REG - Eurowag - Preliminary Results for year ended 31 Dec 2021
24/03/2022 07:01
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RNS Number : 8323F Eurowag 24 March 2022
24 March 2022
W.A.G payment solutions plc ("Eurowag", or the "Group")
Preliminary Results for the year ended 31 December 2021
STRONG GROWTH IN LINE WITH IPO GUIDANCE
Financial highlights
The Group achieved key financial objectives on its medium-term financial
guidance.
· Net energy and services(1) sales up by 19.1% at €153.1m, with
organic growth(1) of 17.1% year-on-year
· Payment solutions(1) segment up by 20.2% at €113.1m and
mobility solutions(1) segment up by 15.9% at €40.0m
· Adjusted EBITDA(1) up by 18.9% at €69.7m resulting in adjusted
EBITDA margin(1) at 45.5%
· Strong progress on transformational capital expenditure(1) plan
with €23.3m spent
· Net cash(1) position of €61.7m as at 31 December 2021
providing for significant leverage headroom to take advantage of strategic
opportunities
Growing scale and network within a high quality payments-oriented business
model and highly diversified revenue base underpinned strong net energy and
services sales growth.
· Average active payment solutions customers(1) up by 13.9% at
15,020
· Average active payment solutions trucks(1) up by 13.4% at 82,640
· Payment solutions transactions(1) up by 11.7% at 32.5m
· Net revenue retention(1) for 2017-2021 over 110%
Key statutory financials 2021 2020 YoY %
Revenue from contracts with customers (€m) 1 646.1 1 253.0 31.4%
Profit before tax (€m) 17.7 28.8 (38.5%)
Basic EPS (cents/share) 1.54 3.76 (59.0%)
Alternative performance measures 2021 2020 YoY %
Net energy and services sales (€m) 153.1 128.6 19.1%
Adjusted EBITDA (€m) 69.7 58.6 18.9%
Adjusted basic EPS(1) (cents/share) 5.77 4.83 19.5%
Operational and strategic highlights
· Listed on the London Stock Exchange, raised €200m in equity
capital to support inorganic growth and technology transformation, and
improved company profile to attract talent
· Strengthened the management team and established a Board of
Directors with UK plc experience
· Completed the acquisition of ADS and commenced customer portfolio
integration
· Acquired stakes in KomTeS, Drivitty and Last Mile Solutions, and
announced the intended acquisition of WebEye
· Launched mobile payments pilot and enabled payments for charging
stations on Sygic GPS Navigation
· Launched EETS operations in Austria and Belgium in 2021, followed
by a pilot in Germany in 2022
· Expanded the acceptance network for roadside service payments
· Expanded the Road Lords application for use in the office and on
the road, and introduced the Eurowag mobile application for easy access to
customer account
· Deployed telematics features for fleet management to the on-board
unit for toll payments, with anti-fraud protection for energy payments
· Rolled out digital onboarding and the Automated Credit Approval
System
· Offered new supply-chain financing solutions via third parties
and hybrid financing for tax refunds
· Introduced methodical approach to ESG, established baseline for
reporting and set future goals for carbon reduction, Diversity, Equity, and
Inclusion, and employee engagement
· Expanded the indirect sales channel to provide navigation systems
to automotive OEMs
Paul Manduca, Independent Non-Executive Director and Chair said:
"I am pleased to be introducing Eurowag's first set of annual results as a
company listed on the London Stock Exchange. Despite macro-economic challenges
the Group has delivered growth in line with guidance. The Company is in a good
position to continue to broaden its technological foundations and
capabilities. With its accelerated growth plans, the Company is committed to
its mandate from shareholders to make select strategic acquisitions and expand
our market offering. Despite the volatile geopolitical situation which may
have a negative impact on the European economy, Eurowag continues to be a fast
growing, profitable, cash generative business. The Board will continue to
monitor the humanitarian tragedy in Ukraine and our thoughts are with the
Ukrainian people at this time. "
Martin Vohánka, CEO and Founder said:
"We delivered strong organic growth in 2021 and enter 2022 with clear
momentum, and confidence in the business. Eurowag has built a large payments
acceptance network in Europe integrated with complementary mobility services
putting it at the forefront of digital transformation of the Commercial Road
Transportation industry. The shocking act of unprovoked and unjustified
aggression from the Russian Federation against Ukraine is unfolding as we
publish this report. Following the invasion the Group took immediate steps to
comply with sanctions and suspend all services we provided in Russia.
Notwithstanding the uncertain operating environment, the management remains
focused on strategic priorities, drawing on the strength of our business model
and its resilience proven over previous economic cycles."
Outlook
In 2021 we delivered a strong performance with all key financial metrics in
line with our mid-term financial guidance. As we move into 2022, we expect to
continue to increase penetration in our existing markets supported by
effective go-to-market strategies which will be enhanced by our digital sales
channel.
Early in the current financial year the Group has delivered growth in line
with management expectations, and is focused on executing our strategy
investing into technology transformation. We estimate net energy and services
sales for Q1 2022 of at least €39m with strong LTM growth at 19% YoY. Q1
2022 growth of 12% YoY has been affected by changing seasonality, resulting in
a very strong comparator. We expect our growth rate to accelerate in H2 2022
as comparators soften.
The Group has limited exposure to Russia and Ukraine, which together accounted
for less than 0.1% of group net energy and services sales in 2021. We
discontinued our payments network in Russia and we continue our operations in
Ukraine to the extent supplies are available. Direct impact of discontinued or
disrupted operations is immaterial to the Group's revenues.
Current trading is demonstrating the resilience of our business despite
headwinds such as continuing Covid-related supply chain disruptions,
occasional fuel shortages in some regions of Eastern Europe caused by the war
in Ukraine, and the price cap on retail fuel sales in Hungary. Eurowag has
been able to respond pro-actively to emerging risks and opportunities given
our strong pan-European network, long-standing relationships with suppliers,
the mission-critical nature of products and services we provide to our
customers, and management with experience proven throughout the cycle.
Based on current trading, and assuming no worsening of the current
environment, our expectations for 2022 are unchanged, and we anticipate
delivering results in line with our mid-term financial guidance. However, the
economic outlook in our key regions is uncertain and the management continues
to monitor and evaluate the potential impact of the Russian invasion of
Ukraine on the out-turn for the full year.
A virtual presentation and Q&A session for investors and analysts will be
held at 9.00am GMT on 24 March 2022. The presentation and webcast details
are available on the Group's website at https://investors.eurowag.com/
(https://investors.eurowag.com/)
Please register
(https://www.lsegissuerservices.com/spark/WAGPAYMENTSOLUTIONS/events/a50b3cb7-49df-4992-9c74-0159557213eb)
to attend the investor presentation (full link below).
https://www.lsegissuerservices.com/spark/WAGPAYMENTSOLUTIONS/events/a50b3cb7-49df-4992-9c74-0159557213eb
(https://www.lsegissuerservices.com/spark/WAGPAYMENTSOLUTIONS/events/a50b3cb7-49df-4992-9c74-0159557213eb)
ENQUIRIES
Eurowag
Tomáš Novotný (Head of Investor Relations)
investors@eurowag.com (mailto:investors@eurowag.com)
Michal Malysa (Head of Group Communications)
michal.malysa@eurowag.com (mailto:michal.malysa@eurowag.com)
+420 775 70 80 86
About Eurowag
Eurowag was founded in 1995 and is a leading pan-European integrated payments
& mobility platform focused on the commercial road transportation
industry. Eurowag's innovative solutions makes life simpler for small and
medium businesses in the Commercial Road Transportation industry across Europe
through its unique combination of payments solutions, seamless technology, a
data-driven digital eco-system and high-quality customer service.
www.eurowag.com (http://www.eurowag.com)
Operational and strategic review
We are delighted to have achieved very strong results this year, in line with
guidance we presented during our IPO on the London Stock Exchange in October
2021. We delivered strong revenue and adjusted profits growth from our two
segments of payment and mobility solutions. Operating in an economic
environment that is still dealing with the headwinds of the pandemic and
supply-chain disruptions, this demonstrates the resilience of our business
model, and the mission-critical nature of our customer value proposition.
Throughout the year, we have also continued to invest in our future by
building the skills within our organisation, and through strategic investments
such as accelerating the development of our digital platform through Road
Lords and Eurowag applications, or completing the acquisition of ADS and
executing new M&A transactions.
True to our purpose, we continued to innovate the Road Transportation Industry
and enable energy transition in Europe, by introducing mobile payments and
enabling payments for charging stations on the Sygic GPS Navigation. To
build-out the integrated nature of our offering, we deployed new telematics
features for fleet management on our On Board Unit for toll payments and
improved anti-fraud protection for fuel card payments through geolocation. To
further expand our platform, we added payments for roadside services to the
acceptance network, enabled hybrid financing of tax refunds and introduced a
new solution for supply chain financing via third parties.
From a geographic perspective, core markets in our Central Cluster continue to
account for nearly 50% of net energy and services sales. The Southern Cluster
grew the fastest in 2021, now accounting for 30% of net energy and services
sales, driven predominantly by successful market penetration in Romania. We
continue to see opportunity for growth in the Western Cluster, especially in
cross-sell and up-sell to ADS customers during the integration phase,
supported by investment into direct, indirect and digital sales channels. To
accelerate customer onboarding and complete their digital journey, we launched
a pilot of the Automated Credit Approval System for small exposures in France.
The IPO was a significant milestone in the company's development enabling us
to take advantage of the benefits of listing in a number of ways. First, the
capital raise will enable us to accelerate the execution of our strategic
objectives. Second, our status as a publicly listed company provides a clear
signal of our ambitions and confidence in our prospects. And third, it will
help us attract the talented people we need to maintain our growth trajectory.
