REG - Eurowag - Half-year Report
06/09/2022 07:16
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RNS Number : 3521Y Eurowag 06 September 2022
6 September 2022
W.A.G payment solutions plc ("Eurowag", "EW" or the "Group")
Interim results for the six months ended 30 June 2022
DELIVERING STRONG AND RESILIENT GROWTH
W.A.G payment solutions plc ("Eurowag", "EW" or the "Group"), a leading
pan-European integrated payments & mobility platform focused on the
Commercial Road Transportation industry ("CRT"), today announces its interim
results for the six-month period ended 30 June 2022.
Financial highlights
The Group achieved strong half-year results with growth in line with mid-term
financial guidance.
· Net energy and services sales(1) up 19.4% year-on-year to €87.0m,
with organic growth(1) of 18.0% year-on-year;
· Payment solutions(1) grew by 17.2% year-on-year to €63.5m, while
mobility solutions(1) grew 25.7% year-on-year to €23.5m;
· Adjusted EBITDA(1) up 5.7% to €35.0m resulting in adjusted EBITDA
margin of 40.2% impacted by incremental PLC costs and WebEye consolidation;
· Adjusted EBITDA margin(1) on a comparable basis, excluding WebEye
consolidation, incremental PLC costs would be 43.3%;
· Significant progress on transformational capital expenditure(1) plan
with €13.3m spent, in line with mid-term guidance set at the IPO;
· Net cash(1) position of €28.7m (gross cash of €181.5m) as at 30
June 2022 providing for significant leverage headroom to take advantage of
strategic opportunities.
Growing scale and network within a high-quality payments-oriented business
model and highly diversified revenue base, underpinned by strong net energy
and services sales growth.
· Average active payment solutions customers(1) up 13.0%
year-on-year to 16,523;
· Average active payment solutions trucks(1) up 7.3% year-on-year
to 87,626;
· Payment solutions transactions(1) up 8.6% year-on-year to 17.7m;
· Net revenue retention(1) for the last five years over 110%.
Key statutory financials 6M2022 6M2021 YoY
Revenue from contracts with customers (€m) 1,160.8 784.4 48.0%
Profit before tax (€m) 13.4 12.4 8.1%
Basic EPS (cents/share) 1.29 1.53 (15.7%)
Alternative performance measures 6M2022 6M2021 YoY
Net energy and services sales (€m) 87.0 72.9 19.4%
Adjusted EBITDA (€m) 35.0 33.1 5.7%
Adjusted EBITDA margin (%) 40.2 45.4 (5.2 pp)
Adjusted basic EPS(1) (cents/share) 2.35 2.57 (8.6%)
Strategic and operational highlights
· Successfully managed volatile environment in fuel supplies (shortages,
surging fuel prices, changing regulations) and increased resilience of the
business.
· Completed the acquisition of substantially all of the assets of
WebEye Telematics Zrt. ("WebEye"), a leading fleet management solutions
provider in Central and Eastern Europe, broadening the Group's customer base
(non-Hungarian subsidiaries acquired on 16 May 2022 and Hungarian subsidiaries
acquired on 1 July 2022).
· Expanded our acceptance network with a focus on LNG to support the energy
transition and decarbonization of the CRT industry. The total number of
contracted LNG stations rose to 304, representing more than 50% of the
European market.
· Continued to strengthen our competitive moats by completing trial
operations for EETS in Germany, the largest tolling market in Europe,
resulting in the signing of the final admission by the German Toll Charger and
going live. Germany represents the biggest share of toll transactions volumes
across our business.
· Simplified settlement and improved security by activating mobile
payments on all owned truck parks, as well as in the acceptance network
resulting in 388 POS ready for mobile payment.
· Expanded the senior leadership team through key hires in the
product and technology area to accelerate digital platform development.
· Tax refund has become more flexible adapting to several regulatory
changes in the legal framework across the EU countries. Our consulting
services help clients navigate through additional complexity from the
reciprocity agreements with countries outside the EU territory.
· RoadLords app is now installed on more than 3m mobile devices
across Europe with the active installation base reaching 600k drivers during
the H1 2022. Engagement of the regular users/drivers increased by 25%.
· Expanded the automation of credit scoring mechanism, allowing us to
benefit from the digital client journey and tailor customer credit limit
requirements.
· Joined new consortium to advance Hydrogen for the CRT sector and
engage across the eMobility sector to promote standards for e-Trucks.
Outlook
The Group has performed in line with management expectations year-to-date.
Looking ahead, we estimate organic net energy and services sales for Q3 2022
of at least €44.5m which would represent strong LTM growth in excess of
19.0% year-on-year. In addition, Webeye's contribution to the top line for Q3
2022 is expected to be at least €3.5m.
During the first half of 2022, fuel supply risks and macroeconomic conditions
have deteriorated, with inflation and higher fuel prices moderately impacting
the Group's operations and operating expenses. Despite these challenges we
expect to deliver a resilient full year performance, with Adjusted EBITDA for
the year-to-date developing in line with expectations. While inflation, the
post Covid-19 cost rebase and additional PLC costs continue to impact our
profitability, we expect these incremental costs will be offset by the profit
delivered from WebEye in the second half of the year.
Whilst the business has navigated with confidence through the challenging
environment, the Directors note elevated risks and uncertainties with respect
to the future of the European economy, and potential impacts of the sanctions
related to imports of Russian oil introduced by the European Commission.
Notwithstanding these headwinds, and assuming no significant worsening of the
current environment, we remain confident in our future outlook and reaffirm
our mid-term guidance.
Martin Vohánka, Founder and CEO, commented:
"Along with many other businesses across Europe, Eurowag has had to adapt to
unprecedented circumstances over the past six months. Still, the Group has
delivered a strong set of results, demonstrating the resilience of our
business model, and highlighting the importance of our services to the CRT
industry.
I am particularly pleased that we completed the WebEye acquisition and
established a public market track-record of delivering value-accretive
strategic M&A. Eurowag can now offer integrated payment and mobility
solutions to significantly more customers across our core markets, and
capitalise on the data from even more connected trucks to help our customers
run their businesses more efficiently.
We continue to strengthen our senior leadership team with appointments in the
product and technology areas, to accelerate the digital platform development.
Our strong performance in the first half would not have been possible without
the commitment of our people, so I would like to say thank you to all our
employees."
Magdalena Bartoś, CFO said:
"Eurowag traded strongly in the first half and delivered significant organic
growth in net revenue and adjusted EBITDA. Our business continues to grow
scale, evidenced by the increasing number of active trucks using our payment
solutions, and the expanding customer base provides more opportunities for
effective cross-selling, which improves loyalty and drives revenue retention.
Our robust balance sheet, which remains in a net cash position, provides
significant headroom to further invest in our platform.
Looking ahead, whilst there continues to be a high level of uncertainty, our
expectations for the full year of 2022 remain unchanged and we anticipate
delivering results in line with our mid-term financial guidance. With a clear
strategy, we believe Eurowag is well positioned to capitalise on further
growth opportunities and will continue delivering sustainable long-term value
for all our stakeholders."
Investor and analyst presentation today
Martin Vohánka (CEO) and Magdalena Bartoś (CFO) will host a virtual
presentation and a Q&A session for investors and analysts today, 6
September 2022, at 9.00am BST. The presentation and webcast details are
available on the Group's website at https://investors.eurowag.com
(https://investors.eurowag.com/)
Please register to attend the investor presentation via the following link:
https://www.lsegissuerservices.com/spark/WAGPAYMENTSOLUTIONS/events/f87d5021-326a-40f1-b3c9-4d5ded2885be
(https://www.lsegissuerservices.com/spark/WAGPAYMENTSOLUTIONS/events/f87d5021-326a-40f1-b3c9-4d5ded2885be)
Enquiries
Eurowag
Tomáš Novotný
Head of Investor Relations
investors@eurowag.com (mailto:investors@eurowag.com)
Instinctif Partners
Tim McCall, Galyna Kulachek, Bryn Woodward
IR and international media
eurowag@instinctif.com (mailto:eurowag@instinctif.com)
About Eurowag
Eurowag was founded in 1995 and is a leading pan-European integrated payments
& mobility platform focused on the Commercial Road Transportation ("CRT")
industry. Eurowag's innovative solutions makes life simpler for small and
medium businesses in the CRT industry across Europe through its unique
combination of payments solutions, seamless technology, a data-driven digital
eco-system and high-quality customer service. https://investors.eurowag.com
(https://investors.eurowag.com/)
Strategic review
Our strategy has been developed with the aim of democratising the on-road
mobility industry through a technological revolution. It is built on five core
pillars that will enable Eurowag to capitalise on the opportunities that lie
ahead and deliver growth for all our stakeholders.
In H1 2022, we demonstrated substantial progress against our strategy,
differentiated our offerings, and grew scale and network within a high-quality
payment-oriented business model and highly diversified revenue base.
1. Growth from existing customers.
Through further innovation in core payment services, and integration and
cross-selling with mobility services, we can retain and expand our existing
customer relationships by continuing to meet their evolving needs. In H1 2022,
the Group:
· Expanded the acceptance network with a focus on LNG to support the
energy transition and adoption of low carbon fuels.
· Continued to strengthen our competitive moats by completing trial
operations for EETS in Germany.
· Maintained strong net revenue retention above 110%.
2. Geographic expansion and penetration.
We apply our scalable business model to new markets serving both existing and
new customers, thus expanding market share. In H1 2022, the Group:
· Increased the number of Payment solutions active customers by 13%.
The majority of the growth came from already established markets in the
Southern and Central cluster.
· Started to expand into the DACH region (Germany, Austria,
Switzerland), establishing a new sales team of 15 strong industry experts in
Germany with a focus on acquisition of new customers in this region which will
support future growth.
· Continued the roll out of digital sales channels in Western
Europe to expand its footprint.
3. Go-to-market channel expansion.
We continue to acquire new customers through our marketing strategy based on
geographic clusters, and three sales channels (direct, indirect and digital)
with an increasing focus on digital sales. In H1 2022, the Group:
· Launched an end-to-end, fully automated digital customer acquisition,
credit scoring and onboarding channel in the Czech Republic, Slovakia, Poland,
Spain and France.
· Built an extensive base of digital leads and achieved a high
conversion rate for turning these leads into new active customers.
4. Digital platform development.
We continue to develop our end-to-end platform to be a conduit for
intermediate payments and data exchange between all parties, thereby
connecting digital services and physical assets. This allows us to expand our
client base to include shippers and freight forwarders, as well as seamlessly
integrating third-party providers and financiers into our platform, thereby
facilitating frictionless interactions among industry participants to create a
fully connected marketplace. In H1 2022, the Group:
· Further developed the digital platform by expanding the pilot for
receivables financing.
· Simplified settlement and improved security by activating mobile
payments on all owned truck parks, as well as in the acceptance network.
· Went live with SAP ERP with energy payments transactions processed and
enriched in the new system.
5. Accretive M&A.
We have a strong track record of identifying and executing strategic M&A.
· On 15 May 2022 and 1 July 2022, Eurowag completed the acquisition of
substantially all of the assets of WebEye Telematics Zrt., a leading fleet
management solutions provider in Central and Eastern Europe. The transaction
expands the Group's customer base, and provides WebEye's 5,000 customers, and
over 58,000 connected trucks, which now have access to Eurowag's unrivalled
range of integrated end-to-end payment mobility solutions.
· The Group continues to screen acquisition targets that will create
cross-sell and up-sell opportunities, generate cost and revenue synergies, and
further develop our product and technology capabilities. We continue to
actively manage a pipeline of future opportunities that can support our
inorganic growth.
Operational review
The Group is structured with two business segments, which each deliver a range
of services to clients, while also delivering cross and up selling
opportunities.
Payment solutions Mobility solutions
Serve customers with mission critical needs and often serve as an introduction Provide a mix of re-occurring transaction revenue, recurring subscription and
to our services other fee-based revenue streams
Energy payments Tax-refund services and Consulting Services
Toll payments Telematics
E-Fleet management
Location-based products and services
Roadside services
Payment solutions
Payments are a core part of our ecosystem and are comprised of economically
efficient and secure means of energy payments through pre-pay or post-pay fuel
cards, and toll payments by on-board units ("OBU"). They often serve as an
introduction to our services for customers. Payment solutions grew by 17.2%
year-on-year to €63.5m, representing 73% of total net energy and services
sales.
Energy payments
Our energy payment solutions generate mainly re-ocurring transactional revenue
through our network of acceptance points and bunkering sites located on major
transportation routes. These offer customers a more efficient way to purchase
and finance their energy needs while on the road, offering competitive prices
for their energy at accessible locations across Europe, through pre-pay or
post-pay fuel cards.
In H1 2022, to support our geographic expansion and penetration, we focused on
adding acceptance points and bunkering sites (capacity extension or new sites)
with focus on TEN-T corridors, both in traditional energy as well as
alternative fuels. We extended our card acceptance network for traditional
fuels by additional 104 locations to more than 17,000 in total.
Our business model is technology agnostic, with growing alternative fuels
network and strong eMobility presence. Our key objective is to help our
customers compete and grow in a low-carbon economy - and we use our position
to facilitate the transition to low carbon fuels, including LNG. The Eurowag
acceptance network now includes LNG and compressed natural gas (CNG)
stations in 12 European countries, covering 304 LNG stations, with new
stations being added almost daily.
As we continue reducing our carbon footprint with the shift to renewable
electricity at our sites, we installed photovoltaic panels on truck park in
the Arraia, Spain during 1H 2022. This will further contribute to reducing GHG
emissions from our operations.
To support convenience, security and facilitate digital journey of our CRT
clients, EW activated mobile payments on all our truck parks, as well as in
the acceptance network in the first merchant countries (Czech Republic,
Slovakia, Poland, Hungary, Germany, Belgium, Spain, Lithuania and Austria),
resulting in 388 POS ready for mobile payment as of 30 June 2022.
Toll payments
The EU has recently increased the requirements for European member states to
comply with the European Electronic Toll Service ("EETS"), aiming to create a
harmonised EU-wide toll system to simplify the administrative burden and
reduce the associated costs. We have taken the opportunity to build a
proprietary EETS toll payment solution, that from the outset integrates with
our other services, such as telematics, energy payment and fraud prevention.
