TIDMWPS

RNS Number : 3521Y

Eurowag

06 September 2022

6 September 2022

W.A.G payment solutions plc ("Eurowag", "EW" or the "Group")

Interim results for the six months ended 30 June 2022

DELIVERING STRONG AND RESILIENT GROWTH

W.A.G payment solutions plc ("Eurowag", "EW" or the "Group"), a leading pan-European integrated payments & mobility platform focused on the Commercial Road Transportation industry ("CRT"), today announces its interim results for the six-month period ended 30 June 2022.

Financial highlights

The Group achieved strong half-year results with growth in line with mid-term financial guidance.

-- Net energy and services sales(1) up 19.4% year-on-year to EUR87.0m, with organic growth(1) of 18.0% year-on-year;

-- Payment solutions(1) grew by 17.2% year-on-year to EUR63.5m, while mobility solutions(1) grew 25.7% year-on-year to EUR23.5m;

-- Adjusted EBITDA(1) up 5.7% to EUR35.0m resulting in adjusted EBITDA margin of 40.2% impacted by incremental PLC costs and WebEye consolidation;

-- Adjusted EBITDA margin(1) on a comparable basis, excluding WebEye consolidation, incremental PLC costs would be 43.3%;

-- Significant progress on transformational capital expenditure(1) plan with EUR13.3m spent, in line with mid-term guidance set at the IPO;

-- Net cash(1) position of EUR28.7m (gross cash of EUR181.5m) as at 30 June 2022 providing for significant leverage headroom to take advantage of strategic opportunities.

Growing scale and network within a high-quality payments-oriented business model and highly diversified revenue base, underpinned by strong net energy and services sales growth.

   --      Average active payment solutions customers(1) up 13.0% year-on-year to 16,523; 
   --      Average active payment solutions trucks(1) up 7.3% year-on-year to 87,626; 
   --      Payment solutions transactions(1) up 8.6% year-on-year to 17.7m; 
   --      Net revenue retention(1) for the last five years over 110%. 
 
 Key statutory financials                 6M2022    6M2021     YoY 
 Revenue from contracts with customers 
  (EURm)                                  1,160.8   784.4     48.0% 
                                         --------  -------  -------- 
 Profit before tax (EURm)                  13.4      12.4     8.1% 
                                         --------  -------  -------- 
 Basic EPS (cents/share)                   1.29      1.53    (15.7%) 
                                         --------  -------  -------- 
 
 
 Alternative performance measures        6M2022   6M2021     YoY 
 Net energy and services sales (EURm)     87.0     72.9     19.4% 
                                        -------  -------  --------- 
 Adjusted EBITDA (EURm)                   35.0     33.1      5.7% 
                                        -------  -------  --------- 
 Adjusted EBITDA margin (%)               40.2     45.4    (5.2 pp) 
                                        -------  -------  --------- 
 Adjusted basic EPS(1) (cents/share)      2.35     2.57     (8.6%) 
                                        -------  -------  --------- 
 

Strategic and operational highlights

-- Successfully managed volatile environment in fuel supplies (shortages, surging fuel prices, changing regulations) and increased resilience of the business.

-- Completed the acquisition of substantially all of the assets of WebEye Telematics Zrt. ("WebEye"), a leading fleet management solutions provider in Central and Eastern Europe, broadening the Group's customer base (non-Hungarian subsidiaries acquired on 16 May 2022 and Hungarian subsidiaries acquired on 1 July 2022).

-- Expanded our acceptance network with a focus on LNG to support the energy transition and decarbonization of the CRT industry. The total number of contracted LNG stations rose to 304, representing more than 50% of the European market.

-- Continued to strengthen our competitive moats by completing trial operations for EETS in Germany, the largest tolling market in Europe, resulting in the signing of the final admission by the German Toll Charger and going live. Germany represents the biggest share of toll transactions volumes across our business.

-- Simplified settlement and improved security by activating mobile payments on all owned truck parks, as well as in the acceptance network resulting in 388 POS ready for mobile payment.

-- Expanded the senior leadership team through key hires in the product and technology area to accelerate digital platform development.

-- Tax refund has become more flexible adapting to several regulatory changes in the legal framework across the EU countries. Our consulting services help clients navigate through additional complexity from the reciprocity agreements with countries outside the EU territory.

-- RoadLords app is now installed on more than 3m mobile devices across Europe with the active installation base reaching 600k drivers during the H1 2022. Engagement of the regular users/drivers increased by 25%.

-- Expanded the automation of credit scoring mechanism, allowing us to benefit from the digital client journey and tailor customer credit limit requirements.

-- Joined new consortium to advance Hydrogen for the CRT sector and engage across the eMobility sector to promote standards for e-Trucks.

Outlook

The Group has performed in line with management expectations year-to-date. Looking ahead, we estimate organic net energy and services sales for Q3 2022 of at least EUR44.5m which would represent strong LTM growth in excess of 19.0% year-on-year. In addition, Webeye's contribution to the top line for Q3 2022 is expected to be at least EUR3.5m.

During the first half of 2022, fuel supply risks and macroeconomic conditions have deteriorated, with inflation and higher fuel prices moderately impacting the Group's operations and operating expenses. Despite these challenges we expect to deliver a resilient full year performance, with Adjusted EBITDA for the year-to-date developing in line with expectations. While inflation, the post Covid-19 cost rebase and additional PLC costs continue to impact our profitability, we expect these incremental costs will be offset by the profit delivered from WebEye in the second half of the year.

Whilst the business has navigated with confidence through the challenging environment, the Directors note elevated risks and uncertainties with respect to the future of the European economy, and potential impacts of the sanctions related to imports of Russian oil introduced by the European Commission. Notwithstanding these headwinds, and assuming no significant worsening of the current environment, we remain confident in our future outlook and reaffirm our mid-term guidance.

Martin Vohánka, Founder and CEO, commented:

"Along with many other businesses across Europe, Eurowag has had to adapt to unprecedented circumstances over the past six months. Still, the Group has delivered a strong set of results, demonstrating the resilience of our business model, and highlighting the importance of our services to the CRT industry.

I am particularly pleased that we completed the WebEye acquisition and established a public market track-record of delivering value-accretive strategic M&A. Eurowag can now offer integrated payment and mobility solutions to significantly more customers across our core markets, and capitalise on the data from even more connected trucks to help our customers run their businesses more efficiently.

We continue to strengthen our senior leadership team with appointments in the product and technology areas, to accelerate the digital platform development. Our strong performance in the first half would not have been possible without the commitment of our people, so I would like to say thank you to all our employees."

Magdalena Bartoś, CFO said:

"Eurowag traded strongly in the first half and delivered significant organic growth in net revenue and adjusted EBITDA. Our business continues to grow scale, evidenced by the increasing number of active trucks using our payment solutions, and the expanding customer base provides more opportunities for effective cross-selling, which improves loyalty and drives revenue retention. Our robust balance sheet, which remains in a net cash position, provides significant headroom to further invest in our platform.

Looking ahead, whilst there continues to be a high level of uncertainty, our expectations for the full year of 2022 remain unchanged and we anticipate delivering results in line with our mid-term financial guidance. With a clear strategy, we believe Eurowag is well positioned to capitalise on further growth opportunities and will continue delivering sustainable long-term value for all our stakeholders."

Investor and analyst presentation today

Martin Vohánka (CEO) and Magdalena Bartoś (CFO) will host a virtual presentation and a Q&A session for investors and analysts today, 6 September 2022, at 9.00am BST. The presentation and webcast details are available on the Group's website at https://investors.eurowag.com

Please register to attend the investor presentation via the following link: https://www.lsegissuerservices.com/spark/WAGPAYMENTSOLUTIONS/events/f87d5021-326a-40f1-b3c9-4d5ded2885be

Enquiries

Eurowag

Tomáš Novotný

Head of Investor Relations

investors@eurowag.com

Instinctif Partners

Tim McCall, Galyna Kulachek, Bryn Woodward

IR and international media

eurowag@instinctif.com

About Eurowag

Eurowag was founded in 1995 and is a leading pan-European integrated payments & mobility platform focused on the Commercial Road Transportation ("CRT") industry. Eurowag's innovative solutions makes life simpler for small and medium businesses in the CRT industry across Europe through its unique combination of payments solutions, seamless technology, a data-driven digital eco-system and high-quality customer service. https://investors.eurowag.com

Strategic review

Our strategy has been developed with the aim of democratising the on-road mobility industry through a technological revolution. It is built on five core pillars that will enable Eurowag to capitalise on the opportunities that lie ahead and deliver growth for all our stakeholders.

In H1 2022, we demonstrated substantial progress against our strategy, differentiated our offerings, and grew scale and network within a high-quality payment-oriented business model and highly diversified revenue base.

   1.   Growth from existing customers. 

Through further innovation in core payment services, and integration and cross-selling with mobility services, we can retain and expand our existing customer relationships by continuing to meet their evolving needs. In H1 2022, the Group:

-- Expanded the acceptance network with a focus on LNG to support the energy transition and adoption of low carbon fuels.

-- Continued to strengthen our competitive moats by completing trial operations for EETS in Germany.

   --      Maintained strong net revenue retention above 110%. 
   2.   Geographic expansion and penetration. 

We apply our scalable business model to new markets serving both existing and new customers, thus expanding market share. In H1 2022, the Group:

-- Increased the number of Payment solutions active customers by 13%. The majority of the growth came from already established markets in the Southern and Central cluster.

-- Started to expand into the DACH region (Germany, Austria, Switzerland), establishing a new sales team of 15 strong industry experts in Germany with a focus on acquisition of new customers in this region which will support future growth.

   --      Continued the roll out of digital sales channels in Western Europe to expand its footprint. 
   3.   Go-to-market channel expansion. 

We continue to acquire new customers through our marketing strategy based on geographic clusters, and three sales channels (direct, indirect and digital) with an increasing focus on digital sales. In H1 2022, the Group:

-- Launched an end-to-end, fully automated digital customer acquisition, credit scoring and onboarding channel in the Czech Republic, Slovakia, Poland, Spain and France.

-- Built an extensive base of digital leads and achieved a high conversion rate for turning these leads into new active customers.

   4.   Digital platform development. 

We continue to develop our end-to-end platform to be a conduit for intermediate payments and data exchange between all parties, thereby connecting digital services and physical assets. This allows us to expand our client base to include shippers and freight forwarders, as well as seamlessly integrating third-party providers and financiers into our platform, thereby facilitating frictionless interactions among industry participants to create a fully connected marketplace. In H1 2022, the Group:

   --      Further developed the digital platform by expanding the pilot for receivables financing. 

-- Simplified settlement and improved security by activating mobile payments on all owned truck parks, as well as in the acceptance network.

-- Went live with SAP ERP with energy payments transactions processed and enriched in the new system.

   5.   Accretive M&A. 

We have a strong track record of identifying and executing strategic M&A.

-- On 15 May 2022 and 1 July 2022, Eurowag completed the acquisition of substantially all of the assets of WebEye Telematics Zrt., a leading fleet management solutions provider in Central and Eastern Europe. The transaction expands the Group's customer base, and provides WebEye's 5,000 customers, and over 58,000 connected trucks, which now have access to Eurowag's unrivalled range of integrated end-to-end payment mobility solutions.

-- The Group continues to screen acquisition targets that will create cross-sell and up-sell opportunities, generate cost and revenue synergies, and further develop our product and technology capabilities. We continue to actively manage a pipeline of future opportunities that can support our inorganic growth.

Operational review

The Group is structured with two business segments, which each deliver a range of services to clients, while also delivering cross and up selling opportunities.

 
 Payment solutions               Mobility solutions 
  Serve customers with            Provide a mix of re-occurring 
  mission critical needs          transaction revenue, recurring 
  and often serve as an           subscription and other fee-based 
  introduction to our services    revenue streams 
 Energy payments                 Tax-refund services and Consulting 
                                  Services 
 Toll payments                   Telematics 
                                 E-Fleet management 
                                 Location-based products and 
                                  services 
                                 Roadside services 
                                ----------------------------------- 
 

Payment solutions

Payments are a core part of our ecosystem and are comprised of economically efficient and secure means of energy payments through pre-pay or post-pay fuel cards, and toll payments by on-board units ("OBU"). They often serve as an introduction to our services for customers. Payment solutions grew by 17.2% year-on-year to EUR63.5m, representing 73% of total net energy and services sales.

Energy payments

Our energy payment solutions generate mainly re-ocurring transactional revenue through our network of acceptance points and bunkering sites located on major transportation routes. These offer customers a more efficient way to purchase and finance their energy needs while on the road, offering competitive prices for their energy at accessible locations across Europe, through pre-pay or post-pay fuel cards.

In H1 2022, to support our geographic expansion and penetration, we focused on adding acceptance points and bunkering sites (capacity extension or new sites) with focus on TEN-T corridors, both in traditional energy as well as alternative fuels. We extended our card acceptance network for traditional fuels by additional 104 locations to more than 17,000 in total.

Our business model is technology agnostic, with growing alternative fuels network and strong eMobility presence. Our key objective is to help our customers compete and grow in a low-carbon economy - and we use our position to facilitate the transition to low carbon fuels, including LNG. The Eurowag acceptance network now includes LNG and compressed natural gas (CNG) stations in 12 European countries, covering 304 LNG stations, with new stations being added almost daily.

As we continue reducing our carbon footprint with the shift to renewable electricity at our sites, we installed photovoltaic panels on truck park in the Arraia, Spain during 1H 2022. This will further contribute to reducing GHG emissions from our operations.

To support convenience, security and facilitate digital journey of our CRT clients, EW activated mobile payments on all our truck parks, as well as in the acceptance network in the first merchant countries (Czech Republic, Slovakia, Poland, Hungary, Germany, Belgium, Spain, Lithuania and Austria), resulting in 388 POS ready for mobile payment as of 30 June 2022.

Toll payments

The EU has recently increased the requirements for European member states to comply with the European Electronic Toll Service ("EETS"), aiming to create a harmonised EU-wide toll system to simplify the administrative burden and reduce the associated costs. We have taken the opportunity to build a proprietary EETS toll payment solution, that from the outset integrates with our other services, such as telematics, energy payment and fraud prevention.

In H1 2022, we ran a successful trial EETS operation in Germany. Germany is the single biggest toll volume domain in Europe and is located at the intersection of major European international transport routes according to EU TEN-T network, and EW is the first EETS provider to manage the certification procedure under a new mandatory regime. Pilot operations with real customers have been completed, resulting in the signing of the final admission by the German Toll Charger effective 1 August 2022. All prerequisites are met in order to successfully grow in Germany, which is the largest tolling market in Europe and represents the biggest share of toll transaction volumes in Eurowag.

Part of the competitive moat is not only to certify and operate new domains but also to manage the complexity of recertification in already certified Toll domains caused by certification of new domains. As expected, certification in Germany made recertification in Austria and Belgium necessary, which we also successfully underwent in Q2. This demonstrates that we are not only capable of certifying our system in new domains but also to keep our existing toll domains certified and operate successfully in a complex setup with many technical dependencies across toll domains.

We continue to expand the coverage in our core market of Central Europe. In the last few months, we have finished the technical implementation of private highways in Poland, which starts to be offered commercially. In addition, we are in active preparation for the start of EETS Czech Republic and Slovakia with aim to retain our strong position within Central and Eastern Europe as soon as these markets open up for EETS. In the meantime, we serve customers with currently available national toll service. In line with our strategy, we continue with certification of all available domains.

Mobility solutions

Through our mobility solutions segment, we offer customers tax refund services, telematics products, smart routing and other adjacent services. The segment provides a mix of re-occurring transactional revenue, recurring subscription and other fee-based revenue streams. Mobility solutions grew by 25.7% year-on-year to EUR23.5m, representing 27% of total net energy and services sales.

Tax refund and consulting services

Tax refund has continued to be one of the leading tax refund providers offering all clients of Eurowag a broad array of products and services. We offer tax refund services on standard VAT, ED partial refund, pre-financed VAT, and advance payment of excise duty ("APED"). Since January 2022, the product and service portfolio has been enhanced with a new type of refund. This type of tax refund includes hybrid financing, whereby the customers can decide which of the submitted transaction shall or shall not be financed. Alongside that, a customer can choose a standard refund with a financing limit, which allows the customers to decide which refundable tax amount shall be financed. These features create maximum flexibility for the customers to utilize the tax refund and its benefits.

During the reporting period, Tax refund has also improved the efficiency of its processes by implementing fully automated electronic submissions of tax refund applications in France, including customers based outside the European Union, as well as obtaining access to the Croatian tax refund portal, which also allows customers to request tax refunds from Croatia.

