Okay. Good morning, everybody, and welcome to Smart Parking's first half FY 2026 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 a 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, the first half results, the investor conference call. Today, we're in Melbourne in our, in the Smart Parking office. I'm joined by our Group CFO, Richard Ludbrook. As Michael highlighted, I'll present our record results for the first half of FY 2026. I'll give a positive update on our U.S. acquisition, Peak Parking, which is exceeding our expectations, and a progress report on other markets where we're growing strongly. Richard will then take you through the numbers in more detail, and following the presentation, we will, of course, open the line for some questions. So if we can start now with slide number 2 and our record results, please. We've delivered 96% revenue growth compared to PCP.
Adjusted EBITDA is up 85%, and the NPATA, at AUD 6.5 million, is up 163%. We've effectively doubled the size of our business in the last 12 months. Last February, we acquired Peak Parking and entered the U.S., the world's largest parking management market. We completed our largest ever equity capital raise to fund the acquisition. These results validate that bold strategy. The original investment case at the time of the acquisition was for Peak Parking to enhance EPS by 25%. We've exceeded that, and accretion is expected to be over 30%. EBITDA for the period was up 24% to $4.5 million in the U.S., triggering the full earn-out payment.
Since we took ownership, we've strengthened the platforms, enhanced our service offerings, implemented 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 resolve to become the leading ANPR parking management provider in our selected states in the U.S., and deliver years and years of profitable growth. Peak is a perfect beachhead, and there are scope for further M&A activity across the U.S.A. It's pleasing to see that while we are busy in the U.S., we're also delivering growth in every other market that we operate. The number of sites at the end of the year increased by 18% over the PCP. These are encouraging results, demonstrating SPZ's competitive strength and clear execution abilities. Our free cash flow and balance sheet are also highlights.
We generated AUD 10.4 million of free cash flow and an increase of 89%, once again, showing the capital-like nature of our model. We closed the period with 21% increase in cash to AUD 15.3 million. As I've said many times before, we generate high levels of free cash, and we can self-fund our organic growth while maintaining a strong balance sheet. Moving to slide 3. The disciplined execution of our growth strategy continues to drive our performance. We delivered ongoing organic growth across our markets, and Peak is exceeding our expectations, as I highlighted on the last slide. We issued a record number of PBNs in the half, at over 560,000, growth of 9% on the PCP. Across the group, we closed the year with 1,852 ANPR sites under management.
We added 200 gross new sites in the first half, with 114 of these in the U.K. As we flagged in the Q1 updates, we closed 71 sites in Queensland during the half. We have successfully redeployed this equipment into the growing New Zealand markets. We delivered good site growth in the U.K., with 1,397 sites at the end of the half, a rise of 17%. This asset base is driving strong revenue growth, up 64%. I will say upfront, the number of PBNs we issued in the U.K. was flat on the prior period. We did see cost of living pressures reduce dwell times on some of the U.K. sites, which has impacted our issuance.
Despite this, the business had a very strong profit result, with EBITDA up 40%, although the margin was a little 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 per PBN significantly by 44% across the group. Encouragingly, we're seeing early signs of the issuance recovering 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 2019, the U.K. made up 100% of the group's PBNs. That contribution is now 69%, making SPZ a more resilient business with a long growth runway ahead of it.
We've selectively added 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 site ROI. If a site isn't performing to benchmark, then we will redeploy the equipment or new sites elsewhere. 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. If we look now to page four, 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 debt resolution processes continue to make a difference in the U.K.
We are continuing to enhance the debt, the debt process, driving higher yields and delivering greater returns for every breach issued. Since we took action to change and improve our debt process, we've seen the average ticket value increase by 44% across the group. This has been a successful initiative. I sometimes get asked by investors, "Is the debt recovery plan a one-off benefit?" The answer is no, not at all. There is a significant back book of aged debt of over 1.2 million PBNs that these yield-enhancing strategies can be applied to, and that's growing every month as we continue to grow the estate to help issue more PBNs. We have three service providers, coupled with our technology, this is clearly helping improve the debt recovery yields.
The legal costs on collecting aged debt are higher, given the court process involved, but we see this benefit assisting our results for a significant time to come. New Zealand continues to perform well, delivering both the fastest growth in PBNs and the highest EBITDA margins in the group at 44.5%. It's, it's reasonable to ask if this performance is sustainable. Well, to ask, yes. Let's look at the drivers. First, New Zealand is not a congested market. Competitive intensity is low. We are already the largest ANPR parking site manager in the country with a first-mover advantage, and to date, 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, car ownership levels are very high.
