TIDMWPS
RNS Number : 1476T
Eurowag
16 March 2023
16 March 2023
W.A.G payment solutions plc ("Eurowag" or the "Group")
Preliminary results for the year ended 31 December 2022
CONTINUED STRONG AND RESILIENT GROWTH
W.A.G payment solutions plc ("Eurowag" or the "Group"), a
leading pan-European integrated payments and mobility platform
focused on the Commercial Road Transport ("CRT") industry, today
announces its preliminary results for the year ended 31 December
2022.
Martin Vohánka, Founder and CEO, commented:
"I am very pleased with our strong performance this year despite
the macro-economic challenges we faced across Europe. This is
testament to the hard work and commitment of our team, and once
again demonstrates not just the resilience of Eurowag, but the
vital role our services play in keeping the Commercial Road
Transport industry in Europe moving.
Our strategy over the last few years has been focused on
accumulating and building our product and technology capabilities,
as well as expanding our customer footprint across Europe, as we
work towards achieving our goal of delivering the CRT industry's
first truly integrated, end-to-end digital platform. We made
significant progress towards achieving this ambition last year. Key
strategic highlights include the acquisition of Webeye, entering
into a new strategic partnership with JITpay and the acquisition of
Inelo, which is now complete. We continue to make good progress on
our transformational technology programme, which revolutionises the
customer experience by piecing together our product capabilities
into one seamless platform.
There is still much work to do as we approach a new phase of
Eurowag's journey. However, we have entered into 2023 with strong
momentum and I am more confident than ever that our integrated,
end-to-end digital platform will unlock further value for both our
customers and shareholders."
The Group achieved strong full-year results with growth in line
with medium-term financial guidance.
-- Net energy and services sales(1) up 24.6% year-on-year to
EUR190.9m, with organic growth(2) of 19.4% year-on-year;
-- Payment solutions(1) grew by 19.2% year-on-year to EUR134.8m
with organic growth of 18.3% year-on-year;
-- Mobility solutions(1) grew 39.8% year-on-year to EUR56.0m,
with organic growth of 22.3% year-on-year;
-- Adjusted EBITDA(1) up 17.0% year-on-year to EUR81.6m
resulting in adjusted EBITDA margin(1) of 42.8% including
incremental PLC costs and Webeye consolidation(3) ;
-- Adjusted EBITDA margin excluding incremental PLC costs and Webeye consolidation is 45.6%;
-- On a statutory basis, profit before tax was EUR28.0m, a 58.3% increase year-on-year;
-- Transformational capital expenditure(1) programme on track, EUR25.5m spent in 2022;
-- Net cash(1) position of EUR2.8m (gross cash of EUR146.0m) as
at 31 December 2022, providing leverage headroom ahead of
completing Grupa Inelo S.A. ("Inelo") acquisition in Q1 2023.
Key statutory financials FY 2022 FY 2021 YoY
Revenue from contracts with customers
(EURm) 2,368.3 1,646.1 43.9%
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Profit before tax (EURm) 28.0 17.7 58.3%
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Basic EPS (cents/share) 2.41 1.54 57.2%
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Alternative performance measures FY 2022 FY 2021 YoY
(1)
Net energy and services sales (EURm) 190.9 153.1 24.6%
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Adjusted EBITDA (EURm) 81.6 69.7 17.0%
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Adjusted EBITDA margin (%) 42.8 45.5 (2.7 pp)
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Adjusted basic EPS(4) (cents/share) 5.75 5.77 (0.3%)
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Operational and strategic highlights
-- Positive performance against non-financial KPIs,
demonstrating customer loyalty and the mission critical nature of
Eurowag's products:
-- Average active payment solutions customers(5) up 12.9% year-on-year to 16,950;
-- Average active payment solutions trucks(6) up 6.7% year-on-year to 88,189;
-- Payment solutions transactions(7) up 8.4% year-on-year to 35.2m;
-- Average net revenue retention(8) for the last five years was over 110%.
-- Continued successful execution of M&A strategy, with key
capabilities and services added to Eurowag:
-- Completed the acquisition of substantially all of the assets
of Webeye Telematics Zrt. ("Webeye");
-- Launched a strategic partnership with JITpay Group;
-- Entered into agreement with Sygic to take full control of its resources, and
-- Completed the acquisition of Inelo.
Outlook
Eurowag enters 2023 in a strong position. We have a loyal and
growing customer base and truly mission critical products and
services. As we expand both our geographic footprint and the range
of services we offer, we have a great opportunity to drive growth
by acquiring new customers and selling additional products to
existing customers.
This coming year, our focus will be on integrating the
businesses we acquired in 2022, so we can unlock the expected
synergies and capitalise on our cross-sell opportunities. We expect
to finalise our transformational capex programme at the end of the
year, having invested in the last few years towards developing the
industry's first digitally integrated end-to-end platform. With the
recent acquisition of Inelo, our leverage ratio is expected to
exceed the top end of our medium-term guidance range of 1.5x to
2.5x net debt to adjusted EBITDA, therefore, our priority in the
near-term is to return to within the target range as we remain
disciplined and want to maintain a robust balance sheet.
As we enter our integration phase and continue to focus on the
delivery of our platform, we can unlock the scale of opportunity
whilst driving value for Eurowag's customers and shareholders. As a
result, we continue to be confident that we will deliver strong
growth in line with our expectations, and our medium-term financial
guidance remains unchanged.
Medium-term guidance reiterated
-- Organic net revenue growth between high teens and low twenties.
-- Adjusted EBITDA margin expansion from mid-forties to
high-forties. The acquisition of Inelo changes the revenue mix of
the Group, with an increase of revenue contribution to the mobility
segment. Inelo's revenues are majority subscription based and
naturally more recurring, however it generates lower operational
gearing. Consequently, the change in revenue mix may impact the
pace of margin expansion to high-forties over the medium-term.
-- Ordinary capex at around high single digit percent of net revenue.
-- Transformational capex programme of EUR50m cumulative for 2022 and 2023.
-- Leverage target of 1.5x to 2.5x net debt to adjusted EBITDA.
Our leverage ratio is expected to exceed the top end of the range
by around half a turn of adjusted EBITDA on completion of Inelo and
we anticipate returning to within the target range in the
near-term.
Notes:
1. Please refer to section Explanation of Alternative
Performance Measures for a definition and see note 5.
2. Growth in Net energy and services sales excluding the net
sales of the Group's acquisitions in the current period. In 2022,
organic growth includes an adjustment related to Webeye acquisition
to enhance year-on-year comparability.
3. Webeye consolidation includes integration expenses related to acquisitions.
4. Remained flat due to higher number of weighted average number
of shares in 2022 at 688.9m (2021: 595.6m).
5. Average active payment solutions customers represents the
number of customers who have used the Group's payment solutions
services in a given period, calculated as the average of the number
of active customers for each month in the period. A customer is
considered an active customer if it uses the Group's payment
solutions products at least once in a given month.
6. Average active payment solutions trucks represents the number
of customer vehicles that have used the Group's payment solutions
services in a given period, calculated as the average of the number
of active customer vehicles for each month in the period. A
customer vehicle is considered an active truck if it uses the
Group's payment solutions products at least once in a given
month.
7. Number of payment solutions transactions represents the
number of payment solutions transactions (fuel and toll
transactions) processed by the Group for customers in that
period.
8. Average net revenue retention represents, for Eurowag only
(i.e., excluding ADS, Sygic and Webeye), the average retained
proportion of the Group's net revenues derived from its payment
solutions and tax refund customers during the entirety of the
previous years.
Investor and analyst presentation today
Martin Vohánka (CEO) and Magdalena Bartoś (CFO) will host a
virtual presentation and a Q&A session for investors and
analysts today, 16 March 2023, at 9.00am GMT. The presentation and
webcast details are available on the Group's website at
https://investors.eurowag.com
Please register to attend the investor presentation via the
following link:
https://www.lsegissuerservices.com/spark/WAGPAYMENTSOLUTIONS/events/de660150-4425-4888-9948-1e677a52c810
Should you want to ask questions at the end of the presentation,
please use the following link:
https://cossprereg.btci.com/prereg/key.process?key=PHQXJ3C8P
ENQUIRIES
Eurowag
Carla Bloom
Head of Investor Relations and Communications
+44 (0) 789 109 4542
investors@eurowag.com
Instinctif Partners
Tim McCall, Galyna Kulachek, Bryn Woodward
IR and international media
+44 (0)20 7457 2020
eurowag@instinctif.com
About Eurowag
Eurowag was founded in 1995 and is a leading pan-European
integrated payments and mobility platform focused on the CRT
industry. Eurowag's innovative solutions makes life simpler for
small and medium businesses in the CRT industry across Europe
through its unique combination of payments solutions, seamless
technology, a data-driven digital ecosystem and high-quality
customer service. https://investors.eurowag.com
Chief Executive Officer's Review
Last year we set out our ambition to make the CRT industry
clean, fair, and efficient. We can achieve this by evolving and
adding to the services that we offer to our customers, through
innovation and M&A, as well as developing our digital
capabilities. This will not only transform our business, but also
the industry as a whole, which is lacking in digital solutions. Our
overarching strategic goal is to deliver the CRT industry's first
truly integrated, digital end-to-end platform.
Our five strategic pillars underpin our day-to-day operations,
driving organic and inorganic growth, and represent the foundations
for how we will achieve our long-term objectives. Key achievements
delivered against each pillar in the year include:
1. Growing our existing customer base. Through further
innovation in core payment services, and integration and
cross-selling with mobility services, we can retain and expand our
existing customer relationships by continuing to meet their
evolving needs. Progress in 2022 includes:
-- Successful certification of our EETS platform received in
Germany and more recently in the Czech Republic, as well as
relevant bridges in Denmark and Sweden; now compatible with
Poland's tolling system.
-- Extended our card acceptance network for both traditional and
alternative fuels by an additional 1,005 locations across 15
European countries.
-- Added new acceptance points to our LNG and HVO100 network,
which now represents more than 50% of the European market.
-- Driven by customer demand, we introduced more flexible
financing options for VAT refund customers, such as hybrid
financing or financing on demand, offering customers a prefinancing
option.
-- Maintained strong average net revenue retention above 110% over the last five years.
2. Geographic expansion and market penetration. We apply our
scalable business model to new markets serving both existing and
new customers, thus expanding market share. Progress in 2022
includes:
-- Increased the number of active payment solutions customers by
12.9% with the majority of the growth coming from already
established markets in the Southern and Central regions.
-- Expanded into the DACH region (Germany, Austria,
Switzerland), establishing a new experienced sales team in
Germany.
3. Go-to-market channel expansion. We acquire new customers
through our marketing strategy based on geographic clusters and
three sales channels (direct, indirect, and digital). Progress in
2022 includes:
-- Launched an end-to-end, fully automated digital customer
acquisition, credit scoring and onboarding channel in 5
countries.
-- Migrated our ADS customers onto our Eurowag card network,
including the onboarding and contractual processes.
-- Built an extensive base of digital leads and achieved strong
conversion rates during our marketing campaigns.
-- Through our indirect channel, we signed two leading European
OEM contracts, placing Eurowag's application in every new dashboard
from 2027. Sygic also signed an agreement with koda Auto Volkswagen
India Private Ltd. to integrate its GPS Navigation in their India
2.0 cars and future models until 2029.
4. Digital platform development. We are developing our
end-to-end platform as a conduit for intermediate payments and data
exchange between parties, connecting digital services, and physical
assets, to create a fully connected marketplace. Progress in 2022
includes:
-- Added Eurowag Pay feature to our mobile app, allowing our
customers to unlock fuel pumps remotely.
-- Activated mobile payments on bunkering locations and in the
acceptance network across 10 countries, resulting in 424 POS ready
for mobile payment as at the year end.
-- Implemented phase one of our SAP Enterprise Resource Planning
("ERP") software focused on processes relating to energy payment
transactions.
-- Our Sygic application Road Lords reached around 632,000
drivers as at 31 December 2022, with average monthly downloads of
c.106,000.
5. Accretive M&A. We have a strong track record of
identifying and executing strategic M&A. We continue to screen
acquisition targets that will create cross-sell and up-sell
opportunities, generate cost and revenue synergies, and further
develop our product and technology capabilities. Progress in 2022
includes:
-- Completed the acquisition of Webeye in July 2022, a leading
fleet management solutions provider in Central and Eastern Europe,
broadening the Group's customer base.
-- Launched a strategic partnership with JITpay Group in
September 2022, a leading provider of digitalised billing,
receivables management and financing solutions, including invoice
discounting.
-- Entered into an agreement with Sygic in December 2022 to take
full control of its resources, with the consideration for the
remaining 30% equity interest to be payable and transferred in
April 2024, in line with the original option agreement.
-- Completed the acquisition of Inelo in March 2023, a leading
fleet management solutions and work time management software
provider.
Updated strategic framework
It is clear that following the significant progress Eurowag has
made in both expanding its geographic footprint and its range of
services in recent years, it is now entering a new phase in its
journey. As a result, we are updating our strategic framework to
enable enhanced focus on key strategic priorities in order to
achieve our goal of delivering an integrated, end-to-end digital
platform.
Our key goals for 2023 and the medium-term are driving growth
through cross-selling to existing customers and growing our
customer base in existing and new European territories, integrating
the businesses and capabilities acquired over the last few years
and building on our end-to-end digital platform.
Taking these into consideration and to reflect the progress the
business has made to date, we have evolved our strategic framework
to focus on the following strategic priorities:
1) Be in every truck (attract)
2) Drive customer centricity (engage)
3) Grow core services (monetise)
4) Expand platform capability (retain)
With the appointment of a new CFO, Eurowag has decided to move
its Capital Markets Day to after its half year results, giving them
more time to become fully embedded into the business. Therefore,
the new strategic priorities will be discussed in more detail
during the CMD later in the year.
Operational review
Payment solutions
Payment solutions currently represent the largest part of our
ecosystem and include secure means of making energy payments
through pre- or post-paid fuel cards and toll payments. This is
often the first introduction customers have to our services. In
2022, the payment solutions segment grew by 19.2% year-on-year to
EUR134.8m (2021: EUR113.1m), representing 70.7% of total net energy
and services sales.
Energy payments
During the year, we activated mobile payments at bunkering
locations and on our acceptance network in 10 countries and will
continue to roll out mobile activation into 2023 across our
business. In addition, we extended our card acceptance network for
both traditional and alternative fuels by an additional 1,005
locations across 15 European countries.
As the world moves towards more sustainable alternative fuels,
we are focused on supporting the transition to a low-carbon future.
In 2022, we opened our first Eurowag owned LNG bunkering stations
in the Czech Republic, added new POS to our LNG acceptance network,
including entering a new country, Hungary, and added POS where our
customers can refuel with hydrotreated vegetable oil (HVO100).
HVO100 can reduce CO2 emissions by up to 90%, compared with diesel
fuel. At the end of the year, we had 302 active LNG and CNG
stations, which represents more than 50% of the European market.
With a focus on reducing emissions from bunkering locations, we are
also installing photovoltaic panels in our truck parks.
At the outbreak of the Russian war in Ukraine, we reacted
quickly and shut down the entire acceptance network in Russia
immediately. Before Europe-wide sanctions were introduced, we ended
co-operation with a Russian-related wholesale suppliers and POS
partners. This resulted in the closure of around 1,000 card
acceptance points. Where possible, we added new, alternative
acceptance network partners and advised our customers to refuel
prior to entering areas with closed acceptance networks.
Toll payments
Our toll payment services, like our energy payment services,
allow customers to pre-pay or post-pay for their toll payments on
European tolled road networks. During 2022, we received
certification in Germany for our EETS platform; this is the single
biggest toll volume domain in Europe, located at the intersection
of major European international transport routes and this
consequently represents an important milestone for Eurowag. We have
also been certified on relevant bridges in Denmark and Sweden and
are now compatible with the tolling system in Poland. More recently
we were awarded certification from the Czech authority.
The nature of tolling requires not only continuous tracking of
geolocation data, but also collection and storage of relevant
vehicle attributes. Via our tolling solution, we not only feed the
data platform with real-time location of vehicles, but also allow
the matching of vehicle "master data" attributes, such as engine
type, number of axles, weight class, and others. Therefore, our
EETS solution not only supports the growth of our core business and
is an enabler for the development and growth of Eurowag's broader
business.
Mobility solutions
The mobility solutions segment offers our customers tax refund
services, fleet management services, location-based products and
services, and other adjacent services. In 2022, the segment grew by
39.8% year-on-year to EUR56.0m (2021: EUR40.0m), representing 29.3%
of total net energy and services sales. Mobility solutions revenue
is largely subscription based, and consequently, in the long-term,
represents a more resilient and predictable revenue stream.
Following completion of the proposed acquisition of Inelo, mobility
solutions is estimated to represent around 45% of Eurowag's total
net revenue.
Tax refund services
During the year, we introduced more flexible financing options
for our customers, such as hybrid financing, financing on demand or
advanced payment. Advanced payment speeds up not only the excise
duty refund process but also the VAT refund process, allowing
customers to receive their funds as soon as they submit their
claims. Additionally, we increased the range of services in
Croatia, Bulgaria, and Romania, and continue to review our markets
to see where we can add further tax support solutions for our
customers. A redesign of the current IT solution for tax refund has
enabled the scalability of the business model and increased the
speed and quality of the tax refund submissions. The use of AI has
enabled us to streamline our processes further, enabling
operational efficiencies.
As a tax refund provider, we get full insight into customers'
journeys. This allows us to identify the times and locations where
customers deviate from our solutions and opt for others,
contributing important data analytics to our central data lake,
which we can use to help us understand our customers better,
cross-sell more effectively and drive the development of our
integrated platform.
Fleet management services
Fleet management services allow dispatchers and truckers to
better understand their trucks. It can check maintenance, tracks
fuel consumption, driving time, load, and other metrics.
During the year, we added a Maintenance module, which allows our
users to have all their maintenance tasks in one place. Dispatchers
can record vehicle servicing, regular inspections, and expenses for
their operations. The system is configured to notify users in
advance if any maintenance is required on the truck. Dispatchers
can now also download tachograph data remotely at any time. We have
also started to implement new features that enable our telematics
services to be used in hydrogen-powered vehicles.
In 2022, we acquired Webeye, a leader in CRT fleet management
solutions. Webeye supports the carriers' road activities on several
levels: route planning and fleet tracking support for operators and
analysis of driving habits, style, and performance, either
aggregated or on a driver-by-driver level. By combining Eurowag's
payment and mobility services with Webeye's solutions, we can
provide further optimisation to fleet operators and wider control
over fleets, which increases efficiency and profitability. Data
from connected trucks offers insights and enables the continuous
development of new and improved solutions.
Location-based products and services
We offer smart navigation products and location-based services
through our brand Sygic, one of the leaders in providing smart
routing worldwide for both individual truck drivers and various
size fleets. Sygic uses a Connected Operations Cloud to optimise
fleet operations and enhance the driver experience. Sygic continues
to invest in improving its app to enhance customer experience.
During the year, app functionality has had updates such as quick
and easy sign-in, provided more technical details and availability
of the charging points, smart routing, and better-arranged payment
process. Sygic's Road Lords application, which links drivers with
each other to share unique trucking information when on the road,
has been installed on more than 3 million mobile devices across
Europe, whilst the active installation base reached 632,000 drivers
at the year end. Road Lords is downloaded on average 106,000 times
a month, and currently gets 4.6 stars out of 5 from customer
reviews. Sygic is now listed on the Samsara App Marketplace . The
Samsara app has 2 million IoT connected devices, which can easily
connect their solution to Sygic Professional Navigation and guide
their drivers as scheduled by fleet managers.
Putting our customers first
Our business has grown and developed because we have listened to
and understood our customers' needs and pain points as the
commercial transport industry becomes more complex and regulatory
requirements increase. As we evolve and expand our services, we
need to ensure our Net Promoter Score (NPS) and customer churn are
moving in the right direction. During the year we embarked on two
customer experience projects: one was to understand why our
customers in Poland were struggling to implement our e-Toll
solutions and another was to survey customers on our new digital
platform. We mapped our customers' journeys in Poland and were able
to understand the challenges our customers were facing with the
installation of our toll products. We were then able to solve the
issues in Poland, which in turn stabilised churn and improved our
NPS by 50 points. The survey on our digital platform confirmed that
our new product development reflected the needs of our customers,
no matter their size or complexity of their journey. As a result,
we were able to improve Eurowag's brand NPS in the year by 8.2
points to +40.7 points, showcasing our strong brand advocacy and
brand loyalty across our markets.