In H1 2022, we ran a successful trial EETS operation in Germany. Germany is
the single biggest toll volume domain in Europe and is located at the
intersection of major European international transport routes according to EU
TEN-T network, and EW is the first EETS provider to manage the certification
procedure under a new mandatory regime. Pilot operations with real customers
have been completed, resulting in the signing of the final admission by the
German Toll Charger effective 1 August 2022. All prerequisites are met in
order to successfully grow in Germany, which is the largest tolling market in
Europe and represents the biggest share of toll transaction volumes in
Eurowag.
Part of the competitive moat is not only to certify and operate new domains
but also to manage the complexity of recertification in already certified Toll
domains caused by certification of new domains. As expected, certification in
Germany made recertification in Austria and Belgium necessary, which we also
successfully underwent in Q2. This demonstrates that we are not only capable
of certifying our system in new domains but also to keep our existing toll
domains certified and operate successfully in a complex setup with many
technical dependencies across toll domains.
We continue to expand the coverage in our core market of Central Europe. In
the last few months, we have finished the technical implementation of private
highways in Poland, which starts to be offered commercially. In addition, we
are in active preparation for the start of EETS Czech Republic and Slovakia
with aim to retain our strong position within Central and Eastern Europe as
soon as these markets open up for EETS. In the meantime, we serve customers
with currently available national toll service. In line with our strategy, we
continue with certification of all available domains.
Mobility solutions
Through our mobility solutions segment, we offer customers tax refund
services, telematics products, smart routing and other adjacent services. The
segment provides a mix of re-occurring transactional revenue, recurring
subscription and other fee-based revenue streams. Mobility solutions grew by
25.7% year-on-year to €23.5m, representing 27% of total net energy and
services sales.
Tax refund and consulting services
Tax refund has continued to be one of the leading tax refund providers
offering all clients of Eurowag a broad array of products and services. We
offer tax refund services on standard VAT, ED partial refund, pre-financed
VAT, and advance payment of excise duty ("APED"). Since January 2022, the
product and service portfolio has been enhanced with a new type of refund.
This type of tax refund includes hybrid financing, whereby the customers can
decide which of the submitted transaction shall or shall not be financed.
Alongside that, a customer can choose a standard refund with a financing
limit, which allows the customers to decide which refundable tax amount shall
be financed. These features create maximum flexibility for the customers to
utilize the tax refund and its benefits.
During the reporting period, Tax refund has also improved the efficiency of
its processes by implementing fully automated electronic submissions of tax
refund applications in France, including customers based outside the European
Union, as well as obtaining access to the Croatian tax refund portal, which
also allows customers to request tax refunds from Croatia.
In 2022, Tax refund was impacted by legislative changes in the tax rate,
which, in turn, affected the business model. These changes have an impact on
the tax refund as refundable rates (e.g. Slovenia, Belgium, France, Italy) and
VAT (e.g. Germany, Poland) were reduced by the governments in order to support
businesses and consumers to respond to growing energy prices. Some of these
changes are temporary, whilst others are permanent.
As part of its commitment to delivering an integrated offer, in close
cooperation with an external partner Eurowag provides a range of broader
consulting services to its customers. This includes supporting drivers and
transport companies with the Minimum wage regulations across Europe, and
providing advice and guidance around registering the necessary documents with
local authorities.
The business also supports with CO2 emissions calculations which subsequently
enables customers to compensate for these either financially or through
certified projects.
The EU Commission rules for the road transport sector, Mobility Package I,
represent a key challenge for transport companies across Europe as they
include regulations on driving times, rest periods and tachographs, and a very
important directive on posting of drivers including the minimum wage
regulations in some EU countries. Eurowag provides a digital solution to
enable customers to navigate Mobility package I, covering 12 languages.
Telematics
Combining advanced telematics data with state-of-the-art software enables us
to provide value added fleet management services to our customers. Customers
can easily track the real-time location of their fleet and other key
indicators from the trucks such as mileage, fuel consumption, speed, load
weight, driving time and idling. Users can also plan routes based on real
truck and route parameters and get accurate estimations on the expected
transport costs.
Telematics enable customers to optimise their fleet management processes; key
innovative features include:
· Remote tachograph download;
· Border crossing reports;
· Travel allowance and European Road Transport Agreement (AETR)
calculations;
· Fuel transaction visualisation.
Driving behaviour is also analysed via an in-house algorithm, which provides
valuable tailored insights on drivers and outlines recommendations. The
platform also supports the majority of electric vehicles, both Battery
electric vehicles (BEVs) and Plug-in hybrid electric vehicles (PHEVs).
During H1 2022, we have added valuable new features to automate fleet
operations and improve efficiency:
· The new Maintenance Module helps our customers to manage vehicle
maintenance plans and connect it with the utilisation and planning management.
The automated workflows can be set up based on an odometer status event. There
is also a possibility to setup customised reminders, deadlines and automated
triggers.
· We have improved the ETA near-real-time calculation and prediction by
new insight - Border Crossing Times. The prediction of the time is based on
Telematics Big Data, which we collect from all our telematics and toll units
and is based on our proprietary analytical algorithms.
· To improve the profitability and planning process, we have added a new
Toll Costs Calculation and prediction based on the real truck and route
parameters.
· Our customers can now offer their unutilised vehicles to third-party
fleets using the new Vehicle Sharing functionality to improve not only the
overall fleet efficiency but also contribute to a solution tackling
utilisation problem within the road-freight transportation industry.
· To improve the transportation management efficiency, we have added
new POI Alerts to inform dispatchers and shippers about vehicles arriving or
leaving important locations, e.g. loading or unloading sites.
· To help our customers to transition to low carbon future, we have
developed a Calculation of Energy Consumption and GHG emissions tool. This
tool can help our customers to calculate and communicate the emissions of a
shipment in the value chain to help shippers understand and identify
opportunities to reduce indirect (Scope 3) GHG emissions.
Additionally, we introduced new features to help our customers in Poland with:
· Integration with the PUESC e-customs system developed by the Customs
Agency in Poland, which enables the mandatory submission of electronic export
declarations. We can now automate the process by creating a PUESC account and
registering required information for the electronic declaration. Once a truck
enters the territory of Poland the electronic declaration process is
automatically triggered, leading to an easier and faster custom clearance
process.
· Integration with Trans. (http://trans.EU) eu freight exchange to
enable dispatchers to see the real-time recommendations for future transports.
These recommendations are rated based on various parameters, such as distance
and load weight, and provide information on expected costs and the final
shipment price. Once selected, the shipment can be booked via the Trans.eu
portal which can be seen on the dispatcher's dashboard as an actual planned
route.
E-Fleet management
Customers can benefit from using a single telematics solution with fleets that
combine standard diesel/petrol engines, battery electric vehicles, and plug-in
hybrids. With an eMobility licence subscription, the on-board unit can read
additional metrics such as state of charge, driving range, or battery status.
With this data available, a dispatcher can plan a trip for an electric
vehicle, manage home/company charging, or assess charging behavior of a
plug-in hybrid vehicle user.
At the beginning of Q2, we started the next phase of the eTruck pilot project
with DHL and installed Eurowag telematics unit into the first electric truck
in the Czech Republic. Based on the collected data (e.g. state of charging or
range), we can help our customers even more to lead their journey toward the
electrification of their fleets.
Location based products and services
We offer smart navigation products and location-based services through our
brand Sygic, one of the leaders in providing smart routing worldwide for both
individual truck drivers and various size fleets.
Key highlights from H1 include:
· New navigation functionalities aimed at reducing driver distraction and
supporting road safety, while mirroring navigation instructions on a car
display. A phone can also be operated as a stand-alone device with some extra
and camera-based features used simultaneously.
· We introduced an enhanced navigation feature over Low emission zones
and Clear air zones in the UK. Using the latest map data combined with a
vehicle profile allows our algorithm to find the best route over those zones.
During H1 2022, the Group's community-based trucking ecosystem linking drivers
with each other and crowdsourcing unique trucking data, RoadLords app was
installed on more than 3m mobile devices across Europe, whilst the active
installation base has reached 600k drivers. The engagement of regular
users/drivers has also improved by 25%.
Community or RoadLords truck drivers have already created more than 30,000 new
trucking-related points of interest, including more than 12,000 new parking
places suitable for tucks and 14,300 company addresses used for loading or
unloading. During H1 2022, truck drivers informed the community about more
than 18,000 road incidents and over 45,000 hazards or vehicles blocking the
route.
To improve near-real-time visibility, during the reporting period, we added a
new Share ETA functionality for drivers allowing them to share their position
and ETA with shipper, forwarder, consignee, or dispatcher. We also added Toll
Costs Calculation feature in order to provide more reliable planning based on
more precise cost estimation.
Sygic's GPS navigation & eMobility app offers drivers an all-in-one
solution with integrated payment for charging electric vehicles: it helps to
find a charging station, get navigated to it and pay for a service.
Key developments in H1 2022 include:
· Introduced simplified ways of connecting our eMobility Service
Provider (EMSP) accounts with partners to enhance user experience. This helps
both EW and partners expand our cooperation and share end-users both ways.
· Cooperated with Plugsurfing, TomTom, Polyfazer, ChargeUp, eJoin,
GreenWay and Elec2Go, to increase the coverage of our charging points network
to more than 466,000 charging points, of which approximately 290,000 have
online data and payment capabilities.
Roadside services
The Group currently offers its customers 5 roadside services: parking,
washing, cleaning, truck repairs and ferry booking, across more than 1,300
locations in 18 countries. This not only supports one of the Group's strategic
pillars aimed at growth from existing customers by extending share of the
wallet, but also provides truck drivers with safety and comfort of using EW
card for various payments, making their life easier.
Responsibility and sustainability
Introduced in 2021, Eurowag's sustainability strategy is based on its social
and environmental responsibilities, aiming to create sustainable financial and
technological solutions for the benefit of the industry, society and the
environment. While these sustainability principles have always been at the
core of Eurowag's purpose, we have formalized our approach to help our
customers prosper, make road transport cleaner, fairer and more efficient, and
help our employees and communities thrive in a healthy environment.
We set targets including:
· A carbon reduction target to reduce emissions from our own
operations (Scope 1 and Scope 2) by 50% by 2030 on a 2019 baseline with Scope
3 target under development;
· A Diversity, Equity, and Inclusion target to have 40% female
representation in leadership roles on a 2021 baseline by 2025;
· Achievement of a top 25% of employee engagement score as compared to
EU Tech companies benchmark by 2025.
We are now:
· Making steady progress against our sustainability commitments and
targets in H1;
· Enhancing partnerships to drive a more efficient and better
connected and lower carbon CRT sector;
· Enhancing and expanding transitional, low carbon and eMobility
solutions for our customers;
· Supporting colleagues and communities in the response to the war
in Ukraine;
· Transitioning to renewable electricity to reduce our operational
emissions.
Key highlights from H1 include:
Collaborating with the Industry to drive a more efficient, better connected
and lower carbon CRT sector
· Joined new multistakeholder consortium to advance Hydrogen for
CRT sector.
· Participated in CharIN, the leading global association dedicated to
promote interoperability for E-Charging Systems through our LMS business.
Thanks to this, we are monitoring and engaging in industry developments
including discussions about a future charging standard for heavy commercial
vehicles.
Enhancing and expanding our low carbon solutions and services for customers to
help make their operations more efficient and sustainable
· Commissioned customer research in nine European markets aimed at
identifying and improving ways we can help customers accelerate the move to
low carbon solutions.
· Expanded transitional, low carbon and eMobility solutions by adding
101 new POS into our LNG acceptance network, starting construction of two new
LNG sites in the Czech Republic and increasing eMobility network coverage to
more than 466,000 charging points for passenger cars.
· Introduced via Sygic a navigation support feature over low emission
zones and Clear air zones in the UK. Using the latest map data combined with a
vehicle profile allows our algorithm to find the best route over those zones.
· Developed an energy consumption and GHG emissions calculation feature
in EW Telematics application. GHG emissions of rides can help EW Telematics
customers to communicate the GHG emissions of a shipment in the value chain to
help shippers understand indirect (Scope 3) GHG emissions.
· Continued support and services for customer wellbeing
o Financial wellbeing partnerships: partnering with a non-profit
organization (Institut prevence a řešení předlužení) to offer debt
relief and financial wellbeing services to all drivers in the Czech Republic.
In addition, the Group entered into a cooperation agreement with an external
partner to provide advisory services to drivers and transport companies to
meet minimum wage regulations across Europe.
o New functionalities to Sygic navigation aimed at reducing driver
distraction and supporting road safety - while mirroring navigation
instructions on a car display, a phone can also be used as a stand-alone
device with some extra and camera-based features used simultaneously.
Reducing our carbon footprint and supporting employees and communities
affected by the war in Ukraine.
· Continued to reduce our carbon footprint with the shift to renewable
electricity at our sites by installing photovoltaic panels on truck park in
Arraia, Spain.
· Continued supporting employees and communities affected by the war in
Ukraine: financial support provided to 46 people; direct support of 14 NGOs
through Ukraine Aid and Philanthropy and You; 69 employees participated in
matched fundraising campaign to support People in Need's humanitarian efforts
in Ukraine and in neighbouring countries
· Completed our 2022 employee driven charity programme with more than
83% of employees participating in 227 projects across 14 countries.
Organizational culture and change management
At Eurowag we continue to build on and embed our Company values by promoting
the following:
· Be a good person - our focus is on our social responsibility programmes
as well as ensuring all our colleagues are acting fully in accordance with our
compliance and ethics standards.
· Be a true colleague - by working towards a culture of
collaboration, flexibility and two-way communication.
· Embrace change - improving our change management capability and creating
a culture of continual improvement and learning.
· Deliver your best - ensuring we have the right skills in the
organisation and insisting on razor sharp accountability and increased
performance management.
Listing on the London Stock Exchange has helped us to follow our talent
strategy of attracting critical skills to Eurowag from a far larger and more
diverse talent pool across Europe. This capability will enable us to transform
and change our business and deliver our longer term business goals, giving us
a great competitive advantage. Examples of this are key hires in the product
and technology area to accelerate our digital platform development.
We ran our first employee engagement survey (previously we used eNPS) in the
first quarter of 2022. It was completed by 90% of our colleagues and we
achieved an engagement score of 68%. The aim of reaching the top quartile by
2025 remains a top priority KPI for us.