In 2022, Tax refund was impacted by legislative changes in the tax rate, which, in turn, affected the business model. These changes have an impact on the tax refund as refundable rates (e.g. Slovenia, Belgium, France, Italy) and VAT (e.g. Germany, Poland) were reduced by the governments in order to support businesses and consumers to respond to growing energy prices. Some of these changes are temporary, whilst others are permanent.

As part of its commitment to delivering an integrated offer, in close cooperation with an external partner Eurowag provides a range of broader consulting services to its customers. This includes supporting drivers and transport companies with the Minimum wage regulations across Europe, and providing advice and guidance around registering the necessary documents with local authorities.

The business also supports with CO2 emissions calculations which subsequently enables customers to compensate for these either financially or through certified projects.

The EU Commission rules for the road transport sector, Mobility Package I, represent a key challenge for transport companies across Europe as they include regulations on driving times, rest periods and tachographs, and a very important directive on posting of drivers including the minimum wage regulations in some EU countries. Eurowag provides a digital solution to enable customers to navigate Mobility package I, covering 12 languages.

Telematics

Combining advanced telematics data with state-of-the-art software enables us to provide value added fleet management services to our customers. Customers can easily track the real-time location of their fleet and other key indicators from the trucks such as mileage, fuel consumption, speed, load weight, driving time and idling. Users can also plan routes based on real truck and route parameters and get accurate estimations on the expected transport costs.

Telematics enable customers to optimise their fleet management processes; key innovative features include:

   --      Remote tachograph download; 
   --      Border crossing reports; 
   --      Travel allowance and European Road Transport Agreement (AETR) calculations; 
   --      Fuel transaction visualisation. 

Driving behaviour is also analysed via an in-house algorithm, which provides valuable tailored insights on drivers and outlines recommendations. The platform also supports the majority of electric vehicles, both Battery electric vehicles (BEVs) and Plug-in hybrid electric vehicles (PHEVs).

During H1 2022, we have added valuable new features to automate fleet operations and improve efficiency:

-- The new Maintenance Module helps our customers to manage vehicle maintenance plans and connect it with the utilisation and planning management. The automated workflows can be set up based on an odometer status event. There is also a possibility to setup customised reminders, deadlines and automated triggers.

-- We have improved the ETA near-real-time calculation and prediction by new insight - Border Crossing Times. The prediction of the time is based on Telematics Big Data, which we collect from all our telematics and toll units and is based on our proprietary analytical algorithms.

-- To improve the profitability and planning process, we have added a new Toll Costs Calculation and prediction based on the real truck and route parameters.

-- Our customers can now offer their unutilised vehicles to third-party fleets using the new Vehicle Sharing functionality to improve not only the overall fleet efficiency but also contribute to a solution tackling utilisation problem within the road-freight transportation industry.

-- To improve the transportation management efficiency, we have added new POI Alerts to inform dispatchers and shippers about vehicles arriving or leaving important locations, e.g. loading or unloading sites.

-- To help our customers to transition to low carbon future, we have developed a Calculation of Energy Consumption and GHG emissions tool. This tool can help our customers to calculate and communicate the emissions of a shipment in the value chain to help shippers understand and identify opportunities to reduce indirect (Scope 3) GHG emissions.

Additionally, we introduced new features to help our customers in Poland with:

-- Integration with the PUESC e-customs system developed by the Customs Agency in Poland, which enables the mandatory submission of electronic export declarations. We can now automate the process by creating a PUESC account and registering required information for the electronic declaration. Once a truck enters the territory of Poland the electronic declaration process is automatically triggered, leading to an easier and faster custom clearance process.

-- Integration with Trans. eu freight exchange to enable dispatchers to see the real-time recommendations for future transports. These recommendations are rated based on various parameters, such as distance and load weight, and provide information on expected costs and the final shipment price. Once selected, the shipment can be booked via the Trans.eu portal which can be seen on the dispatcher's dashboard as an actual planned route.

E-Fleet management

Customers can benefit from using a single telematics solution with fleets that combine standard diesel/petrol engines, battery electric vehicles, and plug-in hybrids. With an eMobility licence subscription, the on-board unit can read additional metrics such as state of charge, driving range, or battery status. With this data available, a dispatcher can plan a trip for an electric vehicle, manage home/company charging, or assess charging behavior of a plug-in hybrid vehicle user.

At the beginning of Q2, we started the next phase of the eTruck pilot project with DHL and installed Eurowag telematics unit into the first electric truck in the Czech Republic. Based on the collected data (e.g. state of charging or range), we can help our customers even more to lead their journey toward the electrification of their fleets.

Location based products and services

We offer smart navigation products and location-based services through our brand Sygic, one of the leaders in providing smart routing worldwide for both individual truck drivers and various size fleets.

Key highlights from H1 include:

-- New navigation functionalities aimed at reducing driver distraction and supporting road safety, while mirroring navigation instructions on a car display. A phone can also be operated as a stand-alone device with some extra and camera-based features used simultaneously.

-- We introduced an enhanced navigation feature over Low emission zones and Clear air zones in the UK. Using the latest map data combined with a vehicle profile allows our algorithm to find the best route over those zones.

During H1 2022, the Group's community-based trucking ecosystem linking drivers with each other and crowdsourcing unique trucking data, RoadLords app was installed on more than 3m mobile devices across Europe, whilst the active installation base has reached 600k drivers. The engagement of regular users/drivers has also improved by 25%.

Community or RoadLords truck drivers have already created more than 30,000 new trucking-related points of interest, including more than 12,000 new parking places suitable for tucks and 14,300 company addresses used for loading or unloading. During H1 2022, truck drivers informed the community about more than 18,000 road incidents and over 45,000 hazards or vehicles blocking the route.

To improve near-real-time visibility, during the reporting period, we added a new Share ETA functionality for drivers allowing them to share their position and ETA with shipper, forwarder, consignee, or dispatcher. We also added Toll Costs Calculation feature in order to provide more reliable planning based on more precise cost estimation.

Sygic's GPS navigation & eMobility app offers drivers an all-in-one solution with integrated payment for charging electric vehicles: it helps to find a charging station, get navigated to it and pay for a service.

Key developments in H1 2022 include:

-- Introduced simplified ways of connecting our eMobility Service Provider (EMSP) accounts with partners to enhance user experience. This helps both EW and partners expand our cooperation and share end-users both ways.

-- Cooperated with Plugsurfing, TomTom, Polyfazer, ChargeUp, eJoin, GreenWay and Elec2Go, to increase the coverage of our charging points network to more than 466,000 charging points, of which approximately 290,000 have online data and payment capabilities.

Roadside services

The Group currently offers its customers 5 roadside services: parking, washing, cleaning, truck repairs and ferry booking, across more than 1,300 locations in 18 countries. This not only supports one of the Group's strategic pillars aimed at growth from existing customers by extending share of the wallet, but also provides truck drivers with safety and comfort of using EW card for various payments, making their life easier.

Responsibility and sustainability

Introduced in 2021, Eurowag's sustainability strategy is based on its social and environmental responsibilities, aiming to create sustainable financial and technological solutions for the benefit of the industry, society and the environment. While these sustainability principles have always been at the core of Eurowag's purpose, we have formalized our approach to help our customers prosper, make road transport cleaner, fairer and more efficient, and help our employees and communities thrive in a healthy environment.

We set targets including:

-- A carbon reduction target to reduce emissions from our own operations (Scope 1 and Scope 2) by 50% by 2030 on a 2019 baseline with Scope 3 target under development;

-- A Diversity, Equity, and Inclusion target to have 40% female representation in leadership roles on a 2021 baseline by 2025;

-- Achievement of a top 25% of employee engagement score as compared to EU Tech companies benchmark by 2025.

We are now:

   --      Making steady progress against our sustainability commitments and targets in H1; 

-- Enhancing partnerships to drive a more efficient and better connected and lower carbon CRT sector;

   --      Enhancing and expanding transitional, low carbon and eMobility solutions for our customers; 
   --      Supporting colleagues and communities in the response to the war in Ukraine; 
   --      Transitioning to renewable electricity to reduce our operational emissions. 

Key highlights from H1 include:

Collaborating with the Industry to drive a more efficient, better connected and lower carbon CRT sector

   --      Joined new multistakeholder consortium to advance Hydrogen for CRT sector. 

-- Participated in CharIN, the leading global association dedicated to promote interoperability for E-Charging Systems through our LMS business. Thanks to this, we are monitoring and engaging in industry developments including discussions about a future charging standard for heavy commercial vehicles.

Enhancing and expanding our low carbon solutions and services for customers to help make their operations more efficient and sustainable

-- Commissioned customer research in nine European markets aimed at identifying and improving ways we can help customers accelerate the move to low carbon solutions.

-- Expanded transitional, low carbon and eMobility solutions by adding 101 new POS into our LNG acceptance network, starting construction of two new LNG sites in the Czech Republic and increasing eMobility network coverage to more than 466,000 charging points for passenger cars.

-- Introduced via Sygic a navigation support feature over low emission zones and Clear air zones in the UK. Using the latest map data combined with a vehicle profile allows our algorithm to find the best route over those zones.

-- Developed an energy consumption and GHG emissions calculation feature in EW Telematics application. GHG emissions of rides can help EW Telematics customers to communicate the GHG emissions of a shipment in the value chain to help shippers understand indirect (Scope 3) GHG emissions.

   --      Continued support and services for customer wellbeing 

o Financial wellbeing partnerships: partnering with a non-profit organization (Institut prevence a ř ešení předlu ení) to offer debt relief and financial wellbeing services to all drivers in the Czech Republic. In addition, the Group entered into a cooperation agreement with an external partner to provide advisory services to drivers and transport companies to meet minimum wage regulations across Europe.

o New functionalities to Sygic navigation aimed at reducing driver distraction and supporting road safety - while mirroring navigation instructions on a car display, a phone can also be used as a stand-alone device with some extra and camera-based features used simultaneously.

Reducing our carbon footprint and supporting employees and communities affected by the war in Ukraine.

-- Continued to reduce our carbon footprint with the shift to renewable electricity at our sites by installing photovoltaic panels on truck park in Arraia, Spain.

-- Continued supporting employees and communities affected by the war in Ukraine: financial support provided to 46 people; direct support of 14 NGOs through Ukraine Aid and Philanthropy and You; 69 employees participated in matched fundraising campaign to support People in Need's humanitarian efforts in Ukraine and in neighbouring countries

-- Completed our 2022 employee driven charity programme with more than 83% of employees participating in 227 projects across 14 countries.

Organizational culture and change management

At Eurowag we continue to build on and embed our Company values by promoting the following:

-- Be a good person - our focus is on our social responsibility programmes as well as ensuring all our colleagues are acting fully in accordance with our compliance and ethics standards.

-- Be a true colleague - by working towards a culture of collaboration, flexibility and two-way communication.

-- Embrace change - improving our change management capability and creating a culture of continual improvement and learning.

-- Deliver your best - ensuring we have the right skills in the organisation and insisting on razor sharp accountability and increased performance management.

Listing on the London Stock Exchange has helped us to follow our talent strategy of attracting critical skills to Eurowag from a far larger and more diverse talent pool across Europe. This capability will enable us to transform and change our business and deliver our longer term business goals, giving us a great competitive advantage. Examples of this are key hires in the product and technology area to accelerate our digital platform development.

We ran our first employee engagement survey (previously we used eNPS) in the first quarter of 2022. It was completed by 90% of our colleagues and we achieved an engagement score of 68%. The aim of reaching the top quartile by 2025 remains a top priority KPI for us.

Financial review

Eurowag delivered a strong set of results in the first half, demonstrating the resilience and strength of our business model and proposition, as well as further highlighting the importance of our services to the CRT industry. This result is testament to the commitment and resourcefulness of our team.

The first six months of the year had an exceptional range of challenges, many of which are expected to continue into the second half. We had to rapidly respond to all these challenges and ensure continued and seamless operations across all our regions.

The war in Ukraine is shocking and has had a number of knock-on effects on the macroeconomic environment, including a hike in energy prices and inflation. Faced with a rising cost of living, multiple governments have introduced measures to ease the burden of high energy prices on consumers, some permanently, some on a temporary basis. Among others, this includes fuel prices being capped in Hungary, a Government fuel price compensation scheme introduced in Spain, as well as a temporary reduction of VAT rates applied in Poland. This uncertain regulatory landscape has represented a headwind to the business, and Eurowag has also had to respond quickly to the various sanctions imposed by European markets across its operations, targeting Russia. All of this has come off the back of the two years of disruption caused by the Covid-19 pandemic.

To grow our customer base and maintain customer retention, as well as deliver an increase in revenues and adjusted EBITDA against this backdrop, represents a significant achievement. Along with successfully completing our first acquisition post IPO, we have further developed our digital capabilities and strengthened our team to ensure we can continue to deliver on our ambitious strategy. The trading performance reported in the first six months confirms the strength of our proposition to CRT industry. Group Net energy and services sales growth of 19.4% year-on-year was delivered through further expanding our customer base in the payment solutions segment (average number of active customers up by 13.0%), enhanced by effective cross selling of our mobility solutions and strong average net revenue retention of above 110%.

Adjusted EBITDA increased by 5.7% year-on-year to EUR35.0m (2021: EUR33.1m). Adjusted EBITDA margin decreased year-on-year to 40.2% (2021: 45.4%), reflecting EUR2.0m incremental PLC related costs and impact of WebEye consolidation (EUR0.1m). Adjusted EBITDA margin on a comparable basis, excluding incremental PLC costs and WebEye consolidation would be 43.3%. Increased operating costs due to lower Covid-19 impacted base and inflation of EUR0.8m, as well as EUR0.6m severance payments and the EUR0.5m share-based payment ("PSP") cost further impacted Adjusted EBITDA margin in the first half of 2022.

Adjusted basic EPS decreased by 8.6% year-on year to 2.35 cents per share (2021: 2.57), predominantly due to higher basic weighted average number of shares in 2022 as a result of new shares issued in Eurowag's IPO.

On a statutory basis, profit before tax increased by 8.1% year-on-year to EUR13.4m (2021: EUR12.4m), while basic EPS decreased by 15.7% to 1.29 cents per share (2021: 1.53) due to higher basic weighted average number of shares in 2022.

As a result of our IPO primary equity raise and supported by our underlying highly cash generative business model, our overall financial position remains strong with reported EUR28.7m of net cash as of the end of June 2022.

In line with the strategy announced at the IPO, we continued investing in our digital transformation and inorganic growth. During the first six months of 2022, our transformational capital expenditure totaled EUR13.3m, while investments in our subsidiaries and associates reached EUR25.9m.

Performance review

Below is a summary of the segmental performance and explanatory notes related to items including corporate expenses, alternative performance measures, taxation, interest, investment and cash flow generation.

Segments

 
                                  6M2022    6M2021    YoY (EURm)    YoY 
                                   (EURm)    (EURm) 
 Segment revenue total            1,160.8    784.4      376.4      48.0% 
                                 --------  --------  -----------  ------- 
            Payment solutions     1,137.3    765.7      371.6      48.5% 
                                 --------  --------  -----------  ------- 
            Mobility solutions     23.5      18.7        4.8       25.7% 
                                 --------  --------  -----------  ------- 
 Net energy and services 
  sales total                      87.0      72.9        14.1      19.4% 
                                 --------  --------  -----------  ------- 
            Payment solutions      63.5      54.2        9.3       17.2% 
                                 --------  --------  -----------  ------- 
            Mobility solutions     23.5      18.7        4.8       25.7% 
                                 --------  --------  -----------  ------- 
 Expenses included in 
  Contribution(1)                  15.1      12.1        3.0       24.8% 
                                 --------  --------  -----------  ------- 
 Contribution total                71.9      60.8        11.1      18.3% 
                                 --------  --------  -----------  ------- 
            Payment solutions      54.9      47.8        7.1       14.9% 
                                 --------  --------  -----------  ------- 
            Mobility solutions     17.0      13.0        4.0       30.8% 
                                 --------  --------  -----------  ------- 
 Contribution margin(1) 
  total                             83%       83%        0 pp       N/A 
                                 --------  --------  -----------  ------- 
            Payment solutions       87%       88%       (1 pp)      N/A 
                                 --------  --------  -----------  ------- 
            Mobility solutions      72%       70%        2 pp       N/A 
                                 --------  --------  -----------  ------- 
 Corporate overhead and 
  indirect costs before 
  adjusting items                 (36.9)    (27.7)      (9.2)      33.2% 
                                 --------  --------  -----------  ------- 
 Adjusted EBITDA                   35.0      33.1        1.9        5.7% 
                                 --------  --------  -----------  ------- 
 Adjusting items affecting 
  Adjusted EBITDA                  (5.5)     (5.4)      (0.1)       1.9% 
                                 --------  --------  -----------  ------- 
 EBITDA(1)                         29.5      27.7        1.8        6.5% 
                                 --------  --------  -----------  ------- 
 Depreciation and amortisation     12.4      10.5        1.9       18.1% 
                                 --------  --------  -----------  ------- 
 Operating profit                  17.1      17.2       (0.1)      (0.6%) 
                                 --------  --------  -----------  ------- 
 

The Group's total revenues increased by 48.0% year-on-year to EUR1,160.8m driven by higher energy prices (a corresponding growth was reported for costs of energy sold) and as a result of the growing scale of our payment solutions.