Building our people capabilities
None of our achievements in the year would have been possible
without our people. We continued to invest in our people leaders in
2022, building on a strong foundation of skills and
capabilities.
As our operating model moves towards being a digitally enabled
platform, expanding on our core competencies is essential to
scaling our business and succeeding in developing our digital
capabilities. With this in mind, we strengthened our Senior
Leadership Team, including our Executive Committee, through changes
to organization structures, personnel, and changes of roles. Within
the year we added new roles such as a Chief Product Officer and
Chief Information Officer. Changes like this naturally lead to
attrition, and we had senior leavers in the year, including the
Chief Commercial Officer, Chief HR Officer and Chief Technology
Officer. The roles were filled promptly by individuals that have
had previous experience with the business and have significant
experience in their field.
To help us maintain our recent strong performance and drive
sustained growth, we grew our employee base by 20% last year
through both talent acquisition and acquisition of businesses, such
as Webeye.
In a services-based business, we recognise that engaging our
colleagues and ensuring they remain motivated, driven, and rewarded
is crucial. In 2022, we re-ran our pulse survey with 82% of our
employees participated in the survey and our engagement score was
66% (2021: 75%). In the future we plan to introduce more frequent
short 'mood' check surveys to promptly address any feedback.
Following the end of the reporting period, we appointed a new
Chief Financial Officer who will take over from Magdalena Bartoś ,
with effect from 17 April 2023. The new CFO will also be appointed
as an Executive Director of the Board on 12 May 2023. I would like
to thank Magdalena for her contribution to Eurowag over the past
three years. She has played an important role and her knowledge and
expertise has been invaluable. Her many achievements include
leading us through the IPO and recent refinancing, and further
building Eurowag's strong track record of delivering strategically
important partnerships and acquisitions. I wish her all the best in
her future endeavours.
Sustainability
Our sustainability plan underpins our strategy and is focused on
four areas, climate action, customer success and well-being,
company governance and culture and community impact. Eurowag's
purpose is to make the CRT industry clean, fair, and efficient. We
have committed to being a Net Zero company by 2050 and have
established a decarbonisation roadmap to help us achieve our
objective. We have accelerated our ambition to reduce greenhouse
gas emissions (GHG) from our own operations and become a zero
emissions operation by 2040. We have also set targets to help our
customers reduce GHG and accelerate the energy transition to
low-carbon commercial transport. Our target is to reach 80,000
active alternative fuel trucks using our products by 2030 and
achieve 20% carbon intensity reduction per tkm by 2030.
In order to meet these targets, in 2022, we introduced HVO100 as
an alternative fuel and opened two Eurowag owned LNG sites. We also
introduced new services for electric vehicles, and our telematics
products now support hydrogen-powered vehicles. Our driving
behaviour tools and telematics data enables our customers to become
safer and more efficient drivers. We installed photovoltaic panels
on two truck parks in Spain and we continue to increase the
proportion of energy we purchase from renewable sources for our own
assets.
Through our community impact, we aim to donate at least 1.5% of
annual EBIT to charities from 2023. In 2022, we made donations to
support the Truck HELP foundation, which aids children who have
lost a family member on the road, and we provided financial support
to employees impacted by the war in Ukraine.
Financial Review
In the face of what were exceptionally challenging market
conditions, Eurowag delivered a strong performance last year,
demonstrating once again the inherent resilience of our business
model and the mission critical nature of our services. At a
headline level, net energy and services sales were up 24.6% with
adjusted EBITDA up 17.0%, and pleasingly mobility solutions
delivered organic growth of 22.3%, outpacing our payment solutions
division, which itself saw double digit growth. This represents a
strong platform from which to build as we enter 2023 and
beyond.
These positive results were delivered in the context of
unprecedented geo-political turmoil as a result of the Russian
invasion of Ukraine, which led to significant increases in energy
prices, inflation, and interest rates, as well as a deterioration
in consumer and business confidence. On top of that, along with
responding swiftly to sanctions and other operational challenges,
on a personal level many of our team had family members and friends
caught up in the conflict, which is taking place next to Poland,
one of the largest and most important CRT markets in Europe. To
deliver such a strong performance in this context represents a
significant achievement and highlights the commitment and
resilience of our team.
The business made significant strides in 2022 towards achieving
our objective of delivering the CRT industry's first truly
integrated, digital, end-to-end platform. As a result of our
strategic M&A programme and investment in digital
transformation, Eurowag has added both new geographies and
additional products to our services, including, following the
completion of Inelo transaction, mission critical Working Time
Management software, and we have done so while maintaining
financial discipline. However, as we enter the next phase of our
journey there remains much to do in terms of integrating all our
operations into one, seamless platform, to ensure we benefit from
the significant opportunities we see in the market.
In terms of detail, last year our Adjusted EBITDA increased to
EUR81.6 million (2021: EUR69.7 million) with Adjusted EBITDA margin
of 42.8% (2021: 45.5%). This year-on-year profitability decrease
reflects EUR3.4 million incremental PLC related costs (total
PLC-related costs in 2022: EUR4.8 million, 2021: EUR1.5 million)
and impact of Webeye consolidation. Adjusted EBITDA margin on a
comparable basis, excluding incremental PLC costs and Webeye
consolidation, would be 45.6%. An increase in operating costs due
to a lower Covid-19 impacted base and inflation of EUR1.9 million,
as well as EUR1.1 million severance payments and EUR0.8 million
share-based payment (PSP) further impacted Adjusted EBITDA margin
for the year.
On a statutory basis, profit before tax grew by 58.3%
year-on-year to EUR28.0 million (2021: EUR17.7 million) as a result
of an increase in the underlying business results supported by
lower adjusting items (due to IPO-related expenses in 2021 not
applicable in 2022, the drop was partially offset by higher
M&A-related expenses in 2022) and net finance expense. Basic
EPS increased by 57.2% to 2.41 cents per share (2021: 1.54 cents).
Adjusted basic EPS remained flat year-on-year at 5.75 cents per
share (2021: 5.77 cents) driven by higher basic weighted average
number of shares in 2022 as a result of new shares issued in
Eurowag's IPO in 2021.
Our overall financial position remains strong with reported
EUR2.8 million of net cash as of 31 December 2022.
In line with the strategy announced at the IPO in October 2021,
we continued investing in our digital transformation and inorganic
growth. In 2022, our transformational capital expenditure totaled
EUR25.5 million, while investments in our subsidiaries, associates
and financial investments reached EUR60.1 million, which consists
of the Webeye (EUR42.7 million), Last Mile Solutions (EUR3.0
million), and JITpay (EUR14.4 million) acquisitions.
Performance review
Below is a summary of the segmental performance and explanatory
notes related to items including corporate expenses, alternative
performance measures, taxation, interest, investment, and cash flow
generation.
Segments
FY 2022 FY 2021 YoY (EURm) YoY %
(EURm) (EURm)
Segment revenue total 2,368.3 1,646.1 722.2 43.9%
-------- -------- ----------- --------
Payment solutions 2,312.3 1,606.1 706.2 44.0%
-------- -------- ----------- --------
Mobility solutions 56.0 40.0 16.0 39.8%
-------- -------- ----------- --------
Net energy and services
sales total 190.9 153.1 37.7 24.6%
-------- -------- ----------- --------
Payment solutions 134.8 113.1 21.8 19.2%
-------- -------- ----------- --------
Mobility solutions 56.0 40.0 16.0 39.8%
-------- -------- ----------- --------
Expenses included in
Contribution (31.9) (24.6) (7.3) 29.6%
-------- -------- ----------- --------
Contribution total(1) 159.0 128.5 30.4 23.7%
-------- -------- ----------- --------
Payment solutions 118.2 99.6 18.6 18.6%
-------- -------- ----------- --------
Mobility solutions 40.8 28.9 11.9 41.1%
-------- -------- ----------- --------
Contribution margin
total(1) 83% 84% (1.0)pp N/A
-------- -------- ----------- --------
Payment solutions 88% 88% 0 pp N/A
-------- -------- ----------- --------
Mobility solutions 73% 72% 1.0 pp N/A
-------- -------- ----------- --------
Corporate overhead and
indirect costs before
adjusting items (77.4) (58.8) (18.6) 31.6%
-------- -------- ----------- --------
Adjusted EBITDA 81.6 69.7 11.9 17.0%
-------- -------- ----------- --------
Adjusting items affecting
Adjusted EBITDA (18.5) (22.8) (4.3) (19.0)%
-------- -------- ----------- --------
EBITDA 63.1 46.9 16.2 34.5%
-------- -------- ----------- --------
Depreciation and amortisation (30.4) (21.9) 8.5 39.0%
-------- -------- ----------- --------
Operating profit 32.7 25.1 7.7 30.6%
-------- -------- ----------- --------
Note:
1. Please refer to section Explanation of Alternative
Performance Measures for a definition and see note 5.
The Group's total revenues increased by 43.9% year-on-year to
EUR2,368.3 million driven by higher energy prices (a corresponding
growth was reported for costs of energy sold) and as a result of
the growing scale of our payment solutions.
The Group delivered double-digit net energy and services sales
growth and strong contribution margins in both segments. Growth in
organic net energy and services sales was 19.4%, while the overall
net energy and services sales increased by 24.6% year-on-year,
given the incremental EUR8.1 million from our Webeye
acquisition.
Payment solutions net energy and services sales grew by 19.2%
year-on-year. This increase reflects strong new customers and
trucks acquisitions underpinned by strong average net revenue
retention.
Mobility solutions net energy and services sales grew by 39.8%
year-on-year, mainly as a result of effective cross-selling, as
well as sales to automotive partners and Webeye consolidation.
In terms of geographic breakdown, the Central cluster remains
the largest segment with nearly 50% share of total net energy and
services sales (2022: EUR92.4 million; 2021: EUR74.0 million). All
markets in the Central cluster delivered strong double-digit
growth. The Southern cluster has kept the momentum from 2021 and
remains the fastest growing area with 44.2% year-on-year increase
(2022: EUR66.6 million; 2021: EUR46.2 million). On an organic
basis, the Southern cluster delivered 32.5% growth year-on-year. A
9.4% decline in the Western cluster's net energy and services sales
(2022: EUR24.2 million; 2021: EUR26.6 million) was mainly driven by
a 9.6% decrease in the average number of active payment solutions
customers (2022: 1,998 customers, 2021: 2,211 customers). Customer
churn was driven by business closures reflecting the challenging
market environment and ADS client base migration to the Eurowag
platform. The vast majority of ADS customers were migrated in
2022.
Corporate expenses
FY 2022 FY 2021 YoY (EURm) YoY %
(EURm) (EURm)
Expenses included in Contribution 31.9 24.6 7.3 29.6%
------- ------- ---------- -------
Corporate overhead and
indirect costs before adjusting
items 71.3 57.0 14.3 25.3%
------- ------- ---------- -------
PLC related costs and PSP 6.0 1.8 4.2 227.6%
------- ------- ---------- -------
Adjusting items affecting
Adjusted EBITDA 18.5 22.8 (4.3) (19.0)%
------- ------- ---------- -------
Depreciation and amortisation 30.4 21.9 8.5 39.0%
------- ------- ---------- -------
Total 158.1 128.1 30.0 23.5%
------- ------- ---------- -------
The table above is from the segmental review, while the table
below summarises corporate expenses based on statutory financial
categories.
FY 2022 FY 2021 YoY (EURm) YoY %
(EURm) (EURm)
Employee expenses 67.2 55.7 11.5 20.7%
------- ------- ---------- -----
Impairment losses of financial
assets 3.9 3.1 0.8 25.5%
------- ------- ---------- -----
Technology expenses 9.8 6.8 3.0 44.5%
------- ------- ---------- -----
Other operating income (0.4) (0.7) 0.3 31.5%
------- ------- ---------- -----
Other operating expenses 47.2 41.3 5.9 14.4%
------- ------- ---------- -----
Depreciation and amortisation 30.4 21.9 8.5 39.0%
------- ------- ---------- -----
Total 158.1 128.1 30.0 23.5%
------- ------- ---------- -----
Employee expenses increased by 20.7% year-on-year to EUR67.2
million as the Group focused on priority hires, talent retention,
strengthening the structure, and implementing remuneration schemes
appropriate for a listed company. Adjusting items included in
employee expenses amounted to EUR7.4 million for the full year of
2022 (2021: EUR8.6 million) and included pre-IPO share based
remunerations (2022: EUR5.3 million and 2021: EUR6.4 million) and
costs related to senior management transformation (2022: EUR1.9
million and 2021: EUR0.7 million).
Impairment losses of financial assets amounted to EUR3.9 million
(2021: EUR3.1 million). While throughout the year we managed
increased credit losses risk due to higher notional credit exposure
reflecting higher energy prices, our full year credit losses ratio
remained flat (2022: 0.1% and 2021: 0.1%). Our expertise in
managing credit risk and cash collections resulted in a strong and
stable ageing performance of our receivables portfolio with
approximately 80% balances current as of the end of December
2022.
Technology expenses increased by 44.5% year-on-year to EUR9.8
million (2021: EUR6.8 million), reflecting the Group's focus on
technology transformation, cloud transition, and expenses related
to the new generation ERP system. Adjusting items included in
technology expenses amounted to EUR0.3 million in 2022 (2021:
EUR0.6 million).
Other operating expenses increased by 14.4% year-on-year to
EUR47.2 million (2021: EUR41.3 million), mainly due to a full year
of PLC-related costs of professional services (incremental EUR2.4
million), return of travel and other costs post Covid-19, as well
as inflation, resulting in an increase of EUR1.9 million and Webeye
consolidation adding EUR1.7 million. Adjusting items included in
other operating expenses amounted to EUR10.7 million for the year
(2021: EUR13.9 million) and included expenses related to
acquisitions of EUR7.1 million (2021: EUR0.4 million) and strategic
transformation costs of EUR3.6 million (2021: EUR1.8 million).
Depreciation and amortisation grew by 39.0% year-on-year to
EUR30.4 million (2021: EUR21.9 million) primarily as a result of
transformational technology being put into production. Additional
increase came from amortization of acquired assets of Webeye and
one-off impact due to change of useful life of technology being
replaced as a result of transformation. Adjusting items included in
depreciation and amortisation amounted to EUR8.4 million for the
year (2021: EUR7.1 million).
Net finance expense
Net finance expense in 2022 amounted to EUR4.1 million (2021:
EUR6.7 million). The decrease mainly reflects the result on
revaluation of derivatives and lower foreign exchange losses,
partially offset by higher factoring fees related to higher average
factoring limits utilisation throughout the year, as well as
transaction fees reflecting the refinancing of existing debt
announced in September 2022.
Taxation
The Group tax charge of EUR10.3 million (2021: EUR8.0 million)
represents an effective tax rate of 36.8% in 2022 (2021: 45.4%).
Corporate income tax for companies in the Czech Republic and the UK
for 2021- 2022 was 19%, while in Spain it was set at 24%. These
represent the major tax regimes in which the Group operates.
The Group's effective tax rate was impacted by the tax impact of
Adjusting items. It is, therefore, helpful to consider the
underlying and Adjusting items affecting tax rates separately:
-- The effective tax rate on Adjusted earnings before tax for
the year decreased to 24.3% (2021: 24.8%), largely due to higher
profits in 2022.
-- The effective tax rate for Adjusting items was 11.3% (2021: 12.7%) and was driven mainly by equity-settled, share-based payments and acquisition expenses in 2022.
We adopted a prudent approach to our tax affairs, aligned with
business transactions and economic activity. We have a constructive
and good working relationship with the tax authorities in the
countries in which we operate and there are no outstanding tax
audits with the exception of Italy, Bulgaria and Slovenia where no
significant issues are expected.
On 29 November 2022 we approved and published the Group tax
strategy. Our Group tax strategy is underpinned by our Code of
Conduct and values. We believe that payment of an appropriate
amount of tax is a key requirement for all businesses, and that tax
payments enable wider society to benefit from business success. The
Group manages its tax affairs according to local legal
requirements.
EPS
Basic EPS for 2022 was 2.41 cents per share, a 57.2%
year-on-year increase. This was predominantly due to higher profit
for the year.
Adjusted basic EPS for 2022 was 5.75 cents per share which is
flat relative to 2021. Weighted average number of ordinary shares
in issue during 2022 amounted to 688,911,333 impacting the
calculation (2021: 595,582,785). After accounting for the impact of
PSP, adjusted diluted earnings per share was 5.75 cents per share.
Adjusting items are as described below in the Alternative
performance measures section.
Investments in subsidiaries and associates
Acquisition of Webeye Group
Further to the subsequent events discussed in the 2021 Annual
Report and Accounts, the Group signed a novated agreement on 16 May
2022 to acquire substantially all of the assets of WebEye
Telematics Zrt. ("Webeye") , a leading fleet management solutions
provider in Central and Eastern Europe. The Group paid EUR23.3
million in cash upon the acquisition of 100% of the share capital
of the non-Hungarian subsidiaries and a further EUR19.9 million was
paid upon completion of the acquisition of the Hungarian
subsidiaries on 1 July 2022. In addition, the Group will pay a
deferred settlement component within three years of closing, a
portion of which is contingent upon the achievement of certain
KPIs. The maximum amount, including the deferred amount of the
purchase price, is capped at EUR60.6 million.
The transaction has expanded the Group's customer base and
Webeye's customers have gained access to Eurowag's unrivalled range
of integrated end-to-end payment and mobility solutions leading to
incremental revenue opportunities. Furthermore, data from the
connected trucks will provide insights and enable the continual
development of new and improved solutions to address customers'
needs.
The provisionally determined fair values of identifiable assets
and liabilities of subsidiaries of Webeye as at the date of
acquisition were:
EURm
Total assets 35.1
------
Total liabilities (6.3)
------
Total identifiable net assets
at fair value 28.7
------
Goodwill arising on acquisition 31.3
------
Purchase consideration:
------
Cash paid 43.2
------
Deferred consideration (discounted) 16.8
------
Total purchase consideration 60.0
------
From the date of acquisition until 31 December 2022,
subsidiaries of Webeye contributed EUR8.1 million of revenue and
EUR0.9 million loss after tax (mainly driven by amortisation of
acquired intangibles and M&A related adjusting items).
Excluding amortisation of acquired intangibles and adjusting items
the adjusted profit after tax would have been EUR0.7 million. If
the acquisition had occurred on 1 January 2022, consolidated
revenue and consolidated loss after tax of combined Hungarian and
non-Hungarian Webeye entities for the year ended 31 December 2022
would have been EUR15.4 million and EUR0.9 million, respectively.
Excluding amortisation of acquired intangibles and adjusting items,
the adjusted profit after tax would have been EUR1.6 million.
Acquisition of 9.99% share in JITpay
On 27 September 2022, Eurowag entered into a strategic
partnership with JITpay, a German-based payment service provider
specialising in the logistics industry. The transaction expands the
Group's product portfolio by adding invoice discounting,
digitalised billing, and receivables management solutions and
strengthens its presence in Germany, one of the most strategically
important trucking markets in Europe. As part of the strategic
partnership, Eurowag acquired a 9.99% stake in JITpay for an
initial consideration of EUR14.3 million, with the flexibility for
a potential increase in its ownership over time, subject to
regulatory approvals. The investment is considered to be a
strategic investment and is not held for trading.
The Group has call options to acquire an additional 18.01%
share, which can be exercised either by 3 July 2023 for a
consideration of EUR25.7 million or by 1 January 2024 for EUR35.0
million. The first call option reflects the original valuation,
which is not expected to change over a short period. In the case
that neither of the call options is exercised, JITpay has the right
to buy back the acquired 9.99% share for EUR1.