The population is growing, and just as we see in many countries, there is growing pressure on private landowners and site managers to ensure their genuine customers can 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 one drives operating leverage, given our high incremental margins, and the second one expands the moat. To drive these benefits, we've decided to accelerate our go-to-market into our new markets, Germany and Switzerland. This has involved a modest increase in investment. In Germany, revenue increased to AUD 2.6 million, up 74%. Post investments, EBITDA was maintained at a - AUD 513,000, I should say. I will highlight that the business in Germany turned EBITDA positive in January 2026.
This is a significant milestone for our business. Germany should be our largest European market, and we are focused on accelerating scale and profitability there. In Denmark, as highlighted previously, the government uncharacteristically switched to manual operations from the first of July. The new policy requires the first PBN must be manually placed on the car's windscreen, then we can deploy our technology solution. This change has affected revenues and costs. We are confident the policy will be reversed, and we have strong industry representation and support there. Regardless, Denmark is still an attractive market for us. PBN prices are high at 910 DKK, 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 increase the site density.
Finally, we established our business in Switzerland in July 2025. This is also a potentially high returns market. Ticket prices, PBN prices are CHF 65, and the payment ratio is in excess of 75%. In the majority of the 25 Swiss cantons, access to data is either free or at a minimal cost. Furthermore, we see exactly the same pressure on site managers as we see in New Zealand, which is our underlying tailwind. The investment in fixed cost infrastructure is now complete, and the operation structure has been put in place. We've recruited an impressive team, and I'm delighted to say we won our first contract in December. The new site is expected to generate revenues in the coming weeks.
It is early days, but I'd like to think 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 growth. It's a strong position to be in. 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 eight, where you will see the underlying net profit after tax, before amortization of customer relationships of AUD 6.5 million, is up 163% compared to HY FY 2025. The UNPAT also excludes foreign exchange gains and losses and normalizes the tax expense. Earnings per share using UNPAT of 1.56 cents per share is up 121% on the prior year. Revenue of AUD 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 six-month period related to Peak Parking, which was acquired in February 2025. A 9% increase in parking breach notices, driven by organic growth in sites, and the impact from enhanced debt resolution procedures in the U.K.
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 the newer territories, including Switzerland, and the acquisition of Peak Parking. Adjusted EBITDA of AUD 15.6 million rose 85% on H1 FY 2025, 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 AUD 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 ANPR sites and following the acquisition of Peak Parking. The company incurred a tax expense of AUD 2.8 million, compared to a tax expense of AUD 0.7 million in H1 FY2025. The U.K. or USA businesses are in a tax-paying 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 2026, because we'll have the benefit of new ANPR sites previously added, revenue from new ANPR sites 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 USA was acquired in February 2025, so the results include $13.5 million contribution for the six-month period, and this is up 6% on the pre-acquisition comparative period. At December 31, there were 7 live U.S. ANPR sites that had generated PBN revenue of approximately $90,000. We are very early on in the rollout of ANPR and have a small sample of sites. However, the metrics are encouraging, with PBNs per site being significantly higher than other territories we operate in.
Revenue from the managed services business, excluding the U.S., was up 56% compared to H1 FY 2025, and revenue per PBN for the group was up 44%. Revenue from the U.K. of AUD 41.6 million was up 64%, benefiting from the enhanced debt resolution procedures. Revenue in New Zealand of AUD 4.2 million increased 23% on the prior period, with Germany contributing revenue of AUD 2.6 million, up 38%. Revenue in Denmark was down following the change to manual operations, whereby the initial breach notice needs to be placed on the windscreen 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.
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 AUD 15.3 million. The company generated adjusted free cash flow of AUD 10.4 million, up 89% on H1 FY 2025. The company continues to make a substantial investment in future growth, with AUD 4.7 million spent on CapEx and intangible assets and AUD 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 AUD 18.9 million includes AUD 2.7 million for the six 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 putting the initial PBN on the car windscreen, with the business hiring parking attendants 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 2025, the company established debt facilities with a $10 million U.S. dollar revolving credit facility and a further AUD 10 million Australian accordion facility available on request and satisfaction of certain conditions. That facility was paid down during July.
A major highlight was the achievement of the U.S. earn-out for the 2025 calendar year. You'll recall, as part of the acquisition, the vendor of Peak Parking received $26 million in cash, $6 million in Smart Parking scrip, and under the earn-out, a further $4 million of SPZ scrip will be issued, and that will be escrowed for 1 year. I'll now hand back to Paul to discuss the business update.
