I would now like to hand the conference over to Mr. Paul Gillespie, Chief Executive Officer. Please go ahead.
Good morning, and thank you for joining today's Smart Parking FY 2026 results investor conference call. Richard Ludbrook, our CFO, is here with me. We've released a deck to ASX today with plenty of detail. On this call, I'll focus on the record results for the year and the momentum in the business, our progress scaling across multiple territories, including our established markets and new territories like the U.S., and the multiple growth drivers across our portfolio, which underpin our positive outlook for 2027 and beyond. After that, Richard will take you through the financials in more detail. Following the presentation, we'll be pleased to open the line for questions. First, let's start on slide two and our record results. We've had a strong year.
Several years ago, we set out some internal milestones for the business, delivering over AUD 100 million of revenues with AUD 30 million of adjusted EBITDA and 2,000 ANPR sites under management. It's pleasing to say that this year we've surpassed all of those internal milestones, but we have much more to do. Given our momentum, the target of having 3,000 ANPR sites under management by December 2028 is very much intact. In FY 2026, revenues grew to AUD 126 million, up 63% compared to the PCP. Adjusted EBITDA was AUD 30.8 million, a rise of 50%, and the UNPATA number at AUD 11.4 million was up 73%. It's important to note that 72% of the revenue growth is organic, which is quite an achievement. The inorganic growth is the full year of contribution from Peak Parking, which was acquired in February 2025.
One question shareholders will have is, why does headline revenue growth outpace EBITDA growth? We spent AUD 3.8 million on setup and establishment costs in Switzerland and Denmark, predominantly in the second half of the year, to accelerate scale across mainland Europe. We've taken these establishment costs above the line. If you exclude them, adjusted EBITDA was AUD 33.8 million, which is growth of 69%. That highlights the underlying operational gearing in the existing business. Our free cash flow and balance sheet continue to be strong. We generated AUD 20 million of free cash flow, once again, showing our capital-light nature of our model. We closed the period with 37% increase in cash to AUD 17.4 million. We generate high levels of free cash flow. We can self-fund our organic growth strategy, invest in our market-leading proprietary technology and AI capabilities, and maintain a strong balance sheet.
Finally on this slide, we closed the year with 2,083 ANPR sites under management, generating revenues across six territories. Site growth is our key earnings driver. This is an increase of 16% on the PCP. With these sites, we issued a record number of PBNs, up 12% versus the PCP. Turning now to slide three, the disciplined execution of our growth strategy continues to drive our performance. Our plan is to leverage world-class technology and AI capabilities to provide parking site owners and managers a step change in service quality and financial outcomes to drive enduring growth across multiple territories. In FY 2026, we continued our strong track record and delivered organic ANPR site growth across all operating markets. If we look back over the last five years, SPZ has delivered some impressive CAGRs.
We have increased ANPR sites under management by 27% per annum on average, grown revenue at a 44% CAGR, and delivered an EBITDA CAGR of 69%. That earnings growth includes all the greenfield establishment costs we have invested to enter new markets over that period. In FY 2026, momentum built through the second half of the year, which bodes well for FY 2027. We added 200 new sites in the first half of FY 2026 and 303 new sites in the second half. All these sites will generate a full year's revenue in FY 2027. Another positive to highlight is the PBN issuance return to growth in the U.K. in the second half of the year. This is a large driver of our increased performance.
After flat issuance in 1H, PBN issuance recovered and was up 8% in 2H versus the PCP. This contributed to our U.K. business reporting impressive results. Our largest business delivered the fastest rate of revenue growth in the group. Revenue was up 62%, adjusted EBITDA was up 54%, and margins remained over 30%. We also continue to benefit from our improved debt resolution processes in the U.K. We have worked hard on improving our effectiveness in resolving aged debt. These are additional operating earnings that we did not previously collect.
We are working with new partners and new trace technologies to increase the overall yield. Technology is making a difference here, and we have been more active resolving matters through legal channels, although this is more expensive and does reduce margins at the final stage of the process. We have around 750,000 PBNs that are over a year old going through the second-stage resolution process. There is a new slide on page 10 that takes you through this.