Sustainability, which was already at the heart of how we run our business, has
also benefitted. Strengthening our governance credentials means even greater
transparency and rigour in our reporting and controls. We have further
formalised our ESG strategy and made sure it involves all relevant
stakeholders, collected baseline data for more detailed reporting and have set
ourselves specific targets within areas where we can produce the greatest
potential impact. The ESG-related KPIs commit us to a 50% reduction of Scope 1
and Scope 2 emissions from our operations by 2030, on a 2019 baseline. We have
also set a target to achieve 40% female representation in leadership roles by
2025, and reach the top 25% of European technology companies for employee
engagement in the same timeframe.
We can now state three distinctive ambitions for our business each benefiting
broader society. The first is to help predominantly small and medium
commercial road transport companies prosper and improve the wellbeing of their
people. The second is to contribute to making our industry cleaner by
promoting decarbonisation and enabling efficiency gains, such as truck
utilisation, better routing and driver performance. The third is to grow the
value of our business for investors, while helping our employees develop as
professionals with fulfilling roles, ensuring both groups benefit from a
productive journey with Eurowag.
The Culture Manifesto we presented in 2020 contains four fundamental values
that inspire us to achieve success, happiness and personal growth in our work
and private lives. We encourage employees at every step of their journey with
us, from the interview process through to day-to-day operations. We are also
investing to ensure our culture becomes the 'tone from the top', and have
appointed a new Board of Directors and strengthened the Executive Committee.
We have introduced programmes to make Eurowag a great place to work and have
accordingly been able to recruit very talented people.
We are set up to succeed by supporting many current industry trends and
aligning to new regulations. The most notable of these is the transition to
clean mobility, promoted by the Renewables Energy Directive II and
Alternative-Fuels Infrastructure Regulation among others. This stimulates
better industry cooperation with greater potential for alliances and
partnerships, with substantial funding being channelled into new low-carbon
powertrain solutions and the related infrastructure. The accelerating
digitalisation of payments is extending the transformation from cash-to-card
to card-to-virtual and increasing the penetration of alternative payment
methods. Implementation of the European Electronic Toll Service (EETS) also
progressed with pilot launches in Austria and Belgium in 2021, and Germany
launching in 2022. Finally, we are expanding and developing our relationships
with vehicle manufacturers as they shift their business models towards the
concept of Transportation-as-a-Service.
Our strategy remains focused on five key areas:
1. Growth from existing customers. Through further innovation
in core payment services, and integration and cross-selling with mobility
services, we can retain and expand our existing customer relationships by
continuing to solve their evolving needs.
2. Geographic expansion and penetration. We apply our scalable
business model to new markets serving both existing and new customers, thus
expanding market share.
3. Go-to-market channel expansion. We continue to acquire new
customers through a marketing strategy based on geographic clusters and three
sales channels - digital, telesales and field - with an increasing focus on
digital sales.
4. Digital platform development. We continue to develop our
end-to-end platform to be a conduit for intermediating payments and data
exchange between all parties, thereby connecting digital services and physical
assets. This allows us to expand our client base to include shippers and
freight forwarders, and to integrate third-party providers and financiers
seamlessly into our platform, thereby facilitating frictionless interactions
among industry participants to create a fully connected marketplace.
5. Accretive M&A. We continue to seek acquisition targets
that will create cross-sell and up-sell opportunities, generate cost and
revenue synergies, and develop our product and technology capabilities.
At the outset of 2021, we acquired the remaining minority stake in ADS,
allowing for the full migration of the ADS portfolio onto our platform. This
means ADS customers now have access to our broader portfolio of services. We
have also strengthened our critical skillset by acquiring a minority stake in
the Lithuanian firm Drivitty. This brings in-house expertise of digital
payments, allowing customers to execute transactions using mobile devices and
On Board Units and accelerates our progress towards providing fully integrated
payments and mobility solutions. With Last Mile Solutions, the rapidly growing
leader in e-mobility, we are expanding our platform by offering EV charging
and smart energy management services for e-mobility businesses in Europe. We
also announced the intended acquisition of WebEye, a leading provider of fleet
management solutions in Hungary and Romania. Although the transaction was not
approved by the Hungarian Ministry of Interior in March 2022, we are looking
for ways how to facilitate the acquisition to expand our customer base,
generate cross-sell and up-sell opportunities, and obtain data from the
connected trucks which will provide more insights for optimising the
development of new and improved solutions.
Response to the war in Ukraine
The shocking act of unprovoked and unjustified aggression from the Russian
Federation against Ukraine is unfolding as we publish this report. Following
the invasion the Group took immediate steps to comply with sanctions and
suspend all services we provided in Russia. Our response to the humanitarian
aspect of this crisis benefited from strong support of all our employees. We
offered help to colleagues with origins or family members from the affected
regions and have created a Ukraine Aid fund on their behalf. The Group is
matching charitable donations made by our employees, over and above our
ongoing commitment to distribute 1% of EBIT each year to charitable causes. We
are also providing fuelling for humanitarian convoys.
Although the Group has limited exposure to Russia and Ukraine, which together
account for less than 0.1% of Group net revenue, the economic outlook in our
key regions is uncertain and we continue to monitor and evaluate the potential
impacts as the situation evolves. Should the conflict escalate and materially
affect European economies, we may observe lower demand for our products and
services. The impacts of recent events on global supply chain disruptions are
not yet over, and the Group could be affected by energy-supply shortages in
the region hindering industrial production and mobility. Additional risks to
the business include a potential shortage of drivers and regulatory measures
such as retail fuel price caps that may have an impact on margins.
We therefore continue to diligently monitor the areas we can control and
mitigate. Primarily, this is by further diversifying energy-supply
partnerships, while acknowledging the dependency on Russian-originated sources
across Central and Eastern Europe and the Balkan region. To mitigate the
impacts of a potential economic downturn, we can apply cost-saving measures
and implement actions to stimulate revenue growth learnt and used during the
last two global economic crises. These include actions to promote customer
loyalty, readiness of our customers to pay a premium for mission-critical
products and services, and increased interest of our customers in efficiency
gains and cost-saving solutions which the Group provides.
Financial review
It has been a year of rapid growth and change for Eurowag. We are proud of the
way the business has dealt with the challenges arising from continued Covid
pandemic restrictions and its agility in responding to the opportunities
presented. We have delivered a strong set of results in a truly exceptional
year, listed the Group on the London Stock Exchange, completed several
business acquisitions and are delivering on our technology transformation
plans.
Throughout the year, the business executed at pace against the strategy that
we set out at the time of the IPO. We delivered strong performance with all
key financial metrics on a positive trajectory, reflecting the resilience and
strength of our business. Group Net energy and services sales growth of 19.1%
year-on-year was delivered through further expanding our customer base in the
payment solutions segment (average number of active customers up by 13.9%),
enhanced by effective cross selling of our mobility solutions. Resilience and
strength of our business is supported by average number of services per
customer of 2.83 (2020: 2.82)(2). Our growth through these turbulent times is
a testimony to the essential nature of the CRT industry, the efficiencies that
our products and services deliver to our customers, the strength of our
revenue retention and the geographic and product revenue diversity of our
business enhanced by strong customer relationships.
Adjusted EBITDA increased 18.9% year-on-year to €69.7m (2020: €58.6m).
Adjusted EBITDA margin was unchanged year on year at 45.5% (2020: 45.6%) in
line with our mid-term guidance. Adjusted EBITDA performance reflects strong
operating leverage inherent in the business while we continue to invest in the
organisation focusing on priority hires, upskilling the organisation and
technology related spend. Adjusted basic EPS increased 19.5% year-on year to
5.77 (2020: 4.83) cents per share in line with adjusted EBITDA growth.
On a statutory basis, profit before tax decreased by 38.5% to €17.7m (2020:
€28.8m) and basic EPS decreased by 59.0% to 1.54 (2020: 3.76) cents per
share due to a significant amount of adjusting items including non-recurring
IPO-related expenses, pre-IPO share-based compensation schemes and strategic
transformation costs. Basic EPS has reduced more than profit before tax due to
a higher effective tax rate in 2021 which is further discussed in Taxation
section.
Due to our IPO equity raise and supported by our underlying highly cash
generative business model, our overall financial position has significantly
strengthened, and we closed the year with a net cash position of €61.7m. Our
absolute focus on credit risk management and cash collection contributed to
improvement in credit losses ratio from 0.2% to 0.1%(3). Against the backdrop
of business performance and strong cash generation we continued to invest into
our digital transformation (with transformational capital expenditure reaching
€23.3m) and inorganic growth (with investments in subsidiaries, associates
and acquisition of non-controlling interests reaching €38.9m).
As we embark on the next year of implementing the Group's strategy, our robust
financial position and disciplined approach to capital allocation will ensure
that the business is well positioned to leverage the benefits of industry
digital disruption and many opportunities that lie ahead. We have strong
conviction around our purpose to create sustainable financial and
technological solutions for the benefit of our industry, society and the
environment.
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
2021 (€m) 2020 (€m) YoY (€m) YoY %
Segment revenue total 1 646.1 1 253.0 393.1 31.4%
Payment solutions 1 606.1 1 218.5 387.6 31.8%
Mobility solutions 40.0 34.5 5.5 15.9%
Net energy and services sales total 153.1 128.6 24.5 19.1%
Payment solutions 113.1 94.1 19.0 20.2%
Mobility solutions 40.0 34.5 5.5 15.9%
Expenses included in Contribution(1) (24.6) (23.8) (0.8) 3.4%
Contribution total 128.5 104.8 23.7 22.6%
Payment solutions 99.6 79.8 19.8 24.8%
Mobility solutions 28.9 25.0 3.9 15.6%
Contribution margin(1) total 84% 81% 2.5 pp n/a
Payment solutions 88% 85% 3.3 pp n/a
Mobility solutions 72% 73% (0.3 pp) n/a
Corporate overhead and indirect costs before adjusting items (58.8) (46.2) (12.6) 27.3%
Adjusted EBITDA 69.7 58.6 11.1 18.9%
Adjusting items affecting Adjusted EBITDA (22.8) (3.2) (19.6) 612.5%
EBITDA(1) 46.9 55.4 (8.5) (15.3%)
Depreciation and amortisation (21.9) (18.2) (3.7) 20.3%
Operating profit 25.1 37.2 (12.1) (32.5%)
The Group's total revenues increased by 31.4% year-on-year to €1 646.1m
driven by growing scale of our payment solutions complemented by higher energy
prices (a corresponding growth was reported for costs of energy sold).
