REG - Eurowag - Preliminary results for the year ended 31 Dec 2022
16/03/2023 07:00
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RNS Number : 1476T Eurowag 16 March 2023
16 March 2023
W.A.G payment solutions plc ("Eurowag" or the "Group")
Preliminary results for the year ended 31 December 2022
CONTINUED STRONG AND RESILIENT GROWTH
W.A.G payment solutions plc ("Eurowag" or the "Group"), a leading pan-European
integrated payments and mobility platform focused on the Commercial Road
Transport ("CRT") industry, today announces its preliminary results for the
year ended 31 December 2022.
Martin Vohánka, Founder and CEO, commented:
"I am very pleased with our strong performance this year despite the
macro-economic challenges we faced across Europe. This is testament to the
hard work and commitment of our team, and once again demonstrates not just the
resilience of Eurowag, but the vital role our services play in keeping the
Commercial Road Transport industry in Europe moving.
Our strategy over the last few years has been focused on accumulating and
building our product and technology capabilities, as well as expanding our
customer footprint across Europe, as we work towards achieving our goal of
delivering the CRT industry's first truly integrated, end-to-end digital
platform. We made significant progress towards achieving this ambition last
year. Key strategic highlights include the acquisition of Webeye, entering
into a new strategic partnership with JITpay and the acquisition of Inelo,
which is now complete. We continue to make good progress on our
transformational technology programme, which revolutionises the customer
experience by piecing together our product capabilities into one seamless
platform.
There is still much work to do as we approach a new phase of Eurowag's
journey. However, we have entered into 2023 with strong momentum and I am more
confident than ever that our integrated, end-to-end digital platform will
unlock further value for both our customers and shareholders."
The Group achieved strong full-year results with growth in line with
medium-term financial guidance.
· Net energy and services sales(1) up 24.6% year-on-year to
€190.9m, with organic growth(2) of 19.4% year-on-year;
· Payment solutions(1) grew by 19.2% year-on-year to €134.8m with
organic growth of 18.3% year-on-year;
· Mobility solutions(1) grew 39.8% year-on-year to €56.0m, with
organic growth of 22.3% year-on-year;
· Adjusted EBITDA(1) up 17.0% year-on-year to €81.6m resulting in
adjusted EBITDA margin(1) of 42.8% including incremental PLC costs and Webeye
consolidation(3);
· Adjusted EBITDA margin excluding incremental PLC costs and Webeye
consolidation is 45.6%;
· On a statutory basis, profit before tax was €28.0m, a 58.3%
increase year-on-year;
· Transformational capital expenditure(1) programme on track,
€25.5m spent in 2022;
· Net cash(1) position of €2.8m (gross cash of €146.0m) as at
31 December 2022, providing leverage headroom ahead of completing Grupa Inelo
S.A. ("Inelo") acquisition in Q1 2023.
Key statutory financials FY 2022 FY 2021 YoY
Revenue from contracts with customers (€m) 2,368.3 1,646.1 43.9%
Profit before tax (€m) 28.0 17.7 58.3%
Basic EPS (cents/share) 2.41 1.54 57.2%
Alternative performance measures (1) FY 2022 FY 2021 YoY
Net energy and services sales (€m) 190.9 153.1 24.6%
Adjusted EBITDA (€m) 81.6 69.7 17.0%
Adjusted EBITDA margin (%) 42.8 45.5 (2.7 pp)
Adjusted basic EPS(4) (cents/share) 5.75 5.77 (0.3%)
Operational and strategic highlights
· Positive performance against non-financial KPIs, demonstrating
customer loyalty and the mission critical nature of Eurowag's products:
· Average active payment solutions customers(5) up 12.9%
year-on-year to 16,950;
· Average active payment solutions trucks(6) up 6.7% year-on-year
to 88,189;
· Payment solutions transactions(7) up 8.4% year-on-year to 35.2m;
· Average net revenue retention(8) for the last five years was over
110%.
· Continued successful execution of M&A strategy, with key
capabilities and services added to Eurowag:
· Completed the acquisition of substantially all of the assets of
Webeye Telematics Zrt. ("Webeye");
· Launched a strategic partnership with JITpay Group;
· Entered into agreement with Sygic to take full control of its
resources, and
· Completed the acquisition of Inelo.
Outlook
Eurowag enters 2023 in a strong position. We have a loyal and growing customer
base and truly mission critical products and services. As we expand both our
geographic footprint and the range of services we offer, we have a great
opportunity to drive growth by acquiring new customers and selling additional
products to existing customers.
This coming year, our focus will be on integrating the businesses we acquired
in 2022, so we can unlock the expected synergies and capitalise on our
cross-sell opportunities. We expect to finalise our transformational capex
programme at the end of the year, having invested in the last few years
towards developing the industry's first digitally integrated end-to-end
platform. With the recent acquisition of Inelo, our leverage ratio is expected
to exceed the top end of our medium-term guidance range of 1.5x to 2.5x net
debt to adjusted EBITDA, therefore, our priority in the near-term is to return
to within the target range as we remain disciplined and want to maintain a
robust balance sheet.
As we enter our integration phase and continue to focus on the delivery of our
platform, we can unlock the scale of opportunity whilst driving value for
Eurowag's customers and shareholders. As a result, we continue to be confident
that we will deliver strong growth in line with our expectations, and our
medium-term financial guidance remains unchanged.
Medium-term guidance reiterated
· Organic net revenue growth between high teens and low twenties.
· Adjusted EBITDA margin expansion from mid-forties to
high-forties. The acquisition of Inelo changes the revenue mix of the Group,
with an increase of revenue contribution to the mobility segment. Inelo's
revenues are majority subscription based and naturally more recurring, however
it generates lower operational gearing. Consequently, the change in revenue
mix may impact the pace of margin expansion to high-forties over the
medium-term.
· Ordinary capex at around high single digit percent of net
revenue.
· Transformational capex programme of €50m cumulative for 2022
and 2023.
· Leverage target of 1.5x to 2.5x net debt to adjusted EBITDA. Our
leverage ratio is expected to exceed the top end of the range by around half a
turn of adjusted EBITDA on completion of Inelo and we anticipate returning to
within the target range in the near-term.
Notes:
1. Please refer to section Explanation of Alternative Performance
Measures for a definition and see note 5.
2. 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.
3. Webeye consolidation includes integration expenses related to
acquisitions.
4. Remained flat due to higher number of weighted average number of
shares in 2022 at 688.9m (2021: 595.6m).
5. 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.
6. 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.
7. Number of payment solutions transactions represents the number of
payment solutions transactions (fuel and toll transactions) processed by the
Group for customers in that period.
8. Average net revenue retention represents, for Eurowag only (i.e.,
excluding ADS, Sygic and Webeye), 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.
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, 16 March
2023, at 9.00am GMT. 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/de660150-4425-4888-9948-1e677a52c810
(https://www.lsegissuerservices.com/spark/WAGPAYMENTSOLUTIONS/events/de660150-4425-4888-9948-1e677a52c810)
Should you want to ask questions at the end of the presentation, please use
the following link:
https://cossprereg.btci.com/prereg/key.process?key=PHQXJ3C8P
ENQUIRIES
Eurowag
Carla Bloom
Head of Investor Relations and Communications
+44 (0) 789 109 4542
investors@eurowag.com (mailto:investors@eurowag.com)
Instinctif Partners
Tim McCall, Galyna Kulachek, Bryn Woodward
IR and international media
+44 (0)20 7457 2020
eurowag@instinctif.com (mailto:eurowag@instinctif.com)
About Eurowag
Eurowag was founded in 1995 and is a leading pan-European integrated payments
and mobility platform focused on the 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 ecosystem and high-quality customer
service. https://investors.eurowag.com (https://investors.eurowag.com)
Chief Executive Officer's Review
Last year we set out our ambition to make the CRT industry clean, fair, and
efficient. We can achieve this by evolving and adding to the services that we
offer to our customers, through innovation and M&A, as well as developing
our digital capabilities. This will not only transform our business, but also
the industry as a whole, which is lacking in digital solutions. Our
overarching strategic goal is to deliver the CRT industry's first truly
integrated, digital end-to-end platform.
Our five strategic pillars underpin our day-to-day operations, driving organic
and inorganic growth, and represent the foundations for how we will achieve
our long-term objectives. Key achievements delivered against each pillar in
the year include:
1. Growing our existing customer base. 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. Progress in 2022 includes:
· Successful certification of our EETS platform received in Germany
and more recently in the Czech Republic, as well as relevant bridges in
Denmark and Sweden; now compatible with Poland's tolling system.
· Extended our card acceptance network for both traditional and
alternative fuels by an additional 1,005 locations across 15 European
countries.
· Added new acceptance points to our LNG and HVO100 network, which
now represents more than 50% of the European market.
· Driven by customer demand, we introduced more flexible financing
options for VAT refund customers, such as hybrid financing or financing on
demand, offering customers a prefinancing option.
· Maintained strong average net revenue retention above 110% over
the last five years.
2. Geographic expansion and market penetration. We apply our scalable
business model to new markets serving both existing and new customers, thus
expanding market share. Progress in 2022 includes:
· Increased the number of active payment solutions customers by
12.9% with the majority of the growth coming from already established markets
in the Southern and Central regions.
· Expanded into the DACH region (Germany, Austria, Switzerland),
establishing a new experienced sales team in Germany.
3. Go-to-market channel expansion. We acquire new customers through our
marketing strategy based on geographic clusters and three sales channels
(direct, indirect, and digital). Progress in 2022 includes:
· Launched an end-to-end, fully automated digital customer
acquisition, credit scoring and onboarding channel in 5 countries.
· Migrated our ADS customers onto our Eurowag card network,
including the onboarding and contractual processes.
· Built an extensive base of digital leads and achieved strong
conversion rates during our marketing campaigns.
· Through our indirect channel, we signed two leading European OEM
contracts, placing Eurowag's application in every new dashboard from 2027.
Sygic also signed an agreement with Škoda Auto Volkswagen India Private Ltd.
to integrate its GPS Navigation in their India 2.0 cars and future models
until 2029.
4. Digital platform development. We are developing our end-to-end platform
as a conduit for intermediate payments and data exchange between parties,
connecting digital services, and physical assets, to create a fully connected
marketplace. Progress in 2022 includes:
· Added Eurowag Pay feature to our mobile app, allowing our
customers to unlock fuel pumps remotely.
· Activated mobile payments on bunkering locations and in the
acceptance network across 10 countries, resulting in 424 POS ready for mobile
payment as at the year end.
· Implemented phase one of our SAP Enterprise Resource Planning
("ERP") software focused on processes relating to energy payment transactions.
· Our Sygic application Road Lords reached around 632,000 drivers
as at 31 December 2022, with average monthly downloads of c.106,000.
5. Accretive M&A. We have a strong track record of identifying and
executing strategic M&A. We continue 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.
Progress in 2022 includes:
· Completed the acquisition of Webeye in July 2022, a leading fleet
management solutions provider in Central and Eastern Europe, broadening the
Group's customer base.
· Launched a strategic partnership with JITpay Group in September
2022, a leading provider of digitalised billing, receivables management and
financing solutions, including invoice discounting.
· Entered into an agreement with Sygic in December 2022 to take
full control of its resources, with the consideration for the remaining 30%
equity interest to be payable and transferred in April 2024, in line with the
original option agreement.
· Completed the acquisition of Inelo in March 2023, a leading fleet
management solutions and work time management software provider.
Updated strategic framework
It is clear that following the significant progress Eurowag has made in both
expanding its geographic footprint and its range of services in recent years,
it is now entering a new phase in its journey. As a result, we are updating
our strategic framework to enable enhanced focus on key strategic priorities
in order to achieve our goal of delivering an integrated, end-to-end digital
platform.
Our key goals for 2023 and the medium-term are driving growth through
cross-selling to existing customers and growing our customer base in existing
and new European territories, integrating the businesses and capabilities
acquired over the last few years and building on our end-to-end digital
platform.
Taking these into consideration and to reflect the progress the business has
made to date, we have evolved our strategic framework to focus on the
following strategic priorities:
1) Be in every truck (attract)
2) Drive customer centricity (engage)
3) Grow core services (monetise)
4) Expand platform capability (retain)
With the appointment of a new CFO, Eurowag has decided to move its Capital
Markets Day to after its half year results, giving them more time to become
fully embedded into the business. Therefore, the new strategic priorities will
be discussed in more detail during the CMD later in the year.
Operational review
Payment solutions
Payment solutions currently represent the largest part of our ecosystem and
include secure means of making energy payments through pre- or post-paid fuel
cards and toll payments. This is often the first introduction customers have
to our services. In 2022, the payment solutions segment grew by 19.2%
year-on-year to €134.8m (2021: €113.1m), representing 70.7% of total net
energy and services sales.
Energy payments
During the year, we activated mobile payments at bunkering locations and on
our acceptance network in 10 countries and will continue to roll out mobile
activation into 2023 across our business. In addition, we extended our card
acceptance network for both traditional and alternative fuels by an additional
1,005 locations across 15 European countries.
As the world moves towards more sustainable alternative fuels, we are focused
on supporting the transition to a low-carbon future. In 2022, we opened our
first Eurowag owned LNG bunkering stations in the Czech Republic, added new
POS to our LNG acceptance network, including entering a new country, Hungary,
and added POS where our customers can refuel with hydrotreated vegetable oil
(HVO100). HVO100 can reduce CO2 emissions by up to 90%, compared with diesel
fuel. At the end of the year, we had 302 active LNG and CNG stations, which
represents more than 50% of the European market. With a focus on reducing
emissions from bunkering locations, we are also installing photovoltaic panels
in our truck parks.
At the outbreak of the Russian war in Ukraine, we reacted quickly and shut
down the entire acceptance network in Russia immediately. Before Europe-wide
sanctions were introduced, we ended co-operation with a Russian-related
wholesale suppliers and POS partners. This resulted in the closure of around
1,000 card acceptance points. Where possible, we added new, alternative
acceptance network partners and advised our customers to refuel prior to
entering areas with closed acceptance networks.
Toll payments
Our toll payment services, like our energy payment services, allow customers
to pre-pay or post-pay for their toll payments on European tolled road
networks. During 2022, we received certification in Germany for our EETS
platform; this is the single biggest toll volume domain in Europe, located at
the intersection of major European international transport routes and this
consequently represents an important milestone for Eurowag. We have also been
certified on relevant bridges in Denmark and Sweden and are now compatible
with the tolling system in Poland. More recently we were awarded certification
from the Czech authority.
The nature of tolling requires not only continuous tracking of geolocation
data, but also collection and storage of relevant vehicle attributes. Via our
tolling solution, we not only feed the data platform with real-time location
of vehicles, but also allow the matching of vehicle "master data" attributes,
such as engine type, number of axles, weight class, and others. Therefore, our
EETS solution not only supports the growth of our core business and is an
enabler for the development and growth of Eurowag's broader business.
Mobility solutions
The mobility solutions segment offers our customers tax refund services, fleet
management services, location-based products and services, and other adjacent
services. In 2022, the segment grew by 39.8% year-on-year to €56.0m (2021:
€40.0m), representing 29.3% of total net energy and services sales. Mobility
solutions revenue is largely subscription based, and consequently, in the
long-term, represents a more resilient and predictable revenue stream.
Following completion of the proposed acquisition of Inelo, mobility solutions
is estimated to represent around 45% of Eurowag's total net revenue.
Tax refund services
During the year, we introduced more flexible financing options for our
customers, such as hybrid financing, financing on demand or advanced payment.
Advanced payment speeds up not only the excise duty refund process but also
the VAT refund process, allowing customers to receive their funds as soon as
they submit their claims. Additionally, we increased the range of services in
Croatia, Bulgaria, and Romania, and continue to review our markets to see
where we can add further tax support solutions for our customers. A redesign
of the current IT solution for tax refund has enabled the scalability of the
business model and increased the speed and quality of the tax refund
submissions. The use of AI has enabled us to streamline our processes further,
enabling operational efficiencies.
As a tax refund provider, we get full insight into customers' journeys. This
allows us to identify the times and locations where customers deviate from our
solutions and opt for others, contributing important data analytics to our
central data lake, which we can use to help us understand our customers
better, cross-sell more effectively and drive the development of our
integrated platform.