Acquisition of non-controlling interest in Sygic
On 20 December 2022, the Group signed an agreement with the
non-controlling shareholders of Sygic a.s., which will enable the
Group to acquire the remaining 30% equity interest in Sygic.
Consideration for the 30% equity interest of EUR14.4 million is
payable in April 2024, in line with the original option agreement.
Ownership of the shares remains with the non-controlling
shareholders until April 2024. However, following the fixed-price
agreement, they are no longer exposed to variable returns from the
investment.
Under the previous shareholders' agreement, the minority
shareholders had certain rights pertaining to the application of
Sygic's resources within the Group. Having full control of Sygic
will provide the Group with unrestricted access to Sygic's
resources and allow it to fully utilise Sygic's digital expertise
and people capabilities. This, in turn, will enable the Group to
accelerate its digital sales channel and integrated product
initiatives by utilising Sygic's capabilities more effectively
across Eurowag's whole range of mobility solutions.
Pay-out of deferred consideration related to Last Mile Solutions
(LMS)
On 31 January 2022, the Group paid deferred acquisition
consideration of EUR3.0 million, related to the acquisition of
Threeforce B.V. (Last Mile Solutions).
Balance sheet
Net assets of the Group increased by 11.2% to EUR316.6 million,
mainly reflecting profit for 2022 and positive revaluation of
cash-flow hedges.
Intangible assets of the Group excluding goodwill increased by
EUR42.7 million to EUR131.0 million in the reporting period,
predominantly due to the Webeye acquisition and investments in
strategic technology transformation.
Goodwill comprises mainly CGU Energy of EUR40.2 million, CGU
Navigation of EUR34.6 million and CGU Fleet management solutions of
EUR58.0 million. Goodwill is tested for impairment on an annual
basis; there were no impairment indicators identified in 2022
(2021: no impairment posted).
Inventories increased by EUR10.7 million to EUR20.3 million,
mainly due to a higher stock of on-board units and materials
resulting from the Group's decision to secure stock levels in
response to market chip shortages and shifting production to an
alternative supplier as we cancelled co-operation with a
manufacturer owned by Russian individuals. The remaining growth is
mainly due to the Webeye consolidation and higher value of the fuel
inventory, reflecting increased volumes and higher energy prices in
the reporting year.
Trade and other receivables increased by EUR77.6 million to
EUR378.2 million, mainly due to higher volume of transactions and
increased energy prices.
Trade and other payables increased by EUR83.7 million to
EUR398.2 million as a result of the factors mentioned above.
Cash performance
FY2022 (EURm) FY2021 (EURm) YoY (EURm) YoY
change
Net cash generated from
operating activities 44.2 (9.6) 53.8 (562)%
-------------- -------------- ----------- --------
Net cash used in investing
activities (104.3) (43.1) (61.2) 142%
-------------- -------------- ----------- --------
Net cash used in financing
activities (18.2) 187.8 (206.0) (110)%
-------------- -------------- ----------- --------
Net decrease in cash
and cash equivalents (78.2) 135.1 (213.4) (158)%
-------------- -------------- ----------- --------
Cash and cash equivalents
at beginning of period 224.2 88.9 135.3 152%
-------------- -------------- ----------- --------
Cash and cash equivalents
at end of period (presented
in statement of cash
flows) 146.0 224.2 (78.2) (35)%
-------------- -------------- ----------- --------
Bank overdrafts - - - -
-------------- -------------- ----------- --------
Cash and cash equivalents
at end of period (presented
in statement of financial
position) 146.0 224.2 (78.2) (35)%
-------------- -------------- ----------- --------
Interest-bearing loans
and borrowings (143.2) (162.5) 19.3 (12)%
-------------- -------------- ----------- --------
Net cash/(debt) 2.8 61.7 (58.8) (95)%
-------------- -------------- ----------- --------
As at 31 December 2022, the Group's net cash position stood at
EUR2.8 million compared with EUR61.7 million as at 31 December
2021.
The decrease in the level of cash is due to the cash outflows
used in investing activities, including technology transformation
investments, the acquisition of Webeye and JITpay, deferred
consideration due on LMS, as well as repayments of borrowing
compensated by underlying cash generation.
Net cash flows from operating activities increased from (EUR9.6
million) in 2021 to EUR44.2 million, primarily due to business
performance supported by stable working capital movements. Impact
related to Adjusting items in the reporting period amounted to an
outflow of EUR13.9 million (2021: EUR15.4 million) and included
EUR2.1 million for acquisitions related expenses, EUR5.1 million
for strategic transformation expenses, EUR5.4 million for
non-recurring IPO-related expenses, and EUR1.3 million for
share-based compensation.
Interest paid increased to EUR10.1 million (2021: EUR4.5
million) driven by one off cash outflow in the amount of EUR4.9
million related to refinancing transaction fees.
Tax paid decreased from EUR10.2 million in 2021 to EUR7.8
million due to the collection of prior-year income tax advances in
2022.
Net cash used in investing activities increased by EUR61.2
million to EUR104.3 million, largely due to the outflows in
connection with investment in acquisitions and investments in
transformational technology and asset base.
Net cash from financing activities amounted to an outflow of
EUR18.2 million in the reporting period, representing the
repayments of borrowings due to bank loans amortisation and lease
payments.
Capital expenditure
Capital expenditure in 2022 amounted to EUR43.2 million compared
with EUR33.8 million for the previous year. This increase relates
to investments in the Group's technology platform and existing
asset base.
The Group's ordinary capital expenditure of EUR17.7 million
(2021: EUR10.4 million) represents reinvestment into the platform
and assets base and amounted to 9.3% of net energy and services
sales compared with 6.8% in the corresponding period of the
previous year.
The Group's transformational investment programme was EUR25.5
million (2021: EUR23.3 million) and continued to focus on enhancing
our sales and customer touchpoint channels, expanding our product
capabilities and building a cloud-based data system for the
Group.
As part of enhancing our sales channels, this year we focused on
improving our customer digital journey and continued to invest in
the implementation of our new generation ERP software supplied by
SAP. The ERP implementation is delivered in stages, the first
launched in April 2022, and focused on energy billing, pricing,
sales and purchases. As a consequence of the development of the
overall technology roadmap and in order to enable smooth
integration of acquisitions, the technology team had to revise the
architecture for the subsequent phases of implementation, in line
with our current product and technology capabilities, ensuring we
are building a SAP system fit for purpose. The second phase
includes general ledger and group reporting processes, and due to
the architecture redesign, the implementation was pushed back into
2024.
Part of our transformational capital expenditure was also
invested into expanding our product capabilities, with most of the
investment going into improving our EETS product offering and
enhancing our financing capabilities, enabling further automation
and real-time finance management. This year, we continued to invest
in building a cloud-base data system. With the volume of customer
information, we receive from all our products and services, we are
starting to consolidate the data in a data lake and have started to
build customer data insight tools to support our sales
channels.
Alternative performance measures
The Group has identified certain Alternative Performance
Measures (APMs) that it believes provide additional useful
information to the readers of Consolidated Financial Statements and
enhance the understanding of the Group's performance. These APMs
are not defined within IFRS and are not considered to be a
substitute for, or superior to, IFRS measures. These APMs may not
be necessarily comparable to similarly titled measures used by
other companies. Directors and management use these APMs alongside
IFRS measures when budgeting and planning, and when reviewing
business performance. Executive management bonus targets include an
adjusted EBITDA measure and long-term incentive plans include an
adjusted basic EPS measure.
FY 2022 FY 2021 YoY (EURm) YoY
(EURm)
(EURm) change
Profit before tax 28.0 17.7 10.3 58.3%
-------- -------- ----------- --------
Net finance expense and
share of net loss of associates 4.8 7.4 (2.6) (35.6)%
-------- -------- ----------- --------
Depreciation and amortisation 30.4 21.9 8.5 39.0%
-------- -------- ----------- --------
EBITDA 63.1 46.9 16.2 34.5%
-------- -------- ----------- --------
M&A-related expenses 8.0 0.8 7.2 907.3%
-------- -------- ----------- --------
Non-recurring IPO-related
expenses - 12.9 (12.9) (100.0)%
-------- -------- ----------- --------
Strategic transformation
expenses 5.2 2.7 2.5 93.8%
-------- -------- ----------- --------
Share-based compensation 5.3 6.4 (1.1) (16.7)%
-------- -------- ----------- --------
Adjusting items 18.5 22.8 (4.3) (19.0)%
-------- -------- ----------- --------
Adjusted EBITDA 81.6 69.7 11.9 17.0%
-------- -------- ----------- --------
FY 2022 FY 2021 YoY YoY
(EURm) (EURm) (EURm) change
Profit for the year 17.7 9.7 8.0 83.4%
-------- -------- -------- --------
Amortisation of acquired
intangibles 6.6 5.4 1.1 21.1%
-------- -------- -------- --------
Amortisation due to transformational
useful life changes 1.8 1.7 0.1 8.6%
-------- -------- -------- --------
Adjusting items affecting
Adjusted EBITDA 18.5 22.8 (4.3) (19.0)%
-------- -------- -------- --------
Tax effect (3.0) (3.8) 0.8 (20.3)%
-------- -------- -------- --------
Adjusted earnings (net
profit) 41.6 35.8 5.8 16.1%
-------- -------- -------- --------
FY 2022 FY 2021 YoY YoY
change
Adjusted net profit attributable
to equity holders (EURm) 39.6 34.4 5.4 15.3%
------------ ------------ ---- --------
Basic weighted average
number of shares 688,911,333 595,582,785 15.7%
------------ ------------ ---- --------
Adjusted basic EPS (cents/share) 5.75 5.77 (0.3)%
------------ ------------ ---- --------
Costs arising in connection with the IPO have been separately
identified in recognition of the nature, infrequency and
materiality of this capital markets transaction. IPO expenses were
incurred in 2021 and had no impact on expenses in 2022.
Acquisitions related expenses are fees and other costs relating
to the Group's M&A activity. Acquisitions related expenses
differ every year based on the acquisition activity of the Group.
Exclusion of these costs allows for better results
comparability.
Strategic transformation expenses are costs relating to
broadening the skill bases of the Group's employees (including
executive search and recruiting costs), as well as costs relating
to transformation of key IT systems. As previously announced,
strategic transformation is due to be completed in 2023.
In addition, adjustment has been made for the compensations
provided to the Group's management before the IPO. These legacy
incentives comprise a combination of cash and share-based payments,
and those that have not yet vested will vest across each of the
subsequent financial years ending 31 December 2024. The Group
believes that it is appropriate to treat these costs as an
adjusting item as they relate to a one-off award, designed and
implemented whilst the Group was under private ownership (and are
reasonably typical of that market and appropriate in that context).
The Group now operates in a new environment and the Remuneration
Committee has applied the Remuneration Policy in a listed- company
context; hence, similar awards are not expected in future. For
clarity, where share-based payment charges arise as a consequence
of the operation of the Group's post-IPO Remuneration Policy, these
are not treated as adjusting items as they represent a non-cash
element of the annual remuneration package. This includes costs of
EUR1.1 million in 2022 relating to grants in connection with the
awards vesting in 2024 and 2025.
Amortisation of acquired intangibles represents amortisation of
assets recognised at the time of an acquisition (primarily ADS,
Sygic and Webeye). The item is prone to volatility from
period-to-period depending on the level of M&A activity.
Amortisation due to transformational useful-life changes
represents accelerated amortisation of assets being replaced by the
strategic transformation of the Group. The Group expects this
adjustment to be relevant until 2024.
Capital allocation
Our priority will continue to be organic and inorganic
investment to drive long term sustainable growth. As previously
communicated, the Group will incur aggregated transformational
capital expenditures of EUR50 million during 2022 and 2023 to
develop our integrated end-to-end digital platform and invest in
the quality of our integrated product and service offering. Our
transformational capital expenditure is on track to complete at the
end of 2023, by which point we will have an integrated, modern
technology stack and product offering.
This coming year, our focus will be on integrating the
businesses we acquired in 2022, aligning our products and people
capabilities across the organisation, to unlock both revenue and
cost synergies. With the recent acquisition of Inelo, our leverage
ratio is expected to exceed the top end of our medium-term guidance
range of 1.5x to 2.5x net debt to adjusted EBITDA. Therefore, our
priority in the near term is to return to within the target range.
M&A is still important to us, and we will continue to consider
value-accretive M&A opportunities in our current and adjacent
markets, and in product and technologies that will accelerate
growth. However, we remain disciplined and want to maintain our
strong and robust balance sheet. As set out in our financial
guidance, the Group does not intend to pay dividends as we continue
to prioritise investment in growth.
Treasury management
The Group maintains a disciplined approach to its financing and
is committed to maintaining a net debt to adjusted EBITDA leverage
ratio of 1.5-2.5 times over the medium-term. Our leverage ratio may
temporarily exceed the top end of the range depending on the
quantum and timing of potential acquisitions.
In September 2022, the Group signed a new Multicurrency Term and
Revolving Facilities Agreement to refinance and expand the Group's
existing credit facilities (new club financing agreement). The new
club financing agreement secured favourable terms on a strengthened
debt package, extended maturities for all facilities, and expanded
the Group's club of financing banks.
The new club financing agreement consists of four tranches:
(i) EUR150 million committed Facility A for the refinancing of
all existing term loan indebtedness;
(ii) EUR180 million committed Facility B for permitted acquisitions and capital expenditure;
(iii) EUR235 million committed Revolving Credit Facility, of
which EUR85 million may be utilised by way of revolving loans, and
EUR150 million may be utilised by way of ancillary facilities in
the form of bank guarantees, letters of credit, or an overdraft up
to EUR25 million;
(iv) EUR150 million uncommitted Incremental Facility for
permitted acquisitions, capital expenditure, and revolving credit
facilities up to EUR50 million of which not more than EUR25 million
can be utilised as revolving loans.
The transaction provided more flexibility with respect to
certain financial covenants, security packages, and other
provisions than the Group's existing credit facilities.
The new maturity date for all term loan facilities and for the
revolving credit facility is 30 September 2027. Facility A will
amortise in quarterly repayments starting on 31 March 2023, with a
EUR45 million balloon. Facility B will amortise in quarterly
repayments starting on the later of the date falling 3 months from
the end of the 24-month availability period, or the end of the
first financial quarter after the full utilisation of the facility,
with a EUR54 million balloon. Eurowag completed refinancing on 17
October 2022.
The new club financing agreement contains financial covenants at
the Group level . Financial covenants are governed by financial
definitions under the agreement . Financial covenants are tested
semi-annually based on announced financials. As part of our testing
under the viability statement, it has been concluded that the
acquisition of Inelo does not impact our compliance with financial
covenants.
Covenant Calculation Target Actual
31 December
2022
================ ================================= =========== =============
the ratio of adjusted EBITDA
Interest cover to finance charges Min 4.00 11.20
the ratio of total net debt
Net leverage to adjusted EBITDA Max 4.00* 0.13
Adjusted net the ratio of the adjusted total
leverage net debt to adjusted EBITDA Max 6.50 1.95
---------------- --------------------------------- ----------- -------------
*The covenant shall not exceed 3.75 in 2024 and 3.50 in 2025 and
onwards
The Group concentrates cash in bank accounts held with financial
institutions that participate in the new club financing agreement.
Balances may be held in bank accounts with other financial
institutions to fund outgoing payments, especially in countries
outside of the Economic and Monetary Union.
The Group has effectively managed its floating EURIBOR interest
rate exposure on existing term loans through the execution of zero
floor interest rate swaps. The swaps were structured with varying
hedge ratios, providing coverage of 100% in 2023 and 2024, 75% in
2025, 50% in 2026, and 25% in 2027. This strategic approach
demonstrates the Group's proactive risk management practices and
commitment to financial stability.
With respect to Facility A, interest rate swaps executed in 2019
in the amount of EUR120.0 million (unamortized) have an effective
payable fixed rate of 0.1% and are expected to expire in 2024.
Interest rate swaps executed in 2022 but effective in 2023 in the
amount of EUR30.0 million (amortized) have an effective payable
fixed rate of 2.7% and are expected to expire in 2027. The latter
have a complementary amortizing profile in order to achieve the
above-mentioned hedge ratio.
Throughout 2022, the Group has effectively managed its working
capital needs through the use of uncommitted factoring facilities,
with average financing limits of EUR101 million and average
utilization of 66.1% (2021: EUR96 million and 56.5% respectively).
This demonstrates the Group's proactive approach to maintaining a
strong financial position, and its ability to optimize working
capital.
Risk management
Managing risk plays an important role in the Group achieving its
strategic objectives and in adding sustainable value to all our
activities.
Principal risks register
The list below provides further details on our identified
principal risks, trends of their exposure and the mitigation
measures implemented.
1. Product demand decline risk
Our operating results are dependent on the conditions in the
European economy and its cycles. The volume of customer payment
transactions and customer demand for the products and services
provided by the Group correlate with current and prospective
economic conditions across Europe. Economic downturns are generally
characterised by reduced commercial activity and trade, resulting
in reduced demand and use of our products and services by
customers.
As a result of COVID-19 and the Russian invasion of Ukraine, the
economy in the EEA is already experiencing indications of
recession. These are expressed by persisting disruptions in supply
chains, high inflation, increasing of nominal interest rates,
currency weakening, and reduced customer demand. Together with a
possible recession there are high uncertainties regarding energy
supplies across the region, which places additional pressures on
the supply chains in the region and underlying demand for the
Group's products and services. Eventual decline in demand would
adversely affect the Group's current and prospective business and
financial condition.
The Group considers the trend of the risk as increasing due to
the continued Russian invasion of Ukraine and a possible economic
recession. The current managed risk rating is above the Group's
approved risk appetite.
Mitigation measures:
-- Reducing dependency on a single economy
-- Reducing dependency on non-Euro currency
-- Diversification of products and services offering and through
new M&A activities and implementation of the subscription-based
revenues
-- Geographical expansions - EU and non-EU countries
-- Strategy positioning flexibility - due to wider portfolio of
products, capability to adjust our offer for customers to meet
their needs
2. Fuel supplies risk
The Group recognises a high risk of insufficient fuel at its
energy payment network and payments drying up across our network as
a consequence of the emerging energy crisis and imposed sanctions
due to the Russian invasion of Ukraine. The situation could be
aggravated by local government intervention (e.g. price capping,
export embargo), unpredictable price development, potential
sabotage of the crude pipelines from Russia and disruption of oil
refinery production, with the Group experiencing higher risks in
securing sufficient fuel supplies at its energy payment network, at
favourable financial and operational terms. These risks have an
adverse impact on the Group's financial position, operations, and
business.
The Group considers the trend of the risk as increasing due to
significant uncertainties on the energy markets caused by the
Russian invasion of Ukraine, threats of further conflict
escalation, potential sabotage of energy infrastructure and local
government interventions. The current managed risk rating is above
the Group's approved risk appetite.
Mitigation measures:
-- Our fuel procurement strategy is fully compliant with EU
legislation and sanctions and in 2023, we will focus on local fuel
procurement rather than cross-border deliveries. We are confident
that we can provide high quality, EU origin and competitive diesel,
LNG, and AdBlue to our customers
-- Centralised procurement team for energy supplies and logistics
-- Continuous monitoring and reporting on the situation development of fuel supplies crisis
-- Scenarios analysis of potential future
-- development and a preparation of preventive and mitigation
actions in case of different scenario materialisation
-- Diversification of different types of energies (eMobility, LNG)
3. Interest rate risk
Economic recession can be accompanied by an increase in nominal
interest rates. We are utilising various forms of financing, some
of which are subject to changes in interest rates. The acquisition
of Inelo will result in an increase in debt for the enlarged
organisation, since existing facilities will be utilised to acquire
equity and refinance the acquired company's debt. We will be
required to make interest payments on the increased debt. There is
no guarantee that we will be able to refinance existing
arrangements or that the cost or availability of financing will not
negatively impact the Group's business, financial condition, and
future prospects. Any increase in the cost, or lack of
availability, of finance could have a material adverse effect on
the Group's business, financial condition, results of operations,
and future prospects.
The Group considers the trend of the risk as increasing due to
current economic outlooks. The Group implements its hedging
strategy to mitigate risk to the level of its risk appetite.