Financial review
Eurowag delivered a strong set of results in the first half, demonstrating the
resilience and strength of our business model and proposition, as well as
further highlighting the importance of our services to the CRT industry. This
result is testament to the commitment and resourcefulness of our team.
The first six months of the year had an exceptional range of challenges, many
of which are expected to continue into the second half. We had to rapidly
respond to all these challenges and ensure continued and seamless operations
across all our regions.
The war in Ukraine is shocking and has had a number of knock-on effects on the
macroeconomic environment, including a hike in energy prices and inflation.
Faced with a rising cost of living, multiple governments have introduced
measures to ease the burden of high energy prices on consumers, some
permanently, some on a temporary basis. Among others, this includes fuel
prices being capped in Hungary, a Government fuel price compensation scheme
introduced in Spain, as well as a temporary reduction of VAT rates applied in
Poland. This uncertain regulatory landscape has represented a headwind to the
business, and Eurowag has also had to respond quickly to the various sanctions
imposed by European markets across its operations, targeting Russia. All of
this has come off the back of the two years of disruption caused by the
Covid-19 pandemic.
To grow our customer base and maintain customer retention, as well as deliver
an increase in revenues and adjusted EBITDA against this backdrop, represents
a significant achievement. Along with successfully completing our first
acquisition post IPO, we have further developed our digital capabilities and
strengthened our team to ensure we can continue to deliver on our ambitious
strategy. The trading performance reported in the first six months confirms
the strength of our proposition to CRT industry. Group Net energy and services
sales growth of 19.4% year-on-year was delivered through further expanding our
customer base in the payment solutions segment (average number of active
customers up by 13.0%), enhanced by effective cross selling of our mobility
solutions and strong average net revenue retention of above 110%.
Adjusted EBITDA increased by 5.7% year-on-year to €35.0m (2021: €33.1m).
Adjusted EBITDA margin decreased year-on-year to 40.2% (2021: 45.4%),
reflecting €2.0m incremental PLC related costs and impact of WebEye
consolidation (€0.1m). Adjusted EBITDA margin on a comparable basis,
excluding incremental PLC costs and WebEye consolidation would be 43.3%.
Increased operating costs due to lower Covid-19 impacted base and inflation of
€0.8m, as well as €0.6m severance payments and the €0.5m share-based
payment ("PSP") cost further impacted Adjusted EBITDA margin in the first half
of 2022.
Adjusted basic EPS decreased by 8.6% year-on year to 2.35 cents per share
(2021: 2.57), predominantly due to higher basic weighted average number of
shares in 2022 as a result of new shares issued in Eurowag's IPO.
On a statutory basis, profit before tax increased by 8.1% year-on-year to
€13.4m (2021: €12.4m), while basic EPS decreased by 15.7% to 1.29 cents
per share (2021: 1.53) due to higher basic weighted average number of shares
in 2022.
As a result of our IPO primary equity raise and supported by our underlying
highly cash generative business model, our overall financial position remains
strong with reported €28.7m of net cash as of the end of June 2022.
In line with the strategy announced at the IPO, we continued investing in our
digital transformation and inorganic growth. During the first six months of
2022, our transformational capital expenditure totaled €13.3m, while
investments in our subsidiaries and associates reached €25.9m.
Performance review
Below is a summary of the segmental performance and explanatory notes related
to items including corporate expenses, alternative performance measures,
taxation, interest, investment and cash flow generation.
Segments
6M2022 (€m) 6M2021 (€m) YoY (€m) YoY
Segment revenue total 1,160.8 784.4 376.4 48.0%
Payment solutions 1,137.3 765.7 371.6 48.5%
Mobility solutions 23.5 18.7 4.8 25.7%
Net energy and services sales total 87.0 72.9 14.1 19.4%
Payment solutions 63.5 54.2 9.3 17.2%
Mobility solutions 23.5 18.7 4.8 25.7%
Expenses included in Contribution(1) 15.1 12.1 3.0 24.8%
Contribution total 71.9 60.8 11.1 18.3%
Payment solutions 54.9 47.8 7.1 14.9%
Mobility solutions 17.0 13.0 4.0 30.8%
Contribution margin(1) total 83% 83% 0 pp N/A
Payment solutions 87% 88% (1 pp) N/A
Mobility solutions 72% 70% 2 pp N/A
Corporate overhead and indirect costs before adjusting items (36.9) (27.7) (9.2) 33.2%
Adjusted EBITDA 35.0 33.1 1.9 5.7%
Adjusting items affecting Adjusted EBITDA (5.5) (5.4) (0.1) 1.9%
EBITDA(1) 29.5 27.7 1.8 6.5%
Depreciation and amortisation 12.4 10.5 1.9 18.1%
Operating profit 17.1 17.2 (0.1) (0.6%)
The Group's total revenues increased by 48.0% year-on-year to €1,160.8m
driven by higher energy prices (a corresponding growth was reported for costs
of energy sold) and as a result of the growing scale of our payment solutions.
The Group delivered double-digit Net energy and services sales growth and
strong Contribution margins in both segments. Growth in organic Net energy and
services sales was 18.0%, while the overall Net energy and services sales were
up 19.4% given a €1.0m positive impact from WebEye.
Payment solutions Net energy and services sales grew by 17.2% year-on-year,
driven by strong new customer and truck acquisitions underpinned by strong Net
revenue retention.
Mobility solutions Net energy and services sales grew by 25.7% year-on-year,
mainly as a result of effective cross-sell, as well as sales to automotive
partners and WebEye's consolidation.
In terms of geographic breakdown, the Central cluster remains the largest
segment with nearly 50% share of total Net energy and services sales (2022:
€43.3m, 2021: €35.4m). All markets in the Central cluster delivered strong
double-digit growth. Southern cluster has kept the momentum from 2021 and
remains the fastest growing area with 35.8% (32.2% organic) year-on-year
increase (2022: €28.1m, 2021: €20.7m). A decline of Western cluster's Net
energy and services sales by 12.2% (2022: €12.1m, 2021: €13.8m) was mainly
due to lower number of average active payment solutions customers (500
customers). Customer churn has been driven by business closures reflecting
challenging market environment and ADS client base migration to Eurowag
platform which is expected to conclude by end of 2022.
Corporate expenses
6M2022 (€m) 6M2021 (€m) YoY (€m) YoY
Expenses included in Contribution 15.1 12.1 3.0 24.8%
Corporate overhead and indirect costs before adjusting items 34.4 27.7 6.7 24.2%
Incremental PLC related costs and PSP 2.5 0.0 2.5 N/A
Adjusting items affecting Adjusted EBITDA 5.5 5.4 0.1 1.9%
Depreciation and amortisation 12.4 10.5 1.9 18.1%
Total 69.9 55.7 14.2 25.5%
The above table is relevant for segmental review, while below table summarises
corporate expenses based on statutory financials categories:
6M2022 (€m) 6M2021 (€m) YoY (€m) YoY
Employee expenses 32.8 26.5 6.3 23.8%
Impairment losses of financial assets 2.7 1.2 1.5 125.0%
Technology expenses 3.9 2.8 1.1 39.3%
Other operating income (0.2) (0.3) 0.1 (33.3%)
Other operating expenses 18.3 15.0 3.3 22.0%
Depreciation and amortisation 12.4 10.5 1.9 18.1%
Total 69.9 55.7 14.2 25.5%
Employee expenses increased by 23.8% year-on-year to €32.8m as the Group
focused on priority hires, talent retention, strengthening the structure and
implementing remuneration schemes appropriate for a listed company. Adjusting
items included in employee expenses amounted to €4.2m in the first half of
2022 (2021: €2.1m).
Impairment losses of financial assets amounted to €2.7m (2021: €1.2m) as a
result of increased risk due to higher notional credit exposure reflecting
higher energy prices. Our customer exposure impacted credit losses ratio(2)
that increased from 0.1% to 0.2%. Nevertheless, our expertise in managing
credit risk and cash collections resulted in strong and stable ageing
performance of our receivables portfolio with approximately 80% current
balances as of the end of June 2022.
Technology expenses increased by 39.3% to €3.9m, largely as a result of the
Group's focus on technology transformation, cloud transition and expenses
related to the new generation ERP system. Adjusting items included in
technology expenses amounted to €0.2m in the first half of 2022 (2021:
€0.1m).
Other operating expenses increased by 22.0% to €18.3m, mainly due to PLC
related costs of €1.6m (2021: €0.0m), return of travel and other costs
post Covid-19 and inflation of €0.8m. Adjusting items included in other
operating expenses amounted to €1.1m in the first half of 2022 (2021:
€3.2m).
Depreciation and amortisation grew by 18.1% to €12.4m, primarily as a result
of increased transformational technology being put into production. Adjusting
items included in depreciation and amortisation amounted to €3.4m in the
first half of 2022 (2021: €3.6).
Net finance expense
Net finance expense in the first six months of 2022 was €3.3m (2020:
€4.5m). The decrease reflects mainly improved result on revaluation of
derivatives and lower foreign exchange losses, partially offset by higher
factoring fees related to higher average factoring limits utilization
throughout the year to date and interest charges reflecting higher average
level of borrowings in the first six months ending 30 June 2022 compared to
the corresponding period of 2021.
Taxation
The Group tax charge of €4.3m (2021: €3.6m) represents an effective tax
rate of 31.7% in 2022 (2021: 28.9%). Corporate income tax for companies in the
Czech Republic and the United Kingdom for 2021- 2022 was 19%, while in Spain
it was set at 24%. They represent the major tax regimes in which the Group
operates.
The Group's effective tax rate is impacted by the tax impact of Adjusting
items. It is, therefore, helpful to consider the underlying and adjusting
items affecting tax rates separately:
· The effective tax rate on Adjusted earnings(1) before tax for the year
decreased to 24.4% (2021: 29.0%), largely due to taxes in respect of prior
years paid in 2021.
· The effective tax rate for Adjusting items was 13.3% (2021: 28.9%) and
was driven mainly by equity-settled share-based payments.
We adopted a prudent approach to our tax affairs, aligned with business
transactions and economic activity. We have a constructive and good working
relationship with the tax authorities in the countries in which we operate and
there are no outstanding tax audits with the exception of Hungary and
Slovakia.
EPS
Basic EPS for 2022 was 1.29 cents per share, a decrease of 15.7% relative to
2021. This was predominantly due to higher basic weighted average number of
shares in 2022 as a result of new shares issued in Eurowag's IPO.
Adjusted basic EPS(1) for 2022 was 2.35 cents per share, representing a
decrease of 8.6% relative to 2021, based on the weighted average number of
ordinary shares in issue during the year of 688,911,333. After accounting for
the impact of PSP, adjusted diluted earnings per share was 2.35 cents per
share. Adjusting items are as described below.
Investments in subsidiaries and associates
Acquisition of WebEye Group
Further to the subsequent events discussed in the 2021 Annual Report, the
Group signed a novated agreement on 16 May 2022 to acquire substantially all
of the assets of WebEye Telematics Zrt., a leading fleet management solutions
provider in Central and Eastern Europe. The Company paid €23.3m in cash
upon the acquisition of 100% of the share capital of the non-Hungarian
subsidiaries and a further €19.9m was paid upon completion of the
acquisition of the Hungarian subsidiaries on 1 July 2022. In addition, the
Company will pay a deferred settlement component within three years of
closing, a portion of which is contingent upon the achievement of certain
KPIs. The maximum amount, including the deferred amount of the purchase price,
is capped at €60.6m.
The transaction will expand the Group's customer base, and WebEye's customers
will gain access to Eurowag's unrivalled range of integrated end-to-end
payment and mobility solutions leading to incremental revenue
opportunities. Furthermore, data from the connected trucks will provide
insights and enable the continual development of new and improved solutions to
address customers' needs.
The provisionally determined fair values of identifiable assets and
liabilities of non-Hungarian subsidiaries of WebEye as at the date of
acquisition were:
(€m)
Total Assets 19.8
Total Liabilities 2.6
Total identifiable net assets at fair value 17.2
Goodwill arising on acquisition 19.7
Purchase consideration:
Cash paid 23.3
Deferred consideration (discounted) 13.6
Total purchase consideration 36.9
From the date of acquisition until 30 June 2022, non-Hungarian subsidiaries of
WebEye contributed €1.0m of revenue and €0.2m loss after tax (mainly
driven by amortisation of acquired intangibles).
If the acquisition of combined Hungarian and non-Hungarian WebEye entities had
occurred on 1 January 2022, consolidated revenue and consolidated loss after
tax for the half year ended 30 June 2022 would have been €7.4m and €0.1m
respectively. Excluding amortisation of acquired intangibles the profit after
tax would have been €1.2m. Consolidated revenue for the six months would
have been evenly distributed between the two acquisitions.
Pay-out of deferred consideration related to Last Mile Solutions
On 31 January 2022, the Group paid deferred acquisition consideration of
€3.0m related to acquisition of company Threeforce B.V. (Last Mile
Solutions).
Balance sheet
Net assets of the Group increased by 6.3% to €302.6m, mainly reflecting
profit for the six months ending 30 June 2022 and positive revaluation of
cash-flow hedges.
Intangible assets of the Group excluding goodwill increased by €23.8m to
€112.0m in the reporting period, predominantly due to WebEye acquisition and
investments into the strategic IT transformation.
Goodwill comprises mainly CGU(1) Energy of €40.2m, CGU Navigation of
€34.6m and CGU Telematics of €45.8m. Goodwill is tested for impairment on
an annual basis, there was no impairment posted in 2021 and no impairment
indicators were identified in the first six months of 2022.
Inventories increased by €9.8m to €19.4m mainly due to higher stock of
on-board units resulting from the Group's decision to move production to an
alternative supplier, thus, cancelling cooperation with a manufacturer owned
by Russian individuals. The remaining growth mainly reflects the WebEye
consolidation and higher value of fuel inventory reflecting increased energy
prices in the reporting period.
Trade and other receivables increased by €131.7m to €432.3m, mainly due to
higher volume of transactions and increased energy prices.
Trade and other payables increased by €127.1m to €441.7m as a result of
the factors mentioned above.