Thank you, Richard. Okay, so I will leave shareholders to read the page in the deck at your leisure. I'll close with some growth priorities on page 18, but we will step through the slides on the way. We clearly have a strong set of results for the first half of the year, and we enter the second half with significant momentum. Execution is always key. We will continue to drive organic growth across all our, all our markets while optimizing the portfolio for performance. We have a superior and unique offer in markets we operate in, and the pipelines for new sites are excellent. Peak is performing very well, and we expect to increase sites under management in both new and existing U.S. markets.
We've set up a dedicated team to focus on securing new ANPR locations and leverage our market-leading technologies. The leadership team at Peak are highly motivated, and I spend a great deal of my time over there supporting them. 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 our way to our site target of 3,000 ANPR sites under management by December 2028. 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 2026, we will continue to grow and strengthen the foundations for growth.
We've developed market-leading technology and have over a decade of domain expertise in understanding customers' needs and the compliance and regulation frameworks in the markets in which we operate. Smart Parking is well-placed 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, are you able to-
Thank you, Paul. Thank you, Paul. 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 are 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 says: Is the AUD 100 revenue per PBN in the U.K. sustainable, given cost of living pressures and the debt recovery operators earning high margins? Paul, I'll direct that to you, please.
Yeah. So I'll cover the reputation of the stories. I mean, I think it, it's fair to say we get a large amount of scrutiny, and rightly so, from the marketplace, from whether it be the industry bodies like the British Parking Association or the International Parking Community, which these are, our industry associations of which we're members of, okay? So we have to operate to a very high level of accountability. You know, we're held to a high level of accountability 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 Code of Practices, then we are doing absolutely everything correctly, and we're not stepping out of line.
And if we look at the kind of, PR pushback or those kind of things that we get, the majority of those, of what I see, and it's, it's not that many that come up, if we compare ourselves with ParkingEye or Euro Car Parks and others. The majority of those tend to be, you know, somebody who hasn't appealed their breach notice, have gone straight to the press, and hits the press. It's a good story to be up by a parking company. But ultimately, if you read right the way through the article, you'll see that the response always comes from us, which is: we operate a correct, process to high levels of accounting standards put in place by the British Parking Association. And this particular motorist didn't follow the rules, so therefore, they were issued the breach correctly.
That is, you know, 9.9 times out of 10, that is the way, the way it goes. I mean, in terms of political risk, clearly, there's always a conversation we're having with government about the Code of Practice through the trade associations. That's been running for many, many years. But like I say, we operate to a very high, very high level, very high standard. We don't deviate from that. The only way to manage these particular risks that you highlight is to operate correctly, which we do. And so from that perspective, it doesn't concern me. To Stella's point on sustainability, absolutely, it's sustainable.
Clearly, we continue to win new locations, win sites, issuing the breaches, and that's. We've already seen that turn and start to grow again, as of just after Christmas. But the enhanced debt recovery process is actually not a new process. We've just 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 these motorists to court for recidivist offenders to court, we're just making sure we highlight that process further to make sure we 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 more better at it, and we've put a lot more focus on it. We've brought in additional suppliers to assist us, and we've added the legal piece. So yeah, 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 DVLA, the Driver and Vehicle Licensing Agency, the process we have with the British Parking Association and also the IPC. So that's completely in line with all those, all of those rules and regulations.
Thank you, Paul. Let's stay on the U.K. Question here from Francis: Have you modeled downside scenarios under potential PBN cap assumptions in the U.K. consultation? And if implemented, how sensitive would U.K., U.K. EBITDA margins be? Given yield per PBN has increased but hasn't translated into margin expansion, is cost inflation or recovery expense structurally offsetting the uplift?
Well, I'll cover the first bit, and I think Richard can cover the second bit. We don't see that changing at this stage. You know, the all the feedback we've had from government so far, in terms and also not just government, but also the British Parking Association, IPC, these are the people that, that lobby on our behalf and talk to government on a weekly basis. We're not seeing they're not seeing the feedback that the price or the, 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's put forward a very good, very strong representation that shows that the value of the debt recovery process should remain in place to ensure that people actually do follow the rules. But yes, no, I don't believe that there's going to be a... If there's a cap, the cap is at GBP 100, which is where we are today.
Okay, so in terms of the margin, so obviously, as Paul said, we have three debt recovery providers, and the margin for each of those providers is slightly different because obviously, the older debt is more expensive to chase, and as Paul said, the legal part is particularly expensive because there'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.