Mitigation measures:
-- The management of interest rate risk is the responsibility of the Treasury department
-- The Group has refinanced and expanded its existing credit
facilities. The new maturity date for all term loan facilities and
for the revolving credit facility will be 30 September 2027
-- The Group has implemented a hedging strategy using interest
rate swaps on the existing senior term loans with 100% hedge ratio
in 2023 and 2024, 75% hedge ratio in 2025, 50% hedge ratio in 2026,
and 25% hedge ratio in 2027
-- As part of the integration process for the acquisition of
Inelo, the incremental debt is expected to align to the hedging
policy as stated above
4. Sanctions risk
The Group continuously monitors its compliance with various
sanctions regimes. Currently, one of the consequences of the
Russian invasion of Ukraine is the sanctions imposed by the EU, UK,
US, and the United Nations.
The Group's policies and procedures, which are designed to
ensure that it, its employees, agents, and intermediaries comply
with applicable sanctions, may fail to always comply effectively.
Any violation of the sanctions regime could result in significant
expenses or reputational harm, divert management attention, and
otherwise have a negative impact on the Group.
Given the nature of Group's business, the sanctions are also
exposing us to the risk of adverse business and operational
impacts. The 6th sanctions package, imposed by the European
Commission, has introduced prohibitions related to crude oil and
petroleum products, mainly in terms of their purchase, import, and
transfer. Due to the 6th sanctions package, the Group is exposed to
the risk of balancing product disruption in central Europe caused
by the ban on the export of products produced from crude oil
originating in Russia and delivered via the Druzba pipeline.
Disrupted product balancing in central Europe (Austria, Czech
Republic, Slovakia, Hungary) could lead to a lack of products in
certain markets during certain periods . In addition to those
sanctions already issued (an 8th package of sanctions has currently
been issued), the Group recognises a risk of new sanctions
significantly impacting the current and prospective business
model.
The Group considers the trend of the risk as stable due to
proven ability of the Group to comply with all issued sanctions.
The current managed risk rating is above the Group's approved risk
appetite.
Mitigation measures:
-- Group uses a system for partner screening with an
automatically updating sanctions database. Any new sanctions are
also monitored by an external law firm within legislative
monitoring and by the internal team, which dedicates capacity to
screening subscribed notifications from respective authorities and
press releases
-- The internal team thoroughly analyse any new sanctions and
their impacts on the Group's business and operations. In complex
matters, the team co-operates with specialist external advisors
-- New sanction legislation relevant for the Group's business is
regularly reported to the Executive Committee together with
scenario planning and impact assessment
-- Manual screening of new partners and customers against sanctions lists
-- Self-sanctioning scheme - application of stricter rules on
partners, going beyond valid sanctions. It is used also as a
prevention against impacts of newly issued sanctions
5. Competitors risk
The Group faces competition in each of its product lines from
many companies offering similar capabilities and services,
including international oil companies, single-product providers of
fuel cards, and other services. Moreover, the windfall tax scheme
is being used by some competitors (large wholesellers) to decrease
prices in their retail businesses and, in terms of pricing, the
Group cannot compete with this. In addition, markets where we
operate are characterised as oligopolistic or monopolistic, and are
burdened by heavy regulation and restrictions for entering or
expanding. These factors could cause an adverse impact on revenues
and prospects if we cannot compete or expand our business
activities effectively.
The Group considers the trend of the risk as increasing due to
potential impacts on the markets from geopolitical, economical, and
legislative uncertainties. The current managed risk rating is in
line with the Group's approved risk appetite.
Mitigation measures:
-- Reducing dependency on a single economy, single market, or single revenue stream
-- Geographical diversification and products or services offering diversification
-- Membership in a number of industry associations and trade
bodies to ensure that we are aware of market competition activity
and trends
-- Fast inorganic growth through M&A activities
-- M&A activities in 2022 - JITpay, Webeye and Inelo
6. External parties' dependency risk
The Group's business is dependent on several key strategic
relationships with third parties, the loss of which could adversely
affect our results. Key partners mainly fall into the following
categories - fuel suppliers, acceptance network, toll chargers,
authorisation centres, and technology service providers. In
addition, the Group has also started the process of setting up an
internal authorisation centre for its fuel cards transactions. This
service is currently provided by an external authorisation centre -
AEVI. Realising the project is significantly dependent on the
current external provider and an inability to complete the set up
of an internal authorisation centre of acceptable quality and in
the expected timeframe would expose the Group to additional costs
and potential business disruptions.
The Group considers the trend of the risk as decreasing due to
positive progress having been made with setting up an internal
authorisation centre. The current managed risk rating is above the
Group's approved risk appetite.
Mitigation measures :
-- IT vendors management policy - setting the standards for
vendors selection, contracts reviews and signature and vendors
monitoring
-- Centralised vendors management role
-- Centralised procurement team for energy supplies and logistics
-- Centralised development and maintenance role for acceptance network
-- Contract management rules and attestation rules
-- Centralised legal counsel - aids contracts elaboration and reviews
-- New IT system on orders and invoices management - Coupa
-- Continuous implementation of improvements, which are result
of human rights risk assessment - human rights training, Code of
Conduct for Suppliers and Suppliers onboarding process
-- Project on setting up an internal authorisation centre is
progressing with the highest priority
7. Technology security and resilience risk
The Group's business relies on technology and data
confidentiality, integrity, and availability. As with other
businesses, we are subject to the risk of external security and
privacy breaches, such as cyber-attacks. In the last year, these
attacks have increased in number and sophistication, particularly
those coming from the Russian Federation. If we cannot adequately
protect our information systems, including the data we collect on
customers, it could result in a liability and damage to our
reputation. The Group's outsourced Internal Audit has identified
deficiencies in the area of IT security and our inability to close
the gaps in a timely manner in accordance with the approved
mitigation plan could expose the Group to a further increase in
risk. Moreover, the Group is active in its M&A activities and,
where a newly acquired company does not have IT security standards
at the same level as the Group, the enlarged Group is exposing
itself to an increased risk. Also, if the technology we use to
operate the business and interact with customers fails, does not
operate to expectations, or is not available, then this could
adversely affect our business and results.
Despite the risk increasing from new acquisitions, as described
above, the Group considers the trend of the risk as stable due to
overall improvement in the IT security level of the Group and
further standardisation of post-merger integration processes. The
current managed risk rating is above the Group's approved risk
appetite.
Mitigation measures:
-- The Group prevents itself against cyber-attacks by continuous
implementation and improvement of the cyber security standards, in
line with the ISO27001
-- The Group has established a central project on continuous
improvement in information security that comprises key security
functions from Technology and Risk departments
-- The Group, as part of crisis management, which was activated
as a response to the Russian invasion of Ukraine, additionally
funded and assigned highest priority to the immediate improvement
cyber security tools to achieve better prevention against the
increasing number of cyber-attacks
-- The Group has established 3 lines of defence system with
clear responsibilities regarding cyber security
-- The Group has a standardised post-mergers integration process
that considers the IT security level of newly acquired companies,
setting priorities, and integration milestones
8. Personnel dependency risk
The Group's success depends, in part, on its Executive Committee
members and other key personnel, and our ability to secure the
capabilities to achieve our strategic objectives. Lack of
capability and the loss of key personnel could adversely affect our
business. In October 2022, the Group announced the planned
departure of its CFO. An inability to find an adequate replacement
would expose the Group to additional risk. Moreover, the current
economic environment and competition in the job market are
increasing the risk of retaining key personnel and acquiring new
talents.
We also depend on our founder and CEO. The inability to secure a
ready successor could reduce our ability to achieve our strategic
goals and an adverse reaction from stakeholders.
The current managed risk rating is above the Group's approved
risk appetite. The Group considers the trend of the risk as
decreasing due to the successful hiring of a new CFO and Senior
Finance expert to help with the transition.
Mitigation measures:
-- The Group has hired a new CFO and secured sufficient transition plans from the current CFO
-- The Group has hired a Senior Finance expert, with PLC
experience to help with the transition
-- Establishing and nurturing a talent pool to maintain the
required skills level within the Group
-- Annual salary review process in place to reflect inflation,
market salary levels, and performance ratings
-- Long-term retention plans for the talent pool
-- Elaboration of the succession plans, providing adequate training for chosen successors
-- Eurowag Group commitment to greater diversity, equity, and inclusion
-- Key personnel rotation for selected functions
9. Climate change risk
Climate change and energy transition represent both a risk and
opportunity for the Group. Our reputation, operating and compliance
costs, and diversification of revenue may be influenced by our pace
of action, the pace of the energy transition in the CRT sector, and
by our customers in the short, medium, and long term. Our business
generates a significant proportion of revenue from fees through
selling energy to the CRT sector, which currently uses
predominantly diesel fuel. We are aware that changes in road
transport policy and regulations, the cost of carbon, carbon
taxation, changes in market demand for alternative fuel and clean
mobility solutions, and pace of adoption of low-carbon powertrains
by our customers can all influence the level of risk and
opportunity for the business. We also recognise that
extreme-weather events could pose a risk to business continuity for
our physical assets, as well as the health, safety, and well-being
of our workforce and customers. The Group already recognises the
impact of weather changes in delays and the decrease in
transactions linked to seasonal transportation in some regions. In
addition, we recognise that we are responsible for reducing our own
carbon footprint, as well as contributing to solutions to help
customers make the transition to a low-carbon future.
The Group considers the trend of the risk as increasing due to
science predictions and upcoming actions of regulators, countries,
and community leaders. The Group has a strategy in place to
mitigate the risk to the risk appetite level. The current managed
risk rating is above the Group's approved risk appetite.
Mitigation measures:
-- Investing in a portfolio of alternative fuels and
technologies, including eMobility (investment in Last Mile
Solutions), to support the transition to a low-carbon future in the
CRT sector
-- Investment in digitalisation and technologies to help our
customers improve efficiency in CRT road transport and reduce
energy intensity per-kilometre of transported goods
-- Formalisation of the Group's ESG strategy, including carbon
reduction targets for our operations as well as the development of
targets and actions to reduce Scope 3 emissions across our value
chain
-- Engagement with OEM manufacturers to help with developing
lower-carbon-intensive vehicles with greater tracking and
monitoring of environmental impacts
-- Review of business continuity plans to take into account the
potential impacts of extreme weather events driven by climate
change and the impact on both people and physical assets
-- Increased reporting transparency of carbon emissions and
related actions to reduce emissions
-- Formal, structured scenario analysis to assess the physical
and transition risks for Eurowag and its assets and inform ongoing
risk assessment and mitigation measures as well as reporting in
line with TCFD
-- M&A activities focus on non-energy businesses
10. Physical security risk
The Group operates a number of truck parks and offices, and
these are exposed to security threats. A security threat
materialising as a result of insufficient protection or natural
disasters would result in danger to the health of our employees and
customers, and significant business disruptions. This risk
increased this year with the Russian invasion of Ukraine and
potential escalation of the conflict to other countries, including
those where the Group has its employees and assets. Moreover, there
is an increasing risk of security threats as a result of the war
impacts. These are not limited to energy crisis and fuel shortages
at Group' petrol stations. In addition, the recent earthquakes in
Turkey and Syria have had a catastrophic impact on the lives and
health of tens of thousands of people and represent an increasing
risk factor for the Group in terms of protecting the lives and
health of its employees and customers in these and other natural
disaster-prone regions.
The Group considers the trend of the risk as increasing due to
the Russian invasion of Ukraine and its potential further
development.
Mitigation measures:
-- Implementation of health and safety plans at the Group's
truck parks to avoid security threats materialising
-- Having emergency plans in place and staff trained to act in an emergency situation
-- Petrol stations security rules and system for the prevention
of physical security threats and their regular control and
revision
-- Business continuity plans in place and their regular testing and revision
11. Regulatory and licensing risk
The Group relies on numerous licences for the provision of its
on-road mobility products. These include wholesale and retail
permits required for the provision of fuel products, as well as
fuel station operating licences for its truck parks, EETS licence
and EETS certifications in a number of countries, electronic money
institution licence required for the provision of financial
services, and an insurance distribution licence. As a consequence
of holding these licences and certifications, the Group is subject
to strict regulatory requirements (Governance, Products, IT
security and Operational) of regulatory bodies in respective
jurisdictions. Non-compliance with these can result in fines,
suspension of business or loss of licences. Key regulatory
requirements are undertaken by governance and compliance with UK
listing rules, anti-money laundering (AML) and sanction laws,
personal data-protection laws, Czech National Bank regulation,
fuel-reselling legislation, and EETS regulation. In addition,
changes in laws, regulations, and enforcement activities are
accompanied with the cost of implementation and may well adversely
affect our products, services and markets.
The current managed risk rating is above the Group's approved
risk appetite. The Group considers the trend of the risk as
increasing due to potential future legislative changes (see
emerging risks) and further expansion of Group's business
activities within highly regulated markets. The Group focuses on
delivering the technology roadmap and has strengthened its Senior
Leadership Team with the focus on technology and operations, to
address the gap between risk appetite and risk rating.
Mitigation measures:
-- Dedicated legal and compliance business partners for all
business units, with regulation watch implied
-- Continuous improvement of the risk management control
framework, specifically in terms of regulatory and licensing risks
mitigation
-- Involving legal and compliance counsels in new-markets entry process
-- Implementing Group-wide AML policy, partner screening directive, and detailed AML directive
-- Regular AML re-screening of customers who use regulated financial services
-- Annual AML audit with sufficient results
-- Group-wide personal-data protection policy and detailed GDPR directive
12. Clients' default risk
The Group is subject to the credit risk of its customers, many
of whom are small and mid-sized CRT businesses. We are exposed to
customer credit risk, particularly for customers in our payment
solutions segment, who we finance through post-payment of their
energy consumption and toll balances. If we fail to assess and
monitor adequately the credit risks posed by counterparties, we
could experience an increase in credit losses and other adverse
effects.
The Group considers the trend of the risk as stable due to
proven credibility and efficiency of the Group's credit risk
management. The current managed risk rating is in line with the
Group's approved risk appetite.
Mitigation measures:
-- Credit assessment at onboarding (scoring) - in determining
the credit risk of its customers, the Group performs a credit
assessment, which consists of a financial analysis of recent
results and development as well as a business analysis and
verification using available databases
-- The Group's credit risk department conducts ongoing credit
exposure monitoring, revising credit limits in regular intervals
and upon utilisation of available limits, and updating collateral
from customers as needed
-- The ageing of receivables is regularly monitored by the Group
Management to assess credit risk, based on expected loss
calculations, which evaluate probability of default, exposure at
default, and loss given default
-- The Group has credit insurance subject to first-loss policies
on both individual and aggregate bases to ensure against the risk
of default from customers on its trade and other receivables
-- Collateral (guarantees, pledge of receivables, pledge of
physical assets) - the Group accepts cash deposits and advance
payments from customers to secure credit exposure. The Group also
accepts other types of security (such as pledges of assets or
promissory notes) to mitigate credit risk
13. Processes execution risk
The Group operates in a very complex and diversified
environment. The Group's entities are in different stages of
processes, IT systems, and governance maturity. Lower maturity of
processes results in non-co-ordinated actions and unintended
mistakes, as a consequence of manual controls. The outcomes of
these mistakes could materialise in non-keeping of contractual
obligations towards third parties (e.g. change management
notification obligations towards EETS providers), late payments to
third parties (fines received), mistakes in reporting creation, and
lower quality of service provided to our clients.
Moreover, the Group is very active in the M&A field. Every
completed M&A initiative is accompanied by an increase of the
overall complexity in the Group's processes and demands on systems,
data, and people. Where there is an inadequate post-mergers
integration process and insufficient predispositions for a
successful integration (IT systems maturity, data management
maturity and processes, and their governance maturity), the Group
exposes itself to an additional processes risk and a risk of
unrealised M&A benefits. Additionally, the Group is currently
in the process of transforming its operational model, accompanied
with the changes in the Senior Leadership Team, which may bring
temporary unclarity in accountabilities.
The current managed risk rating is above the Group's approved
risk appetite. The Group considers the trend of the risk to be
increasing due to the increased complexity brought by recent
acquisitions, which increase the demands on finance processes in
particular. The Group expects to mitigate this risk in the coming
periods through the integration of our acquisitions and the
implementation of ERP software.
Mitigation measures:
-- The Group has established post-mergers integration processes
with clear governance and senior leadership
-- The Group engages well-established consulting firms to assist
in the post-merger integration process, when needed
-- The Group has designed its processes model, which is
continuously maintained and updated. Moreover, the Group has a
processes design department, which in its activities focuses on
improvement of the maturity of processes
-- The Group has established an internal controls risk
management framework. Regular reporting and testing of the internal
controls ensures continuous improvement of the effectiveness of
operational controls
-- Operational model transformation introduces new focus and
disciplines in product and technology capabilities
Viability statement
In accordance with provision 31 of the UK Corporate Governance
Code 2018 (the Code), the Board has assessed the Company and
Group's prospects and viability, considering the business model,
the Group's current financial position, and principal risks over a
period longer than the 12 months required by the Going Concern
statement.
Viability timeframe
The Board has determined that a three-year period to 31 December
2025 is the appropriate timeframe to assess viability.
The choice of this timeframe is based on the following
rationale:
-- This period is reviewed by the Board in the long-term
planning and detailed annual budgeting process and allows financial
modelling to be supported by the budget and growth factors in
business plan approved by the Board
-- This time horizon is captured as the relevant period for
evaluation and stress testing of principal risks (primarily those
of an operational nature), which typically occur within this
timeframe
-- The innovative nature of the Group and the disruptive nature
of the market make it difficult to predict with sufficient
confidence how competition and other risks will impact the business
beyond a three-year timeframe
-- Considering the continuous changes of macroeconomic and
political environment over a period of longer than a three-year
timeframe would bring greater uncertainty to forecasting
assumptions
While the Board has no reason to believe that the Company and
Group will not be viable over a longer period, they consider three
financial years to be an appropriate planning time horizon to
assess viability and to determine the probability and impact of
principal risks.
Assessment of budget and financial forecast
The Company's and Group's financial forecast is assessed
primarily through the financial planning process (annual operating
budget) and the strategic planning (long-term strategic plan). This
process is managed by the Chief Executive Officer, Chief Strategy
Officer and Chief Financial Officer, in co-operation with
divisional and functional management teams.
The Board participates fully in the annual process to review,
challenge, and approve the annual operating budget for the new
financial year. The output of the financial planning process
provides a clear explanation and overview of key assumptions and
risks to be considered when agreeing the annual operating budget as
a detailed set of one-year financial forecasts.
The Group also has a long-term strategy in place in the form of
a long-term strategic plan. The strategy is reviewed and updated on
a periodic basis and is based on detailed financial forecasts.
The long-term financial forecasts are prepared with financial
forecasts for the first year based on the Group's annual operating
budget and for subsequent years based on the strategic plan.
The latest updates to the strategic plan were finalised in
September 2022 following the annual strategic away-days with the
participation of the Board. This considered the Group's current
position and the development of the business as a whole, focusing
on our path to expanding the number of active trucks whilst using
our industry expertise, technology solutions, scale and data
insight to help our customers prosper in the digital, low carbon
future.
Thanks to digitizing the way we work, becoming data-driven
company and growing organisation capabilities, we aim to build
platform business and serve "every truck". At the same time,
commitments to helping the industry become clean, fair, and
efficient were made in order to contribute to sustainable
future.
Both the annual operating budget and the strategic plan are
updated further through a rolling forecast process. The annual
operating budget is updated on a quarterly basis and the strategic
plan is reviewed on an annual basis. Should the occurrence of any
risk be identified through actual trading performance or through
the rolling forecast process, mitigating actions can be applied by
the Senior Leadership Team.
The latest annual operating budget for the year ending 31
December 2023 was reviewed and approved by the Board in March 2023,
and this budget is based on the Company and Group's current
financial position, and its prospects over the forthcoming year and
in line with the Group's stated strategy.
Assumptions used in financial forecast
The key assumptions within the Company's and Group's financial
forecasts are as follows:
-- Organic net revenue development is expected to be driven by
both payment and mobility solutions, growing on average at a
similar pace over the projected period.