It is important to highlight that this process will deliver for a long period of time as we continue to add 20,000 to 25,000 PBNs to the process every month. This number will grow as we add more sites and PBNs. In FY 2026, as a result of this work and the improved process, average PBN values in the U.K. were up 54% versus the PCP. During the year, the process delivered an additional AUD 7 million of EBITDA to the group. As we continue to progress through the age debt profile, we expect the contribution to be around AUD 5 million in FY 2027 and AUD 2 million less than the PCP. As we continue to work through the process and additional aged PBNs, we expect to reach a steady state and then grow in line with PBN issuance.
Looking further ahead, we are trialing opportunities to improve our aged collections in other territories. There is more work to do, but this process has the potential to be applied across some of our other markets and significantly benefit future earnings. To the question you will ask, will this benefit continue to add to revenue and EBITDA in FY 2027 and beyond? The simple answer is yes. We expect to continue to benefit from improved debt resolution for a long time. Our progress in the U.S. is a highlight. It is our largest growth opportunity. We have completed the integration of Peak Parking and acquired American Parking recently in July. We are proving our ANPR strategy and technology advantage there. At June 30th, we have 30 ANPR sites under contract. Converting manual sites to ANPR provides great case studies for new customers, as well as expanding our margins.
New Zealand is a great success story of what happens when we deploy our technology and AI tools and build scale in the market with attractive fundamentals. We expanded our estate by 30% in the year to 310 sites under management. Revenue improved by 19% and EBITDA margins increased by 390 basis points to almost 47%, a new divisional high for the group. We are building the foundations for long-term growth in complementary new markets.
As I mentioned earlier, the AUD 3.8 million investment in Switzerland to accelerate our scale across mainland Europe. The heavy investment phase there is now complete, and we expect improving profitability in FY 2027 with a focus on positive EBITDA in FY 2028. We expect to break even in this territory between 80 and 100 ANPR locations. Growth is accelerating in Germany, another major growth market and a large positive swing factor in our P&L this year.
Performance is improving as sites grow, and we have delivered several months of EBITDA profitability in 2H. During the year, we grew sites by 40% to close with 150 sites under management, and we issued over 120,000 PBNs, a rise of almost 50%. Revenue grew by 40% and adjusted EBITDA improved by 33%. Going forward, we expect this business to scale and turn EBITDA positive during FY 2027, assuming we deliver an increase in ANPR sites to 190 and above by the end of the year.
Remember, the addressable market in Germany is around 90,000 ANPR sites. We are at the very start of the growth runway. We have invested in the team and put in place the platform to support enduring growth. Finally on this slide, today we announced a AUD 5 million share buyback program, which is a signal of confidence in our positive outlook for Smart Parking.
If we go now to page six and moving beyond the results, what is our growth strategy? How do we categorize our markets and how do we prioritize capital deployment? There is a purposeful plan here. We have three pillars for growth. We have first wave markets where we are already established, such as the U.K. and New Zealand. Our focus here is to drive strong revenue growth and margin expansion. Second, we are incubating new businesses in major long-term growth markets. We are establishing our teams and brand, proving our ANPR advantage, and demonstrating our superior value add to prospective clients. This, of course, is the U.S. and Germany. Leveraging off existing infrastructure and expertise, we are also expanding into complementary markets across mainland Europe. These markets can offer attractive returns as they scale, such as Switzerland and Denmark.
As I mentioned, we've invested over AUD 3.5 million in these new markets this year. In Denmark, with a new government and minister, we're looking to return to a technology-driven solution for clients. In Switzerland, where we've been investing in people, structure, and sales capacity over the last year, we now have live sites and PBN issuance has commenced. Finally, to support the organic growth, we have a successful track record of making disciplined, accretive acquisitions. We've made six acquisitions in six years. Some were bolt-ons, others beachheads. They added scale and earnings. We will continue to carefully pursue acquisitions, and we have an active pipeline of opportunities that we're evaluating today. If we move to slide nine now, let's focus on the U.S. market as it's a primary choice for capital deployment. Why do we like it? Let me recap.
There are around 2 billion parking spaces in the market with a concentration of sites in states in which we already operate. Incumbent operators rely heavily on legacy solutions, which we've been successfully replacing elsewhere. We've invested in infrastructure and platforms that can scale. We now have eight sales heads located in key states in the U.S. with positive regulatory environments. We have an opportunity to grow the sales team further and enter up to 40 states that have regulations that align with SPZ's technology strategy. We finished the year in the U.S. with 156 sites under management, with 30 of these being ANPR-enabled locations. We expect this number to accelerate as we continue to demonstrate the value uplift to clients. Since the year-end, we announced the acquisition of American Parking, which brings the total number of sites to 210.