Very good. Thanks, Richard. I'm going to stay on the U.K. theme with a question from Owen Humphries: U.K. PBN volumes were flat despite site ongoing growth. Can you talk through the drivers of this and expectations of growth in CY 2026, and views on if 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 the first?
Yeah, I can take that. So I guess what we saw, what we noticed, obviously, we analyzed the site performance very closely, as you can imagine. And what we noticed towards the back end of the summer, or August, September time in the U.K., was the average dwell times, so the time that a motorist will spend on site was coming down. We saw that, as in, they spent less time in the location, less time on the parking site. And the only real kind of feedback or the only real answer we can put to that is cost of living, you know. So, and things have been pretty tough in the U.K.
We've had a very good look at how we, you know, apply the business rules for every particular location, how we apply the customer dashboard, as in, this is a smart hub where our landowner can actually access information on the site, see what's going on, how they implement the business rules, how they implement the exemption listing or whitelisting, as you might well call it. And we've made sure that that is being absolutely set up correctly, absolutely, held to the right level of contract, right level of customer expectation. And I think what we've seen already, you know, post-Christmas, is that start to return, that issuance. So I can say confidently, I know probably January was a better January than January 2025, for example, in terms of ticket issuance.
Again, we've seen those dwell times start to recover a touch. So those are things that we monitor very, very closely, and 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 those two lines growing in unison, if you like. But again, we monitor these things incredibly closely. We see changes very quickly. We're able to make some changes and moves in terms of the move some of the technology around to ensure that customers get what they need, but also we're still seeing that level of issuance grow.
But yes, very early or just after the summer is when we saw that those dwell times drop, and we can apply that to things that we should always control. We can't control whether how long someone spends in a location, but we can control all the other things around it, that the installation is correct, the camera parameters are correct, the business rules are correct, the hardware is set up correctly, the customer's getting the right service. And all those things are now in place or have been in place, and I'm confident that we're going to see it return. We're already seeing it happen in January, February.
Thanks, Paul. That's very clear. Question from Stella here, just moving countries. Congrats on driving EBITDA in Germany. On Swiss entry, you originally expected investing AUD 1.5 million in FY 2026 and become EBITDA positive in FY 2027. 1H alone already saw a AUD 1.8 million loss. Should we now expect Swiss break even later than FY 2027?
I think it's fair to say we've gone a bit harder in Switzerland, as in to enter the market faster, if you like. So we've hired, we've got a very impressive team there. I'm very pleased with how they're performing today. The pipeline is growing nicely in line with our expectations. As I said a moment ago, you know, the average ticket value there is high, you know, CHF 65. The payment ratio is high. We just need to make sure that we go and win the sites.
I think by building the sales team to where we are today, having the rights, 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, legal set-up costs, all those kind of things that come into the first, yeah, first half of when you set a business up. So I think we will, we will see that come backwards in the second half. In terms of break-even, clearly, it comes down to how quickly we win these sites. We're still confident we can, we can win a lot of locations in that market.
We see it as a very profitable place to be, and a very exciting market to be in, and an extension of the, of the German business, and building out the DACH region, if you like. So yes, are we expecting to break even in 2027? It, it all comes down to how many sites we set up. Clearly, the focus now is to really, roll out as many locations we can to see that get to the point where we need to be. So, I think we'll be challenged to make 2027 break even, but not far.
Thanks, Paul. I'll move to James Tracy, who has a verbal question. Go ahead, James.
Thank you, Michael. Thank you, Richard. Thank you, Paul. James Tracy from Blue Ocean. A bit of a, a longer-term question, really just around the, 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, you know, notwithstanding that, you've got a target to go to 3,000 sites from 2,000, 2,000 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?
Yeah, look, we're very confident, James. I mean, if you strip out the, the legal placement in Switzerland, the underlying EBITDA margin is actually up 300 basis points on last year. So whereas countries like Switzerland, Denmark, Germany, you know, they're 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 ANPR in the U.S., and we know that ANPR is high incremental margins.
Just a quick follow-up on that. Are you able to give some illustrative unit economics of the impact of ANPR on, you know, the profitability of a typical site in the U.S.?
Look, it's still very early. You know, we've got a very small sample of sites. What we are seeing is, though, a substantially higher number of tickets per site than we see in other territories. I mean, you know, in excess of double, but look, I'm very conscious it's a small number of sites. So, you know, as we grow, we're about to get you some more data.