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 17.1% and overall Net energy and services sales were up by
19.1%.
Payment solutions Net energy and services sales grew by 20.2% year-on-year,
driven by strong new customer and truck acquisitions complemented by Net
revenue retention.
The Group saw growth in new customer acquisition across all geographic
clusters, as the strength of the Group's payments network and effectiveness of
the go-to-market strategy enabled us to increase market penetration. The Group
also expanded into new sales channels including digital and enabled fully
online customers onboarding.
Mobility solutions Net energy and services sales grew by 15.9% year-on-year,
driven by effective cross sell supported by inorganic growth of telematics Net
energy and services sales.
On 1 January 2021, the Group acquired 51% of the share capital in KomTeS, a
value-added reseller of the Group's telematics solutions. The transaction will
ensure the highest level of support, service, and value to the Group and
KomTeS customers in the Czech Republic and Slovakia.
Corporate expenses
2021 (€m) 2020 (€m) YoY (€m) YoY %
Expenses included in Contribution (24.6) (23.8) (0.8) 3.4%
Corporate overhead and indirect costs before adjusting items (58.8) (46.2) (12.6) 27.3%
Adjusting items affecting Adjusted EBITDA (22.8) (3.2) (19.6) 612.5%
Depreciation and amortisation (21.9) (18.2) (3.7) 20.3%
Total (128.1) (91.4) (36.7) 40.2%
The above table is relevant for segmental review while below table summarises
corporate expenses based on statutory financials categories:
2021 (€m) 2020 (€m) YoY (€m) YoY %
Employee expenses (55.7) (41.4) (14.3) 34.5%
Impairment losses of financial assets (3.1) (4.1) 1.0 (24.4%)
Technology expenses (6.8) (4.0) (2.8) 70.0%
Other operating income 0.7 0.9 (0.2) (22.2%)
Other operating expenses (41.3) (24.6) (16.7) 67.9%
Depreciation and amortisation (21.9) (18.2) (3.7) 20.3%
Total (128.1) (91.4) (36.7) 40.2%
Employee expenses increased by 34.5% to €55.7m as the Group focused on
priority hires, talent retention, strengthening the structure and remuneration
schemes appropriate for a listed company. Adjusting items included in employee
expenses amounted to €8.6m in 2021.
Impairment losses of financial assets decreased by 24.4% to €3.1m thanks to
a focus on credit risk management and cash collection.
Technology expenses increased by 70.0% to €6.8m as a consequence of the
Group's focus on cloud transition and expenses related to the new generation
ERP system. Adjusting items included in technology expenses amounted to
€0.6m in 2021.
Other operating expenses increased by 67.9% to €41.3m mainly due to
non-recurring IPO costs.
Depreciation and amortisation increased by 20.3% to €21.9m primarily as a
result of increased transformational technology being put into production.
Adjusting items included in depreciation and amortisation amounted to €7.1m
in 2021.
Net finance expense
Net finance expense in 2021 was €6.7m (2020: €8.3m). The decrease in 2021
reflects the lower interest charge on Senior Facilities Agreement (weighted
average interest rate in 2021 2.4% compared to 3.3% in 2020) and improved
result on revaluation of derivatives partially offset by higher factoring fees
related to higher average factoring limits utilization throughout the year.
Taxation
The Group tax charge of €8.0m (2020: €5.9m) represents an effective tax
rate of 45.4% in 2021 (2020: 20.4%). Corporate income tax for companies in the
Czech Republic and United Kingdom for the years 2020 and 2021 was 19%,
corporate income tax in Spain for the years 2020 and 2021 was 24%. They
represent the major tax regimes in which the Group operates.
The Group's effective tax rate is impacted by the tax impact of Adjusting
items. It is therefore helpful to consider the underlying and adjusting items
affecting tax rates separately:
· The effective tax rate on Adjusted earnings(1) before tax for the
year increased to 24.8% (2020: 20.2%) largely due to the fact that 2020
effective tax rate was influenced by newly recognized deferred tax assets in
the year.
· The effective tax rate for Adjusting items was 12.7% (2020:
20.4%) and was driven mainly by non-deductible IPO-related expenses and
share-based payments.
We adopt a prudent approach to our tax affairs, aligned to 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 except for France.
EPS
Basic EPS for 2021 was 1.54 cents per share (a decrease of 59.0% relative to
2020) due to a significant amount of Adjusting items including non-recurring
IPO-related expenses and pre-IPO share-based compensations.
Adjusted basic EPS(1) for 2021 was 5.77 cents per share (an increase of 19.5%
relative to 2020) based on the weighted average number of ordinary shares in
issue during the year of 595,582,785. After accounting for the impact of PSP,
adjusted diluted earnings per share was 5.76 cents per share. Adjusting items
are as described above.
Investments in associates
In 2021, the Group acquired 28% interest in Threeforce BV (Last Mile
Solutions) and 20% interest in UAB "Tankita" (Drivitty).
Last Mile Solutions is a fast growing eMobility platform in Europe and the
investment supports the Group's position in the eMobility market and confirms
our focus on sustainable transportation solutions. Key financials for 2021
were as follows:
Threeforce B.V. 2021 (€m)
(Last Mile Solutions)
Net assets 11.3
Revenue 29.6
Total comprehensive income (2.2)
Impact on Group profit for the year (0.6)
Drivitty is 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
experience to its customers. Drivitty financials are currently immaterial to
the Group.
Balance sheet
Net assets of the Group increased by 344.2% to €284.7m mainly reflecting the
IPO proceeds of €196.1m, retained earnings increase of €12.3m, other
comprehensive income increase of €5.1m and exercised share options impact of
€3.8m.
Intangible assets of the Group excluding goodwill increased by €20.7m to
€88.3m in 2021 predominantly due to investments into the strategic IT
transformation.
Goodwill comprises mainly CGU(1) Energy of €40.2m, CGU Navigation of
€34.6m and CGU Telematics of €26.0m. Goodwill is tested for impairment on
an annual basis, no impairment loss was identified in 2021.
Trade and other receivables increased by €64.2m to €300.6m mainly due to
changes to phasing of tax refund receivables collection (year-on-year impact
of €29.9m), higher volume of transactions and increased energy prices in
2021.
Trade and other payables increased by €8.6m to €314.5m mainly due to
higher volume of transactions and increased energy prices in 2021.
Cash performance
2021 (€m) 2020 (€m) YoY (€m) YoY %
Net cash (used in)/generated from operating activities (9.6) 86.7 (96.3) (111.1%)
Net cash used in investing activities (43.1) (23.2) (19.9) 85.8%
Net cash generated from financing activities 187.8 5.4 182.4 3377.8%
Net increase in cash and cash equivalents 135.1 68.9 66.2 96.1%
Effect of exchange rate changes on cash and cash equivalents 0.1 (0.2) 0.3 (150.0%)
Cash and cash equivalents at beginning of period 89.0 20.3 68.7 338.4%
Cash and cash equivalents at end of period (presented in statement of cash 224.2 89.0 135.2 151.9%
flows)
Bank overdrafts - 29.1 (29.1) (100.0%)
Cash and cash equivalents at end of period (presented in statement of 224.2 118.1 106.1 89.8%
financial position)
Interest-bearing loans and borrowings (162.5) (171.2) 8.7 (5.1%)
Net cash/(debt) 61.7 (53.1) 114.8 (216.2%)
At 31 December 2021, the Group had net cash of €61.7m compared to net debt
of €53.1m as of 31 December 2020.
The increase in the level of cash is due to the proceeds from new shares
issued and strong underlying cash generation offset by IPO related expenses,
acquisition of subsidiaries and associates and transformational capital
expenditure.
Net cash flows from operating activities decreased from €86.7m in 2020 to
€(9.6)m primarily due to adverse working capital movements related to
phasing of tax refund receivables collection €(29.9)m and overall higher
volume of transactions and increased fuel prices affecting 2021 receivables,
there was further impact of €15.4m related to Adjusting items in 2021.
Interest paid decreased to €4.5m reflecting lower cost of debt.
Tax paid increased by €2.9m due to higher tax advances paid.
Net cash used in investing activities increased by €19.9m in 2021 to
€43.1m largely due to the outflows in connection with capital expenditure
related to investment in the development of technology (increase of €6.3m)
and outflows related to investments in subsidiaries and associates (increase
of €11.9m).
Net cash from financing activities amounted to an inflow of €187.8m in 2021
(2020: €5.4m), largely driven by the proceeds from new shares issued and the
net movement in borrowings offset by an outflow related to the acquisition of
the remaining minority interest of ADS (€27.0m).
The cash impact of Adjusting items was €7.6m for IPO-related expenses,
€0.8m for M&A-related expenses and €2.7m for strategic transformation
expenses.
Capital expenditure
Capital expenditure in the year amounted to €33.8m compared with €22.0m
for the year ended 31 December 2020. The marked increase reflects the
transformational investment into our technology platform.
The Group's transformational investment programme totaling €23.3m (2020:
€16.4m) continued to focus on expanding the customer and products
capabilities for the Group, including the digital customer journey, new
generation ERP, EETS Toll and OBU, Telematics and the integrated offering.
