Ten Lifestyle Group (LSE:TENG) — Full Year Results Investor Meeting

0:01 Good afternoon, ladies and gentlemen, and welcome to the TEN LIFESTYLE GROUP PLC full year results investor presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted anytime using the Q and A tab situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your investment company dashboard and will notify you by email when they are ready for your review. I'd also like

0:33 to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll, and I'm sure, the company will be most grateful for your responses. And I'd now like to hand over to Alan Donald, CFO, and Alex Cheadle, CEO from TEN LIFESTYLE GROUP PLC. Good afternoon. Great. Thank you very much, Mark. Well, good afternoon, everybody, and thanks very much for coming along to listen to our results for the year to the end of August twenty twenty one. What we're going to do is run through what we're about. A short reminder there, run through the results and then talk about the outlook moving forward. So as most of you will know, we are all about becoming the world's most trusted service business. We want to earn and deserve the trust of our members, and we do that by organizing, being the best place for them to organize travel, dining, lifestyle, other lifestyle needs, music, theater and sport, helping them buy rare items, expensive items and organizing events for themselves as well.

1:33 That market being the best place for high net worths and mass affluent to organize the things in their social life, in their entertainment life, in their travel life is a huge market opportunity, a multi trillion pound opportunity. Now, to date, what we've done is we've become the best lifestyle concierge service in the world, which we've become the established market leader in that market. We win the vast majority of contracts that come up for tender, and we win those contracts on multi year periods whereby large companies pay us to look after their top customers. Those people become our members, and we then serve them in the areas that we talked about before. Over the last few years, we've generally seen sustained growth, the pandemic aside, but even during the pandemic, we've seen growth in our profit margins and in our profit before tax figures as well. As we grow and develop the business, we invest more into our proposition. We improve the proposition to our members because they get more from the service, they use the service more, more of them use the service more. That drives value for our corporate partners who give us more money to spend on their customers, our members, and we invest that into improving our proposition.

2:44 But we also use it to invest into our technology and into our supplier base, so our business becomes more efficient and high quality as well. That really is our investment case, is that we are a tiny fraction of the size of the business that we'll become as we go through that growth engine and have several more turns of that. So here's a metaphor for how we feel after eighteen months of COVID. And this guy in the middle of this slide is Tom Dean. Some of you all know him. He's a swimmer. Tom won two golds in the Olympics in Tokyo in the twenty twenty Olympics in Tokyo. Now what's interesting is if those Olympics had been held in 2020, he wouldn't have been expected to have won any golds and at best might have got a bronze.

3:31 Now, as it is, when COVID meant that Tokyo got moved back, this 20 year old guy spent an extra year training,

3:42 just as we spent an extra year investing in our technology and improving our processes and improving our proposition. And he also adapted. He had to stop swimming at Bath University Pool and start swimming in the Thames near Marlowe because they shut the pool down because of COVID. Now for us during COVID, many of our members couldn't travel. For periods, people couldn't eat out in restaurants, and people certainly couldn't go and see music, theater and sport. Like him, he's faming the Thames. We invented virtual events. We invented home deliveries and benefits we could bring with that. We invented book clubs. We did all sorts of other things. We massively improved our investment in content to make ourselves relevant, keep ourselves relevant, keep ourselves generating revenue from our membership base.

4:29 So just as Tom at the end of twenty nineteen, had a good future, a very good future ahead of him for 2020, today he's got an even better future ahead of him. He's looking forward to the European Championships in Rome and then the Paris twenty twenty four Olympics. Let's hope he wins a few more goals. For us, our focus from here on in is to build on the successes of the last year. And in the last year, we retained not most, but every single one of our corporate clients, and we won new contracts. We've got more eligible members than we had before the pandemic. We've got better tech because we carried on investing in it. We've got a better proposition as measured by our record service levels.

5:15 We've got a stronger competitive position, and we've got a great pipeline of new business too. Our focus, his focus is Paris 2024. Our focus is to continue to drive our growth engine, to continue to improve that proposition and service levels so that we grow our revenues, increase our buying power. That allows us to invest more into our technology and improve our proposition and service levels still further. So that's a kind of overview of our business in the last year with that metaphor, and I'll hand over to Alan to talk about the business overall and the financials within the business. Thank you, Alex. I'll just take you through the key financial highlights of the year. The group managed to remain relevant to our clients and members throughout the year, as Alex said, and we maintained profitability despite the challenging conditions of COVID.

6:05 As you can see, revenue of £45,000,000 was down 21,600,000 versus 2020, with corporate revenues, either revenue we get earned from our corporate clients down 22%, and supply revenue, which is predominantly travel hotel commissions down 15%. Now supply revenue did start to improve in the last quarter of the year, principally in Europe, as travel opened back up. And I've got a slide on that later I can go through. To offset the net revenue shortfall, operating expenses reduced by £9,100,000 and I'll go into that in more detail. And that resulted in adjusted EBITDA just slightly below last year at £4,400,000 However, we did actually improve our margin by two percentage points to 12.8%. And the improvement in EBITDA flow through to our loss before tax, improving by 0.4.