General, you get an uplift on average, but not just U.S., in general, you see an uplift of all times.
From manual to.
Yeah.
From manual to automated, absolutely. Yeah.
Okay, and then, just one 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, you know, get more, get more tickets to customers, in a way?
I'm not sure I'd call it tactical, James. That sounds a little bit underhand, which it's not. But what I would say is ensuring that every single site or every single customer dashboard, so we provide. And we're quite unique in this, right? Not many of our competitors do anything similar to this, but we provide a high level of control to the customer with the SmartCloud Hub dashboard. They can go in, they can add to their whitelisting or their exemption listing, they can cancel breaches, they can ask us to adjust business rules, those sorts of things. And I think what we've done is just make sure we tighten up some of those parameters to ensure that as per the contract, the customer gets X amount of people on their whitelist, for example.
When they want to add someone else, they have to remove another. If they've got a budget of 100, you want to add another 10, then you've got to take 10 off somewhere else. These are just basic account management things, so ensuring that we tighten up, ensuring that we keep, you know, keep driving those business rules to keep the customers honest, 'cause everybody wants to keep adding lots of things, but that then obviously can potentially impact our issue with service. So of course, it's a high level of engagement with the customer, a high level of account management with the customer, and a high level of focus on these key business rules or business rules per site. I think-...
Yeah, it's something that we've been doing for many years, and we've got a deep understanding and a deep level of respect of the customer and customer relationship, that these things go very, very well. And it's not like you're turning knobs to try and, you know, issue more tickets. It's about ensuring that we deliver the best possible service for the customer, and that is also in line with the contract. So those sorts of things we put a very heavy focus on, as well as the technology focus, right? Ensuring that all the cameras are operating correctly.
It sounds really simple, but, you know, we've got, whatever it is, you know, just under 1,400 locations in the U.K., so there's like 3,000 cameras out in the field that we're monitoring on a daily basis, that our technology monitors on a daily basis. Ensuring that they're all, you know, working correctly, ensuring that we get the best possible capture range, employing the new technology tools through AI that's ensuring that we get the best possible capture rate and actually match rate. All these things have to be done on a, on a sort of almost hourly basis. Ensuring we do that correctly, ensuring we keep a really high standard, is what drives issuance, right?
So we've just ensured that we've gone back through all that information, double-checked our data, double-checked our processes, double-checked contracts to ensure that we, we are doing things correctly, which we are. And of course, now we're seeing things improve again. We're seeing dwell times increase. There's more, there's more traffic going through the estate, and we're seeing that start to rise. So it's a multiple level or a number of technology and service provision adjustments that we've made to make sure that we, we can grow that issuance again. And of course, things that we can't control, things like the average dwell time, the customers, those sorts of things, the motorists, these are things that we, you know, 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. Question here from Drew Titmarsh: "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?" Paul, one for you.
Yeah, I'll take that, and I, I guess I'll start with the Queensland bit. First thing we need to understand, everybody needs to understand at school, this is not like Queensland. Very, very different situation. So what the government have said to us in Denmark is they actually don't mind us accessing keeper details, and we've still got our access to the e-Boks system, right? Which allows us to get keeper details and send a ticket in the post, but that has to be the second action. The, in the past, it was the first action, right? Which is what makes our technology work incredibly well. In the first action, the first instance, we have to put the PBN on the windscreen, okay? Now, clearly, that's different at this stage. Now, what have we done? How are we engaging with government?
So what we've done is actually created a new trade association in Denmark. There's already one there, but a new one because the legacy providers don't really operate in technology, so this doesn't really bother them. Whereas for us and one or two others, it is an issue, so clearly, we've created a new trade association, and we've also got membership and association with Danish Industry. Now, Danish Industry are, they represent 50,000 companies across Denmark and the Nordics, and a lot of real estate businesses are involved with Danish Industry. So they've taken our case on, they've been lobbying with the government, and particularly the Transport Minister .
They have a very high level of confidence this will be reversed, and they will find a new way forward about how can we, you know, the first action be the use of ANPR. And the argument there is, look, we're using ANPR right away across the country, right? On toll roads, on bridges, you know, the bridges to Sweden and back, and a number of areas for local government use. So why not for private land and to also keep traffic moving on front, you know, for the, for the private industry? Already, that's been reasonably well received, and the engagement from government is positive. Yeah, and I.
