W.A.G payment solutions plc Interim results 2024

Strong growth, on-track for Q4 phased rollout of integrated platform

W.A.G payment solutions plc ("Eurowag" or the "Group"), today announces its interim results for the six-month period ended 30 June 2024.

H1 financial highlights

Continued strong growth from our business-critical products and services

• Total net revenue1 +18.4% to €141.0m (H1 2023: €119.1m).
• Payment solutions revenue1 +10.2% to €79.8m, supported by growth from toll revenues and 11.8% growth in active payment solutions trucks .
• Mobility solutions revenue1 +31.3% to €61.3m, as a result of the annualisation of Inelo and continued growth across all our products.
• Adjusted EBITDA1 +18.2% to €59.4m (H1 2023: €50.2m), with a margin1 of 42.1% (H1 2023: 42.2%).
• Adjusted profit before tax1 €21.6m (H1 2023: €25.3m). Statutory profit before tax of €4.2m (H1 2023: €8.5m), a result of higher amortisation from acquired intangibles and interest costs relating to increased leverage, as well as higher depreciation as a result of our transformational capital expenditure programme, which is now complete.
• Capital expenditure spend of €20.5m (H1 2023: €24.7m), including the final €3.0m from our transformational programme.
• Net debt1 position of €302.4m (FY 2023: €316.8m); a marked improvement with Net leverage2 at 2.6x. Renegotiated credit facilities; extended maturity to 2029 reducing annual amortisation payments and extended revolving facility.

Early adopters already onboarded; on-track for phased rollout of industry-first integrated platform in Q4 2024

• New platform unifies all Eurowag brands and services into a single data ecosystem, providing a one-stop-shop to deliver increased growth and efficiencies for customers.
• Early adopters already onboarded; phased migration of existing customers onto the Eurowag Office application for live-user testing. The platform will be ready for new customers in Q4 2024.

Outlook

• While the Board is mindful of macroeconomic challenges across the industry, Eurowag is well positioned and trading in-line with the Board's expectations.
• Furthermore, the Board remains confident in the value creation from the new integrated platform and therefore our medium-term guidance remains unchanged.

Martin Vohánka, Founder and CEO, commented:

"We continue to deliver strong double-digit growth, despite the economic headwinds impacting the Commercial Road Transport ("CRT") industry across Europe. Our resolute focus on providing mission-critical products to our customers has allowed us to create a highly resilient business model, giving us the capacity to enhance our services, scale and innovate.

I am pleased with our strong performance and progress in the first half of 2024, having successfully integrated certain functions of our recently acquired businesses - bringing together new colleagues and teams - and laid the groundwork for the phased rollout of our industry's first integrated digital platform in Q4 this year.

The new digital one-stop-shop will be transformational. For the first time, the industry will have access to a single data-driven ecosystem, solving the complexity and fragmentation challenge that has held the sector back for far too long. For us, the new platform will deepen customer relationships and unlock further opportunities, and this gives me real confidence in our near and medium term guidance."

H1 financials

Notes:

• Please refer to the section Alternative Performance Measures for a definition and see Note 6 of the condensed interim financial statements.
• Net debt includes lease liabilities and derivative liabilities.
• An active customer or truck is defined as using the Group's payment solutions products at least once in a given month.
• Number of payment solutions transactions represents the number of payment solutions transactions (fuel and toll transactions) processed by the Group for customers in that period.

Outlook, near and medium-term guidance unchanged

Eurowag continues to see pressures in the CRT industry, impacting loads and kilometres driven which places higher pressures on the financial stability of smaller businesses, evidenced by a higher rate of insolvencies across some of our markets. Looking ahead, we are starting to see some signs of economic recovery with the load spot market improving, which will benefit small to medium size trucking companies with increased revenues and cash flows. These early indications in the load spot market gives us confidence in delivering in-line with near-term expectations.

With our transformational capital expenditure programme completed, we still expect our ordinary capex to move to around 10% of net revenues. As a result of several deferred consideration payments of circa €35m from past acquisitions to payout in FY 2024, we expect our net debt to adjusted EBITDA to be moderately above our target range of 1.5x -2.5x, with a priority to return within the range in FY 2025.