Cash performance
6M2022 (€m) 6M2021 (€m) YoY (€m) YoY
Net cash generated from operating activities 16.4 4.0 12.4 310.0%
Net cash used in investing activities (47.5) (27.1) (20.4) 75.3%
Net cash used in financing activities (11.5) (0.1) (11.4) 11400.0%
Net increase in cash and cash equivalents (42.6) (23.2) (19.4) 83.6%
Cash and cash equivalents at beginning of period 224.2 89.0 135.2 151.9%
Cash and cash equivalents at end of period (presented in statement of cash 181.5 65.8 115.7 175.8%
flows)
Bank overdrafts 0.0 (12.7) 12.7 (100.0%)
Cash and cash equivalents at end of period (presented in statement of 181.5 78.5 103.0 131.2%
financial position)
Interest-bearing loans and borrowings 152.8 162.5 (9.7) (6.0%)
Net cash/(debt) 28.7 (84.0) 112.7 (134.2%)
As at 30 June 2022, the Group's net cash position stood at €28.7m compared
to €61.7m as at 31 December 2021.
The decrease in the level of cash is due to the cash outflows used in
investing activities, including technology transformation investments, the
acquisition of WebEye, deferred consideration due on LMS, as well as
repayments of borrowing compensated by underlying cash generation, which was
in turn offset by the settlement of IPO related expenses.
Net cash flows from operating activities increased from €4.0m in 2021 to
€16.4m, primarily due to business performance supported by stable working
capital movements. Impact related to Adjusting items in the reporting period
amounted to of €7.7m (2021: €3.3m).
Interest paid increased to €2.3m reflecting higher average level of
borrowings in the first six months ending 30 June 2022 compared to the
corresponding period of 2021.
Tax paid decreased by €1.0m due to lower advance payments.
Net cash used in investing activities increased by €20.4m in the first
six-month period to €47.5m, largely due to the outflows in connection with
capital expenditure related to investment in the development of technology
(increase of €4.8m) and outflows related to investments in subsidiaries and
associates (increase of €14.5m).
Net cash from financing activities amounted to an outflow of €11.5m in the
reporting period representing the repayments of borrowings due to amortisation
of Senior Facilities Agreements and lease payments.
The cash impact of Adjusting items was €0.5m for M&A-related expenses,
€1.7m for strategic transformation expenses, €5.3m for non-recurring
IPO-related expenses and €0.1m for share-based compensation in 2022.
Capital expenditure
Capital expenditure in the first six months of 2022 amounted to €19.9m
compared to €15.3m for the previous year. This increase relates to
investments into our technology platform and existing asset base.
The Group's transformational investment programme was €13.3m (2021:
€11.6m) and continued to focus on expanding the customer and products
capabilities for the Group, including the digital customer journey, EETS Toll
and new Telematics and Pro Navi, as well as new generation ERP and the
integrated offering.
The Group's ordinary capital expenditure totalling €6.6m (2021: €3.6m)
represents reinvestment into the platform and assets base and amounted to 7.6%
of Net energy and services sales compared to 5.0% in the corresponding period
of previous year.
Alternative performance measures
The Group has identified certain Alternative Performance Measures ("APMs")
that it believes provide additional useful information to the readers of
Consolidated Financial Statements and enhance the understanding of the Group's
performance. These APMs are not defined within IFRS and are not considered
to be a substitute for, or superior to, IFRS measures. These APMs may not be
necessarily comparable to similarly titled measures used by other companies.
Directors and management use these APMs alongside IFRS measures when budgeting
and planning, and when reviewing business performance. Executive management
bonus targets include an adjusted EBITDA measure and long-term incentive plans
include an adjusted basic EPS measure.
6M2022 (€m) 6M2021 (€m) YoY (€m) YoY
Profit before tax 13.4 12.4 1.0 8.1%
Net finance expense and share of net loss of associates 3.7 4.8 (1.1) (22.9%)
Depreciation and amortisation 12.4 10.5 1.9 18.1%
EBITDA 29.5 27.7 1.8 6.5%
M&A-related expenses 0.5 0.1 0.4 400.0%
Non-recurring IPO-related expenses 0.0 2.8 (2.8) (100.0%)
Strategic transformation expenses 1.7 0.8 0.9 112.5%
Share-based compensation 3.3 1.7 1.6 94.1%
Adjusting items 5.5 5.4 0.1 1.9%
Adjusted EBITDA 35.0 33.1 1.9 5.7%
6M2022 (€m) 6M2021 (€m) YoY (€m) YoY
Profit for the year 9.2 8.8 0.4 4.5%
Amortisation of acquired intangibles 2.8 2.7 0.1 3.7%
Amortisation due to transformational useful life changes 0.7 0.9 (0.2) (22.2%)
Adjusting items affecting Adjusted EBITDA 5.5 5.4 0.1 1.9%
Tax effect (1.3) (2.6) 1.3 (50.0%)
Adjusted earnings (net profit) 16.9 15.2 1.7 11.2%
6M2022 (€m) 6M2021 (€m) YoY (€m) YoY
Adjusted net profit attributable to equity holders (€m) 16.2 14.5 1.7 11.7%
Basic weighted average number of shares 688,911,333 565,931,997 122,979,336 21,7%
Adjusted basic EPS (cents/share) 2.35 2.57 (0.22) (8.6%)
Costs arising in connection with the IPO have been separately identified in
recognition of the nature, infrequency and materiality of this capital markets
transaction. IPO expenses were incurred in 2021 and had no impact on expenses
in 2022.
M&A-related expenses are fees and other costs relating to the Group's
acquisitions activity. M&A-related expenses differ every year based on
acquisition activity of the Group. Exclusion of these costs allows for better
result comparability.
Strategic transformation expenses are costs relating to broadening the skill
bases of the Group's employees (including executive search and recruiting
costs) as well as costs related to transformation of key IT systems. As
previously announced, the strategic transformation is expected to complete in
2023.
In addition, adjustment has been made for the compensations provided to the
Group's management before the IPO. These legacy incentives comprise a
combination of cash and share-based payments and those that have not yet
vested will vest across each of the subsequent financial years ending 31
December 2024. The Group believes that it is appropriate to treat these costs
as an adjusting item as they relate to a one-off award, designed and
implemented whilst the Group was under private ownership (and are reasonably
typical of that market and appropriate in that context). The Group now
operates in a new environment and the Remuneration Committee has applied the
Remuneration Policy in a listed company context, hence, similar awards are not
expected in future. For clarity, where share-based payment charges arise as a
consequence of the operation of the Group's post-IPO Remuneration Policy,
these are not treated as adjusting items as they represent non-cash element of
annual remuneration package. This includes costs of €0.5m in the first six
months ending 30 June 2022 relating to grants in connection with the 2024 and
2025 PSP.
Amortisation of acquired intangibles represents amortisation of assets
recognised at the time of an acquisition (primarily ADS and Sygic). The item
is prone to volatility from period to period depending on the level of
M&A.
Amortisation due to transformational useful life changes represents
accelerated amortisation of assets being replaced by strategic transformation
of the Group. The Group expects this adjustment to be relevant until 2024.
Capital allocation
Our priority will continue to be organic and inorganic investment to drive
long term sustainable growth. As previously advised, the Group will incur
aggregated transformational capital expenditures of €50m during 2022 and
2023 to develop our integrated end-to-end digital platform and invest in the
quality of our integrated product and service offering. Our transformational
capex is firmly on track to complete in 2023, by which point we will have the
most modern, complete and modular tech stack and product offering in the
industry. We will continue to consider value-accretive M&A opportunities
in our current and adjacent markets and in product and technology areas that
will accelerate growth. We will only look to make acquisitions where the
acquisition is complementary to our strategy and in line with our acquisition
criteria. We will also maintain a robust balance sheet. As set out in our
financial guidance the Group does not intend to pay dividends as we continue
to prioritise investment in growth.
Treasury management
The Group maintains a disciplined approach to its financing and is committed
to maintain a net debt to adjusted EBITDA leverage ratio of 1.5-2.5 times over
the medium term. Our leverage ratio may temporarily exceed the top end of the
range depending on the quantum and timing of potential acquisitions.
The Group holds financial debt under the Senior Multicurrency Term and
Revolving Facilities Agreement ("Syndicated Facilities Agreement"), which
consists of the following tranches:
· Amortising EUR term loan facility for a maximum amount of
€47.5m
· Non-amortising EUR term loan facility for a maximum amount of
€47.5m
· Amortising EUR term loan facility for a maximum amount of
€95.0m (Acquisition/CAPEX)
· Multicurrency revolving credit facility for a maximum amount of
€120.0m, split as
o €45.0m Revolving Credit Facility
o €15.0m Multicurrency Overdraft Facility
o €60.0m Bank Guarantee Facilities
As of 30 June 2022, the Revolving Credit Facility and Multicurrency Overdraft
Facility remained undrawn.
Additionally, subject to certain conditions, the Group can request to raise
additional debt through uncommitted Incremental Facility mechanism under the
Syndicated Facilities Agreement up to an amount of €100.0m, of which up to
€50.0m can be used to finance certain acquisitions which are specifically
permitted under the Syndicated Facilities Agreement, and the remaining
€50.0m can be used to finance or refinance working capital of companies,
businesses or undertakings acquired as a result of such permitted acquisition
or utilized by way of a guarantee, documentary or stand-by letter of credit.
As of 30 June 2022, the Incremental Facility II was fully drawn to establish
limits for Bank Guarantees for a total amount of up to €50m.
The Syndicated Facilities Agreement contains financial covenants at the level
of W.A.G. payment solutions, a.s. Financial covenants are governed by
financial definitions under The Syndicated Facilities Agreement:
· Interest Cover (the ratio of Adjusted EBITDA to finance charges) is
not less than 5.00:1 for each twelve-month period ending on the last day of
each financial quarter. As of 30 June 2022, Interest Cover was at 16.26.
· Net Leverage (measured quarterly on the basis of Total Net Debt on the
measurement date and rolling twelve months Adjusted EBITDA) does not exceed
3.50:1 for each twelve-month period ending on the last day of each financial
quarter in 2022. As of 30 June 2022, Net Leverage was at negative 0.15 (The
Group had more Cash and Cash Equivalent Investments than Borrowings).
· Adjusted Net Leverage (measured quarterly on the basis of Adjusted
Total Net Debt on the measurement date and rolling twelve months Adjusted
EBITDA) does not exceed 6.50:1 for each twelve-month period ending on the last
day of each financial quarter. As of 30 June 2022, Adjusted Net Leverage was
at 1.47.
· Borrowing Base (the ratio of the sum of outstanding amount of revolving
facility less cash and cash equivalents, to trade receivables) must not exceed
1.00:1 in relation to any three-month period ending on the last day of each
financial quarter. As at 30 June 2022, Borrowing Base was at negative 0.55
(The Group had more Cash and Cash Equivalent Investments than aggregate amount
of outstanding Revolving Facility Loans).
During the first half of 2022, the Group repaid €10.0m (principal) of the
Syndicated Facilities Agreement borrowings resulting in a notional outstanding
debt of €155m as of 30 June 2022.
During year-to-date, the Group utilised €21.0m of Incremental Facility in
the way of Bank Guarantees.
The Group concentrates cash on bank accounts held with financial institutions
that participate in the Syndicated Facilities Agreement. Balances may be held
on bank accounts with other financial institutions to fund outgoing payments
especially in countries outside of the Economic and Monetary Union.
Directors' responsibility statement
We confirm that to the best of our knowledge:
The unaudited condensed consolidated financial statements have been prepared
in accordance with UK-adopted IAS 34 Interim Financial Reporting.
The interim management report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report in
Financial statements dated 24 March 2022 that could do so.
