Ten Lifestyle Group Plc

I'm Alex Cheetle. I'm the chief executive co-founder, and Alan Donald's going to be talking soon as CFO. I'll be running through the highlights of the last year, and then Alan will talk through the financial results and a reminder of our business model. I'll then dive back in to an operational update and looking forward to where from here, and we'll have time for Q&A at the end. So overall, we've had a year where we've sustained the improvements of the last couple of years. So in the previous two reported years, we grew at 30% a year and we had a step change last year in profitability. And the good news is that that step change in profitability is sustained and the revenue growth is also sustained. So whilst we didn't grow revenues. And we didn't grow profit by much, albeit we did grow by a bit. What we did do was sustain a very big setup improvement from the previous years. And we're now in a great position to continue to grow because of our investment in tech and improving our proposition. And we'll talk more of that in a little. But also say that since the year end, we've won an extra large contract in the USA and we've won a medium contract in one of our most mature markets in Asia and both of those will make a difference to H2 of this current year and both of them are good signs of us growing in markets the USA uh the market with the most high net worths in the world uh and the market that we've grown into in uh asia is a super important market for us um which is also very good and we've won that from a competitor great growth in the last couple of years and and then we've sustained at around 63 million uh in net revenues active members have also uh stayed around the same in the last year after a lot of growth in the last two years Adjusted EBITDA is up, but profit before tax is actually marginally down. And that's because of movement in non-cash items, amortization, depreciation, as well as increased interest and some FX losses. As a business, we're all about becoming the world's most trusted service platform for our members. So we're the best place in the world to organize travel, dining, tickets, retail, but then also the most trusted to drive customer loyalty for the world's leading brands, particularly in financial services. And this brand logo list is a number of our top financial service clients around the world. I've actually got more corporate clients than this, but this is a very good side for us to show because what it demonstrates is that these people that use us to drive the commercial impact and the profitability that they get from their most valued clients are people that can afford to invest more and more with us. And the reason they do that is because we drive ROI for them. The more they spend with us, the more money they make because they have an improvement in client retention, client acquisition, and share of client, whether that's improved spend on card, or whether it's improved assets under management or improved upsell of just cash or lending that they benefit from from their clients. What we can prove to them is with their own data very often, that positive impact that gives them an improved return on investment. And we do that by delivering the world's best services in travel, dining, entertainment, luxury, retail. So in travel, we give people the best pricing when they want that. But also we've got an amazing team of lifestyle managers and travel experts that can organize the best holidays for people. We're going through all the kind of detailed things that make a difference on a complex itinerary, whether it's a honeymoon or a sabbatical trip down to just a fly and flop holiday. And we've got great benefits, room upgrades, early check-in, late check-outs, complimentary breakfasts at thousands and thousands of the world's top hotels, as well as best pricing at almost all of the world's hotels. In dining, we are the world's best recommendation and booking service, and more about how we're improving on that later on. Entertainment, again, we're going to talk about later on in this presentation, but we're becoming the best place to organize your music, theater, sport, and other events as well. Again, we've developed in luxury retail lots more events around the world, which our luxury retailers put on for us to get our members into their stores, drinking champagne, eating canapes, and then what the retailer then wants is those people to then buy luxury items. Other things around those four main pillars on the left-hand side, experiences and content inspiration, are also important parts of our service. And the reason why people invest in TEN is that We were a huge market opportunity with a number one market leader in concierge, and we've got a proven growth engine. So the market opportunity, good to think of this in two ways. Firstly, we are still 0.2% of the customer loyalty market in financial services alone. So we could grow that very significantly and still have lots of room for growth. Even more importantly than that, as we become the best way to organize travel, dining, tickets, retail, that market opportunity becomes absolutely vast. To be organizing the world in those four areas for the world's high net worths and mass affluent is an extremely powerful place to be, and that's a huge market above and beyond customer loyalty and financial services. But within corporate concierge, delivering concierge through other brands and actually delivering it in total, we're the number one market leader outside of American Express. So we're the number one in terms of investment into tech and assets, where assets might be relationships with hotels or restaurants or inventory of tickets. and we've got these long-term contracts with the brands that you saw earlier across multiple years that allows us to have the mass affluent and high net worth side of a two-sided marketplace the suppliers being on the other side of that marketplace and then that growth engine means that as we mature our business the business gets better because it gets more efficient and higher quality both of the efficiency improvements and the quality improvements allow us to continue to drive growth and create a deep competitive moat and a more and more valuable business and that growth engine is worth looking out for those of you that haven't seen it it's on our website and really this slide is a summary of that but it's a four minute video that's worth looking at on the website So where from here? It's about growing our large member base. So we've got that member base and that mature platform. Now it's a question of just scaling it. And we only need to scale it in the markets, the verticals of travel, dining, retail, and entertainment. We don't need new verticals within our proposition. We're in financial services. Actually, just growing in financial services would be enough, albeit we are exploring. We've got some very interesting stuff going on in markets outside financial services as well. And then we're already profitable and generating cash. And that allows us to reinvest into the growth engine and grow our balance sheet as well. Alan, over to you.