The Group delivered double-digit Net energy and services sales growth and strong Contribution margins in both segments. Growth in organic Net energy and services sales was 18.0%, while the overall Net energy and services sales were up 19.4% given a EUR1.0m positive impact from WebEye.

Payment solutions Net energy and services sales grew by 17.2% year-on-year, driven by strong new customer and truck acquisitions underpinned by strong Net revenue retention.

Mobility solutions Net energy and services sales grew by 25.7% year-on-year, mainly as a result of effective cross-sell, as well as sales to automotive partners and WebEye's consolidation.

In terms of geographic breakdown, the Central cluster remains the largest segment with nearly 50% share of total Net energy and services sales (2022: EUR43.3m, 2021: EUR35.4m). All markets in the Central cluster delivered strong double-digit growth. Southern cluster has kept the momentum from 2021 and remains the fastest growing area with 35.8% (32.2% organic) year-on-year increase (2022: EUR28.1m, 2021: EUR20.7m). A decline of Western cluster's Net energy and services sales by 12.2% (2022: EUR12.1m, 2021: EUR13.8m) was mainly due to lower number of average active payment solutions customers (500 customers). Customer churn has been driven by business closures reflecting challenging market environment and ADS client base migration to Eurowag platform which is expected to conclude by end of 2022.

Corporate expenses

 
                                  6M2022    6M2021    YoY (EURm)    YoY 
                                   (EURm)    (EURm) 
 Expenses included in 
  Contribution                     15.1      12.1        3.0       24.8% 
                                 --------  --------  -----------  ------ 
 Corporate overhead and 
  indirect costs before 
  adjusting items                  34.4      27.7        6.7       24.2% 
                                 --------  --------  -----------  ------ 
 Incremental PLC related 
  costs and PSP                     2.5       0.0        2.5        N/A 
                                 --------  --------  -----------  ------ 
 Adjusting items affecting 
  Adjusted EBITDA                   5.5       5.4        0.1       1.9% 
                                 --------  --------  -----------  ------ 
 Depreciation and amortisation     12.4      10.5        1.9       18.1% 
                                 --------  --------  -----------  ------ 
 Total                            69.9      55.7      14.2         25.5% 
                                 --------  --------  -----------  ------ 
 

The above table is relevant for segmental review, while below table summarises corporate expenses based on statutory financials categories:

 
                                  6M2022    6M2021    YoY (EURm)     YoY 
                                   (EURm)    (EURm) 
 Employee expenses                 32.8      26.5        6.3        23.8% 
                                 --------  --------  -----------  -------- 
 Impairment losses of 
  financial assets                  2.7       1.2        1.5       125.0% 
                                 --------  --------  -----------  -------- 
 Technology expenses                3.9       2.8        1.1        39.3% 
                                 --------  --------  -----------  -------- 
 Other operating income            (0.2)     (0.3)       0.1       (33.3%) 
                                 --------  --------  -----------  -------- 
 Other operating expenses          18.3      15.0        3.3        22.0% 
                                 --------  --------  -----------  -------- 
 Depreciation and amortisation     12.4      10.5        1.9        18.1% 
                                 --------  --------  -----------  -------- 
 Total                             69.9      55.7        14.2       25.5% 
                                 --------  --------  -----------  -------- 
 

Employee expenses increased by 23.8% year-on-year to EUR32.8m as the Group focused on priority hires, talent retention, strengthening the structure and implementing remuneration schemes appropriate for a listed company. Adjusting items included in employee expenses amounted to EUR4.2m in the first half of 2022 (2021: EUR2.1m).

Impairment losses of financial assets amounted to EUR2.7m (2021: EUR1.2m) as a result of increased risk due to higher notional credit exposure reflecting higher energy prices. Our customer exposure impacted credit losses ratio(2) that increased from 0.1% to 0.2%. Nevertheless, our expertise in managing credit risk and cash collections resulted in strong and stable ageing performance of our receivables portfolio with approximately 80% current balances as of the end of June 2022.

Technology expenses increased by 39.3% to EUR3.9m, largely as a result of the Group's focus on technology transformation, cloud transition and expenses related to the new generation ERP system. Adjusting items included in technology expenses amounted to EUR0.2m in the first half of 2022 (2021: EUR0.1m).

Other operating expenses increased by 22.0% to EUR18.3m, mainly due to PLC related costs of EUR1.6m (2021: EUR0.0m), return of travel and other costs post Covid-19 and inflation of EUR0.8m. Adjusting items included in other operating expenses amounted to EUR1.1m in the first half of 2022 (2021: EUR3.2m).

Depreciation and amortisation grew by 18.1% to EUR12.4m, primarily as a result of increased transformational technology being put into production. Adjusting items included in depreciation and amortisation amounted to EUR3.4m in the first half of 2022 (2021: EUR3.6).

Net finance expense

Net finance expense in the first six months of 2022 was EUR3.3m (2020: EUR4.5m). The decrease reflects mainly improved result on revaluation of derivatives and lower foreign exchange losses, partially offset by higher factoring fees related to higher average factoring limits utilization throughout the year to date and interest charges reflecting higher average level of borrowings in the first six months ending 30 June 2022 compared to the corresponding period of 2021.

Taxation

The Group tax charge of EUR4.3m (2021: EUR3.6m) represents an effective tax rate of 31.7% in 2022 (2021: 28.9%). Corporate income tax for companies in the Czech Republic and the United Kingdom for 2021- 2022 was 19%, while in Spain it was set at 24%. They represent the major tax regimes in which the Group operates.

The Group's effective tax rate is impacted by the tax impact of Adjusting items. It is, therefore, helpful to consider the underlying and adjusting items affecting tax rates separately:

-- The effective tax rate on Adjusted earnings(1) before tax for the year decreased to 24.4% (2021: 29.0%), largely due to taxes in respect of prior years paid in 2021.

   --     The effective tax rate for Adjusting items was 13.3% (2021: 28.9%) and was driven mainly by equity-settled share-based payments. 

We adopted a prudent approach to our tax affairs, aligned with business transactions and economic activity. We have a constructive and good working relationship with the tax authorities in the countries in which we operate and there are no outstanding tax audits with the exception of Hungary and Slovakia.

EPS

Basic EPS for 2022 was 1.29 cents per share, a decrease of 15.7% relative to 2021. This was predominantly due to higher basic weighted average number of shares in 2022 as a result of new shares issued in Eurowag's IPO.

Adjusted basic EPS(1) for 2022 was 2.35 cents per share, representing a decrease of 8.6% relative to 2021, based on the weighted average number of ordinary shares in issue during the year of 688,911,333. After accounting for the impact of PSP, adjusted diluted earnings per share was 2.35 cents per share. Adjusting items are as described below.

Investments in subsidiaries and associates

Acquisition of WebEye Group

Further to the subsequent events discussed in the 2021 Annual Report, the Group signed a novated agreement on 16 May 2022 to acquire substantially all of the assets of WebEye Telematics Zrt., a leading fleet management solutions provider in Central and Eastern Europe. The Company paid EUR23.3m in cash upon the acquisition of 100% of the share capital of the non-Hungarian subsidiaries and a further EUR19.9m was paid upon completion of the acquisition of the Hungarian subsidiaries on 1 July 2022. In addition, the Company will pay a deferred settlement component within three years of closing, a portion of which is contingent upon the achievement of certain KPIs. The maximum amount, including the deferred amount of the purchase price, is capped at EUR60.6m.

The transaction will expand the Group's customer base, and WebEye's customers will gain access to Eurowag's unrivalled range of integrated end-to-end payment and mobility solutions leading to incremental revenue opportunities. Furthermore, data from the connected trucks will provide insights and enable the continual development of new and improved solutions to address customers' needs.

The provisionally determined fair values of identifiable assets and liabilities of non-Hungarian subsidiaries of WebEye as at the date of acquisition were:

 
                                         (EURm) 
 Total Assets                            19.8 
                                       -------- 
 Total Liabilities                        2.6 
                                       -------- 
 Total identifiable net assets 
  at fair value                          17.2 
                                       -------- 
 Goodwill arising on acquisition         19.7 
                                       -------- 
 Purchase consideration: 
                                       -------- 
 Cash paid                               23.3 
                                       -------- 
 Deferred consideration (discounted)     13.6 
                                       -------- 
 Total purchase consideration            36.9 
                                       -------- 
 

From the date of acquisition until 30 June 2022, non-Hungarian subsidiaries of WebEye contributed EUR1.0m of revenue and EUR0.2m loss after tax (mainly driven by amortisation of acquired intangibles).

If the acquisition of combined Hungarian and non-Hungarian WebEye entities had occurred on 1 January 2022, consolidated revenue and consolidated loss after tax for the half year ended 30 June 2022 would have been EUR 7.4m and EUR0.1m respectively. Excluding amortisation of acquired intangibles the profit after tax would have been EUR 1.2m. Consolidated revenue for the six months would have been evenly distributed between the two acquisitions.

Pay-out of deferred consideration related to Last Mile Solutions

On 31 January 2022, the Group paid deferred acquisition consideration of EUR3.0m related to acquisition of company Threeforce B.V. (Last Mile Solutions).

Balance sheet

Net assets of the Group increased by 6.3% to EUR302.6m, mainly reflecting profit for the six months ending 30 June 2022 and positive revaluation of cash-flow hedges.

Intangible assets of the Group excluding goodwill increased by EUR23.8m to EUR112.0m in the reporting period, predominantly due to WebEye acquisition and investments into the strategic IT transformation.

Goodwill comprises mainly CGU(1) Energy of EUR40.2m, CGU Navigation of EUR34.6m and CGU Telematics of EUR45.8m. Goodwill is tested for impairment on an annual basis, there was no impairment posted in 2021 and no impairment indicators were identified in the first six months of 2022.

Inventories increased by EUR9.8m to EUR19.4m mainly due to higher stock of on-board units resulting from the Group's decision to move production to an alternative supplier, thus, cancelling cooperation with a manufacturer owned by Russian individuals. The remaining growth mainly reflects the WebEye consolidation and higher value of fuel inventory reflecting increased energy prices in the reporting period.

Trade and other receivables increased by EUR131.7m to EUR432.3m, mainly due to higher volume of transactions and increased energy prices.

Trade and other payables increased by EUR127.1m to EUR441.7m as a result of the factors mentioned above.

Cash performance

 
                                 6M2022    6M2021    YoY (EURm)     YoY 
                                  (EURm)    (EURm) 
 Net cash generated from 
  operating activities            16.4       4.0        12.4       310.0% 
                                --------  --------  -----------  --------- 
 Net cash used in investing 
  activities                     (47.5)    (27.1)      (20.4)      75.3% 
                                --------  --------  -----------  --------- 
 Net cash used in financing 
  activities                     (11.5)     (0.1)      (11.4)     11400.0% 
                                --------  --------  -----------  --------- 
 Net increase in cash 
  and cash equivalents           (42.6)    (23.2)      (19.4)      83.6% 
                                --------  --------  -----------  --------- 
 Cash and cash equivalents 
  at beginning of period          224.2     89.0       135.2       151.9% 
                                --------  --------  -----------  --------- 
 Cash and cash equivalents 
  at end of period (presented 
  in statement of cash 
  flows)                          181.5     65.8       115.7       175.8% 
                                --------  --------  -----------  --------- 
 Bank overdrafts                   0.0     (12.7)       12.7      (100.0%) 
                                --------  --------  -----------  --------- 
 Cash and cash equivalents 
  at end of period (presented 
  in statement of financial 
  position)                       181.5     78.5       103.0       131.2% 
                                --------  --------  -----------  --------- 
 Interest-bearing loans 
  and borrowings                  152.8     162.5      (9.7)       (6.0%) 
                                --------  --------  -----------  --------- 
 Net cash/(debt)                  28.7     (84.0)      112.7      (134.2%) 
                                --------  --------  -----------  --------- 
 

As at 30 June 2022, the Group's net cash position stood at EUR28.7m compared to EUR61.7m as at 31 December 2021.

The decrease in the level of cash is due to the cash outflows used in investing activities, including technology transformation investments, the acquisition of WebEye, deferred consideration due on LMS, as well as repayments of borrowing compensated by underlying cash generation, which was in turn offset by the settlement of IPO related expenses.

Net cash flows from operating activities increased from EUR4.0m in 2021 to EUR16.4m, primarily due to business performance supported by stable working capital movements. Impact related to Adjusting items in the reporting period amounted to of EUR7.7m (2021: EUR3.3m).

Interest paid increased to EUR2.3m reflecting higher average level of borrowings in the first six months ending 30 June 2022 compared to the corresponding period of 2021.

Tax paid decreased by EUR1.0m due to lower advance payments.

Net cash used in investing activities increased by EUR20.4m in the first six-month period to EUR47.5m, largely due to the outflows in connection with capital expenditure related to investment in the development of technology (increase of EUR4.8m) and outflows related to investments in subsidiaries and associates (increase of EUR14.5m).

Net cash from financing activities amounted to an outflow of EUR11.5m in the reporting period representing the repayments of borrowings due to amortisation of Senior Facilities Agreements and lease payments.

The cash impact of Adjusting items was EUR0.5m for M&A-related expenses, EUR1.7m for strategic transformation expenses, EUR5.3m for non-recurring IPO-related expenses and EUR0.1m for share-based compensation in 2022.

Capital expenditure

Capital expenditure in the first six months of 2022 amounted to EUR19.9m compared to EUR15.3m for the previous year. This increase relates to investments into our technology platform and existing asset base.

The Group's transformational investment programme was EUR13.3m (2021: EUR11.6m) and continued to focus on expanding the customer and products capabilities for the Group, including the digital customer journey, EETS Toll and new Telematics and Pro Navi, as well as new generation ERP and the integrated offering.

The Group's ordinary capital expenditure totalling EUR6.6m (2021: EUR3.6m) represents reinvestment into the platform and assets base and amounted to 7.6% of Net energy and services sales compared to 5.0% in the corresponding period of previous year.

Alternative performance measures

The Group has identified certain Alternative Performance Measures ("APMs") that it believes provide additional useful information to the readers of Consolidated Financial Statements and enhance the understanding of the Group's performance. These APMs are not defined within IFRS and are not considered to be a substitute for, or superior to, IFRS measures. These APMs may not be necessarily comparable to similarly titled measures used by other companies. Directors and management use these APMs alongside IFRS measures when budgeting and planning, and when reviewing business performance. Executive management bonus targets include an adjusted EBITDA measure and long-term incentive plans include an adjusted basic EPS measure.