The delivery of our platform underpins the Group's confidence in delivering mid-teens net revenue growth in the near and medium-term. With further integration work still to take place in respect of recent acquisitions, Adjusted EBITDA margins are expected to grow over the medium-term. The Board is confident in delivering strong growth in-line with expectations, and medium-term financial guidance remains unchanged.

Investor and analyst presentation today

Martin Vohánka (CEO) and Oskar Zahn (CFO) will host a virtual presentation and a Q&A session for investors and analysts today, 05 September 2024, 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:

To view the webcast, you will need to register with SparkLive, which should only take a moment.

Should you want to ask questions at the end of the presentation, please use the following link:

Europe's CRT industry, with a purpose to make it clean, fair and efficient. Eurowag enables trucking companies to successfully transition to a low carbon, digital future by harnessing all mission critical data, insights and payment and financing transactions into a single ecosystem and connects their operations seamless before a journey, on the road and post-delivery. https://investors.eurowag.com

Chief Executive Officer's Review

The first half of 2024 has been a dynamic period for the European CRT industry, marked by regulatory changes, persisting macroeconomic volatility, including fluctuating fuel prices, and a continued shift towards digitalisation.

We have remained focused on our strategic priorities, with significant progress made in each area, as we prepare for the phased rollout of our digital platform in Q4 2024. Progress in the first half of the year includes:

• Be in every truck (attract)
• 11.8% increase in the number of active payment solutions trucks, to 102,667.
• Launched Eurowag Prime - a collection of 70 strategically placed fuel stations along the major transit corridors in 16 countries, that offer optimised prices, superior service standards and infrastructure.
• Launched sales omnichannel pilot in Poland, end-to-end digital sales and onboarding process with a bundled offer.
• Investment in digital sales, growth in converted digital leads +37% year on year.
• Drive customer centricity (engage)
• Eurowag app evolving as part of the new platform, monthly active users +12% to c.36k (FY 2023: c.32k)
• Increased the number of mobile acceptance points to 1,500 (FY 2023: 800).
• Grow core services (monetise)
• Total number of acceptance points now 13,900 (FY 2023: 13,000), in 23 countries.
• Received European Electronic Toll System ("EETS") certification in Slovakia, and we are now certified in 11 countries across Europe. Toll domains ordered on EVA tripled compared to H1 2023.
• Year-on-year more than doubled the number of OBU devices sold.
• Continued development of Decarbonisation-as-a-Service ("DaaS"), established the first HVO corridor in Central and Eastern Europe, connecting Austria, Slovakia and Czech Republic.
• Became the first eMobility Service Provider for the CRT sector.
• Expand platform capability (retain)
• Ongoing implementation of ERP system with next phase focussing on billing.
• E-wallet development continued, on track to launch in FY 2024.
• Development of our new digital integrated platform on track, with groups of users already migrated; on track for the phased rollout to new customers in Q4 2024.

Integration and transformation of our core products and services

Eurowag has been focused on growing both organically and inorganically and is currently navigating through a heavy transformation phase. After starting out as a local fuel card provider, it is now close to delivering an industry-first integrated digital platform.

Before the phased rollout of the digital platform to new customers, we are starting to migrate existing customers onto the platform so we can pilot and test their user experience. The RoadLords users were the first customers to be migrated to the new application, with around 200,000 monthly active users already migrated, and we are currently focused on migrating our Eurowag Fleet Management solution and Eurowag Fuel card users, of which around 7,000 Fleet Management users are already migrated. Migrated customers will benefit from new functionalities and user dashboards. We are still on track to offer new customers access to the platform in Q4 this year.

Alongside working on the digital platform delivery, we continue to expand and improve our core suite of products. In the first half of the year, we expanded our acceptance network to 13,900 points, compared to 13,000 at the end of 2023, of which over 700 in our HVO and LNG networks, supporting our sustainability action plan to improve our customers' access to non-fossil fuel. Our mobile payments application is now available at around 1,500 acceptance points across Europe, almost doubling the acceptance points in the first half of the year. When it comes to toll services, following the successful activation of EETS in Slovakia at the beginning of the year, we saw the number of toll domains ordered through our EVA device triple. We have also added new functionalities, where users can now transfer an OBU between vehicles, improving customer experience. From the beginning of July, Germany has extended toll duty for all vehicles weighting over 3.5 tonnes (as opposed to 7.5 tonnes previously). Together with the new toll regulation in Hungary, which applies toll duty to buses and coaches over 3.5 tonnes, this opens a whole new segment of vehicles to the market and represents a significant revenue opportunity.