Fleet management services
Fleet management services allow dispatchers and truckers to better understand
their trucks. It can check maintenance, tracks fuel consumption, driving time,
load, and other metrics.
During the year, we added a Maintenance module, which allows our users to have
all their maintenance tasks in one place. Dispatchers can record vehicle
servicing, regular inspections, and expenses for their operations. The system
is configured to notify users in advance if any maintenance is required on the
truck. Dispatchers can now also download tachograph data remotely at any time.
We have also started to implement new features that enable our telematics
services to be used in hydrogen-powered vehicles.
In 2022, we acquired Webeye, a leader in CRT fleet management solutions.
Webeye supports the carriers' road activities on several levels: route
planning and fleet tracking support for operators and analysis of driving
habits, style, and performance, either aggregated or on a driver-by-driver
level. By combining Eurowag's payment and mobility services with Webeye's
solutions, we can provide further optimisation to fleet operators and wider
control over fleets, which increases efficiency and profitability. Data from
connected trucks offers insights and enables the continuous development of new
and improved solutions.
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. Sygic uses a Connected
Operations Cloud to optimise fleet operations and enhance the driver
experience. Sygic continues to invest in improving its app to enhance customer
experience. During the year, app functionality has had updates such as quick
and easy sign-in, provided more technical details and availability of the
charging points, smart routing, and better-arranged payment process. Sygic's
Road Lords application, which links drivers with each other to share unique
trucking information when on the road, has been installed on more than 3
million mobile devices across Europe, whilst the active installation base
reached 632,000 drivers at the year end. Road Lords is downloaded on average
106,000 times a month, and currently gets 4.6 stars out of 5 from customer
reviews. Sygic is now listed on the Samsara App Marketplace. The Samsara app
has 2 million IoT connected devices, which can easily connect their solution
to Sygic Professional Navigation and guide their drivers as scheduled by fleet
managers.
Putting our customers first
Our business has grown and developed because we have listened to and
understood our customers' needs and pain points as the commercial transport
industry becomes more complex and regulatory requirements increase. As we
evolve and expand our services, we need to ensure our Net Promoter Score (NPS)
and customer churn are moving in the right direction. During the year we
embarked on two customer experience projects: one was to understand why our
customers in Poland were struggling to implement our e-Toll solutions and
another was to survey customers on our new digital platform. We mapped our
customers' journeys in Poland and were able to understand the challenges our
customers were facing with the installation of our toll products. We were then
able to solve the issues in Poland, which in turn stabilised churn and
improved our NPS by 50 points. The survey on our digital platform confirmed
that our new product development reflected the needs of our customers, no
matter their size or complexity of their journey. As a result, we were able to
improve Eurowag's brand NPS in the year by 8.2 points to +40.7 points,
showcasing our strong brand advocacy and brand loyalty across our markets.
Building our people capabilities
None of our achievements in the year would have been possible without our
people. We continued to invest in our people leaders in 2022, building on a
strong foundation of skills and capabilities.
As our operating model moves towards being a digitally enabled platform,
expanding on our core competencies is essential to scaling our business and
succeeding in developing our digital capabilities. With this in mind, we
strengthened our Senior Leadership Team, including our Executive Committee,
through changes to organization structures, personnel, and changes of roles.
Within the year we added new roles such as a Chief Product Officer and Chief
Information Officer. Changes like this naturally lead to attrition, and we had
senior leavers in the year, including the Chief Commercial Officer, Chief HR
Officer and Chief Technology Officer. The roles were filled promptly by
individuals that have had previous experience with the business and have
significant experience in their field.
To help us maintain our recent strong performance and drive sustained growth,
we grew our employee base by 20% last year through both talent acquisition and
acquisition of businesses, such as Webeye.
In a services-based business, we recognise that engaging our colleagues and
ensuring they remain motivated, driven, and rewarded is crucial. In 2022, we
re-ran our pulse survey with 82% of our employees participated in the survey
and our engagement score was 66% (2021: 75%). In the future we plan to
introduce more frequent short 'mood' check surveys to promptly address any
feedback.
Following the end of the reporting period, we appointed a new Chief Financial
Officer who will take over from Magdalena Bartoś, with effect from 17 April
2023. The new CFO will also be appointed as an Executive Director of the Board
on 12 May 2023. I would like to thank Magdalena for her contribution to
Eurowag over the past three years. She has played an important role and her
knowledge and expertise has been invaluable. Her many achievements include
leading us through the IPO and recent refinancing, and further building
Eurowag's strong track record of delivering strategically important
partnerships and acquisitions. I wish her all the best in her future
endeavours.
Sustainability
Our sustainability plan underpins our strategy and is focused on four areas,
climate action, customer success and well-being, company governance and
culture and community impact. Eurowag's purpose is to make the CRT industry
clean, fair, and efficient. We have committed to being a Net Zero company by
2050 and have established a decarbonisation roadmap to help us achieve our
objective. We have accelerated our ambition to reduce greenhouse gas emissions
(GHG) from our own operations and become a zero emissions operation by 2040.
We have also set targets to help our customers reduce GHG and accelerate the
energy transition to low-carbon commercial transport. Our target is to reach
80,000 active alternative fuel trucks using our products by 2030 and achieve
20% carbon intensity reduction per tkm by 2030.
In order to meet these targets, in 2022, we introduced HVO100 as an
alternative fuel and opened two Eurowag owned LNG sites. We also introduced
new services for electric vehicles, and our telematics products now support
hydrogen-powered vehicles. Our driving behaviour tools and telematics data
enables our customers to become safer and more efficient drivers. We installed
photovoltaic panels on two truck parks in Spain and we continue to increase
the proportion of energy we purchase from renewable sources for our own
assets.
Through our community impact, we aim to donate at least 1.5% of annual EBIT to
charities from 2023. In 2022, we made donations to support the Truck HELP
foundation, which aids children who have lost a family member on the road, and
we provided financial support to employees impacted by the war in Ukraine.
Financial Review
In the face of what were exceptionally challenging market conditions, Eurowag
delivered a strong performance last year, demonstrating once again the
inherent resilience of our business model and the mission critical nature of
our services. At a headline level, net energy and services sales were up 24.6%
with adjusted EBITDA up 17.0%, and pleasingly mobility solutions delivered
organic growth of 22.3%, outpacing our payment solutions division, which
itself saw double digit growth. This represents a strong platform from which
to build as we enter 2023 and beyond.
These positive results were delivered in the context of unprecedented
geo-political turmoil as a result of the Russian invasion of Ukraine, which
led to significant increases in energy prices, inflation, and interest rates,
as well as a deterioration in consumer and business confidence. On top of
that, along with responding swiftly to sanctions and other operational
challenges, on a personal level many of our team had family members and
friends caught up in the conflict, which is taking place next to Poland, one
of the largest and most important CRT markets in Europe. To deliver such a
strong performance in this context represents a significant achievement and
highlights the commitment and resilience of our team.
The business made significant strides in 2022 towards achieving our objective
of delivering the CRT industry's first truly integrated, digital, end-to-end
platform. As a result of our strategic M&A programme and investment in
digital transformation, Eurowag has added both new geographies and additional
products to our services, including, following the completion of Inelo
transaction, mission critical Working Time Management software, and we have
done so while maintaining financial discipline. However, as we enter the next
phase of our journey there remains much to do in terms of integrating all our
operations into one, seamless platform, to ensure we benefit from the
significant opportunities we see in the market.
In terms of detail, last year our Adjusted EBITDA increased to €81.6 million
(2021: €69.7 million) with Adjusted EBITDA margin of 42.8% (2021: 45.5%).
This year-on-year profitability decrease reflects €3.4 million incremental
PLC related costs (total PLC-related costs in 2022: €4.8 million, 2021:
€1.5 million) and impact of Webeye consolidation. Adjusted EBITDA margin on
a comparable basis, excluding incremental PLC costs and Webeye consolidation,
would be 45.6%. An increase in operating costs due to a lower Covid-19
impacted base and inflation of €1.9 million, as well as €1.1 million
severance payments and €0.8 million share-based payment (PSP) further
impacted Adjusted EBITDA margin for the year.
On a statutory basis, profit before tax grew by 58.3% year-on-year to €28.0
million (2021: €17.7 million) as a result of an increase in the underlying
business results supported by lower adjusting items (due to IPO-related
expenses in 2021 not applicable in 2022, the drop was partially offset by
higher M&A-related expenses in 2022) and net finance expense. Basic EPS
increased by 57.2% to 2.41 cents per share (2021: 1.54 cents). Adjusted basic
EPS remained flat year-on-year at 5.75 cents per share (2021: 5.77 cents)
driven by higher basic weighted average number of shares in 2022 as a result
of new shares issued in Eurowag's IPO in 2021.
Our overall financial position remains strong with reported €2.8 million of
net cash as of 31 December 2022.
In line with the strategy announced at the IPO in October 2021, we continued
investing in our digital transformation and inorganic growth. In 2022, our
transformational capital expenditure totaled €25.5 million, while
investments in our subsidiaries, associates and financial investments reached
€60.1 million, which consists of the Webeye (€42.7 million), Last Mile
Solutions (€3.0 million), and JITpay (€14.4 million) acquisitions.
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
FY 2022 (€m) FY 2021 (€m) YoY (€m) YoY %
Segment revenue total 2,368.3 1,646.1 722.2 43.9%
Payment solutions 2,312.3 1,606.1 706.2 44.0%
Mobility solutions 56.0 40.0 16.0 39.8%
Net energy and services sales total 190.9 153.1 37.7 24.6%
Payment solutions 134.8 113.1 21.8 19.2%
Mobility solutions 56.0 40.0 16.0 39.8%
Expenses included in Contribution (31.9) (24.6) (7.3) 29.6%
Contribution total(1) 159.0 128.5 30.4 23.7%
Payment solutions 118.2 99.6 18.6 18.6%
Mobility solutions 40.8 28.9 11.9 41.1%
Contribution margin total(1) 83% 84% (1.0)pp N/A
Payment solutions 88% 88% 0 pp N/A
Mobility solutions 73% 72% 1.0 pp N/A
Corporate overhead and indirect costs before adjusting items (77.4) (58.8) (18.6) 31.6%
Adjusted EBITDA 81.6 69.7 11.9 17.0%
Adjusting items affecting Adjusted EBITDA (18.5) (22.8) (4.3) (19.0)%
EBITDA 63.1 46.9 16.2 34.5%
Depreciation and amortisation (30.4) (21.9) 8.5 39.0%
Operating profit 32.7 25.1 7.7 30.6%
Note:
1. Please refer to section Explanation of Alternative Performance
Measures for a definition and see note 5.
The Group's total revenues increased by 43.9% year-on-year to €2,368.3
million 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 19.4%, while the overall net energy and services sales
increased by 24.6% year-on-year, given the incremental €8.1 million from our
Webeye acquisition.
Payment solutions net energy and services sales grew by 19.2% year-on-year.
This increase reflects strong new customers and trucks acquisitions
underpinned by strong average net revenue retention.
Mobility solutions net energy and services sales grew by 39.8% year-on-year,
mainly as a result of effective cross-selling, as well as sales to automotive
partners and Webeye 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:
€92.4 million; 2021: €74.0 million). All markets in the Central cluster
delivered strong double-digit growth. The Southern cluster has kept the
momentum from 2021 and remains the fastest growing area with 44.2%
year-on-year increase (2022: €66.6 million; 2021: €46.2 million). On an
organic basis, the Southern cluster delivered 32.5% growth year-on-year. A
9.4% decline in the Western cluster's net energy and services sales (2022:
€24.2 million; 2021: €26.6 million) was mainly driven by a 9.6% decrease
in the average number of active payment solutions customers (2022: 1,998
customers, 2021: 2,211 customers). Customer churn was driven by business
closures reflecting the challenging market environment and ADS client base
migration to the Eurowag platform. The vast majority of ADS customers were
migrated in 2022.
Corporate expenses
FY 2022 (€m) FY 2021 (€m) YoY (€m) YoY %
Expenses included in Contribution 31.9 24.6 7.3 29.6%
Corporate overhead and indirect costs before adjusting items 71.3 57.0 14.3 25.3%
PLC related costs and PSP 6.0 1.8 4.2 227.6%
Adjusting items affecting Adjusted EBITDA 18.5 22.8 (4.3) (19.0)%
Depreciation and amortisation 30.4 21.9 8.5 39.0%
Total 158.1 128.1 30.0 23.5%
The table above is from the segmental review, while the table below summarises
corporate expenses based on statutory financial categories.
FY 2022 (€m) FY 2021 (€m) YoY (€m) YoY %
Employee expenses 67.2 55.7 11.5 20.7%
Impairment losses of financial assets 3.9 3.1 0.8 25.5%
Technology expenses 9.8 6.8 3.0 44.5%
Other operating income (0.4) (0.7) 0.3 31.5%
Other operating expenses 47.2 41.3 5.9 14.4%
Depreciation and amortisation 30.4 21.9 8.5 39.0%
Total 158.1 128.1 30.0 23.5%
Employee expenses increased by 20.7% year-on-year to €67.2 million 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 €7.4
million for the full year of 2022 (2021: €8.6 million) and included pre-IPO
share based remunerations (2022: €5.3 million and 2021: €6.4 million) and
costs related to senior management transformation (2022: €1.9 million and
2021: €0.7 million).
Impairment losses of financial assets amounted to €3.9 million (2021: €3.1
million). While throughout the year we managed increased credit losses risk
due to higher notional credit exposure reflecting higher energy prices, our
full year credit losses ratio remained flat (2022: 0.1% and 2021: 0.1%). Our
expertise in managing credit risk and cash collections resulted in a strong
and stable ageing performance of our receivables portfolio with approximately
80% balances current as of the end of December 2022.
Technology expenses increased by 44.5% year-on-year to €9.8 million (2021:
€6.8 million), reflecting 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 €0.3 million in
2022 (2021: €0.6 million).
Other operating expenses increased by 14.4% year-on-year to €47.2 million
(2021: €41.3 million), mainly due to a full year of PLC-related costs of
professional services (incremental €2.4 million), return of travel and other
costs post Covid-19, as well as inflation, resulting in an increase of €1.9
million and Webeye consolidation adding €1.7 million. Adjusting items
included in other operating expenses amounted to €10.7 million for the year
(2021: €13.9 million) and included expenses related to acquisitions of
€7.1 million (2021: €0.4 million) and strategic transformation costs of
€3.6 million (2021: €1.8 million).
Depreciation and amortisation grew by 39.0% year-on-year to €30.4 million
(2021: €21.9 million) primarily as a result of transformational technology
being put into production. Additional increase came from amortization of
acquired assets of Webeye and one-off impact due to change of useful life of
technology being replaced as a result of transformation. Adjusting items
included in depreciation and amortisation amounted to €8.4 million for the
year (2021: €7.1 million).
Net finance expense
Net finance expense in 2022 amounted to €4.1 million (2021: €6.7 million).
The decrease mainly reflects the result on revaluation of derivatives and
lower foreign exchange losses, partially offset by higher factoring fees
related to higher average factoring limits utilisation throughout the year, as
well as transaction fees reflecting the refinancing of existing debt announced
in September 2022.
Taxation
The Group tax charge of €10.3 million (2021: €8.0 million) represents an
effective tax rate of 36.8% in 2022 (2021: 45.4%). Corporate income tax for
companies in the Czech Republic and the UK for 2021- 2022 was 19%, while in
Spain it was set at 24%. These represent the major tax regimes in which the
Group operates.
The Group's effective tax rate was 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 before tax for the
year decreased to 24.3% (2021: 24.8%), largely due to higher profits in
2022.
· The effective tax rate for Adjusting items was 11.3% (2021:
12.7%) and was driven mainly by equity-settled, share-based payments and
acquisition expenses in 2022.
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 Italy, Bulgaria and
Slovenia where no significant issues are expected.
On 29 November 2022 we approved and published the Group tax strategy. Our
Group tax strategy is underpinned by our Code of Conduct and values. We
believe that payment of an appropriate amount of tax is a key requirement for
all businesses, and that tax payments enable wider society to benefit from
business success. The Group manages its tax affairs according to local legal
requirements.