On behalf of the Board of Directors
Martin Vohánka
Chief Executive Officer
Financial statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(EUR '000)
Notes For the six months ended 30 June
2022 2021
(unaudited)
(unaudited)
Revenue from contracts with customers 7 1,160,815 784,369
Costs of energy sold (1,073,837) (711,513)
Net energy and services sales 8 86,978 72,856
Other operating income 221 341
Employee expenses 9 (32,768) (26,567)
Impairment losses of financial assets (2,719) (1,152)
Technology expenses (3,882) (2,782)
Other operating expenses (18,325) (15,009)
Operating profit before depreciation and amortisation (EBITDA) 29,505 27,687
Analysed as:
Adjusting items 8 5,498 5,367
Adjusted EBITDA 8 35,003 33,054
Depreciation and amortisation 8 (12,431) (10,457)
Operating profit 17,074 17,230
Finance income 1,275 31
Finance costs (4,553) (4,571)
Share of net loss of associates (353) (295)
Profit before tax 13,443 12,395
Income tax expense 10 (4,256) (3,588)
PROFIT FOR THE YEAR 9,187 8,807
OTHER COMPREHENSIVE INCOME
Other comprehensive income to be reclassified to profit or loss in subsequent
periods
Change in fair value of cash flow hedge recognised in equity 4,976 3,123
Exchange differences on translation of foreign operations 302 925
Deferred tax related to other comprehensive income - -
TOTAL OTHER COMPREHENSIVE INCOME 5,278 4,048
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 14,465 12,855
Total profit for the financial year attributable to equity holders of the 8,902 8,657
Company
Total profit for the financial year attributable to non-controlling interests 285 150
Total comprehensive income for the financial year attributable to equity 14,137 12,688
holders of the Company
Total comprehensive income for the financial year attributable to 328 167
non-controlling interests
Earnings per share (in cents per share): 14
Basic earnings per share 1.29 1.53
Diluted earnings per share 1.29 1.52
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(EUR '000)
Notes As at
30 June 2022 31 December 2021
(unaudited)
ASSETS
Non-current assets
Intangible assets 11 237,043 193,453
Property, plant and equipment 11 37,225 34,763
Right-of-use assets 10,827 8,112
Investments in associates 12,581 12,934
Financial assets 37 37
Deferred tax assets 9,291 7,642
Derivative assets 6 5,928 252
Other non-current assets 3,498 3,554
Total non-current assets 316,430 260,747
Current assets
Inventories 12 19,365 9,557
Trade and other receivables 13 432,268 300,601
Income tax receivables 6,095 5,095
Derivative assets 6 2,208 2,694
Cash and cash equivalents 181,546 224,164
Total current assets 641,482 542,111
TOTAL ASSETS 957,912 802,858
SHAREHOLDERS' EQUITY AND LIABILITIES
Share capital 8,107 38,113
Share premium 2,958 194,763
Merger reserve (25,963) (25,963)
Other reserves 6,700 1,465
Business combinations equity adjustment (17,220) (17,046)
Retained earnings 318,857 84,526
Equity attributable to equity holders of the Company 293,439 275,859
Non-controlling interests 9,160 8,889
Total equity 302,599 284,747
Non-current liabilities
Interest-bearing loans and borrowings 133,928 143,579
Lease liabilities 8,198 5,973
Deferred tax liabilities 7,649 5,495
Derivative liabilities 6 130 657
Other non-current liabilities 15 31,173 20,281
Total non-current liabilities 181,078 175,985
Current liabilities
Trade and other payables 15 441,660 314,522
Interest-bearing loans and borrowings 18,871 18,894
Lease liabilities 3,084 2,601
Provisions 1,627 1,545
Income tax liabilities 7,437 4,208
Derivative liabilities 6 1,556 356
Total current liabilities 474,235 342,126
TOTAL EQUITY AND LIABILITIES 957,912 802,858
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)
(EUR '000)
Notes Share capital Share premium Other reserves Merger reserve Business combinations equity adjustment Retained earnings Total equity attributable to equity holders of the parent Non-controlling interests Total equity
At 1 January 2021 4,158 2,927 (3,263) - (46,009) 72,177 29,990 34,115 64,105
Profit for the year - - - - - 8,657 8,657 150 8,807
Other comprehensive income - - 4,031 - - - 4,031 17 4,048
Total comprehensive income - - 4,031 - - 8,657 12,688 167 12,855
Share options exercised 11 200 - - - - 211 - 211
Dividends paid - - - - - - - (1,980) (1,980)
Share-based payments - - - - - 892 892 - 892
Acquisition of subsidiaries - - - - - - - 2,259 2,259
Acquisition of a non-controlling interests 27,003 (966) 26,037 (26,037) -
Put options held by non-controlling interests - - - - (4,495) - (4,495) - (4,495)
At 30 June 2021 4,169 3,127 768 - (23,501) 80,760 65,323 8,524 73,847
At 1 January 2022 38,113 194,763 1,465 (25,963) (17,046) 84,526 275,858 8,889 284,747
Profit for the year - - - - - 8,902 8,902 285 9,187
Other comprehensive income - - 5,235 - - - 5,235 43 5,278
Total comprehensive income - - 5,235 - - 8,902 14,137 328 14,465
Capital reduction (30,006) (191,805) - - - 221,811 - - -
Dividends paid - - - - - - - (57) (57)
Share-based payments - - - - - 3,618 3,618 - 3,618
Put options held by non-controlling interests - - - - (174) - (174) - (174)
At 30 June 2022 8,107 2,958 6,700 (25,963) (17,220) 318,857 293,439 9,160 302,599
CONSOLIDATED STATEMENT OF CASH FLOWS
(EUR '000)
Notes For the six months ended 30 June
2022 2021 (unaudited)
(unaudited)
Cash flows from operating activities
Profit before tax for the period 13,443 12,395
Non-cash adjustments:
Depreciation and amortisation 8 12,431 10,457
Gain on disposal of non-current assets (51) 22
Interest income (79) (21)
Interest expense 2,650 2,234
Movements in provisions 17 375
Impairment losses of financial assets 2,719 1,152
Foreign currency exchange rate differences 39 5
Fair value revaluation of derivatives 457 140
Share-based payments 3,618 892
Other non-cash items 423 413
Working capital adjustments:
(Increase)/decrease in trade and other receivables and prepayments (134,596) (65,262)
(Increase)/decrease in inventories (9,302) 1,422
Increase in trade and other payables 130,046 45,942
Interest received 79 21
Interest paid (2,261) (2,014)
Income tax paid (3,207) (4,173)
Net cash flows generated from operating activities 16,417 4,000
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 144 89
Purchase of property, plant and equipment (3,664) (2,445)
Purchase of intangible assets 5 (18,104) (13,283)
Payments for acquisition of subsidiaries, net of cash acquired (22,924) (746)
Investment in associates (3,000) (10,685)
Net cash used in investing activities (47,548) (27,071)
Cash flows from financing activities
Payment of principal elements of lease liabilities (1,415) (1,047)
Proceeds from borrowings - 39,786
Repayment of borrowings (10,012) (8,593)
Acquisition of non-controlling interests - (27,003)
Dividend payments (57) (3,480)
Proceeds from issued share capital (net of expenses) - 211
Net cash used in financing activities (11,484) (126)
Net increase in cash and cash equivalents (42,614) (23,196)
Effect of exchange rate changes on cash and cash equivalents - -
Cash and cash equivalents at beginning of period 224,154 88,961
Cash and cash equivalents at end of period 181,540 65,765
1. CORPORATE INFORMATION
W.A.G payment solutions plc (the "Company" or the "Parent") is a public
limited company incorporated and domiciled in the United Kingdom and
registered under the laws of England & Wales under company number 13544823
with its registered address at Third Floor (East), Albemarle House, 1
Albemarle Street, London W1S 4HA. The ordinary shares of the Company were
admitted to the premium listing segment of the Official List of the UK
Financial Conduct Authority and have traded on the London Stock Exchange plc's
main market for listed securities since 13 October 2021.
The Parent and its subsidiaries (together the "Group") are principally engaged
in:
· Providing payment solutions for fleets of professional transport and
forwarding companies, as well as running a network of petrol stations for
commercial road transportation;
· Providing unified way of electronic toll payments on a number of
European road networks for fleets of professional transport and forwarding
companies;
· Recovery of VAT refunds and excise duty from European countries;
· Creating an automated journey book and optimising traffic with the use
of integrated digital maps;
· Combine advanced solutions in the field of electronics, software
engineering and applied mathematics;
· Sale of navigation licenses; and
· Other services.
Prior to the Initial Public Offering ("IPO"), W.A.G. payments solutions, a.s.
was the parent company of the Group for which consolidated financial
statements were produced. On 7 October 2021, the Shareholders of W.A.G.
payments solutions, a.s. transferred all of their shares in W.A.G. payments
solutions, a.s. to W.A.G payment solutions plc in exchange for ordinary shares
of equal value in W.A.G payment solutions plc ("Group reorganisation"). This
resulted in W.A.G payment solutions plc becoming the new Parent Company of the
Group. On 8 October 2021, the IPO was completed, with 13 October 2021
representing admission to trading on the London Stock Exchange ("Admission").
These condensed interim financial statements were approved for issue on 6
September 2022 and have been neither reviewed nor audited.
These condensed interim financial statements do not comprise statutory
accounts within the meaning of Section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2021 were approved by the
Board of Directors on 24 March 2022 and delivered to the Registrar of
Companies. The report of the auditors on those accounts was unqualified, did
not contain an emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006.
2. BASIS OF PREPARATION
The condensed interim financial statements for the six-months ended 30 June
2022 have been prepared in accordance with UK-adopted IAS 34 Interim Financial
Reporting and the Disclosure and Transparency Rules of the Financial Conduct
Authority. The condensed interim financial statements should be read in
conjunction with the Annual Report and Consolidated financial statements for
the year ended 31 December 2021, which have been prepared in accordance with
UK-adopted International Accounting Standards (UK-adopted IFRS).
As there was no change in control with the Group reorganisation (see Note 1)
involving the Company becoming the new holding company of the Group in a share
for share exchange, the financial information for the six months ended 30 June
2022 (and comparative information for the six months ended 30 June 2021) is
presented as a continuation of W.A.G. payment solutions, a.s.
The condensed interim financial statements have been prepared on a historical
cost basis, except for derivative financial instruments that have been
measured at fair value. The interim condensed financial statements are
presented in EUR and all values are rounded to the nearest thousand (EUR
'000), except where otherwise indicated.
These unaudited condensed interim financial statements have been prepared on
the going concern basis. The Board of Directors have considered the financial
prospects of the Company and the Group for the foreseeable future, over the
period to 31 December 2023 and made an assessment of the Company's and the
Group's ability to continue as a going concern. The Directors' assessment
included consideration of the availability of the Company's and the Group's
credit facilities, cash flow forecasts and stress scenarios. The stress
scenarios considered the Group's principal risks including: potential downside
pressures on product demand, increasing operating costs of technology security
and resilience and physical assets security risk. The Directors continue to
carefully monitor the impact of the war in Ukraine including impact of
sanctions, impact on fuel supplies, impact of macroeconomic environment
including inflation and increasing interest rates and impact of supply chains
disruption as a result of Covid-19 pandemic.
The Board of Directors are satisfied that the Company and the Group has the
resources to continue business for the foreseeable future, in particular given
the level of cash balances available following the IPO, and furthermore are
not aware of any material uncertainties that may cast significant doubt upon
the Company's and the Group's ability to continue as a going concern and the
Board of Directors considers it is appropriate to adopt the going concern
basis of accounting in preparing the condensed interim financial
statements.
The condensed interim financial statements are prepared for the six months
beginning on 1 January and ending on 30 June 2022.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies adopted, as well as significant judgements and key
estimates applied, are consistent with those in the annual financial
statements for the year ended 31 December 2021, as described in those
financial statements, except as described below:
· Taxes on income in the interim periods are accrued using the tax rate
that would be applicable to expected total annual profit or loss.
· Significant estimates:
Business combination
Accounting for business combinations requires significant judgment and
assumptions at the acquisition date, including estimating the fair value of
acquired intangible assets, estimated income tax assets and liabilities
assumed, and determination of the fair value of contractual obligations, where
applicable. Significant estimates in valuing certain intangible assets
include, but are not limited to, future expected cash-flows from acquired
customers, acquired software and trade names from a market participant
perspective, useful lives and discount rates. The estimates are based on
historical experience and information obtained from the management of the
acquired companies and are inherently uncertain.
Details of the business combination are disclosed in Note 5.
4. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES, ADOPTION OF NEW AND REVISED STANDARDS
4.1. Application of new IFRS - standards and interpretations effective
in the reporting period
The Group has applied the following standards and amendments for the first
time for their annual reporting period commencing 1 January 2022:
· Property, Plant and Equipment: Proceeds before intended use -
Amendments to IAS 16
· Reference to the Conceptual Framework - Amendments to IFRS 3
· Onerous Contracts - Cost of Fulfilling a Contract - Amendments to
IAS 37
· Annual Improvements to IFRS Standards 2018-2020 - Amendments to IFRS
9, IFRS 16, IFRS 1, and IAS 41
These Amendments did not have a significant impact on the Group's condensed
interim financial statements.
4.2. New IFRSs and IFRICs published by the IASB that are not yet
effective
The Group is currently assessing the potential impacts of the new and revised
standards and interpretations that are expected to be effective from 1 January
2023 or later.
· Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture - amendments to IFRS 10 and IAS 28
· IFRS 17 "Insurance Contracts"
· Classification of liabilities as current or non-current - Amendments
to IAS 1
· Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of
Accounting policies
· Amendments to IAS 8 - Definition of Accounting Estimates
· Deferred tax related to assets and liabilities arising from a single
transaction - Amendments to IAS 12
These new standards and amendments are not expected to have any significant
impacts on the Group's consolidated financial statements.
5. BUSINESS COMBINATION
As of 30 June 2022, the following acquisitions took place:
Acquisition of WebEye Group
Further to the subsequent events described in 2021 Annual Report, the Group
signed a novated agreement on 16 May 2022 to acquire substantially all of the
assets of WebEye Telematics Zrt., a leading fleet management solutions
provider in Central and Eastern Europe. The Group paid EUR 23.3 million in
cash upon the acquisition of 100% of the share capital of the non-Hungarian
subsidiaries (Note 17) and a further EUR 19.9 million was paid upon completion
of the acquisition of the Hungarian subsidiaries on 1 July 2022. Acquisition
of Hungarian subsidiaries is disclosed as a subsequent event (Note 18). In
addition, the Company will pay a deferred settlement component within three
years of closing, a portion of which is contingent upon the achievement of
certain KPIs. The maximum amount, including the deferred amount of the
purchase price, is capped at EUR 60.6 million.
The transaction will expand the Group's customer base, and WebEye's customers
will gain access to Eurowag's unrivalled range of integrated end-to-end
payment and mobility solutions leading to incremental revenue
opportunities. Furthermore, data from the connected trucks will provide
insights and enable the continual development of new and improved solutions to
address customers' needs.
The provisionally determined fair values of identifiable assets and
liabilities of non-Hungarian subsidiaries of WebEye as at the date of
acquisition were:
EUR '000 Fair value recognised on acquisition non-Hungarian WebEye subsidiaries
Assets
Property, plant and equipment 1,219
Identifiable intangible assets 16,217
Right-of-use assets 483
Trade receivables 1,000
Cash and cash equivalents 395
Inventories 505
Other assets 11
Total Assets 19,830
Trade payables 361
Lease liabilities 483
Deferred tax 1,752
Total Liabilities 2,596
Total identifiable net assets at fair value 17,234
Goodwill arising on acquisition 19,678
Purchase consideration:
Cash paid 23,319
Deferred consideration (discounted) 13,593
Total purchase consideration 36,912
The gross contractual receivables acquired amounted to EUR 1,594 thousand. At
acquisition date, there were EUR 594 thousand of contractual cash flows not
expected to be collected.
From the date of acquisition until 30 June 2022, non-Hungarian subsidiaries of
WebEye contributed EUR 1,039 thousand of revenue and EUR 178 thousand loss
after tax (mainly driven by amortisation of acquired intangibles).
Consolidated revenue and consolidated profit after tax for the half year ended
30 June 2022, if the acquisition had occurred on 1 January 2022, is disclosed
in Note 18.
Discount rate of 2.00% was used to determine present value of deferred
consideration.
Pay-out of deferred consideration
On 31 January 2022, the Group paid deferred acquisition consideration of EUR
3,000 thousand related to acquisition of company Threeforce B.V. (Last Mile
Solutions).
Net outflows of cash to acquire subsidiaries were as follows:
EUR '000 30 June 2022 (unaudited) 30 June 2021 (unaudited)
Cash consideration paid 23,319 2,356
Cash acquired (395) (1,610)
Net outflow of cash - investing activities 22,924 746
Cost of acquisition of subsidiaries recognised in other operating expense:
EUR '000 For the six months ended 30 June
2022 (unaudited) 2021 (unaudited)
Acquisition costs 524 111
6. FAIR VALUE MEASUREMENT
The following table provides the fair value measurement hierarchy of the
Group's assets and liabilities.