-- Organic net revenue growth, of both payment and mobility
solutions, is primarily driven by increasing the number of
customers, which is positively influenced by:
- Continuous enhancement of sales channels (digital and
telesales)
- Additional penetration of the markets where the Group has an
already established position
- Cross-sell of Eurowag's core services into the Webeye customer
base
- New markets entries; and
- sustained up-sell/cross-sell activities of our products into
the customer base.
-- We expect to keep average net revenue retention at a minimum level of 110%.
-- Mobility solutions are positively supported by continuous
up-selling and cross-selling of products, due to:
- Enhancement and additional automation of up-sell
capabilities
- Strong cross-selling of tax refund services into the payment
solutions customer base
- Expansion of our fleet management solution
- Continuous growth in financial services
- Development of smart navigation products and mobile
applications (Road Lords and Eurowag App) and continuous growth in
OEM cooperation
-- Credit losses reflect an increase of turnover; there is no change in credit risk assumed
-- The operational costs (opex) plan in both the budgeted and
forecasted period is based on the following assumptions:
- To keep costs under control, opex in the budgeted period is
based on 2022 run rates increased by additional costs related
to:
- Annual salary reviews and changes in management bonus
schemes
- Planed commitment to increase charity donations - Expenses
required for achieving synergies
- Inelo integration expenses
- SAP implementation expenses
-- M&A investments - both budget and financial plan assume
all committed transactions, including the acquisition of Inelo,
investment in LMS, JITpay, KomTes, and payment for the remaining
30% stake in Sygic as well as deferred settlement component for
100% stake in Webeye.
-- External financing - both budget and financial plan assume
the following tranches from the committed financing announced on 22
September 2022:
- EUR150 million committed Facility A for the refinancing of all
existing term loan indebtedness
- EUR180 million committed Facility B for permitted acquisitions
and capital expenditure
- EUR235 million committed Revolving Credit Facility, of which
EUR85 million may be utilised by way of revolving loans, and EUR150
million may be utilised by way of ancillary facilities in the form
of bank guarantees, letters of credit, or an overdraft up to EUR25
million
-- Interest costs expectations for each loan are based on margin
depending on net leverage covenant and facility type and on a
floating base rate of 3.0% p.a. for the period 2023-2024 and 2.0%
p.a. in 2025, while also considering existing interest rate swaps
executed in 2019 in the amount of EUR120 million with an effective
fixed rate of 0.1% p.a. and expiration in 2024.
-- The capital expenditure (capex) plan is based on the following assumptions:
- Ordinary capex of high single digit % of net revenues for
period 2023-2025
- Transformational capex expected at a level of EUR24.5 million
for the year ending 31 December 2023. There is no transformational
capex planned for 2024
Assessment of viability
The key assumptions within the projections were stress tested
with reference to risks set out in the Risk Management section of
the Annual Report and Accounts.
In 2022, the Board considered the application of the following
risks:
-- Impact of ongoing macroeconomic crisis. Principal risk: Product demand decline risk
-- Impact of any form of geopolitical risk. Principal risk: Product demand decline risk
-- International fuel supply crisis resulting in lower sales
volume and higher fuel prices due to fuel supply shortage.
Principal risk: Fuel supplies risk
-- Impact of potential problems after cyberattacks on on-board
units, which may cause problems with product functionality and data
loss, and primarily result in penalties from toll providers.
Principal risk: Technology security and resilience risk
-- Impact of potential project failure, related to EETS
shielding strategy. Principal risk: External parties dependency
risk
-- Given the geographical location of the Spanish subsidiary, we
considered the potential risk of flooding at one of our truck
parks. Principal risk: Physical security risk
-- Impact of climate changes which could result in an increase
in: opex - we could expect increases in people costs, consultancy
costs, marketing and PR, technology costs, engineering cost, and
costs related to truck park management; increases of capex -
additional investments in technology projects related to climate
change. Principal risk: Climate change risk
-- Impact of base rate increase, which may affect our expenses.
Principal risk: Interest rate risk
-- Impact of regulatory changes for technology requirements
which may affect our existing on-board units in inventory.
Principal risk: Regulatory and licensing risk.
Applied risks and their effect were stress tested via 4 types of
downside scenarios:
First scenario focuses on product demand decline risk, in
combination with technology and resilience risk, external parties'
dependency risk, climate change risk, regulatory and licensing
risk, and interest rate risk.
Second scenario focuses on supply risk, in combination with
technology and resilience risk, external parties' dependency risk,
climate change risk, regulatory and licensing risk, and interest
rate risk.
The risks applied in the first and second scenario were
estimated to create severe but plausible downside scenarios covered
in the first and the second scenario, and considered the
development of net revenues, level of opex, and levels of capex.
The scenarios were also modelled to test potential occurrence of
any liquidity issue of the Group; both scenarios have proven that
the Group operates with sufficient level of liquidity headroom and
ability to meet financial covenants. The above mentioned scenarios
have been taken into account as a whole, but they were not modeled
because the probability of both occurring simultaneously is very
low, hence they are not considered to represent a risk to our long
term viability.
Specifically, neither of the two scenarios outlined above
resulted in a breach of financial covenants (please refer to the
Treasury management section in the Financial review) , nor was the
allowed spike in Net leverage and Adjusted Net leverage covenant
utilized. Moreover, even during the year with the most stress on
liquidity, more than 50% of committed EUR85 million Revolving
Credit Facility remained undrawn and not committed debt (please
refer to the Treasury management section in the Financial review)
nor not committed factoring facilities were not considered in the
assessment.
The Board also considered potential mitigating actions that the
Group could take to preserve liquidity and ensure compliance with
the Group's financial covenants.
Reverse stress test scenarios
Along with this analysis, the Board has considered a reverse
stress tests scenario (Third and Fourth scenario) to further assess
the Company's and the Group's viability.
A reverse stress test scenario is a risk management approach
used to assess the resilience of a company or financial institution
to a specific event or risk. Unlike traditional stress testing,
which assumes a base case scenario and evaluates the impact of
adverse events on the Company's financial performance, a reverse
stress test starts with a hypothetical worst-case scenario and
works backwards to identify the events that could lead to that
scenario.
In order to assess the resilience of the Company and the Group,
the Board has performed a reverse stress test to determine the
potential consequences of a liquidity crisis and to approach the
threshold of covenant breach.
The Board then assessed the likelihood and severity of these
risks and evaluated whether the Company has sufficient resources
and contingency plans in place to manage them.
By conducting a reverse stress test, the Board is taking a
proactive approach to risk management and demonstrating a
commitment to ensuring the long-term viability of the Company and
the Group. The results of the test can inform strategic
decision-making, help identify areas where additional risk
mitigation measures may be needed, and provide stakeholders with
greater confidence in the Company's ability to navigate challenging
market conditions.
Third scenario applies risks from the First scenario with an
even more severe impact on our business model.
Fourth scenario applies risks from the Second scenario with a
severe impact on our business model, adding additional supply risks
linked to the potential impact of geopolitical changes related to
ongoing Russian invasion of Ukraine, which may cause oil supply
disruptions in the CEE region.
The above mentioned scenarios have been considered as a whole,
but they were not modeled because the probability of both occurring
simultaneously is extremely very low.
The Board also considered potential mitigating actions that the
Group could take to preserve liquidity and ensure compliance with
the Group's financial covenants. In doing so, judgement has been
applied in determining whether such actions would be reasonably
possible to execute as well as the financial impact of taking such
actions. In terms of mitigating actions, the Board is confident
that they would be able to take similar actions to those taken
during previous economic downturns.
Considering the high severity and low plausibility of the
reverse stress test scenarios, the Board has no reason to believe
that the Company and Group will not be viable over the long-term
period.
Application of the presented risks in the above-mentioned
scenarios were examined via four different effects on Group's
business, overview of these effects and their application for the
particular risk and scenario is outlined in the table below.
Downside Effect Effect Effect Effect Effect
Risk applications scenario 1 2 3 4 5
Data
breach
Market / Cyber Loss Technological Finance
Principal risk decline attack of business disruption costs
------------------------- ---------- --------- --------- ------------- -------------- --------
Product demand decline
risk 1,3 x x
Fuel supplies risk 2,4 x x
Technology security
and resilience risk 1,2,3,4 x x
External parties'
dependency risk 1,2,3,4 x x x
Physical security
risk 1,2,3,4 x x
Climate change risk 1,2,3,4 x
Regulatory and licensing
risk 1,2,3,4 x x
Interest rate risk 1,2,3,4 x
---------- --------- --------- ------------- -------------- --------
Viability statement
Based on the above described assessment of the principal risks
facing the Company and Group, stress testing and reverse stress
testing undertaken to assess the Company's and Group's prospects,
the Board has a reasonable expectation that the Company and Group
will be able to continue in operation and retain sufficient
available cash to meet its liabilities as they fall due over the
period to 31 December 2025 and, consequently, the Group proved it
will remain relevant and solvent in the medium to long term taking
into consideration the technological, social, and environmental
changes expected to happen in the medium-to long-term period.
Going concern
The Board has considered the financial prospects of the Company
and Group for the foreseeable future, which is at least the next 12
months from this date, and made an assessment of the Company's and
Group's ability to continue as a going concern. The Board's
assessment included consideration of the availability of the
Company's and Group's credit facilities, cash flow forecasts and
stress scenarios. Stress test scenarios applied in the Going
Concern statement are in line with scenarios covered in the
Viability statement. The Board is satisfied that the Company and
Group have the resources to continue operating the business for the
foreseeable future, and furthermore are not aware of any material
uncertainties that may cast significant doubt upon the Company's
and Group's ability to continue as a going concern and the Board
considers it is appropriate to adopt the going concern basis of
accounting in preparing the annual financial statements.
Financial statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(EUR '000)
For the year ended 31 December
===== ================================
Notes 2022 2021
============================================================================= ===== =============== ===============
Revenue from contracts with customers 4 2,368,252 1,646,102
Costs of energy sold (2,177,395) (1,492,970)
============================================================================= ===== =============== ===============
Net energy and services sales 5 190,857 153,132
Other operating income 449 655
Employee expenses (67,212) (55,665)
Impairment losses of financial assets (3,912) (3,116)
Technology expenses (9,823) (6,797)
Other operating expenses (47,227) (41,282)
Operating profit before depreciation and amortisation (EBITDA) 63,132 46,927
Analysed as:
----------------------------------------------------------------------------- ----- --------------- ---------------
Adjusting items 5 18,461 22,793
Adjusted EBITDA 5 81,593 69,720
----------------------------------------------------------------------------- ----- --------------- ---------------
Depreciation and amortisation 5 (30,393) (21,867)
============================================================================= ===== =============== ===============
Operating profit 32,739 25,060
Finance income 4,750 2,234
Finance costs 6 (8,802) (8,943)
Share of net loss of associates (711) (682)
============================================================================= ===== =============== ===============
Profit before tax 27,976 17,669
Income tax expense 7 (10,280) (8,019)
============================================================================= ===== =============== ===============
PROFIT FOR THE YEAR 17,696 9,650
============================================================================= ===== =============== ===============
OTHER COMPREHENSIVE INCOME
Other comprehensive income to be reclassified to profit or loss in subsequent
periods
Change in fair value of cash flow hedge recognised in equity 7,602 3,683
Exchange differences on translation of foreign operations 1,303 1,458
Deferred tax related to other comprehensive income - -
----------------------------------------------------------------------------- ----- --------------- ---------------
TOTAL OTHER COMPREHENSIVE INCOME 8,905 5,141
============================================================================= ===== =============== ===============
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 26,601 14,791
============================================================================= ===== =============== ===============
Total profit for the financial year attributable to equity holders of the
Company 16,630 9,148
Total profit for the financial year attributable to non-controlling interests 1,066 502
Total comprehensive income for the financial year attributable to equity
holders of the Company 25,507 14,259
Total comprehensive income for the financial year attributable to
non-controlling interests 1,094 532
Earnings per share (in cents per share): 10
Basic earnings per share 2.41 1.54
Diluted earnings per share 2.41 1.53
============================================================================= ===== =============== ===============
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(EUR '000)
As at 31 December
========================================= ====== ====================
Notes 2022 2021
========================================= ====== ========= =========
ASSETS
Non-current assets
Intangible assets 8 268,171 193,453
Property, plant and equipment 9 39,826 34,763
Right-of-use assets 13,340 8,112
Investments in associates 12,223 12,934
Financial assets at fair value through 14,364 -
other comprehensive income
Deferred tax assets 7 10,505 7,642
Derivative assets 3,093 252
Other non-current assets 3,791 3,591
========================================= ====== ========= =========
Total non-current assets 365,313 260,747
========================================= ====== ========= =========
Current assets
Inventories 20,291 9,557
Trade and other receivables 378,152 300,601
Income tax receivables 1,800 5,095
Derivative assets 3,851 2,694
Cash and cash equivalents 146,003 224,164
========================================= ====== ========= =========
Total current assets 550,097 542,111
========================================= ====== ========= =========
TOTAL ASSETS 915,410 802,858
========================================= ====== ========= =========
SHAREHOLDERS' EQUITY AND LIABILITIES
Share capital 8,107 38,113
Share premium 2,958 194,763
Merger reserve (25,963) (25,963)
Other reserves 10,342 1,465
Business combinations equity adjustment (12,526) (17,046)
Retained earnings 329,362 84,526
Equity attributable to equity holders
of the Company 312,280 275,858
Non-controlling interests 4,283 8,889
========= =========
Total equity 316,563 284,747
========================================= ====== ========= =========
Non-current liabilities
Interest-bearing loans and borrowings 11 121,272 143,579
Lease liabilities 9,510 5,973
Deferred tax liabilities 7 8,677 5,495
Derivative liabilities 186 657
Other non-current liabilities 27,376 20,281
========================================= ====== ========= =========
Total non-current liabilities 167,021 175,985
========================================= ====== ========= =========
Current liabilities
Trade and other payables 398,235 314,522
Interest-bearing loans and borrowings 11 21,884 18,894
Lease liabilities 3,917 2,601
Provisions 2,124 1,545
Income tax liabilities 5,649 4,208
Derivative liabilities 17 356
========================================= ====== ========= =========
Total current liabilities 431,826 342,126
========================================= ====== ========= =========
TOTAL EQUITY AND LIABILITIES 915,410 802,858
========================================= ====== ========= =========
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(EUR '000)
Notes Share Share Merger Other Business Retained Total equity Non-controlling Total
capital premium reserve reserves combinations earnings attributable interests equity
equity to equity
adjustment holders of
the parent
------------------------ -------- --------- ---------- --------- --------- ------------- --------- ------------- ---------------- --------
At 31 December 2020 4,158 2,927 - (3,263) (46,009) 72,177 29,990 34,115 64,105
================================== ========= ========== ========= ========= ============= ========= ============= ================ ========
Profit for the year - - - - - 9,148 9,148 502 9,650
Other comprehensive income - - - 5,111 - - 5,111 30 5,141
==================================
Total comprehensive income - - - 5,111 - 9,148 14,259 532 14,791
========= ========== ========= ========= ============= ========= ============= ================ ========
Share options exercised 84 3,698 - - - - 3,782 - 3,782
Transactions with own shares - - - - - (10) (10) - (10)
Group reorganisation 2,582 (6,625) 4,043 - - - - - -
Pre-IPO bonus (share-based
payments) 7 - - - - - 7 - 7
Primary proceeds (net of
expenses) 1,334 194,763 - - - - 196,097 - 196,097
Cancellation of shares (58) - - - - 58 - - -
Allotment of class B share 30,006 - (30,006) - - - - - -
Dividends paid - - - - - - - (1,980) (1,980)
Transfer of reserves - - - (383) - 383 - - -
Share-based payments - - - - - 3,736 3,736 - 3,736
Acquisition of subsidiaries - - - - - - - 2,259 2,259
Acquisition of non-controlling
interests - - - - 27,003 (966) 26,037 (26,037) -
Put options held by
non-controlling interests - - - - 1,960 - 1,960 - 1,960
---------------------------------- --------- ---------- --------- --------- ------------- --------- ------------- ---------------- --------
Total transactions with owners
recognised directly in equity 33,955 191,836 (25,963) (383) 28,963 3,201 231,609 (25,758) 205,851
---------------------------------- --------- ---------- --------- --------- ------------- --------- ------------- ---------------- --------
At 31 December 2021 38,113 194,763 (25,963) 1,465 (17,046) 84,526 275,858 8,889 284,747
---------------------------------- --------- ---------- --------- --------- ------------- --------- ------------- ---------------- --------
Profit for the year - - - - - 16,630 16,630 1,066 17,696
Other comprehensive income - - - 8,877 - - 8,877 28 8,905
---------------------------------- --------- ---------- --------- ------------- --------- ------------- ---------------- --------
Total comprehensive income - - - 8,877 - 16,630 25,507 1,094 26,601
---------------------------------- --------- ---------- ========= --------- ------------- --------- ------------- ---------------- --------
Capital reduction (30,006) (191,805) - - - 221,811 - - -
Dividends paid - - - - - - - (56) (56)
Share-based payments - - - - - 6,395 6,395 - 6,395
Acquisition of a non-controlling
interests - - - - 5,644 - 5,644 (5,644) -
Put options held by
non-controlling interests - - - - (1,124) - (1,124) - (1,124)
---------------------------------- --------- ---------- --------- --------- ------------- --------- ------------- ---------------- --------
Total transactions with owners
recognised directly in equity (30,006) (191,805) - - 4,520 228,206 10,915 (5,700) 5,215
---------------------------------- --------- ---------- --------- --------- ------------- --------- ------------- ---------------- --------
At 31 December 2022 8,107 2,958 (25,963) 10,342 (12,526) 329,362 312,280 4,283 316,563
================================== ========= ========== ========= ========= ============= ========= ============= ================ ========
CONSOLIDATED STATEMENT OF CASH FLOWS
(EUR '000)
For the year ended 31 December
=================================
Notes 2022 2021
==================================================================== ================ ===============
Cash flows from operating activities
Profit before tax for the period 27,976 17,669
Non-cash adjustments:
Depreciation and amortisation 5 30,393 21,867
Gain on disposal of non-current assets (114) (29)
Interest income (234) (44)
Interest expense 5,815 4,913
Movements in provisions 541 153
Impairment losses of financial assets 3,912 3,116
Movements in allowances for inventories 183 (64)
Foreign currency exchange rate differences (1,838) (784)
Fair value revaluation of derivatives 2,769 (1,472)
Share-based payments 6,395 3,736
Other non-cash items 709 792
Working capital adjustments:
(Increase)/decrease in trade and other receivables and prepayments (79,507) (69,445)
(Increase)/decrease in inventories (10,156) (4,108)
Increase in trade and other payables 75,087 28,774
Interest received 234 44
Interest paid (10,123) (4,498)
Income tax paid (7,799) (10,193)
Net cash flows (used in)/generated from operating activities 44,243 (9,573)
==================================================================== ====== ================ ===============
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 289 225
Proceeds from sale of financial instruments 56 -
Purchase of property, plant and equipment (7,271) (5,221)
Purchase of intangible assets (37,290) (26,230)
Purchase of financial instruments (14,364) -
Payments for acquisition of subsidiaries, net of cash acquired (42,712) (1,166)
Investment in associates (3,000) (10,685)
Net cash used in investing activities (104,292) (43,077)
==================================================================== ====== ================ ===============
Cash flows from financing activities
Payment of principal elements of lease liabilities (3,112) (2,382)
Proceeds from borrowings - 39,519
Repayment of borrowings (15,014) (18,773)
Acquisition of non-controlling interests - (27,003)
Dividend payments (56) (3,480)
Proceeds from issued share capital (net of expenses) - 199,879
Proceeds from sale of own shares - 20
Net cash (used in) / generated from financing activities (18,182) 187,780
==================================================================== ====== ================ ===============
Net (decrease)/increase in cash and cash equivalents (78,231) 135,130
Effect of exchange rate changes on cash and cash equivalents 79 63
Cash and cash equivalents at beginning of period 224,154 88,961
Cash and cash equivalents at end of period 146,001 224,154
==================================================================== ====== ================ ===============
1. CORPORATE INFORMATION
W.A.G payment solutions plc (the "Company" or the "Parent") is a
public limited company incorporated and domiciled in the United
Kingdom and registered under the laws of England & Wales under
company number 13544823 with its registered address at Third Floor
(East), Albemarle House, 1 Albemarle Street, London W1S 4HA. The
ordinary shares of the Company were admitted to the premium listing
segment of the Official List of the UK Financial Conduct Authority
and have traded on the London Stock Exchange plc's main market for
listed securities on 13 October 2021.
