@Dangles Agree - hoping for a robust Q&A on the UK. That was the standout for me.

However (and we have a lot of UK friends and relatives) the mood is just depressing there (see below). But I don't think it FULLY explains the PBN change.

Off to join the call.

@Dangles Yep, as my tweet indicated I had a very big eyebrow raise seeing that.

On the call now we are getting some answers. SPZ chased up some legacy PBN's which required using debt collectors and taking breaches to tribunals. This has always been an option available to SPZ but one they generally haven't pursued in the past given the incremental revenue is offset by the extra costs. It's why they generally had a 50-60% conversion rate on PBN's, some people just didn't pay and SPZ didn't think it was worth pursuing.

I suspect they will try and shift focus to the US and new geographies but this is something that will need some time spent on it I think. It's a change in operating model and it's important to understand why.

@Wini thinking out loud, is the accumulated impact of an industry sending out automated PBNs with increasingly rigorous debt follow-up training the UK public to become more compliant over time.

I know it's just an anecdote, but we had a UK visitor staying with us in October, and she described how she and her husband were both being more rigorous in saving their parking tickets, and documenting their parking entry and exit times, so that they could appeal breaches. (One case, when they were issued a PBN having entered and exited the car park twice in one day.)

Might this be just a natural market maturation (learning curve) that happens over time?

In this case, pushing ahead to "10 diversified markets with 1000 car parks" is the right strategy. You don't want all your eggs in one maturing basket. So @Silky84 is right, management has the easure of this.

Paul has said Jan-26 is showing improvement over Jan-25. For me, the 2H 26 over 2H 25 comparison is going to be the first thing I look at when the FY comes out.

For now, for me, there is enough strength in the result, but it is a flag for the future.

@mikebrisy i was thinking exactly the same thing and would probably be seen in the older vintage sites, have they optimised/normalised so slower steady state? probably an issue in the longer term, since the growth opportunity is large now

lol he just answered it, normalises over 4-5 years

Hard to disagree with the general consensus here. And i'll be keen to hear what was said during the call (i cant make it sadly) re the UK.

Beyond the official cost of living explanation (which i think is a plausible explanation, at least to a certain degree), the drop in UK tickets per site could also be a side effect of Smart Parking's own tech and strict compliance standards? EG. Their new payment app and automatic ANPR-linked billing make it much harder for drivers to accidentally overstay or forget to pay, which naturally boosts compliance and cuts down on violations. At the same time, the company works hard to keep a "GREEN" status in government audits, which means they have to be fair and follow strict industry codes rather than just cranking out as many fines as possible.

If true, that's probably a sensible long term move to sustain their "social license" and longer term cash generating ability.

We'll see what comes out of the call (i cant attend sadly, but keen to hear what was said), but I find it hard to imagine there's been a big structural shift that undermines the business case, even if it does suggest we temper some near term growth expectations. I could well be wrong though.

But overall, I still think this is a great business. Easy to understand, a management team with a great history of executing well, a big addressable market, attractive ROIC, a mountain of cash with no debt, and essentially immune from AI-disruption (maybe you can easily replicate the software stack, but you still need to install all the hardware and secure physical locations). And they've reiterated their 3,000 site target which would imply revenue of ~$200m and a NPAT of ~24m (excluding one-offs and amortisation), a big lift from current levels.

It's the valuation that is the hard part for me. 9 months ago i penned an estimate of 75c, and we are well past that. But i was (very) probably too conservative in my assumptions.

I can get a much higher estimate if i strip out amortisation costs (probably not unreasonable), assume minimal new share issuance and a 30-plus terminal PE (currently at ~48) in the next 2 years. So i dont think the price is necessarily silly at all. There's just not a lot of room for error. As we have seen time and again on the ASX; when stocks priced for strong growth fall a little short, the re-rate can be brutal.

