SMART PARKING LIMITED — Annual Report 2019

Aug 25, 2019

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Smart Parking Limited (ASX:SPZ)

FY19 Results 26 August 2019 CEO Paul Gillespie

smartparking.com

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Recovery & growth World-leading technology for parking design, World-leading technology and first-class managed services. development and management

Management Services | UK

Management Services | UK Technology | Global

Profitable and operates exclusively in the UK. Specialises in managing • Executing long term growth car parks on behalf of retail customers, land owners and managing agents and currently generates 85% of Smart Parking’s revenue.strategies in the IoT marketplace.

• Year of consolidating and strengthening market position. • Successful stabilisation has created Technology | Global a platform for long term growth.

Technology | Global • Significant market opportunities intact with solid operations plan. Designs, develops and specialises in on-street and off-street parking technology and software, enabling clients to manage parking • New smart city product delivery efficiently and cost effectively. Critical to competitive advantage in strengthens SPZ technology offering the Services business and to the future growth of Smart Parking in the and global market position. smart cities and IoT market place.

• Growth in market position with industry leading technology. • New management team and additional heads in sales and operations fuels positive growth in site installations.

• R&D funded from operating cash flow and treated as an expense.

Strong balance sheet to self fund growth strategies

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Recovery & Growth | Smart Parking Group

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ANPR Sites Under Management 415
389
374
355
336
315 324
301
289
249 259 269 276
236
Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 23 Aug-19
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UK ANPR roll out continues

181 new sites installed in FY19, with 28 removed. 389 total sites under management using ANPR technology at 30 June. 415 total sites under management at 23 August. Pipeline continues to grow currently in excess of 300 sites.

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PBNs Per Month
34,702 35,550
32,921
30,667
29,090
25,768
23,843
Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19
Fcst
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Technology Annual Recurring Revenue (m)

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3.5
3.1
2.7
FY18 FY19 Committed Annual
Recurring Revenue
(Aug 2019)
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PBN’s now returning to growth

Annual recurring revenue grows

Despite some significant site losses in FY19 PBN issuance is now returning to growth in line with site acquisition.

Annual recurring revenue from the technology business continues to grow as we win more customers.

FY19 Results Presentation | smartparking.com | PAGE 3

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FY19 Financial Update

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Smart Parking Group

• Reaffirming the message at the half year, SPZ is investing in our people, product and process to fuel future growth.

• Lower revenue in FY19 due to:

• The loss of some key car parking sites in the UK management estate.

• Higher client revenue share due to site mix.

• Fewer PBNs being issued in line with customer engagement strategy.

• Investment in additional sales executives, customer engagement strategy and operational resource is showing results in more new site wins, set to continue into FY20.

• Site growth in the UK Services business in FY20 will increase PBNs issued and drive revenue growth.

FY19 Results |

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FY18 FY19
Revenue 30.7 27.0
Cost of Sales (13.1) (12.0)
17.6 15.0
Gross Profit
Overheads (13.5) (15.4)
EBITDA 4.1 (0.4)
Net Interest Received 0.3 0.3
Depreciation & Amortisation (2.0) (1.9)
Other 0.0 (0.2)
Net profit/(loss) before tax 2.4 (2.2)
Tax expense (0.7) (0.4)
Net Profit/(loss) after tax 1.7 (2.6)
Gross Margin % 57.4% 55.6%
Overheads/Revenue % 44.0% 57.0%
EBITDA Margin % 13.4% 0.2%
EPS (cents per share) 0.46 (0.72)
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FY19 Results Presentation | smartparking.com | PAGE 5

FY19 Results | Group Financial Position (m)

FY19 Results | Operating Cash Flow & CAPEX (m)

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$m Jun-18 Jun-19
Current assets 23.2 18.8
Non current assets 8.8 9.7
Total assets 32.0 28.5
Current liabilities 7.8 6.5
Term liabilities 0.1 -
Total equity 24.1 22.0
Net cash & cash equivalents 13.4 10.5
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3.5
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3.3
2.9
0.3
FY18 FY19 FY18 FY19
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Operating Cash Flow

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Capital Expenditure
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• Strong balance sheet with cash reserves and no debt – well placed to fund growth strategies.

• All corporate bonds liquidated during FY19 - $10.5m is all cash

• Payments for fixed asset additions of $2.9m related to deployment of technology in the UK.

• Deferred tax asset of $0.5m.