Thank you, Alex. I'll firstly go through our income statement. As Alex said, we've broadly maintained our net revenue at 62.9. We actually reduced our operating expenses of the year, and that's driven our improved adjusted EBITDA at 12.8, which on a margin basis is a 1.2% increase to 20.3 in the year. Also, as Alex said, we continue to invest in our digital capabilities, so our amortization increased to 5.8. And to drive efficiencies out into the business, we did take some exceptional costs of 0.7 in the year, and that's going to drive efficiencies going forward. Our fire expense was increased by 0.7 during the year, and that was due to the higher loan and lease interest, as well as FX losses on our intercompany balances. And whilst we did make a second consecutive year of PBT of 0.5, the impact of that higher loan and lease interest X did impact year on year, so slightly down. We have still recognised a tax credit in the year, and that's recognising some of our deferred tax asset off the back of historical losses as we go forward. And then this is the net revenue bridge that we show normally. As I said, net revenue maintained at 62.9, although there was a bit of a currency tailwind, so we're actually up 1.5 million in constant currency. Our base corporate revenue did grow up to 0.9, and then our net increase of 0.3 on new contracts more than offset the large contract we lost in H224. Our supply library was slightly up at 0.2, and the next slide shows the historical breakdown of supply revenue. The graph just shows our half-year performance pre-COVID, coming through COVID, and the recovery since then. So our supplier revenue is mostly travel related and it's about just over 12% of our net revenue. So pretty consistent through the year as we continue to invest in the product offering around that, as well as maintaining and developing our supplier relationships across the globe. and then from a net revenue adjusted EBITDA by region as I said overall we were flat and then there were small movements on the net revenue Europe up two percent America's down three and EMEA up two so flat overall and then if you look at the adjusted EBITDA Europe which is our most mature region adjusted EBITDA was up 1.2 into 10.4 and the margin at 39 is the highest in our most mature region America, as I just said, did dip in the year, and that reflects continued investment in preparation for new contract launches. And as Alex mentioned, we did win that extra-large contract in the US, which won post-balance sheet. Then AMEA, strong profit performance, up 0.9 to 1.8, and that was on the back of new contract launches and continued operational efficiencies. Continued technology investment. This graph on the right hand side just shows what we're spending on our technology platforms, columns and infrastructure. So it's looking at our total cash costs, both P&L and capitalised. So in the year we spent £12.8 million, of which £6.7 million we capitalised as we developed those assets. And why do we do that? It grows competitive advantage, it grows efficiency, server sales and revenue across the business. And as you can see, the purple line shows the actual percentage tech investment as a percentage of net revenue. And that has declined each year since 2021. And we see that continuing. And the percentage of tech spend as a percentage of revenue will continue to fall as we grow the business. Our cash flow, we did increase our cash and cash equivalents up 1.1 to 9.2 against 8.2 last year. And our net cash increased a little bit, up 0.2 to 3.9 in the year. A little bit of helping operating cash flow through working capital movements and the reduction in PVT. As I said, we continue to invest in Tantros. That's a 6.7 million we developed. And then at the start of the year, we did take out some more loan notes of 1.1 million just to help the balance sheet. Moving on, this is just a reminder of our business model. This next slide we show is the pie chart just shows the split of our revenue. So the corporate revenue is what our clients pay us to look after their high value members. So 88% of our revenue comes from that. And supply revenue, which mostly travel rate is 12% of revenue, as I've said. And the right-hand side, our typical contract, they are long-term contracts, normally three years, and often with agreed minimums in there. And we get paid by activity via high-touch requests through talking to one of our lifestyle managers, either through email or through phone or through WhatsApp. And then it's through our platform, DigitalQuest, which is self-serving through our platform. And that's what drives our total corporate client revenue. This slide as well we're looking at is that this is looking at the Eligible members, we help them can use our service and the active members who's actually used it. And as a reminder, we do actually segment our clients looking through the lens of the bank, how they value their member. And we look at it from a medium point of view, high and very high. Medium maybe being a credit card that somebody might have, high being on a premium bank account, and then very high where some members may have assets under management. So we do look at that and how we segment it. On the left-hand side of the graph, we're just looking at the