People and Board

The Board continue to evolve to reflect the Group's strategy, in particular with focus on supporting the development of the integrated platform. During the period, the appointments of Kevin Li Ying and Sophie Krishnan as non-executive directors were announced, effective from 1 March 2024. In conjunction, Susan Hooper retired from the Board at the conclusion of the AGM. The Group would like to thank Susan for all her commitment and contribution since the Group's IPO.

Furthermore, as the Group progresses into the next phase of its integrated platform phased rollout, it also seeks to strengthen its Executive team to ensure it has the right mix of skills and capabilities to deliver its ambitions. In June, the Group made two new appointments: Felipe Alves joined us as Chief Operating Officer, overseeing all aspects of customer operations, and Francesco Nazzarri joined us as Chief Commercial Officer.

Sustainability and decarbonisation

In the first half of 2024, we have continued to work on our sustainability action plan, which focuses on climate action, customer success and wellbeing, community impact and responsible business.

As we continue to explore opportunities and partnerships in eMobility, we have become the first eMobility Service Provider for the CRT sector, in collaboration with Last Mile Solutions, the largest eMobility platform in Europe.

Our LNG network has expanded to over 420 stations, of which c.12% offer bioLNG. Our HVO acceptance network has expanded to over 310 locations in the Europe (including our own truck parks in Austria, Slovakia and the Czech Republic), helping to establish the first HVO corridor in Central and Eastern Europe, with 48% of HVO sales volumes coming from our own truck parks. The volume of LNG sold in the first half of 2024 has more than doubled, compared to the first six months of 2023.

Financial review

The Group continued to excel in the first half, with growth delivered both organically and from the acquisition made in 2023, demonstrating the strength in its strategic and financial transformations. The Group achieved net revenue growth of 18.4%, with payment solutions up 10.2% and mobility solutions up 31.3%.

Our Adjusted EBITDA increased by 18.2% to €59.4m (H1 2023: €50.2m), in-line with revenue growth. On a like-for-like basis, if you include the annualisation of Inelo of €4.4m and exclude the €6.0m FX forward gain last year and the commercial settlement this year of €2.2m, EBITDA grew by 17.6%. The Adjusted EBITDA margin decreased slightly to 42.1% from 42.2%. Despite strong growth in revenues and higher than expected credit losses, we were able to manage our operating costs to keep margins stable year-on-year.

On a statutory basis, profit before tax decreased by 50.6% year-on-year to €4.2m (H1 2023: €8.5m), mainly as a result of higher depreciation, amortisation and interest. Basic EPS decreased by 53.9% to 0.35 cents per share (H1 2022: 0.76 cents). Adjusted basic EPS decreased year-on-year to 2.51 cents per share (H1 2023: 2.90 cents) driven by lower profit before tax.

The Group's term debt and committed facility, including a multi-currency syndicated revolving credit facility, was amended in the period, now expiring March 2029, with a change to the amortisation but with no change to the related covenants. Net debt at the end of the reporting period was €302.4m (FY 2023: €316.8m). Our net leverage ratio improved to 2.6x net debt to adjusted EBITDA.

In the first half of 2024, investments in our subsidiaries, associates, and financial investments amounted to €8.2m, which consists of deferred acquisition payments for WebEye (€5.0m), deferred acquisition payments for Aldobec (€0.7m) and an acquisition of non-controlling interest within Inelo (€2.5m).

Performance review

Below is a summary of the segmental performance and explanatory notes relating to corporate expenses, adjusting items, taxation, interest, investments and cash flow generation. As in prior years, adjusted and other performance measures are used in this announcement to describe the Group's results. Adjustments are items included within our statutory results that are deemed by the Board to be unusual by virtue of their size and/or nature. Our adjusted measures are calculated by removing such adjustments from our statutory results. Note 6 of the condensed interim financial statements includes reconciliations.