The Group's ordinary capital expenditure in 2021 was €10.4m (2020: €5.1m)
representing reinvestment into the platform and assets base and amounted to
6.8% of Net energy and services sales compared to 4.0% in the previous year.
Alternative performance measures
The Group has identified certain Alternative Performance Measures ("APMs")
that it believes provide additional useful information to the readers of
Consolidated Financial Statements and enhance the understanding of the Group's
performance. These APMs are not defined within IFRS and are not considered
to be a substitute for, or superior to, IFRS measures. These APMs may not be
necessarily comparable to similarly titled measures used by other companies.
Directors and management use these APMs alongside IFRS measures when budgeting
and planning, and when reviewing business performance. Executive management
bonus targets include an adjusted EBITDA measure and long-term incentive plans
include an adjusted basic EPS measure.
2021 (€m) 2020 (€m) YoY (€m) YoY %
Profit before tax 17.7 28.8 (11.1) (38.5%)
Net finance expense and share of net loss of associates 7.3 8.4 (1.1) (13.1%)
Depreciation and amortisation 21.9 18.2 3.7 20.3%
EBITDA 46.9 55.4 (8.5) (15.3%)
M&A-related expenses 0.8 0.4 0.4 100.0%
Non-recurring IPO-related expenses 12.9 0.3 12.6 4200.0%
Strategic transformation expenses 2.7 1.2 1.5 125.0%
Share-based compensation 6.4 1.2 5.2 433.3%
Adjusting items 22.8 3.2 19.6 612.5%
Adjusted EBITDA 69.7 58.6 11.1 18.9%
2021 (€m) 2020 (€m) YoY (€m) YoY %
Profit for the year 9.7 23.0 (13.3) (57.8%)
Amortisation of acquired intangibles 5.4 5.5 (0.1) (1.8%)
Amortisation due to transformational useful life changes 1.7 0.2 1.5 750.0%
Adjusting items affecting Adjusted EBITDA 22.8 3.2 19.6 612.5%
Tax effect (3.8) (1.8) (2.0) (111.1%)
Adjusted earnings (net profit) 35.8 30.1 5.7 18.9%
2021 2020 YoY YoY %
Adjusted net profit attributable to equity holders (€m) 34.4 27.3 7.1 26.0%
Basic weighted average number of shares 595,582,785 564,857,081 30,725,704 5.4%
Adjusted basic EPS (cents/share) 5.77 4.83 0.94 19.5%
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 had very limited impact on expenses in 2020 and will not have
any impact on expenses in 2022.
M&A-related expenses are fees and other costs relating to the Group's
acquisitions activity. M&A-related expenses differ every year based on
acquisition activity of the Group. Exclusion of these costs allow better
result comparability.
Strategic transformation expenses are costs relating to broadening the skill
bases of the Group's employees (including executive search and recruiting
costs) as well as costs related to transformation of key IT systems. As
previously announced, the strategic transformation is expected to complete in
2023.
In addition, adjustment has been made for the compensations provided to the
Group's management before 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 will apply the Remuneration Policy in a listed
company context, hence similar awards are not expected in future. For clarity,
where share-based payment charges arise as a consequence of the operation of
the Group's post-IPO Remuneration Policy, these are not treated as adjusting
items as they represent non-cash element of annual remuneration package. This
includes costs of €0.4m in 2021 relating to a grant in connection with the
2024 PSP.
Amortisation of acquired intangibles represents amortisation of assets
recognized at the time of an acquisition (primarily ADS and Sygic). The item
is prone to volatility from period to period depending on the level of
M&A.
Amortisation due to transformational useful life changes represents
accelerated amortisation of assets being replaced by strategic transformation
of the Group. The Group expects this adjustment to be relevant until 2024.
Capital allocation
Our priority will continue to be organic and inorganic investment to drive
long term sustainable growth. As previously advised, the Group will incur
aggregated transformational capital expenditures of €50m during 2022 and
2023 to develop our integrated end to end digital platform and invest in the
quality of our integrated product and service offering. Our transformational
capex is firmly on track to complete in 2023, by which point we will have the
most modern, complete and modular tech stack and product offering in the
industry. We will continue to consider value-accretive M&A opportunities
in our current and adjacent markets and in product and technology areas that
will accelerate growth. We will only look to make acquisitions where the
acquisition is complementary to our strategy and in line with our acquisition
criteria. We will also maintain a robust balance sheet. As set out in our
financial guidance the Group does not intend to pay dividends as we continue
to prioritise investment in growth.
Treasury management
The Group maintains a disciplined approach to its financing and is committed
to maintain a net debt to EBITDA leverage ratio of 1.5-2.5 times over the
medium term.
The Group holds financial debt under the Senior Multicurrency Term and
Revolving Facilities Agreement ("Syndicated Facilities Agreement"), which
consists of the following tranches:
· Amortizing EUR term loan facility for a maximum amount of
€47.5m
· Non-amortizing EUR term loan facility for a maximum amount of
€47.5m
· Amortizing EUR term loan facility for a maximum amount of
€95.0m (Acquisition/CAPEX)
· Multicurrency revolving credit facility for a maximum amount of
€120.0m, split as
o €45.0m Revolving Credit Facility
o €15.0m Multicurrency Overdraft Facility
o €60.0m Bank Guarantee Facilities
Subject to certain conditions, the Group can request to raise additional debt
under the Syndicated Facilities Agreement up to an amount of €100.0m, of
which up to €50.0m can be used to finance certain acquisitions which are
specifically permitted under the Syndicated Facilities Agreement and the
remaining €50.0m can be used to finance or refinance working capital of
companies, businesses or undertakings acquired as a result of such permitted
acquisition or utilized by way of a guarantee, documentary or stand-by letter
of credit. As of 31 December 2021, €29m has been drawn to establish limits
for Bank Guarantees, with the remainder of €21m to be drawn in Q1 2022 for
the same purpose. The Incremental Facility is not committed.
The Syndicated Facilities Agreement contains financial covenants at the level
of W.A.G. payment solutions, a.s. some of which were amended at IPO:
· Interest Cover (the ratio of Adjusted EBITDA to finance charges),
which replaced the previous cashflow cover (the ratio of cashflow to debt
service), is not less than 5.00:1 for each twelve-month period ending on the
last day of each financial quarter. As at 31 December 2021, Interest Cover was
at 11.81.
· Net Leverage (measured quarterly on the basis of Total Net Debt
on the measurement date and rolling twelve months Adjusted EBITDA) does not
exceed 3.75:1 for each twelve-month period ending on the last day of each
financial quarter in 2021. As at 31 December 2021, Net Leverage was at 2.12.
· Adjusted Net Leverage (measured quarterly on the basis of
Adjusted Total Net Debt on the measurement date and rolling twelve months
Adjusted EBITDA) does not exceed 6.50:1 for each twelve-month period ending on
the last day of each financial quarter. As at 31 December 2021, Adjusted Net
Leverage was at 3.49.
· Borrowing Base (the ratio of the sum of outstanding amount of
revolving facility less cash and cash equivalents, to trade receivables) which
was amended to exclude the outstanding bank guarantees and must not exceed 1:1
in relation to any three-month period ending on the last day of each financial
quarter. As at 31 December 2021, Borrowing Base was at 0.46.
During 2021 the Group repaid €18.4m of the Syndicated Facilities Agreement
borrowings and drew down €39.5m to finance acquisitions and capital
expenditures resulting in a notional debt of €165m outstanding under the SFA
as of 31 December 2021.
The Group concentrates cash on bank accounts held with financial institutions
that participate in the Syndicated Facilities Agreement. Balances may be held
on bank accounts with other financial institutions to fund outgoing payments
especially in countries outside of the Economic and Monetary Union.
Sustainability
In 2021, Eurowag introduced its ESG strategy to support the Group's purpose to
create sustainable financial and technological solutions for the benefit of
the Commercial Road Transportation Industry, society and the environment.
While ESG principles have always been at the core of Eurowag purpose, we have
formalized our approach to help our customers prosper, make road transport
cleaner, more efficient and safer, and help our employees and communities
thrive in a healthy environment.
Highlights of progress in 2021
· Formalised a new sustainability strategy including commitments
that focus on helping our customers compete and grow in a low-carbon, digital
future.
· Established a sustainability function and strengthened
sustainability governance, including the appointment of Susan Hooper as the
Board-level champion.
· Set new targets including:
o A carbon reduction target to reduce emissions from our own operations
(Scope 1 and Scope 2) by 50% by 2030 on a 2019 baseline; with a scope 3 target
under development
o A Diversity, Equity, and Inclusion target to have 40% female
representation in managerial roles by 2025 on a 2021 baseline.
o Achievement of a top 25% of employee engagement score as compared to EU
Tech companies benchmark by 2025.
· Expanded the scope of reporting in line with TCFD requirements.
We continue to embed sustainability into our core business as well as enhance
and create a successful, resilient, sustainable future for the CRT industry,
our customers, as well as our colleagues, communities and company.