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Segment reporting

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Revenue EBITDA
(000’s) FY19 FY19
FY18 FY19 FY18 FY19
vs FY18 vs FY18
Parking Management 23,873 21,692 (9.1%) 6,521 3,609 (44.7%)
Technology Division 8,860 7,650 (13.7%) (565) (1,213) (146.9%)
Research & Development 0 0 (696) (1,020) (46.6%)
32,733 29,342 (10.4%) 5,260 1,376 (73.8%)
Corporate 327 235 (28.1%) (1,190) (1,120) 5.9%
Eliminations (2,041) (2,393) (17.2%) 0 0
Underlying Revenue / Adjusted before EBITDA before non
31,019 27,184 (12.4%) 4,070 256 (93.7%)
recurring items
Adjusted EBITDA Margin 13.1% 0.9%
Parking Management Division EBITDA Margin 27.3% 16.6%
Technology Division EBITDA Margin (6.4%) (15.9%)
Research & Development/Technology Revenue 7.9% 13.3%
FY19 Results Presentation
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FY19 Results Presentation | smartparking.com | PAGE 7

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FY19 Results | Management Services Financials (m)

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23.9
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Management Services

• Business stabilised and now back in growth mode following successful sales and customer engagement strategy.

• Despite the loss of key sites through FY19, the exit run rate is strong, demonstrated with July 2019 EBITDA of $0.5m.

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21.7
6.5
3.6
FY18 FY19 FY18 FY19
Revenue Adjusted EBITDA
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FY19 Results Presentation | smartparking.com | PAGE 8

FY19 Results | Parking Breach Notices Issued

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107,504
104,115
100,968
97,406
92,678
86,341
83,001
73,746
Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19
2018 2019
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FY19 Results | Site Reconciliation

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415
104
389
(16)
77
301
(12)
236
Sites at 30 Jun 2018 H1 FY19 AdditionsH1 FY19 Removals Sites at 31 Dec 2018 H2 FY19 AdditionsH2 FY19 Removals Sites at 30 Jun 2019Sites at 21 Aug 2019
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• PBNs issued are growing, as demonstrated in the July 2019 results.

• Record number of site additions during FY19, with a focus on winning and installing 200 new sites in FY20.

• Exercise in the removal of poor yielding sites complete in H2 FY19.

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Technology

• Results reflect the cost of dual processing as we migrate customers from legacy systems to the new SmartCloud platform.

• FY19 result impacted by customer delays in smart city project delivery.

• Firm orders of $1.6m to install in FY20.

• Annualised committed recurring revenue of $3.5m.

FY19 Results | Technology Financials (m)

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(0.6)
(1.2)
FY18 FY19
Revenue Adjusted EBITDA
8.9
7.7
FY18 FY19
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FY19 Results Presentation | smartparking.com | PAGE 10

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FY19 Results | Research & Development Investment (m)

1.0

Research & Development

• Increased investment in the Smart City platform including delivery of the Smartphone payment application and enhancements to SmartCloud and new hardware products.

• Ongoing investment in R&D will support future revenue growth.

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0.7
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FY18

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FY19

FY19 Results Presentation | smartparking.com | PAGE 11

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FY19 Business Update

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Business update: UK managed services

• | Investments driving recovery and growth

• Strong focus on capturing market share in the ANPR parking enforcement market place – total market of 45,000 off street sites.

• Investment in additional sales and operational capacity showing positive results delivering a record number of new ANPR installations in FY19 of 181 sites.

• Despite the loss of key sites, investment in infrastructure is showing positive growth with a strong exit run rate, demonstrated by July 2019 EBITDA of $0.5m.

• SPZ has a big addressable market and are focused on capturing the opportunity, with over 300 new sites in the Services pipeline for FY20.

• Over 76 million cars using SPZ managed car parks during FY19 across the UK estate. Volume set to increase in line with site acquisition growth.

• UK services market consolidation continues with more corporate actions during H2 FY19.

FY19 Results Presentation | smartparking.com | PAGE 13

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Management services

| Diverse and growing customer base

• Growth in sales force continue to be successful in winning new sustainable business.

• Pipeline of new sites and clients growing beyond 300 locations.

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FY19 Results Presentation | smartparking.com | PAGE 14

Business update: Technology

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• | Smart City and IoT technology continues to be adopted

• Focused sales effort in winning customer contracts across all verticals, growth in partnerships and the delivery of best in class technology.

• Growth of new market relationships across all territories including Germany, Gibraltar, UK, South Africa, Australia and New Zealand.

• First order received from German retailer Kaufland, with further installation of Smart Parking products to sites across Germany and Australia to follow.

• Firm revenue of $5.1m in FY20, including $1.6m new business and $3.5m of committed annual recurring revenue.

• Continued R&D investment to deliver future revenue streams.

FY19 Results Presentation | smartparking.com | PAGE 15

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FY19 Results Presentation | smartparking.com | PAGE 16
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Growing technology customer base

| Continued growth within all operating territories, and expansion into new markets.

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Business update: R&D

• | Investment in smart city technology stack

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• Parking App – guidance, payment and enforcement tracking delivered in FY19 to multiple customers.

• SmartCloud platform – additional functionality delivered to enhance the smart city and IoT dashboard.

• SmartCloud platform – message processing from multiple IoT devices:

• smart lighting for council customers

• smart LPR for parking management customers

• ingestion of flight information and people counting data for aviation customers

• API Portal – developers at client sites can create reports and dashboards to exact specifications.

• Enforcement management system – in development to complete the end-to-end customer journey, opening up a wider pool of customers with greater product offering.

