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(Alliance News) - Despite positive annual results on a profit and revenue basis, WAG Payment Solutions PLC on Thursday said its focus remained on taking advantage of "huge" market opportunities to maximise value, instead of declaring a return to shareholders.
This was despite the London-based company known as Eurowag, which processes toll and fuel payments for trucks across Europe, seeing pretax profit surge 59% in 2022 to EUR28.0 million from EUR17.1 million in 2021, as revenue increased 44% to EUR2.37 billion from EUR1.65 billion.
Eurowag confirmed it did not intent to pay dividends as it continues to "prioritise investment".
Speaking to Alliance News, Chief Executive Officer Martin Vohanka said he felt the trucking industry was overlooked, despite how "crucial" it is in providing goods services. He labelled Eurowag's purpose as looking to provide the "digital and operational transformation" needed within a persistently "analogue" industry.
"On top of the great results, we have progressed our technological journey, completing all the necessary components in order to a create market-first, integrated end-to-end platform for the trucking industry," Vohanka said.
"Across 2022, there were two ways of doing this: at first, building in-house, but also via mergers and acquisitions."
These included acquiring "substantially all of the assets" of central and eastern Europe-focused fleet management solutions provider Webeye Telematics Zrt in July 2022; launching a strategic partnership with JITpay Group in September 2022, a provider of digitalised billing, receivables management and financing solutions, including invoice discounting; and entering into an agreement with Sygic in December 2022 to take full control of its resources.
On Wednesday, Eurowag also completed the acquisition of fleet management solutions and work time management software provider Inelo.
Amid a series of acquisitions growing the company towards its goal of accelerating towards an "integrated platform" of increasingly digital products, Vohanka also stressed Eurowag was mindful of financial discipline.
This was why Eurowag opted, once again, to not make a dividend payment to shareholders, Vohanka said, arguing it has been consistent since its initial public offering in 2021 identifying greater value to shareholders in "huge" market opportunities than via paying dividends.
"More broadly, I would like to draw attention to how society sees the trucking industry," Vohanka said. "The industry is suffering, but we need it otherwise goods would not reach supermarkets. Now we are facing challenges with decarbonisation, causing low profitability across the wider industry.
"We saw this with a lack of drivers in the UK last year. Therefore, you can see from what we have been able to build over the last few years and what more we can do for the industry. Fundamentally, we change it and add much necessary value through further investment. We prefer this path over more medium-term considerations of paying dividends at the moment."
Despite this, Vohanka did not rule out Eurowag in the long term of paying out dividends to shareholders. "I think it's more a matter of the right timing," he said.
Vohanka was not concerned by net cash falling 95% across 2022 to GBP2.8 million at December 31 from GBP61.7 million a year earlier. He argued Eurowag has a track record of being a "highly cash generative" business.
The fall in the level of cash was due to the cash outflows used in investing activities, including
technology transformation investments, the acquisition of Webeye and JITpay, as well as repayments of borrowing compensated by underlying cash generation.
Looking ahead, Eurowag said it plans to focus on integrating the businesses it acquired in 2022. The company also said it is confident of strong growth, while its medium-term financial guidance remains unchanged.
"There is still much work to do as we approach a new phase of Eurowag’s journey," said Vohanka.
"However, we have entered into 2023 with strong momentum and I am more confident than ever that our integrated, end-to-end digital platform will unlock further value for both our customers and shareholders."
Eurowag told Alliance News it has a good track record of weathering macroeconomic pressures, claiming to have had steady net revenue since 2005, withstanding the pressures of the 2008 financial crisis, Covid-19 and, currently, the fall-out from the war in Ukraine.
While Eurowag expects to be nearing the end of its "accumulation phase", focusing rather on integrating its acquired assets, Vohankar said "we do not stop looking" for further market opportunities to maximise value, as and when they arise.
Shares in Eurowag were up 0.2% to 82.00 pence each in London on Thursday afternoon.
By Greg Rosenvinge, Alliance News reporter
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