 
                                  6M2022    6M2021    YoY (EURm)     YoY 
                                   (EURm)    (EURm) 
 Profit before tax                 13.4      12.4        1.0         8.1% 
                                 --------  --------  -----------  --------- 
 Net finance expense and 
  share of net loss of 
  associates                        3.7       4.8       (1.1)      (22.9%) 
                                 --------  --------  -----------  --------- 
 Depreciation and amortisation     12.4      10.5        1.9        18.1% 
                                 --------  --------  -----------  --------- 
 EBITDA                            29.5      27.7        1.8         6.5% 
                                 --------  --------  -----------  --------- 
 M&A-related expenses               0.5       0.1        0.4        400.0% 
                                 --------  --------  -----------  --------- 
 Non-recurring IPO-related 
  expenses                          0.0       2.8       (2.8)      (100.0%) 
                                 --------  --------  -----------  --------- 
 Strategic transformation 
  expenses                          1.7       0.8        0.9        112.5% 
                                 --------  --------  -----------  --------- 
 Share-based compensation           3.3       1.7        1.6        94.1% 
                                 --------  --------  -----------  --------- 
 Adjusting items                    5.5       5.4        0.1         1.9% 
                                 --------  --------  -----------  --------- 
 Adjusted EBITDA                   35.0      33.1        1.9         5.7% 
                                 --------  --------  -----------  --------- 
 
 
                                         6M2022    6M2021    YoY (EURm)     YoY 
                                          (EURm)    (EURm) 
 Profit for the year                       9.2       8.8        0.4        4.5% 
                                        --------  --------  -----------  -------- 
 Amortisation of acquired 
  intangibles                              2.8       2.7        0.1        3.7% 
                                        --------  --------  -----------  -------- 
 Amortisation due to transformational 
  useful life changes                      0.7       0.9       (0.2)      (22.2%) 
                                        --------  --------  -----------  -------- 
 Adjusting items affecting 
  Adjusted EBITDA                          5.5       5.4        0.1        1.9% 
                                        --------  --------  -----------  -------- 
 Tax effect                               (1.3)     (2.6)       1.3       (50.0%) 
                                        --------  --------  -----------  -------- 
 Adjusted earnings (net 
  profit)                                 16.9      15.2        1.7        11.2% 
                                        --------  --------  -----------  -------- 
 
 
                                       6M2022        6M2021      YoY (EURm)     YoY 
                                        (EURm)        (EURm) 
 Adjusted net profit attributable 
  to equity holders (EURm)              16.2          14.5           1.7       11.7% 
                                    ------------  ------------  ------------  ------- 
 Basic weighted average 
  number of shares                   688,911,333   565,931,997   122,979,336   21,7% 
                                    ------------  ------------  ------------  ------- 
 Adjusted basic EPS (cents/share)       2.35          2.57         (0.22)      (8.6%) 
                                    ------------  ------------  ------------  ------- 
 

Costs arising in connection with the IPO have been separately identified in recognition of the nature, infrequency and materiality of this capital markets transaction. IPO expenses were incurred in 2021 and had no impact on expenses in 2022.

M&A-related expenses are fees and other costs relating to the Group's acquisitions activity. M&A-related expenses differ every year based on acquisition activity of the Group. Exclusion of these costs allows for better result comparability.

Strategic transformation expenses are costs relating to broadening the skill bases of the Group's employees (including executive search and recruiting costs) as well as costs related to transformation of key IT systems. As previously announced, the strategic transformation is expected to complete in 2023.

In addition, adjustment has been made for the compensations provided to the Group's management before the IPO. These legacy incentives comprise a combination of cash and share-based payments and those that have not yet vested will vest across each of the subsequent financial years ending 31 December 2024. The Group believes that it is appropriate to treat these costs as an adjusting item as they relate to a one-off award, designed and implemented whilst the Group was under private ownership (and are reasonably typical of that market and appropriate in that context). The Group now operates in a new environment and the Remuneration Committee has applied the Remuneration Policy in a listed company context, hence, similar awards are not expected in future. For clarity, where share-based payment charges arise as a consequence of the operation of the Group's post-IPO Remuneration Policy, these are not treated as adjusting items as they represent non-cash element of annual remuneration package. This includes costs of EUR0.5m in the first six months ending 30 June 2022 relating to grants in connection with the 2024 and 2025 PSP.

Amortisation of acquired intangibles represents amortisation of assets recognised at the time of an acquisition (primarily ADS and Sygic). The item is prone to volatility from period to period depending on the level of M&A.

Amortisation due to transformational useful life changes represents accelerated amortisation of assets being replaced by strategic transformation of the Group. The Group expects this adjustment to be relevant until 2024.

Capital allocation

Our priority will continue to be organic and inorganic investment to drive long term sustainable growth. As previously advised, the Group will incur aggregated transformational capital expenditures of EUR50m during 2022 and 2023 to develop our integrated end-to-end digital platform and invest in the quality of our integrated product and service offering. Our transformational capex is firmly on track to complete in 2023, by which point we will have the most modern, complete and modular tech stack and product offering in the industry. We will continue to consider value-accretive M&A opportunities in our current and adjacent markets and in product and technology areas that will accelerate growth. We will only look to make acquisitions where the acquisition is complementary to our strategy and in line with our acquisition criteria. We will also maintain a robust balance sheet. As set out in our financial guidance the Group does not intend to pay dividends as we continue to prioritise investment in growth.

Treasury management

The Group maintains a disciplined approach to its financing and is committed to maintain a net debt to adjusted EBITDA leverage ratio of 1.5-2.5 times over the medium term. Our leverage ratio may temporarily exceed the top end of the range depending on the quantum and timing of potential acquisitions.

The Group holds financial debt under the Senior Multicurrency Term and Revolving Facilities Agreement ("Syndicated Facilities Agreement"), which consists of the following tranches:

   --      Amortising EUR term loan facility for a maximum amount of EUR47.5m 
   --      Non-amortising EUR term loan facility for a maximum amount of EUR47.5m 
   --      Amortising EUR term loan facility for a maximum amount of EUR95.0m (Acquisition/CAPEX) 
   --      Multicurrency revolving credit facility for a maximum amount of EUR120.0m, split as 

o EUR45.0m Revolving Credit Facility

o EUR15.0m Multicurrency Overdraft Facility

o EUR60.0m Bank Guarantee Facilities

As of 30 June 2022, the Revolving Credit Facility and Multicurrency Overdraft Facility remained undrawn.

Additionally, subject to certain conditions, the Group can request to raise additional debt through uncommitted Incremental Facility mechanism under the Syndicated Facilities Agreement up to an amount of EUR100.0m, of which up to EUR50.0m can be used to finance certain acquisitions which are specifically permitted under the Syndicated Facilities Agreement, and the remaining EUR50.0m can be used to finance or refinance working capital of companies, businesses or undertakings acquired as a result of such permitted acquisition or utilized by way of a guarantee, documentary or stand-by letter of credit. As of 30 June 2022, the Incremental Facility II was fully drawn to establish limits for Bank Guarantees for a total amount of up to EUR50m.

The Syndicated Facilities Agreement contains financial covenants at the level of W.A.G. payment solutions, a.s. Financial covenants are governed by financial definitions under The Syndicated Facilities Agreement:

-- Interest Cover (the ratio of Adjusted EBITDA to finance charges) is not less than 5.00:1 for each twelve-month period ending on the last day of each financial quarter. As of 30 June 2022, Interest Cover was at 16.26.

-- Net Leverage (measured quarterly on the basis of Total Net Debt on the measurement date and rolling twelve months Adjusted EBITDA) does not exceed 3.50:1 for each twelve-month period ending on the last day of each financial quarter in 2022. As of 30 June 2022, Net Leverage was at negative 0.15 (The Group had more Cash and Cash Equivalent Investments than Borrowings).

-- Adjusted Net Leverage (measured quarterly on the basis of Adjusted Total Net Debt on the measurement date and rolling twelve months Adjusted EBITDA) does not exceed 6.50:1 for each twelve-month period ending on the last day of each financial quarter. As of 30 June 2022, Adjusted Net Leverage was at 1.47.

-- Borrowing Base (the ratio of the sum of outstanding amount of revolving facility less cash and cash equivalents, to trade receivables) must not exceed 1.00:1 in relation to any three-month period ending on the last day of each financial quarter. As at 30 June 2022, Borrowing Base was at negative 0.55 (The Group had more Cash and Cash Equivalent Investments than aggregate amount of outstanding Revolving Facility Loans).

During the first half of 2022, the Group repaid EUR10.0m (principal) of the Syndicated Facilities Agreement borrowings resulting in a notional outstanding debt of EUR155m as of 30 June 2022.

During year-to-date, the Group utilised EUR21.0m of Incremental Facility in the way of Bank Guarantees.

The Group concentrates cash on bank accounts held with financial institutions that participate in the Syndicated Facilities Agreement. Balances may be held on bank accounts with other financial institutions to fund outgoing payments especially in countries outside of the Economic and Monetary Union.

Directors' responsibility statement

We confirm that to the best of our knowledge:

The unaudited condensed consolidated financial statements have been prepared in accordance with UK-adopted IAS 34 Interim Financial Reporting.

The interim management report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report in Financial statements dated 24 March 2022 that could do so.

On behalf of the Board of Directors

Martin Vohánka

Chief Executive Officer

Financial statements

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(EUR '000)

 
                                                                                     For the six months ended 30 June 
                                                                            ======  ================================== 
                                                                                          2022              2021 
                                                                             Notes     (unaudited)       (unaudited) 
==========================================================================  ======  ================  ================ 
Revenue from contracts with customers                                         7            1,160,815           784,369 
Costs of energy sold                                                                     (1,073,837)         (711,513) 
==========================================================================  ======  ================  ================ 
Net energy and services sales                                                 8               86,978            72,856 
 
Other operating income                                                                           221               341 
Employee expenses                                                             9             (32,768)          (26,567) 
Impairment losses of financial assets                                                        (2,719)           (1,152) 
Technology expenses                                                                          (3,882)           (2,782) 
Other operating expenses                                                                    (18,325)          (15,009) 
Operating profit before depreciation and amortisation (EBITDA)                                29,505            27,687 
Analysed as: 
Adjusting items                                                               8                5,498             5,367 
--------------------------------------------------------------------------  ------  ----------------  ---------------- 
Adjusted EBITDA                                                               8               35,003            33,054 
 
Depreciation and amortisation                                                 8             (12,431)          (10,457) 
==========================================================================  ======  ================  ================ 
Operating profit                                                                              17,074            17,230 
Finance income                                                                                 1,275                31 
Finance costs                                                                                (4,553)           (4,571) 
Share of net loss of associates                                                                (353)             (295) 
==========================================================================  ======  ================  ================ 
Profit before tax                                                                             13,443            12,395 
Income tax expense                                                            10             (4,256)           (3,588) 
==========================================================================  ======  ================  ================ 
PROFIT FOR THE YEAR                                                                            9,187             8,807 
==========================================================================  ======  ================  ================ 
 
OTHER COMPREHENSIVE INCOME 
Other comprehensive income to be reclassified to profit or loss in 
subsequent periods 
Change in fair value of cash flow hedge recognised in equity                                   4,976             3,123 
Exchange differences on translation of foreign operations                                        302               925 
Deferred tax related to other comprehensive income                                                 -                 - 
--------------------------------------------------------------------------  ------  ----------------  ---------------- 
TOTAL OTHER COMPREHENSIVE INCOME                                                               5,278             4,048 
==========================================================================  ======  ================  ================ 
TOTAL COMPREHENSIVE INCOME FOR THE YEAR                                                       14,465            12,855 
==========================================================================  ======  ================  ================ 
 
Total profit for the financial year attributable to equity holders of the 
 Company                                                                                       8,902             8,657 
Total profit for the financial year attributable to non-controlling 
 interests                                                                                       285               150 
Total comprehensive income for the financial year attributable to equity 
 holders of the Company                                                                       14,137            12,688 
Total comprehensive income for the financial year attributable to 
 non-controlling interests                                                                       328               167 
 
Earnings per share (in cents per share):                                      14 
Basic earnings per share                                                                        1.29              1.53 
Diluted earnings per share                                                                      1.29              1.52 
==========================================================================  ======  ================  ================ 
 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(EUR '000)

 
                                                                As at 
=========================================  =======  ============================= 
                                                           30 June    31 December 
                                                              2022           2021 
                                             Notes     (unaudited) 
=========================================  =======  ==============  ============= 
 ASSETS 
 Non-current assets 
 Intangible assets                            11           237,043        193,453 
 Property, plant and equipment                11            37,225         34,763 
 Right-of-use assets                                        10,827          8,112 
 Investments in associates                                  12,581         12,934 
 Financial assets                                               37             37 
 Deferred tax assets                                         9,291          7,642 
 Derivative assets                            6              5,928            252 
 Other non-current assets                                    3,498          3,554 
=========================================  =======  ==============  ============= 
 Total non-current assets                                  316,430        260,747 
=========================================  =======  ==============  ============= 
 Current assets 
 Inventories                                  12            19,365          9,557 
 Trade and other receivables                  13           432,268        300,601 
 Income tax receivables                                      6,095          5,095 
 Derivative assets                            6              2,208          2,694 
 Cash and cash equivalents                                 181,546        224,164 
=========================================  =======  ==============  ============= 
 Total current assets                                      641,482        542,111 
=========================================  =======  ==============  ============= 
 TOTAL ASSETS                                              957,912        802,858 
=========================================  =======  ==============  ============= 
 SHAREHOLDERS' EQUITY AND LIABILITIES 
 Share capital                                               8,107         38,113 
 Share premium                                               2,958        194,763 
 Merger reserve                                           (25,963)       (25,963) 
 Other reserves                                              6,700          1,465 
 Business combinations equity adjustment                  (17,220)       (17,046) 
 Retained earnings                                         318,857         84,526 
 Equity attributable to equity holders 
  of the Company                                           293,439        275,859 
 Non-controlling interests                                   9,160          8,889 
                                                    ==============  ============= 
 Total equity                                              302,599        284,747 
=========================================  =======  ==============  ============= 
 Non-current liabilities 
 Interest-bearing loans and borrowings                     133,928        143,579 
 Lease liabilities                                           8,198          5,973 
 Deferred tax liabilities                                    7,649          5,495 
 Derivative liabilities                       6                130            657 
 Other non-current liabilities                15            31,173         20,281 
=========================================  =======  ==============  ============= 
 Total non-current liabilities                             181,078        175,985 
=========================================  =======  ==============  ============= 
 Current liabilities 
 Trade and other payables                     15           441,660        314,522 
 Interest-bearing loans and borrowings                      18,871         18,894 
 Lease liabilities                                           3,084          2,601 
 Provisions                                                  1,627          1,545 
 Income tax liabilities                                      7,437          4,208 
 Derivative liabilities                       6              1,556            356 
=========================================  =======  ==============  ============= 
 Total current liabilities                                 474,235        342,126 
=========================================  =======  ==============  ============= 
 TOTAL EQUITY AND LIABILITIES                              957,912        802,858 
=========================================  =======  ==============  ============= 
 

The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)

(EUR '000)

 
                    Notes       Share       Share      Other     Merger       Business   Retained   Total equity   Non-controlling      Total 
                              capital     premium   reserves    reserve   combinations   earnings   attributable         interests     equity 
                                                                                equity                 to equity 
                                                                            adjustment                holders of 
                                                                                                      the parent 
-----------------  -------  ---------  ----------  ---------  ---------  -------------  ---------  -------------  ----------------  --------- 
 At 1 January 2021              4,158       2,927    (3,263)          -       (46,009)     72,177         29,990            34,115     64,105 
==========================  =========  ==========  =========  =========  =============  =========  =============  ================  ========= 
 Profit for the year                -           -          -          -              -      8,657          8,657               150      8,807 
 Other comprehensive 
  income                            -           -      4,031          -              -          -          4,031                17      4,048 
========================== 
 Total comprehensive 
  income                            -           -      4,031          -              -      8,657         12,688               167     12,855 
                            =========  ==========  =========  =========  =============  =========  =============  ================  ========= 
 
 Share options exercised           11         200          -          -              -          -            211                 -        211 
 Dividends paid                     -           -          -          -              -          -              -           (1,980)    (1,980) 
 Share-based payments               -           -          -          -              -        892            892                 -        892 
 Acquisition of 
  subsidiaries                      -           -          -          -              -          -              -             2,259      2,259 
 Acquisition of a 
  non-controlling 
  interests                                                                     27,003      (966)         26,037          (26,037)          - 
 Put options held by 
  non-controlling 
  interests                         -           -          -          -        (4,495)          -        (4,495)                 -    (4,495) 
 At 30 June 2021                4,169       3,127        768          -       (23,501)     80,760         65,323             8,524     73,847 
==========================  =========  ==========  =========  =========  =============  =========  =============  ================  ========= 
 
 At 1 January 2022             38,113     194,763      1,465   (25,963)       (17,046)     84,526        275,858             8,889    284,747 
==========================  =========  ==========  =========  =========  =============  =========  =============  ================  ========= 
 Profit for the year                -           -          -          -              -      8,902          8,902               285      9,187 
 Other comprehensive 
  income                            -           -      5,235          -              -          -          5,235                43      5,278 
========================== 
 Total comprehensive 
  income                            -           -      5,235          -              -      8,902         14,137               328     14,465 
                            =========  ==========  =========  =========  =============  =========  =============  ================  ========= 
 
 Capital reduction           (30,006)   (191,805)          -          -              -    221,811              -                 -          - 
 Dividends paid                     -           -          -          -              -          -              -              (57)       (57) 
 Share-based payments               -           -          -          -              -      3,618          3,618                 -      3,618 
 Put options held by 
  non-controlling 
  interests                         -           -          -          -          (174)          -          (174)                 -      (174) 
 At 30 June 2022                8,107       2,958      6,700   (25,963)       (17,220)    318,857        293,439             9,160    302,599 
==========================  =========  ==========  =========  =========  =============  =========  =============  ================  ========= 
 

CONSOLIDATED STATEMENT OF CASH FLOWS

(EUR '000)