We're very pleased with the acquisition because it adds sites in key markets such as Texas, and opens up further opportunities to leverage our proprietary AI-driven technology platform, SmartCloud. To make sure we take full advantage, I will be relocating with my family to the U.S. during the first half of FY 2027. With that, I'll now hand over to Richard, who will take you through the numbers in more detail.
Thanks, Paul, and good morning, everyone. I'll now take you through the financial performance for FY 2026. As shown on slide 12, Smart Parking delivered another record year of financial results. Revenue increased 63% to AUD 126 million, reflecting the continued organic expansion of our ANPR estate, the full year contribution from Peak Parking in the U.S., and the strong performance of our enhanced debt resolution initiatives in the U.K. 72% of the revenue growth achieved during the year was generated organically, highlighting the underlying strength of the business model. Adjusted EBITDA increased 50% to AUD 30.8 million, which includes AUD 3.8 million of startup investment in Switzerland, and continued growth in the U.S. and Germany. Excluding the Swiss investment, adjusted EBITDA growth would've been approximately 69% year- on- year.
The adjusted EBITDA margin remains strong at 24.4%, with a reduction of 220 basis points reflecting the higher marginal cost associated with pursuing an increased proportion of aged PBNs. This strategy has delivered additional revenue, profit, and cash flow while further strengthening the effectiveness of the group's debt resolution processes. The margin was also impacted by the dilutionary impact of the investment in Switzerland. A measure of underlying profitability, UNPATA, increased 73% to AUD 11.4 million, demonstrating the strength of the underlying operating performance across the group. Foreign exchange movements had a material impact during FY 2026. In addition to the AUD 2.6 million FX loss recognized in the P&L, the stronger Australian dollar reduced reported revenue by approximately AUD 2.9 million and reduced adjusted EBITDA by around AUD 1 million. On a constant currency basis, the revenue growth was approximately 67%, and adjusted EBITDA growth was 55%.
The effective tax rate increased to 40.7%, up from 15.7% in FY 2025. This reflected the impact of the U.K. and N.Z. taxable profits, amplified by the dilutionary impact of losses in Denmark, Germany, and Switzerland, where no tax benefit has yet been recognized. This was partly offset by the recognition of historical deferred tax benefits in Australia. The lower FY 2025 tax rate benefited from the recognition of a AUD 2 million deferred tax benefit relating to historical New Zealand losses. Looking at slide 13, our results demonstrate the benefit of operating across multiple growth markets. The U.K. remains our largest market, generating revenue of AUD 84.9 million, up 62%, with adjusted EBITDA increasing 54% to AUD 25.9 million. U.K. operational momentum resumed in H2 FY 2026, with PBN issuance growing 8% in H2 compared to PCP.
Improvements to the debt resolution process increased average recoveries, generating an additional AUD 7 million of EBITDA in FY 2026. The uplift is expected to reduce to approximately AUD 5 million in FY 2027. It is expected to deliver ongoing benefits into FY 2028 and beyond, driven by continued PBN volume growth. New Zealand continued to perform well. Revenue increased 19% to AUD 8.8 million, while the EBITDA margin expanded to 46.7%, demonstrating the operating leverage available as site numbers continued to grow.
Germany continues to scale, with revenue increasing 40% and PBN issuance increasing 47%. Germany is expected to scale in line with further site growth, driving further improvements in profitability in FY 2027. The U.S. contributed AUD 25.3 million of revenue and AUD 6.3 million of adjusted EBITDA. Importantly, we now have 30 contracted ANPR locations and are validating the value proposition of our technology-led parking management model in what is the world's largest parking market.