Fair value measurement hierarchy for assets and liabilities as at 30 June 2022
(unaudited):
EUR '000 Date of valuation Fair value measurement using Total
Quoted prices in active markets (Level 1) Significant observable inputs Significant unobservable inputs
(Level 2)
(Level 3)
Assets measured at fair value
Derivative financial assets
Foreign currency forwards 30 June 2022 - 2,208 - 2,208
Interest rate swaps 30 June 2022 - 5,928 - 5,928
Liabilities measured at fair value
Derivative financial liabilities
Foreign currency forwards 30 June 2022 - 1,545 - 1,545
Put options 30 June 2022 - - 130 130
Foreign currency swaps 30 June 2022 - 11 - 11
There have been no transfers between Level 1, Level 2 and Level 3 during the
six months ended 30 June 2022.
Fair value measurement hierarchy for assets and liabilities as at 31 December
2021:
EUR '000 Date of valuation Fair value measurement using Total
Quoted prices in active markets (Level 1) Significant observable inputs Significant unobservable inputs
(Level 2)
(Level 3)
Assets measured at fair value
Derivative financial assets
Foreign currency forwards 31 December 2021 - 2,694 - 2,694
Interest rate swaps 31 December 2021 - 252 - 252
Liabilities measured at fair value
Derivative financial liabilities
Foreign currency forwards 31 December 2021 - 356 - 356
Put options 31 December 2021 - 130 130
Interest rate swaps 31 December 2021 - 527 - 527
There have been no transfers between Level 1, Level 2 and Level 3 during the
year ended 31 December 2021.
Management assessed that the fair values of cash and cash equivalents, trade
and other receivables and trade and other payables approximates their carrying
amounts largely due to the short-term maturities of these instruments.
Interest-bearing loans and borrowings are at floating rates with margin
corresponding to market margins.
The fair value of the financial assets and liabilities is included at the
amount at which the instrument could be exchanged in a current transaction
between willing parties, other than in a forced or liquidation sale.
7. SEGMENTAL ANALYSIS
Operating segments are reported in a manner consistent with the internal
reporting provided to the Chief Operating Decision Maker ("CODM"). The Group
considers the Executive Committee to be the CODM effective from July 2021. The
Board of Directors was considered as CODM prior to that date. The CODM reviews
net energy and services sales and contribution to evaluate segment performance
and allocate resources to the overall business.
For management purposes and based on internal reporting information, the Group
is organised in two operating segments; Payment solutions and Mobility
solutions. Payment solutions represent the core of the Group's revenues, which
are based on recurring and frequent transactional payments. The segment
includes Energy and Toll payments, which are a typical first choice of a new
customer. Mobility solutions represent a number of services, which are
subsequently sold to customers using Payment solutions products. The segment
includes Tax refund, Telematics, Navigation, and other service offerings.
Net energy and services sales, contribution, EBITDA, and Adjusted EBITDA are
non-GAAP measures, see Note 8.
The CODM does not review assets and liabilities at segment level.
Six months ended 30 June 2022 (unaudited) Payment solutions Mobility solutions Total
EUR '000
Segment revenue 1,137,314 23,501 1,160,815
Net energy and services sales 63,477 23,501 86,978
Contribution 54,938 16,971 71,909
Contribution margin 87% 72% 83%
Corporate overhead and indirect costs before adjusting items (36,906)
Adjusting items affecting Adjusted EBITDA (5,498)
Depreciation and amortisation (12,431)
Net finance costs and share of net loss of associates (3,631)
Profit before tax 13,443
Six months ended 30 June 2021 (unaudited) Payment solutions Mobility solutions Total
EUR '000
Segment revenue 765,649 18,720 784,369
Net energy and services sales 54,136 18,720 72,856
Contribution 47,780 13,032 60,812
Contribution margin 88% 70% 83%
Corporate overhead and indirect costs before adjusting items (27,758)
Adjusting items affecting Adjusted EBITDA (5,367)
Depreciation and amortisation (10,457)
Net finance costs and share of net loss of associates (4,835)
Profit before tax 12,395
Geographical split - segment revenue from contracts with customers
The geographical analysis is derived from the base location of responsible
sales teams, rather than reflecting the geographical location of the actual
transaction.
EUR '000 For the six months ended 30 June
2022 (unaudited) 2021 (unaudited)
Czech Republic ("CZ") 242,813 150,604
Poland ("PL") 199,284 137,490
Central Cluster (excluding CZ and PL) 133,417 89,406
Portugal ("PT") 205,110 172,081
Western Cluster (excluding PT) 38,117 18,322
Romania ("RO") 153,735 83,085
Southern Cluster (excluding RO) 183,556 129,378
Not specified 4,783 4,003
Total 1,160,815 784,369
There were no individually significant customers, which would represent 10% of
revenue or more.
Geographical split - net energy and services sales
EUR '000 For the six months ended 30 June
2022 (unaudited) 2021 (unaudited)
Czech Republic 15,861 12,642
Poland 15,323 12,956
Central Cluster (excluding CZ and PL) 12,120 9,786
Portugal 8,638 11,114
Western Cluster (excluding PT) 3,492 2,702
Romania 12,570 8,588
Southern Cluster (excluding RO) 15,559 12,133
Not specified 3,415 2,935
Total 86,978 72,856
Timing of revenue recognition was as follows:
EUR '000 For the six months ended 30 June
2022 (unaudited) 2021 (unaudited)
Payment solutions
Goods and services transferred at a point in time 1,125,804 755,207
Services transferred over time 11,510 10,442
1,137,314 765,649
Mobility solutions
Goods and services transferred at a point in time 6,357 5,489
Services transferred over time 17,144 13,231
23,501 18,720
Total segment revenue 1,160,815 784,369
8. ALTERNATIVE PERFORMANCE MEASURES
To supplement its consolidated financial statements, which are prepared and
presented in accordance with IFRS, the Group uses the following non-GAAP
financial measures that are not defined or recognised under IFRS: Net energy
and services sales, Contribution, EBITDA, Adjusted EBITDA, Adjusted earnings,
Adjusted earnings per share, Adjusted effective tax rate, Net debt/cash and
Transformational capital expenditure.
The Group uses Alternative Performance Measures ("APMs") to provide additional
information to investors and to enhance their understanding of its results.
The APMs should be viewed as complementary to, rather than a substitute for,
the figures determined according to IFRS. Moreover, these metrics may be
defined or calculated differently by other companies, and, as a result, they
may not be comparable to similar metrics calculated by the Group's peers.
Net energy and services sales
Net energy and services sales is an alternative performance measure, which is
calculated as total revenues from contracts with customers, less cost of
energy sold. The Group believes this subtotal is relevant to an understanding
of its financial performance on the basis that it adjusts for the volatility
in underlying energy prices. The Group has discretion in establishing final
energy price independent from the prices of its suppliers as explained in its
accounting policies.
This measure also supports comparability of the Group's performance with other
entities, who have concluded that they act as an agent in the sale of energy
and, therefore, report revenues net of energy purchased.
Contribution
Contribution is defined as net energy and services sales less operating costs
that can be directly attributed to or controlled by the segments. Contribution
does not include indirect costs and allocations of shared costs that are
managed at a group level and hence shown separately under indirect costs and
corporate overhead.
The CODM reviews net energy and services sales and contribution to evaluate
segment performance and allocate resources to the overall business (Note 7).
EBITDA
EBITDA is defined as operating profit before depreciation and amortisation.
The Group presents EBITDA because it is widely used by securities analysts,
investors, and other interested parties to evaluate the profitability of
companies. EBITDA eliminates potential differences in performance caused by
variations in capital structures (affecting net finance costs), tax positions
(such as the availability of net operating losses, against which to relieve
taxable profits), the cost and age of tangible assets (affecting relative
depreciation expense) and the extent to which intangible assets are
identifiable (affecting relative amortisation expense).
Adjusted EBITDA
Adjusted EBITDA is defined as EBITDA before adjusting items:
Adjusting item Definition Exclusion justification
M&A-related expenses Fees and other costs relating to the Group's acquisitions activity M&A-related expenses differ every year based on acquisition activity of
the Group. Exclusion of these costs allow better result comparability.
Non-recurring IPO-related expenses Non-recurring advisory and other expenses relating to the Admission IPO costs are related to a one-off event, which has significant impact on 2021
profitability. IPO does not have any impact on expenses in 2022.
Strategic transformation expenses Costs relating to broadening the skill bases of the Group's employees Broadening the skill base
(including in respect of executive search and recruiting costs), as well as
costs related to transformation of key IT systems IPO and IT strategic transformation requires different skill base of the
Group's employees. Expenses related to these strategic events were excluded as
otherwise they would not be incurred. The expenses are expected to end in
2022.
Transformation of key IT systems
Transformational expenditure represents investments intended to create a new
product or service, or significantly enhance an existing one, in order to
increase the Group's revenue potential. This also includes systems and
processes improvements to improve services provided to customers.
Transformational expenditures, which cannot be capitalised as they are mainly
related to research, were excluded as the Group is executing its strategic
transformation programme, which is expected to end in 2023 and due to the fact
that annual investments compared to Group's Net sales are significantly higher
than regular investments of a technology company.
Share-based compensation Equity-settled and cash-settled compensation provided to the Group's Share options and cash-settled compensation have been provided to management
management before IPO and certain employees in connection with the IPO. Total share-based payment
charge to be excluded in period 2021-2024 amounts to EUR 21.9 million, from
which EUR 1.3 million is a one-off and EUR 20.6 million is amortised over
three years. Although these costs will be amortised over the next three years
based on accounting policies, they were excluded as they relate to a one-off
event. Anticipated expense adjustment amounts to EUR 6.9 million in 2022, EUR
6.1 million in 2023 and EUR 2.6 million in 2024.
Share awards provided post-IPO were not excluded as they represent non-cash
element of annual remuneration package.
Management believes that Adjusted EBITDA is a useful measure for investors
because it is a measure closely tracked by management to evaluate the Group's
operating performance and to make financial, strategic, and operating
decisions. It may help investors to understand and evaluate, in the same
manner as management, the underlying trends in the Group's operational
performance on a comparable basis, period on period.
Adjusted EBITDA reconciliation
EUR '000 For the six months ended 30 June
2022 (unaudited) 2021 (unaudited)
Intangible assets amortisation (Note 11) 8,830 7,274
Tangible assets depreciation (Note 11) 2,176 2,022
Right of use depreciation 1,425 1,161
Depreciation and amortisation 12,431 10,457
Net finance costs and share of net loss of associates 3,631 4,835
Profit before tax 13,443 12,395
EBITDA 29,505 27,687
M&A-related expenses (Note 5) 524 111
Non-recurring IPO-related expenses - 2,827
Strategic transformation expenses 1,661 764
Share-based compensation 3,313 1,665
Adjusting items 5,498 5,367
Adjusted EBITDA 35,003 33,054
Adjusted earnings (net profit)
Adjusted earnings are defined as profit after tax before adjusting items:
Adjusting item Definition Exclusion justification
Amortisation of acquired intangibles Amortisation of assets recognised at the time of an acquisition (primarily ADS The Group acquired a number of companies in the past and plans further
and Sygic) acquisitions in the future. The item is prone to volatility from period to
period depending on the level of M&A.
Amortisation due to transformational useful life changes Accelerated amortisation of assets being replaced by strategic transformation Strategic IT transformation programme of the Group is replacing selected
of the Group softwares before their originally estimated useful life. This may also include
early fixed asset write-offs. Amortisation of such assets has been accelerated
and abnormally high difference between original and accelerated depreciation
was excluded to allow period on period result comparability.
Total expected amortisation charge to be excluded in period 2020-2022 amounts
to EUR 3.3 million, from which EUR 1.3 million is expected to be excluded in
2022. The amount represents assets replaced by strategic IT transformation at
the end of 2021, however, decisions may be taken as the Group continues with
its strategic IT transformation in 2022 and 2023, which may lead to new assets
being replaced and either accelerated or written-off. The Group expects this
adjustment to be relevant until 2024.
Adjusting items affecting Adjusted EBITDA Items recognised in the preceding table, which reconciles EBITDA to Adjusted Justifications for each item are listed in the preceding table.
EBITDA
Tax effect Decrease in tax expense as a result of above adjustments Tax effect of above adjustments is excluded to adjust the impact on after tax
profit.
The Group believes this measure is relevant to an understanding of its
financial performance absent the impact of abnormally high levels of
amortisation resulting from acquisitions and from technology transformation
programmes.
Adjusted earnings reconciliation
EUR '000 For the six months ended 30 June
2022 (unaudited) 2021 (unaudited)
Profit for the period 9,187 8,807
Amortisation of acquired intangibles 2,761 2,710
Amortisation due to transformational useful life changes 651 851
Adjusting items affecting Adjusted EBITDA 5,498 5,367
Tax effect (1,188) (2,584)
Adjusted earnings (net profit) 16,909 15,151
Adjusted earnings per share
Adjusted earnings per share is calculated by dividing the adjusted net profit
for the period attributable to equity holders by the weighted average number
of ordinary shares outstanding during the period. See Note 14 for further
information.
Adjusted effective tax rate
Adjusted effective tax rate is calculated by dividing the adjusted tax expense
by the adjusted profit before tax. The adjustments represent adjusting items
affecting adjusted earnings. See Note 10 for further information.
Net debt/cash
Net debt/cash is calculated as cash and cash equivalents less interest-bearing
loans and borrowings.
Transformational capital expenditure
Transformational capital expenditure represents investments intended to create
a new product or service, or significantly enhance an existing one, in order
to increase Group's revenue potential. This also includes systems and
processed improvements to improve services provided to customers.
9. EMPLOYEE EXPENSES
Employee expenses for the respective periods consist of the following:
EUR '000 For the six months ended 30 June
2022 (unaudited) 20
21
(u
na
ud
it
ed
)
Total personnel Key management* Total personnel Key management*
Wages and salaries 26,335 2,406 21,289 1,306
Social security and health insurance 6,797 349 5,667 242
Social cost 699 2 666 -
Share-based payments 3,807 3,421 1,665 1,665
Own work capitalised (4,870) - (2,720) -
Total employee expense 32,768 6,178 26,567 3,213
*Until 30 June 2021, included Chief Officers (Board of Directors) and
Non-Executive Directors (Supervisory Board) of W.A.G. payment solutions, a.s.