EPS
Basic EPS for 2022 was 2.41 cents per share, a 57.2% year-on-year increase.
This was predominantly due to higher profit for the year.
Adjusted basic EPS for 2022 was 5.75 cents per share which is flat relative to
2021. Weighted average number of ordinary shares in issue during 2022 amounted
to 688,911,333 impacting the calculation (2021: 595,582,785). After accounting
for the impact of PSP, adjusted diluted earnings per share was 5.75 cents per
share. Adjusting items are as described below in the Alternative performance
measures section.
Investments in subsidiaries and associates
Acquisition of Webeye Group
Further to the subsequent events discussed in the 2021 Annual Report and
Accounts, the Group signed a novated agreement on 16 May 2022 to acquire
substantially all of the assets of WebEye Telematics Zrt. ("Webeye"), a
leading fleet management solutions provider in Central and Eastern Europe.
The Group paid €23.3 million in cash upon the acquisition of 100% of the
share capital of the non-Hungarian subsidiaries and a further €19.9 million
was paid upon completion of the acquisition of the Hungarian subsidiaries on 1
July 2022. In addition, the Group 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 €60.6 million.
The transaction has expanded the Group's customer base and Webeye's customers
have gained 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 subsidiaries of Webeye as at the date of acquisition were:
€m
Total assets 35.1
Total liabilities (6.3)
Total identifiable net assets at fair value 28.7
Goodwill arising on acquisition 31.3
Purchase consideration:
Cash paid 43.2
Deferred consideration (discounted) 16.8
Total purchase consideration 60.0
From the date of acquisition until 31 December 2022, subsidiaries of Webeye
contributed €8.1 million of revenue and €0.9 million loss after tax
(mainly driven by amortisation of acquired intangibles and M&A related
adjusting items). Excluding amortisation of acquired intangibles and adjusting
items the adjusted profit after tax would have been €0.7 million. 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 year ended 31 December 2022 would have been €15.4 million
and €0.9 million, respectively. Excluding amortisation of acquired
intangibles and adjusting items, the adjusted profit after tax would have been
€1.6 million.
Acquisition of 9.99% share in JITpay
On 27 September 2022, Eurowag entered into a strategic partnership with
JITpay, a German-based payment service provider specialising in the logistics
industry. The transaction expands the Group's product portfolio by adding
invoice discounting, digitalised billing, and receivables management solutions
and strengthens its presence in Germany, one of the most strategically
important trucking markets in Europe. As part of the strategic partnership,
Eurowag acquired a 9.99% stake in JITpay for an initial consideration of
€14.3 million, with the flexibility for a potential increase in its
ownership over time, subject to regulatory approvals. The investment is
considered to be a strategic investment and is not held for trading.
The Group has call options to acquire an additional 18.01% share, which can be
exercised either by 3 July 2023 for a consideration of €25.7 million or by 1
January 2024 for €35.0 million. The first call option reflects the original
valuation, which is not expected to change over a short period. In the case
that neither of the call options is exercised, JITpay has the right to buy
back the acquired 9.99% share for €1.
Acquisition of non-controlling interest in Sygic
On 20 December 2022, the Group signed an agreement with the non-controlling
shareholders of Sygic a.s., which will enable the Group to acquire the
remaining 30% equity interest in Sygic. Consideration for the 30% equity
interest of €14.4 million is payable in April 2024, in line with the
original option agreement. Ownership of the shares remains with the
non-controlling shareholders until April 2024. However, following the
fixed-price agreement, they are no longer exposed to variable returns from the
investment.
Under the previous shareholders' agreement, the minority shareholders had
certain rights pertaining to the application of Sygic's resources within the
Group. Having full control of Sygic will provide the Group with unrestricted
access to Sygic's resources and allow it to fully utilise Sygic's digital
expertise and people capabilities. This, in turn, will enable the Group to
accelerate its digital sales channel and integrated product initiatives by
utilising Sygic's capabilities more effectively across Eurowag's whole range
of mobility solutions.
Pay-out of deferred consideration related to Last Mile Solutions (LMS)
On 31 January 2022, the Group paid deferred acquisition consideration of
€3.0 million, related to the acquisition of Threeforce B.V. (Last Mile
Solutions).
Balance sheet
Net assets of the Group increased by 11.2% to €316.6 million, mainly
reflecting profit for 2022 and positive revaluation of cash-flow hedges.
Intangible assets of the Group excluding goodwill increased by €42.7 million
to €131.0 million in the reporting period, predominantly due to the Webeye
acquisition and investments in strategic technology transformation.
Goodwill comprises mainly CGU Energy of €40.2 million, CGU Navigation of
€34.6 million and CGU Fleet management solutions of €58.0 million.
Goodwill is tested for impairment on an annual basis; there were no impairment
indicators identified in 2022 (2021: no impairment posted).
Inventories increased by €10.7 million to €20.3 million, mainly due to a
higher stock of on-board units and materials resulting from the Group's
decision to secure stock levels in response to market chip shortages and
shifting production to an alternative supplier as we cancelled co-operation
with a manufacturer owned by Russian individuals. The remaining growth is
mainly due to the Webeye consolidation and higher value of the fuel inventory,
reflecting increased volumes and higher energy prices in the reporting year.
Trade and other receivables increased by €77.6 million to €378.2 million,
mainly due to higher volume of transactions and increased energy prices.
Trade and other payables increased by €83.7 million to €398.2 million as a
result of the factors mentioned above.
Cash performance
FY2022 (€m) FY2021 (€m) YoY (€m) YoY
change
Net cash generated from operating activities 44.2 (9.6) 53.8 (562)%
Net cash used in investing activities (104.3) (43.1) (61.2) 142%
Net cash used in financing activities (18.2) 187.8 (206.0) (110)%
Net decrease in cash and cash equivalents (78.2) 135.1 (213.4) (158)%
Cash and cash equivalents at beginning of period 224.2 88.9 135.3 152%
Cash and cash equivalents at end of period (presented in statement of cash 146.0 224.2 (78.2) (35)%
flows)
Bank overdrafts - - - -
Cash and cash equivalents at end of period (presented in statement of 146.0 224.2 (78.2) (35)%
financial position)
Interest-bearing loans and borrowings (143.2) (162.5) 19.3 (12)%
Net cash/(debt) 2.8 61.7 (58.8) (95)%
As at 31 December 2022, the Group's net cash position stood at €2.8 million
compared with €61.7 million 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 and JITpay, deferred consideration due on LMS, as well
as repayments of borrowing compensated by underlying cash generation.
Net cash flows from operating activities increased from (€9.6 million) in
2021 to €44.2 million, primarily due to business performance supported by
stable working capital movements. Impact related to Adjusting items in the
reporting period amounted to an outflow of €13.9 million (2021: €15.4
million) and included €2.1 million for acquisitions related expenses, €5.1
million for strategic transformation expenses, €5.4 million for
non-recurring IPO-related expenses, and €1.3 million for share-based
compensation.
Interest paid increased to €10.1 million (2021: €4.5 million) driven by
one off cash outflow in the amount of €4.9 million related to refinancing
transaction fees.
Tax paid decreased from €10.2 million in 2021 to €7.8 million due to the
collection of prior-year income tax advances in 2022.
Net cash used in investing activities increased by €61.2 million to €104.3
million, largely due to the outflows in connection with investment in
acquisitions and investments in transformational technology and asset base.
Net cash from financing activities amounted to an outflow of €18.2 million
in the reporting period, representing the repayments of borrowings due to bank
loans amortisation and lease payments.
Capital expenditure
Capital expenditure in 2022 amounted to €43.2 million compared with €33.8
million for the previous year. This increase relates to investments in the
Group's technology platform and existing asset base.
The Group's ordinary capital expenditure of €17.7 million (2021: €10.4
million) represents reinvestment into the platform and assets base and
amounted to 9.3% of net energy and services sales compared with 6.8% in the
corresponding period of the previous year.
The Group's transformational investment programme was €25.5 million (2021:
€23.3 million) and continued to focus on enhancing our sales and customer
touchpoint channels, expanding our product capabilities and building a
cloud-based data system for the Group.
As part of enhancing our sales channels, this year we focused on improving our
customer digital journey and continued to invest in the implementation of our
new generation ERP software supplied by SAP. The ERP implementation is
delivered in stages, the first launched in April 2022, and focused on energy
billing, pricing, sales and purchases. As a consequence of the development of
the overall technology roadmap and in order to enable smooth integration of
acquisitions, the technology team had to revise the architecture for the
subsequent phases of implementation, in line with our current product and
technology capabilities, ensuring we are building a SAP system fit for
purpose. The second phase includes general ledger and group reporting
processes, and due to the architecture redesign, the implementation was pushed
back into 2024.
Part of our transformational capital expenditure was also invested into
expanding our product capabilities, with most of the investment going into
improving our EETS product offering and enhancing our financing capabilities,
enabling further automation and real-time finance management. This year, we
continued to invest in building a cloud-base data system. With the volume of
customer information, we receive from all our products and services, we are
starting to consolidate the data in a data lake and have started to build
customer data insight tools to support our sales channels.
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.
FY 2022 (€m) FY 2021 YoY (€m) YoY
(€m) change
Profit before tax 28.0 17.7 10.3 58.3%
Net finance expense and share of net loss of associates 4.8 7.4 (2.6) (35.6)%
Depreciation and amortisation 30.4 21.9 8.5 39.0%
EBITDA 63.1 46.9 16.2 34.5%
M&A-related expenses 8.0 0.8 7.2 907.3%
Non-recurring IPO-related expenses - 12.9 (12.9) (100.0)%
Strategic transformation expenses 5.2 2.7 2.5 93.8%
Share-based compensation 5.3 6.4 (1.1) (16.7)%
Adjusting items 18.5 22.8 (4.3) (19.0)%
Adjusted EBITDA 81.6 69.7 11.9 17.0%
FY 2022 (€m) FY 2021 (€m) YoY YoY
(€m) change
Profit for the year 17.7 9.7 8.0 83.4%
Amortisation of acquired intangibles 6.6 5.4 1.1 21.1%
Amortisation due to transformational useful life changes 1.8 1.7 0.1 8.6%
Adjusting items affecting Adjusted EBITDA 18.5 22.8 (4.3) (19.0)%
Tax effect (3.0) (3.8) 0.8 (20.3)%
Adjusted earnings (net profit) 41.6 35.8 5.8 16.1%
FY 2022 FY 2021 YoY YoY
change
Adjusted net profit attributable to equity holders (€m) 39.6 34.4 5.4 15.3%
Basic weighted average number of shares 688,911,333 595,582,785 15.7%
Adjusted basic EPS (cents/share) 5.75 5.77 (0.3)%
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.
Acquisitions related expenses are fees and other costs relating to the Group's
M&A activity. Acquisitions related expenses differ every year based on the
acquisition activity of the Group. Exclusion of these costs allows for better
results 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 relating to transformation of key IT systems. As
previously announced, strategic transformation is due to be completed 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 a non-cash element
of the annual remuneration package. This includes costs of €1.1 million in
2022 relating to grants in connection with the awards vesting in 2024 and
2025.
Amortisation of acquired intangibles represents amortisation of assets
recognised at the time of an acquisition (primarily ADS, Sygic and Webeye).
The item is prone to volatility from period-to-period depending on the level
of M&A activity.
Amortisation due to transformational useful-life changes represents
accelerated amortisation of assets being replaced by the 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 communicated, the Group will incur
aggregated transformational capital expenditures of €50 million 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 capital expenditure is on track to complete at the end of
2023, by which point we will have an integrated, modern technology stack and
product offering.
This coming year, our focus will be on integrating the businesses we acquired
in 2022, aligning our products and people capabilities across the
organisation, to unlock both revenue and cost synergies. With the recent
acquisition of Inelo, our leverage ratio is expected to exceed the top end of
our medium-term guidance range of 1.5x to 2.5x net debt to adjusted EBITDA.
Therefore, our priority in the near term is to return to within the target
range. M&A is still important to us, and we will continue to consider
value-accretive M&A opportunities in our current and adjacent markets, and
in product and technologies that will accelerate growth. However, we remain
disciplined and want to maintain our strong and 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 maintaining 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.
In September 2022, the Group signed a new Multicurrency Term and Revolving
Facilities Agreement to refinance and expand the Group's existing credit
facilities (new club financing agreement). The new club financing agreement
secured favourable terms on a strengthened debt package, extended maturities
for all facilities, and expanded the Group's club of financing banks.
The new club financing agreement consists of four tranches:
(i) €150 million committed Facility A for the refinancing of all
existing term loan indebtedness;
(ii) €180 million committed Facility B for permitted acquisitions and
capital expenditure;
(iii) €235 million committed Revolving Credit Facility, of which €85
million may be utilised by way of revolving loans, and €150 million may
be utilised by way of ancillary facilities in the form of bank guarantees,
letters of credit, or an overdraft up to €25 million;
(iv) €150 million uncommitted Incremental Facility for permitted
acquisitions, capital expenditure, and revolving credit facilities up
to €50 million of which not more than €25 million can be utilised as
revolving loans.
The transaction provided more flexibility with respect to certain financial
covenants, security packages, and other provisions than the Group's existing
credit facilities.
The new maturity date for all term loan facilities and for the revolving
credit facility is 30 September 2027. Facility A will amortise in quarterly
repayments starting on 31 March 2023, with a €45 million balloon.
Facility B will amortise in quarterly repayments starting on the later of the
date falling 3 months from the end of the 24-month availability period, or the
end of the first financial quarter after the full utilisation of the facility,
with a €54 million balloon. Eurowag completed refinancing on 17 October
2022.
The new club financing agreement contains financial covenants at the Group
level. Financial covenants are governed by financial definitions under the
agreement. Financial covenants are tested semi-annually based on announced
financials. As part of our testing under the viability statement, it has been
concluded that the acquisition of Inelo does not impact our compliance with
financial covenants.
Covenant Calculation Target Actual
31 December 2022
Interest cover the ratio of adjusted EBITDA to finance charges Min 4.00 11.20
Net leverage the ratio of total net debt to adjusted EBITDA Max 4.00* 0.13
Adjusted net leverage the ratio of the adjusted total net debt to adjusted EBITDA Max 6.50 1.95
*The covenant shall not exceed 3.75 in 2024 and 3.50 in 2025 and onwards
The Group concentrates cash in bank accounts held with financial institutions
that participate in the new club financing agreement. Balances may be held in
bank accounts with other financial institutions to fund outgoing payments,
especially in countries outside of the Economic and Monetary Union.
The Group has effectively managed its floating EURIBOR interest rate exposure
on existing term loans through the execution of zero floor interest rate
swaps. The swaps were structured with varying hedge ratios, providing coverage
of 100% in 2023 and 2024, 75% in 2025, 50% in 2026, and 25% in 2027. This
strategic approach demonstrates the Group's proactive risk management
practices and commitment to financial stability.
With respect to Facility A, interest rate swaps executed in 2019 in the amount
of €120.0 million (unamortized) have an effective payable fixed rate of 0.1%
and are expected to expire in 2024. Interest rate swaps executed in 2022 but
effective in 2023 in the amount of €30.0 million (amortized) have an
effective payable fixed rate of 2.7% and are expected to expire in 2027. The
latter have a complementary amortizing profile in order to achieve the
above-mentioned hedge ratio.
Throughout 2022, the Group has effectively managed its working capital needs
through the use of uncommitted factoring facilities, with average financing
limits of €101 million and average utilization of 66.1% (2021: €96 million
and 56.5% respectively). This demonstrates the Group's proactive approach to
maintaining a strong financial position, and its ability to optimize working
capital.
Risk management
Managing risk plays an important role in the Group achieving its strategic
objectives and in adding sustainable value to all our activities.
Principal risks register
The list below provides further details on our identified principal risks,
trends of their exposure and the mitigation measures implemented.
1. Product demand decline risk
Our operating results are dependent on the conditions in the European economy
and its cycles. The volume of customer payment transactions and customer
demand for the products and services provided by the Group correlate with
current and prospective economic conditions across Europe. Economic downturns
are generally characterised by reduced commercial activity and trade,
resulting in reduced demand and use of our products and services by customers.