The Parent and its subsidiaries (together the "Group") are
principally engaged in:
-- Providing payment solutions for fleets of professional
transport and forwarding companies, as well as running a network of
truck parks for commercial road transportation;
-- Providing unified way of electronic toll payments on a number
of European road networks for fleets of professional transport and
forwarding companies;
-- Recovery of VAT refunds and excise duty from European countries;
-- Creating an automated journey book and optimising traffic
with the use of integrated digital maps;
-- Combine advanced solutions in the field of electronics,
software engineering and applied mathematics;
-- Sale of navigation licenses; and
-- Other services.
Prior to the Initial Public Offering ("IPO"), W.A.G. payments
solutions, a.s. was the parent company of the Group for which
consolidated financial statements were produced. On 7 October 2021,
the Shareholders of W.A.G. payments solutions, a.s. transferred all
of their shares in W.A.G. payments solutions, a.s. to W.A.G payment
solutions plc in exchange for ordinary shares of equal value in
W.A.G payment solutions plc ("Group reorganisation"). This resulted
in W.A.G payment solutions plc becoming the new Parent Company of
the Group. On 8 October 2021, the IPO was completed, with 13
October 2021 representing admission to trading on the London Stock
Exchange ("Admission") .
The financial information for the year ended 31 December 2021
was presented as a continuation of W.A.G. payments solutions,
a.s.
2. BASIS OF PREPARATION
The annual report and financial statements for the period ended
31 December 2022 were approved by the Board of Directors on 16
March 2023 along with this preliminary announcement, but have not
yet been delivered to the Registrar of Companies.
The financial information contained in this preliminary
announcement does not constitute the Group's statutory accounts
within the meaning of Section 434 of the Companies Act 2006.
The auditor's report on the statutory accounts for the period
ended 31 December 2022 was unqualified and did not contain a
statement under section 498 of the Companies Act 2006.
The consolidated financial statements of the Group have been
prepared in accordance with UK-adopted International Accounting
Standards ("IFRS") and with the requirements of the Companies Act
2006 as applicable to companies reporting under these
standards.
As there was no change in control with the Group reorganisation
(see Note 1) involving the Company becoming the new holding company
of the Group in a share for share exchange, the financial
information for the year ended 31 December 2021 was presented as a
continuation of W.A.G. payment solutions, a.s. A movement in share
capital, share premium and merger reserve is reflected in the
statement of changes in equity at the date of Group
reorganisation.
The consolidated financial statements have been prepared on a
historical cost basis, except for certain financial assets and
liabilities (including derivative financial instruments) that have
been measured at fair value. The consolidated financial statements
are presented in EUR and all values are rounded to the nearest
thousand (EUR '000), except where otherwise indicated.
The Board has considered the financial prospects of the Company
and Group for the foreseeable future, which is at least the next 12
months, and made an assessment of the Company's and Group's ability
to continue as a going concern. The Board's assessment included
consideration of the availability of the Company's and Group's
credit facilities, cash flow forecasts and stress test scenarios.
Stress test scenarios applied in the Going Concern statement are in
line with scenarios covered in the Viability statement. The Board
is satisfied that the Company and Group have the resources to
continue operating the business for the foreseeable future, and
furthermore are not aware of any material uncertainties that may
cast significant doubt upon the Company's and Group's ability to
continue as a going concern and the Board considers it is
appropriate to adopt the going concern basis of accounting in
preparing the annual financial statements.
3. BUSINESS COMBINATION
The following acquisitions took place in 2022:
Acquisition of WebEye Group
Further to the subsequent events described in the 2021 Annual
Report and Accounts, the Group signed a novated agreement on 16 May
2022 to acquire substantially all of the assets of Webeye
Telematics Zrt. ("Webeye"), a leading Fleet Management Solution
provider in Central and Eastern Europe. The Group paid EUR 23.3
million in cash upon the acquisition of 100% of the share capital
of the non-Hungarian subsidiaries on 16 May 2022 and a further EUR
19.9 million was paid upon completion of the acquisition of the
Hungarian subsidiaries on 1 July 2022. In addition, the Company
will pay a deferred settlement component within three years of
closing, a portion of which is contingent upon the achievement of
certain KPIs. The maximum amount, including the deferred amount of
the purchase price, is capped at EUR 60.6 million.
The transaction has expanded the Group's customer base, and
Webeye's customers will gain access to Eurowag's unrivalled range
of integrated end-to-end payment and mobility solutions leading to
incremental revenue opportunities. Furthermore, data from the
connected trucks will provide insights and enable the continual
development of new and improved solutions to address customers'
needs.
The provisionally determined fair values of identifiable assets
and liabilities of subsidiaries of Webeye as at the date of
acquisition were:
EUR '000 Fair value Fair value Total
recognised recognised on
on acquisition acquisition
non-Hungarian Hungarian Webeye
Webeye subsidiaries subsidiaries
================================= ===================== ================== =======
Assets
Identifiable intangible
assets 16,256 11,077 27,333
Property, plant and equipment 1,411 729 2,140
Right-of-use assets 357 1,598 1,955
Inventories 263 497 760
Trade receivables 1,308 1,058 2,366
Cash and cash equivalents 395 103 498
Other assets 10 - 10
Total Assets 20,000 15,062 35,062
Deferred tax 1,810 986 2,796
Trade payables 714 883 1,597
Lease liabilities 357 1,598 1,955
Total Liabilities 2,881 3,467 6,348
================================= ===================== ================== =======
Total identifiable net
assets at fair value 17,119 11,595 28,714
================================= ===================== ================== =======
Goodwill arising on acquisition 19,793 11,512 31,305
--------------------------------- --------------------- ------------------ -------
Purchase consideration:
--------------------------------- --------------------- ------------------ -------
Cash paid 23,319 19,891 43,210
--------------------------------- --------------------- ------------------ -------
Deferred and contingent
consideration (discounted) 13,593 3,216 16,809
--------------------------------- --------------------- ------------------ -------
Total purchase consideration 36,912 23,107 60,019
--------------------------------- --------------------- ------------------ -------
The goodwill is attributable to expected synergies from
combining operations. It will not be deductible for tax
purposes.
The gross contractual receivables acquired amounted to EUR 3,002
thousand. At acquisition date, there were EUR 636 thousand of
contractual cash flows not expected to be collected.
From the date of acquisition until 31 December 2022, Webeye
entities contributed EUR 8,057 thousand of revenue and EUR 887
thousand loss after tax (mainly driven by amortisation of acquired
intangibles and M&A related adjusting items). Excluding
amortisation of acquired intangibles and adjusting items the
adjusted profit after tax would have been EUR 734 thousand.
If the acquisition had occurred on 1 January 2022, consolidated
revenue and consolidated loss after tax of Webeye entities for the
year ended 31 December 2022 would have been EUR 15,429 thousand and
EUR 865 thousand respectively. Excluding amortisation of acquired
intangibles and adjusting items the adjusted profit after tax would
have been EUR 1,557 thousand. Transaction costs are disclosed at
the end of this note.
As at the date of acquisition, discount rate of 2.00% was used
to determine the present value of deferred and contingent
consideration. As at 31 December 2022, the discount rate was
increased to 3.90%. Reasonably possible change in the discount rate
does not lead to a significant change in the present value of
deferred and contingent consideration.
Contingent consideration is subject to achievement of
integration related milestones. Reasonably possible change in
milestones achievement does not lead to a significant change in the
fair value of contingent consideration.
Acquisition of 9.99% share in JITpay
On 27 September 2022, Eurowag entered into a strategic
partnership with JITpay Group, a German-based payment service
provider specialising in the logistics industry. The transaction
expands the Group's product portfolio by adding invoice
discounting, digitalised billing and receivables management
solutions and strengthens its presence in Germany, one of the most
strategically important trucking markets in Europe. As part of the
strategic partnership, Eurowag has acquired a 9.99% stake in JITpay
for an initial consideration of EUR 14.3 million, with the
flexibility for a potential increase in its ownership over time
subject to regulatory approvals. The investment was classified as
financial asset at fair value through other comprehensive income.
The investment is considered to be a strategic investment and is
not held for trading.
The Group has call options to acquire an additional 18.01% share
which can be exercised either by 3 July 2023 for a consideration of
EUR 25.7 million or later by 1 January 2024 for EUR 35 million.
First call option reflects original valuation, which is not
expected to change during a short period.
In case neither of the call options is exercised, JITpay has the
right to buy back acquired 9.99% share for EUR 1.
Acquisition of non-controlling interest in Sygic
On 20 December 2022, the Group signed an agreement with
Non-controlling Shareholders of Sygic, a.s., which will enable the
Group to take full control of Sygic's resources. Consideration for
the 30% equity interest of EUR 14.4 million is payable in April
2024, in line with the original option agreement. Ownership of the
shares remains with Non-controlling Shareholders until April 2024,
however following the agreement with fixed price they are no longer
exposed to variable returns from the investment.
Under the previous shareholders agreement, the minority
shareholders had certain rights pertaining to the application of
Sygic's resources within the Group. Having full control of Sygic
has provided the Group with unrestricted access to Sygic's
resources and allowed it to fully utilise Sygic's digital expertise
and people capabilities. This, in turn, will enable the Group to
accelerate its digital sales channel and integrated product
initiatives by utilising Sygic's capabilities more effectively
across Eurowag's whole range of mobility solutions.
Pay-out of deferred consideration
On 31 January 2022, the Group paid deferred acquisition
consideration of EUR 3 million related to acquisition of company
Threeforce B.V. (Last Mile Solutions).
The following acquisitions took place in 2021:
Acquisition of 51% share in KomTeS
On 1 January 2021, the Group acquired 51% of the share capital
in KomTeS, a value-added reseller of the Group's Webdispečink
product (Fleet management solutions). The transaction will ensure
the highest level of support, service, and value to Group and
KomTeS customers in both the Czech Republic and Slovakia.
The remaining 49% non-controlling interest is subject to
put/call option rights of the parties, where the Group is entitled
to exercise the call option at any time after 1 January 2022 and
the minority Shareholders are entitled to exercise the put option
at any time after 18 December 2023 (if the call option has not been
exercised).
The fair values of identifiable assets and liabilities of KomTeS
as at the date of acquisition were:
EUR '000 Fair value recognised
on acquisition KomTeS
Group
================================= =======================
Assets
Identifiable intangible
assets 4,981
Property, plant and equipment 109
Inventories 96
Trade receivables 772
Accruals 10
Cash and cash equivalents 1,610
Total Assets 7,578
Deferred tax 946
Trade payables 1,989
Accruals 29
Total Liabilities 2,964
================================= =======================
Total identifiable net
assets at fair value 4,614
================================= =======================
Non-controlling interest
measured at fair value 2,259
Goodwill arising on acquisition -
--------------------------------- -----------------------
No adjustments were made to opening balance sheet in 2022 and
the fair value of acquired asset is finalised.
The gross contractual receivables acquired amounted to EUR 772
thousand. At acquisition date, there were no contractual cash flows
not expected to be collected.
Associate investment in Last Mile Solutions
On 16 February 2021, the Group acquired 28% non-controlling
interest in Dutch-based Threeforce B.V., operating under brand Last
Mile Solutions, a fast growing eMobility platform in Europe. The
deal supports the Group's position in the eMobility market and
confirms its focus on sustainable transportation solutions. Through
this partnership, both companies will combine efforts to provide
industry-leading eMobility services to their customers throughout
Europe.
Additional 62% shares are subject to a put option, which may
require the Group to acquire shares of Last Mile Solutions. The put
option is measured as a derivative instrument and it might be
exercised between February 2025 and February 2026.
Associate investment in Drivitty
On 1 April 2021, the Group acquired a 20% non-controlling
interest in the Lithuanian company Tankita UAB, operating under the
brand Drivitty, a mobile services integration leader in the
commercial transportation market. With this strategic partnership
the Group aims to accelerate its path towards providing fully
seamless mobile payments for its customers.
Although the Group has a call option to acquire the remaining
shares of Drivitty, it concluded that the call option does not
provide control over the entity.
Acquisition of 25% non-controlling interest in ADS Group
On 4 March 2021, the Group acquired the remaining 25% of shares
of ADS companies, a top commercial road transport services provider
in Spain and Portugal. The transaction is a key part of the Group's
long-term strategy to strengthen its presence in the Iberian
Peninsula and Western Europe.
As the remaining 25% non-controlling interest was subject to
put/call option rights of the parties, the Group recognised a
financial liability at the present value of the amount payable on
exercise of the NCI put in accordance with IFRS 9 at 31 December
2020.
Pay-out of deferred acquisition consideration
On 24 November 2021, the Group paid first deferred acquisition
consideration of EUR 421 thousand related to acquisition of Aldobec
technologies, s.r.o.
Other disclosures
Net outflows of cash to acquire subsidiaries were as
follows:
EUR '000 31 December 31 December
2022 2021
========================= ============ ============
Cash consideration paid 43,210 2,776
Cash acquired (498) (1,610)
============ ============
Net outflow of cash
- investing activities 42,712 1,166
========================= ============ ============
Cost of acquisition of subsidiaries recognised in other
operating expense and cash flows from operating activities:
EUR '000 For the year ended
31 December
=================== =====================
2022 2021
=================== =========== ========
Acquisition costs 7,941 789
=================== =========== ========
Acquisition costs incurred in 2022 mostly relate to acquisition
of Grupa Inelo.
4. Segmental Analysis
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Operating Decision Maker
("CODM"). The Group considers the Executive Committee to be the
CODM effective from July 2021. The Board of Directors of W.A.G.
payments solutions, a.s. was considered as CODM prior to that date.
The CODM reviews net energy and services sales and contribution to
evaluate segment performance and allocate resources to the overall
business.
For management purposes and based on internal reporting
information, the Group is organised in two operating segments;
Payment solutions and Mobility solutions. Payment solutions
represent Group's revenues, which are based on recurring and
frequent transactional payments. The segment includes Energy and
Toll payments, which are a typical first choice of a new customer.
Mobility solutions represent a number of services, which are either
subscription based or subsequently sold to customers using Payment
solutions products. The segment includes Tax refund, Fleet
management solutions, Navigation, and other service offerings.
Net energy and services sales, contribution, contribution
margin, EBITDA, and Adjusted EBITDA are non-GAAP measures, see Note
5.
The CODM does not review assets and liabilities at segment
level.
Year ended 31 December Payment Mobility Total
2022 EUR '000 solutions solutions
------------------------- ----------- ----------- ----------
Segment revenue 2,312,242 56,010 2,368,252
Net energy and services
sales 134,847 56,010 190,857
Contribution 118,157 40,807 158,964
Contribution margin 88% 73% 83%
Corporate overhead
and indirect costs
before adjusting
items (77,371)
Adjusting items
affecting Adjusted
EBITDA (18,461)
Depreciation and
amortisation (30,393)
Net finance costs
and share of net
loss of associates (4,763)
------------------------- ----------- ----------- ----------
Profit before tax 27,976
------------------------- ----------- ----------- ----------
Year ended 31 Payment Mobility Total
December 2021 solutions solutions
EUR '000
--------------------- ----------- ----------- ----------
Segment revenue 1,606,051 40,051 1,646,102
Net energy and
services sales 113,081 40,051 153,132
Contribution 99,594 28,926 128,520
Contribution margin 88% 72% 84%
Corporate overhead
and indirect costs
before adjusting
items (58,800)
Adjusting items
affecting Adjusted
EBITDA (22,793)
Depreciation and
amortisation (21,867)
Net finance costs
and share of net
loss of associates (7,391)
--------------------- ----------- ----------- ----------
Profit before
tax 17,669
--------------------- ----------- ----------- ----------
Geographical split - segment revenue from contracts with
customers
The geographical analysis is derived from the base location of
responsible sales teams, rather than reflecting the geographical
location of the actual transaction.
EUR '000 For the year ended
31 December
============================= ======================
2022 2021
============================= ========== ==========
Czech Republic ("CZ") 484,055 316,707
Poland ("PL") 401,528 290,499
Central Cluster (excluding
CZ and PL) 275,000 189,439
Portugal ("PT") 397,052 334,069
Western Cluster (excluding
PT) 92,192 36,381
Romania ("RO") 317,518 192,742
Southern Cluster (excluding
RO) 391,515 278,125
Not specified 9,392 8,140
Total 2,368,252 1,646,102
============================= ========== ==========
There were no individually significant customers, which would
represent 10% of revenue or more.
Geographical split - net energy and services sales
EUR '000 For the year ended
31 December
============================= =====================
2022 2021
============================= ========== =========
Czech Republic 35,179 26,347
Poland 30,485 27,037
Central Cluster (excluding
CZ and PL) 26,715 20,566
Portugal 16,362 21,058
Western Cluster (excluding
PT) 7,787 5,590
Romania 28,252 19,676
Southern Cluster (excluding
RO) 38,339 26,495
Not specified 7,738 6,363
Total 190,857 153,132
============================= ========== =========
The following table presents the Group's non-current assets, net
of accumulated depreciation and amortisation, by country.
Non-current assets for this purpose consist of property and
equipment, right-of-use assets, intangible assets, investments in
associates, financial assets and other non-current assets
(excluding deferred tax assets and derivative assets).
EUR '000 For the year ended
31 December
================ =====================
2022 2021
================ ========== =========
Czech Republic 152,155 126,427
Spain 61,898 63,238
Slovakia 55,799 53,882
United Kingdom 1,552 541
Other 80,311 8,765
---------------- ---------- ---------
Total 351,715 252,853
---------------- ---------- ---------
Timing of revenue recognition was as follows:
EUR '000 For the year ended
31 December
================================ ======================
2022 2021
================================ ========== ==========
Payment solutions
Goods and services transferred
at a point in time 2,286,450 1,585,701
Services transferred over
time 25,792 20,350
-------------------------------- ---------- ----------
2,312,242 1,606,051
Mobility solutions
Goods and services transferred
at a point in time 15,700 12,753
Services transferred over
time 40,310 27,298
-------------------------------- ---------- ----------
56,010 40,051
Total segment revenue 2,368,252 1,646,102
================================ ========== ==========
5. Alternative performance measures
To supplement its consolidated financial statements, which are
prepared and presented in accordance with IFRS, the Group uses the
following non-GAAP financial measures that are not defined or
recognised under IFRS: Net energy and services sales, Contribution,
Contribution margin, EBITDA, Adjusted EBITDA, Adjusted EBITDA
margin, Adjusted earnings, Adjusted earnings per share, and
Adjusted effective tax rate, Net debt/cash and Transformational
capital expenditure.
The Group uses Alternative Performance Measures ("APMs") to
provide additional information to investors and to enhance their
understanding of its results. The APMs should be viewed as
complementary to, rather than a substitute for, the figures
determined according to IFRS. Moreover, these metrics may be
defined or calculated differently by other companies, and, as a
result, they may not be comparable to similar metrics calculated by
the Group's peers.
Net energy and services sales
Net energy and services sales is an alternative performance
measure, which is calculated as total revenues from contracts with
customers, less cost of energy sold. The Group believes this
subtotal is relevant to an understanding of its financial
performance on the basis that it adjusts for the volatility in
underlying energy prices. The Group has discretion in establishing
final energy price independent from the prices of its
suppliers.
This measure also supports comparability of the Group's
performance with other entities, who have concluded that they act
as an agent in the sale of energy and, therefore, report revenues
net of energy purchased.
Contribution
Contribution is defined as net energy and services sales less
operating costs that can be directly attributed to or controlled by
the segments. Contribution does not include indirect costs and
allocations of shared costs that are managed at a group level and
hence shown separately under Indirect costs and corporate
overhead.
The CODM reviews net energy and services sales and contribution
to evaluate segment performance and allocate resources to the
overall business (Note 4).