 
                                                                                 For the six months ended 30 June 
                                                                      =======  =================================== 
                                                                                     2022         2021 (unaudited) 
                                                                        Notes     (unaudited) 
====================================================================  =======  ===============  ================== 
 Cash flows from operating activities 
 Profit before tax for the period                                                       13,443              12,395 
 Non-cash adjustments: 
 Depreciation and amortisation                                           8              12,431              10,457 
 Gain on disposal of non-current assets                                                   (51)                  22 
 Interest income                                                                          (79)                (21) 
 Interest expense                                                                        2,650               2,234 
 Movements in provisions                                                                    17                 375 
 Impairment losses of financial assets                                                   2,719               1,152 
 Foreign currency exchange rate differences                                                 39                   5 
 Fair value revaluation of derivatives                                                     457                 140 
 Share-based payments                                                                    3,618                 892 
 Other non-cash items                                                                      423                 413 
 Working capital adjustments: 
 (Increase)/decrease in trade and other receivables and prepayments                  (134,596)            (65,262) 
 (Increase)/decrease in inventories                                                    (9,302)               1,422 
 Increase in trade and other payables                                                  130,046              45,942 
 
 Interest received                                                                          79                  21 
 Interest paid                                                                         (2,261)             (2,014) 
 Income tax paid                                                                       (3,207)             (4,173) 
 Net cash flows generated from operating activities                                     16,417               4,000 
====================================================================  =======  ===============  ================== 
 
 Cash flows from investing activities 
 Proceeds from sale of property, plant and equipment                                       144                  89 
 Purchase of property, plant and equipment                                             (3,664)             (2,445) 
 Purchase of intangible assets                                            5           (18,104)            (13,283) 
 Payments for acquisition of subsidiaries, net of cash acquired                       (22,924)               (746) 
 Investment in associates                                                              (3,000)            (10,685) 
 Net cash used in investing activities                                                (47,548)            (27,071) 
====================================================================  =======  ===============  ================== 
 
 Cash flows from financing activities 
 Payment of principal elements of lease liabilities                                    (1,415)             (1,047) 
 Proceeds from borrowings                                                                    -              39,786 
 Repayment of borrowings                                                              (10,012)             (8,593) 
 Acquisition of non-controlling interests                                                    -            (27,003) 
 Dividend payments                                                                        (57)             (3,480) 
 Proceeds from issued share capital (net of expenses)                                        -                 211 
 Net cash used in financing activities                                                (11,484)               (126) 
====================================================================  =======  ===============  ================== 
 
 Net increase in cash and cash equivalents                                            (42,614)            (23,196) 
 Effect of exchange rate changes on cash and cash equivalents                                -                   - 
 Cash and cash equivalents at beginning of period                                      224,154              88,961 
 Cash and cash equivalents at end of period                                            181,540              65,765 
====================================================================  =======  ===============  ================== 
 
   1.   CORPORATE INFORMATION 

W.A.G payment solutions plc (the "Company" or the "Parent") is a public limited company incorporated and domiciled in the United Kingdom and registered under the laws of England & Wales under company number 13544823 with its registered address at Third Floor (East), Albemarle House, 1 Albemarle Street, London W1S 4HA. The ordinary shares of the Company were admitted to the premium listing segment of the Official List of the UK Financial Conduct Authority and have traded on the London Stock Exchange plc's main market for listed securities since 13 October 2021.

The Parent and its subsidiaries (together the "Group") are principally engaged in:

-- Providing payment solutions for fleets of professional transport and forwarding companies, as well as running a network of petrol stations for commercial road transportation;

-- Providing unified way of electronic toll payments on a number of European road networks for fleets of professional transport and forwarding companies;

   --      Recovery of VAT refunds and excise duty from European countries; 

-- Creating an automated journey book and optimising traffic with the use of integrated digital maps;

-- Combine advanced solutions in the field of electronics, software engineering and applied mathematics;

   --      Sale of navigation licenses; and 
   --      Other services. 

Prior to the Initial Public Offering ("IPO"), W.A.G. payments solutions, a.s. was the parent company of the Group for which consolidated financial statements were produced. On 7 October 2021, the Shareholders of W.A.G. payments solutions, a.s. transferred all of their shares in W.A.G. payments solutions, a.s. to W.A.G payment solutions plc in exchange for ordinary shares of equal value in W.A.G payment solutions plc ("Group reorganisation"). This resulted in W.A.G payment solutions plc becoming the new Parent Company of the Group. On 8 October 2021, the IPO was completed, with 13 October 2021 representing admission to trading on the London Stock Exchange ("Admission") .

These condensed interim financial statements were approved for issue on 6 September 2022 and have been neither reviewed nor audited.

These condensed interim financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2021 were approved by the Board of Directors on 24 March 2022 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

   2.   BASIS OF PREPARATION 

The condensed interim financial statements for the six-months ended 30 June 2022 have been prepared in accordance with UK-adopted IAS 34 Interim Financial Reporting and the Disclosure and Transparency Rules of the Financial Conduct Authority. The condensed interim financial statements should be read in conjunction with the Annual Report and Consolidated financial statements for the year ended 31 December 2021, which have been prepared in accordance with UK-adopted International Accounting Standards (UK-adopted IFRS).

As there was no change in control with the Group reorganisation (see Note 1 ) involving the Company becoming the new holding company of the Group in a share for share exchange, the financial information for the six months ended 30 June 2022 (and comparative information for the six months ended 30 June 2021) is presented as a continuation of W.A.G. payment solutions, a.s.

The condensed interim financial statements have been prepared on a historical cost basis, except for derivative financial instruments that have been measured at fair value. The interim condensed financial statements are presented in EUR and all values are rounded to the nearest thousand (EUR '000), except where otherwise indicated.

These unaudited condensed interim financial statements have been prepared on the going concern basis. The Board of Directors have considered the financial prospects of the Company and the Group for the foreseeable future, over the period to 31 December 2023 and made an assessment of the Company's and the Group's ability to continue as a going concern. The Directors' assessment included consideration of the availability of the Company's and the Group's credit facilities, cash flow forecasts and stress scenarios. The stress scenarios considered the Group's principal risks including: potential downside pressures on product demand, increasing operating costs of technology security and resilience and physical assets security risk. The Directors continue to carefully monitor the impact of the war in Ukraine including impact of sanctions, impact on fuel supplies, impact of macroeconomic environment including inflation and increasing interest rates and impact of supply chains disruption as a result of Covid-19 pandemic.

The Board of Directors are satisfied that the Company and the Group has the resources to continue business for the foreseeable future, in particular given the level of cash balances available following the IPO, and furthermore are not aware of any material uncertainties that may cast significant doubt upon the Company's and the Group's ability to continue as a going concern and the Board of Directors considers it is appropriate to adopt the going concern basis of accounting in preparing the condensed interim financial statements.

The condensed interim financial statements are prepared for the six months beginning on 1 January and ending on 30 June 2022.

   3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

The accounting policies adopted, as well as significant judgements and key estimates applied, are consistent with those in the annual financial statements for the year ended 31 December 2021, as described in those financial statements, except as described below:

-- Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.

   --      Significant estimates: 

Business combination

Accounting for business combinations requires significant judgment and assumptions at the acquisition date, including estimating the fair value of acquired intangible assets, estimated income tax assets and liabilities assumed, and determination of the fair value of contractual obligations, where applicable. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash-flows from acquired customers, acquired software and trade names from a market participant perspective, useful lives and discount rates. The estimates are based on historical experience and information obtained from the management of the acquired companies and are inherently uncertain.

Details of the business combination are disclosed in Note 5 .

   4.   CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES, ADOPTION OF NEW AND REVISED STANDARDS 
   4.1.    Application of new IFRS - standards and interpretations effective in the reporting period 

The Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2022:

   --      Property, Plant and Equipment: Proceeds before intended use - Amendments to IAS 16 
   --      Reference to the Conceptual Framework - Amendments to IFRS 3 
   --      Onerous Contracts - Cost of Fulfilling a Contract - Amendments to IAS 37 

-- Annual Improvements to IFRS Standards 2018-2020 - Amendments to IFRS 9, IFRS 16, IFRS 1, and IAS 41

These Amendments did not have a significant impact on the Group's condensed interim financial statements.

   4.2.    New IFRSs and IFRICs published by the IASB that are not yet effective 

The Group is currently assessing the potential impacts of the new and revised standards and interpretations that are expected to be effective from 1 January 2023 or later.

-- Sale or Contribution of Assets between an Investor and its Associate or Joint Venture - amendments to IFRS 10 and IAS 28

   --      IFRS 17 "Insurance Contracts" 
   --      Classification of liabilities as current or non-current - Amendments to IAS 1 
   --      Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting policies 
   --      Amendments to IAS 8 - Definition of Accounting Estimates 

-- Deferred tax related to assets and liabilities arising from a single transaction - Amendments to IAS 12

These new standards and amendments are not expected to have any significant impacts on the Group's consolidated financial statements.

   5.   BUSINESS COMBINATION 

As of 30 June 2022, the following acquisitions took place:

Acquisition of WebEye Group

Further to the subsequent events described in 2021 Annual Report, the Group signed a novated agreement on 16 May 2022 to acquire substantially all of the assets of WebEye Telematics Zrt., a leading fleet management solutions provider in Central and Eastern Europe. The Group paid EUR 23.3 million in cash upon the acquisition of 100% of the share capital of the non-Hungarian subsidiaries (Note 17 ) and a further EUR 19.9 million was paid upon completion of the acquisition of the Hungarian subsidiaries on 1 July 2022. Acquisition of Hungarian subsidiaries is disclosed as a subsequent event (Note 18 ). In addition, the Company will pay a deferred settlement component within three years of closing, a portion of which is contingent upon the achievement of certain KPIs. The maximum amount, including the deferred amount of the purchase price, is capped at EUR 60.6 million.

The transaction will expand the Group's customer base, and WebEye's customers will gain access to Eurowag's unrivalled range of integrated end-to-end payment and mobility solutions leading to incremental revenue opportunities. Furthermore, data from the connected trucks will provide insights and enable the continual development of new and improved solutions to address customers' needs.

The provisionally determined fair values of identifiable assets and liabilities of non-Hungarian subsidiaries of WebEye as at the date of acquisition were:

 
 EUR '000                                               Fair value recognised 
                                                 on acquisition non-Hungarian 
                                                          WebEye subsidiaries 
=====================================  ====================================== 
 Assets 
 Property, plant and equipment                                          1,219 
 Identifiable intangible 
  assets                                                               16,217 
 Right-of-use assets                                                      483 
 Trade receivables                                                      1,000 
 Cash and cash equivalents                                                395 
 Inventories                                                              505 
 Other assets                                                              11 
 Total Assets                                                          19,830 
 
 Trade payables                                                           361 
 Lease liabilities                                                        483 
 Deferred tax                                                           1,752 
 Total Liabilities                                                      2,596 
=====================================  ====================================== 
 Total identifiable net 
  assets at fair value                                                 17,234 
=====================================  ====================================== 
 Goodwill arising on acquisition                                       19,678 
-------------------------------------  -------------------------------------- 
 
 Purchase consideration: 
-------------------------------------  -------------------------------------- 
 Cash paid                                                             23,319 
-------------------------------------  -------------------------------------- 
 Deferred consideration (discounted)                                   13,593 
-------------------------------------  -------------------------------------- 
 Total purchase consideration                                          36,912 
-------------------------------------  -------------------------------------- 
 

The gross contractual receivables acquired amounted to EUR 1,594 thousand. At acquisition date, there were EUR 594 thousand of contractual cash flows not expected to be collected.

From the date of acquisition until 30 June 2022, non-Hungarian subsidiaries of WebEye contributed EUR 1,039 thousand of revenue and EUR 178 thousand loss after tax (mainly driven by amortisation of acquired intangibles).

Consolidated revenue and consolidated profit after tax for the half year ended 30 June 2022, if the acquisition had occurred on 1 January 2022, is disclosed in Note 18 .

Discount rate of 2.00% was used to determine present value of deferred consideration.

Pay-out of deferred consideration

On 31 January 2022, the Group paid deferred acquisition consideration of EUR 3,000 thousand related to acquisition of company Threeforce B.V. (Last Mile Solutions).

Net outflows of cash to acquire subsidiaries were as follows:

 
 EUR '000                             30 June             30 June 
                             2022 (unaudited)    2021 (unaudited) 
=========================  ==================  ================== 
 Cash consideration paid               23,319               2,356 
 Cash acquired                          (395)             (1,610) 
                           ==================  ================== 
 Net outflow of cash 
  - investing activities               22,924                 746 
=========================  ==================  ================== 
 

Cost of acquisition of subsidiaries recognised in other operating expense:

 
 EUR '000                     For the six months 
                                 ended 30 June 
===================  ==================================== 
                      2022 (unaudited)   2021 (unaudited) 
===================  =================  ================= 
 Acquisition costs                 524                111 
===================  =================  ================= 
 
   6.   FAIR VALUE MEASUREMENT 

The following table provides the fair value measurement hierarchy of the Group's assets and liabilities.

Fair value measurement hierarchy for assets and liabilities as at 30 June 2022 (unaudited):

 
 EUR '000                    Date of               Fair value measurement 
                            valuation                       using 
=======================  ==============  ------------------------------------------  ====== 
                                            Quoted      Significant    Significant 
                                             prices      observable    unobservable 
                                           in active       inputs         inputs 
                                            markets        (Level         (Level 
                                             (Level          2)             3) 
                                               1)                                     Total 
=======================  ==============  ============  ============  ==============  ====== 
 Assets measured 
  at fair value 
 Derivative financial 
  assets 
   Foreign currency 
    forwards               30 June 2022             -         2,208               -   2,208 
   Interest rate swaps     30 June 2022             -         5,928               -   5,928 
 Liabilities measured 
  at fair value 
 Derivative financial 
  liabilities 
   Foreign currency 
    forwards               30 June 2022             -         1,545               -   1,545 
   Put options             30 June 2022             -             -             130     130 
   Foreign currency 
    swaps                  30 June 2022             -            11               -      11 
=======================  ==============  ============  ============  ==============  ====== 
 

There have been no transfers between Level 1, Level 2 and Level 3 during the six months ended 30 June 2022.

Fair value measurement hierarchy for assets and liabilities as at 31 December 2021:

 
 EUR '000               Date of valuation                      Fair value measurement using 
=====================  ===================  ==================================================================  ====== 
                                               Quoted prices in         Significant            Significant 
                                                active markets       observable inputs     unobservable inputs 
                                                  (Level 1)              (Level 2)              (Level 3)        Total 
=====================  ===================  =====================  =====================  ====================  ====== 
 Assets measured at 
 fair value 
 Derivative financial 
 assets 
  Foreign currency 
   forwards               31 December 2021                      -                  2,694                     -   2,694 
  Interest rate swaps     31 December 2021                      -                    252                     -     252 
 Liabilities measured 
 at fair value 
 Derivative financial 
 liabilities 
  Foreign currency 
   forwards               31 December 2021                      -                    356                     -     356 
  Put options                                    31 December 2021                      -                   130     130 
  Interest rate swaps     31 December 2021                      -                    527                     -     527 
=====================  ===================  =====================  =====================  ====================  ====== 
 

There have been no transfers between Level 1, Level 2 and Level 3 during the year ended 31 December 2021.

Management assessed that the fair values of cash and cash equivalents, trade and other receivables and trade and other payables approximates their carrying amounts largely due to the short-term maturities of these instruments. Interest-bearing loans and borrowings are at floating rates with margin corresponding to market margins.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

   7.   SEGMENTAL ANALYSIS 

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker ("CODM"). The Group considers the Executive Committee to be the CODM effective from July 2021. The Board of Directors was considered as CODM prior to that date. The CODM reviews net energy and services sales and contribution to evaluate segment performance and allocate resources to the overall business.

For management purposes and based on internal reporting information, the Group is organised in two operating segments; Payment solutions and Mobility solutions. Payment solutions represent the core of the Group's revenues, which are based on recurring and frequent transactional payments. The segment includes Energy and Toll payments, which are a typical first choice of a new customer. Mobility solutions represent a number of services, which are subsequently sold to customers using Payment solutions products. The segment includes Tax refund, Telematics, Navigation, and other service offerings.

Net energy and services sales, contribution, EBITDA, and Adjusted EBITDA are non-GAAP measures, see Note 8 .

The CODM does not review assets and liabilities at segment level.