6:50 Our net cash did reduce by 3,300,000 year on year, and that was primarily due to our decision to continue to invest in our technology investment. And I'll go through that in a slide further on. In relation to our income statement, I'll cover off net revenue in the next slide, but our operating expenses, where we reduced costs, while it was continuing operational efficiencies in the business, we also took action around salary and bonus and we froze those. We did make some redundancies and reduced the headcount in the business. We also implemented a salary sacrifice scheme in exchange for share options where employees sacrifice salary for share options. And that was probably a cash saving measure, but it did actually improve our EBITDA and the charge for that came through in our share based payment charge followed down in the P and L, as you'll see. We did take government support across all regions, amounting to £2,000,000 this year as opposed to £1,600,000 in the prior year. This included furlough in The UK, carcerbite in Europe and other similar government schemes across a number of countries.

7:48 In addition, we did take out a US government backed PPP loan, where we took that last financial year and that was fully forgiven in the year. So that came through in our other income, 1,000,000. Our depreciation did reduce by £1,200,000 Other actions we took was that because our right of use asset, I. The property that we lease, has reduced in the year as we downsized across the world and also renegotiated our lease costs, and that's reduced depreciation charge to our P and L. Share based payment charge in line with last year with the salary sacrifice schemes in both years. Then we had a small exceptional cost charge of 0.6, 0.4 of which was an impairment charge on some of our content that we capitalized, and also some exceptional project costs of 0.2 in the year. As I said, that led to a loss before tax of 5,500,000.

8:36 If you move on to the net revenue slide, and this is looking at the bridge between '20 '21. As you can see, we didn't lose any clients during the pandemic, but our base business did go down by 7,900,000 due to the pandemic. Supply revenue were down by 0.5 to 2.8. And we did have one contract change, was Revolut, went from a large contract to a small affiliate contract in September 2020. But we did manage to win two medium contracts in the year, which contribute 0.5. The next slide is basically our analysis of our supplier revenue. And this is a look at the impact of COVID on our supplier revenue. Remember, this is predominantly travel and hotel commissions. The left hand side of the graph shows the full year revenue that we earn. So pre COVID, we earned 5,500,000.

9:25 As COVID hit, it went down to three point three million in 2020 and down to two point eight million in 2021. Now, if you split that by half year, so H1 twenty twenty, which was pre COVID, we made two point five million. And you can see the impact of COVID down to zero point eight in H2 twenty twenty, a slow recovery in H1 twenty twenty one, and then a strong recovery in H2 twenty one, and that was basically Europe coming back and travelling starting. So we're getting back to pre COVID levels. And that has continued into our new financial year, September, October and November. This is just our net revenue split by region, and this is basically showing the impact of the pandemic across all regions. EMU down 18%, Americas declined 28%, and APAC 21%. And within EMU, already highlighted the revenue contract change and supply revenue recovery in the last quarter.

10:16 The next slide is just our adjusted EBITDA by region, and you can see EBITDA and EMEA reduced by £2,000,000 However, we maintained a strong margin there, with 34%, only a decline of 3%. That's our most mature region in the group. Americas loss decreased by £1,700,000 and that's where we've managed costs and also maintained our key resources using the PPP loan, which was forgiven in the year.

10:44 APAC EBITDA slightly improved, that was the cost and operational efficiencies coming through. This is an important slide for us. And this is looking at our technology investment. And we continue to invest in our technology. We invested £11,500,000 and that is through our digital platform, 10 Made, which are our internal CRM system, content and our IT infrastructure and communications. And we continue to spend that through COVID. We could have cut that if we wanted to. Why? It Because creates competitive advantage, it drives efficiency, it drives service levels, it drives ultimate revenues. As we come out of COVID, it will put us in a strong position. And then the next slide is basically our cash flow. And we did generate £4,000,000 of operating cash flow in the year.

11:30 And we, as I said, continue to invest in technology. The investment in intangibles of £5,400,000 is probably our technology investment. We did receive some cash proceeds of 0.9 a year, and that was exercising some share options through the year. And then, as I said, net decrease in cash with that investment technology of 4.3 through the year. Moving on, we'll just touch on the business model. This first slide shows where we make our revenue. The pie chart shows that 92% of our revenue in FY21 was for our corporate revenue, I. Corporates paying us to look after their members. And supplier revenue was 8% of revenue, which normally pre COVID was around 12%, and that's predominantly travel and hotel commissions. The right hand side looks at the typical contract and how that's made up. We get paid by request via high touch when you talk to our lifestyle manager, either through email or phone or through WhatsApp.

12:25 And we also charge per digital request,

12:28 which is self serving and that's a lower fee. These contracts are normally three to five years in length, and about 60% of them have agreed guaranteed minimums within them. This is a new KPI that we've brought out in the business, and this is looking at the number of eligible members in our base business, and also the number of active members who use our service. The definition of active is if they've used our service leads once in the last twelve months. So the left hand side of the graph is our eligible base for what we categorise as our very high value clients and our high value clients. And then on the right hand side, active members, we are very high and high, but also of our medium value clients.