As a result of COVID-19 and the Russian invasion of Ukraine, the economy in
the EEA 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 a possible recession there are high uncertainties regarding
energy supplies across the region, which places 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 condition.
The Group considers the trend of the risk as increasing due to the continued
Russian invasion of Ukraine and a possible economic recession. The current
managed risk rating is above the Group's approved risk appetite.
Mitigation measures:
· Reducing dependency on a single economy
· Reducing dependency on non-Euro currency
· Diversification of products and services offering and through new
M&A activities and implementation of the subscription-based revenues
· Geographical expansions - EU and non-EU countries
· Strategy positioning flexibility - due to wider portfolio of
products, capability to adjust our offer for customers to meet their needs
2. Fuel supplies risk
The Group recognises a high risk of insufficient fuel at its energy payment
network and payments drying up across our network as a consequence of the
emerging energy crisis and imposed sanctions due to the Russian invasion of
Ukraine. The situation could be aggravated by local government intervention
(e.g. price capping, export embargo), unpredictable price development,
potential sabotage of the crude pipelines from Russia and disruption of oil
refinery production, with the Group experiencing higher risks in securing
sufficient fuel supplies at its energy payment network, at favourable
financial and operational terms. These risks have an adverse impact on the
Group's financial position, operations, and business.
The Group considers the trend of the risk as increasing due to significant
uncertainties on the energy markets caused by the Russian invasion of Ukraine,
threats of further conflict escalation, potential sabotage of energy
infrastructure and local government interventions. The current managed risk
rating is above the Group's approved risk appetite.
Mitigation measures:
· Our fuel procurement strategy is fully compliant with EU
legislation and sanctions and in 2023, we will focus on local fuel procurement
rather than cross-border deliveries. We are confident that we can provide high
quality, EU origin and competitive diesel, LNG, and AdBlue to our customers
· Centralised procurement team for energy supplies and logistics
· Continuous monitoring and reporting on the situation development
of fuel supplies crisis
· Scenarios analysis of potential future
· development and a preparation of preventive and mitigation
actions in case of different scenario materialisation
· Diversification of different types of energies (eMobility, LNG)
3. Interest rate risk
Economic recession can be accompanied by an increase in nominal interest
rates. We are utilising various forms of financing, some of which are subject
to changes in interest rates. The acquisition of Inelo will result in an
increase in debt for the enlarged organisation, since existing facilities will
be utilised to acquire equity and refinance the acquired company's debt. We
will be required to make interest payments on the increased debt. There is no
guarantee that we will be able to refinance existing arrangements or that the
cost or availability of financing will not negatively impact the Group's
business, financial condition, and future prospects. Any increase in the cost,
or lack of availability, of finance could have a material adverse effect on
the Group's business, financial condition, results of operations, and future
prospects.
The Group considers the trend of the risk as increasing due to current
economic outlooks. The Group implements its hedging strategy to mitigate risk
to the level of its risk appetite.
Mitigation measures:
· The management of interest rate risk is the responsibility of the
Treasury department
· The Group has refinanced and expanded its existing credit
facilities. The new maturity date for all term loan facilities and for the
revolving credit facility will be 30 September 2027
· The Group has implemented a hedging strategy using interest rate
swaps on the existing senior term loans with 100% hedge ratio in 2023 and
2024, 75% hedge ratio in 2025, 50% hedge ratio in 2026, and 25% hedge ratio in
2027
· As part of the integration process for the acquisition of Inelo,
the incremental debt is expected to align to the hedging policy as stated
above
4. Sanctions risk
The Group continuously monitors its compliance with various sanctions regimes.
Currently, one of the consequences of the Russian invasion of Ukraine is the
sanctions imposed by the EU, UK, US, and the United Nations.
The Group's policies and procedures, which are designed to ensure that it, its
employees, agents, and intermediaries comply with applicable sanctions, may
fail to always comply effectively. Any violation of the sanctions regime could
result in significant expenses or reputational harm, divert management
attention, and otherwise have a negative impact on the Group.
Given the nature of Group's business, the sanctions are also exposing us to
the risk of adverse business and operational impacts. The 6th sanctions
package, imposed by the European Commission, has introduced prohibitions
related to crude oil and petroleum products, mainly in terms of their
purchase, import, and transfer. Due to the 6th sanctions package, the Group is
exposed to the risk of balancing product disruption in central Europe caused
by the ban on the export of products produced from crude oil originating in
Russia and delivered via the Druzba pipeline. Disrupted product balancing in
central Europe (Austria, Czech Republic, Slovakia, Hungary) could lead to a
lack of products in certain markets during certain periods. In addition to
those sanctions already issued (an 8th package of sanctions has currently been
issued), the Group recognises a risk of new sanctions significantly impacting
the current and prospective business model.
The Group considers the trend of the risk as stable due to proven ability of
the Group to comply with all issued sanctions. The current managed risk rating
is above the Group's approved risk appetite.
Mitigation measures:
· Group uses a system for partner screening with an automatically
updating sanctions database. Any new sanctions are also monitored by an
external law firm within legislative monitoring and by the internal team,
which dedicates capacity to screening subscribed notifications from respective
authorities and press releases
· The internal team thoroughly analyse any new sanctions and their
impacts on the Group's business and operations. In complex matters, the team
co-operates with specialist external advisors
· New sanction legislation relevant for the Group's business is
regularly reported to the Executive Committee together with scenario planning
and impact assessment
· Manual screening of new partners and customers against sanctions
lists
· Self-sanctioning scheme - application of stricter rules on
partners, going beyond valid sanctions. It is used also as a prevention
against impacts of newly issued sanctions
5. Competitors risk
The Group faces competition in each of its product lines from many companies
offering similar capabilities and services, including international oil
companies, single-product providers of fuel cards, and other services.
Moreover, the windfall tax scheme is being used by some competitors (large
wholesellers) to decrease prices in their retail businesses and, in terms of
pricing, the Group cannot compete with this. In addition, markets where we
operate are characterised as oligopolistic or monopolistic, and are burdened
by heavy regulation and restrictions for entering or expanding. These factors
could cause an adverse impact on revenues and prospects if we cannot compete
or expand our business activities effectively.
The Group considers the trend of the risk as increasing due to potential
impacts on the markets from geopolitical, economical, and legislative
uncertainties. The current managed risk rating is in line with the Group's
approved risk appetite.
Mitigation measures:
· Reducing dependency on a single economy, single market, or single
revenue stream
· Geographical diversification and products or services offering
diversification
· Membership in a number of industry associations and trade bodies
to ensure that we are aware of market competition activity and trends
· Fast inorganic growth through M&A activities
· M&A activities in 2022 - JITpay, Webeye and Inelo
6. External parties' dependency risk
The Group's business is dependent on several key strategic relationships with
third parties, the loss of which could adversely affect our results. Key
partners mainly fall into the following categories - fuel suppliers,
acceptance network, toll chargers, authorisation centres, and technology
service providers. In addition, the Group has also started the process of
setting up an internal authorisation centre for its fuel cards transactions.
This service is currently provided by an external authorisation centre - AEVI.
Realising the project is significantly dependent on the current external
provider and an inability to complete the set up of an internal authorisation
centre of acceptable quality and in the expected timeframe would expose the
Group to additional costs and potential business disruptions.
The Group considers the trend of the risk as decreasing due to positive
progress having been made with setting up an internal authorisation centre.
The current managed risk rating is above the Group's approved risk appetite.
Mitigation measures:
· IT vendors management policy - setting the standards for vendors
selection, contracts reviews and signature and vendors monitoring
· Centralised vendors management role
· Centralised procurement team for energy supplies and logistics
· Centralised development and maintenance role for acceptance
network
· Contract management rules and attestation rules
· Centralised legal counsel - aids contracts elaboration and
reviews
· New IT system on orders and invoices management - Coupa
· Continuous implementation of improvements, which are result of
human rights risk assessment - human rights training, Code of Conduct for
Suppliers and Suppliers onboarding process
· Project on setting up an internal authorisation centre is
progressing with the highest priority
7. Technology security and resilience risk
The Group's business relies on technology and data confidentiality, integrity,
and availability. As with other businesses, we are subject to the risk of
external security and privacy breaches, such as cyber-attacks. In the last
year, these attacks have increased in number and sophistication, particularly
those coming from the Russian Federation. 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 reputation. The Group's outsourced
Internal Audit has identified deficiencies in the area of IT security and our
inability to close the gaps in a timely manner in accordance with the approved
mitigation plan could expose the Group to a further increase in risk.
Moreover, the Group is active in its M&A activities and, where a newly
acquired company does not have IT security standards at the same level as the
Group, the enlarged Group is exposing itself to an increased risk. Also, if
the technology we use to operate the business and interact with customers
fails, does not operate to expectations, or is not available, then this could
adversely affect our business and results.
Despite the risk increasing from new acquisitions, as described above, the
Group considers the trend of the risk as stable due to overall improvement in
the IT security level of the Group and further standardisation of post-merger
integration processes. The current managed risk rating is above the Group's
approved risk appetite.
Mitigation measures:
· The Group prevents itself against cyber-attacks by continuous
implementation and improvement of the cyber security standards, in line with
the ISO27001
· The Group has established a central project on continuous
improvement in information security that comprises key security functions from
Technology and Risk departments
· The Group, as part of crisis management, which was activated as a
response to the Russian invasion of Ukraine, additionally funded and assigned
highest priority to the immediate improvement cyber security tools to achieve
better prevention against the increasing number of cyber-attacks
· The Group has established 3 lines of defence system with clear
responsibilities regarding cyber security
· The Group has a standardised post-mergers integration process
that considers the IT security level of newly acquired companies, setting
priorities, and integration milestones
8. Personnel dependency risk
The Group's success depends, in part, on its Executive Committee members and
other key personnel, and our ability to secure the capabilities to achieve our
strategic objectives. Lack of capability and the loss of key personnel could
adversely affect our business. In October 2022, the Group announced the
planned departure of its CFO. An inability to find an adequate replacement
would expose the Group to additional risk. Moreover, the current economic
environment and competition in the job market are increasing the risk of
retaining key personnel and acquiring new talents.
We also depend on our founder and CEO. The inability to secure a ready
successor could reduce our ability to achieve our strategic goals and an
adverse reaction from stakeholders.
The current managed risk rating is above the Group's approved risk appetite.
The Group considers the trend of the risk as decreasing due to the successful
hiring of a new CFO and Senior Finance expert to help with the transition.
Mitigation measures:
· The Group has hired a new CFO and secured sufficient transition
plans from the current CFO
· The Group has hired a Senior Finance expert, with PLC experience
to help with the transition
· Establishing and nurturing a talent pool to maintain the required
skills level within the Group
· Annual salary review process in place to reflect inflation,
market salary levels, and performance ratings
· Long-term retention plans for the talent pool
· Elaboration of the succession plans, providing adequate training
for chosen successors
· Eurowag Group commitment to greater diversity, equity, and
inclusion
· Key personnel rotation for selected functions
9. Climate change risk
Climate change and energy transition represent both a risk and opportunity for
the Group. Our reputation, operating and compliance costs, and 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, medium, and
long term. Our business generates a significant proportion of revenue from
fees through selling energy to the CRT sector, which currently uses
predominantly diesel fuel. We are aware that changes in road transport policy
and regulations, the cost of carbon, carbon taxation, changes in market demand
for alternative fuel and clean mobility solutions, 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 recognise that extreme-weather
events could pose a risk to business continuity for our physical assets, as
well as the health, safety, and well-being of our workforce and customers. The
Group already recognises the impact of weather changes in delays and the
decrease in transactions linked to seasonal transportation in some regions. In
addition, we recognise that we are responsible for reducing our own carbon
footprint, as well as contributing to solutions to help customers make the
transition to a low-carbon future.
The Group considers the trend of the risk as increasing due to science
predictions and upcoming actions of regulators, countries, and community
leaders. The Group has a strategy in place to mitigate the risk to the risk
appetite level. The current managed risk rating is above the Group's approved
risk appetite.
Mitigation measures:
· Investing in a portfolio of alternative fuels and technologies,
including eMobility (investment in Last Mile Solutions), to support the
transition to a low-carbon future in the CRT sector
· Investment in digitalisation and technologies to help our
customers improve efficiency in CRT road transport and reduce energy intensity
per-kilometre of transported goods
· Formalisation of the Group's ESG strategy, including carbon
reduction targets for our operations as well as the development of targets and
actions to reduce Scope 3 emissions across our value chain
· Engagement with OEM manufacturers to help with developing
lower-carbon-intensive vehicles with greater tracking and monitoring of
environmental impacts
· Review of business continuity plans to take into account the
potential impacts of extreme weather events driven by climate change and the
impact on both people and physical assets
· Increased reporting transparency of carbon emissions and related
actions to reduce emissions
· Formal, structured scenario analysis to assess the physical and
transition risks for Eurowag and its assets and inform ongoing risk assessment
and mitigation measures as well as reporting in line with TCFD
· M&A activities focus on non-energy businesses
10. Physical security risk
The Group operates a number of truck parks and offices, and these are exposed
to security threats. A security threat materialising as a result of
insufficient protection or natural disasters would result in danger to the
health of our employees and customers, and significant business disruptions.
This risk increased this year with the Russian invasion of Ukraine and
potential escalation of the conflict to other countries, including those where
the Group has its employees and assets. Moreover, there is an increasing risk
of security threats as a result of the war impacts. These are not limited to
energy crisis and fuel shortages at Group' petrol stations. In addition, the
recent earthquakes in Turkey and Syria have had a catastrophic impact on the
lives and health of tens of thousands of people and represent an increasing
risk factor for the Group in terms of protecting the lives and health of its
employees and customers in these and other natural disaster-prone regions.
The Group considers the trend of the risk as increasing due to the Russian
invasion of Ukraine and its potential further development.
Mitigation measures:
· Implementation of health and safety plans at the Group's truck
parks to avoid security threats materialising
· Having emergency plans in place and staff trained to act in an
emergency situation
· Petrol stations security rules and system for the prevention of
physical security threats and their regular control and revision
· Business continuity plans in place and their regular testing and
revision
11. Regulatory and licensing risk
The Group relies on numerous licences for the provision of its on-road
mobility products. These include wholesale and retail permits required for the
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,
electronic money institution licence required for the provision of financial
services, and an insurance distribution licence. As a consequence of holding
these licences and certifications, the Group is subject to strict regulatory
requirements (Governance, Products, IT security and Operational) of regulatory
bodies in respective jurisdictions. Non-compliance with these can result in
fines, suspension of business or loss of licences. Key regulatory requirements
are undertaken by governance and compliance with UK listing rules, anti-money
laundering (AML) and sanction laws, personal data-protection laws, Czech
National Bank regulation, fuel-reselling legislation, and EETS regulation. In
addition, changes in laws, regulations, and enforcement activities are
accompanied with the cost of implementation and may well adversely affect our
products, services and markets.
The current managed risk rating is above the Group's approved risk appetite.
The Group considers the trend of the risk as increasing due to potential
future legislative changes (see emerging risks) and further expansion of
Group´s business activities within highly regulated markets. The Group
focuses on delivering the technology roadmap and has strengthened its Senior
Leadership Team with the focus on technology and operations, to address the
gap between risk appetite and risk rating.
Mitigation measures:
· Dedicated legal and compliance business partners for all business
units, with regulation watch implied
· Continuous improvement of the risk management control framework,
specifically in terms of regulatory and licensing risks mitigation
· Involving legal and compliance counsels in new-markets entry
process
· Implementing Group-wide AML policy, partner screening directive,
and detailed AML directive
· Regular AML re-screening of customers who use regulated financial
services
· Annual AML audit with sufficient results
· Group-wide personal-data protection policy and detailed GDPR
directive
12. Clients' default risk
The Group is subject to the credit risk of its customers, many of whom are
small and mid-sized CRT businesses. We are exposed to customer credit risk,
particularly for customers in our payment solutions segment, who we finance
through post-payment of their energy consumption and toll balances. If we fail
to assess and monitor adequately the credit risks posed by counterparties, we
could experience an increase in credit losses and other adverse effects.