Contribution margin
Contribution margin represents, for each of the Group's two
operating segments, that segment's contribution as a proportion of
that segment's Net energy and services sales.
EBITDA
EBITDA is defined as operating profit before depreciation and
amortisation.
The Group presents EBITDA because it is widely used by
securities analysts, investors, and other interested parties to
evaluate the profitability of companies. EBITDA eliminates
potential differences in performance caused by variations in
capital structures (affecting net finance costs), tax positions
(such as the availability of net operating losses, against which to
relieve taxable profits), the cost and age of tangible assets
(affecting relative depreciation expense), the extent to which
intangible assets are identifiable (affecting relative amortisation
expense) and share of loss of associates.
Adjusted EBITDA
Adjusted EBITDA is defined as EBITDA before adjusting items:
Adjusting item Definition Exclusion justification
========================= =========================== ==========================================
M&A-related Fees and other M&A-related expenses differ every
expenses costs relating year based on acquisition activity
to the Group's of the Group. Exclusion of these
acquisitions activity costs allow better result comparability.
------------------------- --------------------------- ------------------------------------------
Non-recurring Non-recurring IPO costs are related to a one-off
IPO-related advisory and other event, which has significant
expenses expenses relating impact on 2021 profitability.
to the Admission IPO had no impact on expenses
in 2022.
------------------------- --------------------------- ------------------------------------------
Strategic transformation Costs relating Broadening the skill base
expenses to broadening IPO and IT strategic transformation
the skill bases requires different skill base
of the Group's of the Group's employees. Expenses
employees (including related to these strategic events
in respect of were excluded as otherwise they
executive search would not be incurred. The expenses
and recruiting are not expected to be adjusted
costs), costs in 2023.
related to transformation Transformation of key IT systems
of key IT systems Transformational expenditure
as well as Grupa represents investments intended
Inelo integration to create a new product or service,
costs or significantly enhance an existing
one, in order to increase the
Group's revenue potential. This
also includes systems and processes
improvements to improve services
provided to customers. Transformational
expenditures, which cannot be
capitalised as they are mainly
related to research, were excluded
as the Group is executing its
strategic transformation programme
and due to the fact that annual
investments compared to Group's
Net sales are significantly higher
than regular investments of a
technology company. Strategic
transformation programme is expected
to end in 2023 except for SAP
implementation, which is expected
to end in 2024. Anticipated IT
transformation expense adjustment
in 2023 amounts to EUR 4.1 million
in 2023 and EUR 3.3 million in
2024. The Group does not expect
significant capitalisation related
to SAP in 2024.
Integration costs of Grupa Inelo
In 2023 and 2024, the Group expects
to adjust one-off costs related
to transformation and integration
of Grupa Inelo. While the Group
did not adjust integration costs
in the past, the related activities
and one-off costs are expected
to be significantly higher than
for previously completed acquisitions.
Exclusion of these costs will
allow better result comparability.
The Group currently estimates
approximately EUR 2 million of
integration costs in 2023. The
Group is in very early stage
of integration, the management
will evaluate integration progress
and update the expected amount
in 2023 interim financial statements.
------------------------- --------------------------- ------------------------------------------
Share-based Equity-settled Share options and cash-settled
compensation and cash-settled compensation have been provided
compensation provided to management and certain employees
to the Group's in connection with the IPO. Total
management before share-based payment charge to
IPO be excluded in period 2021-2024
amounts to EUR 20.7 million,
from which EUR 1.3 million was
a one-off in 2021 and EUR 19.4
million is amortised over three
years. Although these costs will
be amortised over the next three
years based on accounting policies,
they were excluded as they relate
to a one-off event. Amortised
expenses amounted to EUR 5.1
million in 2021 and 5.3 million
in 2022 and anticipated expense
adjustment amounts to EUR 6.5
million in 2023 and EUR 2.5 million
in 2024.
Share awards provided post-IPO
were not excluded as they represent
non-cash element of annual remuneration
package.
========================= =========================== ==========================================
Management believes that Adjusted EBITDA is a useful measure for
investors because it is a measure closely tracked by management to
evaluate the Group's operating performance and to make financial,
strategic, and operating decisions. It may help investors to
understand and evaluate, in the same manner as management, the
underlying trends in the Group's operational performance on a
comparable basis, period on period.
Adjusted EBITDA reconciliation
EUR '000 For the year ended
31 December
================================ =====================
2022 2021
================================ ========== =========
Intangible assets amortisation
(Note 8) 22,234 15,303
Tangible assets depreciation
(Note 9) 4,790 4,129
Right of use depreciation 3,369 2,435
-------------------------------- ---------- ---------
Depreciation and amortization 30,393 21,867
Net finance costs and share
of net loss of associates 4,763 7,391
Profit before tax 27,976 17,669
-------------------------------- ---------- ---------
EBITDA 63,132 46,927
M&A-related expenses (Note
5) 7,941 789
Non-recurring IPO-related
expenses - 12,943
Strategic transformation
expenses 5,209 2,688
Share-based compensation 5,311 6,373
-------------------------------- ---------- ---------
Adjusting items 18,461 22,793
Adjusted EBITDA 81,593 69,720
================================ ========== =========
Adjusted EBITDA margin
Adjusted EBITDA margin represents Adjusted EBITDA for the period
divided by Net energy and services sales.
Adjusted earnings (net profit)
Adjusted earnings are defined as profit after tax before
adjusting items:
Adjusting item Definition Exclusion justification
========================== ============================== =================================
Amortisation of acquired Amortisation of assets The Group acquired
intangibles recognised at the time a number of companies
of an acquisition (primarily in the past and plans
ADS, Sygic and Webeye) further acquisitions
in the future. The
item is prone to volatility
from period to period
depending on the level
of M&A.
-------------------------- ------------------------------ ---------------------------------
Amortisation due Accelerated amortisation Strategic IT transformation
to transformational of assets being replaced programme of the Group
useful life changes by strategic transformation is replacing selected
of the Group softwares before their
originally estimated
useful life. This may
also include early
fixed asset write-offs.
Amortisation of such
assets has been accelerated
and abnormally high
difference between
original and accelerated
depreciation was excluded
to allow period on
period result comparability.
The item adjusted in
2020-2022 represents
assets replaced by
strategic IT transformation
by the end of 2022,
however, decisions
may be taken as the
Group continues with
its strategic IT transformation
in 2023, which may
lead to new assets
being replaced and
either accelerated
or written-off. The
Group expects this
adjustment to be relevant
until 2024, although,
no significant costs
are currently expected
to be adjusted in 2023
and 2024.
-------------------------- ------------------------------ ---------------------------------
Adjusting items affecting Items recognised in Justifications for
Adjusted EBITDA the preceding table, each item are listed
which reconciles EBITDA in the preceding table.
to Adjusted EBITDA
-------------------------- ------------------------------ ---------------------------------
Tax effect Decrease in tax expense Tax effect of above
as a result of above adjustments is excluded
adjustments to adjust the impact
on after tax profit.
-------------------------- ------------------------------ ---------------------------------
The Group believes this measure is relevant to an understanding
of its financial performance absent the impact of abnormally high
levels of amortisation resulting from acquisitions and from
technology transformation programmes.
Adjusted earnings reconciliation
EUR '000 For the year ended
31 December
====================================== =====================
2022 2021
====================================== ========== =========
Profit for the year 17,696 9,650
Amortisation of acquired intangibles 6,562 5,419
Amortisation due to transformational
useful life changes 1,864 1,717
Adjusting items affecting Adjusted
EBITDA 18,461 22,793
Tax effect (3,029) (3,801)
Adjusted earnings (net profit) 41,554 35,778
====================================== ========== =========
Adjusted earnings per share
Adjusted earnings per share is calculated by dividing the
adjusted net profit for the period attributable to equity holders
by the weighted average number of ordinary shares outstanding
during the period. See Note 10 for further information.
Adjusted effective tax rate
Adjusted effective tax rate is calculated by dividing the
adjusted tax expense by the adjusted profit before tax. The
adjustments represent adjusting items affecting adjusted earnings.
See Note 7 for further information.
Net debt/cash
Net debt/cash is calculated as cash and cash equivalents less
interest-bearing loans and borrowings.
Transformational capital expenditure
Transformational capital expenditure represents investments
intended to create a new product or service, or significantly
enhance an existing one, in order to increase Group's revenue
potential. This also includes systems and processed improvements to
improve services provided to customers.
6. Finance Costs
Finance costs for the respective periods were as follows:
EUR '000 For the year ended
31 December
======================= =====================
2022 2021
======================= ========== =========
Bank guarantees fee 899 616
Interest expense 5,815 5,188
Factoring fee 1,348 698
Foreign exchange loss 692 2,380
Other 48 61
Total 8,802 8,943
======================= ========== =========
The Group manages its foreign currency risk by using foreign
currency forwards and swaps .
7. Income Tax
Corporate income tax for companies in the Czech Republic and
United Kingdom for the years 2021 and 2022 was 19%.
WAG Iberia, together with all the Alava tax resident companies
of ADS sub-group (Reivalsa, Trofa, Arraia Oil, Arraia Autopistas
and Liserteco 24h), formed a consolidation tax group for CIT
purposes beginning on 1 April 2019. Spanish corporate income tax is
24% (2021: 24%).
Structure of the income tax for the respective periods is as
follows:
EUR '000 For the year ended 31 December
============================================================= =================================
2022 2021
============================================================= ================== =============
Current income tax charge 12,148 7,679
Adjustments in respect of current income tax of prior years 495 112
Deferred tax (2,363) 228
Total 10,280 8,019
============================================================= ================== =============
Reconciliation of tax expense and the accounting profit
multiplied by the Company domestic tax rate for the below
periods:
EUR '000 For the year ended 31 December
=================================================================================== =================================
2022 2021
=================================================================================== ================ ===============
Accounting profit before tax 27,976 17,669
=================================================================================== ================ ===============
At UK's statutory income tax rate of 19% (2021: 19%) 5,316 3,357
Adjustments in respect of current income tax of prior years 495 112
Effect of different tax rates in other countries of the Group 30 507
Non-deductible expenses (M&A related) 1,350 84
Non-deductible expenses (IPO related) - 1,368
Non-deductible expenses (other) 1,857 1,314
Share-based payments 1,020 700
Net investment hedge 260 468
Effect of accumulated tax loss claimed in the current period (68) (36)
Effect of unrecognised deferred tax assets relating to tax losses of current
period 20 145
At the effective income tax rate of 36.75% 45.38%
Income tax expense reported in the statement of profit or loss 10,280 8,019
----------------------------------------------------------------------------------- ---------------- ---------------
Adjusted effective tax rate is as follows:
EUR '000 For the year ended 31 December
========================================================== =================================
2022 2021
========================================================== ================ ===============
Accounting profit before tax 27,976 17,669
Adjusting items affecting adjusted EBITDA 18,461 22,793
Amortisation of acquired intangibles 6,562 5,419
Amortisation due to transformational useful life changes 1,864 1,717
---------------------------------------------------------- ---------------- ---------------
Adjusted profit before tax (A) 54,863 47,598
Accounting tax expense 10,280 8,019
Tax effect of above adjustments 3,029 3,801
---------------------------------------------------------- ---------------- ---------------
Adjusted tax expense (B) 13,309 11,820
Adjusted earnings (A-B) 41,554 35,778
Adjusted effective tax rate (B/A) 24.26% 24.83%
---------------------------------------------------------- ---------------- ---------------
Unused tax losses, for which no deferred tax asset has been
recognised were as follows:
EUR '000 31 December 31 December
2022 2021
============================= ============ ============
Unrecognised tax losses
expiring by the end of:
31 December 2022 - 210
31 December 2023 210 279
31 December 2024 and after 1,240 813
No expiry date 444 942
----------------------------- ------------ ------------
Total unrecognised tax
losses 1,894 2,244
Potential tax benefit 360 426
----------------------------- ------------ ------------
The unused tax losses were incurred by dormant subsidiaries that
are not likely to generate taxable income in the foreseeable
future.
Deferred tax balances and movements:
EUR '000 1 January 2022 Business (Charged) Charged to Translation 31 December
combinations credited to equity differences 2022
profit or loss
================== ============== =============== ============== =============== =============== ===============
Difference between
net book value of
fixed assets for
accounting and
tax purposes (7,522) (2,747) (243) - 10 (10,502)
Allowances to
receivables 1,638 - 1,273 - 65 2,976
Provisions for
liabilities and
charges 1,454 - 94 - 37 1,585
Tax losses 148 - 193 - 4 345
Tax benefit from
pre-acquisition
reserves 6,423 - (480) - - 5,943
Other 6 (49) 1,526 - (2) 1,481
------------------ -------------- --------------- -------------- --------------- --------------- ---------------
Net deferred tax
asset/(liability) 2,147 (2,796) 2,363 - 114 1,828
================== ============== =============== ============== =============== =============== ===============
Recognised
deferred tax
asset 7,642 - 2,757 - 106 10,505
================== ============== =============== ============== =============== =============== ===============
Recognised
deferred tax
liability (5,495) (2,796) (394) - 8 (8,677)
================== ============== =============== ============== =============== =============== ===============
EUR '000 1 January 2021 Business (Charged) Charged to Translation 31 December
combinations credited to equity differences 2021
profit or loss
================== ============== =============== ============== =============== =============== ===============
Difference between
net book value of
fixed assets for
accounting and
tax purposes (6,499) (946) (63) - (14) (7,522)
Allowances to
receivables 1,994 - (443) - 87 1,638
Provisions for
liabilities and
charges 1,276 - 119 - 59 1,454
Tax losses 157 - (15) - 6 148
Tax benefit from
pre-acquisition
reserves 6,995 - (572) - - 6,423
Other (724) - 746 - (16) 6
------------------ -------------- --------------- -------------- --------------- --------------- ---------------
Net deferred tax
asset/(liability) 3,199 (946) (228) - 122 2,147
================== ============== =============== ============== =============== =============== ===============
Recognised
deferred tax
asset 7,057 - 463 - 122 7,642
================== ============== =============== ============== =============== =============== ===============
Recognised
deferred tax
liability (3,858) (946) (691) - - (5,495)
================== ============== =============== ============== =============== =============== ===============
The Group offsets tax assets and liabilities if and only if it
has a legally enforceable right to set off current tax assets and
current tax liabilities and the deferred tax assets and deferred
tax liabilities relate to income taxes levied by the same tax
authority.
Direct subsidiaries of the Company, W.A.G. payment solutions,
a.s. and its subsidiaries, have undistributed earnings of EUR
195,685 thousand (2021: EUR 154,840 thousand) which, if paid out as
dividends to the Company, would be subject to 5% withholding tax.
An assessable temporary difference exists, but no deferred tax
liability has been recognised as the Group is able to control the
timing of distributions from this subsidiary and is not expected to
distribute these profits in the foreseeable future.
8. Intangible Assets
Cost of intangible assets subject to amortisation:
EUR '000 Goodwill Client Internal Patents External Other Internal External Total
relationships software and rights software intangible assets in assets in
development assets progress progress
============ ======== ============= =========== ========== ========== ========== ========= ========== =======
1 January
2021 103,788 24,167 39,853 5,460 20,612 31 10,788 1,338 206,037
============ ======== ============= =========== ========== ========== ========== ========= ========== =======
Additions - 113 18,738 - 2,077 - 7,647 - 28,575
Acquisition
of a
subsidiary - 4,965 - - 77 - - - 5,042
Transfer - - - - 915 - - (915) -
Disposals - - - - (155) - (124) - (279)
Translation
differences 1,410 - 2,298 5 719 - 747 36 5,215
============ ======== ============= =========== ========== ========== ========== ========= ========== =======
31 December
2021 105,198 29,245 60,889 5,465 24,245 31 19,058 459 244,590
============ ======== ============= =========== ========== ========== ========== ========= ========== =======
Additions - - 21,592 - 2,398 - 8,302 3,291 35,583
Acquisition
of a
subsidiary 31,305 21,080 5,898 105 298 - - - 58,686
Transfer - - 17,149 - - - (16,972) (177) -
Disposals - - (69) - (24) - (35) - (128)
Translation
differences 712 (102) 2,579 - 269 - 430 (4) 3,884
============ ======== ============= =========== ========== ========== ========== ========= ========== =======
31 December
2022 137,215 50,223 108,038 5,570 27,186 31 10,783 3,569 342,615
============ ======== ============= =========== ========== ========== ========== ========= ========== =======
Accumulated amortisation and impairment of intangible assets
subject to amortisation:
EUR '000 Goodwill Client Internal Patents External Other Assets in Total
relationships software and software intangible progress
development rights assets
============== ========== ============== ============ ========== =========== =========== ========== ==========
1 January
2021 - (8,837) (13,740) (2,729) (9,343) (24) - (34,673)
============== ========== ============== ============ ========== =========== =========== ========== ==========
Amortisation - (2,850) (9,246) (5) (3,200) (2) - (15,303)
Acquisition
of a
subsidiary - - - - (61) - - (61)
Disposals - - - - 155 - - 155
Translation
differences - - (981) (3) (271) - - (1,255)
============== ========== ============== ============ ========== =========== =========== ========== ==========
31 December
2021 - (11,687) (23,967) (2,737) (12,720) (26) - (51,137)
============== ========== ============== ============ ========== =========== =========== ========== ==========
Amortisation - (4,024) (14,512) (28) (3,668) (2) - (22,234)
Disposals - - 69 - 10 - - 79
Translation
differences - - (974) (2) (176) - - (1,152)
============== ========== ============== ============ ========== =========== =========== ========== ==========
31 December
2022 - (15,711) (39,384) (2,767) (16,554) (28) - (74,444)
============== ========== ============== ============ ========== =========== =========== ========== ==========
Net book value:
EUR '000 Goodwill Client Internal Patents External Other Internal External Total
relationships software and software intangible assets assets
development rights assets in in
progress progress
========== ========= ============== ============ ========= ========= =========== --------- ========= ========
Net book
value
at 31
December
2021 105,198 17,558 36,922 2,728 11,525 5 19,058 459 193,453
Net book
value
========= ============== ============ ========= ========= =========== ========= ========= ========
at 31
December
2022 137,215 34,512 68,654 2,803 10,632 3 10,783 3,569 268,171
========== ========= ============== ============ ========= ========= =========== ========= ========= ========
The table below presents carrying amount and remaining
amortisation period of individual intangible assets that are
considered material to the Group 's consolidated financial
statements:
As at 31 December As at 31 December
2022 2021
========================
Net book Remaining Net book Remaining
value useful value useful
Individual asset (in '000 life (in (in '000 life (in
name EUR) months) EUR) months)
======================== ========== ========== ========== ==========
Customer relationships
- ADS 7,306 60 8,767 72
Customer relationships
- Webeye 19,794 113 - -
Internal software
- EETS toll platform 15,046 62 4,896 74
Internal software
- SAP 6,658 83 3,780 95
Internal software
- Webeye platform 6,265 55 - -
======================== ========== ========== ========== ==========
EETS stands for European Electronic Toll Service, an initiative
from the European Union to create a simpler framework for paying
toll in Europe by use of single on-board unit for all toll systems
within EU. The Group developed a platform enabling its
EETS-certified OBUs to make toll payments in multiple
countries.
Internal assets in progress consist of assets where the
development phase has not yet been completed.
The Group capitalised employee expenses and cost of materials
and services used or consumed in generating the intangible
asset.
Research and development costs that were not capitalised and
are, therefore, recognised expenses are as follows:
EUR '000 For the year ended
31 December
======================= =====================
2022 2021
======================= ========== =========
Expensed research and
development costs 3,331 5,024
----------------------- ---------- ---------
Impairment testing
Goodwill acquired through business combinations is allocated to
the respective CGUs for impairment testing.
Carrying amount of the goodwill allocated to each of the
CGUs:
EUR '000 31 December 31 December
2022 2021
================== ============ ============
Energy 40,180 40,180
Navigation 34,610 34,579
Fleet management
solutions 57,963 25,996
Tax refund 2,401 2,382
Toll 2,061 2,061
------------------ ------------ ------------
Total 137,215 105,198
------------------ ------------ ------------
The recoverable amount of CGUs has been determined based on a
value-in-use calculation using cash flow projections from financial
budgets and forecast approved by the Board covering a five-year
period, which shows growth in revenues.