13:13 So what do I mean by very high, high and medium? So very high is where we have a contract with a bank, really premium bank, private bank, where they have clients and our members who have high assets under management or a premium credit card. So the bank can afford to spend more money with those customers, and they can spend an average concierge revenue per member more for us in that segment. In the high segment, I will be working with the retail bank directly with a premium credit card. And that will be slightly below the very high value segment. And a medium, that is where we're probably contracting through our network of Visa and Mastercard, and dealing with the banks through there. And that is a high, a lower average concierge revenue per member, because the bank, the credit card companies, banks can't afford to spend as much money on that segment.

14:06 And that's really looking at the penetration in each of these segments. As an example, in our very high value, we've got about half a million of eligible members. And in 2021, 57,000 used the service, which is just over 10%. And we've got a variation in that segment of mature contracts being over 30% penetration, and other contracts that are five, six, that could grow to that as well. So it's looking at the opportunity we have to grow the business from the client base. The next slide is just looking at the concierge revenue by value segment and looking at just showing that 62% of our conscious revenue comes from that very high and high value segments. And that's been fairly consistent through COVID, as you can see in the bar charts.

14:54 And I'll hand you back to Alex now to go through the operational update. Great. Thanks very much, Alan. So, update. We're delighted to say that we launched Westpac at the beginning of the financial year. We won Credit Saisons and launched it just after the financial year. Credit Saisons are like a very premium Barclaycard or Capital One type organization in Japan. They're one of the top issuers of credit cards in Japan. That Credit Saisons contract is worth, in this current financial year, more than £2,000,000 a year and will be worth that ongoing. It's on a long term contract. We are delighted that we retained all of our material contracts, so real evidence that we've provided real value to our corporate clients before COVID, during COVID, and that they see value continuing after COVID as well.

15:42 Continue to invest in tech. It would have been very easy for us to panic at the start of COVID and cut our investment in tech, but tech is one of the things that drives our competitive advantage. It makes us more efficient. So actually our investment in tech over time actually makes us money, wins us contracts, improves our service and helps the whole growth engine flow. We've improved the member proposition. We've got record member satisfaction and I'm very pleased to say we've hung on to every member of our senior leadership team, have stayed very loyal, connected, engaged. The reason I'm happy about that is I think they're doing a great job. We've also continued to invest into our lifestyle managers and our managers to make sure that we've got better management throughout the business and a higher service quality. And of course, the fact that we've actually grown our EBITDA margin during the toughest time over the last twelve months is really impressive.

16:38 Can we just play a video to remind people, Mark, about how we explain our service to people here in The UK?

16:48 You believe that life is for living. It's time to start living times 10. Our experts on the ground will show you a world tailored to you with local and global partners to guarantee exclusive rates and upgrades. Our box office contacts will get you into every entertainment event you're into and into the seat of your choice. When it comes to dining, we make unbookable tables bookable with prime time reservations in your favorite and future favorite restaurants. As a 10 member, you'll have our personalized platform at your fingertips, Our team of lifestyle managers at your side and access to exclusive offers from the world's top brands.

17:37 RealMate, living a life filled with unforgettable experiences, effortless. And because we've got the buying power of 250,000 members, we'll do it all at a price that you'll love. This is Living Times 10. Great. Thank you very much, Mark. And I think we're back to the presentation. So that's how we explain our service typically to a high net worth or mass affluent customer member here in The UK. Obviously, we change that around the world depending on which parts of our service are most attractive. Over the last year, we've had another year of record Net Promoter Score, and that's how we measure the quality of the service that we're delivering.

18:27 Now that can look like quite a dry number, but it's absolutely essential. Every lifestyle manager in our business can tell you what their current Net Promoter Score is on the request that they've been doing for the members they've been looking after. It's how we run the service quality in our business alongside a few other measures as well, but this one's dominant. The better that is, the more likely people are to reuse our service, report back that they love their bank because of the concierge service they get with their banking product or their card product. It's only a good thing to see that number strong and healthy. Because our service is so good, our corporates have been talking about it more than ever. Although recently we've been talking more about virtual events and staycations rather than physical events and international travel, we have been doing more engagement with clients than ever before.

19:17 We've also been engaging more with our corporates. So historically, we were completely obsessed and still are obsessed with the member, the person that uses our service. We've got a lot smarter though in terms of how we explain to the sponsoring banks, credit card businesses, and other luxury brands that pay us to deliver our service, we've got much better explain to them why they should do that, typically using their own data, so we can prove that they get a very positive return on their investment. On our website at 10lifestylegroup.com or 10group.com, you can see all of these under case studies, and they're worth flicking through to see quite how compelling our rationale is and our case studies are for why banks and others should invest into our service. That's one of the reasons why we've got 100% corporate success in retention and why we've won new contracts even at the heights of COVID.