Segments

Note:

• Please refer to the section Alternative Performance Measures for a definition and see Note 6 of the condensed interim financial statements.

The Group's gross revenues increased by 13.0% year-on-year to €1,149.7m, driven mainly by higher average energy prices (a corresponding increase was reported for costs of energy sold).

The Group delivered double-digit net revenue growth and strong contribution margins in both segments. The overall net revenue increased by 18.4% year-on-year, which includes €25.7m contribution from Inelo.

Payment solutions net revenue grew by 10.2% year-on-year. This increase reflects strong growth in Toll revenues as a result of new CO2 charges in Germany and Austria, as well as strong EVA sales and double-digit growth in new truck acquisitions, although the growth is partially offset by lower energy unit prices compared to prior year.

Mobility solutions net revenue grew by 31.3% year-on-year. This strong growth is the result of effective cross-selling, Inelo consolidation, and strong growth in tax refund and transport management system.

Total contribution increased by €14.5m to €107.1m (H1 2023: €92.6m), driven by higher net revenues, although increased expenses particularly from credit losses, reduced the contribution margin performance by 2pp to 76%. (H1 2023: 78%).

Corporate expenses

Statutory operating expenses increased by €17.2m to €121.7m (H1 2023: €104.5m), largely due to increased depreciation and amortisation and higher impairment losses of financial assets, with further details provided later on in this Financial review.

Adjusted Total operating expenses increased by €12.7m to €81.6m, of which €5.2m related to the annualisation of Inelo. The increase comprised mainly of the following:

Adjusted employee expenses increased by 5.8% year-on-year to €44.0m. This growth was driven by salary increases communicated at the start of the year, as well as hiring the right people to support the business through the next phase of our transformation.

Impairment losses of financial assets amounted to €7.8m (H1 2023: €4.2m). The additional charge relates to higher than expected credit losses arising in markets such as Poland, Romania, Hungary and Portugal, where a high number of insolvencies have been observed across the transport industry, in particular with small and medium-sized providers. As a consequence, the Group saw its overall credit loss ratio increase slightly to 0.4% from 0.3%. Nevertheless, the Group's overall receivables portfolio and cash collection process remains robust.

Adjusted technology expenses increased by 8.9% year-on-year to €7.3m (H1 2023: €6.8m). This increase reflects the Group's focus on technology transformation and cloud transition.

Adjusted other operating expenses, comprising consultancy, facilities maintenance and cost of services provided, increased by 10.8% year-on-year to €25.6m (H1 2023: €23.1m), mainly due to the Inelo acquisition.

Other operating income decreased by 54.2% year-on-year to €3.1m (H1 2023: €6.8m); last year's balance included a favourable FX forward gain of €6.0m, while this year's balance of €3.1m relates mainly to a legal settlement of a dispute following an acquisition.

Adjusted depreciation and amortisation grew by 19.6% year-on-year to €22.7m (H1 2023: €18.9m), primarily due to the amortisation of acquired assets of Inelo.

Adjusting items

In H1 2024, the Group incurred costs of €17.4m (H1 2023: €16.8m), which were considered to be Adjusting items and have therefore been excluded when calculating Adjusted EBITDA and Adjusted profit before tax. These are summarised below:

The Group has incurred acquisition related costs which are primarily professional fees of €2.2m (H1 2023: €2.7m) in relation to M&A activities, predominantly the Inelo acquisition.

ERP implementation and integration expenses are costs relating to key IT systems and the integration of Inelo. Around €2.8m is related to the implementation of our ERP system, which successfully went live in January 2024. A further €12-16m expense is anticipated until the end of 2026. Integration costs of €0.2m were incurred in H1 2024 and approximately €1m is expected to be adjusted in 2024.

Expenses are no longer categorised as Strategic transformation expenses, as the Group considers the transformational programme was concluded at the end of 2023.

Share-based compensation primarily relates to compensation provided to previous management, prior to the IPO. These legacy incentives comprise a combination of cash and share-based payments and will vest during this year. No further share-based compensation adjusting expenses are expected in the future. For clarity, post-IPO share-based payment charges are not treated as Adjusting items.