Key assumptions used for impairment testing
Discounted cash flow model is based on the following key
assumptions:
-- Discount rate
-- Net energy and services sales for Energy CGU; revenues for
Navigation, Fleet management solutions and Tax refund CGUs
-- Long-term revenue growth rate
Net energy and services sales and revenue growth were determined
by management separately for each CGU. They are based on the
knowledge of each particular market, taking into account the
historical development of revenues, estimated macroeconomic
developments in individual regions and the Group's plans regarding
new products development, growth opportunities and market share
expansion. Estimated net energy and services sales and revenue
growth represent the best possible assumption of the Group's
management considering the future development as at the end of the
period.
Discount rate reflects specific risks relating to the industry
in which the Group operates. The discount rate used is based on the
weighted average cost of capital ("WACC") of the Group as presumed
by Capital Asset Pricing Model.
The table below shows key assumptions used in the value-in-use
calculations for material CGUs:
31 December 31 December
2022 2021
============================ ============ ============
Energy CGU
Pre-tax discount rate 9.5% 10.0%
Net energy and services
sales growth rate* 1.9% 0.1%
Long-term growth rate 1.8% 1.8%
Navigation CGU
Pre-tax discount rate 12.0% 12.0%
Revenue growth rate* 20.0% 25.2%
Long-term growth rate 3.0% 2.0%
Fleet management solutions
CGU
Pre-tax discount rate 12.0% 11.0%
Net energy and services
sales growth rate* 17.0% 18.9%
Long-term growth rate 3.0% 2.0%
Tax refund CGU
Pre-tax discount rate 10.0% 10.0%
Revenue growth rate* 10.1% 2.0%
Long-term growth rate 1.8% 1.8%
============================ ============ ============
* Average over 5-year period.
Toll CGU was not significant.
The Group has considered the potential impact of climate change
in impairment tests. For all CGUs except Fleet management
solutions, additional sensitivities of discounted cash-flows were
modelled to determine break-even increase in operating and capital
expenses and a combination of revenue decrease and expense
increase. Reasonably possible change in operating and capital
expenses does not lead to any impairment, climate change impact on
recoverable amounts and useful life of non-financial assets is thus
not considered to be significant for these CGUs.
Fleet management solutions recoverable amount is closer to the
carrying amount than all other CGUs. A combination of revenue
decrease and operating and capital expenses increase was therefore
included in Fleet management solutions CGU base model.
Sensitivities of discounted cash-flows described below directly
include the expected climate change impact, which would either lead
to breakeven or to a significant impairment.
Energy
The recoverable amount is estimated to exceed the carrying
amount of the CGU at 31 December 2022 by EUR 28,140 thousand.
Discount rate used in the value-in-use calculation would have to
increase to 12.3% for the recoverable amount to be equal to its
carrying amount.
Net energy and services sales used in the value-in-use
calculation would have to decrease by 26.0% for the recoverable
amount to be equal to its carrying amount.
Long-term revenue growth rate would have to decrease to -4.5%
for the recoverable amount to be equal to its carrying amount.
Navigation
The recoverable amount is estimated to exceed the carrying
amount of the CGU at 31 December 2022 by EUR 78,405 thousand.
Discount rate used in the value-in-use calculation would have to
increase to 22.1% for the recoverable amount to be equal to its
carrying amount.
Revenue used in the value-in-use calculation would have to
decrease by 28.2% for the recoverable amount to be equal to its
carrying amount.
Long-term revenue growth rate would have to decrease to -33.4%
for the recoverable amount to be equal to its carrying amount.
Fleet management solutions
The recoverable amount is estimated to exceed the carrying
amount of the CGU at 31 December 2022 by EUR 5,845 thousand.
Discount rate used in the value-in-use calculation would have to
increase to 12.4% for the recoverable amount to be equal to its
carrying amount and to 12.7% for a significant impairment to
occur.
Revenue used in the value-in-use calculation would have to
decrease by 1.7% for the recoverable amount to be equal to its
carrying amount and by 3.0% for a significant impairment to
occur.
Long-term revenue growth rate would have to decrease to 2.1% for
the recoverable amount to be equal to its carrying amount and to
1.3% for a significant impairment to occur.
Tax refund
The recoverable amount is estimated to exceed the carrying
amount of the CGU at 31 December 2022 by EUR 9,547 thousand.
Discount rate used in the value-in-use calculation would have to
increase to 25.5% for the recoverable amount to be equal to its
carrying amount.
Revenue used in the value-in-use calculation would have to
decrease by 27.0% for the recoverable amount to be equal to its
carrying amount.
Reasonably possible change in long-term revenue growth rate of
1.80% does not lead to any impairment.
9. Property, Plant And Equipment
Cost of property, plant and equipment:
EUR '000 Lands Leasehold Machinery Vehicles, Tangibles Total
and Buildings improvements and equipment Furniture in progress
and fixtures
========================= =============== ============== =============== ============== ============= ========
1 January 2021 23,992 3,601 19,510 5,746 1,555 54,404
========================= =============== ============== =============== ============== ============= ========
Additions 1,768 432 2,762 213 5 5,180
Acquisition of
a subsidiary - - - 557 - 557
Disposals - (41) (119) (1,212) (10) (1,382)
Translation differences 631 173 705 291 23 1,823
=========================
31 December
2021 26,391 4,165 22,858 5,595 1,573 60,582
========================= =============== ============== =============== ============== ============= ========
Additions 1,551 380 3,413 184 2,073 7,601
Acquisition of
a subsidiary 14 - 1,998 128 - 2,140
Disposals - (7) (641) (895) (4) (1,547)
Translation differences 238 99 367 135 (61) 778
========================= =============== ============== =============== ============== ============= ========
31 December
2022 28,194 4,637 27,995 5,147 3,581 69,554
========================= =============== ============== =============== ============== ============= ========
Accumulated depreciation and impairment of property, plant and
equipment:
EUR '000 Lands Leasehold Machinery Vehicles, Tangibles Total
and Buildings improvements and equipment Furniture in progress
and fixtures
========================= =============== ============== =============== ============== ============= ==========
1 January 2021 (4,282) (1,417) (12,215) (3,515) - (21,429)
========================= =============== ============== =============== ============== ============= ==========
Depreciation
charge (569) (590) (2,126) (844) - (4,129)
Acquisition of
a subsidiary - - - (448) - (448)
Disposals - 10 113 1,056 - 1,179
Translation differences (181) (108) (447) (256) - (992)
========================= =============== ============== =============== ============== ============= ==========
31 December
2021 (5,032) (2,105) (14,675) (4,007) - (25,819)
========================= =============== ============== =============== ============== ============= ==========
Depreciation
charge (834) (724) (2,496) (735) - (4,789)
Disposals - 2 626 729 - 1,357
Translation differences (77) (71) (237) (92) - (477)
========================= =============== ============== =============== ============== ============= ==========
31 December
2022 (5,943) (2,898) (16,782) (4,105) - (29,728)
========================= =============== ============== =============== ============== ============= ==========
Net book value of property, plant and equipment:
EUR '000 Lands Leasehold Machinery Vehicles, Tangibles Total
and Buildings improvements and equipment Furniture in progress
and fixtures
================ =============== ============== =============== ============== ============= =======
Net book value
at 31 December
2021 21,359 2,060 8,183 1,588 1,573 34,763
Net book value
=============== ============== =============== ============== ============= =======
at 31 December
2022 22,251 1,739 11,213 1,042 3,581 39,826
================ =============== ============== =============== ============== ============= =======
Land, buildings and machinery and equipment are subject to
pledge in respect of bank loans:
EUR '000 31 December 31 December
2022 2021
====================== ============ ============
Pledged property,
plant and equipment 39,467 34,544
---------------------- ------------ ------------
10. Earnings Per Share
All ordinary shares have the same rights. Class B share was
excluded from earnings per share ("EPS") calculation as it had no
voting rights, rights to distributions or rights to the return of
capital on winding up.
Basic EPS is calculated by dividing the net profit for the
period attributable to equity holders of the Group by the weighted
average number of ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the net profit for the
period attributable to equity holders of the Group by the weighted
average number of ordinary shares outstanding during the period,
plus the weighted average number of shares that would be issued if
all dilutive potential ordinary shares were converted into ordinary
shares.
Adjusted basic EPS is calculated by dividing the Adjusted
earnings (net profit) for the period attributable to equity holders
by the weighted average number of ordinary shares outstanding
during the period.
The following reflects the income and share data used in
calculating EPS:
For the year
ended 31 December
========================================== ==========================
2022 2021
========================================== ============ ============
Net profit attributable to equity
holders (EUR '000) 16,630 9,148
========================================== ============ ============
Basic weighted average number of
shares 688,911,333 595,582,785
Effects of dilution from share options 816,306 1,483,248
Total number of shares used in computing
dilutive earnings per share 689,727,639 597,066,033
------------------------------------------ ------------ ------------
Basic earnings per share (cents/share) 2.41 1.54
Diluted earnings per share (cents/share) 2.41 1.53
========================================== ============ ============
Adjusted earnings per share measures:
For the year
ended 31 December
======================================= ==========================
2022 2021
======================================= ============ ============
Net profit attributable to equity
holders (EUR '000) 16,630 9,148
======================================= ============ ============
Adjusting items affecting Adjusted
EBITDA (Note 5) 18,461 22,793
Amortisation of acquired intangibles* 5,499 4,297
Amortisation due to transformational
useful life changes 1,864 1,717
Tax impact of above adjustments* (2,813) (3,573)
======================================= ============ ============
Adjusted net profit attributable
to equity holders (EUR '000) 39,641 34,382
======================================= ============ ============
Basic weighted average number of
shares 688,911,333 595,582,785
======================================= ============ ============
Adjusted basic earnings per share
(cents/share) 5.75 5.77
======================================= ============ ============
Diluted weighted average number
of shares 689,727,639 597,066,033
======================================= ============ ============
Adjusted dilutive earnings per
share (cents/share) 5.75 5.76
======================================= ============ ============
*non-controlling interests impact was excluded
Options
Options granted to employees under Share-based payments are
considered to be potential ordinary shares. They have been included
in the determination of diluted earnings per share if the required
performance criteria would have been met based on the Group's
performance up to the reporting date, and to the extent to which
they are dilutive. The options have not been included in the
determination of basic earnings per share as their performance
conditions have not been met.
11. Interest Bearing Loans And Borrowings
31 December 2022 31 December 2021
============== ========= ========= =========== ================================ =================================
Currency Maturity Interest Total Amount in Amount in Total Amount in Amount in
rate limit in original EUR'000 limit in original EUR'000
currency currency currency currency
============== ========= ========= =========== ========= ========= ========== ========== ========= ==========
Bank loans
Senior
multicurrency
term and
revolving
facilities 3M EURIBOR
agreement* EUR 2025/05 + margin - - - 47,500 30,898 30,898
Senior
multicurrency
term and
revolving
facilities 3M EURIBOR
agreement* EUR 2025/05 + margin - - - 47,500 46,843 46,843
Senior
multicurrency
term and
revolving
facilities 3M EURIBOR
agreement* EUR 2025/05 + margin - - - 95,000 84,510 84,510
Multicurrency
term and
revolving
facilities 3M EURIBOR
agreement** EUR 2027/09 + margin 45,000 42,941 42,941 - - -
Multicurrency
term and
revolving
facilities 3M EURIBOR
agreement** EUR 2027/09 + margin 68,000 64,889 64,889 - - -
Multicurrency
term and
revolving
facilities 3M EURIBOR
agreement** EUR 2027/09 + margin 37,000 35,307 35,307 - - -
Other loans CZK fixed rate 393 393 17 5,277 5,277 212
============== ==================== ========== ========= ========= ========== ========== ========= ==========
Revolving facilities and overdrafts - 2 2 - 10 10
------------------------------------------------- --------- --------- ---------- ---------- --------- ----------
Total EUR 143,156 162,473
============== ================================= ========= ========= ========== ========== ========= ==========
Current EUR 21,884 18,894
============== ================================= ========= ========= ========== ========== ========= ==========
Non-current EUR 121,272 143,579
============== ================================= ========= ========= ========== ========== ========= ==========
*On 27 May 2019, the Group signed senior multicurrency term and
revolving facilities agreements ("old club financing agreement")
with following banks:
a. BNP Paribas S.A. acting through its branch BNP Paribas S.A.,
pobočka Česká republika,
b. Citibank Europe plc acting through its branch Citibank Europe
plc, organizační slo ka,
c. Česká spořitelna, a.s.,
d. Československá obchodní banka, a. s.,
e. HSBC Bank plc acting through its branch HSBC Bank plc - pobočka Praha,
f. Komerční banka, a.s.,
g. Raiffeisenbank a.s.,
h. UniCredit Bank Czech Republic and Slovakia, a.s.
Under this financing, up to EUR 60 million was available for the
Group for revolving facilities and overdraft accounts, and up to
EUR 113 million for bank guarantees.
**On 22 September 2022, the Group signed new multicurrency term
and revolving facilities agreement ("new club financing agreement")
with following banks:
a. BNP Paribas S.A. acting through its branch BNP Paribas S.A.,
pobočka Česká republika,
b. Citibank Europe plc acting through its branch Citibank Europe
plc, organizační slo ka,
c. Česká spořitelna, a.s.,
d. Československá obchodní banka, a. s.,
e. Komerční banka, a.s.,
f. Raiffeisenbank a.s.,
g. UniCredit Bank Czech Republic and Slovakia, a.s.
h. Powszechna Kasa Oszczednosci Bank Polski Spolka Akcyjna
acting through PKO BP S.A., Czech branch
i. Česká exportní banka, a.s.
The new club financing agreement consists of four tranches:
-- EUR 150 million committed facility A for the refinancing of
all existing term loan indebtedness;
-- EUR 180 million committed facility B for permitted acquisitions and capital expenditure;
-- EUR 235 million committed auxiliary credit facility, of which
EUR 85 million may be utilised by way of revolving loans, and EUR
150 million may be utilised by way of ancillary facilities in the
form of bank guarantees, letters of credit, or an overdraft up to
EUR 25 million; and
-- EUR 150 million uncommitted incremental facility for
permitted acquisitions, capital expenditure, and auxiliary credit
facilities up to EUR 50 million of which not more than EUR 25
million can be utilised as revolving loans.
The applicable interest rate margin for the new club financing
shall be determined according to the following margin grid:
Net leverage Facility
A and B
============= ===========
> 3.25 2.30% p.a.
<= 3.25 >= 2.10% p.a.
2.50
< 2.50 1.90% p.a.
------------- -----------
The Group has not drawn any loans from a non-bank entity.
The interest expense relating to bank loans and borrowings is
presented in Note 6.
Interest bearing loans and borrowings are non-derivative
financial liabilities carried at amortised cost.
As at 31 December 2022, the following pledges have been made as
a security for aforementioned loans:
-- pledge of shares (mainly W.A.G payment solution, a.s.);
-- pledge of receivables;
-- pledge of bank accounts;
-- pledge of trademarks.
As at 31 December 2021, the following pledges had been made as a
security for aforementioned loans:
-- pledge of shares (W.A.G payment solution, a.s. shares were fully pledged after Admission);
-- pledge of receivables;
-- pledge of bank accounts;
-- pledge of real estate (Note 9);
-- pledge of movable assets (Note 9); and
-- pledge of trademarks.
The Group complied with all financial covenants under the old
and new club financing agreements as of 31 December 2022 and 31
December 2021, and forecasts compliance for the going concern
period.
Financial covenant terms of the new club financing facilities
were as follows:
Covenant Calculation Target Actual
31 December
2022
================ ================================= =========== =============
the ratio of adjusted EBITDA
Interest cover to finance charges Min 4.00 11.20
the ratio of total net debt
Net leverage to adjusted EBITDA Max 4.00* 0.13
Adjusted net the ratio of the adjusted total
leverage net debt to adjusted EBITDA Max 6.50 1.95
---------------- --------------------------------- ----------- -------------
*the covenant shall not exceed 3.75 in 2024 and 3.50 in 2025 and
onwards
Under the old club financing facilities, the Group was required
to comply with the following financial covenants:
-- interest cover (the ratio of adjusted EBITDA to interest payable) shall not be less than 5;
-- net leverage (the ratio of total net debt to Adjusted EBITDA)
shall not exceed 3.75 in 2021 and 3.5 in 2022;
-- the borrowing base covenant (the ratio of the sum of
outstanding amount of revolving facility, outstanding bank
guarantees less cash and cash equivalents, to trade receivables)
shall not exceed 1.00; and
-- adjusted net leverage (the ratio of the adjusted total net
debt to Adjusted EBITDA) shall not exceed 6.50.
For the purposes of covenants calculation, alternative
performance measures are defined differently by the new club
financing agreement:
-- adjusted EBITDA represents full year adjusted EBITDA of
companies acquired during the period;
-- net debt includes lease liabilities and derivative liabilities, and
-- adjusted net debt includes face amount of guarantees, bonds,
standby or documentary letter of credit or any other instrument
issued by a bank or financial institution in respect of any
liability of the Group.
Explanation of Alternative Performance Measures
Category Name Definition
Financial Adjusted EBITDA Adjusted EBITDA represents profit before
tax, finance income and costs, depreciation,
amortisation, M&A-related expenses,
non-recurring IPO-related expenses,
strategic transformation expenses and
pre-IPO share-based compensation.
---------------------- --------------------------------------------------
Financial Adjusted EBITDA Adjusted EBITDA margin represents Adjusted
margin EBITDA for the period divided by Net
energy and services sales
---------------------- --------------------------------------------------
Financial Adjusted effective Adjusted effective tax rate is calculated
tax rate 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 Adjusted basic EPS is calculated by
earnings per share 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 Net debt / Net cash is calculated as
debt Cash and cash equivalents less Interest-bearing
loans and borrowings.
---------------------- --------------------------------------------------
Financial Net energy and Net energy and services sales represents
services sales 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 Growth in Net energy and services sales
and services sales excluding the net sales of the Group's
growth acquisitions in the current period.
In 2022, organic growth includes an
adjustment related to WebEye acquisition
to enhance year-on-year comparability.
---------------------- --------------------------------------------------
Financial Transformational Transformational capital expenditure
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 Average active payment solutions customers
payment solutions represents the number of customers who
customers 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 Average active payment solutions trucks
payment solutions represents the number of customer vehicles
trucks 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 Payment solutions transactions represents
transactions 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 Mobility solutions segment represents
segment 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 Payment solutions segment represents
segment core of Group's revenues, which are
based on re-occurring and frequent transactional
payments. The segment includes Energy
and Toll payments, which are typical
first choice of a new customer.
---------------------- --------------------------------------------------
Operational Net revenue retention Average net revenue retention represents,
for Eurowag only (i.e., excluding ADS,
Sygic and WebEye) , the average retained
proportion of the Group's net revenues
derived from its payment solutions and
tax refund customers during the entirety
of the previous years.
---------------------- --------------------------------------------------
Directors' Responsibility Statement Required under the
Disclosure and Transparency Rules
The responsibility statement below has been prepared in
connection with the Company's full Annual Report and Accounts for
the year ended 31 December 2022. Certain parts of that Report are
not included within this announcement. We confirm to the best of
our knowledge:
-- the Group Financial Statements, which have been prepared in
accordance with UK-adopted international accounting standards, give
a true and fair view of the assets, liabilities, financial position
and profit of the Group;
-- the Company Financial Statements, which have been prepared in
accordance with United Kingdom Accounting Standards, comprising FRS
101, give a true and fair view of the assets, liabilities and
financial position of the Company; and
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Group and Company, together with a description of the principal
risks and uncertainties that it faces.
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END
FR FZGMFFKNGFZZ
(END) Dow Jones Newswires
March 16, 2023 03:00 ET (07:00 GMT)
W.a.g Payment Solutions (LSE:WPS)
過去 株価チャート
から 11 2024 まで 12 2024
W.a.g Payment Solutions (LSE:WPS)
過去 株価チャート
から 12 2023 まで 12 2024