Financial statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(EUR '000)
Notes For the year ended 31 December
2021 2020
Revenue from contracts with customers 3 1,646,102 1,252,954
Costs of energy sold (1,492,970) (1,124,348)
Net energy and services sales 4 153,132 128,606
Other operating income 655 942
Employee expenses (55,665) (41,407)
Impairment losses of financial assets (3,116) (4,061)
Technology expenses (6,797) (4,049)
Other operating expenses (41,282) (24,600)
Operating profit before depreciation and amortisation (EBITDA) 46,927 55,431
Analysed as:
Adjusting items 4 22,793 3,168
Adjusted EBITDA 4 69,720 58,599
Depreciation and amortisation 4 (21,867) (18,246)
Operating profit 25,060 37,185
Finance income 2,234 141
Finance costs 5 (8,943) (8,488)
Share of net loss of associates (682) -
Profit before tax 17,669 28,838
Income tax expense 6 (8,019) (5,886)
PROFIT FOR THE YEAR 9,650 22,952
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 3,683 (4,002)
Exchange differences on translation of foreign operations 1,458 (835)
Deferred tax related to other comprehensive income - 46
TOTAL OTHER COMPREHENSIVE INCOME 5,141 (4,791)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 14,791 18,161
Total profit for the financial year attributable to equity holders of the 9,148 21,239
Company
Total profit for the financial year attributable to non-controlling interests 502 1,713
Total comprehensive income for the financial year attributable to equity 14,259 16,468
holders of the Company
Total comprehensive income for the financial year attributable to 532 1,693
non-controlling interests
Earnings per share (in cents per share): 10
Basic earnings per share 1.54 3.76
Diluted earnings per share 1.53 3.73
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(EUR '000)
Notes As at 31 December
2021 2020
ASSETS
Non-current assets
Intangible assets 7 193,453 171,364
Property, plant and equipment 8 34,763 32,975
Right-of-use assets 9 8,112 8,644
Investments in associates 12,934 -
Financial assets 37 258
Deferred tax assets 6 7,642 7,057
Derivative assets 252 -
Other non-current assets 3,554 4,395
Total non-current assets 260,747 224,693
Current assets
Inventories 9,557 5,289
Trade and other receivables 300,601 236,432
Income tax receivables 5,095 1,212
Derivative assets 2,694 526
Cash and cash equivalents 224,164 118,105
Total current assets 542,111 361,564
TOTAL ASSETS 802,858 586,257
SHAREHOLDERS' EQUITY AND LIABILITIES
Share capital 38,113 4,158
Share premium 194,763 2,927
Merger reserve (25,963) -
Other reserves 1,465 (3,263)
Business combinations equity adjustment (17,046) (46,009)
Retained earnings 84,526 72,177
Equity attributable to equity holders of the Company 275,858 29,990
Non-controlling interests 8,889 34,115
Total equity 284,747 64,105
Non-current liabilities
Interest-bearing loans and borrowings 11 143,579 128,965
Lease liabilities 9 5,973 7,155
Deferred tax liabilities 6 5,495 3,858
Derivative liabilities 657 2,691
Other non-current liabilities 20,281 22,273
Total non-current liabilities 175,985 164,942
Current liabilities
Trade and other payables 314,522 305,957
Interest-bearing loans and borrowings 11 18,894 42,274
Lease liabilities 9 2,601 2,208
Provisions 1,545 1,380
Income tax liabilities 4,208 4,332
Derivative liabilities 356 1,059
Total current liabilities 342,126 357,210
TOTAL EQUITY AND LIABILITIES 802,858 586,257
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(EUR '000)
Notes Share capital Share premium Other reserves Merger reserve Business combinations equity adjustment Retained earnings Total equity attributable to equity holders of the parent Non-controlling interests Total equity
At 31 December 2019 4,158 2,927 1,499 - (41,745) 50,258 17,097 32,487 49,584
Profit for the year - - - - - 21,239 21,239 1,713 22,952
Other comprehensive income - - (4,771) - - - (4,771) (20) (4,791)
Total comprehensive income - - (4,771) - - 21,239 16,468 1,693 18,161
Dividends paid - - - - - - - (65) (65)
Share-based payments - - - - - 689 689 - 689
Contribution to reserve fund - - 9 - - (9) - - -
Put options held by non-controlling interests - - - - (4,264) - (4,264) - (4,264)
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
At 31 December 2021 38,113 194,763 1,465 (25,963) (17,046) 84,526 275,858 8,889 284,747
CONSOLIDATED STATEMENT OF CASH FLOWS
(EUR '000)
Notes For the year ended 31 December
2021 2020
Cash flows from operating activities
Profit before tax for the period 17,669 28,838
Non-cash adjustments:
Depreciation and amortisation 4 21,867 18,246
Gain on disposal of non-current assets (29) (48)
Interest income (44) (50)
Interest expense 4,913 5,469
Movements in provisions 153 1,883
Impairment losses of financial assets 3,116 4,061
Movements in allowances for inventories (64) 89
Foreign currency exchange rate differences (784) 1,372
Fair value revaluation of derivatives (1,472) (1,057)
Share-based payments 3,736 689
Other non-cash items 792 (124)
Working capital adjustments:
(Increase)/decrease in trade and other receivables and prepayments (69,445) (7,279)
(Increase)/decrease in inventories (4,108) 1,855
Increase in trade and other payables 28,774 45,024
Interest received 44 50
Interest paid (4,498) (5,086)
Income tax paid (10,193) (7,273)
Net cash flows (used in)/generated from operating activities (9,573) 86,659
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 225 89
Purchase of property, plant and equipment (5,221) (3,221)
Purchase of intangible assets (26,230) (19,954)
Purchase of financial instruments - (127)
Payments for acquisition of subsidiaries, net of cash acquired (1,166) -
Investment in associates (10,685) -
Net cash used in investing activities (43,077) (23,213)
Cash flows from financing activities
Payment of principal elements of lease liabilities (2,382) (2,145)
Proceeds from borrowings 39,519 12,147
Repayment of borrowings (18,773) (4,494)
Acquisition of non-controlling interests (27,003) -
Dividend payments (3,480) (65)
Proceeds from issued share capital (net of expenses) 199,879 -
Proceeds from sale of own shares 20 -
Net cash generated from financing activities 187,780 5,443
Net increase in cash and cash equivalents 135,130 68,889
Effect of exchange rate changes on cash and cash equivalents 63 (217)
Cash and cash equivalents at beginning of period 88,961 20,289
Cash and cash equivalents at end of period 224,154 88,961
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 are
admitted to the premium listing segment of the Official List of the UK
Financial Conduct Authority and trade 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 petrol stations for
commercial road transportation;
· Providing unified way of electronic toll payments on a number of
European road networks for fleets of professional transport and forwarding
companies;
· Recovery of VAT refunds and excise duty from European countries;
· Creating an automated journey book and optimising traffic with
the use of integrated digital maps;
· Combine advanced solutions in the field of electronics, software
engineering and applied mathematics;
· Sale of navigation licenses; and
· Other services.
Prior to the Initial Public Offering ("IPO"), W.A.G. payments solutions, a.s.
was the parent company of the Group for which consolidated financial
statements were produced. On 7 October 2021, the Shareholders of W.A.G.
payments solutions, a.s. transferred all of their shares in W.A.G. payments
solutions, a.s. to W.A.G payment solutions plc in exchange for ordinary shares
of equal value in W.A.G payment solutions plc ("Group reorganisation"). This
resulted in W.A.G payment solutions plc becoming the new Parent Company of the
Group. On 8 October 2021, the IPO was completed, with 13 October 2021
representing admission to trading on the London Stock Exchange ("Admission").
The financial information for the year ended 31 December 2021 (and comparative
information for the year ended 31 December 2020) is 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
2021 were approved by the Board of Directors on 24 March 2022 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 2021 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") in
conformity with the requirements of the Companies Act 2006.
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 (and comparative information for the year ended 31 December 2020) is
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 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 of Directors have considered the financial prospects of the Company
and the Group for the foreseeable future, which is at least the next 12 months
and made an assessment of the Company's and the Group's ability to continue as
a going concern. The Directors' assessment included consideration of the
availability of the Company's and the Group's credit facilities, cash flow
forecasts and stress scenarios. Stress test scenarios applied in the Going
Concern statement are in line with scenarios covered in the Viability
statement. The Board of Directors are satisfied that the Company and the Group
has the resources to continue business for the foreseeable future, in
particular given the level of cash balances available following the IPO, and
furthermore are not aware of any material uncertainties that may cast
significant doubt upon the Company's and the Group's ability to continue as a
going concern and the Board of Directors considers it is appropriate to adopt
the going concern basis of accounting in preparing the annual financial
statements.
The Group's fiscal year begins on 1 January and ends on 31 December.
3. SEGMENTAL ANALYSIS
Operating segments are reported in a manner consistent with the internal
reporting provided to the Chief Operating Decision Maker ("CODM"). The Group
considers the Executive Committee to be the CODM effective from July 2021. The
Board of Directors was considered as CODM prior to that date. The CODM reviews
net energy and services sales and contribution to evaluate segment performance
and allocate resources to the overall business.
For management purposes and based on internal reporting information, the Group
is organised in two operating segments; Payment solutions and Mobility
solutions. Payment solutions represent the core of the Group's revenues, which
are based on recurring and frequent transactional payments. The segment
includes Energy and Toll payments, which are a typical first choice of a new
customer. Mobility solutions represent a number of services, which are
subsequently sold to customers using Payment solutions products. The segment
includes Tax refund, Telematics, Navigation, and other service offerings.
Net energy and services sales, contribution, EBITDA, and Adjusted EBITDA are
non-GAAP measures, see Note 4.
The CODM does not review assets and liabilities at segment level.
Year ended 31 December 2021 EUR '000 Payment solutions Mobility solutions Total
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
Year ended 31 December 2020 Payment solutions Mobility solutions Total
EUR '000
Segment revenue 1,218,438 34,516 1,252,954
Net energy and services sales 94,090 34,516 128,606
Contribution 79,726 25,040 104,766
Contribution margin 85% 73% 81%
Corporate overhead and indirect costs before adjusting items (46,167)
Adjusting items affecting Adjusted EBITDA (3,168)
Depreciation and amortisation (18,246)
Net finance costs and share of net loss of associates (8,347)
Profit before tax 28,838
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
2021 2020
Czech Republic ("CZ") 316,707 253,724
Poland ("PL") 290,499 231,133
Central Cluster (excluding CZ and PL) 189,439 142,540
Portugal ("PT") 334,069 267,637
Western Cluster (excluding PT) 36,381 39,340
Romania ("RO") 192,742 109,854
Southern Cluster (excluding RO) 278,125 201,494
Not specified 8,140 7,232
Total 1,646,102 1,252,954
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
2021 2020
Czech Republic 26,347 24,863
Poland 27,037 24,130
Central Cluster (excluding CZ and PL) 20,566 14,932
Portugal 21,058 19,639
Western Cluster (excluding PT) 5,590 6,251
Romania 19,676 12,102
Southern Cluster (excluding RO) 26,495 20,769
Not specified 6,363 5,920
Total 153,132 128,606
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 and other non-current assets.