20:17 Our corporate client base as well are very, very strong. They're strong, they're solvent, and we look after the clients that are good for them in good times and bad. Asset rich, cash rich customers are always a good thing for a bank. They make money on cash in the bank, as well as when they're selling somebody investment products or a mortgage or a credit product. Across our portfolio, we've got some of the most extraordinary brands and the most solid blue chip organizations in the world. Over the last year, we've actually got better. Like Tom Dean got better at swimming, we've got better at quite a few ingredients in our model. So we've invested into an onboarding journey so that when people first get invited to our service, we're twice as effective as engaging new customers than we were before.

21:13 Because we now don't just send them an email with some nice images in it and a good bunch of narrative, we do a series that involve video, which involve personalization, which really do connect with you as an individual and explain how our service can help you. And then as people use our service, we learn more about them as an individual, them and their families and how they live their life. And we can then come back to you and say how we can help you about your own particular needs. We've also automated parts of our service. So if you fly to New York and you've booked a flight for July, we'll get in touch with you in the middle of August and we'll point out things that are going on in New York, restaurants you might want to visit, etcetera, during your stay, personalized to you that you can book on our digital platform.

22:00 We've also put chat functionality into our service, so in many parts of the world, starting with Russia, but then we've launched it in Latin America and in some markets, on some programs in The UK, we've launched chat and WhatsApp as well. And because we've got a chat functionality in the platform now, we can automate some of those chat responses. Now, not most chats still need a live human being to deal with them, but some questions are highly predictable and we can answer them very effectively with

22:30 a chatbot, which makes us a little bit more efficient. Things like that will grow the efficiency of the service over time, although we'll only roll out chatbots where they really are as good as a human being. We've also got smarter at how we match lifestyle managers with the right member and with the right request, so that if you're halfway through a holiday booking, when you call the generic number, you automatically go through the lifestyle manager that's organizing that booking for you. If you call up from a particular postcode as a

23:01 first time user, you should be talking to a lifestyle manager that is more likely to know your area. So things like that is what we call bullseye call routing. We've also put in things like abandoned basket automation. So if on our digital platform, you get halfway through booking a five star hotel in The Maldives, and then you pull out, we can reach out and say, Would you like more information about that? We'd obviously like to help our members book that, and the person that might call them back, or not call them back, but actually just offer to call them back, would be a lifestyle manager that understands The Maldives and is one of our Maldives experts, for instance. Now investment in tech doesn't just improve our service quality, but it does that. And it doesn't just speed up our service, which members love. It also makes us more profitable because our lifestyle managers can manage more requests when they use our technology.

23:58 And of course, when a member uses our technology that doesn't need any human intervention, that's also a really good thing for our profitability as well as the member experience. So it's great to see the orange part of the bar chart here shrinking, the gray growing, and the green growing as well, because we want more of our service to be automated, more of it to be partially automated, where technology is helping the member, helping the lifestyle manager deliver service very efficiently. We are not trying to become a pure technology business. I don't believe that at any time in the foreseeable future, we won't have really expert lifestyle managers organizing requests in our business. And as our business grows, there'll be opportunities for us to grow the number of lifestyle managers that we recruit.

24:46 However, we will have a growing proportion that are fully automated or partially automated, and that will continue to drive our margins and service quality and competitive advantage. On top of that, once you've got a digital platform, that becomes a wonderful place to put content, And so we've grown the number of magazines and up to date destination guides that are on our digital platform. And we also ask our corporate clients to send those out to the eligible customer base, many of whom won't have yet become active members. So if somebody reads our Dine magazine, which is all about eating out and enjoying restaurants, it's a great read in itself, and I recommend that you do enjoy those, but it also creates desire to use our service.

25:39 Through every Dine magazine, we explain why we're better at booking restaurants than you are on your own. And because that's seeded through these magazines, whether it's Explore for travel, Dine

25:53 sorry, Dine for eating out and so on, that brings our service alive to people that might not know they love concierge yet, but they do know they're interested in eating out. Then they use our service, then they discover it, we've got another active member that grows our revenues and helps us take a few more steps towards becoming the most trusted service in the world.

26:17 I mentioned before, we continue to invest not only in our tech, but in our people as well. So we've improved our global communications. We had a very successful move to hybrid working and homeworking, entirely homeworking for large parts of the last eighteen months. And that led to record scores in our employee engagement survey that we did earlier this year. Plus, we've continued to invest into the TEN Academy, which is our in house training programme. One of our programmes on that is the Global Leadership Programme, which really helps line managers manage their people better, inspire them better, lead them better. And that in the end makes for a better service and happy lifestyle managers, and happy lifestyle managers deliver a better service as well. I'll just put out two things on this chart, which is really a summary of some of the improvements we've made in tech over the last twelve months.