The Group considers the trend of the risk as stable due to proven credibility
and efficiency of the Group´s credit risk management. The current managed
risk rating is in line with the Group's approved risk appetite.
Mitigation measures:
· Credit assessment at onboarding (scoring) - in determining the
credit risk of its customers, the Group performs a credit assessment, which
consists of a financial analysis of recent results and development as well as
a business analysis and verification using available databases
· The Group's credit risk department conducts ongoing credit
exposure monitoring, revising credit limits in 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
13. Processes execution risk
The Group operates in a very complex and diversified environment. The Group's
entities are in different stages of processes, IT systems, and governance
maturity. Lower maturity of processes results in non-co-ordinated actions and
unintended mistakes, as a consequence of manual controls. The outcomes of
these mistakes could materialise in non-keeping of contractual obligations
towards third parties (e.g. change management notification obligations towards
EETS providers), late payments to third parties (fines received), mistakes in
reporting creation, and lower quality of service provided to our clients.
Moreover, the Group is very active in the M&A field. Every completed
M&A initiative is accompanied by an increase of the overall complexity in
the Group's processes and demands on systems, data, and people. Where there is
an inadequate post-mergers integration process and insufficient
predispositions for a successful integration (IT systems maturity, data
management maturity and processes, and their governance maturity), the Group
exposes itself to an additional processes risk and a risk of unrealised
M&A benefits. Additionally, the Group is currently in the process of
transforming its operational model, accompanied with the changes in the Senior
Leadership Team, which may bring temporary unclarity in accountabilities.
The current managed risk rating is above the Group's approved risk appetite.
The Group considers the trend of the risk to be increasing due to the
increased complexity brought by recent acquisitions, which increase the
demands on finance processes in particular. The Group expects to mitigate this
risk in the coming periods through the integration of our acquisitions and the
implementation of ERP software.
Mitigation measures:
· The Group has established post-mergers integration processes with
clear governance and senior leadership
· The Group engages well-established consulting firms to assist in
the post-merger integration process, when needed
· The Group has designed its processes model, which is continuously
maintained and updated. Moreover, the Group has a processes design department,
which in its activities focuses on improvement of the maturity of processes
· The Group has established an internal controls risk management
framework. Regular reporting and testing of the internal controls ensures
continuous improvement of the effectiveness of operational controls
· Operational model transformation introduces new focus and
disciplines in product and technology capabilities
Viability statement
In accordance with provision 31 of the UK Corporate Governance Code 2018 (the
Code), the Board has assessed the Company and Group's prospects and viability,
considering the business model, the Group's current financial position, and
principal risks over a period longer than the 12 months required by the Going
Concern statement.
Viability timeframe
The Board has determined that a three-year period to 31 December 2025 is the
appropriate timeframe to assess viability.
The choice of this timeframe is based on the following rationale:
· This period is reviewed by the Board in the long-term planning
and detailed annual budgeting process and allows financial modelling to be
supported by the budget and growth factors in business plan approved by the
Board
· This time horizon is captured as the relevant period for
evaluation and stress testing of principal risks (primarily those of an
operational nature), which typically occur within this timeframe
· The innovative nature of the Group and the disruptive nature of
the market make it difficult to predict with sufficient confidence how
competition and other risks will impact the business beyond a three-year
timeframe
· Considering the continuous changes of macroeconomic and political
environment over a period of longer than a three-year timeframe would bring
greater uncertainty to forecasting assumptions
While the Board has no reason to believe that the Company and Group will not
be viable over a longer period, they consider three financial years to be an
appropriate planning time horizon to assess viability and to determine the
probability and impact of principal risks.
Assessment of budget and financial forecast
The Company's and Group's financial forecast is assessed primarily through the
financial planning process (annual operating budget) and the strategic
planning (long-term strategic plan). This process is managed by the Chief
Executive Officer, Chief Strategy Officer and Chief Financial Officer, in
co-operation with divisional and functional management teams.
The Board participates fully in the annual process to review, challenge, and
approve the annual operating budget for the new financial year. The output of
the financial planning process provides a clear explanation and overview of
key assumptions and risks to be considered when agreeing the annual operating
budget as a detailed set of one-year financial forecasts.
The Group also has a long-term strategy in place in the form of a long-term
strategic plan. The strategy is reviewed and updated on a periodic basis and
is based on detailed financial forecasts.
The long-term financial forecasts are prepared with financial forecasts for
the first year based on the Group's annual operating budget and for subsequent
years based on the strategic plan.
The latest updates to the strategic plan were finalised in September 2022
following the annual strategic away-days with the participation of the Board.
This considered the Group's current position and the development of the
business as a whole, focusing on our path to expanding the number of active
trucks whilst using our industry expertise, technology solutions, scale and
data insight to help our customers prosper in the digital, low carbon future.
Thanks to digitizing the way we work, becoming data-driven company and growing
organisation capabilities, we aim to build platform business and serve "every
truck". At the same time, commitments to helping the industry become clean,
fair, and efficient were made in order to contribute to sustainable future.
Both the annual operating budget and the strategic plan are updated further
through a rolling forecast process. The annual operating budget is updated on
a quarterly basis and the strategic plan is reviewed on an annual basis.
Should the occurrence of any risk be identified through actual trading
performance or through the rolling forecast process, mitigating actions can be
applied by the Senior Leadership Team.
The latest annual operating budget for the year ending 31 December 2023 was
reviewed and approved by the Board in March 2023, and this budget is based on
the Company and Group's current financial position, and its prospects over the
forthcoming year and in line with the Group's stated strategy.
Assumptions used in financial forecast
The key assumptions within the Company's and Group's financial forecasts are
as follows:
· Organic net revenue development is expected to be driven by both
payment and mobility solutions, growing on average at a similar pace over the
projected period.
· Organic net revenue growth, of both payment and mobility
solutions, is primarily driven by increasing the number of customers, which is
positively influenced by:
- Continuous enhancement of sales channels (digital and telesales)
- Additional penetration of the markets where the Group has an already
established position
- Cross-sell of Eurowag's core services into the Webeye customer base
- New markets entries; and
- sustained up-sell/cross-sell activities of our products into the customer
base.
· We expect to keep average net revenue retention at a minimum
level of 110%.
· Mobility solutions are positively supported by continuous
up-selling and cross-selling of products, due to:
- Enhancement and additional automation of up-sell capabilities
- Strong cross-selling of tax refund services into the payment solutions
customer base
- Expansion of our fleet management solution
- Continuous growth in financial services
- Development of smart navigation products and mobile applications (Road
Lords and Eurowag App) and continuous growth in OEM cooperation
· Credit losses reflect an increase of turnover; there is no change
in credit risk assumed
· The operational costs (opex) plan in both the budgeted and
forecasted period is based on the following assumptions:
- To keep costs under control, opex in the budgeted period is based on 2022
run rates increased by additional costs related to:
- Annual salary reviews and changes in management bonus schemes
- Planed commitment to increase charity donations - Expenses required for
achieving synergies
- Inelo integration expenses
- SAP implementation expenses
· M&A investments - both budget and financial plan assume all
committed transactions, including the acquisition of Inelo, investment in LMS,
JITpay, KomTes, and payment for the remaining 30% stake in Sygic as well as
deferred settlement component for 100% stake in Webeye.
· External financing - both budget and financial plan assume the
following tranches from the committed financing announced on 22 September
2022:
- €150 million committed Facility A for the refinancing of all existing
term loan indebtedness
- €180 million committed Facility B for permitted acquisitions and capital
expenditure
- €235 million committed Revolving Credit Facility, of which €85 million
may be utilised by way of revolving loans, and €150 million may be utilised
by way of ancillary facilities in the form of bank guarantees, letters of
credit, or an overdraft up to €25 million
· Interest costs expectations for each loan are based on margin
depending on net leverage covenant and facility type and on a floating base
rate of 3.0% p.a. for the period 2023-2024 and 2.0% p.a. in 2025, while also
considering existing interest rate swaps executed in 2019 in the amount of
€120 million with an effective fixed rate of 0.1% p.a. and expiration in
2024.
· The capital expenditure (capex) plan is based on the following
assumptions:
- Ordinary capex of high single digit % of net revenues for period 2023-2025
- Transformational capex expected at a level of €24.5 million for the year
ending 31 December 2023. There is no transformational capex planned for 2024
Assessment of viability
The key assumptions within the projections were stress tested with reference
to risks set out in the Risk Management section of the Annual Report and
Accounts.
In 2022, the Board considered the application of the following risks:
· Impact of ongoing macroeconomic crisis. Principal risk: Product
demand decline risk
· Impact of any form of geopolitical risk. Principal risk: Product
demand decline risk
· International fuel supply crisis resulting in lower sales volume
and higher fuel prices due to fuel supply shortage. Principal risk: Fuel
supplies risk
· Impact of potential problems after cyberattacks on on-board
units, which may cause problems with product functionality and data loss, and
primarily result in penalties from toll providers. Principal risk: Technology
security and resilience risk
· Impact of potential project failure, related to EETS shielding
strategy. Principal risk: External parties dependency risk
· Given the geographical location of the Spanish subsidiary, we
considered the potential risk of flooding at one of our truck parks. Principal
risk: Physical security risk
· Impact of climate changes which could result in an increase in:
opex - we could expect increases in people costs, consultancy costs, marketing
and PR, technology costs, engineering cost, and costs related to truck park
management; increases of capex - additional investments in technology projects
related to climate change. Principal risk: Climate change risk
· Impact of base rate increase, which may affect our expenses.
Principal risk: Interest rate risk
· Impact of regulatory changes for technology requirements which
may affect our existing on-board units in inventory. Principal risk:
Regulatory and licensing risk.
Applied risks and their effect were stress tested via 4 types of downside
scenarios:
First scenario focuses on product demand decline risk, in combination with
technology and resilience risk, external parties' dependency risk, climate
change risk, regulatory and licensing risk, and interest rate risk.
Second scenario focuses on supply risk, in combination with technology and
resilience risk, external parties' dependency risk, climate change risk,
regulatory and licensing risk, and interest rate risk.
The risks applied in the first and second scenario were estimated to create
severe but plausible downside scenarios covered in the first and the second
scenario, and considered the development of net revenues, level of opex, and
levels of capex. The scenarios were also modelled to test potential occurrence
of any liquidity issue of the Group; both scenarios have proven that the Group
operates with sufficient level of liquidity headroom and ability to meet
financial covenants. The above mentioned scenarios have been taken into
account as a whole, but they were not modeled because the probability of both
occurring simultaneously is very low, hence they are not considered to
represent a risk to our long term viability.
Specifically, neither of the two scenarios outlined above resulted in a breach
of financial covenants (please refer to the Treasury management section in the
Financial review) , nor was the allowed spike in Net leverage and Adjusted Net
leverage covenant utilized. Moreover, even during the year with the most
stress on liquidity, more than 50% of committed €85 million Revolving Credit
Facility remained undrawn and not committed debt (please refer to the Treasury
management section in the Financial review) nor not committed factoring
facilities were not considered in the assessment.
The Board also considered potential mitigating actions that the Group could
take to preserve liquidity and ensure compliance with the Group's financial
covenants.
Reverse stress test scenarios
Along with this analysis, the Board has considered a reverse stress tests
scenario (Third and Fourth scenario) to further assess the Company's and the
Group's viability.
A reverse stress test scenario is a risk management approach used to assess
the resilience of a company or financial institution to a specific event or
risk. Unlike traditional stress testing, which assumes a base case scenario
and evaluates the impact of adverse events on the Company's financial
performance, a reverse stress test starts with a hypothetical worst-case
scenario and works backwards to identify the events that could lead to that
scenario.
In order to assess the resilience of the Company and the Group, the Board has
performed a reverse stress test to determine the potential consequences of a
liquidity crisis and to approach the threshold of covenant breach.
The Board then assessed the likelihood and severity of these risks and
evaluated whether the Company has sufficient resources and contingency plans
in place to manage them.
By conducting a reverse stress test, the Board is taking a proactive approach
to risk management and demonstrating a commitment to ensuring the long-term
viability of the Company and the Group. The results of the test can inform
strategic decision-making, help identify areas where additional risk
mitigation measures may be needed, and provide stakeholders with greater
confidence in the Company's ability to navigate challenging market conditions.
Third scenario applies risks from the First scenario with an even more severe
impact on our business model.
Fourth scenario applies risks from the Second scenario with a severe impact on
our business model, adding additional supply risks linked to the potential
impact of geopolitical changes related to ongoing Russian invasion of Ukraine,
which may cause oil supply disruptions in the CEE region.
The above mentioned scenarios have been considered as a whole, but they were
not modeled because the probability of both occurring simultaneously is
extremely very low.
The Board also considered potential mitigating actions that the Group could
take to preserve liquidity and ensure compliance with the Group's financial
covenants. In doing so, judgement has been applied in determining whether such
actions would be reasonably possible to execute as well as the financial
impact of taking such actions. In terms of mitigating actions, the Board is
confident that they would be able to take similar actions to those taken
during previous economic downturns.
Considering the high severity and low plausibility of the reverse stress test
scenarios, the Board has no reason to believe that the Company and Group will
not be viable over the long-term period.
Application of the presented risks in the above-mentioned scenarios were
examined via four different effects on Group's business, overview of these
effects and their application for the particular risk and scenario is outlined
in the table below.
Risk applications Downside scenario Effect 1 Effect 2 Effect 3 Effect 4 Effect 5
Principal risk Market decline Data breach / Cyber attack Loss of business Technological disruption Finance costs
Product demand decline risk 1,3 x x
Fuel supplies risk 2,4 x x
Technology security and resilience risk 1,2,3,4 x x
External parties' dependency risk 1,2,3,4 x x x
Physical security risk 1,2,3,4 x x
Climate change risk 1,2,3,4 x
Regulatory and licensing risk 1,2,3,4 x x
Interest rate risk 1,2,3,4 x
Viability statement
Based on the above described assessment of the principal risks facing the
Company and Group, stress testing and reverse stress testing undertaken to
assess the Company's and Group's prospects, the Board has a reasonable
expectation that the Company and Group will be able to continue in operation
and retain sufficient available cash to meet its liabilities as they fall due
over the period to 31 December 2025 and, consequently, the Group proved it
will remain relevant and solvent in the medium to long term taking into
consideration the technological, social, and environmental changes expected to
happen in the medium-to long-term period.
Going concern
The Board has considered the financial prospects of the Company and Group for
the foreseeable future, which is at least the next 12 months from this date,
and made an assessment of the Company's and Group's ability to continue as a
going concern. The Board's assessment included consideration of the
availability of the Company's and Group's credit facilities, cash flow
forecasts and stress scenarios. Stress test scenarios applied in the Going
Concern statement are in line with scenarios covered in the Viability
statement. The Board is satisfied that the Company and Group have the
resources to continue operating the business for the foreseeable future, and
furthermore are not aware of any material uncertainties that may cast
significant doubt upon the Company's and Group's ability to continue as a
going concern and the Board considers it is appropriate to adopt the going
concern basis of accounting in preparing the annual financial statements.