From 1 July 2021 includes the Board and Executive Committee of W.A.G payment
solutions PLC.
Expenses arising from share-based payment transactions
EUR '000 For the six months ended 30 June
2022 2021
(unaudited) (unaudited)
Equity-settled plans (pre-IPO option plans) 3,124 892
Cash-settled plans (pre-IPO) 189 773
Total pre-IPO expenses (Note 8) 3,313 1,665
Equity-settled plans (PSP) 494 -
Total 3,807 1,665
10. INCOME TAX
The taxation charge for the interim period has been calculated based on
estimated effective tax rate for the full year of 31.7% (six months ended 30
June 2021: 28.9%).
The tax rate is higher in 2022 mainly due to tax non-deductible costs of
equity-settled share-based payments of EUR 3,618 thousand (six months ended 30
June 2021: EUR 892 thousand). Related tax impact amounts to EUR 687 thousand
in the six months ended 30 June 2022, which represents 5.1 percentage points
of the effective tax rate (six months ended 30 June 2021: EUR 131 thousand,
which represented 1.0 percentage point of the effective tax rate).
Adjusted effective tax rate is as follows:
EUR '000 For the six months ended 30 June
2022 (unaudited) 2021 (unaudited)
Accounting profit before tax 13,443 12,395
Adjusting items affecting adjusted EBITDA 5,498 5,367
Amortisation of acquired intangibles 2,761 2,710
Amortisation due to transformational useful life changes 651 851
Adjusted profit before tax (A) 22,353 21,323
Accounting tax expense 4,256 3,588
Tax effect of above adjustments 1,188 2,584
Adjusted tax expense (B) 5,444 6,172
Adjusted earnings (A-B) 16,909 15,151
Adjusted effective tax rate (B/A) 24.35% 28.95%
11. INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT
EUR '000 Intangible assets Property, plant and equipment
Cost
Opening balance as at 1 January 2022 244,590 60,582
Acquisition of a subsidiary 35,918 2,917
Additions 16,193 3,708
Disposals - (530)
Translation differences 446 (208)
Closing balance at 30 June 2022 (unaudited) 297,147 66,469
Accumulated amortisation / depreciation
Opening balance as at 1 January 2022 (51,137) (25,819)
Acquisition of a subsidiary (23) (1,698)
Amortisation / depreciation (8,830) (2,176)
Disposals - 443
Translation differences (114) 6
Closing balance at 30 June 2022 (unaudited) (60,104) (29,244)
Net book value
As at 1 January 2022 193,453 34,763
As at 30 June 2022 (unaudited) 237,043 37,225
Impairment testing
The Group has tested the intangible assets with an indefinite useful life for
impairment as at 31 December 2021. As at 30 June 2022, the Group had not
identified any indicators of impairment. The key assumptions used to determine
the recoverable amount for the different CGUs are disclosed and further
explained in the annual consolidated financial statements for the year ended
on 31 December 2021.
12. INVENTORIES
EUR '000 30 June 2022 (unaudited) 31 December 2021
Raw materials 367 136
Goods (excluding on-board units) 11,210 6,470
Finished products 3 3
On-board units 7,785 2,948
Total 19,365 9,557
Goods recognised as an expense are presented in full under cost of energy
sold.
13. TRADE AND OTHER RECEIVABLES
EUR '000 30 June 2022 (unaudited) 31 December 2021
Trade receivables 302,517 201,924
Receivables from tax authorities 16,677 11,729
Advances granted 13,243 10,948
Unbilled revenue 11,375 5,533
Miscellaneous receivables 3,159 4,000
Tax refund receivables 78,952 60,945
Prepaid expenses and accrued income 3,597 3,038
Contract assets 2,748 2,484
Total 432,268 300,601
14. EARNINGS PER SHARE
All ordinary shares have the same rights. Until 8 January 2022, the Company
had 1 Class B share, which was excluded from earnings per share ("EPS")
calculation as it had no voting rights, rights to distributions or rights to
the return of capital on winding up.
Basic EPS is calculated by dividing the net profit for the period attributable
to equity holders of the Group by the weighted average number of ordinary
shares outstanding during the year.
Diluted EPS is calculated by dividing the net profit for the period
attributable to equity holders of the Group by the weighted average number of
ordinary shares outstanding during the period, plus the weighted average
number of shares that would be issued if all dilutive potential ordinary
shares were converted into ordinary shares.
Adjusted EPS is calculated by dividing the Adjusted earnings (net profit) for
the period attributable to equity holders by the weighted average number of
ordinary shares outstanding during the period.
The following reflects the income and share data used in calculating EPS:
For the six months ended 30 June
2022 (unaudited) 2021 (unaudited)
Net profit attributable to equity holders (EUR '000) 8,902 8,657
Basic weighted average number of shares 688,911,333 565,931,997
Effects of dilution from share options 517,940 3,657,993
Total number of shares used in computing dilutive earnings per share 689,429,273 569,589,990
Basic earnings per share (cents/share) 1.29 1.53
Diluted earnings per share (cents/share) 1.29 1.52
The weighted average number of shares for the six months ended 30 June 2021 of
565,931,997 has been determined based on the number of shares of W.A.G.
payment solutions, a.s. multiplied by the ratio at which these shares were
exchanged for shares in the Company on 7 October 2021.
Adjusted earnings per share measures:
For the six months ended 30 June
2022 (unaudited) 2021 (unaudited)
Net profit attributable to equity holders (EUR '000) 8,902 8,657
Adjusting items affecting Adjusted EBITDA (Note 8) 5,498 5,367
Amortisation of acquired intangibles* 2,229 2,120
Amortisation due to transformational useful life changes 651 851
Tax impact of above adjustments* (1,080) (2,464)
Adjusted net profit attributable to equity holders (EUR '000) 16,200 14,531
Basic weighted average number of shares 688,911,333 565,931,997
Adjusted basic earnings per share (cents/share) 2.35 2.57
Diluted weighted average number of shares 689,429,273 569,589,990
Adjusted dilutive earnings per share (cents/share) 2.35 2.55
*non-controlling interests' impact was excluded
Options
Options granted to employees under Share-based Option Plans are considered to
be potential ordinary shares. They have been included in the determination of
diluted earnings per share if the required performance criteria would have
been met based on the Group's performance up to the reporting date, and to the
extent to which they are dilutive. The options have not been included in the
determination of basic earnings per share.
15. TRADE AND OTHER PAYABLES, OTHER LIABILITIES
EUR '000 30 June 2022 (unaudited) 31 December 2021
Current
Trade payables 383,848 260,530
Employee related liabilities 10,214 10,656
Advances received 16,523 13,464
Miscellaneous payables 7,896 10,941
Payables to tax authorities 14,540 9,728
Contract liabilities 3,164 3,151
Refund liabilities 2,526 3,052
Deferred acquisition consideration 2,949 3,000
Total Trade and other payables 441,660 314,522
Non-current
Put option redemption liability 17,220 17,046
Contract liabilities 1,521 1,742
Employee related liabilities 1,090 747
Deferred acquisition consideration 11,318 -
Other liabilities 24 746
Total Other non-current liabilities 31,173 20,281
16. FINANCIAL RISK MANAGEMENT
The Group is exposed to a variety of financial risks including foreign
currency risk, fair value interest rate risk, credit risk and liquidity risk.
The condensed interim financial statements do not include all financial risk
management information and disclosures required in the annual financial
statements; they should be read in conjunction with the Group's annual
financial statements as at 31 December 2021. There have been no changes in
any risk management policies since the year end.
17. RELATED PARTY DISCLOSURES
Company
The Company controlling the Group is disclosed in Note 1.
Subsidiaries
As at 30 June 2022, there were the following changes in the Group's
subsidiaries:
Name Principal activities Country of incorporation Registered address Effective economic interest
2022 2021
WebEye International s.r.l. Mobility solutions Romania Oradea, str. Nufărului nr. 28E, Județul Bihor, Romania 100% -
Webeye Polska sp. z.o.o. Mobility solutions Poland 30-663 Kraków (Poland), 250 Wielicka Str., Poland 100% -
WebEye Deutschland GmbH Mobility solutions Germany Schatzbogen 33, 81829 München, Germany 100% -
WebEye Slovakia s.r.o Mobility solutions Slovakia Sliačska 1E, 831 02 Bratislava, Slovakia 100% -
Webeye International d.o.o Mobility solutions Slovenia Kidričeva ulica 13D, 1236 Trzin, Slovenia 100% -
WEBEYE Hrvatska d.o.o. Mobility solutions Croatia Zagreb (Grad Zagreb) Buzinski prilaz 10, Croatia 100% -
WEBEYE BULGARIA LTD Mobility solutions Bulgaria Sofia 1528, Iskar district, 41 "Nedelcho Bonchev" Str., floor 3, apt. 16., 100% -
Bulgaria
MYWEBEYE IBÉRIA, LDA Mobility solutions Portugal Rua Francisco Pinto Júnior n 5 2690-390 Santa Iría da Azóia, Portugal 100% -
WebEye CZ s.r.o. Mobility solutions Czech Republic Tuřanka 1222/115, Slatina, 627 00 Brno, Czech Republic 100% -
Key management personnel compensation
Key management personnel compensation is disclosed in Note 9.
Paid dividends
Paid dividends are disclosed in Consolidated Statement of Changes in
Shareholders' Equity.
Other related party transactions
There were no material changes in other related party transactions in the six
months period up to 30 June 2022 compared to corresponding period in 2021.
18. SUBSEQUENT EVENTS
Acquisition of WebEye Group - Hungarian subsidiaries
As disclosed in Note 5, on 1 July 2022 the Company acquired 100% share capital
of the Hungarian subsidiaries of Webeye, a leading fleet management solutions
provider in Central and Eastern Europe.
Financial effects of this transaction have not been recognised at 30 June
2022. The operating results, assets and liabilities of the acquired companies
will be consolidated from 1 July 2022.
The provisionally determined fair values of identifiable assets and
liabilities of Hungarian subsidiaries of WebEye as at the date of acquisition
were:
EUR '000 Fair value recognised on acquisition Hungarian WebEye subsidiaries
Assets
Property, plant and equipment 722
Identifiable intangible assets 11,274
Trade receivables 862
Cash and cash equivalents 102
Inventories 492
Total Assets 13,452
Trade payables 726
Deferred tax 955
Total Liabilities 1,681
Total identifiable net assets at fair value 11,771
Goodwill arising on acquisition 11,336
Purchase consideration:
Cash paid 19,891
Deferred consideration 3,216
Total purchase consideration 23,107
If the acquisition had occurred on 1 January 2022, consolidated revenue and
consolidated loss after tax of combined Hungarian and non-Hungarian WebEye
entities for the half year ended 30 June 2022 would have been EUR 7,372
thousand and EUR 110 thousand respectively. Excluding amortisation of acquired
intangibles the profit after tax would have been EUR 1,186 thousand.
Consolidated revenue for the six months would be evenly distributed between
the two acquisitions.
Principal risks and uncertainties
The overall responsibility for the identification and management of the
principal and emerging risks to the Group lies with the Board of Directors.
The Group has included to its assessment risks related to Russian invasion to
Ukraine, which are mostly reflected in the Group's supplies disruptions, new
sanctions and potential physical threats to Group's employees, clients, and
assets. Further the Group has amended its risk assessment by risks derived
from economic uncertainties. Besides those amendments, the principal risks
remain unchanged from those set out in the Group's most recent Annual Report
and Accounts, which are accessible at
https://investors.eurowag.com/investors/results-center
(https://investors.eurowag.com/investors/results-center) .
Risk Description Mitigation
Product demand decline risk Our operating results are dependent on the conditions in the European economy • Reducing dependency on a single economy
and its cycles. The volume of customer payment transactions and customer
demand for the products and services provided by the Group correlate with • Reducing dependency on non-EUR currency
current and prospective economic conditions across Europe. Economic downturns
are generally characterised by reduced commercial activity and trade, • Diversification of products and services offering
resulting in reduced demand and use of our products and services by customers.
• Subscription-based revenues
As a result of Covid-19 and the Russian invasion to Ukraine, the economy
especially across Central and Eastern Europe is already experiencing
indications of recession. These are expressed by persisting disruptions in
supply chains, high inflation, increasing of nominal interest rates, currency
weakening and reduced customer demand. Together with expected recession there
are high uncertainties regarding energy supplies across the region which
creates additional pressures on the supply chains in the region and underlying
demand for the Group's products and services. Eventual decline in demand would
adversely affect the Group's current and prospective business and financial
conditions. Further the Group recognises a risk of governmental interventions,
which can have an adverse impact on the Group´s contribution margin for its
products and services.
Fuel supplies risk The Group recognises a high risk of the dry outs of its bunkering sites and • Optimised and diversified fuel suppliers portfolio with long lasting
across its payments network, which is a consequence of emerging energy crisis experience of mutual cooperation
and imposed sanctions due to the Russian invasion to Ukraine. Moreover, due to
the same reasons complemented by local governmental interventions, the Group • Centralised procurement team for energy supplies and logistics
experiences higher risks in securing sufficient fuel supplies at its bunkering
sites, at favourable financial and operational terms. These risks have an • Continuous monitoring and reporting on the situation development of fuel
adverse impact on the Group's financials, operations, and business. supplies crisis
• Scenarios analysis of potential future development and preparation of
preventive and mitigation actions in case of different scenario
materialisation
• Diversification of different types of energies (eMobility, LNG)
Sanctions risk The Group must continuously monitor its compliance with various sanctions • The Group uses system for partner screening with automatically updating
regimes. Currently, one of the consequences of the Russian invasion to Ukraine sanctions database. Any new sanctions are also monitored by external law firm
are sanctions imposed by the European Union, or the United Kingdom. within legislative monitoring and by the internal team which dedicates
capacities to screen subscribed notifications from respective authorities and
The Group's policies and procedures, which are designed to ensure that it, its press releases.
employees, agents, and intermediaries comply with applicable sanctions, may
fail to effectively work all of the time. Any violation of the sanctions • The internal team analyse thoroughly any new sanctions and their impacts
regime could result in significant expenses or reputational harm, divert on the Group's business and operations. In complex matters the team cooperates
management attention, and otherwise have a negative impact on the Group. with specialised external advisers.