• Smart Parking is well poised to keep up with the Smart Cities momentum.

FY19 Results Presentation | smartparking.com | PAGE 17

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FY20 Strategy and Outlook

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FY20 Strategy and Goals – Services

• Business back into growth phase with new expanded sales team.

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• Significant infrastructure investment in FY19 now delivering earnings growth demonstrated with July 2019 EBITDA of $0.5m.

• Site growth to continue with a target of 200 new installations in FY20, resulting in increased PBNs.

• Maintain discipline in customer engagement to deliver the best possible customer experience and limit site losses.

• Substantial market opportunity affirmed, SPZ well positioned and well funded to capture greater market share.

FY20 Strategy and Goals – Technology

• Clear focus on product development and delivery for the Smart City and IoT market place globally.

• Growth in Technology sales team to drive new business.

• Grow revenue from existing customer portfolio through additional IoT services.

• Maintain win rate of key local authority business across all operating markets.

• Global IoT opportunity reaffirmed with SPZ well positioned to capture market share.

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Contact

Paul Gillespie Chief Executive Officer paul.gillespie@smartparking.com Richard Ludbrook Chief Financial Officer richard.ludbrook@smartparking.com

smartparking.com

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Supplementary Information

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Management services: How it works

• | Parking management improving customer satisfaction and revenue generation.

• ANPR | Automatic Number Plate Recognition

• Pay & Display | ANPR Linked Automated Payment System

• Site Surveys | Real-time information, analysis and trend data

• Parking Attendants | Trained and qualified staff

• DPC (Disabled, Parent and Child) | Protecting the vulnerable

• Marshaling | Trained, professional and customer-friendly marshals

Validation & payment Machines facilitate pay & walk or validate parking

Motorist

Enters the carpark at the defined entrance

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ENTRY TIME 15:23 ABC321
EXIT TIME 16:48 ABC321
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SmartCloud Automates information and provides detailed reporting

ANPR Recognition Camera identifies the number plate of cars entering and leaving the premises

FY19 Results Presentation | smartparking.com | PAGE 22

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ANPR: How it works

| Automatic number / license plate recognition (ANPR) is a reliable, cost effective off-street parking management solution.

It is proven to serve a wide range of industries including supermarkets, retail, hotels, hospitals and leisure centres. Smart Parking’s ANPR solution ensures greater compliance and increased parking revenue.

• Ticketless, barrier-free system, parking areas that are managed 24/7

• Automatically generated and issued parking charge notices

• Increased security, comprehensive reporting and account management

FY19 Results Presentation | smartparking.com | PAGE 23

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S martCloud
API Serv i ce
Technology: How it works
Interface Pac k s
| Smart Parking’s technology provides
effective parking management solutions
around the world.
SmartZones
On-Street Parking Off-Street Parking
SmartApp
SmartSpot Overhead Guidance
ANPR Camera
Variable
Message Signs
+1
Pay & Walk
In-Ground Infrared Sender
Marshall Handheld Car Counter
Sensor
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Smart Parking app

• | The Smart Parking app and its customised Miami, Cardiff, Adelaide, Moreton Bay, Moonee Valley, Livingstone Shire apps delivered.

Features and benefits:

• Available for both Android and iOS.

• Provides detailed information around hours, tariffs and bay types.

• Shows real-time availability of car park bays.

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• Harnesses the power of Google Maps to provide distance and directions to suitable bays.

• Payment function will allow cashless payment and remote top-ups.

FY19 Results Presentation | smartparking.com | PAGE 25

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Glossary

Adjusted EBITDA – The Board assesses the underlying performance of the Group based on a measure of Adjusted EBITDA which takes into account costs incurred in the current period but not expected to occur in the future.

EBITDA – represents Earnings before interest, taxation, depreciation and amortisation.

Smart Parking legal disclaimer

The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about and observe such restrictions.

This presentation does not constitute, or form part of, an offer to sell or the solicitation of an offer to subscribe for or buy any securities, nor the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issue or transfer of the securities referred to in this presentation in any jurisdiction in contravention of applicable law.

Persons needing advice should consult their stockbroker, bank manager, solicitor, accountant or other independent financial advisor. Certain statements made in this presentation are forward-looking statements. These forward-looking statements are not historical facts but rather are based on Smart Parking Ltd current expectations, estimates and projections about the industry in which Smart Parking Ltd operates, and its beliefs and assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and similar expressions are intended to identify forward - looking statements.

These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors, some of which are beyond the control of Smart Parking Ltd are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Smart Parking Ltd cautions shareholders and prospective shareholders not to place undue reliance on these forward-looking statements, which reflect the view of Smart Parking Ltd only as of the date of this presentation.

The forward-looking statements made in this presentation relate only to events as of the date on which the statements are made. Smart Parking Ltd will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this presentation except as required by law or by any appropriate regulatory authority. Non-IFRS financial information has not been subject to audit or review.

FY19 Results Presentation | smartparking.com | PAGE 26