27:12 One thing is API integrations. With HSBC in Hong Kong and Singapore, if you bank with HSBC and you're a Jade customer, you can now go to your Jade banking app, and as you're transferring money or checking your bank balance, you can also see how to get the most from your concierge service. When you then go to use our concierge service inside the HSBC banking app, you don't need to sign in separately. It's a seamless service experience. Now that is really valuable because again, lots of HSBC Jade members haven't discovered Concierge yet. Part of our job is to get HSBC Jade up to a really good penetration level, 20%, 30%.

27:58 Today, would be far less than 10%. Because if we can double, triple the penetration, very crudely, we'll get paid twice as much, three times as much, and we'll engage more members around the world of HSBC. That's a very good thing. So, getting into that banking app is a good thing for our business and for our service. It's also a colossal vote of confidence in our technology. The CTO, the Chief Technology Officer of HSBC, would not have allowed that if they weren't committed to us as a partner and our service as a really important hero benefit of their banking proposition. Another thing I would point out is just the fact that we are now in 27 brands around the world, and that's the majority of our medium, large and extra large contracts.

28:47 The vast majority now have got our digital platform out in front of their members, and we've never lost a contract where we've launched our digital platform. In terms of outlook, where from here? So we've come through COVID and we've come through COVID with our revenues understandably down 20%, 21%, but with improved profitability and an improved proposition, record service levels, great tech. What about from here on in? So first, I just want to remind you that when we launch a new program, a new corporate contract, it's either brand new, in which case we start from zero, or we're taking over from a competitor. Normally, we take over from a competitor because they think our service, and we think they're right, will do a much better job. So you can conclude from that that when we take over and replace a competitor, they've normally got fairly low penetration levels. So our job over those first twelve months, and sometimes it takes up to three years, is to just replace the competitor, deliver great service, and prove to that corporate client the impact that we have with their customer group.

30:01 That then gives us data to prove that the more money they spend with us, the more money they make as a business. And that means we become a more important partner. They spend more with us. It grows until we become a hero benefit, really an important part of their proposition and at best, integrating with their technology as well. So the reason it's important for Outlook is we've got a whole raft of corporate contracts, which are still in that first stage. They're contracts that we won pre COVID, but that haven't developed as much as they would have done if we hadn't had COVID for the last couple of years. So for us, some other things to point out here in terms of our outlook, some current clients increase the number of active members. Two examples, Swisscard in Switzerland have provided our service to tens of thousands more Credit Suisse customers who they've given an American Express Platinum card to, and that leads to higher usage and more active members in our portfolio driving our revenues.

31:11 That really has been happening over the last few couple of months and over the next couple of months. Most of you would not have been watching Switzerland playing Bulgaria the other day when they qualified ahead of Italy in their World Cup qualifiers. But if you had, at the side of every football pitch, the advert that came up most often was for CSX, which is the Credit Suisse product with which you get the Platinum card. They're making a big deal about it. Very good news. Here in The UK, Barclays have taken our product that was attached to HomePack that wasn't on sale, which is very frustrating for us over the last few years, and they've moved it to Travel Pack Plus. Good news, there are lots, lots more customers that have got Travel Pack Plus, so we get paid more from the middle of December, and we've got the opportunity for more Barclays customers to actually buy that product because it's on sale. It's a product that Barclays want you to buy and that you can buy.

32:11 Similarly, we've won extra engagement with new banks through Visa or Mastercard around the world, and we've won new contracts, Credit Saison in Japan, Westpac, and we've got others in the pipeline, a healthy pipeline, a fantastic pipeline, a stronger pipeline than I think we've had in the history of 10. And then we've got opportunity to launch into new verticals as well. Albeit during COVID, we really focused on our major vertical today, financial services, private banks, retail banks, credit cards. That's really where we focused over the last eighteen months. As we come out and we generate cash that we can spend back on sales and marketing, we will move into other verticals as well that will lead to more revenue and more members. And coming out of COVID, a bit of background.

32:59 Our corporate clients need us more than ever because we've proven that we can engage during COVID and we can engage when things are more normal as well. During COVID, other benefits are nowhere near as useful. For instance, corporate face to face entertainment doesn't really happen when people can't do things face to face. Airport lounge access isn't much use if you're not traveling. Whereas we stayed relevant all the way through, and that's allowed us to really create more relationships at senior levels amongst our banks, and that will do good things for us as we come out. Hotels need us more. Restaurants need us more. Airlines need somebody to fill the front of the plane that isn't going to be full of business travelers anytime soon.

33:46 We believe that we've continued to invest into our tech and into our proposition when our competitors have done that to a far lesser degree, if at all. But it's not just our direct competitors that we've been competing against. It's also travel agents, tour operators, and sometimes the individual organizing travel themselves. Individuals that in 2019 organized their travel themselves for summer twenty twenty very often regretted it and swore they wouldn't organize it themselves in the future. That's an opportunity for us that we're capitalizing on right now. Similarly, many travel agents and tour operators didn't deliver the service that their loyal customers expected in 2020, and that gives us and 2021, and that means that we've got more people using us for the first time.