Financial statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(EUR '000)
Notes For the year ended 31 December
2022 2021
Revenue from contracts with customers 4 2,368,252 1,646,102
Costs of energy sold (2,177,395) (1,492,970)
Net energy and services sales 5 190,857 153,132
Other operating income 449 655
Employee expenses (67,212) (55,665)
Impairment losses of financial assets (3,912) (3,116)
Technology expenses (9,823) (6,797)
Other operating expenses (47,227) (41,282)
Operating profit before depreciation and amortisation (EBITDA) 63,132 46,927
Analysed as:
Adjusting items 5 18,461 22,793
Adjusted EBITDA 5 81,593 69,720
Depreciation and amortisation 5 (30,393) (21,867)
Operating profit 32,739 25,060
Finance income 4,750 2,234
Finance costs 6 (8,802) (8,943)
Share of net loss of associates (711) (682)
Profit before tax 27,976 17,669
Income tax expense 7 (10,280) (8,019)
PROFIT FOR THE YEAR 17,696 9,650
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 7,602 3,683
Exchange differences on translation of foreign operations 1,303 1,458
Deferred tax related to other comprehensive income - -
TOTAL OTHER COMPREHENSIVE INCOME 8,905 5,141
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 26,601 14,791
Total profit for the financial year attributable to equity holders of the 16,630 9,148
Company
Total profit for the financial year attributable to non-controlling interests 1,066 502
Total comprehensive income for the financial year attributable to equity 25,507 14,259
holders of the Company
Total comprehensive income for the financial year attributable to 1,094 532
non-controlling interests
Earnings per share (in cents per share): 10
Basic earnings per share 2.41 1.54
Diluted earnings per share 2.41 1.53
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(EUR '000)
Notes As at 31 December
2022 2021
ASSETS
Non-current assets
Intangible assets 8 268,171 193,453
Property, plant and equipment 9 39,826 34,763
Right-of-use assets 13,340 8,112
Investments in associates 12,223 12,934
Financial assets at fair value through other comprehensive income 14,364 -
Deferred tax assets 7 10,505 7,642
Derivative assets 3,093 252
Other non-current assets 3,791 3,591
Total non-current assets 365,313 260,747
Current assets
Inventories 20,291 9,557
Trade and other receivables 378,152 300,601
Income tax receivables 1,800 5,095
Derivative assets 3,851 2,694
Cash and cash equivalents 146,003 224,164
Total current assets 550,097 542,111
TOTAL ASSETS 915,410 802,858
SHAREHOLDERS' EQUITY AND LIABILITIES
Share capital 8,107 38,113
Share premium 2,958 194,763
Merger reserve (25,963) (25,963)
Other reserves 10,342 1,465
Business combinations equity adjustment (12,526) (17,046)
Retained earnings 329,362 84,526
Equity attributable to equity holders of the Company 312,280 275,858
Non-controlling interests 4,283 8,889
Total equity 316,563 284,747
Non-current liabilities
Interest-bearing loans and borrowings 11 121,272 143,579
Lease liabilities 9,510 5,973
Deferred tax liabilities 7 8,677 5,495
Derivative liabilities 186 657
Other non-current liabilities 27,376 20,281
Total non-current liabilities 167,021 175,985
Current liabilities
Trade and other payables 398,235 314,522
Interest-bearing loans and borrowings 11 21,884 18,894
Lease liabilities 3,917 2,601
Provisions 2,124 1,545
Income tax liabilities 5,649 4,208
Derivative liabilities 17 356
Total current liabilities 431,826 342,126
TOTAL EQUITY AND LIABILITIES 915,410 802,858
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(EUR '000)
Notes Share capital Share premium Merger reserve Other reserves Business combinations equity adjustment Retained earnings Total equity attributable to equity holders of the parent Non-controlling interests Total equity
At 31 December 2020 4,158 2,927 - (3,263) (46,009) 72,177 29,990 34,115 64,105
Profit for the year - - - - - 9,148 9,148 502 9,650
Other comprehensive income - - - 5,111 - - 5,111 30 5,141
Total comprehensive income - - - 5,111 - 9,148 14,259 532 14,791
Share options exercised 84 3,698 - - - - 3,782 - 3,782
Transactions with own shares - - - - - (10) (10) - (10)
Group reorganisation 2,582 (6,625) 4,043 - - - - - -
Pre-IPO bonus (share-based payments) 7 - - - - - 7 - 7
Primary proceeds (net of expenses) 1,334 194,763 - - - - 196,097 - 196,097
Cancellation of shares (58) - - - - 58 - - -
Allotment of class B share 30,006 - (30,006) - - - - - -
Dividends paid - - - - - - - (1,980) (1,980)
Transfer of reserves - - - (383) - 383 - - -
Share-based payments - - - - - 3,736 3,736 - 3,736
Acquisition of subsidiaries - - - - - - - 2,259 2,259
Acquisition of non-controlling interests - - - - 27,003 (966) 26,037 (26,037) -
Put options held by non-controlling interests - - - - 1,960 - 1,960 - 1,960
Total transactions with owners recognised directly in equity 33,955 191,836 (25,963) (383) 28,963 3,201 231,609 (25,758) 205,851
At 31 December 2021 38,113 194,763 (25,963) 1,465 (17,046) 84,526 275,858 8,889 284,747
Profit for the year - - - - - 16,630 16,630 1,066 17,696
Other comprehensive income - - - 8,877 - - 8,877 28 8,905
Total comprehensive income - - - 8,877 - 16,630 25,507 1,094 26,601
Capital reduction (30,006) (191,805) - - - 221,811 - - -
Dividends paid - - - - - - - (56) (56)
Share-based payments - - - - - 6,395 6,395 - 6,395
Acquisition of a non-controlling interests - - - - 5,644 - 5,644 (5,644) -
Put options held by non-controlling interests - - - - (1,124) - (1,124) - (1,124)
Total transactions with owners recognised directly in equity (30,006) (191,805) - - 4,520 228,206 10,915 (5,700) 5,215
At 31 December 2022 8,107 2,958 (25,963) 10,342 (12,526) 329,362 312,280 4,283 316,563
CONSOLIDATED STATEMENT OF CASH FLOWS
(EUR '000)
Notes For the year ended 31 December
2022 2021
Cash flows from operating activities
Profit before tax for the period 27,976 17,669
Non-cash adjustments:
Depreciation and amortisation 5 30,393 21,867
Gain on disposal of non-current assets (114) (29)
Interest income (234) (44)
Interest expense 5,815 4,913
Movements in provisions 541 153
Impairment losses of financial assets 3,912 3,116
Movements in allowances for inventories 183 (64)
Foreign currency exchange rate differences (1,838) (784)
Fair value revaluation of derivatives 2,769 (1,472)
Share-based payments 6,395 3,736
Other non-cash items 709 792
Working capital adjustments:
(Increase)/decrease in trade and other receivables and prepayments (79,507) (69,445)
(Increase)/decrease in inventories (10,156) (4,108)
Increase in trade and other payables 75,087 28,774
Interest received 234 44
Interest paid (10,123) (4,498)
Income tax paid (7,799) (10,193)
Net cash flows (used in)/generated from operating activities 44,243 (9,573)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 289 225
Proceeds from sale of financial instruments 56 -
Purchase of property, plant and equipment (7,271) (5,221)
Purchase of intangible assets (37,290) (26,230)
Purchase of financial instruments (14,364) -
Payments for acquisition of subsidiaries, net of cash acquired (42,712) (1,166)
Investment in associates (3,000) (10,685)
Net cash used in investing activities (104,292) (43,077)
Cash flows from financing activities
Payment of principal elements of lease liabilities (3,112) (2,382)
Proceeds from borrowings - 39,519
Repayment of borrowings (15,014) (18,773)
Acquisition of non-controlling interests - (27,003)
Dividend payments (56) (3,480)
Proceeds from issued share capital (net of expenses) - 199,879
Proceeds from sale of own shares - 20
Net cash (used in) / generated from financing activities (18,182) 187,780
Net (decrease)/increase in cash and cash equivalents (78,231) 135,130
Effect of exchange rate changes on cash and cash equivalents 79 63
Cash and cash equivalents at beginning of period 224,154 88,961
Cash and cash equivalents at end of period 146,001 224,154
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 on 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 truck parks 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").
The financial information for the year ended 31 December 2021 was presented as
a continuation of W.A.G. payments solutions, a.s.
2. BASIS OF PREPARATION
The annual report and financial statements for the period ended 31 December
2022 were approved by the Board of Directors on 16 March 2023 along with this
preliminary announcement, but have not yet been delivered to the Registrar of
Companies.
The financial information contained in this preliminary announcement does not
constitute the Group's statutory accounts within the meaning of Section 434 of
the Companies Act 2006.
The auditor's report on the statutory accounts for the period ended 31
December 2022 was unqualified and did not contain a statement under section
498 of the Companies Act 2006.
The consolidated financial statements of the Group have been prepared in
accordance with UK-adopted International Accounting Standards ("IFRS") and
with the requirements of the Companies Act 2006 as applicable to companies
reporting under these standards.
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 year ended 31 December
2021 was presented as a continuation of W.A.G. payment solutions, a.s. A
movement in share capital, share premium and merger reserve is reflected in
the statement of changes in equity at the date of Group reorganisation.
The consolidated financial statements have been prepared on a historical cost
basis, except for certain financial assets and liabilities (including
derivative financial instruments) that have been measured at fair value. The
consolidated financial statements are presented in EUR and all values are
rounded to the nearest thousand (EUR '000), except where otherwise indicated.
The Board has considered the financial prospects of the Company and Group for
the foreseeable future, which is at least the next 12 months, and made an
assessment of the Company's and Group's ability to continue as a going
concern. The Board's assessment included consideration of the availability of
the Company's and Group's credit facilities, cash flow forecasts and stress
test scenarios. Stress test scenarios applied in the Going Concern statement
are in line with scenarios covered in the Viability statement. The Board is
satisfied that the Company and Group have the resources to continue operating
the business for the foreseeable future, and furthermore are not aware of any
material uncertainties that may cast significant doubt upon the Company's and
Group's ability to continue as a going concern and the Board considers it is
appropriate to adopt the going concern basis of accounting in preparing the
annual financial statements.
3. BUSINESS COMBINATION
The following acquisitions took place in 2022:
Acquisition of WebEye Group
Further to the subsequent events described in the 2021 Annual Report and
Accounts, the Group signed a novated agreement on 16 May 2022 to acquire
substantially all of the assets of Webeye Telematics Zrt. ("Webeye"), a
leading Fleet Management Solution 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 on 16 May 2022 and a further EUR
19.9 million 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 EUR 60.6 million.
The transaction has expanded 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 subsidiaries of Webeye as at the date of acquisition were:
EUR '000 Fair value recognised on acquisition non-Hungarian Webeye subsidiaries Fair value recognised on acquisition Hungarian Webeye subsidiaries Total
Assets
Identifiable intangible assets 16,256 11,077 27,333
Property, plant and equipment 1,411 729 2,140
Right-of-use assets 357 1,598 1,955
Inventories 263 497 760
Trade receivables 1,308 1,058 2,366
Cash and cash equivalents 395 103 498
Other assets 10 - 10
Total Assets 20,000 15,062 35,062
Deferred tax 1,810 986 2,796
Trade payables 714 883 1,597
Lease liabilities 357 1,598 1,955
Total Liabilities 2,881 3,467 6,348
Total identifiable net assets at fair value 17,119 11,595 28,714
Goodwill arising on acquisition 19,793 11,512 31,305
Purchase consideration:
Cash paid 23,319 19,891 43,210
Deferred and contingent consideration (discounted) 13,593 3,216 16,809
Total purchase consideration 36,912 23,107 60,019
The goodwill is attributable to expected synergies from combining operations.
It will not be deductible for tax purposes.
The gross contractual receivables acquired amounted to EUR 3,002 thousand. At
acquisition date, there were EUR 636 thousand of contractual cash flows not
expected to be collected.
From the date of acquisition until 31 December 2022, Webeye entities
contributed EUR 8,057 thousand of revenue and EUR 887 thousand loss after tax
(mainly driven by amortisation of acquired intangibles and M&A related
adjusting items). Excluding amortisation of acquired intangibles and adjusting
items the adjusted profit after tax would have been EUR 734 thousand.
If the acquisition had occurred on 1 January 2022, consolidated revenue and
consolidated loss after tax of Webeye entities for the year ended 31 December
2022 would have been EUR 15,429 thousand and EUR 865 thousand respectively.
Excluding amortisation of acquired intangibles and adjusting items the
adjusted profit after tax would have been EUR 1,557 thousand. Transaction
costs are disclosed at the end of this note.
As at the date of acquisition, discount rate of 2.00% was used to determine
the present value of deferred and contingent consideration. As at 31 December
2022, the discount rate was increased to 3.90%. Reasonably possible change in
the discount rate does not lead to a significant change in the present value
of deferred and contingent consideration.
Contingent consideration is subject to achievement of integration related
milestones. Reasonably possible change in milestones achievement does not lead
to a significant change in the fair value of contingent consideration.
Acquisition of 9.99% share in JITpay
On 27 September 2022, Eurowag entered into a strategic partnership with JITpay
Group, a German-based payment service provider specialising in the logistics
industry. The transaction expands the Group's product portfolio by adding
invoice discounting, digitalised billing and receivables management solutions
and strengthens its presence in Germany, one of the most strategically
important trucking markets in Europe. As part of the strategic partnership,
Eurowag has acquired a 9.99% stake in JITpay for an initial consideration of
EUR 14.3 million, with the flexibility for a potential increase in its
ownership over time subject to regulatory approvals. The investment was
classified as financial asset at fair value through other comprehensive
income. The investment is considered to be a strategic investment and is not
held for trading.
The Group has call options to acquire an additional 18.01% share which can be
exercised either by 3 July 2023 for a consideration of EUR 25.7 million or
later by 1 January 2024 for EUR 35 million. First call option reflects
original valuation, which is not expected to change during a short period.
In case neither of the call options is exercised, JITpay has the right to buy
back acquired 9.99% share for EUR 1.
Acquisition of non-controlling interest in Sygic
On 20 December 2022, the Group signed an agreement with Non-controlling
Shareholders of Sygic, a.s., which will enable the Group to take full control
of Sygic's resources. Consideration for the 30% equity interest of EUR 14.4
million is payable in April 2024, in line with the original option agreement.
Ownership of the shares remains with Non-controlling Shareholders until April
2024, however following the agreement with fixed price they are no longer
exposed to variable returns from the investment.
Under the previous shareholders agreement, the minority shareholders had
certain rights pertaining to the application of Sygic's resources within the
Group. Having full control of Sygic has provided the Group with unrestricted
access to Sygic's resources and allowed it to fully utilise Sygic's digital
expertise and people capabilities. This, in turn, will enable the Group to
accelerate its digital sales channel and integrated product initiatives by
utilising Sygic's capabilities more effectively across Eurowag's whole range
of mobility solutions.
Pay-out of deferred consideration
On 31 January 2022, the Group paid deferred acquisition consideration of EUR 3
million related to acquisition of company Threeforce B.V. (Last Mile
Solutions).
The following acquisitions took place in 2021:
Acquisition of 51% share in KomTeS
On 1 January 2021, the Group acquired 51% of the share capital in KomTeS, a
value-added reseller of the Group's Webdispečink product (Fleet management
solutions). The transaction will ensure the highest level of support, service,
and value to Group and KomTeS customers in both the Czech Republic and
Slovakia.
The remaining 49% non-controlling interest is subject to put/call option
rights of the parties, where the Group is entitled to exercise the call option
at any time after 1 January 2022 and the minority Shareholders are entitled to
exercise the put option at any time after 18 December 2023 (if the call option
has not been exercised).
The fair values of identifiable assets and liabilities of KomTeS as at the
date of acquisition were:
EUR '000 Fair value recognised on acquisition KomTeS Group
Assets
Identifiable intangible assets 4,981
Property, plant and equipment 109
Inventories 96
Trade receivables 772
Accruals 10
Cash and cash equivalents 1,610
Total Assets 7,578
Deferred tax 946
Trade payables 1,989
Accruals 29
Total Liabilities 2,964
Total identifiable net assets at fair value 4,614
Non-controlling interest measured at fair value 2,259
Goodwill arising on acquisition -
No adjustments were made to opening balance sheet in 2022 and the fair value
of acquired asset is finalised.
The gross contractual receivables acquired amounted to EUR 772 thousand. At
acquisition date, there were no contractual cash flows not expected to be
collected.
Associate investment in Last Mile Solutions
On 16 February 2021, the Group acquired 28% non-controlling interest in
Dutch-based Threeforce B.V., operating under brand Last Mile Solutions, a fast
growing eMobility platform in Europe. The deal supports the Group's position
in the eMobility market and confirms its focus on sustainable transportation
solutions. Through this partnership, both companies will combine efforts to
provide industry-leading eMobility services to their customers throughout
Europe.
Additional 62% shares are subject to a put option, which may require the Group
to acquire shares of Last Mile Solutions. The put option is measured as a
derivative instrument and it might be exercised between February 2025 and
February 2026.