 
 Six months ended                Payment     Mobility       Total 
  30 June 2022 (unaudited)     solutions    solutions 
  EUR '000 
---------------------------  -----------  -----------  ---------- 
 Segment revenue               1,137,314       23,501   1,160,815 
 Net energy and services 
  sales                           63,477       23,501      86,978 
 
 Contribution                     54,938       16,971      71,909 
 Contribution margin                 87%          72%         83% 
 Corporate overhead 
  and indirect costs 
  before adjusting 
  items                                                  (36,906) 
 Adjusting items 
  affecting Adjusted 
  EBITDA                                                  (5,498) 
 Depreciation and 
  amortisation                                           (12,431) 
 Net finance costs 
  and share of net 
  loss of associates                                      (3,631) 
---------------------------  -----------  -----------  ---------- 
 Profit before tax                                         13,443 
---------------------------  -----------  -----------  ---------- 
 
 
 Six months ended                Payment     Mobility       Total 
  30 June 2021 (unaudited)     solutions    solutions 
  EUR '000 
---------------------------  -----------  -----------  ---------- 
 Segment revenue                 765,649       18,720     784,369 
 Net energy and services 
  sales                           54,136       18,720      72,856 
 
 Contribution                     47,780       13,032      60,812 
 Contribution margin                 88%          70%         83% 
 Corporate overhead 
  and indirect costs 
  before adjusting 
  items                                                  (27,758) 
 Adjusting items 
  affecting Adjusted 
  EBITDA                                                  (5,367) 
 Depreciation and 
  amortisation                                           (10,457) 
 Net finance costs 
  and share of net 
  loss of associates                                      (4,835) 
---------------------------  -----------  -----------  ---------- 
 Profit before tax                                         12,395 
---------------------------  -----------  -----------  ---------- 
 

Geographical split - segment revenue from contracts with customers

The geographical analysis is derived from the base location of responsible sales teams, rather than reflecting the geographical location of the actual transaction.

 
 EUR '000                               For the six months 
                                           ended 30 June 
=============================  ==================================== 
                                2022 (unaudited)   2021 (unaudited) 
=============================  =================  ================= 
 Czech Republic ("CZ")                   242,813            150,604 
 Poland ("PL")                           199,284            137,490 
 Central Cluster (excluding 
  CZ and PL)                             133,417             89,406 
 Portugal ("PT")                         205,110            172,081 
 Western Cluster (excluding 
  PT)                                     38,117             18,322 
 Romania ("RO")                          153,735             83,085 
 Southern Cluster (excluding 
  RO)                                    183,556            129,378 
 Not specified                             4,783              4,003 
 Total                                 1,160,815            784,369 
=============================  =================  ================= 
 

There were no individually significant customers, which would represent 10% of revenue or more.

Geographical split - net energy and services sales

 
 EUR '000                               For the six months 
                                           ended 30 June 
=============================  ==================================== 
                                2022 (unaudited)   2021 (unaudited) 
=============================  =================  ================= 
 Czech Republic                           15,861             12,642 
 Poland                                   15,323             12,956 
 Central Cluster (excluding 
  CZ and PL)                              12,120              9,786 
 Portugal                                  8,638             11,114 
 Western Cluster (excluding 
  PT)                                      3,492              2,702 
 Romania                                  12,570              8,588 
 Southern Cluster (excluding 
  RO)                                     15,559             12,133 
 Not specified                             3,415              2,935 
 Total                                    86,978             72,856 
=============================  =================  ================= 
 

Timing of revenue recognition was as follows:

 
 EUR '000                                  For the six months 
                                              ended 30 June 
================================  ==================================== 
                                   2022 (unaudited)   2021 (unaudited) 
================================  =================  ================= 
 Payment solutions 
 Goods and services transferred 
  at a point in time                      1,125,804            755,207 
 Services transferred over 
  time                                       11,510             10,442 
--------------------------------  -----------------  ----------------- 
                                          1,137,314            765,649 
 
 Mobility solutions 
 Goods and services transferred 
  at a point in time                          6,357              5,489 
 Services transferred over 
  time                                       17,144             13,231 
--------------------------------  -----------------  ----------------- 
                                             23,501             18,720 
 
 Total segment revenue                    1,160,815            784,369 
================================  =================  ================= 
 
   8.   ALTERNATIVE PERFORMANCE MEASURES 

To supplement its consolidated financial statements, which are prepared and presented in accordance with IFRS, the Group uses the following non-GAAP financial measures that are not defined or recognised under IFRS: Net energy and services sales, Contribution, EBITDA, Adjusted EBITDA, Adjusted earnings, Adjusted earnings per share, Adjusted effective tax rate, Net debt/cash and Transformational capital expenditure.

The Group uses Alternative Performance Measures ("APMs") to provide additional information to investors and to enhance their understanding of its results. The APMs should be viewed as complementary to, rather than a substitute for, the figures determined according to IFRS. Moreover, these metrics may be defined or calculated differently by other companies, and, as a result, they may not be comparable to similar metrics calculated by the Group's peers.

Net energy and services sales

Net energy and services sales is an alternative performance measure, which is calculated as total revenues from contracts with customers, less cost of energy sold. The Group believes this subtotal is relevant to an understanding of its financial performance on the basis that it adjusts for the volatility in underlying energy prices. The Group has discretion in establishing final energy price independent from the prices of its suppliers as explained in its accounting policies.

This measure also supports comparability of the Group's performance with other entities, who have concluded that they act as an agent in the sale of energy and, therefore, report revenues net of energy purchased.

Contribution

Contribution is defined as net energy and services sales less operating costs that can be directly attributed to or controlled by the segments. Contribution does not include indirect costs and allocations of shared costs that are managed at a group level and hence shown separately under indirect costs and corporate overhead.

The CODM reviews net energy and services sales and contribution to evaluate segment performance and allocate resources to the overall business (Note 7 ).

EBITDA

EBITDA is defined as operating profit before depreciation and amortisation.

The Group presents EBITDA because it is widely used by securities analysts, investors, and other interested parties to evaluate the profitability of companies. EBITDA eliminates potential differences in performance caused by variations in capital structures (affecting net finance costs), tax positions (such as the availability of net operating losses, against which to relieve taxable profits), the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortisation expense).

Adjusted EBITDA

Adjusted EBITDA is defined as EBITDA before adjusting items:

 
 Adjusting item                   Definition                   Exclusion justification 
=========================  =======================  ============================================ 
 M&A-related                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 impact 
  expenses                   expenses relating        on 2021 profitability. IPO does 
                             to the Admission         not have any 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 
                             of the Group's           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 expected to end in 2022. 
                             costs), as well          Transformation of key IT systems 
                             as costs related         Transformational expenditure represents 
                             to transformation        investments intended to create 
                             of key IT systems        a new product or service, or significantly 
                                                      enhance an existing one, in order 
                                                      to increase the Group's revenue 
                                                      potential. This also includes systems 
                                                      and processes improvements to improve 
                                                      services provided to customers. 
                                                      Transformational expenditures, 
                                                      which cannot be capitalised as 
                                                      they are mainly related to research, 
                                                      were excluded as the Group is executing 
                                                      its strategic transformation programme, 
                                                      which is expected to end in 2023 
                                                      and due to the fact that annual 
                                                      investments compared to Group's 
                                                      Net sales are significantly higher 
                                                      than regular investments of a technology 
                                                      company. 
-------------------------  -----------------------  -------------------------------------------- 
 Share-based                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 be 
                             IPO                      excluded in period 2021-2024 amounts 
                                                      to EUR 21.9 million, from which 
                                                      EUR 1.3 million is a one-off and 
                                                      EUR 20.6 million is amortised over 
                                                      three years. Although these costs 
                                                      will be amortised over the next 
                                                      three years based on accounting 
                                                      policies, they were excluded as 
                                                      they relate to a one-off event. 
                                                      Anticipated expense adjustment 
                                                      amounts to EUR 6.9 million in 2022, 
                                                      EUR 6.1 million in 2023 and EUR 
                                                      2.6 million in 2024. 
                                                      Share awards provided post-IPO 
                                                      were not excluded as they represent 
                                                      non-cash element of annual remuneration 
                                                      package. 
=========================  =======================  ============================================ 
 

Management believes that Adjusted EBITDA is a useful measure for investors because it is a measure closely tracked by management to evaluate the Group's operating performance and to make financial, strategic, and operating decisions. It may help investors to understand and evaluate, in the same manner as management, the underlying trends in the Group's operational performance on a comparable basis, period on period.

Adjusted EBITDA reconciliation

 
 EUR '000                                  For the six months 
                                              ended 30 June 
================================  ==================================== 
                                   2022 (unaudited)   2021 (unaudited) 
================================  =================  ================= 
 Intangible assets amortisation 
  (Note 11 )                                  8,830              7,274 
 Tangible assets depreciation 
  (Note 11 )                                  2,176              2,022 
 Right of use depreciation                    1,425              1,161 
--------------------------------  -----------------  ----------------- 
 Depreciation and amortisation               12,431             10,457 
 Net finance costs and share 
  of net loss of associates                   3,631              4,835 
 Profit before tax                           13,443             12,395 
--------------------------------  -----------------  ----------------- 
 EBITDA                                      29,505             27,687 
 
 M&A-related expenses (Note 
  5 )                                           524                111 
 Non-recurring IPO-related 
  expenses                                        -              2,827 
 Strategic transformation 
  expenses                                    1,661                764 
 Share-based compensation                     3,313              1,665 
--------------------------------  -----------------  ----------------- 
 Adjusting items                              5,498              5,367 
 
 Adjusted EBITDA                             35,003             33,054 
================================  =================  ================= 
 

Adjusted earnings (net profit)

Adjusted earnings are defined as profit after tax before adjusting items:

 
 Adjusting item                       Definition                 Exclusion justification 
==========================  ==============================  -------------------------------- 
 Amortisation of acquired    Amortisation of assets          The Group acquired a 
  intangibles                 recognised at the time          number of companies 
                              of an acquisition (primarily    in the past and plans 
                              ADS and Sygic)                  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. 
                                                              Total expected amortisation 
                                                              charge to be excluded 
                                                              in period 2020-2022 
                                                              amounts to EUR 3.3 million, 
                                                              from which EUR 1.3 million 
                                                              is expected to be excluded 
                                                              in 2022. The amount 
                                                              represents assets replaced 
                                                              by strategic IT transformation 
                                                              at the end of 2021, 
                                                              however, decisions may 
                                                              be taken as the Group 
                                                              continues with its strategic 
                                                              IT transformation in 
                                                              2022 and 2023, which 
                                                              may lead to new assets 
                                                              being replaced and either 
                                                              accelerated or written-off. 
                                                              The Group expects this 
                                                              adjustment to be relevant 
                                                              until 2024. 
--------------------------  ------------------------------  -------------------------------- 
 Adjusting items affecting   Items recognised in             Justifications for each 
  Adjusted EBITDA             the preceding table,            item are listed in the 
                              which reconciles EBITDA         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 six months 
                                                    ended 30 June 
======================================  ==================================== 
                                         2022 (unaudited)   2021 (unaudited) 
======================================  =================  ================= 
 Profit for the period                              9,187              8,807 
 Amortisation of acquired intangibles               2,761              2,710 
 Amortisation due to transformational 
  useful life changes                                 651                851 
 Adjusting items affecting Adjusted 
  EBITDA                                            5,498              5,367 
 Tax effect                                       (1,188)            (2,584) 
 Adjusted earnings (net profit)                    16,909             15,151 
======================================  =================  ================= 
 

Adjusted earnings per share

Adjusted earnings per share is calculated by dividing the adjusted net profit for the period attributable to equity holders by the weighted average number of ordinary shares outstanding during the period. See Note 14 for further information.

Adjusted effective tax rate

Adjusted effective tax rate is calculated by dividing the adjusted tax expense by the adjusted profit before tax. The adjustments represent adjusting items affecting adjusted earnings. See Note 10 for further information.

Net debt/cash

Net debt/cash is calculated as cash and cash equivalents less interest-bearing loans and borrowings.

Transformational capital expenditure

Transformational capital expenditure represents investments intended to create a new product or service, or significantly enhance an existing one, in order to increase Group's revenue potential. This also includes systems and processed improvements to improve services provided to customers.

   9.   EMPLOYEE EXPENSES 

Employee expenses for the respective periods consist of the following:

 
 EUR '000                                                  For the six months ended 30 June 
======================================  ====================================================================== 
                                                 2022 (unaudited)                    2021 (unaudited) 
======================================  ==================================  ================================== 
                                         Total personnel   Key management*   Total personnel   Key management* 
======================================  ================  ================  ================  ================ 
 Wages and salaries                               26,335             2,406            21,289             1,306 
 Social security and health insurance              6,797               349             5,667               242 
 Social cost                                         699                 2               666                 - 
 Share-based payments                              3,807             3,421             1,665             1,665 
 Own work capitalised                            (4,870)                 -           (2,720)                 - 
======================================  ================  ================  ================  ================ 
 Total employee expense                           32,768             6,178            26,567             3,213 
======================================  ================  ================  ================  ================ 
 

*Until 30 June 2021, included Chief Officers (Board of Directors) and Non-Executive Directors (Supervisory Board) of W.A.G. payment solutions, a.s. From 1 July 2021 includes the Board and Executive Committee of W.A.G payment solutions PLC.

Expenses arising from share-based payment transactions

 
 EUR '000                                     For the six months 
                                                 ended 30 June 
======================================  ============================== 
                                                  2022            2021 
                                           (unaudited)     (unaudited) 
======================================  ==============  ============== 
 Equity-settled plans (pre-IPO option 
  plans)                                         3,124             892 
 Cash-settled plans (pre-IPO)                      189             773 
--------------------------------------  --------------  -------------- 
 Total pre-IPO expenses (Note 8 )                3,313           1,665 
--------------------------------------  --------------  -------------- 
 Equity-settled plans (PSP)                        494               - 
--------------------------------------  --------------  -------------- 
 Total                                           3,807           1,665 
--------------------------------------  --------------  -------------- 
 

10. INCOME TAX

The taxation charge for the interim period has been calculated based on estimated e ective tax rate for the full year of 31.7% (six months ended 30 June 2021: 28.9%).

The tax rate is higher in 2022 mainly due to tax non-deductible costs of equity-settled share-based payments of EUR 3,618 thousand (six months ended 30 June 2021: EUR 892 thousand). Related tax impact amounts to EUR 687 thousand in the six months ended 30 June 2022, which represents 5.1 percentage points of the effective tax rate (six months ended 30 June 2021: EUR 131 thousand, which represented 1.0 percentage point of the effective tax rate).

Adjusted effective tax rate is as follows:

 
 EUR '000                                                     For the six months ended 30 June 
==========================================================  ==================================== 
                                                             2022 (unaudited)   2021 (unaudited) 
==========================================================  =================  ================= 
 Accounting profit before tax                                          13,443             12,395 
==========================================================  =================  ================= 
 Adjusting items affecting adjusted EBITDA                              5,498              5,367 
 Amortisation of acquired intangibles                                   2,761              2,710 
 Amortisation due to transformational useful life changes                 651                851 
----------------------------------------------------------  -----------------  ----------------- 
 Adjusted profit before tax (A)                                        22,353             21,323 
 
 Accounting tax expense                                                 4,256              3,588 
 Tax effect of above adjustments                                        1,188              2,584 
----------------------------------------------------------  -----------------  ----------------- 
 Adjusted tax expense (B)                                               5,444              6,172 
 
 Adjusted earnings (A-B)                                               16,909             15,151 
 Adjusted effective tax rate (B/A)                                     24.35%             28.95% 
----------------------------------------------------------  -----------------  ----------------- 
 

11. INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT

 
                                                 Property, 
                                   Intangible    plant and 
 EUR '000                              assets    equipment 
================================  ===========  =========== 
 Cost 
 Opening balance as at 1 
  January 2022                        244,590       60,582 
 Acquisition of a subsidiary           35,918        2,917 
 Additions                             16,193        3,708 
 Disposals                                  -        (530) 
 Translation differences                  446        (208) 
 Closing balance at 30 
  June 2022 (unaudited)               297,147       66,469 
================================  ===========  =========== 
 
 Accumulated amortisation 
  / depreciation 
 Opening balance as at 1 
  January 2022                       (51,137)     (25,819) 
 Acquisition of a subsidiary             (23)      (1,698) 
 Amortisation / depreciation          (8,830)      (2,176) 
 Disposals                                  -          443 
 Translation differences                (114)            6 
 Closing balance at 30 
  June 2022 (unaudited)              (60,104)     (29,244) 
================================  ===========  =========== 
 
 Net book value 
 As at 1 January 2022                 193,453       34,763 
 As at 30 June 2022 (unaudited)       237,043       37,225 
================================  ===========  =========== 
 

Impairment testing

The Group has tested the intangible assets with an indefinite useful life for impairment as at 31 December 2021. As at 30 June 2022, the Group had not identified any indicators of impairment. The key assumptions used to determine the recoverable amount for the different CGUs are disclosed and further explained in the annual consolidated financial statements for the year ended on 31 December 2021.