34:38 We do a good job. We hang on to those members. Alan, I think, already mentioned that we've got benefits in our cost base as well moving forward. Rents reduced around the world and T and E also reduced. So where from here? We're seeing demand for our core services increase as pandemic eases, as lockdown restrictions ease, we see a very rapid growth in core services coming out of that. So across October, November, December, demand for travel, for instance, around the world of TEN was up 40%, four-zero percent against pre COVID twenty '19. Now, that was led by Europe and The US.

35:23 Actually, in Asia is still incredibly unusual, and travel in Latin America, which is one of our biggest markets, is still very, very much subdued. But on top of that, as we come out, call services reinflate our business, but we still will maintain the book clubs and many of the virtual events that we've done that have been very successful. Some of the virtual events will go. Chefs don't want to do cook alongs when their restaurants are open. However, many will remain, and they've stayed very popular despite lockdown restrictions easing. Because of things like travel, supply revenue is doing very well. We're certainly trading in line with the board's expectations. And as I say, I'd expect us to convert more of our pipeline of opportunities in the coming months and beyond.

36:12 So then that will grow net revenue, grow adjusted EBITDA and EBITDA generally, keep us in a positive net cash position. We scale up the operations and that growth engine continues to kick in. And like Tom Dean, we come out of COVID and come into 2022 stronger than we were going into 2020 before the whole pandemic started. Now, we go into 2022 with record contract retention, highest ever service levels, strong and growing supply revenue, decent and growing margins, and we've continued to invest into our technology and our people and our proposition that grows our business and grows the health and strength of that business and future growth.

37:00 And that's why we're positive looking forward. So that's a very quick run through about where we're at. And we'd love to take questions. We've got some already come in. And we will talk through Thank from you very much. That's great. Alex, Alan, thank you very much indeed for updating investors this afternoon. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. I just want to let Alex and Alan take a few moments to review the questions submitted already. I'd like to remind you that the recording of this presentation, along with a copy of the slides and the published q and a can be accessed via your investor meet company dashboard. You'll be notified as well by email when it's ready for your review. I'd also like to remind you that your feedback is important to the company. And immediately after this presentation's ended, we'll redirect you for the opportunity so that you can provide your thoughts and expectations, back to the company.

37:51 Alex, Alan, that's not a lot of time, to take, onboard some of the questions that have come through. But perhaps if I may, investors did have the ability to presubmit questions, and we've received a number during today's call. So thank you to those that have submitted questions. But perhaps if I could hand back to you to read out the questions and give a response where it's appropriate to do so. Sure. Thanks very much, Mark. So the first one, I'm gonna pass it over to Alan. Alan, when will the company reach profitability and cash generation? Okay, yeah. So under our current plans, and I think you highlighted in the outlook, is that for this year in H1, which is from September to February, from a cash perspective, we will still burn some cash as we continue to invest in technology. However, our revenue run rate coming into the financial year has gone up. Just as Alex explained, we won credits new clients like Credit Saison, we've got extensions on existing contracts as well.

38:41 And also we've seen travel come back strongly, so supply revenue is strong at the moment. So that helps us. So every month going on through this current financial year, the cash burn is getting smaller. And then the forecast in the second half of the year is we generate cash coming out of COVID. And that means year on year we will have a cash inflow in the whole year with a cash outflow H1, cash inflow H2. And from a profitability point of view, we are EBITDA profitable, as you can see by the numbers. Think I from a PBT point of view, that would start to happen at the end of our twenty two year into our twenty three year as the business grows out. So hopefully that answers that question. Super. Thanks very much, Alan. So the next question I'll cut to is how will 10 respond to the new COVID variant if it takes hold and discourages people from traveling?

39:35 That's a question that's come from somebody in Australia, they know a thing or two about lockdowns for sure. So yes, we are clearly thinking very hard about this. So when we went into lockdown last time, we were able to maintain revenues at a really good level and actually improve cash in the business and profitability. But how we're thinking about it this time is if it's the worst case and that life does go back into lockdown around the world, so an absolute worst case, here's how we think about it. Firstly, Asia, our biggest markets in Asia are Japan, China, Hong Kong, Singapore and Australia, and Hong Kong and Mainland China. Travel has never really restarted in those markets, So we're not expecting that to affect our travel business very much. And in fact, our APAC business will be bigger anyway because we've got some business coming in from Westpac and we've got a very large contract coming in, which is all domestic requests today through Credit Saison in Japan.

40:43 So today, actually our APAC business, it's more about if COVID does recede, then there's a lot of upside, but if there is a ban on travel, there's not any more downside than we've already got in that area. However, The US and Europe would be affected if travel wasn't allowed. We would certainly reduce supply revenue for sure, and we would have a reduction in travel as a core category. However, most of our contracts are underpinned with a contract minimum, and that's certainly true for our business in Switzerland, our business in The UK. Not all of our contracts have got a contract minimum, but enough of them that that keeps those geographies in a pretty good shape.