We can't really draw many similarities with Queensland because, you know, despite having met 3 Transport Minister s in Queensland, they basically pulled down the shutters and said, "You're not doing what you wanna do. You just have to send people out there, and even a reminder, you can't access the details." So it's a very different situation to Queensland. 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 beast than we've ever had anything battling for us in Queensland. So we think it's a very different environment. And regardless of that, you know, Denmark's a great place to be. It's a 910 kroner ticket. That's over AUD 200, right?
You know, the average payment ratio is 70% in excess of. So what we need to do is build density, build some scale and density of, you know, sites close together, so when we are using human beings to put tickets on windscreens, they can get to sites easier and quicker. Obviously, today, because we're using ANPR, our sites are quite disparate. They're around the country, so we don't have that density. So we're working on new sales strategies to actually, you know, build sites all around that dense period of Copenhagen to try and raise the issuance. So I still believe it's a good place to be. It's a gateway into the rest of Scandinavia, which we're interested in building out that region into the future. So, you know, we won't be leaving Denmark anytime soon.
Thanks, Paul. Let's combine a couple of questions focusing on the upside potential in Denmark. 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?
Sure. Well, I'll take the second one first. So what would happen, I mean, you tend to get a 4-5 times uplift if you go from manual to technology. So you can see a significant uplift in tickets, and of course, we've already got 60+ locations in place. All right? So, the uplift of when this gets reversed, I think is significant. You go to profitability quite quickly, and you're a profitable growing business, right? So that happens virtually, it's almost overnight. What-- Do I think it's going to be reversed? The answer, I believe it will. And I was in Copenhagen a couple of weeks ago. I had several meetings there, obviously, with the team and some customers. But we also met with our lawyers over there for different reasons.
They, they-- Them and also financiers we met. And I actually met with a competitor to talk through what they're doing about the same thing on the same trade association. And everybody, you know, said the same thing, which is, "This is uncharacteristic of the government to operate in this way. This just does not happen in Denmark." They see things differently. They're much more consultative. "Let's find a better way to do things. Let's introduce technology to make things easier and better for people." And that, that is what they all came back to, and they said, "Look, as soon as Danish Industry gets involved, it'll take some time, but they think you'll get it fixed." And so when? I, 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 before the end of the calendar, right? Provided we keep going in the same direction, keep engaging Danish Industry, they do their job well, and obviously, we meet with the trade, the Transport Minister . What I will say, on top of this, which can be a positive, it is a positive for us, there is an election coming as well in Denmark, so there will be change. All right? So 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 ANPR issue, get back to where you were, and you're going to be issuing a lot more tickets, and you're a profitable business.
Thank you, Paul. I can see that Olivier has his hand up. Olivier, let's move to you.
Hi, guys. 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'd stood up a team, so what's the, I guess, hurdle to profitability of that incremental gross margin from, you know, ANPR sites? Like, how many sites do you think you need before you, the ANPR 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 yet have really good data in terms of, you know, what the long-term average issuance and long-term payment ratios are gonna be, but I would expect it'll be, you know, less than 50 sites, you know, not a huge number. And, you know, we're targeting to get to between 30 and 50 by 30 June, right? So we could get profitable pretty quickly.
Okay. Yeah. So it'll be a modest drag, presumably in the second half of this year, that team that you've put in place, and then you, you'd expect it to be pretty break even to profitable in the first half of next year?
Correct.
Absolutely.
Yeah.
Yeah. Okay, thanks.
Thanks, Olivier. I'm going to follow that up with a question from Michael Holland: With your early U.S. experience, how does the public behavior around PBNs compare with other markets? Metrics like payment rates, time to pay, percentage appealing, repeat offenders, et cetera. Paul, one for you.
Yeah, I mean, as Richard said a minute ago, it's very, very early days. I mean, what I would say is that the behavior of... There's much more contravention, right? So a lot more people break the rules in the U.S. than we see elsewhere. And part of that is communication. We've got signs everywhere, but people aren't reading them, you know, which is quite often a thing that comes through in appeals. But what I would say is, yeah, we are starting to see the payments come through, and they've been coming through quite well. And clearly, as we get more sites on board, more data, more information, we'll understand the payment ratio better. It's certainly north of 35% at the moment, so it's heading towards 40+.
So I think that my experience would tell me, I believe we're gonna see a lot more issues, and you're probably gonna see 40%-45% payment, you know, whereas, which is not as good as the U.K. And if you think about it, right the way across the group, you know, the U.K. has been sort of the baseline. It's 50-55% +. Then New Zealand comes in just above that, and then you've got, you know, Germany at 60%+ , and then Denmark, and we believe Switzerland will be higher. So no, I think if the behaviors are similar elsewhere, but people contravene the rules. They either don't pay or they overstay.