@Strawman valuation is an issue, needs the US to fire up big time (possible) and no unwanted issues to flare up in other markets. i was hoping for some AI-inspired selling to add more, but none so far, lol. Surely an AI agent can crawl across a parking lot and enter the camera and steal the data, they can do anything! lol

disc held

@Solvetheriddle @Strawman his answer did indeed address - in part - the UK PBN rate issue. Question is, does it revert to more normal levels, as he seems to be implying from his Jan-26/Jan-25 data point? Only time will tell.

I also asked the question about early insights from public behaviour in the US in response to PBNs. Encouraging to hear that, despite it being very early days, they are seeing 35% payment rate and Paul thinks it is "heading north of 40+%". (Obviously, they haven't yet PBN'd a crazed billionaire, who goes mad on "X" and appeals all the way to the Supreme Court! Give it time.)

One more comment on Denmark: I like the patient approach here. Having done business many years ago in Scandinavia, the way that society works through stakeholder consultation, slowly, methodically, iteratively, to then arrive at a consensus, is powerful. It is not a given, but when the Danes look to the model working in UK, Germany, and getting started in Switzerland, I think that tide adds weight to the outcome, because a manual process doesn't fit with a culture that generally embraces technology. As long as it doesn't cause them to bleed cash, I think playing the long game here is absolutely the right thing.

On valuation, I'll make a proper effort at a DCF when FY26 is in. On short term metrics, it is expensive, but if you believe the long growth trajectory, it is not hard to see attractive returns from here,...with continued execution - as you say. For now, I am happy to let the momentum (operational, financial and SP) run. A further plus for me is that they are becoming more cash generative (to 8.7% from 4.8% in PCP for FCF margin, by my calculation). I know the cash will be used in acquisitions, but that is what we want them to be doing at this stage.

My only problem, is that no matter what I do, it keeps on becoming my largest holding!

Great problem to have @mikebrisy!

Thanks for reporting back from the meeting.

• The wording on the change in UK debt recovery intrigued me, is this possibly a bit of a one-off sugar hit where they've collected multiple years of outstanding fines?

I am confused by this also, @Dangles . They spent an extra $10m on debt collection, but looking at their aged receivables and credit losses it's hard to work out how that extra spend generated so much extra revenue in the face flat written PBN's. These guys are pretty ruthless, I find it hard to believe they left that sort of ROI ($10m spend, $16m revenue) on the table. Accruals is the largest item far and away – that is tickets issued but not yet due – were they worried about accruals not translating into cash at significantly higher rates so they pushed very hard on collections as they fell due? I don't know!

This is the FY25 receiveables for the group and the ageing table. Unfortunately, they do not publish note 6 at the half year. It's a bit of head scratcher because on the face of it, they spent $10m in debt recovery and added $16m in revenue in the UK business despite the flat pbn growth.

I haven't fully analysed this result yet but I think the answer relates to the accounting treatment of PBNs. I don't think you can think of PBNs the same way you would as an invoice, which are typically recognised as income when generated (DR: Trade Receivables CR: Income). This is typical accrual accounting. Instead SPZ only recognises the income when the PBN is paid i.e. cash accounting. To get to the same P&L position they raise an unearned income accrual (PBNs issued and expected to be paid) at the end of the accounting period based on historical trends. This accrual was $13.5m as at 30 June 2025. The gross value of unpaid PBNs is unknown and not shown in the accounts. If they typically recover 50% of PBN face value then expect it to be at least double the accrual. Probably significantly more though due to the accumulation of unpaid fines. If you said it was $50m then does that seem a more reasonable number to generate a $16m return on? Not sure - it still perhaps undercuts their historical recovery performance narrative.

Hi @Noddy74

If you said it was $50m then does that seem a more reasonable number to generate a $16m return on?

Over the period yes that would make sense. The bit I wasn't thinking about was the gross PBN amount is not stated as you point out.

My understanding is that the accrual is taken through the p&l at the period end are you saying that is not right? That is the netted out PBN value not the gross amount (obviously). I'm not sure it would be correct to treat it as unearned income.

