Ten Lifestyle Group Plc

Good morning and welcome to the analyst call for 10 Lifestyle Group PLC's half-year results for the 2022 financial year. Without any further ado, I'll hand over to Alex.

Great. Thank you very much, Kezia. Thank you, everybody, for coming along. Welcome to the results for the first half of the financial year. We've got good results and a positive outlook, so looking forward to pressing on. As you know, we're all about becoming the most trusted service in the lives of our Mass Affluent and High Net Worth members around the world. And the concept behind TEN as an investment is that we're, first of all, an established market leader. In terms of that, well, in this period, we've won new clients, three new clients, one each in the Americas, Europe and Japan, Asia. And we've retained every single one of our corporate clients once again. That's for the second or even third period on the trot. In terms of growth, very pleased to say that we are growing again at over 20%, and we're expecting that kind of growth to continue into next year and beyond as well. And I'm really pleased that we've been able to sustain investment into our technology, because not only does that make our service better, which leads to more repeat use and drives revenues and takes us closer to our vision for the business, but it also drives efficiencies and profitability that gets us closer to cash generation and generates more cash beyond that too. It's a huge market opportunity because as we become the best place in the world for high net worths and mass affluent to organize their travel, dining, going out and buying premium items as well, that's a huge market opportunity. We've made some good progress in improving that proposition too. And all of that helps us develop a business which gets better, more profitable, higher quality, better service as it gets bigger. Very importantly, since the year end, we've seen, sorry, since the half year end, at the end of February, and really since the beginning of February when we saw the impact of Omicron start to recede, We've got really strong KPIs. So request activity is up in every single region versus the previous periods. Net revenue is up at above pre-COVID levels. That is led clearly by corporate income, but also by supply revenue, which is now above pre-COVID levels as well. Most of our supply revenue comes from travel partners like hotels, and that's doing very well for us. That's despite the fact that in the last few months, we've still got COVID impacting the business in that, for instance, travel is very subdued still in parts of Asia, particularly China and Hong Kong. but also Japan is still not seeing a lot of international travel at all, for instance. And also Latin America has been subdued too. The good results in March and April are also notwithstanding the fact that we closed our Moscow office, which was less than 2% of our net revenues. And obviously that didn't make a difference. Our revenue results would have been higher if Moscow had stayed open. What that means is that The results in March and April are looking very positive, but we hadn't in March and April launched the new programmes that we announced earlier in the year. So I'm delighted to say that we have launched Schroders in the UK as of today. That's hot off the press. We have announced that contract before. We didn't name it before, but that's actually going live today and that people are being asked to register for that from this morning. And we've got another corporate client, the very large bank in the Americas, going live on Thursday this week. So it's a very good week for launches. But most of these launches will make a good difference to next year's numbers. They'll make a difference to the numbers moving forward from May onwards, but they're not in our trading update for March and April. So what do we expect to do from here? Well, deliver improved net revenue, improved profitability in the second half of the year. And so that we achieve the expectations out there in the market today and in line with board's expectations for sure. Beyond this year, we are optimistic. Why? We've got very strong contract retention and many of our contracts still aren't yet at the levels that they were pre-COVID. We've also had wins during COVID and wins coming up and being launched right now, which will make a good impact. And we've got the strongest sales pipeline that we've ever had. We've also got growing supply revenue, which is partly because the cost of travel has gone up, but it's also very much because our success rate at converting travel requests and other types of requests too is improving as well. And the continued investment in tech and proposition has really helps us become a high quality service that drives our metrics in the right direction and more efficient, which helps us with cash generation and profitability. A couple of other things worth pointing out. We've got a very large member base now, and we're growing that all the time. But what we don't need to do is scale into new markets, new languages. The scaling that we need to do is pretty much in known areas where we've got existing management team and existing setup. The proposition that we've got in dining, travel, live entertainment, and premium retail, it's there. It's there on a global basis. Now it's about iterating it. So we don't have to do very much in the way of kind of risky newness to continue to scale and improve our proposition. We could double the business and double it again just in financial services and selling into known markets is likely to be where most of our revenue comes from over the next couple of years. And we're approaching cash generation. And as we do achieve cash generation, we can invest some of that back into the business to speed up the growth and to make the growth that we generate more efficient and more profitable for future success with the business. So that's why we're feeling good. Those of you that don't know, everybody on this call has seen the growth engine video, but a reminder that that is worth looking at. And we fully expect that at year end, we'll be able to update that, and that will become more and more compelling in the months and years to come. Alan, over to you.