And the appeals come in, which is, "Oh, I didn't see the signs." Well, okay, but we're, we're managing that very closely and very carefully in the U.S., and I think we're pitching the value of the PCN correctly or the PBN correctly. Some of our competitors are much higher value, and we've come in lower, and I think that's the right thing to do at the moment whilst we bed ourselves into this market. And I think we're going to see a lot of success there. I'm, I'm excited by what we're going to, going to achieve. Every time I go there, we've got new customers, new things happening, and obviously we've added more people to the team, hired a new sales director just for that ANPR business. Yeah, we're looking forward to really accelerating the growth there.
Richard, just a quick follow-up for you on that from Mark. Can you comment on the incremental margin on ANPR in the U.S., given there's an existing cost structure?
Yes, yeah. So it will, it will be very high. You're absolutely right. We've already got infrastructure. Can you focus it there, Mark? Already got infrastructure, so little bit like New Zealand, you know, 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.
Thank you. Can you hear me there?
Yes.
Yep.
Oh, great. 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, and I highlighted, you know, earlier on in the presentation that a number of shareholders said this is one-off. We're just going back through our older aged debt and just hitting them hard and trying to collect money, which is not technically right. We've actually been running this process or starting this process 18 months ago, right? It's taken quite a long time to get to the point where we're collecting regular outstanding debt, and we're taking it right the way through the process, right to a legal process or a court process, yeah. And that does take time.
If we think about what's in the aged debt book, there's hundreds of thousands of these PBNs there that we, over the last six years, have been, you know, trying to chase, nothing's happened, and we're trying to attack it again to really recover the monies of what people owe. And, you know, we're still... While what we've done so far is, you know, across the two debt recovery providers or second placement providers, is actually, you know, given around about 300 to 350+ thousand cases each, of which they've been working, you know, some are better than others. But there's still well over 1.2 million cases that we've done nothing with yet. Because this is a-- you have to go through this process slowly.
In order to answer a question that came in earlier about how do you manage reputational risk, we, if you really want to blow your reputation up, you'd hit this back book all in one go, and you'd be on the front page of The Sun, right? Or The Mirror, or The Guardian or something. We have to go at it sensibly, conservatively, at the right kind of pace, so that you're going to 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 each month. So it's an ongoing process.
So it's not gonna slow down, like, that's the key thing. We're at a point now where we feel we're going to continue to grow from. And we can keep going with this particular aged debt book, which is going to keep growing as Richard highlighted.
Okay, and just, I guess from consistency perspective in terms of projections, is there a lumpiness to this debt recovery piece, or you're consistently gonna be tapping into that back book and, you know, 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.
Yeah.
It took some time to get this going, right? To make sure we've hired the right partners. They obviously looked at the data for us and got, you know, quoted their rates and all that kind of good stuff. So it did take time to get this right, and then, of course, the process of going from the, you know, from when we issue the ticket, at 28 days, it goes to the first debt recovery provider, right? Which is the first placement, if you like. Then at 12 months and one day, you then go to the second set of debt resolution providers, and then after that process, you then go through a legal process. So setting that up does take a bit of time. We had to build some of our own technology to manage the workflow, because that's additional to what we already do.
But it's been the right investment to make. It's, I mean, you just look at the numbers and the cash, it's working, right?
Mm-hmm.
It's a strategy or initiative when we really tested it, you know, 18 months to 2 years ago, to then actually putting in place, start the process, hire the vendors, and go for it. Yeah, it's, 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.
Great. Thanks, guys.
Well, just staying on that back book theme, Francis has a follow-up question: "Given U.K. parking debts are subject to a six-year limitation period, can you provide the age profile of the back book and indicate what proportion of current recovery revenue is within two years of becoming statute barred?
With it off the top of my head, Francis, no, I can't tell you that. There's an awful lot of cases that we, that we deal with, and but, but what I can say is that 1.2+ million cases that are in the aged debt book today are absolutely within that period of time, within the six-year statute of limitations. A lot of it, I mean, clearly, once you start going through the process, these things tend-can happen quite quickly. And, you know, it's, and like I say, it's, it's being added to on a daily basis, right? Because we're issuing 50, 60, 60, 70 thousand PCNs a month in the U.K. Of course, they go through the first process, second, and then they're into that, into that aged debt book.
Every day it's being added to, but I can't give you sort of my opinion of what the profile is right now.