eligible members who can use our service in the high and very high value, because medium, there's many millions, so it wouldn't fit in the graph. But as you can see, we broadly maintain that at 2.1 million. And then to have the active members who's actually used our service at least once in the last 12 months, as you can see, we've broadly maintained that overall across all three segments, coming in at just under 350. And lastly, we do look at our average revenue per active member, average concierge revenue. We don't show the scale of that because it gives our competitors a view of how we're making our money. But just to show you, as you can see in the very high, the banks can afford to pay us up to over three times what a bank or a credit card company in the medium. And it shows the value of that and how much more they can spend because that customer is very valuable to them so they can spend more money with them. And that just gives you the quantum between each of the value segments. And then how do we actually interact? So procreation is different by value segment. And what we do is we look at it between medium, high, and very high. And that's a sort of gradient. So that in the medium, it is digital first. It's going through the digital platform. It's using ECR and productivity, AI, and chat. It's having an online content inventory and marketing driving into the platform to use it. And then in the high segment, it's more of an enhanced hybrid. So it's an omni-channel contact. You can talk to our Leicester manager or through the digital platform. There's some target offers and live events. And we have that high-touch offline service if you need to use this off the back of the platform and some personalised marketing. And then you go to the very high segment, it was a lot more personalised. We may have a dedicated team, high personalisation, proactivity, some guaranteed ring fence infantry, get to use our private travel service, which we're growing, and there's unlimited marketing. We can do that and we can customise that proactivity. So that's how we actually interact and differentiate the preparation by value segment.

Thank you, Alan. So we've won five medium contracts, including with a private bank in EMEA, Emirates MBD in the Middle East, and the Global Travel Collection. Continue to invest into our tech. And we've also won some awards. So it's just something to celebrate. We won the Concierge Agency of the Year, the top awards ceremony. Spears gave us a recommendation. And we also won the TGG Luxury Travel Awards, not only for being a great lifestyle concierge service, but actually for being a travel service, just the travel part of our business there as well. In banking, it's important to say that it continues to be the case that banks, credit cards and wealth managers are looking to round out their offerings. So where previously many of them offered banking, lending, investments and protection insurance, Now, Offering Lifestyle, they accept, helps them with acquisition, retention, share of customer and customer profitability. And that continues to be a big driver of our growth. But that driver is amplified because of improvements to our service. And one area that we've improved in the last year is in tickets for music, theatre and sport. We've integrated Ticketmaster, one of the first people in the world to integrate the Ticketmaster API. And we've also integrated Ingresso, which gives us access to lots of theatre and our own box office for where we've got our own tickets of inventory, where we can build a box office within our own tech to, for instance, market and allow members to book tickets for our box at the O2 or an allocation of tickets at any venue anywhere in the world we can lay out on our platform. Now, the reason this is important is that this allows us to own more stock, as in we normally do it on sale or return. We don't actually take inventory risk. But to have more stock that we make available to our members that our banks can then market. And we can do that very often in response to the demand from individual members who tell us that they're interested in Coldplay or they tell us they're interested in Drake or they're interested in the ballet. And we can then let them know what we've got. They can just book it online, which is the preferred medium for most of our members. And our corporates, what they get from that is more adoption of the service. People are delighted because they could get Ed Sheeran tickets that they couldn't get as just a normal member of the public, but they could get it because they bank with a particular bank or they've got a wealth management relationship or a particular credit card. That really drives up acquisition, retention, share of customer. And it's because it's often personalized to the member that really gives them even more of a kick and a buzz and positive impact on the commercials as well. Plus, when they come to buy tickets through us digitally, they then find out about other aspects of our service, and that drives the rest of our business too. But tickets isn't the only part of the business that we've improved, and probably the best way to explain how we've improved dining in the last year is just to play a short video of some of the world's top chefs.