During FY 2026, the U.S. grew its sales and operational capability for the newly launched ANPR business and now has seven sales executives in Texas, Florida, Georgia, Indiana, and Washington State. Germany and the U.S. are attractive markets with long-term opportunities. In Denmark, due to regulatory changes, Smart Parking transitioned to manual enforcement operations during FY 2026. This resulted in higher staffing costs as wardens are required to issue PBNs directly, and lower revenue due to the reduced efficiency of manual enforcement compared with ANPR-enabled operations. We expect the loss to reduce in FY 2027, assuming there are no changes in the regulatory environment. Reverting to ANPR operations provides significant upside. We commenced PBN issuance and revenue generation in Switzerland in July 2026. Losses will reduce in line with site growth and PBN issuance. Turning to slide 14. This slide highlights the composition of our revenue growth.
Revenue increased by approximately AUD 49 million year-on-year. The largest contributor was the U.K., which added approximately AUD 33 million of revenue growth through a combination of new sites and enhanced debt resolution revenues. The Peak Parking acquisition contributed approximately AUD 25 million, while Germany and New Zealand collectively contributed more than AUD 3 million of additional revenue. Against that growth, foreign exchange translation reduced reported revenue by approximately AUD 2.9 million. The key takeaway is that the majority of growth continues to be organic and generated from territories where we have already established scale, operating expertise, and technology advantages. Slide 15 shows the continued expansion of operational activity across the group. PBNs increased 12% to a record 1.2 million breaches. Notably, growth accelerated during the second half, with U.K. issuance returning to growth and Germany continuing to scale.
New Zealand and Germany together contributed a substantial proportion of incremental breach notices issued during the year. We believe these trends provide a strong foundation for future revenue growth, given the increasing installed base and the operational leverage within the business model. 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 67%, making SPZ a stronger and more resilient business with a long-term growth runway ahead. Turning to costs on slide 16, operating expenses increased from AUD 29.6 million to AUD 38.1 million. The most significant increases were deliberate growth investments in Switzerland and the U.S. The acquisition of Peak Parking contributed approximately AUD 4.6 million of additional overheads. Importantly, organic overhead growth across our established territories remained disciplined, increasingly only modestly relative to the revenue growth.
U.K. overheads grew by 5% compared to a 62% growth in revenue. This demonstrates the scalability of the Smart Parking platform and our ability to leverage technology and centralized infrastructure as revenues grow. Moving to slide 17, one of the most encouraging aspects of the year was our cash generation. Adjusted free cash flow increased 56% to approximately AUD 20 million. Importantly, while delivering this result, we funded AUD 6.7 million of CapEx, continued technology development, and the establishment of Switzerland. The group ended the year with AUD 17.4 million of cash, up AUD 4.7 million from 30 June 2025. This level of cash conversion reflects the attractive economics of the ANPR model. Moving to slide 18, the group finished FY 2026 with a very strong balance sheet. Cash at the end of the year was AUD 17.4 million, up from AUD 12.7 million a year earlier.
We also maintain access to a $10 million revolving credit facility and a further AUD 10 million accordion facility, providing substantial flexibility to fund future growth initiatives and accretive acquisitions. Subsequent to year-end, we completed the acquisition of American Parking in the U.S. for approximately AUD 17 million, funded through a combination of cash reserves, debt facilities, and equity consideration. This transaction further strengthens our platform in the U.S. market and is earnings accretive before synergies. I'll now hand over to Paul.
Thanks, Richard. I'll now close with our positive outlook on page 19 and some of the key drivers of our earnings trajectory. We've clearly had a strong set of results for FY 2026, and we enter FY 2027 with significant momentum. We'll continue to drive organic growth across all our markets by leveraging our technology advantage, AI capabilities, and deep domain expertise. Our pipelines for new sites are good, targeting sectors where we are already well-known and are successful. We remain laser-focused on our execution. We're targeting to add between 450 and 600 net new organic ANPR sites to the estate this year. Our ambition is to close the year with around 1,750 sites in the U.K., up to 400 sites in New Zealand, over 200 sites in Germany, and between 75 and 150 ANPR sites in the U.S. It's going to be a busy year.
With these additions, we're accelerating growth in our key markets, and we are well on our way towards delivering on our long-held organic target of 3,000 sites under management by December 2028. We'll continue to look to selectively add complementary acquisitions to accelerate our growth and enhance our earnings. Our balance sheet is strong, and we have access to debt facilities if required. There are other drivers that will reshape our FY 2027 results. As I mentioned earlier, we expect around AUD 5 million of EBITDA from the enhanced debt resolution this year. That's around AUD 2 million lower than the PCP. On the positive side of the ledger, we will get a full year's contribution from all the new sites added partway through FY 2026, as well as a contribution from new sites added this year.