Isaac has 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 managing car parks. Our focus is building technology that's gonna deliver, you know, it's gonna monitor car parks and manage space for landowners and our customers. Of course, the center of everything we do is we ensure there's always a place to park for genuine customers. That is what we're really good at. Debt recovery, there's incredibly specialist firms out there who do this all day long, all day, every day. And to me, you wanna put the ace in the right place, you know? Make sure that if you're gonna hire someone, it's the right person for the job, and it's the same with our vendors. It's an interesting comment. It's an interesting thought process.
It's something we have thought about in the past, whether we have that whole process. But in our DNA, we're not debt recovery agents. Right, that's, or debt resolution agents. That's not what we... That's not what we're here to do. We're here to provide a service to landowners, retailers, property agents, and so on, to ensure there's always a place to park for genuine customers. And we wanna hire the best vendors to help us for other ancillary services, and I think we've done that. I think we've hired some great, great vendors. What I would say is, you know, just to expand on this point, is we're now trying to implement this or look at implementing this in other markets, New Zealand, for example, in Germany, and in Denmark as well.
Clearly, there's other opportunities there for this, this legal process or second placement process. And I think that's the thing that we're-- a lot of people don't really see, is we're just looking at one market. But actually, we operate in six markets, yeah? So let's think about how big this can be right the way across the group, not just in one area, which is a test case today, and it's gone phenomenally well.
Thanks, Paul. Isaac had an earlier question, which I'll now move to, which is: "Since SPZ technology leads to, I expect, a majority of parking breaches being fined, have you noticed increased compliance from customers once sites are installed? And therefore, do less PBNs get issued over time over the life of the site?
Well, I think, I think it's important to recognize, before I answer, it's important to recognize what we're there to do, right? We win customers because we're there to solve a problem. That particular location on a customer's site is being abused for some reason. Yeah, people are parking there who shouldn't be parking there, people are parking there way too long, people are parking there and not paying. These are the problems that we solve. We create footfall through that particular site. That is what the landowner wants, right? If they're a McDonald's franchisee or if they're a shop or a hospitality venue or if they're a retail environment, they want footfall, people to go through.
So of course, when you do go into any location, this has been happening for years and years, we've got lots of data to back this up, clearly you're gonna see an uplift, a number of tickets being issued, early in the contract life cycle. And over time, you will see it drop to a certain point and then stay there, which might be two, three, five PCNs a day, for example. It might have started off at 10 a day, and it comes down to five or even four a day. And that's still within our averages, or you know, those are the good sites that we want and wanna hold on to. If someone's issuing two or three tickets a day, fantastic. You know, low CapEx spend, generating great revenues all year round, that's perfect for us.
We want lots of those, right? Rather than the big sort of hitters, and they stay there, but they come with high risks. So yes, you do see a reduction over time, but it normally drops to a certain level, and it stays there because that's what we're there to do. We're there to remove the abuse. We're there to ensure there's always a place to park for genuine 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, everybody, for, for sticking around and listening. We do, we do appreciate your time. But I will finalize, so we'll just finish the presentation with just a few remarks and just reiterate a couple of points I made earlier in the, 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 into the second half. As always, execution is the key. We'll continue to drive organic growth across all of our markets while optimizing the portfolio for greater performance. We have a superior and unique offer in the markets we operate in, and the pipelines are looking fantastic. We're incredibly pleased with the Peak Parking acquisition. It's performing very well, and we're excited by the ANPR increase we're gonna see over this half.
We clearly have set up a dedicated team, dedicated salespeople, and the leadership are highly motivated to deliver, to deliver against their targets. And also, we'll be selective about how we add complementary acquisitions to accelerate our growth and enhance our earnings. Acquisitions provide opportunities to leverage our market-leading proprietary technologies and offer customers a differentiated and superior service. We are well on our way to achieving our site target of 3,000 ANPR sites under management by December 2028, which, by the way, is only 1% to our large TAM. So as I said earlier on today, and as I reaffirm what I said in August last year, in FY 2026, we will continue to grow and strengthen the foundations for future growth.
We've developed market-leading technology and over a decade of domain expertise in understanding customers' needs and the compliance and regulation frameworks in the markets which we operate. We're well-placed to continue to grow in existing and new territories. Thank you very much for joining us today. There will be, I suspect, we'll be meeting a number of people on the road this week and also the first week of March. But again, if you have any questions, please, as I said, reach out. We're very happy to answer them. But thank you very much.