as and when things keep picking up or start picking up again.
But yes, we wouldn't start we didn't start paying that loan back until September this year.
Thank you. And just a follow-up. I understand that the Parking Association of the U. K. Such cities have been having discussions with the government about arrangements and agreements for the way charges operate.
Is that going to have any significant effect on the business going forward?
The short answer is no. But I see and there's been a new parking bill going through to that in the regulation for private parking operators. And I see that is a good thing. We're the only public company operating in that space, okay, in terms of that private parking enforcement space. And so of course, as a public company, we're held to much higher corporate governance, quite rightly, and accounts.
And so like red tape and the governance is something we do quite well. And we understand that we have a very strong risk in audit committee and always have had a very strong risk in audit committee, I'm pleased to say. That ensures that we are, of course, always going to be doing the right thing. Now a lot of our competitors don't have that experience. And so if they're asked to operate slightly differently with more red tape, for example, that's not going to be good then.
So I see it as positive news for us. And I also see it positive to the industry and some more regulation be a big thing. Allows us to just reaffirms what we're trying to do and reaffirms the fact that there's a lot of big side there for us to go and win and capitalize upon. So it's in the short term, Dave, to answer your question, it's no, it's not going to impact us. But longer term, I think it will impact some of our competitors, which I do see as a good thing.
Okay. Thanks. Why don't we come back to you for closing remarks? Okay. I mean, I just really would just like to finish on sort of comments I made towards the end of the presentation really around Slide 17.
I think we've still got Slide 17 showing what we did. So I guess really very encouraged by what we've seen in the first half. And it has been a very, very challenging time for lots of people for many different reasons. And like I said, right at the top of the deck, I don't want to sit here and make COVID excuses. We've had to make some tough decisions.
We worked incredibly hard. The team has worked incredibly hard on our cost base and to get to the point we are today, we're very pleased with. But we can't ignore the rest of the things happening in terms of we have multiple drivers, which drives the growth. We are bullish on Q4, I think I've said that a number of times. I do think the vaccine program will generate more activity.
Our earnings power is, of course, greatly enhanced by the growth in our sites under management. Importantly, we have the resources both in terms of people, capability and also money, cash, capital to execute our plan. I think our results show that. So those are the key things I'd like to make. We're focused on our long term growth times in the funding sites in the NASDAQ 2023, and we're well on the way to making those numbers.
So unless there are any further questions, thank you very much for joining. And that concludes our results call.