Amortisation charges of €10.0m relate to the amortisation of acquired intangibles in H1 2024 (H1 2023: €6.8m); the significant increase is due to the annualization of Inelo.

Net finance expense

Net finance expense in the first half of 2024 amounted to €14.8m (H1 2023: €5.7m). The increase mainly reflects higher interest costs related to increased borrowings as well as higher factoring fees related to higher average utilisation throughout the year.

Taxation

The Group's adjusted effective tax rate increased to H1 2024: 19.6% (H1 2023: 18.3%) in-line with expectation, as a result of the increased rates in key tax regimes in which the Group operates and lower statutory profitability. Corporate income tax in the Czech Republic increased from 19% in 2023 to 21% in 2024, in the UK the rate increased from 23% in 2023 to 25% in 2024, and in Slovenia the rate increased from 19% in 2023 to 22% in 2024, while in Spain the rate remains at 24%. Further details can be found in Note 6 of the condensed interim financial statements.

EPS

Adjusted basic EPS decreased by 13.4% to 2.51 cents per share (H1 2023: 2.90). Despite achieving an increased EBITDA, higher depreciation and amortisation together with increased finance expenses led to an overall decrease. Basic EPS for the first half of 2024 was 0.35 cents per share, a 53.9% year-on-year decrease.

Pay-out of deferred consideration and acquisition of non-controlling interests

In H1 2024, the Group paid deferred acquisition considerations of €5.7m and acquired non-controlling interests for a consideration of €2.5m. Refer to Note 13 of the condensed interim financial statements.

Cash performance

During the period, the Group reported a cash inflow of €14.4m (H1 2023: outflow of €303.7m). The basis of deriving this net debt movement is set out below:

Note:

• Includes proceeds from sale of assets.
• Excludes lease and derivative liabilities.

As at 30 June 2024, the Group's net debt position stood at €302.4m, compared with €300.9m as at 30 June 2023.

Tax paid increased to €6.8m (H1 2023: €4.0m), primarily impacted by higher H1 2024 tax advances in the Czech Republic (€0.5m) and higher tax payments in Hungary (€0.5m). A refund of overpaid tax in Spain in H1 2023 (€1.1m) also decreased the comparative figure.

Interest paid increased to €11.4m (H1 2023: €7.4m), driven by a higher level of borrowings in the first half of 2024 as a result of the Inelo acquisition in Q1 2023.

Non-cash items in Adjusted EBITDA primarily include the add back of share awards issued post IPO and provision movements relating to credit losses of €7.8m (H1 2023: €4.2m).

Net working capital increased by €0.1m (H1 2023: €36.0m) reflecting relatively flat inventory levels and offsetting increases in both trade receivables and payables.

Adjusting items of €3.2m consists predominantly of the ERP implementation costs and Other items mainly relates to bank guarantee and factoring fees.

Capital expenditure

Capital expenditure in the first half of 2024 amounted to €20.5m (H1 2023: €24.7m), which included €3m of spend, completing the transformational programme. Net capital expenditure of €19.5m (H1 2023: €23.6m) included proceeds from the sale of equipment of €1.0m (H1 2023: €1.1m). €6.3m of this capital investment focused on maintaining and enhancing existing products. A further €8.8m is represented by the development and implementation of technology and data systems, including the development of our new Eurowag Office. The target remains to reduce capex spend to around 10 per cent of net revenue through the transition to a single technology platform, and reducing duplications across IT, hardware, and technology processes over time.

Alternative performance measures

The Group has identified certain Alternative Performance Measures ("APMs") that it believes provide additional useful information to the readers of the condensed interim 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.

APMs are reconciled to the statutory equivalent, where applicable, in Note 6 of the accompanying condensed interim financial statements.

Capital allocation

Our priority continues to focus around investment in the platform together with integrating the technologies and products of our acquired businesses. We expect to reduce duplications across IT, hardware, and technology processes. M&A is important and we will continue to consider value-accretive M&A opportunities, however we are mindful of our current leverage position. We remain disciplined and want to maintain our strong and robust balance sheet, therefore the Group does not intend to pay dividends, as we continue to prioritise investment in growth.