Given the nature of the Group's business the sanctions are also exposing us to • New sanction legislation relevant for the Group's business is regularly
the risk of adverse business and operational impacts. Currently valid - 6(th) reported and towards the Executive Committee together with scenario planning
sanctions package is introducing prohibitions related to crude oil and and impact assessment.
petroleum products, mainly in terms of their purchase, import and transfer.
Due to the 6(th) sanctions package, the Group is exposed to the risk of
product balancing disruption in the central region caused by ban on the export
of the products produced from Russian origin crude oil delivered via the
Druzba pipeline. Disrupted product balancing in Central Europe (AT, CZ, SK,
HU) could lead to a lack of products in certain markets at certain periods.
Additionally, to the already issued sanctions, the Group recognises a risk of
new sanctions significantly impacting the current and prospective business
model.
Growth strategy implementation risk Our growth strategy is to build an integrated end-to-end digital platform • Continual diversification of products and services
around the needs of our customers in the CRT industry. Its implementation
relies significantly on technology development and increased power to analyse • Geographic expansion and expansion of sales channels
and utilise data. Inability to successfully achieve the necessary technology
developments, or not completing strategic acquisition targets (as a result of • Activities to introduce financing platform
unavailability of targets or insufficient funding), would expose the Group to
an inability to achieve its growth objectives. This would result in a decline • Activities to introduce digital freight-forwarding platform
in revenue and a more difficult position to recover from.
• Establishment and regular reviews of the M&A strategy
Competitors risk The Group faces competition in each of its product lines from many companies • Reducing dependency on a single economy, single market or single revenue
offering similar capabilities and services, including international oil stream
companies, single-product providers of fuel cards, and other services. In
addition, markets where we operate are characterised as oligopolistic or • Geographical diversification and products or services offering
monopolistic and are burdened by heavy regulation and restrictions for diversification
entering or expanding. These factors could cause an adverse impact on revenues
and prospects if we cannot compete or expand our business activities • Fast inorganic growth through M&A activities
effectively.
External party dependency risk The Group's business is dependent on several key strategic relationships with • IT vendors management policy - setting the standards for vendors
third parties, the loss of which could adversely affect our results. Key selection, contracts reviews and signature and vendors monitoring
partners mainly fall into the following categories - fuel suppliers,
acceptance network, toll chargers, authorisation centres and technology • Newly established centralised vendors management role
service providers. Furthermore, the Group has also initialised an
internalisation of the authorisation centre of its fuel cards transactions • Centralised procurement team for energy supplies and logistics
that is currently being provided by an external authorisation centre - AEVI.
The project is significantly dependent on the current external provider of the • Centralised development and maintenance role for acceptance network
authorisation centre and an inability to complete the internalisation, in an
expected quality and timeframe, would expose Group to additional costs and • Contract management rules and attestation rules
potential business disruptions.
• Centralised legal counsel - aids in the contracts elaboration and reviews
• Project on the internalisation of the authorisation centre in execution
Technology security and resilience risk The Group's business relies on technology and data confidentiality, integrity, • The Group prevents itself against cyber-attacks by continuous
and availability. As with other businesses, we are subject to the risk of implementation and improvement of the cyber security standards, in line with
external security and privacy breaches, such as cyber-attacks. the ISO27001.
In the last half year, these attacks have increased in their number and • The Group has established a central project on continuous information
sophistication, as a result of war in Ukraine. security improvement that comprises key security functions from Technology and
Risk departments.
If we cannot adequately protect our information systems, including the data we
collect on customers, it could result in a liability and damage to our • The Group, as part of crisis management task force, which has been
reputation. Also, if the technology we use to operate the business and activated as a response to Russian invasion of Ukraine, additionally funded
interact with customers fails, does not operate to expectations or is not and assigned highest priority to immediate improvement of cyber security tools
available, then this could affect our business and results adversely. to achieve better prevention against increasing number of cyber-attacks. The
situation is constantly monitored and reported upon to the executive
management.
Personnel dependency risk The Group's success depends, in part, on its Executive officers and other key • Establishing and maintenance of the list of key talents to prevent from
personnel, and our ability to secure the capabilities to achieve our strategic losing of the key personnel
objectives. Lack of capability and the loss of key personnel could adversely
affect our business. Nowadays, the economic environment and competition result • Annual salary reviews, which will reflect affordability and inflation
in increasing of the risk of retaining key personnel. Moreover, the Group
recognises a risk of worsened knowledge resilience, conflicts of interests and • Long-term retention plans for key talents, retention bonuses
internal fraud caused by key personnel being embedded to one region and a
function for a long time period. • Strengthening of HR teams - enhanced HR processes and expenditure of the
Recruitment team
In addition, we depend on our founder and CEO. Inability to secure a ready
successor could reduce our ability to achieve our strategic goals and an • Elaboration of the succession plans, providing of adequate trainings for
adverse reaction from stakeholders. determined successors
• Key personnel rotation for selected functions
• Internal controls system to prevent knowledge resilience, conflicts of
interests and internal frauds risks
• Forward-looking plan for interim CEOs, in case of CEO unavailability
Climate change risk Climate change and the energy transition represent both a risk and opportunity • Investing in a portfolio of alternative fuels and technologies, including
for the Group. Our reputation, operating and compliance costs, and eMobility, to support the transition to a low-carbon future in the CRT sector
diversification of revenue, may be influenced by our pace of action, the pace
of the energy transition in the CRT sector and by our customers in the short, • Investing in eMobility solutions, including in Last Mile Solutions, to
medium and long term. We currently derive a significant portion of our provide industry-leading eMobility services to customers throughout Europe
revenues from fees for fossil fuels transactions. We note that changes in
road-transport policy and regulations, the cost of carbon, carbon taxation, • Investing in digitalisation and technologies to help our customers improve
changes in market demand for alternative fuel and clean mobility solutions, efficiency in CRT and reduce energy intensity
and pace of adoption of low-carbon powertrains by our customers, can all
influence the level of risk and opportunity for the business. We also • ESG strategy in place, including carbon reduction targets for our
recognise that extreme weather events could pose a risk to business continuity operations as well as develop targets for, and means of, reducing Scope 3
for our physical assets, as well as the health, safety and wellbeing of our emissions across our value chain
workforce and customers. In addition, we recognise we are responsible for
reducing our own carbon footprint, as well as for contributing to solutions to • Reviewing business-continuity plans to take into account the potential
help customers make the transition to a low-carbon future. impacts of extreme weather events caused by climate change, and the impact on
people and physical assets
• Increased transparency of carbon emissions and related efforts to reduce
them
• Formal, structured scenario analysis to assess the physical and transition
risks for the business and its assets, and to inform ongoing risk-assessment
and mitigation measures, as well as to report in line with TCFD
Physical security risk The Group operates a number of truck parks and these are exposed to security • Implementation of the Health and safety plans on the Group's truck parks
threats. A security threat materialising as a result of insufficient to avoid security threats materialisation
protection would result in danger to the health of our employees and
customers, and significant business disruptions. • Having in place emergency plans and staff trained on the acting in the
emergency situations
The risk increased further in the last half year by the Russian invasion of
Ukraine and potential escalation of the conflict to the other countries, • Petrol stations security rules and system for prevention against physical
including those where the Group has its employees and assets. In addition, security threats and their regular control and revision
there is an increasing risk of security threats as a result of the war
impacts. These are not limited to energy crisis and dry outs at Group' • Business continuity plans in place and their regular testing and revision
bunkering sites.
Regulatory and licensing risk The Group relies on numerous licences for the provision of its on-road • Legal and compliance business partners dedicated for all business units,
mobility products, these include wholesale and retail permits required for the with regulation watch implied
provision of fuel products, as well as fuel station operating licences for its
truck parks, EETS licence and EETS certifications in a number of countries, • Continuously implementing risk management control framework specifically
Electronic money institution licence required for the provision of financial in terms of regulatory and licensing risk.
services and an insurance distribution licences. As a consequence of holding
the licences and certifications, the Group is subject to strict regulatory • Involving legal and compliance counsels in new-markets entry process
requirements (Governance, Products, IT security and Operational) of regulatory
bodies in respective jurisdictions. Non-compliance with these can result in • Implementing Group-wide AML policy, partner screening directive and
fines, suspension of business or loss of licences. Key regulatory requirements detailed AML directive
are operationalised by governance and compliance with UK plc listing rules,
anti-money laundering ("AML") and sanction laws, personal data-protection • Regular AML re-screening of customers who use regulated financial services
laws, Czech national bank regulation, fuel-reselling legislation and EETS
regulation. In addition, changes in laws, regulations and enforcement • Implementing Group-wide personal-data protection policy and detailed GDPR
activities may adversely affect our products, services and markets. directive
Clients default risk The Group is subject to the credit risk of its customers, many of whom are • Credit assessment at onboarding (scoring) - in determining the credit risk
small and mid-sized CRT businesses. We are exposed to credit risk for of its customers, the Group performs a credit assessment, which consists of a
particular customers in our payment solutions segment who we finance through financial analysis of recent results and development as well as a business
post-payment of their energy consumption and toll balances and also for analysis and verification using available databases.
customers with invoices on 30-day payment terms. If we fail to assess and
monitor adequately the credit risks posed by counterparties, we could • The Group's credit risk department conducts ongoing credit exposure
experience an increase in credit losses and other adverse effects. monitoring, revising credit limits at regular intervals and upon utilisation
of available limits, and updating collateral from customers as needed.
• The ageing of receivables is regularly monitored by the Group management
to assess credit risk, based on expected loss calculations, which evaluate
probability of default, exposure at default and loss given default.
• The Group has credit insurance subject to first loss policies on both
individual and aggregate bases to ensure against the risk of default from
customers on its trade and other receivables.
• Collateral (guarantees, pledge of receivables, pledge of physical assets)
- The Group accepts cash deposits and advance payments from customers to
secure credit exposure. The Group also accepts other types of security (such
as pledges of assets or promissory notes) to mitigate credit risk.
Explanation of Alternative Performance Measures
Category Name Definition
Financial Adjusted EBITDA Adjusted EBITDA represents profit before tax, finance income and costs,
depreciation, amortisation, M&A-related expenses, non-recurring
IPO-related expenses, strategic transformation expenses and pre-IPO
share-based compensation.
Financial Adjusted EBITDA margin Adjusted EBITDA margin represents Adjusted EBITDA for the period divided by
Net energy and services sales
Financial Adjusted earnings Adjusted earnings represents profit for the year, before adjusting items
affecting adjusted EBITDA, amortisation of acquired intangibles and
amortisation due to transformational useful life changes and related tax
effects
Financial Adjusted basic earnings per share Adjusted basic EPS is calculated by dividing the adjusted earnings by the
weighted average number of ordinary shares during the period.
Financial CGU CGU (Cash generating unit) is the smallest identifiable group of assets that
generates cash inflows that are largely independent of the cash inflows from
other assets or group of assets.
Financial Contribution Contribution represents Net energy and services sales less operating costs
that can be directly attributed to or controlled by the segments. Contribution
does not include indirect costs and allocation of shared costs that are
managed at group level and hence shown separately under Indirect costs and
Corporate overhead. Contribution is before Adjusting items.
Financial Contribution margin Contribution margin represents, for each of the Group's two operating
segments, that segment's contribution as a proportion of that segment's Net
energy and services sales.
Financial EBITDA EBITDA is calculated as profit before tax, finance income and costs,
depreciation and amortisation.
Financial Net cash / Net debt Net debt / Net cash is calculated as Cash and cash equivalents less
Interest-bearing loans and borrowings.
Financial Net energy and services sales Net energy and services sales represents revenues from contracts with
customers, less cost of energy resold to customers. The Group believes this
subtotal is relevant to an understanding of its financial performance on the
basis that it adjusts for the volatility in underlying energy prices. The
Group has some discretion in establishing final energy price independent from
the prices of its suppliers.
Financial Organic Net energy and services sales growth Growth in Net energy and services sales excluding the net sales of the Group's
acquisitions in the current period. In 2022, organic growth includes an
adjustment related to WebEye acquisition to enhance year-on-year
comparability.
Financial Transformational capital expenditure Transformational capital expenditure represents investments intended to create
a new product or service, or significantly enhance an existing one, in order
to increase the Group's revenue potential. This also includes systems and
processes improvements to improve services provided to customers.
Operational Average active payment solutions customers Average active payment solutions customers represents the number of customers
who have used the Group's payment solutions services in a given period,
calculated as the average of the number of active customers for each month in
the period. A customer is considered an active customer if it uses the Group's
payment solutions products at least once in a given month.
Operational Average active payment solutions trucks Average active payment solutions trucks represents the number of customer
vehicles that have used the Group's payment solutions services in a given
period, calculated as the average of the number of active customer vehicles
for each month in the period. A customer vehicle is considered an active truck
if it uses the Group's payment solutions products at least once in a given
month.
Operational Payment solutions transactions Payment solutions transactions represents the number of payment solutions
transactions (fuel and toll transactions) processed by the Group for customers
in that period. A fuel transaction is defined as one completed (i.e. not
cancelled or otherwise terminated) fuelling transaction. AdBlue transactions
are not counted as stand-alone fuel transactions. A toll transaction is
defined as one truck passing through a given toll gateway per day and per
merchant country (meaning multiple passages by the same truck through any toll
gateway in one merchant country in a given day is still counted as one
transaction).
Operational Mobility solutions segment Mobility solutions segment represents number of services, which are
subsequently sold to customers using Payment solutions products. The segment
includes Tax refund, Telematics, Navigation and other service offerings.
Operational Payment solutions segment Payment solutions segment represents core of Group's revenues, which are based
on re-occurring and frequent transactional payments. The segment includes
Energy and Toll payments, which are typical first choice of a new customer.
Operational Net revenue retention Average net revenue retention represents, for Eurowag only (i.e., excluding
ADS and Sygic), the average retained proportion of the Group's net revenues
derived from its payment solutions and tax refund customers during the
entirety of the previous years.
Notes:
1) Please refer to section Explanation of Alternative Performance Measures
for a definition.
2) Calculated as impairment losses of financial assets to total revenue
increased by toll payment solutions turnover
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