EUR '000 For the year ended 31 December
2021 2020
Czech Republic 126,427 88,143
Spain 63,238 65,589
Slovakia 53,882 55,200
United Kingdom 541 -
Other 8,729 8,446
Total 252,817 217,378
Timing of revenue recognition was as follows:
EUR '000 For the year ended 31 December
2021 2020
Payment solutions
Goods and services transferred at a point in time 1,585,701 1,198,768
Services transferred over time 20,350 19,670
1,606,051 1,218,438
Mobility solutions
Goods and services transferred at a point in time 12,753 10,392
Services transferred over time 27,298 24,124
40,051 34,516
Total segment revenue 1,646,102 1,252,954
4. Alternative performance measures
To supplement its consolidated financial statements, which are prepared and
presented in accordance with IFRS, the Group uses the following non-GAAP
financial measures that are not defined or recognised under IFRS: Net energy
and services sales, Contribution, EBITDA, Adjusted EBITDA, Adjusted earnings,
Adjusted earnings per share and Adjusted effective tax rate.
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 allocation 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 3).
EBITDA
EBITDA is defined as operating profit before depreciation and amortisation.
The Group presents EBITDA because it is widely used by securities analysts,
investors, and other interested parties to evaluate the profitability of
companies. EBITDA eliminates potential differences in performance caused by
variations in capital structures (affecting net finance costs), tax positions
(such as the availability of net operating losses, against which to relieve
taxable profits), the cost and age of tangible assets (affecting relative
depreciation expense) and the extent to which intangible assets are
identifiable (affecting relative amortisation expense).
Adjusted EBITDA
Adjusted EBITDA is defined as EBITDA before adjusting items:
Adjusting item Definition Exclusion justification
M&A-related expenses Fees and other costs relating to the Group's acquisitions activity M&A-related expenses differ every year based on acquisition activity of
the Group. Exclusion of these costs allow better result comparability.
Non-recurring IPO-related expenses Non-recurring advisory and other expenses relating to the Admission IPO costs are related to a one-off event, which has significant impact on 2021
profitability. IPO had very limited impact on expenses in 2020 and will not
have any impact on expenses in 2022.
Strategic transformation expenses Costs relating to broadening the skill bases of the Group's employees Broadening the skill base
(including in respect of executive search and recruiting costs), as well as
costs related to transformation of key IT systems IPO and IT strategic transformation requires different skill base of the
Group's employees. Expenses related to these strategic events were excluded as
otherwise they would not be incurred. The expenses are expected to end in
2022.
Transformation of key IT systems
Transformational expenditure represents investments intended to create a new
product or service, or significantly enhance an existing one, in order to
increase the Group's revenue potential. This also includes systems and
processes improvements to improve services provided to customers.
Transformational expenditures, which cannot be capitalised as they are mainly
related to research, were excluded as the Group is executing its strategic
transformation programme, which is expected to end in 2023 and due to the fact
that annual investments compared to Group's Net sales are significantly higher
than regular investments of a technology company.
Share-based compensation Equity-settled and cash-settled compensation provided to the Group's Share options and cash-settled compensation have been provided to management
management before IPO and certain employees in connection with the IPO. Total share-based payment
charge to be excluded in period 2021-2024 amounts to EUR 21.9 million, from
which EUR 1.3 million is a one-off and EUR 20.6 million is amortised over
three years. Although these costs will be amortised over the next three years
based on accounting policies, they were excluded as they relate to a one-off
event. Anticipated expense adjustment amounts to EUR 6.9 million in 2022, EUR
6.1 million in 2023 and EUR 2.6 million in 2024.
Share awards provided post-IPO (Performance share plan) 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
2021 2020
Intangible assets amortisation (Note 7) 15,303 12,005
Tangible assets depreciation (Note 8) 4,129 4,134
Right of use depreciation (Note 9) 2,435 2,107
Depreciation and amortisation 21,867 18,246
Net finance costs and share of net loss of associates 7,391 8,347
Profit before tax 17,669 28,838
EBITDA 46,927 55,431
M&A-related expenses (Note 4) 789 376
Non-recurring IPO-related expenses 12,943 330
Strategic transformation expenses 2,688 1,238
Share-based compensation 6,373 1,224
Adjusting items 22,793 3,168
Adjusted EBITDA 69,720 58,599
Adjusted earnings (net profit)
Adjusted earnings are defined as profit after tax before adjusting items:
Adjusting item Definition Exclusion justification
Amortisation of acquired intangibles Amortisation of assets recognised at the time of an acquisition (primarily ADS The Group acquired a number of companies in the past and plans further
and Sygic) acquisitions in the future. The item is prone to volatility from period to
period depending on the level of M&A.
Amortisation due to transformational useful life changes Accelerated amortisation of assets being replaced by strategic transformation Strategic IT transformation programme of the Group is replacing selected
of the Group softwares before their originally estimated useful life. This may also include
early fixed asset write-offs. Amortisation of such assets has been accelerated
and abnormally high difference between original and accelerated depreciation
was excluded to allow period on period result comparability.
Total expected amortisation charge to be excluded in period 2020-2022 amounts
to EUR 4.1 million, from which EUR 2.1 million is expected to be excluded in
2022. The amount represents assets replaced by strategic IT transformation at
the end of 2021, however, decisions may be taken as the Group continues with
its strategic IT transformation in 2022 and 2023, which may lead to new assets
being replaced and either accelerated or written-off. The Group expects this
adjustment to be relevant until 2024.
Adjusting items affecting Adjusted EBITDA Items recognised in the preceding table, which reconciles EBITDA to Adjusted Justifications for each item are listed in the preceding table.
EBITDA
Tax effect Decrease in tax expense as a result of above adjustments Tax effect of above adjustments is excluded to adjust the impact on after tax
profit.
The Group believes this measure is relevant to an understanding of its
financial performance absent the impact of abnormally high levels of
amortisation resulting from acquisitions and from technology transformation
programmes.
Adjusted earnings reconciliation
EUR '000 For the year ended 31 December
2021 2020
Profit for the year 9,650 22,952
Amortisation of acquired intangibles 5,419 5,577
Amortisation due to transformational useful life changes 1,717 261
Adjusting items affecting Adjusted EBITDA 22,793 3,168
Tax effect (3,801) (1,838)
Adjusted earnings (net profit) 35,778 30,120
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 6 for further information.
5. FINANCE COSTS
Finance costs for the respective periods were as follows:
EUR '000 For the year ended 31 December
2021 2020
Bank guarantees fee 616 518
Interest expense 5,188 6,217
Factoring fee 698 366
Loss from the revaluation of derivatives - 878
Foreign exchange loss 2,380 289
Other 61 220
Total 8,943 8,488
Net loss from the revaluation of derivatives relates to contracts that did not
qualify for hedge accounting.
In 2021, foreign exchange loss is mostly compensated by EUR 2,122 thousand
gain from the revaluation of derivatives, which is presented under finance
income.
6. INCOME TAX
Corporate income tax for companies in the Czech Republic and United Kingdom
for the years 2020 and 2021 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%.
Structure of the income tax for the respective periods is as follows:
EUR '000 For the year ended 31 December
2021 2020
Current income tax charge 7,679 7,383
Adjustments in respect of current income tax of prior years 112 873
Deferred tax 228 (2,370)
Total 8,019 5,886
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
2021 2020
Accounting profit before tax 17,669 28,838
At UK's statutory income tax rate of 19% 3,357 5,479
Adjustments in respect of current income tax of prior years 112 873
Effect of certain income subject to a special tax rate - (1)
Effect of different tax rates in other countries of the Group 507 127
Change in unrecognised deferred tax assets - (503)
Non-deductible expenses (non-IPO) 1,398 1,153
Non-deductible expenses (IPO related) 1,368 -
Share-based payments 700 131
Net investment hedge 468 (263)
Tax credits - (432)
Effect of accumulated tax loss claimed in the current period (36) (133)
Effect of non-taxable income - (675)
Effect of unrecognised deferred tax assets relating to tax losses of current 145 130
period
At the effective income tax rate of 45.38% 20.41%
Income tax expense reported in the statement of profit or loss 8,019 5,886
Adjusted effective tax rate is as follows:
EUR '000 For the year ended 31 December
2021 2020
Accounting profit before tax 17,669 28,838
Adjusting items affecting adjusted EBITDA 22,793 3,618
Amortisation of acquired intangibles 5,419 5,577
Amortisation due to transformational useful life changes 1,717 261
Adjusted profit before tax (A) 47,598 38,294
Accounting tax expense 8,019 5,886
Tax effect of above adjustments 3,801 1,838
Adjusted tax expense (B) 11,820 7,724
Adjusted earnings (A-B) 35,778 30,570
Adjusted effective tax rate (B/A) 24.83% 20.17%
Unused tax losses, for which no deferred tax asset has been recognised were as
follows:
EUR '000 31 December 2021 31 December 2020
Unrecognised tax losses expiring by the end of:
31 December 2021 - 113
31 December 2022 210 195
31 December 2023 279 283
31 December 2024 and after 813 852
No expiry date 942 239
Total unrecognised tax losses 2,244 1,683
Potential tax benefit 426 320
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 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)
EUR '000 1 January 2020 Business combinations (Charged) credited to profit or loss Charged to equity Translation differences 31 December 2020
Difference between net book value of fixed assets for accounting and tax (6,967) - 464 - 4 (6,499)
purposes
Allowances to receivables 593 - 1,419 - (18) 1,994
Provisions for liabilities and charges - - 1,298 - (22) 1,276
Accruals tax deductible in different period 331 - (322) - 5 14
Tax losses - - 155 - 2 157
Tax benefit from pre-acquisition reserves 6,995 - - - - 6,995
Other (154) - (626) 46 (4) (738)
Net deferred tax asset/(liability) 798 - 2,388 46 (33) 3,199
Recognised deferred tax asset 5,636 - 1,408 46 (33) 7,057
Recognised deferred tax liability (4,838) - 980 - - (3,858)
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 subsidiary of the Company W.A.G. payment solutions, a.s. and its
subsidiaries have undistributed earnings of EUR 154,840 thousand (2020: EUR
138,635 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.