Financing facility and covenants

On 14 March 2024, the Group signed an amendment to the Club Finance facility, which increased the share of revolving loans within the uncommitted incremental facility up to €40 million (previously up to €25 million). The total amount of uncommitted incremental facility remains unchanged. The amendment also removed the requirement to calculate the interest cover covenant for the six months ended 30 June 2024.

On 6 June 2024, the Group signed another amendment to the Club Finance facility, which changed the maturity date to 31 March 2029 and decreased quarterly instalments.

• The Group is not required to report on the Interest cover covenant as at 30 June 2024.
• The covenant shall not exceed 3.75 in 2024 and 3.50 in 2025 and onwards.

The Group also manages its working capital needs through the use of uncommitted factoring facilities, with average financing limits of €138.7m and average utilisation of 74.0% (H1 2023: €124.1m and 71.8% respectively). This demonstrates the Group's proactive approach to maintaining a strong financial position, and its ability to optimise working capital.

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:

• 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
• 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 the Financial statements dated 26 March 2024 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)

OTHER COMPREHENSIVE INCOME

Other comprehensive income to be reclassified to profit or loss in subsequent periods

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

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)

(EUR '000)

• Corporate information
• Basis of preparation

The condensed interim financial statements for the six-months ended 30 June 2024 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 2023, which have been prepared in accordance with UK-adopted International Accounting Standards (UK-adopted IFRS).

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 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 2023 were approved by the Board of directors on 26 March 2024 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.

These condensed interim financial statements for the half year period (from 1 January 2024 to 30 June 2024) were approved for issue on 5 September 2024 and have been neither reviewed nor audited by the auditors. There is no significant seasonality of Group's operations.

Going concern

The financial statements have been prepared on a going concern basis. Having considered the ability of the Company and the Group to operate within its existing facilities and meet its debt covenants, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. The adoption of the going concern basis is based on an expectation that the Group will have adequate resources to continue in operational existence for at least twelve months from the signing of the consolidated full year financial statements.

The Directors considered the Group's business activities, together with the principal risks and uncertainties, likely to affect its future performance and position. For the purpose of this going concern assessment, the Directors have considered the Group's forecasts for the period to September 2025. The review also included the financial position of the Group, its cash flows and adherence to its banking covenants.

The Group has access to a Club Finance facility which matures in March 2029 comprising of the following:

• Facility A: €150m amortising facility with quarterly repayments plus a €57.5m balloon;
• Facility B: €180m committed facility with quarterly repayments plus a €69m balloon;
• Revolving Credit Facility ("RCF") of €235m for revolving loans (up to €85m) and ancillary facilities (up to €150m); and
• €150m uncommitted Incremental Facility for acquisitions, capital expenditure and revolving credit facilities up to €50m of which not more than €40m for revolving loans.

The Group's Club Finance facility requires the Group to comply with the following three financial covenants which are tested semi-annually:

• Net leverage: total net debt of no more than 3.75 times Adjusted EBITDA in 2024 and 3.5 times in 2025 and onwards;
• Interest cover: Adjusted EBITDA is not less than 4.0 times finance charges; and
• Adjusted net leverage: Adjusted net debt (including guarantees) of no more than 6.5 times Adjusted EBITDA.

The Directors have reviewed the financial forecasts across a range of scenarios and prepared both a base case and severe but plausible downside case. The severe downside case assumes a deterioration in trading performance relating to a decline in product demand, as well as supply chain risks. These downsides would be partly offset by the application of mitigating actions to the extent they are under management's control, including deferrals of capital and other discretionary expenditure.

The Directors have also considered the impact of climate-related matters on the Group's going concern assessment, and do not expect this to have a significant impact on the going concern assessment throughout the forecast period.

On consideration of the above, the Directors believe that the Group has adequate resources to continue in operation existence for the forecast period to December 2025 and the Directors therefore consider it appropriate to continue to adopt the going concern basis in preparing the 2024 interim financial statements.

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 2023, as described in those financial statements, except for tax. Income Taxes for the interim period is accrued using the tax rate that would be applicable to expected total annual profit or loss.