12. INVENTORIES

 
 EUR '000                     30 June             31 December 
                               2022 (unaudited)    2021 
===========================  ==================  ============ 
 Raw materials                367                 136 
 Goods (excluding on-board 
  units)                      11,210              6,470 
 Finished products            3                   3 
 On-board units               7,785               2,948 
===========================  ==================  ============ 
 Total                        19,365              9,557 
===========================  ==================  ============ 
 

Goods recognised as an expense are presented in full under cost of energy sold.

13. TRADE AND OTHER RECEIVABLES

 
 EUR '000                               30 June   31 December 
                               2022 (unaudited)          2021 
===========================  ==================  ============ 
 Trade receivables                      302,517       201,924 
 Receivables from tax 
  authorities                            16,677        11,729 
 Advances granted                        13,243        10,948 
 Unbilled revenue                        11,375         5,533 
 Miscellaneous receivables                3,159         4,000 
 Tax refund receivables                  78,952        60,945 
 Prepaid expenses and 
  accrued income                          3,597         3,038 
 Contract assets                          2,748         2,484 
===========================  ==================  ============ 
 Total                                  432,268       300,601 
===========================  ==================  ============ 
 

14. EARNINGS PER SHARE

All ordinary shares have the same rights. Until 8 January 2022, the Company had 1 Class B share, which was excluded from earnings per share ("EPS") calculation as it had no voting rights, rights to distributions or rights to the return of capital on winding up.

Basic EPS is calculated by dividing the net profit for the period attributable to equity holders of the Group by the weighted average number of ordinary shares outstanding during the year.

Diluted EPS is calculated by dividing the net profit for the period attributable to equity holders of the Group by the weighted average number of ordinary shares outstanding during the period, plus the weighted average number of shares that would be issued if all dilutive potential ordinary shares were converted into ordinary shares.

Adjusted EPS is calculated by dividing the Adjusted earnings (net profit) for the period attributable to equity holders by the weighted average number of ordinary shares outstanding during the period.

The following reflects the income and share data used in calculating EPS:

 
                                                     For the six months 
                                                        ended 30 June 
==========================================  ==================================== 
                                             2022 (unaudited)   2021 (unaudited) 
==========================================  =================  ================= 
 Net profit attributable to equity 
  holders (EUR '000)                                    8,902              8,657 
==========================================  =================  ================= 
 Basic weighted average number of 
  shares                                          688,911,333        565,931,997 
 Effects of dilution from share options               517,940          3,657,993 
 Total number of shares used in computing 
  dilutive earnings per share                     689,429,273        569,589,990 
------------------------------------------  -----------------  ----------------- 
 Basic earnings per share (cents/share)                  1.29               1.53 
 Diluted earnings per share (cents/share)                1.29               1.52 
==========================================  =================  ================= 
 

The weighted average number of shares for the six months ended 30 June 2021 of 565,931,997 has been determined based on the number of shares of W.A.G. payment solutions, a.s. multiplied by the ratio at which these shares were exchanged for shares in the Company on 7 October 2021.

Adjusted earnings per share measures:

 
                                                  For the six months 
                                                     ended 30 June 
=======================================  ==================================== 
                                          2022 (unaudited)   2021 (unaudited) 
=======================================  =================  ================= 
 Net profit attributable to equity 
  holders (EUR '000)                                 8,902              8,657 
=======================================  =================  ================= 
 Adjusting items affecting Adjusted 
  EBITDA (Note 8 )                                   5,498              5,367 
 Amortisation of acquired intangibles*               2,229              2,120 
 Amortisation due to transformational 
  useful life changes                                  651                851 
 Tax impact of above adjustments*                  (1,080)            (2,464) 
=======================================  =================  ================= 
 Adjusted net profit attributable 
  to equity holders (EUR '000)                      16,200             14,531 
=======================================  =================  ================= 
 Basic weighted average number of 
  shares                                       688,911,333        565,931,997 
=======================================  =================  ================= 
 Adjusted basic earnings per share 
  (cents/share)                                       2.35               2.57 
=======================================  =================  ================= 
 Diluted weighted average number 
  of shares                                    689,429,273        569,589,990 
=======================================  =================  ================= 
 Adjusted dilutive earnings per 
  share (cents/share)                                 2.35               2.55 
=======================================  =================  ================= 
 

*non-controlling interests' impact was excluded

Options

Options granted to employees under Share-based Option Plans are considered to be potential ordinary shares. They have been included in the determination of diluted earnings per share if the required performance criteria would have been met based on the Group's performance up to the reporting date, and to the extent to which they are dilutive. The options have not been included in the determination of basic earnings per share.

15. TRADE AND OTHER PAYABLES, OTHER LIABILITIES

 
 EUR '000                                  30 June   31 December 
                                  2022 (unaudited)          2021 
==============================  ==================  ============ 
 Current 
 Trade payables                            383,848       260,530 
 Employee related liabilities               10,214        10,656 
 Advances received                          16,523        13,464 
 Miscellaneous payables                      7,896        10,941 
 Payables to tax authorities                14,540         9,728 
 Contract liabilities                        3,164         3,151 
 Refund liabilities                          2,526         3,052 
 Deferred acquisition 
  consideration                              2,949         3,000 
------------------------------  ------------------  ------------ 
 Total Trade and other 
  payables                                 441,660       314,522 
------------------------------  ------------------  ------------ 
 Non-current 
 Put option redemption 
  liability                                 17,220        17,046 
 Contract liabilities                        1,521         1,742 
 Employee related liabilities                1,090           747 
 Deferred acquisition                       11,318             - 
  consideration 
 Other liabilities                              24           746 
==============================  ==================  ============ 
 Total Other non-current 
  liabilities                               31,173        20,281 
==============================  ==================  ============ 
 

16. FINANCIAL RISK MANAGEMENT

The Group is exposed to a variety of nancial risks including foreign currency risk, fair value interest rate risk, credit risk and liquidity risk. The condensed interim nancial statements do not include all nancial risk management information and disclosures required in the annual nancial statements; they should be read in conjunction with the Group's annual nancial statements as at 31 December 2021. There have been no changes in any risk management policies since the year end.

17. RELATED PARTY DISCLOSURES

Company

The Company controlling the Group is disclosed in Note 1 .

Subsidiaries

As at 30 June 2022, there were the following changes in the Group's subsidiaries :

 
 Name                  Principal             Country of            Registered address     Effective economic interest 
                       activities            incorporation 
====================  ====================  ====================  ==================== 
                                                                                         2022            2021 
   ===================================================================================  ==============  ============== 
 WebEye                Mobility solutions    Romania               Oradea, str. Nuf      100%            - 
  International                                                     rului nr. 28E, 
  s.r.l.                                                            Jude ul Bihor, 
                                                                    Romania 
 Webeye Polska sp.     Mobility solutions    Poland                30-663 Kraków    100%            - 
  z.o.o.                                                            (Poland), 250 
                                                                    Wielicka Str., 
                                                                    Poland 
 WebEye Deutschland    Mobility solutions    Germany               Schatzbogen 33,       100%            - 
  GmbH                                                              81829 
                                                                    München, 
                                                                    Germany 
 WebEye Slovakia       Mobility solutions    Slovakia              Sliačska 1E,     100%            - 
  s.r.o                                                             831 02 Bratislava, 
                                                                    Slovakia 
 Webeye                Mobility solutions    Slovenia              Kidričeva        100%            - 
  International                                                     ulica 13D, 1236 
  d.o.o                                                             Trzin, Slovenia 
 WEBEYE Hrvatska       Mobility solutions    Croatia               Zagreb (Grad          100%            - 
  d.o.o.                                                            Zagreb) Buzinski 
                                                                    prilaz 10, Croatia 
 WEBEYE BULGARIA LTD   Mobility solutions    Bulgaria              Sofia 1528, Iskar     100%            - 
                                                                    district, 41 
                                                                    "Nedelcho Bonchev" 
                                                                    Str., floor 3, 
                                                                    apt. 16., Bulgaria 
 MYWEBEYE              Mobility solutions    Portugal              Rua Francisco Pinto   100%            - 
  IBÉRIA, LDA                                                  Júnior n 5 
                                                                    2690-390 Santa 
                                                                    Iría da 
                                                                    Azóia, 
                                                                    Portugal 
 WebEye CZ s.r.o.      Mobility solutions    Czech Republic        Tuřanka          100%            - 
                                                                    1222/115, Slatina, 
                                                                    627 00 Brno, Czech 
                                                                    Republic 
====================  ====================  ====================  ====================  ==============  ============== 
 

Key management personnel compensation

Key management personnel compensation is disclosed in Note 9 .

Paid dividends

Paid dividends are disclosed in Consolidated Statement of Changes in Shareholders' Equity.

Other related party transactions

There were no material changes in other related party transactions in the six months period up to 30 June 2022 compared to corresponding period in 2021.

18. SUBSEQUENT EVENTS

Acquisition of WebEye Group - Hungarian subsidiaries

As disclosed in Note 5 , on 1 July 2022 the Company acquired 100% share capital of the Hungarian subsidiaries of Webeye, a leading fleet management solutions provider in Central and Eastern Europe.

Financial effects of this transaction have not been recognised at 30 June 2022. The operating results, assets and liabilities of the acquired companies will be consolidated from 1 July 2022.

The provisionally determined fair values of identifiable assets and liabilities of Hungarian subsidiaries of WebEye as at the date of acquisition were:

 
 EUR '000                               Fair value recognised 
                                     on acquisition Hungarian 
                                          WebEye subsidiaries 
=================================  ========================== 
 Assets 
 Property, plant and equipment                            722 
 Identifiable intangible 
  assets                                               11,274 
 Trade receivables                                        862 
 Cash and cash equivalents                                102 
 Inventories                                              492 
 Total Assets                                          13,452 
 
 Trade payables                                           726 
 Deferred tax                                             955 
 Total Liabilities                                      1,681 
=================================  ========================== 
 Total identifiable net 
  assets at fair value                                 11,771 
=================================  ========================== 
 Goodwill arising on acquisition                       11,336 
---------------------------------  -------------------------- 
 
 Purchase consideration: 
---------------------------------  -------------------------- 
 Cash paid                                             19,891 
---------------------------------  -------------------------- 
 Deferred consideration                                 3,216 
---------------------------------  -------------------------- 
 Total purchase consideration                          23,107 
---------------------------------  -------------------------- 
 

If the acquisition had occurred on 1 January 2022, consolidated revenue and consolidated loss after tax of combined Hungarian and non-Hungarian WebEye entities for the half year ended 30 June 2022 would have been EUR 7,372 thousand and EUR 110 thousand respectively. Excluding amortisation of acquired intangibles the profit after tax would have been EUR 1,186 thousand. Consolidated revenue for the six months would be evenly distributed between the two acquisitions.

Principal risks and uncertainties

The overall responsibility for the identification and management of the principal and emerging risks to the Group lies with the Board of Directors.

The Group has included to its assessment risks related to Russian invasion to Ukraine, which are mostly reflected in the Group's supplies disruptions, new sanctions and potential physical threats to Group's employees, clients, and assets. Further the Group has amended its risk assessment by risks derived from economic uncertainties. Besides those amendments, the principal risks remain unchanged from those set out in the Group's most recent Annual Report and Accounts, which are accessible at https://investors.eurowag.com/investors/results-center .