41:35 And of course, we would then kick in with lots of our pandemic measures, our support that we give people when they are at home, when they can't travel. And if they are at home, they can't travel internationally, but they can do things locally, we can organize, and we did last summer and throughout the last eighteen months, organize a hell of a lot of staycations and things that are relevant for people in their home country. That's something a normal travel agent can't do, but we're very well set up to do that. In The Americas, Canada is still quite locked down and Latin America, although many of them are allowed to travel by their governments, the number one destination for well off Latin Americans is The US. And it's incredibly difficult to get a visa to The US at the moment for those Latin Americans that don't have a repeat entry visa.

42:27 So our business in Canada and Latin America is already affected very much by COVID, and most of the requests that we're doing in Canada and Latin America are domestic requests. Travel is a small part of it today. It's in a similar position to Asia. However, in The US, we are doing a fair amount of travel, domestic and international, and that would be affected, but The US is a relatively small proportion of our total business. The biggest impact would be in Europe, where we've got minimum contracts. So, it looked like it was going to be really tough as well, we would reintroduce another salary sacrifice pretty promptly. That's an action that we can take immediately that normally saves us, like for the last couple of years, saved us very roughly a million pounds in cash very immediately.

43:22 And that's if it's done on a voluntary level, even before coming to something that we do, requiring our people, if things got really tough. So as a last resort, there are obviously costs in the business that we've continued to invest in, but we've made it this far without reducing our investment in tech, and we are fully expecting to be able to continue to invest in our tech. We're very happy with the quality of our teams and what they're producing, so that is not a cost that we'd want to reduce. Clearly, there was a complete lockdown, we would want to take advantage of government opportunities as well. What then happens is if you do need to furlough or put some people on Kurtzarbeit, the Swiss equivalent, what you can then do is maintain your revenues at a decent level, propped up with the minimum contract values, and actually lose more cost than you lose in revenue.

44:16 Ironically, can actually help your profitability and cash position. That's a long answer because that question is really important. I know that COVID, a new variant is on top of lots of people's minds right now. Alan, I've got one for you if you take this one. Why do we spend so much money on technology? Yeah, I think, as I said in the presentation, it's a real competitive advantage for us because we believe that, you know, we have competitors out there who have some technology, but not as good as ours, ours is a transactional platform. I think it really does, we call it a good to great investment. So we have good technology, I think through COVID, we're going to create. And I think, know, and I've, you know, personally, I've been in the business for two years, I think where we've come from the last two years, the front end platform that the member sees has improved the wind. And we've got some more improvements coming through in the coming year. And so that really creates a competitive advantage for us.

45:12 It drives a better member experience and it inspires members as well. All the content we have on our platform now, that will inspire them to book through the platform or pick up the phone and talk to lifestyle managers. So it gives us lots of ends in terms of marketing point of view. And it improves our service levels and efficiencies through that and ultimately revenues and profit. So it's a key differentiator, we believe, and that's why we've continued to invest in it through COVID periods. And actually, just to add to that, when our annual report gets published in a couple of weeks' time, it'd be worth flicking through that. There's some really good vignettes in there and examples about where technology does improve member satisfaction and speed and quality of our service, and also personalization, which is a huge part of becoming the most trusted service in the world, is about personalizing to the individual.

46:00 Another question we've got here is, what's more important to the company now? Winning new mandates or upselling within the existing customer base? Gosh, that's a choice happily we don't need to make. I am super confident that we can grow business from inside our existing customer base. Alan earlier on talked about eligible customer members and active members, and even on our very high customer value contracts, where typically people should be expecting and wanting, our corporate clients generally do want and expect to pay for penetration levels of 30%, 40%, 50%. Quite a few of our contracts, because they're immature, are down at 10%.

46:49 If you grow a contract from 10% penetration to 20%, very roughly you're going to double the size of that contract. If you grow it to 30%, you're tripling the size of that contract. We've got plenty of contracts which are very immature. A great example is Westpac who launched us so that we're now available for hundreds of thousands of new eligible members, but they haven't really done anything very much to market the service so far, because they've been so affected by COVID. As we come out of COVID, they will market. They moved to us because they wanted to activate more members and market our digital platform and our service. That is just real good opportunity to grow an existing mandate.

47:35 There's plenty like that. But also new mandates get easier for us to win, easier certainly as we come out of COVID. But also, winning Westpac will help us win some of the other Australian banks. Winning Royal Bank of Canada no doubt helped us win Scotiabank in Canada. Obviously, winning Coots helped us win Barclays, certainly helped us win NatWest, part of the same group, and on it goes. So as we grow, we have more case studies, more evidence of what our service can do that helps us grow more. New mandates will remain really important for us, for sure. Another question from Michael, Who do we see as our competition, as our offering seems fairly unique?