• 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 2024:

• Amendments to IFRS 16 - Lease liability in sale and leaseback.
• Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements.

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

Certain new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for period commencing 1 January 2024 and have not been early adopted by the Group. These new standards, amendments and interpretations are not expected to have any significant impacts on the Group's condensed interim financial statements.

Segmental analysis

In accordance with IFRS 8, The Group has determined its operating segment based on the information reported to the Chief Operating Decision Maker ("CODM"). The Group considers the Executive Committee to be the CODM who evaluate segment performance. The Group is organised in two operating segments: Payment solutions and Mobility solutions. Payment solutions represent Group's revenues, which are based on recurring and frequent transactional payments. The segment includes Energy and Toll payments, which are a typical first choice of a new customer. Mobility solutions represent a number of services, which are either subscription based or subsequently sold to customers using Payment solutions products. The segment includes Tax refund, Fleet management solutions, Navigation, and other service offerings.

Net energy and services sales, contribution, contribution margin, EBITDA, and Adjusted EBITDA are non-GAAP measures, see Note 6.

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

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

Alternative performance measures

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

Net energy and services sales ("Net revenue")

Net energy and services sales 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.

Contribution margin

Contribution margin is the Contribution as a percentage of Net energy and services sales.

Adjusted EBITDA

Adjusted EBITDA is defined as EBITDA before Adjusting items:

Adjusted EBITDA margin

Adjusted EBITDA margin represents Adjusted EBITDA for the period divided by Net energy and services sales.

Adjusted profit before tax

Adjusted profit before tax is calculated by adding back the Adjusting items affecting Adjusted EBITDA and amortisation of acquired intangibles.

Adjusted earnings (net profit)

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

Net debt/cash

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

Where not presented and reconciled on the face of the interim condensed consolidated income statement, balance sheet or cash flow statement, the adjusted measures are reconciled to the IFRS statutory numbers below:

Adjusted EBITDA

* Primarily related to Inelo acquisition.

** In 2023 presented within strategic transformation expenses.

Like-for-Like ("LFL") underlying EBITDA

*non-controlling interests impact was excluded.

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.

Income tax

The taxation charge for the interim period has been calculated based on estimated effective tax rate for the full year of 40.8% (six months ended 30 June 2023: 34.2%). The rate increased as a result of the increased rates in key tax regimes in which the Group operates and lower statutory profitability. Corporate income tax in the Czech Republic increased from 19% in 2023 to 21% in 2024, in the UK the rate increased from 23% in 2023 to 25% in 2024, and in Slovenia the rate increased from 19% in 2023 to 22% in 2024, while in Spain the rate remains at 24%.

Adjusted effective tax rate increased from 18.31% to 19.61%. Further details are provided in Note 6 of the accompanying condensed interim financial statements.

The Group has reviewed impact of OECD Pillar 2 legislation, which is effective in most countries as of 1 January 2024. Based on the analysis of the OECD model rules and modelling performed on the data for the year ending 31 December 2022, the Group should benefit in most countries from safe harbours as defined by OECD (de minimis, simplified effective tax rate) on the assumption that our Country by Country report for the year ending 31 December 2024 is qualifying. For the other most material countries, there might be additional top-up tax in Slovakia and Spain, but this is not expected to be material. Our assessment of substantively enacted legislation, including qualifying domestic minimum taxes, is ongoing. Management will further monitor OECD Pillar 2 tax position of the Group and implement all necessary steps for proper reporting in individual countries.

Earnings per share

All ordinary shares have the same rights.

Basic EPS is calculated by dividing 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 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.

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

For the six months ended 30 June

Options

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

Fair value measurement

Fair value measurement hierarchy for assets and liabilities as at 30 June 2024 (unaudited):

There have been no transfers between Level 1, Level 2 and Level 3 during the six months ended 30 June 2024.

Fair value measurement hierarchy for assets and liabilities as at 31 December 2023:

There have been no transfers between Level 1, Level 2 and Level 3 during the year ended 31 December 2023.

Specific valuation techniques used to value financial instruments include:

• for put options - option pricing models (Monte Carlo); and
• for other financial instruments - discounted cash flow analysis.