7. 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 2020 104,654 23,657 22,437 5,460 20,488 155 10,765 933 188,549
Additions - 510 18,120 2 52 - 365 409 19,458
Transfer - - - - 119 (119) - - -
Disposals - - - - (8) - - - (8)
Translation differences (866) - (704) (2) (39) (5) (342) (4) (1,962)
31 December 2020 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
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 2020 - (7,675) (8,207) (1,511) (5,641) (41) - (23,075)
Amortisation - (1,236) (5,791) (1,221) (3,757) - - (12,005)
Transfer - - - - (14) 14 - -
Disposals - - - - 6 - - 6
Translation differences - 74 258 3 63 3 - 401
31 December 2020 - (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)
Net book value:
EUR '000 Goodwill Client relationships Internal software development Patents and rights External software Other intangible assets Assets in progress Total
Net book value 103,788 15,330 26,113 2,731 11,269 7 12,126 171,364
at 31 December 2020
Net book value 105,198 17,558 36,922 2,728 11,525 5 19,517 193,453
at 31 December 2021
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
2021 2020
Expensed research and development costs 5,024 5,003
Impairment testing
Impairment exists when the carrying value of an asset or cash-generating unit
("CGU") exceeds its recoverable amount, which is the higher of its fair value
less costs of disposal and its value in use. The fair value less costs of
disposal calculation is based on available data from binding sales
transactions, conducted at arm's length, for similar assets or observable
market prices, less incremental costs for disposing of the asset. The
value-in-use calculation is based on a DCF model. The cash flows are derived
from the budget for the next five years and do not include restructuring
activities that the Group is not yet committed to or significant future
investments that will enhance the asset's performance of the CGU being tested.
Climate change impact on recoverable amounts and useful life of non-financial
assets is not considered to be significant in the next five years. The
recoverable amount is sensitive to the discount rate used for the DCF model,
as well as the expected future cash-inflows and the growth rate used for
extrapolation purposes. These estimates are most relevant to goodwill. The key
assumptions used to determine the recoverable amount for the different CGUs
are disclosed and further explained below.
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 2021 31 December 2020
Energy 40,180 40,180
Navigation 34,579 34,527
Telematics 25,996 24,673
Tax refund 2,382 2,347
Toll 2,061 2,061
Total 105,198 103,788
The recoverable amount of CGUs has been determined based on a value-in-use
calculation using cash flow projections from financial budgets approved by
senior management 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 and Telematics CGUs
· Revenue growth
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. Used discount rate 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 2021 31 December 2020
Energy CGU
Pre-tax discount rate 10.0% 10.5%
Long-term growth rate 1.8% 1.8%
Navigation CGU
Pre-tax discount rate 12.0% 12.0%
Long-term growth rate 2.0% 2.0%
Telematics CGU
Pre-tax discount rate 11.0% 11.0%
Long-term growth rate 2.0% 2.0%
Tax refund and Toll CGUs were not significant.
The Group has considered the potential impact of climate change in impairment
tests. 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.
Energy
The recoverable amount is estimated to exceed the carrying amount of the CGU
at 31 December 2021 by EUR 39,162 thousand.
Discount rate used in the value-in-use calculation would have to increase to
15.56% 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 34.74% 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.
Reasonably possible change in operating and capital expenses does not lead to
any impairment.
Reasonably possible change in revenue decrease and expenses increase does not
lead to any impairment.
Navigation
The recoverable amount is estimated to exceed the carrying amount of the CGU
at 31 December 2021 by EUR 44,375 thousand.
Discount rate used in the value-in-use calculation would have to increase to
19.88% for the recoverable amount to be equal to its carrying amount.
Revenue used in the value-in-use calculation would have to decrease by 23.43%
for the recoverable amount to be equal to its carrying amount.
Reasonably possible change in long-term revenue growth rate of 2.00% does not
lead to any impairment.
Reasonably possible change in operating and capital expenses does not lead to
any impairment.
Reasonably possible change in revenue decrease and expenses increase does not
lead to any impairment.
Telematics
The recoverable amount is estimated to exceed the carrying amount of the CGU
at 31 December 2021 by EUR 36,504 thousand.
Discount rate used in the value-in-use calculation would have to increase to
19.32% for the recoverable amount to be equal to its carrying amount.
Revenue used in the value-in-use calculation would have to decrease by 16.74%
for the recoverable amount to be equal to its carrying amount.
Reasonably possible change in long-term revenue growth rate of 2.00% does not
lead to any impairment.
Reasonably possible change in operating and capital expenses does not lead to
any impairment.
Reasonably possible change in revenue decrease and expenses increase does not
lead to any impairment.
8. 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 2020 23,178 3,207 18,575 5,798 3,713 54,471
Additions - - 493 9 2,049 2,551
Transfer 1,499 457 1,373 483 (3,812) -
Disposals - - (476) (340) (268) (1,084)
Translation differences (685) (63) (455) (204) (127) (1,534)
31 December 2020 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
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 2020 (3,885) (1,009) (10,668) (3,020) - (18,582)
Depreciation charge (514) (435) (2,247) (938) - (4,134)
Disposals - - 433 350 - 783
Translation differences 117 27 267 93 - 504
31 December 2020 (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)
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 19,710 2,184 7,295 2,231 1,555 32,975
at 31 December 2020
Net book value 21,359 2,060 8,183 1,588 1,573 34,763
at 31 December 2021
Land, buildings and machinery and equipment are subject to pledge in respect
of bank loans:
EUR '000 31 December 2021 31 December 2020
Pledged property, plant and equipment 34,544 24,440
Increase in pledged assets is mainly driven by fully pledged shares of W.A.G
payment solutions, a.s. after the Admission and Group reorganisation.
9. LEASES (GROUP AS A LEASEE)
The Group leases assets including buildings, land and motor vehicles. The
average lease term is four years. Leases comprise a larger number of various
diversified lease contracts in different locations.
Right-of-use assets
EUR '000 31 December 2021 31 December 2020
Buildings 7,005 8,002
Lands 486 513
Vehicles and machinery 621 129
Total 8,112 8,644
Additions to the right-of-use assets 1,509 498
Depreciation charge of right-of-use assets
EUR '000 For the year ended 31 December
2021 2020
Buildings (2,244) (2,021)
Lands (53) (52)
Vehicles and machinery (138) (34)
Total (2,435) (2,107)
Lease liabilities
EUR '000 31 December 2021 31 December 2020
Long-term lease liabilities 5,973 7,155
Short-term lease liabilities 2,601 2,208
Total lease liabilities 8,574 9,363
EUR '000 31 December 2021 31 December 2020
Within one year 2,601 2,208
After one year but not more than five years 4,289 5,369
More than five years 1,684 1,786
Total lease liabilities 8,574 9,363
Discount rate used was in the range 1.10%-3.25%.
Leases in the Income statement
Leases are shown as follows in the income statement:
EUR '000 For the year ended 31 December
2021 2020
Other operating expense
Short-term lease expenses 547 981
Low-value lease expenses 53 27
Other lease expenses (additional costs) 38 34
Depreciation and impairment losses
Depreciation of right-of-use assets 2,435 2,107
Net finance costs
Interest expense on lease liabilities 229 229
Currency translation (gains)/losses on lease liabilities (107) 5
10. EARNINGS PER SHARE
All ordinary shares have the same rights. Class B share was excluded from
earnings per share ("EPS") calculation as it has no voting rights, rights to
distributions or rights to the return of capital on winding up.
Basic EPS is calculated by dividing the net profit for the period attributable
to equity holders of the Group by the weighted average number of ordinary
shares outstanding during the year.
Diluted EPS is calculated by dividing the net profit for the period
attributable to equity holders of the Group by the weighted average number of
ordinary shares outstanding during the period, plus the weighted average
number of shares that would be issued if all dilutive potential ordinary
shares were converted into ordinary shares.
Adjusted EPS is calculated by dividing the Adjusted earnings (net profit) for
the period attributable to equity holders by the weighted average number of
ordinary shares outstanding during the period.
The following reflects the income and share data used in calculating EPS:
For the year ended 31 December
2021 2020
Net profit attributable to equity holders (EUR '000) 9,148 21,239
Basic weighted average number of shares 595,582,785 564,857,081
Effects of dilution from share options 1,483,248 4,852,427
Total number of shares used in computing dilutive earnings per share 597,066,033 569,709,508
Basic earnings per share (cents/share) 1.54 3.76
Diluted earnings per share (cents/share) 1.53 3.73
The weighted average number of shares for the year ended 31 December 2020 of
564,857,081 has been determined based on the number of shares of W.A.G.
payment solutions, a.s. multiplied by the ratio at which these shares were
exchanged for shares in the Company on 7 October 2021.