 
         Risk                         Description                              Mitigation 
 Product demand         Our operating results are                  -- Reducing dependency 
  decline risk           dependent on the conditions                on a single economy 
                         in the European economy and                -- Reducing dependency 
                         its cycles. The volume of                  on non-EUR currency 
                         customer payment transactions              -- Diversification 
                         and customer demand for the                of products and services 
                         products and services provided             offering 
                         by the Group correlate with                -- Subscription-based 
                         current and prospective economic           revenues 
                         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 to Ukraine, 
                         the economy especially across 
                         Central and Eastern Europe 
                         is already experiencing indications 
                         of recession. These are expressed 
                         by persisting disruptions 
                         in supply chains, high inflation, 
                         increasing of nominal interest 
                         rates, currency weakening 
                         and reduced customer demand. 
                         Together with expected recession 
                         there are high uncertainties 
                         regarding energy supplies 
                         across the region which creates 
                         additional pressures on the 
                         supply chains in the region 
                         and underlying demand for 
                         the Group's products and services. 
                         Eventual decline in demand 
                         would adversely affect the 
                         Group's current and prospective 
                         business and financial conditions. 
                         Further the Group recognises 
                         a risk of governmental interventions, 
                         which can have an adverse 
                         impact on the Group's contribution 
                         margin for its products and 
                         services. 
                       -----------------------------------------  ----------------------------------- 
 Fuel supplies          The Group recognises a high                -- Optimised and diversified 
  risk                   risk of the dry outs of its                fuel suppliers portfolio 
                         bunkering sites and across                 with long lasting experience 
                         its payments network, which                of mutual cooperation 
                         is a consequence of emerging               -- Centralised procurement 
                         energy crisis and imposed                  team for energy supplies 
                         sanctions due to the Russian               and logistics 
                         invasion to Ukraine. Moreover,             -- Continuous monitoring 
                         due to the same reasons complemented       and reporting on the 
                         by local governmental interventions,       situation development 
                         the Group experiences higher               of fuel supplies crisis 
                         risks in securing sufficient               -- Scenarios analysis 
                         fuel supplies at its bunkering             of potential future 
                         sites, at favourable financial             development and preparation 
                         and operational terms. These               of preventive and mitigation 
                         risks have an adverse impact               actions in case of 
                         on the Group's financials,                 different scenario 
                         operations, and business.                  materialisation 
                                                                    -- Diversification 
                                                                    of different types 
                                                                    of energies (eMobility, 
                                                                    LNG) 
                       -----------------------------------------  ----------------------------------- 
 Sanctions risk         The Group must continuously                -- The Group uses system 
                         monitor its compliance with                for partner screening 
                         various sanctions regimes.                 with automatically 
                         Currently, one of the consequences         updating sanctions 
                         of the Russian invasion to                 database. Any new sanctions 
                         Ukraine are sanctions imposed              are also monitored 
                         by the European Union, or                  by external law firm 
                         the United Kingdom.                        within legislative 
                         The Group's policies and procedures,       monitoring and by the 
                         which are designed to ensure               internal team which 
                         that it, its employees, agents,            dedicates capacities 
                         and intermediaries comply                  to screen subscribed 
                         with applicable sanctions,                 notifications from 
                         may fail to effectively work               respective authorities 
                         all of the time. Any violation             and press releases. 
                         of the sanctions regime could              -- The internal team 
                         result in significant expenses             analyse thoroughly 
                         or reputational harm, divert               any new sanctions and 
                         management attention, and                  their impacts on the 
                         otherwise have a negative                  Group's business and 
                         impact on the Group.                       operations. In complex 
                         Given the nature of the Group's            matters the team cooperates 
                         business the sanctions are                 with specialised external 
                         also exposing us to the risk               advisers. 
                         of adverse business and operational        -- New sanction legislation 
                         impacts. Currently valid -                 relevant for the Group's 
                         6(th) sanctions package is                 business is regularly 
                         introducing prohibitions related           reported and towards 
                         to crude oil and petroleum                 the Executive Committee 
                         products, mainly in terms                  together with scenario 
                         of their purchase, import                  planning and impact 
                         and transfer. Due to the 6(th)             assessment. 
                         sanctions package, the Group 
                         is exposed to the risk of 
                         product balancing disruption 
                         in the central region caused 
                         by ban on the export of the 
                         products produced from Russian 
                         origin crude oil delivered 
                         via the Druzba pipeline. Disrupted 
                         product balancing in Central 
                         Europe (AT, CZ, SK, HU) could 
                         lead to a lack of products 
                         in certain markets at certain 
                         periods. 
                         Additionally, to the already 
                         issued sanctions, the Group 
                         recognises a risk of new sanctions 
                         significantly impacting the 
                         current and prospective business 
                         model. 
                       -----------------------------------------  ----------------------------------- 
 Growth strategy        Our growth strategy is to                  -- Continual diversification 
  implementation         build an integrated end-to-end             of products and services 
  risk                   digital platform around the                -- Geographic expansion 
                         needs of our customers in                  and expansion of sales 
                         the CRT industry. Its implementation       channels 
                         relies significantly on technology         -- Activities to introduce 
                         development and increased                  financing platform 
                         power to analyse and utilise               -- Activities to introduce 
                         data. Inability to successfully            digital freight-forwarding 
                         achieve the necessary technology           platform 
                         developments, or not completing            -- Establishment and 
                         strategic acquisition targets              regular reviews of 
                         (as a result of unavailability             the M&A strategy 
                         of targets or insufficient 
                         funding), would expose the 
                         Group to an inability to achieve 
                         its growth objectives. This 
                         would result in a decline 
                         in revenue and a more difficult 
                         position to recover from. 
                       -----------------------------------------  ----------------------------------- 
 Competitors            The Group faces competition                -- Reducing dependency 
  risk                   in each of its product lines               on a single economy, 
                         from many companies offering               single market or single 
                         similar capabilities and services,         revenue stream 
                         including international oil                -- Geographical diversification 
                         companies, single-product                  and products or services 
                         providers of fuel cards, and               offering diversification 
                         other services. In addition,               -- Fast inorganic growth 
                         markets where we operate are               through M&A activities 
                         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. 
                       -----------------------------------------  ----------------------------------- 
 External party         The Group's business is dependent          -- IT vendors management 
  dependency             on several key strategic relationships     policy - setting the 
  risk                   with third parties, the loss               standards for vendors 
                         of which could adversely affect            selection, contracts 
                         our results. Key partners                  reviews and signature 
                         mainly fall into the following             and vendors monitoring 
                         categories - fuel suppliers,               -- Newly established 
                         acceptance network, toll chargers,         centralised vendors 
                         authorisation centres and                  management role 
                         technology service providers.              -- Centralised procurement 
                         Furthermore, the Group has                 team for energy supplies 
                         also initialised an internalisation        and logistics 
                         of the authorisation centre                -- Centralised development 
                         of its fuel cards transactions             and maintenance role 
                         that is currently being provided           for acceptance network 
                         by an external authorisation               -- Contract management 
                         centre - AEVI. The project                 rules and attestation 
                         is significantly dependent                 rules 
                         on the current external provider           -- Centralised legal 
                         of the authorisation centre                counsel - aids in the 
                         and an inability to complete               contracts elaboration 
                         the internalisation, in an                 and reviews 
                         expected quality and timeframe,            -- Project on the internalisation 
                         would expose Group to additional           of the authorisation 
                         costs and potential business               centre in execution 
                         disruptions. 
                       -----------------------------------------  ----------------------------------- 
 Technology             The Group's business relies                -- The Group prevents 
  security and           on technology and data confidentiality,    itself against cyber-attacks 
  resilience             integrity, and availability.               by continuous implementation 
  risk                   As with other businesses,                  and improvement of 
                         we are subject to the risk                 the cyber security 
                         of external security and privacy           standards, in line 
                         breaches, such as cyber-attacks.           with the ISO27001. 
                         In the last half year, these               -- The Group has established 
                         attacks have increased in                  a central project on 
                         their number and sophistication,           continuous information 
                         as a result of war in Ukraine.             security improvement 
                         If we cannot adequately protect            that comprises key 
                         our information systems, including         security functions 
                         the data we collect on customers,          from Technology and 
                         it could result in a liability             Risk departments. 
                         and damage to our reputation.              -- The Group, as part 
                         Also, if the technology we                 of crisis management 
                         use to operate the business                task force, which has 
                         and interact with customers                been activated as a 
                         fails, does not operate to                 response to Russian 
                         expectations or is not available,          invasion of Ukraine, 
                         then this could affect our                 additionally funded 
                         business and results adversely.            and assigned highest 
                                                                    priority to immediate 
                                                                    improvement of cyber 
                                                                    security tools to achieve 
                                                                    better prevention against 
                                                                    increasing number of 
                                                                    cyber-attacks. The 
                                                                    situation is constantly 
                                                                    monitored and reported 
                                                                    upon to the executive 
                                                                    management. 
                       -----------------------------------------  ----------------------------------- 
 Personnel dependency   The Group's success depends,               -- Establishing and 
  risk                   in part, on its Executive                  maintenance of the 
                         officers and other key personnel,          list of key talents 
                         and our ability to secure                  to prevent from losing 
                         the capabilities to achieve                of the key personnel 
                         our strategic objectives.                  -- Annual salary reviews, 
                         Lack of capability and the                 which will reflect 
                         loss of key personnel could                affordability and inflation 
                         adversely affect our business.             -- Long-term retention 
                         Nowadays, the economic environment         plans for key talents, 
                         and competition result in                  retention bonuses 
                         increasing of the risk of                  -- Strengthening of 
                         retaining key personnel. Moreover,         HR teams - enhanced 
                         the Group recognises a risk                HR processes and expenditure 
                         of worsened knowledge resilience,          of the Recruitment 
                         conflicts of interests and                 team 
                         internal fraud caused by key               -- Elaboration of the 
                         personnel being embedded to                succession plans, providing 
                         one region and a function                  of adequate trainings 
                         for a long time period.                    for determined successors 
                         In addition, we depend on                  -- Key personnel rotation 
                         our founder and CEO. Inability             for selected functions 
                         to secure a ready successor                -- Internal controls 
                         could reduce our ability to                system to prevent knowledge 
                         achieve our strategic goals                resilience, conflicts 
                         and an adverse reaction from               of interests and internal 
                         stakeholders.                              frauds risks 
                                                                    -- Forward-looking 
                                                                    plan for interim CEOs, 
                                                                    in case of CEO unavailability 
                       -----------------------------------------  ----------------------------------- 
 Climate change         Climate change and the energy              -- Investing in a portfolio 
  risk                   transition represent both                  of alternative fuels 
                         a risk and opportunity for                 and technologies, including 
                         the Group. Our reputation,                 eMobility, to support 
                         operating and compliance costs,            the transition to a 
                         and diversification of revenue,            low-carbon future in 
                         may be influenced by our pace              the CRT sector 
                         of action, the pace of the                 -- Investing in eMobility 
                         energy transition in the CRT               solutions, including 
                         sector and by our customers                in Last Mile Solutions, 
                         in the short, medium and long              to provide industry-leading 
                         term. We currently derive                  eMobility services 
                         a significant portion of our               to customers throughout 
                         revenues from fees for fossil              Europe 
                         fuels transactions. We note                -- Investing in digitalisation 
                         that changes in road-transport             and technologies to 
                         policy and regulations, the                help our customers 
                         cost of carbon, carbon taxation,           improve efficiency 
                         changes in market demand for               in CRT and reduce energy 
                         alternative fuel and clean                 intensity 
                         mobility solutions, and pace               -- ESG strategy in 
                         of adoption of low-carbon                  place, including carbon 
                         powertrains by our customers,              reduction targets for 
                         can all influence the level                our operations as well 
                         of risk and opportunity for                as develop targets 
                         the business. We also recognise            for, and means of, 
                         that extreme weather events                reducing Scope 3 emissions 
                         could pose a risk to business              across our value chain 
                         continuity for our physical                -- Reviewing business-continuity 
                         assets, as well as the health,             plans to take into 
                         safety and wellbeing of our                account the potential 
                         workforce and customers. In                impacts of extreme 
                         addition, we recognise we                  weather events caused 
                         are responsible for reducing               by climate change, 
                         our own carbon footprint,                  and the impact on people 
                         as well as for contributing                and physical assets 
                         to solutions to help customers             -- Increased transparency 
                         make the transition to a low-carbon        of carbon emissions 
                         future.                                    and related efforts 
                                                                    to reduce them 
                                                                    -- Formal, structured 
                                                                    scenario analysis to 
                                                                    assess the physical 
                                                                    and transition risks 
                                                                    for the business and 
                                                                    its assets, and to 
                                                                    inform ongoing risk-assessment 
                                                                    and mitigation measures, 
                                                                    as well as to report 
                                                                    in line with TCFD 
                       -----------------------------------------  ----------------------------------- 
 Physical security      The Group operates a number                -- Implementation of 
  risk                   of truck parks and these are               the Health and safety 
                         exposed to security threats.               plans on the Group's 
                         A security threat materialising            truck parks to avoid 
                         as a result of insufficient                security threats materialisation 
                         protection would result in                 -- Having in place 
                         danger to the health of our                emergency plans and 
                         employees and customers, and               staff trained on the 
                         significant business disruptions.          acting in the emergency 
                         The risk increased further                 situations 
                         in the last half year by the               -- Petrol stations 
                         Russian invasion of Ukraine                security rules and 
                         and potential escalation of                system for prevention 
                         the conflict to the other                  against physical security 
                         countries, including those                 threats and their regular 
                         where the Group has its employees          control and revision 
                         and assets. In addition, there             -- Business continuity 
                         is an increasing risk of security          plans in place and 
                         threats as a result of the                 their regular testing 
                         war impacts. These are not                 and revision 
                         limited to energy crisis and 
                         dry outs at Group' bunkering 
                         sites. 
                       -----------------------------------------  ----------------------------------- 
 Regulatory             The Group relies on numerous               -- Legal and compliance 
  and licensing          licences for the provision                 business partners dedicated 
  risk                   of its on-road mobility products,          for all business units, 
                         these include wholesale and                with regulation watch 
                         retail permits required for                implied 
                         the provision of fuel products,            -- Continuously implementing 
                         as well as fuel station operating          risk management control 
                         licences for its truck parks,              framework specifically 
                         EETS licence and EETS certifications       in terms of regulatory 
                         in a number of countries,                  and licensing risk. 
                         Electronic money institution               -- Involving legal 
                         licence required for the provision         and compliance counsels 
                         of financial services and                  in new-markets entry 
                         an insurance distribution                  process 
                         licences. As a consequence                 -- Implementing Group-wide 
                         of holding the licences and                AML policy, partner 
                         certifications, the Group                  screening directive 
                         is subject to strict regulatory            and detailed AML directive 
                         requirements (Governance,                  -- Regular AML re-screening 
                         Products, IT security and                  of customers who use 
                         Operational) of regulatory                 regulated financial 
                         bodies in respective jurisdictions.        services 
                         Non-compliance with these                  -- Implementing Group-wide 
                         can result in fines, suspension            personal-data protection 
                         of business or loss of licences.           policy and detailed 
                         Key regulatory requirements                GDPR directive 
                         are operationalised by governance 
                         and compliance with UK plc 
                         listing rules, anti-money 
                         laundering ("AML") and sanction 
                         laws, personal data-protection 
                         laws, Czech national bank 
                         regulation, fuel-reselling 
                         legislation and EETS regulation. 
                         In addition, changes in laws, 
                         regulations and enforcement 
                         activities may adversely affect 
                         our products, services and 
                         markets. 
                       -----------------------------------------  ----------------------------------- 
 Clients default        The Group is subject to the                -- Credit assessment 
  risk                   credit risk of its customers,              at onboarding (scoring) 
                         many of whom are small and                 - in determining the 
                         mid-sized CRT businesses.                  credit risk of its 
                         We are exposed to credit risk              customers, the Group 
                         for particular customers in                performs a credit assessment, 
                         our payment solutions segment              which consists of a 
                         who we finance through post-payment        financial analysis 
                         of their energy consumption                of recent results and 
                         and toll balances and also                 development as well 
                         for customers with invoices                as a business analysis 
                         on 30-day payment terms. If                and verification using 
                         we fail to assess and monitor              available databases. 
                         adequately the credit risks                -- The Group's credit 
                         posed by counterparties, we                risk department conducts 
                         could experience an increase               ongoing credit exposure 
                         in credit losses and other                 monitoring, revising 
                         adverse effects.                           credit limits at regular 
                                                                    intervals and upon 
                                                                    utilisation of available 
                                                                    limits, and updating 
                                                                    collateral from customers 
                                                                    as needed. 
                                                                    -- The ageing of receivables 
                                                                    is regularly monitored 
                                                                    by the Group management 
                                                                    to assess credit risk, 
                                                                    based on expected loss 
                                                                    calculations, which 
                                                                    evaluate probability 
                                                                    of default, exposure 
                                                                    at default and loss 
                                                                    given default. 
                                                                    -- The Group has credit 
                                                                    insurance subject to 
                                                                    first loss policies 
                                                                    on both individual 
                                                                    and aggregate bases 
                                                                    to ensure against the 
                                                                    risk of default from 
                                                                    customers on its trade 
                                                                    and other receivables. 
                                                                    -- Collateral (guarantees, 
                                                                    pledge of receivables, 
                                                                    pledge of physical 
                                                                    assets) - The Group 
                                                                    accepts cash deposits 
                                                                    and advance payments 
                                                                    from customers to secure 
                                                                    credit exposure. The 
                                                                    Group also accepts 
                                                                    other types of security 
                                                                    (such as pledges of 
                                                                    assets or promissory 
                                                                    notes) to mitigate 
                                                                    credit risk. 
                       -----------------------------------------  ----------------------------------- 
 

Explanation of Alternative Performance Measures

 
Category     Name                     Definition 
Financial    Adjusted EBITDA          Adjusted EBITDA represents profit before 
                                       tax, finance income and costs, depreciation, 
                                       amortisation, M&A-related expenses, non-recurring 
                                       IPO-related expenses, strategic transformation 
                                       expenses and pre-IPO share-based compensation. 
             -----------------------  ----------------------------------------------------- 
Financial    Adjusted EBITDA          Adjusted EBITDA margin represents Adjusted 
              margin                   EBITDA for the period divided by Net 
                                       energy and services sales 
             -----------------------  ----------------------------------------------------- 
Financial    Adjusted earnings        Adjusted earnings represents profit for 
                                       the year, before adjusting items affecting 
                                       adjusted EBITDA, amortisation of acquired 
                                       intangibles and amortisation due to transformational 
                                       useful life changes and related tax effects 
             -----------------------  ----------------------------------------------------- 
Financial    Adjusted basic earnings  Adjusted basic EPS is calculated by dividing 
              per share                the adjusted earnings by the weighted 
                                       average number of ordinary shares during 
                                       the period. 
             -----------------------  ----------------------------------------------------- 
Financial    CGU                      CGU (Cash generating unit) is the smallest 
                                       identifiable group of assets that generates 
                                       cash inflows that are largely independent 
                                       of the cash inflows from other assets 
                                       or group of assets. 
             -----------------------  ----------------------------------------------------- 
Financial    Contribution             Contribution represents Net energy and 
                                       services sales less operating costs that 
                                       can be directly attributed to or controlled 
                                       by the segments. Contribution does not 
                                       include indirect costs and allocation 
                                       of shared costs that are managed at group 
                                       level and hence shown separately under 
                                       Indirect costs and Corporate overhead. 
                                       Contribution is before Adjusting items. 
             -----------------------  ----------------------------------------------------- 
Financial    Contribution margin      Contribution margin represents, for each 
                                       of the Group's two operating segments, 
                                       that segment's contribution as a proportion 
                                       of that segment's Net energy and services 
                                       sales. 
             -----------------------  ----------------------------------------------------- 
Financial    EBITDA                   EBITDA is calculated as profit before 
                                       tax, finance income and costs, depreciation 
                                       and amortisation. 
             -----------------------  ----------------------------------------------------- 
Financial    Net cash / Net debt      Net debt / Net cash is calculated as 
                                       Cash and cash equivalents less Interest-bearing 
                                       loans and borrowings. 
             -----------------------  ----------------------------------------------------- 
Financial    Net energy and services  Net energy and services sales represents 
              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 payment   Average active payment solutions customers 
              solutions customers      represents the number of customers who 
                                       have used the Group's payment solutions 
                                       services in a given period, calculated 
                                       as the average of the number of active 
                                       customers for each month in the period. 
                                       A customer is considered an active customer 
                                       if it uses the Group's payment solutions 
                                       products at least once in a given month. 
             -----------------------  ----------------------------------------------------- 
Operational  Average active payment   Average active payment solutions trucks 
              solutions trucks         represents the number of customer vehicles 
                                       that have used the Group's payment solutions 
                                       services in a given period, calculated 
                                       as the average of the number of active 
                                       customer vehicles for each month in the 
                                       period. A customer vehicle is considered 
                                       an active truck if it uses the Group's 
                                       payment solutions products at least once 
                                       in a given month. 
             -----------------------  ----------------------------------------------------- 
Operational  Payment solutions        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 
                                       and Sygic), the average retained proportion 
                                       of the Group's net revenues derived from 
                                       its payment solutions and tax refund 
                                       customers during the entirety of the 
                                       previous years. 
             -----------------------  ----------------------------------------------------- 
 

Notes:

   1)   Please refer to section Explanation of Alternative Performance Measures for a definition. 

2) Calculated as impairment losses of financial assets to total revenue increased by toll payment solutions turnover

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September 06, 2022 02:00 ET (06:00 GMT)

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