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, and the credit rating of the Company has not significantly changed since refinancing in September 2022.

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.

Business combination

There were no new acquisitions in 2024.

Investments in subsidiaries and associates

Pay-out of deferred consideration

On 2 January 2024, the Group paid deferred acquisition consideration of €5.0m related to the acquisition of WebEye.

On 22 January 2024, the Group paid deferred acquisition consideration of €0.7m related to the Aldobec acquisition.

Acquisition of non-controlling interests

On 7 February 2024, the Group acquired the remaining 4.19% interest in CVS for a consideration of €0.8m.

On 25 April 2024 the Group restructured an option to accelerate the acquisition of its remaining shareholding in FireTMS. The maximum option price and final option timing remains the same, however the payment dates and terms were amended. The Group agreed to acquire a further 7.6% of the equity shareholding for €3.4m, paid in two equal instalments in April (€1.7m) and July 2024 (€1.7m). The final 11.4% equity shareholding remains subject to an option mechanism exercisable in H1 2026 and the price is subject to certain financial and KPI targets met by FireTMS.

Inelo contingent consideration

On 4 July 2024, the Group signed a settlement agreement with former shareholders of Grupa Inelo S.A. The final contingent consideration was agreed at €2.0m and is payable by 30 June 2025. Deferred acquisition consideration estimate was revised as at 30 June 2024, the charge was recognised within other operating expenses and considered as an Adjusting item (M&A-related expenses).

Intangible assets and property, plant and equipment

Impairment testing

At 31 December 2023 the Group tested intangible assets with an indefinite useful life for impairment and recognised an impairment charge of €56,663 thousand. As at 30 June 2024, the Group did not identify 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 2023.

Trade and other receivables

Present value of deferred acquisition consideration relates to the following acquisitions:

*includes FIRETMS.COM transferred from put option redemption liability as at 30 June 2024 (Note 13)

Interest bearing loans and borrowings

On 14 March 2024, the Group signed an amendment to the Club Finance facility, which increased share of revolving loans within uncommitted incremental facility up to €40 million (previously up to €25 million). Total amount of uncommitted incremental facility remains unchanged. The amendment also removed the interest cover covenant for the six months ended 30 June 2024.

On 6 June 2024, the Group signed another amendment to the Club Finance facility, which changed maturity date to 31 March 2029 and decreased quarterly instalments.

On 20 June 2024, the Group signed an incremental facility III notice, which committed additional €40 millions of revolving loans and €10 million of bank guarantees.

Financial risk management

The Group is exposed to a variety of financial risks including foreign currency risk, fair value interest rate risk, credit risk and liquidity risk. The condensed interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group's annual financial statements as at 31 December 2023. There have been no changes in any risk management policies since the year end.

Related party disclosures

Company

The Company controlling the Group is disclosed in Note 1.

Subsidiaries

As at 30 June 2024, there were the following changes in the Group's subsidiaries:

Key management personnel compensation

Key management personnel compensation is disclosed in the table below.

*Includes the members of the Board and Executive Committee of W.A.G payment solutions PLC.

Ultimate controlling party

The Company is the ultimate parent entity of the Group and it is considered that there is no ultimate controlling party. Decision making is made collectively by the Board of Directors or by Board sub-committees on behalf of the Board. The Board is the first to approve many of the items brought to vote at the Annual General Meeting (e.g. Directors' appointments and resignations, authority to allot shares, annual accounts approval, appointment of auditors). Mr Vohánka does not control either the Board of Directors or its sub-committees.

Paid dividends

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

Transactions with other related parties

* The Group acquired the following goods and services from entities that are controlled by members of the Group's key management personnel: software development, consultancy.

Subsequent events

Acquisition of non-controlling interests

On 3 July 2024, the Group acquired remaining 30% interest in Sygic, a.s. for a consideration of €15.6m.

On 15 July 2024, the Group acquired 3.8% interest in FIRETMS.COM Sp. z o.o. through its subsidiary Grupa Inelo S.A. for a consideration of €1.7m.

Pay-out of deferred consideration

On 2 August 2024, the Group paid deferred acquisition consideration of €4.1m related to the acquisition of WebEye.