Some good analysis from both of you @UlladullaDave & @Noddy74. Would highly recommend you listen to the call if you can, even if it's just the questions section towards the end as Paul provided plenty of detail on the changes to their collections method.

The short answer is that SPZ was historically very gentle with collecting overdue fines and didn't go much further than a few reminder notices. I would push back-on your categorization of management as ruthless Dave. They are aggressively opening new sites, but Paul is always quite careful to point out that they make a special effort to keep on the good side of regulators and lawmakers. I would guess this was the main reason they previously were quite gentle with overdue collections and only now are they starting to go slightly harder by employing multiple new legal services firms who are escalating their debts to the appropriate court or legal system as part of a new '8-step recovery process'.

As to whether this will be a one-off sugar hit, Paul was insistent that this was more likely to be a new normal for SPZ of higher repayment rates and net revenue, with the trade-off being a slight reduction to margins. Due to the sheer number of new ANPR sites being added YoY, the pool of unpaid fines was growing like crazy, but even now with their new system in operation it is still continuing to grow, so there is a deep pool of potential unpaid fines there to tap into supposedly.

My understanding is that the accrual is taken through the p&l at the period end are you saying that is not right?

Apologies if my understanding of your question is not right but I think you're right, it is taken through the P&L at period end. However, only the recoverable amount (or expected recovery) is accrued for. So worked example where you invoice/PBN $100, it is unpaid at period end and you want to provide for $50 at period end:

Usual accounting

On invoice - DR Trade Receivables $100 CR Income $100

At period end - DR Income $50 CR Provision for Impairment $50

In accounts you will show:

P&L Income - $50

Balance Sheet Trade Receivables $100

Balance Sheet Provision for Impairment $(50)

Smart Parking

On PBN issuance - Do nothing

At period end - DR Other Receivables $50 CR Income $50

In accounts you will show:

P&L Income - $50

Balance Sheet Other Receivables - $50

Whichever way you do it the P&L looks the same but it's slightly different on the balance sheet. I imagine Smart Parking do it that way because they don't want to show a big scary impairment in their accounts. tbh I'd probably do the same even though it lacks transparency.

Thanks @Dangles

What you're saying makes sense. I am just surprised that they found such a high RoI hiding in plain sight so to speak. I will definitely listen to the call later just been a bit flat out today.

I would push back-on your categorization of management as ruthless Dave

Perhaps shrewd is a better adjective. Although I think on here once I compared them to Alec Baldwin's character on Glengarry Glen Ross. Lol.

Thanks @Noddy74

We are in agreement on how it' accounted for.

Just thinking about this some more. They'd probably argue that the usual accounting would reveal their recovery rates to competitors. They might be able to argue that is commercial in confidence.

I'm going back to university here, but would usual accounting want you to put into revenue a number that you have no expectation of ever collecting and then offsetting it with an impairment? It feels like it violates some sort of law!

To your point, I wonder if there is actually that much variation in recovery rates between companies that is driven by the collection process versus just knowing how to pick better quality sites than the competition.

I'm going back to university here, but would usual accounting want you to put into revenue a number that you have no expectation of ever collecting and then offsetting it with an impairment? It feels like it violates some sort of law!

lol. I can't remember the exact details but I do distinctly remember arguing with my Commercial Director that we not do something at month end to prevent internal noise and using the argument that technically we only have to be right twice a year!

To your point, I wonder if there is actually that much variation in recovery rates between companies that is driven by the collection process versus just knowing how to pick better quality sites than the competition.

I didn't say it was a good argument! But if the auditors objected it's definitely one I'd use if I were them, given small changes in recovery rates have such an outsized impact.

Be interesting to see if they can just sell on the unpaid fines to a debt collection agency and realise easy returns on a proportion of those unpaid fines.

@tomsmithidg one consideration here is that once the debt is sold, they presumably lose control over the conduct of the debt collector.

Paul Gillespie is very aware of the political risk of aggressive debt collection. Irrespective of whether they own or have sold the debt, the reputational blow-back would be on them. I think the stakes might be too high.