Adjusted earnings per share measures:
For the year ended 31 December
2021 2020
Net profit attributable to equity holders (EUR '000) 9,148 21,239
Adjusting items affecting Adjusted EBITDA (Note 4) 22,793 3,168
Amortisation of acquired intangibles* 4,297 4,107
Amortisation due to transformational useful life changes 1,717 261
Tax impact of above adjustments* (3,573) (1,514)
Adjusted net profit attributable to equity holders (EUR '000) 34,382 27,261
Basic weighted average number of shares 595,582,785 564,857,081
Adjusted basic earnings per share (cents/share) 5.77 4.83
Diluted weighted average number of shares 597,066,033 569,709,508
Adjusted dilutive earnings per share (cents/share) 5.76 4.79
*non-controlling interests impact was excluded
Options
Options granted to employees under Share-based Option Plans are considered to
be potential ordinary shares. They have been included in the determination of
diluted earnings per share if the required performance criteria would have
been met based on the Group's performance up to the reporting date, and to the
extent to which they are dilutive. The options have not been included in the
determination of basic earnings per share.
11. INTEREST BEARING LOANS AND BORROWINGS
31 December 2021 31 December 2020
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 47,500 38,815 38,815
Senior multicurrency term and revolving facilities agreement* EUR 2025/05 3M EURIBOR + margin 47,500 46,843 46,843 47,500 46,702 46,702
Senior multicurrency term and revolving facilities agreement* EUR 2025/05 3M EURIBOR + margin 95,000 84,510 84,510 95,000 55,967 55,967
Other loans CZK fixed rate 5,277 5,277 212 16,037 16,037 611
Revolving facilities and overdrafts 10 10 29,144 29,144
Total EUR 162,473 171,239
Current EUR 18,894 42,274
Non-current EUR 143,579 128,965
*On 27 May 2019, the Group signed senior multicurrency term and revolving
facilities agreements ("club financing facilities") 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 club financing, up to EUR 60 million is available for the Group for
revolving facilities and overdraft accounts, and up to EUR 92 million for bank
guarantees.
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 5.
Interest bearing loans and borrowings are non-derivative financial liabilities
carried at amortised cost.
As at 31 December 2021 and 31 December 2020, the following pledges have 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 8);
· pledge of movable assets (Note 8); and
· pledge of trademarks.
Under the old terms of the club financing facilities (until 27 August 2021),
the Group was required to comply with the following financial covenants:
· cashflow cover (the ratio of cashflow to debt service) shall not
be less than 1.10;
· net leverage (the ratio of total net debt to Adjusted EBITDA)
shall not exceed 4.25;
· 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 0.90; and
· adjusted net leverage (the ratio of the adjusted total net debt
to Adjusted EBITDA) shall not exceed 6.50.
The Group complied with all financial covenants under the Senior Facilities
Agreement as of 31 December 2021 and 31 December 2020, and forecasts
compliance for the going concern period. The Group did not comply with the
cashflow cover covenant as of 31 March 2020 and 30 June 2020 due to adverse
changes in working capital related to lockdown restrictions during the
COVID-19 pandemic. The Group received waivers from the banks on both covenant
breaches and complied with all financial covenants as of 30 September 2020 and
31 December 2020. The Group replaced the cashflow cover covenant with a less
sensitive interest cover covenant in an amendment to the Senior Facilities
Agreement dated 27 August 2021.
After 27 August 2021, new financial covenant terms of the club financing
facilities were as follows:
Covenant Calculation Target Actual
31 December 2021
Interest cover the ratio of adjusted EBITDA to interest payable Min 5.00 11.81
Net leverage the ratio of total net debt to adjusted EBITDA Max 3.75* 2.12
Borrowing base covenant the ratio of the sum of outstanding amount of revolving facility, outstanding Max 1.00 0.46
bank guarantees less cash and cash equivalents, to trade receivables
Adjusted net leverage the ratio of the adjusted total net debt to adjusted EBITDA Max 6.50 3.49
*the covenant shall not exceed 3.5 in 2022, 3.25 in 2023 and 3.00 from 2024
onwards
Principal risks
1 Product demand decline risk
Our operating results are materially affected by general conditions in the
economy. The volume of customer payment transactions we process, and customer
demand for the products and services we provide, correlates with general
economic conditions. Economic downturns are generally characterised by reduced
commercial activity and trade, resulting in reduced demand and use of our
products and services by customers. Decline in general economic conditions
thus could result in a decline in demand for fuel and toll payments,
tax-refund services, telematics, or other adjacent services we provide.
Decline in demand would adversely affect the Group's business, financial
condition, results of operation and prospects.
2 Growth strategy implementation risk
Our growth strategy is to build an integrated end-to-end digital platform
around the needs of our customers in the CRT industry. Its implementation
relies significantly on technology development and increased power to analyse
and utilise data. Inability to successfully achieve the necessary technology
developments, or not completing strategic acquisition targets (as a result of
unavailability of targets or insufficient funding), would expose the Group to
an inability to achieve its growth objectives. This would result in a decline
in revenue and more difficult position to recover from.
3 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. 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.
4 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. Furthermore, the Group has also initialized an
internalization of the authorization centre. The project is significantly
dependent on the current external provider of the authorization centre and an
inability to complete the internalization in an expected quality and
time-frame, would expose Group to additional costs and potential business
disruptions.
5 Technology security and resilience risk
The Group's business is reliant on technology and data confidentiality,
integrity and availability. Compared to other businesses the Group is subject
to the risk of external security and privacy breaches, such as cyberattacks.
If the Group is not be able to adequately protect its information systems,
including the data it collects on its customers, it could result to a
liability and a damage to its reputation. Moreover, if the technology the
Group uses in operating its business and interacting with its customers fails,
does not operate to expectations or is not available, then its business and
results of operations could be adversely impacted.
6 Personal dependency risk
The Group's success depends, in part, on its executive officers 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 addition, we depend on our founder and CEO. Inability
to secure a ready successor could reduce our ability to achieve our strategic
goals and an adverse reaction from stakeholders.
7 Climate change risk
Climate change and the 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. We currently derive a significant portion of our
revenues from fees for fossil fuels transactions. We note 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 wellbeing of our
workforce and customers. In addition, we recognise we are responsible for
reducing our own carbon footprint, as well as for contributing to solutions to
help customers make the transition to a low-carbon future.
8 Physical security risk
The Group operates a number of truck parks and these are exposed to security
threats. A security threat materialising as a result of insufficient
protection would result in danger to the health of our employees and
customers, and significant business disruptions.
9 Regulatory and licensing risk
The Group relies on numerous of 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 number of countries,
Electronic money institution license required for the provision of financial
services and insurance distribution licenses. As a consequence of holding the
licenses and certifications, the Group is subject to strict regulatory
requirements (Governance, Products, IT security, Operational) of regulatory
bodies in respective jurisdictions. Non-compliance with these can result in
fines, suspension of business or loss of licenses. Key regulatory requirements
are operationalised by governance and compliance with UK plc 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 may adversely affect our products, services and markets.
10 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,
for particularly customers in our payment solutions segment who we finance
through post-payment of their energy consumption and toll balances and also
for customers with invoices on 30- day payment terms. 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 following risks are emerging due to the war in Ukraine:
1 Product demand decline risk - the volume of customer payment transactions we
process, and customer demand for the products and services we provide,
correlates with general economic conditions, which may deteriorate due to the
ongoing conflict.
5 Technology security and resilience risk - the Group is subject to the risk
of external security and privacy breaches, such as cyberattacks. Increase of
the risk is caused by an increased frequency and severity of cyber-attacks due
to the ongoing conflict that is expected to impact countries where the Group
operates.
8 Physical security risk - the Group's truck parks, office buildings and
employees are exposed to higher security threats, especially if the conflict
escalates.
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 2021, organic growth includes an
adjustment related to KomTeS acquisition to enhance year-on-year
comparability, Group net sales to KomTeS are included as if KomTeS was an
external party in 2021 because there were external sales to them in prior
period. Remaining net sales of KomTeS are excluded in the calculation.
Financial Transformational capital expenditure Transformational capital expenditure represents investments intended to create
a new product or service, or significantly enhance an existing one, in order
to increase the Group's revenue potential. This also includes systems and
processes improvements to improve services provided to customers.
Operational Average active payment solutions customers Average active payment solutions customers represents the number of customers
who have used the Group's payment solutions services in a given period,
calculated as the average of the number of active customers for each month in
the period. A customer is considered an active customer if it uses the Group's
payment solutions products at least once in a given month.
Operational Average active payment solutions trucks Average active payment solutions trucks represents the number of customer
vehicles that have used the Group's payment solutions services in a given
period, calculated as the average of the number of active customer vehicles
for each month in the period. A customer vehicle is considered an active truck
if it uses the Group's payment solutions products at least once in a given
month.
Operational Payment solutions transactions Payment solutions transactions represents the number of payment solutions
transactions (fuel and toll transactions) processed by the Group for customers
in that period. A fuel transaction is defined as one completed (i.e. not
cancelled or otherwise terminated) fuelling transaction. AdBlue transactions
are not counted as stand-alone fuel transactions. A toll transaction is
defined as one truck passing through a given toll gateway per day and per
merchant country (meaning multiple passages by the same truck through any toll
gateway in one merchant country in a given day is still counted as one
transaction).
Operational Mobility solutions segment Mobility solutions segment represents number of services, which are
subsequently sold to customers using Payment solutions products. The segment
includes Tax refund, Telematics, Navigation and other service offerings.
Operational Payment solutions segment Payment solutions segment represents core of Group's revenues, which are based
on re-occurring and frequent transactional payments. The segment includes
Energy and Toll payments, which are typical first choice of a new customer.
Operational Net revenue retention Average net revenue retention represents, for Eurowag only (i.e., excluding
ADS and Sygic), the average retained proportion of the Group's net revenues
derived from its payment solutions and tax refund customers during the
entirety of the previous years.
Notes:
1) Please refer to section Explanation of Alternative Performance Measures
for a definition.
2) Presented measure excludes telematics and includes post-paid as a
separate service
3) Calculated as impairment losses of financial assets to total revenue
increased by toll payment solutions turnover
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