Germany is expected to scale with new site growth, driving further improvements in profitability, taking advantage of new sales capacity that we added in H2 of FY 2026. Assuming we deliver over 190 sites in Germany by the end of the year, we expect to turn EBITDA positive during FY 2027. The loss in Switzerland is expected to reduce in line with our site acquisition strategy and growth in PBNs. Based on 50 ANPR locations by the end of FY 2027, we expect the EBITDA loss to improve to AUD 2.5 million, and the business to be at EBITDA positive in FY 2028.
Last year's loss in Denmark is also expected to reduce from around AUD 3 million to AUD 1.5 million. This conservatively assumes manual operations continue, and there is no change to the regulatory environment. A policy change back to ANPR operations would provide significant upside to our earnings. These swings alone should drive a significant uplift in our earnings in FY 2027. In closing, we have an excellent team at Smart Parking, and I'd like to thank them. The business is performing well. We are proud of our execution track record, which continues to build, and with the technology and expertise we have, we can deliver growth across multiple territories for many years to come. That now concludes our presentations, and we can now open the line for some questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Olivier Coulon with E&P Financial Group. Please go ahead.
Hi, guys. Just for American Parking, I think you have had that in the portfolio now for a couple of weeks. Any impressions from what you thought you were getting versus what you have gotten?
Yeah. Hi, Olivier. Yes, it is very positive. We are very pleased with what we have acquired. Clearly, the plan is to upgrade existing locations or existing manual locations with our ANPR solution. I am pleased to say we have already done that across three locations. You might recall that 20% of the sites that American Parking were operating are owned by the vendor, and we have locked that down for a 5+5 lease. So we have got that for 10 years, which is great, those locations, and they are the first ones in the queue to be upgraded to ANPR. So early observations are lots of opportunity, particularly in the likes of Tulsa and Oklahoma City, where the business is located. Yeah, a long way to go with it, but very pleased so far.
Yeah. Perfect. Just Germany, I think initially you were thinking you might get to a profitability break even in the second half of 2027. Have you put in a little bit more investment that has pushed that breakeven point a bit down the track?
Yes, that's correct. We did actually have some breakeven months in the second half, and I spoke quite openly about that at previous conferences. We took the decision. We took on a lot of locations in March of this year, and we took the decision to increase the investment in our customer success team, as well as some operational capacity and sales capacity, which has obviously added more cost to the business, which is why we've disclosed a bit further around the breakeven sites and breakeven numbers in this pack today. But yes, you're quite right. We did add some additional costs in the second half, but for future benefits, which we're excited by. As we highlight in the call, this is a big growth market for us because the size of the addressable market is huge, along with the U.S. That's an area we want to focus on.
Yeah. No, perfect. Maybe just the last one from me. The buyback, that's just a reaction to where the share price is. I'm presuming that doesn't kind of indicate you don't have a number of M&A targets that you're still kind of looking at.
That's correct. We have lots of opportunity that we can look at. Clearly, and I've said this many times, we maintain our discipline with M&A, and we do say no to quite a lot of opportunities that don't fit us or don't give us what we need when we're looking to acquire a business. Clearly, we feel the business is undervalued at the moment. The share price reflects that right now, and we see that as an opportunity to show our confidence in the business. We're very confident in the future, and we want to invest in that. That's essentially the message today is it's very cheap, and we believe it's underpriced right now. So we want to take advantage of that.
Yeah. No, perfect. Thanks. Appreciate it.
Once again, if you wish to ask a question, please press star one on your telephone. We will now pause a short moment for any final questions to register. Thank you. There are no further questions at this time. I will now hand back to Paul Gillespie for closing remarks.
Thank you very much, and I appreciate everyone taking the time to listen to us today. Clearly, it is a very busy time of results season, but I would encourage people to focus on some key messages from our deck being 72% growth in organic. 72% of our growth is organic. Clearly, we are tracking well in the U.S. with our integrated transactions, and we have a long runway of benefit in front of us, both in the U.K., U.S., and other operating markets. Thank you very much for your time today, and we will leave it there. Thank you.
That does conclude our conference for today. Thank you for participating. You may now disconnect.