48:23 Yeah, that's a really interesting question. So our immediate competition in The UK, quintessentially, still have contracts out there that we want and that we've had a good track record of winning those contracts from them, and we will continue to do that. We hope to continue to do that, but not make guaranteed promises as a listed business. But we've also got contracts in or competitors in France. There's one owned by Accord Hotels. We've got a good competitor in Asia as well. It's got a good business in The States. But we believe our digital platform and our commitment to how well engineered our high touch services means that we've got very, very compelling reasons why people should want to work with us.

49:09 Now, what then tends to happen is when people go out and do a proper tender, we tend to win the vast majority of those tenders. And that's just going to show that it's not just us saying that we think we're better, it's the market saying that as well. But on top of that, because our digital platform is so good, some of the world's biggest brands have awarded us contracts without going through a tender process, because you can get a carve out permission to not go through a tender process if your competition can't offer what you can offer. So our uniqueness and the uniqueness of our digital platform allows us to win contracts in the market without going through a really big procurement process because we are unique.

49:55 But I think that competitive moat, what makes us unique, our commitment to innovation and tech, our member focus and our approach to how we join up travel, dining, content, live entertainment is quite unique and it's something that we're going to make stronger and stronger so that people today who book their travel on Expedia or book their travel with a top tour operator will come to us. People that today will book their dining to a top restaurant on OpenTable and get disappointed when they can't get a peak timetable will use us, not for all their dining requests, but when it's a great top restaurant and so on. There's a lot more uniqueness that we can build in over the coming years.

50:56 Another question here: If you go to our private website, the website in The UK that sells private membership, Living Times Ten, you can reach it from our corporate site, 10group.com. The investor here is pointing out is that it's focused on UK based members. It absolutely is. We today are not investing anything in winning private members, members who pay us to become a member. That is essentially a UK only service today. We will launch that internationally, but don't expect us to spend millions on that until and unless we can see that we get a very strong return on investment on that ourselves.

51:42 At the moment, when we sell harder into financial services, we win more contracts and they're very profitable. Right now, if we had an extra few 100,000, we would spend it on extra sales to banks and credit card businesses, and that means we're not spending it today on growing private membership around the rest of the world. Having said that, we do see the advantages in doing that, and we may well do that more as we get a better return on investment in The UK. Probably the next market we'd launch that in would be The US, where we know there are some really good opportunities to launch our private membership, but they're developed yet. It wouldn't cost us very much to launch a US version of that site.

52:30 Another question we've got from Thomas, What can we say about the pipeline for 2022? How are clients feeling today? Are they closer to the finish line in terms of decision making? Certainly, we've seen a lot of banks are very worried about losing parts of their customer base and products from their customer base to fintechs and to other banks. Increasingly, top banking chief execs have said, We've got one huge competitive advantage, which is that they've all got vast and very strong embedded customer bases. But if they're only connected to those customer bases with financial products, they'll gradually get unpicked.

53:18 And so what an increasing number of senior bankers, including Jamie Dimon at JPMorgan Chase, who's made a big play on this over the last twelve months, is what they're concluding is that they need to use lifestyle services and travel services to connect with those customers and grow loyalty so they don't lose them at the rate that they might otherwise to competitors and particularly to FinTechs. So we've got a real growth in understanding of that. And then it's a question of when's the right time to move. And it's normally as we come out of COVID, apart from people that want to move to us from a competitor, so that that transition's been managed so that then they can promote it more as we come.

54:07 Clients are more engaged with us than ever, clients in our pipeline as well, and it's a really healthy pipeline. A question from Australia, as a follow-up to, is it time for TEN to make a bigger noise around the world, advertising what a unique service it provides? Yes. We want to get into cash generation. As we generate cash, we'll be spending that back, some of it on tech, but some of it as well on sales and marketing that will grow our sales pipeline, but also grow our awareness to private individuals as well, for sure. And I guess I better wrap up there. Yeah. That is very kind of you. Thank you. In fact, that was the one question that Alan very kindly gave response to as well, is exactly as you just put it. So look, what I'll do, Alex, if I may, is I'll present any of these other questions that have come in and give those to you for your review post today's meeting.

55:05 I know investor feedback is equally important to you, and I'll shortly redirect investors to give you their thoughts and expectations. But perhaps if I could just ask you for a few closing comments just to wrap up with, and then as I say, I'll redirect the investors to give you their thoughts. For us, we're excited about the next twelve months and beyond, very committed to what we're trying to do. And actually, we've got far more ingredients in place to become the most trusted service in the world than we've ever had before. I think it's an exciting time for the business. Inside the business, we've got a strategy based on what we rather cheesily call tentwentythirty, so plans to grow our business over the next nine years. Some of you will be listening to us talking about the business in the years to come and we hope you enjoy the ride as much as we expect to. Thank you very much. That's great. Thank you.

55:55 You. Thank you, Alex. Thank you, Alan, for updating investors this afternoon. And sorry, we'll assume momentarily earlier. Could I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide feedback in order the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team at TEN LIFESTYLE GROUP PLC, we'd like to thank you for attending today's presentation. That now concludes today's session, and good evening to you all.