Associate investment in Drivitty
On 1 April 2021, the Group acquired a 20% non-controlling interest in the
Lithuanian company Tankita UAB, operating under the brand Drivitty, a mobile
services integration leader in the commercial transportation market. With this
strategic partnership the Group aims to accelerate its path towards providing
fully seamless mobile payments for its customers.
Although the Group has a call option to acquire the remaining shares of
Drivitty, it concluded that the call option does not provide control over the
entity.
Acquisition of 25% non-controlling interest in ADS Group
On 4 March 2021, the Group acquired the remaining 25% of shares of ADS
companies, a top commercial road transport services provider in Spain and
Portugal. The transaction is a key part of the Group's long-term strategy to
strengthen its presence in the Iberian Peninsula and Western Europe.
As the remaining 25% non-controlling interest was subject to put/call option
rights of the parties, the Group recognised a financial liability at the
present value of the amount payable on exercise of the NCI put in accordance
with IFRS 9 at 31 December 2020.
Pay-out of deferred acquisition consideration
On 24 November 2021, the Group paid first deferred acquisition consideration
of EUR 421 thousand related to acquisition of Aldobec technologies, s.r.o.
Other disclosures
Net outflows of cash to acquire subsidiaries were as follows:
EUR '000 31 December 2022 31 December 2021
Cash consideration paid 43,210 2,776
Cash acquired (498) (1,610)
Net outflow of cash - investing activities 42,712 1,166
Cost of acquisition of subsidiaries recognised in other operating expense and
cash flows from operating activities:
EUR '000 For the year ended 31 December
2022 2021
Acquisition costs 7,941 789
Acquisition costs incurred in 2022 mostly relate to acquisition of Grupa
Inelo.
4. 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 of W.A.G. payments solutions, a.s. 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 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 either subscription based
or subsequently sold to customers using Payment solutions products. The
segment includes Tax refund, Fleet management solutions, Navigation, and other
service offerings.
Net energy and services sales, contribution, contribution margin, EBITDA, and
Adjusted EBITDA are non-GAAP measures, see Note 5.
The CODM does not review assets and liabilities at segment level.
Year ended 31 December 2022 EUR '000 Payment solutions Mobility solutions Total
Segment revenue 2,312,242 56,010 2,368,252
Net energy and services sales 134,847 56,010 190,857
Contribution 118,157 40,807 158,964
Contribution margin 88% 73% 83%
Corporate overhead and indirect costs before adjusting items (77,371)
Adjusting items affecting Adjusted EBITDA (18,461)
Depreciation and amortisation (30,393)
Net finance costs and share of net loss of associates (4,763)
Profit before tax 27,976
Year ended 31 December 2021 Payment solutions Mobility solutions Total
EUR '000
Segment revenue 1,606,051 40,051 1,646,102
Net energy and services sales 113,081 40,051 153,132
Contribution 99,594 28,926 128,520
Contribution margin 88% 72% 84%
Corporate overhead and indirect costs before adjusting items (58,800)
Adjusting items affecting Adjusted EBITDA (22,793)
Depreciation and amortisation (21,867)
Net finance costs and share of net loss of associates (7,391)
Profit before tax 17,669
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 year ended 31 December
2022 2021
Czech Republic ("CZ") 484,055 316,707
Poland ("PL") 401,528 290,499
Central Cluster (excluding CZ and PL) 275,000 189,439
Portugal ("PT") 397,052 334,069
Western Cluster (excluding PT) 92,192 36,381
Romania ("RO") 317,518 192,742
Southern Cluster (excluding RO) 391,515 278,125
Not specified 9,392 8,140
Total 2,368,252 1,646,102
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 year ended 31 December
2022 2021
Czech Republic 35,179 26,347
Poland 30,485 27,037
Central Cluster (excluding CZ and PL) 26,715 20,566
Portugal 16,362 21,058
Western Cluster (excluding PT) 7,787 5,590
Romania 28,252 19,676
Southern Cluster (excluding RO) 38,339 26,495
Not specified 7,738 6,363
Total 190,857 153,132
The following table presents the Group´s non-current assets, net of
accumulated depreciation and amortisation, by country. Non-current assets for
this purpose consist of property and equipment, right-of-use assets,
intangible assets, investments in associates, financial assets and other
non-current assets (excluding deferred tax assets and derivative assets).
EUR '000 For the year ended 31 December
2022 2021
Czech Republic 152,155 126,427
Spain 61,898 63,238
Slovakia 55,799 53,882
United Kingdom 1,552 541
Other 80,311 8,765
Total 351,715 252,853
Timing of revenue recognition was as follows:
EUR '000 For the year ended 31 December
2022 2021
Payment solutions
Goods and services transferred at a point in time 2,286,450 1,585,701
Services transferred over time 25,792 20,350
2,312,242 1,606,051
Mobility solutions
Goods and services transferred at a point in time 15,700 12,753
Services transferred over time 40,310 27,298
56,010 40,051
Total segment revenue 2,368,252 1,646,102
5. 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, Contribution margin, EBITDA, Adjusted
EBITDA, Adjusted EBITDA margin, Adjusted earnings, Adjusted earnings per
share, and 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.
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 4).
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.
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), the extent to which intangible assets are identifiable
(affecting relative amortisation expense) and share of loss of associates.
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 had no 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), costs related
to transformation of key IT systems as well as Grupa Inelo integration costs 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 not expected to be
adjusted in 2023.
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 and due to the fact that annual investments compared
to Group's Net sales are significantly higher than regular investments of a
technology company. Strategic transformation programme is expected to end in
2023 except for SAP implementation, which is expected to end in 2024.
Anticipated IT transformation expense adjustment in 2023 amounts to EUR 4.1
million in 2023 and EUR 3.3 million in 2024. The Group does not expect
significant capitalisation related to SAP in 2024.
Integration costs of Grupa Inelo
In 2023 and 2024, the Group expects to adjust one-off costs related to
transformation and integration of Grupa Inelo. While the Group did not adjust
integration costs in the past, the related activities and one-off costs are
expected to be significantly higher than for previously completed
acquisitions. Exclusion of these costs will allow better result comparability.
The Group currently estimates approximately EUR 2 million of integration costs
in 2023. The Group is in very early stage of integration, the management will
evaluate integration progress and update the expected amount in 2023 interim
financial statements.
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 20.7 million, from
which EUR 1.3 million was a one-off in 2021 and EUR 19.4 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. Amortised expenses amounted to EUR 5.1 million in 2021 and 5.3
million in 2022 and anticipated expense adjustment amounts to EUR 6.5 million
in 2023 and EUR 2.5 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 year ended 31 December
2022 2021
Intangible assets amortisation (Note 8) 22,234 15,303
Tangible assets depreciation (Note 9) 4,790 4,129
Right of use depreciation 3,369 2,435
Depreciation and amortization 30,393 21,867
Net finance costs and share of net loss of associates 4,763 7,391
Profit before tax 27,976 17,669
EBITDA 63,132 46,927
M&A-related expenses (Note 5) 7,941 789
Non-recurring IPO-related expenses - 12,943
Strategic transformation expenses 5,209 2,688
Share-based compensation 5,311 6,373
Adjusting items 18,461 22,793
Adjusted EBITDA 81,593 69,720
Adjusted EBITDA margin
Adjusted EBITDA margin represents Adjusted EBITDA for the period divided by
Net energy and services sales.
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 The Group acquired a number of companies in the past and plans further
ADS, Sygic and Webeye) 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.
The item adjusted in 2020-2022 represents assets replaced by strategic IT
transformation by the end of 2022, however, decisions may be taken as the
Group continues with its strategic IT transformation in 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, although, no significant
costs are currently expected to be adjusted in 2023 and 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 year ended 31 December
2022 2021
Profit for the year 17,696 9,650
Amortisation of acquired intangibles 6,562 5,419
Amortisation due to transformational useful life changes 1,864 1,717
Adjusting items affecting Adjusted EBITDA 18,461 22,793
Tax effect (3,029) (3,801)
Adjusted earnings (net profit) 41,554 35,778
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 10 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 7 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.
6. Finance Costs
Finance costs for the respective periods were as follows:
EUR '000 For the year ended 31 December
2022 2021
Bank guarantees fee 899 616
Interest expense 5,815 5,188
Factoring fee 1,348 698
Foreign exchange loss 692 2,380
Other 48 61
Total 8,802 8,943
The Group manages its foreign currency risk by using foreign currency forwards
and swaps.
7. Income Tax
Corporate income tax for companies in the Czech Republic and United Kingdom
for the years 2021 and 2022 was 19%.
WAG Iberia, together with all the Alava tax resident companies of ADS
sub-group (Reivalsa, Trofa, Arraia Oil, Arraia Autopistas and Liserteco 24h),
formed a consolidation tax group for CIT purposes beginning on 1 April 2019.
Spanish corporate income tax is 24% (2021: 24%).
Structure of the income tax for the respective periods is as follows:
EUR '000 For the year ended 31 December
2022 2021
Current income tax charge 12,148 7,679
Adjustments in respect of current income tax of prior years 495 112
Deferred tax (2,363) 228
Total 10,280 8,019
Reconciliation of tax expense and the accounting profit multiplied by the
Company domestic tax rate for the below periods:
EUR '000 For the year ended 31 December
2022 2021
Accounting profit before tax 27,976 17,669
At UK's statutory income tax rate of 19% (2021: 19%) 5,316 3,357
Adjustments in respect of current income tax of prior years 495 112
Effect of different tax rates in other countries of the Group 30 507
Non-deductible expenses (M&A related) 1,350 84
Non-deductible expenses (IPO related) - 1,368
Non-deductible expenses (other) 1,857 1,314
Share-based payments 1,020 700
Net investment hedge 260 468
Effect of accumulated tax loss claimed in the current period (68) (36)
Effect of unrecognised deferred tax assets relating to tax losses of current 20 145
period
At the effective income tax rate of 36.75% 45.38%
Income tax expense reported in the statement of profit or loss 10,280 8,019
Adjusted effective tax rate is as follows:
EUR '000 For the year ended 31 December
2022 2021
Accounting profit before tax 27,976 17,669
Adjusting items affecting adjusted EBITDA 18,461 22,793
Amortisation of acquired intangibles 6,562 5,419
Amortisation due to transformational useful life changes 1,864 1,717
Adjusted profit before tax (A) 54,863 47,598
Accounting tax expense 10,280 8,019
Tax effect of above adjustments 3,029 3,801
Adjusted tax expense (B) 13,309 11,820
Adjusted earnings (A-B) 41,554 35,778
Adjusted effective tax rate (B/A) 24.26% 24.83%
Unused tax losses, for which no deferred tax asset has been recognised were as
follows:
EUR '000 31 December 2022 31 December 2021
Unrecognised tax losses expiring by the end of:
31 December 2022 - 210
31 December 2023 210 279
31 December 2024 and after 1,240 813
No expiry date 444 942
Total unrecognised tax losses 1,894 2,244
Potential tax benefit 360 426
The unused tax losses were incurred by dormant subsidiaries that are not
likely to generate taxable income in the foreseeable future.
Deferred tax balances and movements:
EUR '000 1 January 2022 Business combinations (Charged) credited to profit or loss Charged to equity Translation differences 31 December 2022
Difference between net book value of fixed assets for accounting and tax (7,522) (2,747) (243) - 10 (10,502)
purposes
Allowances to receivables 1,638 - 1,273 - 65 2,976
Provisions for liabilities and charges 1,454 - 94 - 37 1,585
Tax losses 148 - 193 - 4 345
Tax benefit from pre-acquisition reserves 6,423 - (480) - - 5,943
Other 6 (49) 1,526 - (2) 1,481
Net deferred tax asset/(liability) 2,147 (2,796) 2,363 - 114 1,828
Recognised deferred tax asset 7,642 - 2,757 - 106 10,505
Recognised deferred tax liability (5,495) (2,796) (394) - 8 (8,677)
EUR '000 1 January 2021 Business combinations (Charged) credited to profit or loss Charged to equity Translation differences 31 December 2021
Difference between net book value of fixed assets for accounting and tax (6,499) (946) (63) - (14) (7,522)
purposes
Allowances to receivables 1,994 - (443) - 87 1,638
Provisions for liabilities and charges 1,276 - 119 - 59 1,454
Tax losses 157 - (15) - 6 148
Tax benefit from pre-acquisition reserves 6,995 - (572) - - 6,423
Other (724) - 746 - (16) 6
Net deferred tax asset/(liability) 3,199 (946) (228) - 122 2,147
Recognised deferred tax asset 7,057 - 463 - 122 7,642
Recognised deferred tax liability (3,858) (946) (691) - - (5,495)
The Group offsets tax assets and liabilities if and only if it has a legally
enforceable right to set off current tax assets and current tax liabilities
and the deferred tax assets and deferred tax liabilities relate to income
taxes levied by the same tax authority.
Direct subsidiaries of the Company, W.A.G. payment solutions, a.s. and its
subsidiaries, have undistributed earnings of EUR 195,685 thousand (2021: EUR
154,840 thousand) which, if paid out as dividends to the Company, would be
subject to 5% withholding tax. An assessable temporary difference exists, but
no deferred tax liability has been recognised as the Group is able to control
the timing of distributions from this subsidiary and is not expected to
distribute these profits in the foreseeable future.
8. Intangible Assets
Cost of intangible assets subject to amortisation:
EUR '000 Goodwill Client relationships Internal software development Patents and rights External software Other intangible assets Internal assets in progress External assets in progress Total
1 January 2021 103,788 24,167 39,853 5,460 20,612 31 10,788 1,338 206,037
Additions - 113 18,738 - 2,077 - 7,647 - 28,575
Acquisition of a subsidiary - 4,965 - - 77 - - - 5,042
Transfer - - - - 915 - - (915) -
Disposals - - - - (155) - (124) - (279)
Translation differences 1,410 - 2,298 5 719 - 747 36 5,215
31 December 2021 105,198 29,245 60,889 5,465 24,245 31 19,058 459 244,590
Additions - - 21,592 - 2,398 - 8,302 3,291 35,583
Acquisition of a subsidiary 31,305 21,080 5,898 105 298 - - - 58,686
Transfer - - 17,149 - - - (16,972) (177) -
Disposals - - (69) - (24) - (35) - (128)
Translation differences 712 (102) 2,579 - 269 - 430 (4) 3,884
31 December 2022 137,215 50,223 108,038 5,570 27,186 31 10,783 3,569 342,615
Accumulated amortisation and impairment of intangible assets subject to
amortisation:
EUR '000 Goodwill Client relationships Internal software development Patents and rights External software Other intangible assets Assets in progress Total
1 January 2021 - (8,837) (13,740) (2,729) (9,343) (24) - (34,673)
Amortisation - (2,850) (9,246) (5) (3,200) (2) - (15,303)
Acquisition of a subsidiary - - - - (61) - - (61)
Disposals - - - - 155 - - 155
Translation differences - - (981) (3) (271) - - (1,255)
31 December 2021 - (11,687) (23,967) (2,737) (12,720) (26) - (51,137)
Amortisation - (4,024) (14,512) (28) (3,668) (2) - (22,234)
Disposals - - 69 - 10 - - 79
Translation differences - - (974) (2) (176) - - (1,152)
31 December 2022 - (15,711) (39,384) (2,767) (16,554) (28) - (74,444)
Net book value:
EUR '000 Goodwill Client relationships Internal software development Patents and rights External software Other intangible assets Internal assets in progress External assets in progress Total
Net book value 105,198 17,558 36,922 2,728 11,525 5 19,058 459 193,453
at 31 December 2021
Net book value 137,215 34,512 68,654 2,803 10,632 3 10,783 3,569 268,171
at 31 December 2022
The table below presents carrying amount and remaining amortisation period of
individual intangible assets that are considered material to the Group's
consolidated financial statements:
Individual asset name As at 31 December 2022 As at 31 December 2021
Net book value Remaining useful life (in months) Net book value Remaining useful life (in months)
(in '000 EUR)
(in '000 EUR)
Customer relationships - ADS 7,306 60 8,767 72
Customer relationships - Webeye 19,794 113 - -
Internal software - EETS toll platform 15,046 62 4,896 74
Internal software - SAP 6,658 83 3,780 95
Internal software - Webeye platform 6,265 55 - -
EETS stands for European Electronic Toll Service, an initiative from the
European Union to create a simpler framework for paying toll in Europe by use
of single on-board unit for all toll systems within EU. The Group developed a
platform enabling its EETS-certified OBUs to make toll payments in multiple
countries.