Thank you, Alex. The first slide I want to go through is just the key financial highlights. Our net revenue did grow in H1. However, we did have a short-term impact on our profitability through Omrookron, which I can go through. So net revenue increased by 21% to 20.8 million. We had growth in all three regions, with corporate revenue up 13% to 18.4%, and a strong recovery in supplier revenue, as Alex pointed out, and back to pre-COVID levels at 2.4 million for the period. Our operating expenses did increase due to the increased activity to 19.9%, as opposed to 15.5% last year, which did benefit from payroll assistance of 2.1 million, which I'll go into more detail. As a result, our adjusted EBITDA was slightly below last year, 0.9% versus 1.7%. However, our loss before tax did improve at 2.8 versus 3.6 million last year. And we ended with cash in the period at 5.1, which is slightly up on what we said at the trading update. We said 4.7, but when we closed the month end, there's some cash in transit we account for, and that's the difference. Next slide, please, Alex. This is just our income statement. I've got a slide on net revenue next, which I'll go through. So I'll just focus on operating expenses. As I said, increased by 4.4 million. Now that was the removal of payroll assistance. If you remember, we did some salary sacrifice last year, which saved us cost in cash. And also we took advantage of government support across the globe that amounts to 2.1 million. But also we increased FTE through the period because we saw a strong rebound in activity in the first quarter of the period. And we maintained those resources as Omicron hit November, December, January. And that's the reason for the increase in expenses. However, they are still remain below pre-COVID levels. So if you compare it to H120 before, it was 21.7. We're now at 19.9. And that's where we've driven efficiencies through our business model that's driven that result. David Sloan- And divisions decreased by point five basically that's less office space less least costs on the IFRS 16. David Sloan- Our share based payments decreased by point five because we did not have any salary sacrifice options issued this year compared to last year. Exceptional assets were zero with a small impairment last year. And then net finance income would benefit from FX gains in the period. And that resulted in an improved loss before tax of 2.8 by 0.8 against 3.6 million last year. This is our normal revenue bridge. And as I said, we retained all material contracts in the period. Our base corporate revenue did increase by a million despite the impact of Omicron that would have been higher if Omicron had not hit. But supply revenue has come back strongly and I've got a slide next to go through that detail, but as global travel restrictions lifted, especially in EMEA, we saw a return to travel. And then we did launch some new programs in the period. Majority of that is our credit stays on new launch that started in September 21 in Japan. This is to show how supply revenues recovered. The graph just shows that, you know, in H120, which is pre-COVID, two and a half million, and then COVID hit and H220 and then H121. So we saw the sharp decline in activity. And then we saw the recovery coming back through in the second half of last year and then coming back strongly in this period to get back to pre-COVID levels. And more importantly, as Alex pointed out, in March and April, we've seen an above performance, above pre-COVID level performance with supplier revenue. And we're still seeing that coming through in the start of May as well. net revenue by region, as I said, all regions have grown. EMA up 15% with base corporate recovering and supplier revenue coming back, albeit slowed by Omicron. Really strong promise America is up 30% as the base corporate recovered and supplier revenue came back as well. APAC, principally grown because of the credit saison new launch in September 21. And base business recovery continues to be subdued because of the COVID restrictions in that region. Our adjusted EBITDA by region, EMA has gone down versus last year, as we retained FTE through Omicron, as I would believe that was the right thing to do, as it was just a short-term impact on the business. Our actual EBITDA improved in America because of the strong recovery on revenue, as I've highlighted. And then APAC adjusted profits slightly down in last year, some cost controls measures in there to offset the lower base net revenue that came through, which were activity was subdued in the period. This is a normal slide that we show on our technology investment and we're pleased to say we've continued that investment throughout the COVID period and throughout the last period. Why do we do that? It creates competitive advantage and it also drives efficiencies, service levels and ultimately revenues to the business and we've been pretty stable in terms of our investment over that period. Lastly, cash flow. Our operating cash flow in the period was 1.4 million. That was driven by our reduced loss before tax and improved working capital with our non-cash items being depreciation, amortization, share-based payments and exceptional items. We continued to invest in our technology, i.e. an intangible investment was 2.9 million. And then we did receive some cash in the period from exercise of share options and also sale of treasury sales in the period. And then our repayment on leases and interest decreased because of our reduced office space, which overall meant that our net decrease in cash was one and a half million in the period to 5.1 million. Thank you. I'll hand back to Alex now. I thought you were on mute, Alex.