Internal assets in progress consist of assets where the development phase has
not yet been completed.
The Group capitalised employee expenses and cost of materials and services
used or consumed in generating the intangible asset.
Research and development costs that were not capitalised and are, therefore,
recognised expenses are as follows:
EUR '000 For the year ended 31 December
2022 2021
Expensed research and development costs 3,331 5,024
Impairment testing
Goodwill acquired through business combinations is allocated to the respective
CGUs for impairment testing.
Carrying amount of the goodwill allocated to each of the CGUs:
EUR '000 31 December 2022 31 December 2021
Energy 40,180 40,180
Navigation 34,610 34,579
Fleet management solutions 57,963 25,996
Tax refund 2,401 2,382
Toll 2,061 2,061
Total 137,215 105,198
The recoverable amount of CGUs has been determined based on a value-in-use
calculation using cash flow projections from financial budgets and forecast
approved by the Board covering a five-year period, which shows growth in
revenues.
Key assumptions used for impairment testing
Discounted cash flow model is based on the following key assumptions:
· Discount rate
· Net energy and services sales for Energy CGU; revenues for
Navigation, Fleet management solutions and Tax refund CGUs
· Long-term revenue growth rate
Net energy and services sales and revenue growth were determined by management
separately for each CGU. They are based on the knowledge of each particular
market, taking into account the historical development of revenues, estimated
macroeconomic developments in individual regions and the Group's plans
regarding new products development, growth opportunities and market share
expansion. Estimated net energy and services sales and revenue growth
represent the best possible assumption of the Group's management considering
the future development as at the end of the period.
Discount rate reflects specific risks relating to the industry in which the
Group operates. The discount rate used is based on the weighted average cost
of capital ("WACC") of the Group as presumed by Capital Asset Pricing Model.
The table below shows key assumptions used in the value-in-use calculations
for material CGUs:
31 December 2022 31 December 2021
Energy CGU
Pre-tax discount rate 9.5% 10.0%
Net energy and services sales growth rate* 1.9% 0.1%
Long-term growth rate 1.8% 1.8%
Navigation CGU
Pre-tax discount rate 12.0% 12.0%
Revenue growth rate* 20.0% 25.2%
Long-term growth rate 3.0% 2.0%
Fleet management solutions CGU
Pre-tax discount rate 12.0% 11.0%
Net energy and services sales growth rate* 17.0% 18.9%
Long-term growth rate 3.0% 2.0%
Tax refund CGU
Pre-tax discount rate 10.0% 10.0%
Revenue growth rate* 10.1% 2.0%
Long-term growth rate 1.8% 1.8%
* Average over 5-year period.
Toll CGU was not significant.
The Group has considered the potential impact of climate change in impairment
tests. For all CGUs except Fleet management solutions, additional
sensitivities of discounted cash-flows were modelled to determine break-even
increase in operating and capital expenses and a combination of revenue
decrease and expense increase. Reasonably possible change in operating and
capital expenses does not lead to any impairment, climate change impact on
recoverable amounts and useful life of non-financial assets is thus not
considered to be significant for these CGUs.
Fleet management solutions recoverable amount is closer to the carrying amount
than all other CGUs. A combination of revenue decrease and operating and
capital expenses increase was therefore included in Fleet management solutions
CGU base model. Sensitivities of discounted cash-flows described below
directly include the expected climate change impact, which would either lead
to breakeven or to a significant impairment.
Energy
The recoverable amount is estimated to exceed the carrying amount of the CGU
at 31 December 2022 by EUR 28,140 thousand.
Discount rate used in the value-in-use calculation would have to increase to
12.3% for the recoverable amount to be equal to its carrying amount.
Net energy and services sales used in the value-in-use calculation would have
to decrease by 26.0% for the recoverable amount to be equal to its carrying
amount.
Long-term revenue growth rate would have to decrease to -4.5% for the
recoverable amount to be equal to its carrying amount.
Navigation
The recoverable amount is estimated to exceed the carrying amount of the CGU
at 31 December 2022 by EUR 78,405 thousand.
Discount rate used in the value-in-use calculation would have to increase to
22.1% for the recoverable amount to be equal to its carrying amount.
Revenue used in the value-in-use calculation would have to decrease by 28.2%
for the recoverable amount to be equal to its carrying amount.
Long-term revenue growth rate would have to decrease to -33.4% for the
recoverable amount to be equal to its carrying amount.
Fleet management solutions
The recoverable amount is estimated to exceed the carrying amount of the CGU
at 31 December 2022 by EUR 5,845 thousand.
Discount rate used in the value-in-use calculation would have to increase to
12.4% for the recoverable amount to be equal to its carrying amount and to
12.7% for a significant impairment to occur.
Revenue used in the value-in-use calculation would have to decrease by 1.7%
for the recoverable amount to be equal to its carrying amount and by 3.0% for
a significant impairment to occur.
Long-term revenue growth rate would have to decrease to 2.1% for the
recoverable amount to be equal to its carrying amount and to 1.3% for a
significant impairment to occur.
Tax refund
The recoverable amount is estimated to exceed the carrying amount of the CGU
at 31 December 2022 by EUR 9,547 thousand.
Discount rate used in the value-in-use calculation would have to increase to
25.5% for the recoverable amount to be equal to its carrying amount.
Revenue used in the value-in-use calculation would have to decrease by 27.0%
for the recoverable amount to be equal to its carrying amount.
Reasonably possible change in long-term revenue growth rate of 1.80% does not
lead to any impairment.
9. Property, Plant And Equipment
Cost of property, plant and equipment:
EUR '000 Lands and Buildings Leasehold improvements Machinery and equipment Vehicles, Furniture and fixtures Tangibles in progress Total
1 January 2021 23,992 3,601 19,510 5,746 1,555 54,404
Additions 1,768 432 2,762 213 5 5,180
Acquisition of a subsidiary - - - 557 - 557
Disposals - (41) (119) (1,212) (10) (1,382)
Translation differences 631 173 705 291 23 1,823
31 December 2021 26,391 4,165 22,858 5,595 1,573 60,582
Additions 1,551 380 3,413 184 2,073 7,601
Acquisition of a subsidiary 14 - 1,998 128 - 2,140
Disposals - (7) (641) (895) (4) (1,547)
Translation differences 238 99 367 135 (61) 778
31 December 2022 28,194 4,637 27,995 5,147 3,581 69,554
Accumulated depreciation and impairment of property, plant and equipment:
EUR '000 Lands and Buildings Leasehold improvements Machinery and equipment Vehicles, Furniture and fixtures Tangibles in progress Total
1 January 2021 (4,282) (1,417) (12,215) (3,515) - (21,429)
Depreciation charge (569) (590) (2,126) (844) - (4,129)
Acquisition of a subsidiary - - - (448) - (448)
Disposals - 10 113 1,056 - 1,179
Translation differences (181) (108) (447) (256) - (992)
31 December 2021 (5,032) (2,105) (14,675) (4,007) - (25,819)
Depreciation charge (834) (724) (2,496) (735) - (4,789)
Disposals - 2 626 729 - 1,357
Translation differences (77) (71) (237) (92) - (477)
31 December 2022 (5,943) (2,898) (16,782) (4,105) - (29,728)
Net book value of property, plant and equipment:
EUR '000 Lands and Buildings Leasehold improvements Machinery and equipment Vehicles, Furniture and fixtures Tangibles in progress Total
Net book value 21,359 2,060 8,183 1,588 1,573 34,763
at 31 December 2021
Net book value 22,251 1,739 11,213 1,042 3,581 39,826
at 31 December 2022
Land, buildings and machinery and equipment are subject to pledge in respect
of bank loans:
EUR '000 31 December 2022 31 December 2021
Pledged property, plant and equipment 39,467 34,544
10. Earnings Per Share
All ordinary shares have the same rights. Class B share 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 basic 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 year ended 31 December
2022 2021
Net profit attributable to equity holders (EUR '000) 16,630 9,148
Basic weighted average number of shares 688,911,333 595,582,785
Effects of dilution from share options 816,306 1,483,248
Total number of shares used in computing dilutive earnings per share 689,727,639 597,066,033
Basic earnings per share (cents/share) 2.41 1.54
Diluted earnings per share (cents/share) 2.41 1.53
Adjusted earnings per share measures:
For the year ended 31 December
2022 2021
Net profit attributable to equity holders (EUR '000) 16,630 9,148
Adjusting items affecting Adjusted EBITDA (Note 5) 18,461 22,793
Amortisation of acquired intangibles* 5,499 4,297
Amortisation due to transformational useful life changes 1,864 1,717
Tax impact of above adjustments* (2,813) (3,573)
Adjusted net profit attributable to equity holders (EUR '000) 39,641 34,382
Basic weighted average number of shares 688,911,333 595,582,785
Adjusted basic earnings per share (cents/share) 5.75 5.77
Diluted weighted average number of shares 689,727,639 597,066,033
Adjusted dilutive earnings per share (cents/share) 5.75 5.76
*non-controlling interests impact was excluded
Options
Options granted to employees under Share-based payments 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 as their performance conditions have
not been met.
11. Interest Bearing Loans And Borrowings
31 December 2022 31 December 2021
Currency Maturity Interest rate Total limit in currency Amount in original currency Amount in EUR'000 Total limit in currency Amount in original currency Amount in EUR'000
Bank loans
Senior multicurrency term and revolving facilities agreement* EUR 2025/05 3M EURIBOR + margin - - - 47,500 30,898 30,898
Senior multicurrency term and revolving facilities agreement* EUR 2025/05 3M EURIBOR + margin - - - 47,500 46,843 46,843
Senior multicurrency term and revolving facilities agreement* EUR 2025/05 3M EURIBOR + margin - - - 95,000 84,510 84,510
Multicurrency term and revolving facilities agreement** EUR 2027/09 3M EURIBOR + margin 45,000 42,941 42,941 - - -
Multicurrency term and revolving facilities agreement** EUR 2027/09 3M EURIBOR + margin 68,000 64,889 64,889 - - -
Multicurrency term and revolving facilities agreement** EUR 2027/09 3M EURIBOR + margin 37,000 35,307 35,307 - - -
Other loans CZK fixed rate 393 393 17 5,277 5,277 212
Revolving facilities and overdrafts - 2 2 - 10 10
Total EUR 143,156 162,473
Current EUR 21,884 18,894
Non-current EUR 121,272 143,579
*On 27 May 2019, the Group signed senior multicurrency term and revolving
facilities agreements ("old club financing agreement") with following banks:
a. BNP Paribas S.A. acting through its branch BNP Paribas S.A., pobočka
Česká republika,
b. Citibank Europe plc acting through its branch Citibank Europe plc,
organizační složka,
c. Česká spořitelna, a.s.,
d. Československá obchodní banka, a. s.,
e. HSBC Bank plc acting through its branch HSBC Bank plc - pobočka Praha,
f. Komerční banka, a.s.,
g. Raiffeisenbank a.s.,
h. UniCredit Bank Czech Republic and Slovakia, a.s.
Under this financing, up to EUR 60 million was available for the Group for
revolving facilities and overdraft accounts, and up to EUR 113 million for
bank guarantees.
**On 22 September 2022, the Group signed new multicurrency term and revolving
facilities agreement ("new club financing agreement") with following banks:
a. BNP Paribas S.A. acting through its branch BNP Paribas S.A., pobočka
Česká republika,
b. Citibank Europe plc acting through its branch Citibank Europe plc,
organizační složka,
c. Česká spořitelna, a.s.,
d. Československá obchodní banka, a. s.,
e. Komerční banka, a.s.,
f. Raiffeisenbank a.s.,
g. UniCredit Bank Czech Republic and Slovakia, a.s.
h. Powszechna Kasa Oszczednosci Bank Polski Spolka Akcyjna acting through
PKO BP S.A., Czech branch
i. Česká exportní banka, a.s.
The new club financing agreement consists of four tranches:
· EUR 150 million committed facility A for the refinancing of all
existing term loan indebtedness;
· EUR 180 million committed facility B for permitted acquisitions and
capital expenditure;
· EUR 235 million committed auxiliary credit facility, of which EUR
85 million may be utilised by way of revolving loans, and EUR 150 million may
be utilised by way of ancillary facilities in the form of bank guarantees,
letters of credit, or an overdraft up to EUR 25 million; and
· EUR 150 million uncommitted incremental facility for permitted
acquisitions, capital expenditure, and auxiliary credit facilities up to EUR
50 million of which not more than EUR 25 million can be utilised as revolving
loans.
The applicable interest rate margin for the new club financing shall be
determined according to the following margin grid:
Net leverage Facility A and B
> 3.25 2.30% p.a.
≤ 3.25 ≥ 2.50 2.10% p.a.
< 2.50 1.90% p.a.
The Group has not drawn any loans from a non-bank entity.
The interest expense relating to bank loans and borrowings is presented in
Note 6.
Interest bearing loans and borrowings are non-derivative financial liabilities
carried at amortised cost.
As at 31 December 2022, the following pledges have been made as a security for
aforementioned loans:
· pledge of shares (mainly W.A.G payment solution, a.s.);
· pledge of receivables;
· pledge of bank accounts;
· pledge of trademarks.
As at 31 December 2021, the following pledges had been made as a security for
aforementioned loans:
· pledge of shares (W.A.G payment solution, a.s. shares were fully
pledged after Admission);
· pledge of receivables;
· pledge of bank accounts;
· pledge of real estate (Note 9);
· pledge of movable assets (Note 9); and
· pledge of trademarks.
The Group complied with all financial covenants under the old and new club
financing agreements as of 31 December 2022 and 31 December 2021, and
forecasts compliance for the going concern period.
Financial covenant terms of the new club financing facilities were as follows:
Covenant Calculation Target Actual
31 December 2022
Interest cover the ratio of adjusted EBITDA to finance charges Min 4.00 11.20
Net leverage the ratio of total net debt to adjusted EBITDA Max 4.00* 0.13
Adjusted net leverage the ratio of the adjusted total net debt to adjusted EBITDA Max 6.50 1.95
*the covenant shall not exceed 3.75 in 2024 and 3.50 in 2025 and onwards
Under the old club financing facilities, the Group was required to comply with
the following financial covenants:
· interest cover (the ratio of adjusted EBITDA to interest payable)
shall not be less than 5;
· net leverage (the ratio of total net debt to Adjusted EBITDA) shall
not exceed 3.75 in 2021 and 3.5 in 2022;
· the borrowing base covenant (the ratio of the sum of outstanding
amount of revolving facility, outstanding bank guarantees less cash and cash
equivalents, to trade receivables) shall not exceed 1.00; and
· adjusted net leverage (the ratio of the adjusted total net debt to
Adjusted EBITDA) shall not exceed 6.50.
For the purposes of covenants calculation, alternative performance measures
are defined differently by the new club financing agreement:
· adjusted EBITDA represents full year adjusted EBITDA of companies
acquired during the period;
· net debt includes lease liabilities and derivative liabilities, and
· adjusted net debt includes face amount of guarantees, bonds,
standby or documentary letter of credit or any other instrument issued by a
bank or financial institution in respect of any liability of the Group.
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 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.
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, Sygic and WebEye) , 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.
Directors' Responsibility Statement Required under the Disclosure and
Transparency Rules
The responsibility statement below has been prepared in connection with the
Company's full Annual Report and Accounts for the year ended 31 December 2022.
Certain parts of that Report are not included within this announcement. We
confirm to the best of our knowledge:
· the Group Financial Statements, which have been prepared in accordance
with UK-adopted international accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit of the Group;
· the Company Financial Statements, which have been prepared in accordance
with United Kingdom Accounting Standards, comprising FRS 101, give a true and
fair view of the assets, liabilities and financial position of the Company;
and
· the Strategic Report includes a fair review of the development and
performance of the business and the position of the Group and Company,
together with a description of the principal risks and uncertainties that it
faces.
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