W.A.G. Payment Solutions (LSE:EWG) — Half year results 2025

0:02 Good morning, ladies and gentlemen, and welcome to the Eurovag Half Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and we'll publish those responses where it's appropriate to do so on the Investor Meet company platform. Before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to Carla Bloom, VP of Investor Relations and Communications. Carla, good morning. Good morning, and welcome to all of those who've joined me this morning. Thank you for taking the time out to get to know a little bit more about Eurovag.

0:53 We obviously hosted our results last week, and I thought today was a a good opportunity not only for shareholders who know us, but actually for new shareholders. So welcome to those who are new to to Eurovag. I've looked at the list of those who've joined us today, and there's a mixture of USA who some of you know us really well and some of you don't know us at all. So I have got a mixture of slides here today, one of more of an introductory for those who are new, give you sort of a basic level of of who Eurovag is before I then move on to more of our strategic and financial update, which as I said, we presented last week. And then I'll close off with q and a's towards the end. So before I've starts on on Eurobag, what is really helpful for investors to really understand is actually the industry in which we operate.

1:45 So for those who don't know that the trucking industry across Europe, it's made up of 9,000,000 vehicles. It makes up 5% of European GDP. And as you can see, it it it provides sort of to over sort of 20,000,000 jobs across Europe. And you can also see that actually, road transportation is a very key pillar to the economy. Anything in your offices, anything, in your homes needs something. It needs a vehicle. Yes. There are trains and boats, but actually the trucks are the the pillar of the economy in Europe. On the right hand side, as you can see, it's a 9,000,000 vehicles, and they made up of a a variety of different types of vehicles. So you've got, sort of 10 to 15, so about one and one and a half millions of heavy vehicle trucks, and they do the international hauliers. So a lot of these trucks you see in Europe crossing crossing Europe, these are the international hauliers. And then majority of them are based in sort of Central Eastern Europe and actually Iberia, so Portugal and Spain.

2:48 You then have some more sort of kind of commercial vehicles, again heavy, and they make up more of the domestic. So they sort of are traveling within sort of countries rather than doing the international. And as I then you go back to sort of the sort of medium sized carriers. Just to give you a bit of sort of understanding of the challenges that this industry faces and again, you know, laying a foundation for you to then really understand where Eurovag was sort of founded and and why it's grown into the the business that it is today. So looking at the trucking industry, CRT industry, and I I talk mainly about the sort of the international, Julio. So those that are crossing borders, having to go through tolls, having to get their sort of cheapest fuel, where do they stop, where do they refuel, where do they sleep, etcetera, etcetera.

3:35 So this industry is very much, a non digital industry. There are multiple, multiple systems that these hauliers use that are from different service providers. So as you can see on the left hand side, 13% of companies are using digital applications to help them with their operations. It's a very complicated sort of operation. So if you think about a a truck starting its journey until the end of its journey, there are so many administrative tasks that they need to do. Where is the next load? When do they get there? How do they cross the borders? How do they use the tolls? What foreign exchange to use? What driver? Where do they stop? All the regulatory sort of pieces that go with that. And so therefore, it's a very, very complicated business.

4:25 Many of you might know not know that when you see trucks on the European roads, we think that they come from these big operations and they don't. So 90% of the 9,000,000 trucks across Europe are made up of small, medium sized businesses. So on average, these operate or these companies have up to seven trucks per fleet. So as you can see, very small, very unsophisticated, trying to do their best in terms of trying to to operate across Europe. Their financing is is constrained. So if you think about, these operations, a lot of their, costs come up front. So if you think about it, it's their fuel, their employee costs, their maintenance, all of those day to day operations are paid upfront, and yet they're only invoiced and paid sort of thirty to ninety days later.

5:13 So they, you know, their their working capital, their cash is very constrained. As you can see with the lack of digitization, let's say, all of these systems that they have to use within their operations, Some of it's manual. Some of it's actually still whiteboards on their on their offices, to try and understand where their fleet is. Margins are are particularly low because of these inefficiencies with the lack of digitization. The other issue with this industry is because there hasn't been, any sort of digital applications, sort of applied across the the haulier system, or the ecosystem, should I say. 20% of the trucks in Europe on the road are empty. So whilst a truck might be going from example from Bratislava to Barcelona, they might not be able to find the load going back and therefore that load is empty. And that has a fundamental impact on the environmental on the environment. And as you can see there, a lot of the greenhouse gases in Europe are from these trucks crossing Europe.

6:14 So where does Eurovag come into this? So Eurovag was founded thirty years ago by our CEO and founder, Martin Bahanka. He actually lived near a local refinery, and so he started to transfer fuel to local farmers, to truckers. And therefore, this sort of fast forward twenty years on, so in 2020 2015, Eurovag was very much a fuel card company. It's a closed loop card. So when a a truck goes and fuels up, there is no cash that passes at that moment in times, but it's effectively a transaction that we will take from from our card into our system. And we then would invoice the truck owner for that fuel, and we've obviously pre agreed with that particular fuel station a pre agreed price for the fuel. So that was, you know, sort of twenty years of growing this business into very much a fuel card company.

7:14 As you can see on the top piece of the the slide is that Martin and the team, ten years ago, started to really truly understand exactly what our customers needed. It wasn't just a fuel card, but it was about putting all of these different, pieces of their operations into one place. So today, you know, energy, toll, finance, regulatory applications, the shippers, the freight forwarders, everything was done in a separate, system. So if you think about a dispatcher who's on twenty four seven seven days a week trying to make sure that everything is is working, their fleet is in the right place, they're paying for their fuel, they're not stopping, you know, they can make it through the toll systems. You know, there is a lot of sort of systems and process and suppliers that need to be connected to these small, medium sized businesses.

8:08 And as you can see on the bottom is is effectively where Eurovag's customers sit. So we we we deal with the fleet owners, obviously, majority of the time. It is actually the dispatchers and the drivers who are doing the functionality of their business, and that's where Eurovag sort of started to think about. It's not just about the fuel, but it's all all of these sort of operating systems that need to come together to truly drive their operational efficiencies, but equally to help with these empty loads, to help these very small businesses with their operations. And so that's where sort of Eurovag ten years ago started to buy these sort of digital applications that we would be able to over time integrate into one system and give the, sort of the trucking industry a digital tool to make sure that they can help with their operations and they can make it much more more efficient.

9:00 So if I reverse back to IPO, which was four years ago, as you can see there, we only had sort of a select amount of products and services. They were not, digitally sort of put together or that, you know, they were sort of single single products. As I said, energy was our majority of our revenue. So, about 75% of our revenue, back four years ago was made up of energy. So that was the fuel card business. We then started to acquire certain, as a digital applications. One was navigation. So there's only five navigation businesses left in in the world. And we acquired Sagic, which is is basically the heart of this application, which I will come to talk about in a in a bit. Tax is another one. So if you think about all of these international hauliers who are buying fuel, food, all of their kind of expenses within the markets that they don't reside in, they can get that VAT back. And as I mentioned, three to 5% of margins is very low, so every single penny counts for these businesses.

10:02 And so you're allowed one sort of VAT agents and and Eurovag is is one of those. Toll, again, I'll come back to in a minute. But Toll, we've to about five or six years ago, we decided to invest in a system which effectively allows truckers to have one onboard unit in their truck, and that allows them to move seamlessly through Europe. We're a bit we have toll now available in sort of 24 markets. If you have ever seen a truck on the road, I would encourage you to look at their windscreen and you might see sort of three or four boxes. And this is for the sort of the toll sort of services that allows them to move freely across Europe. Since IPO, we've started to invest in in data centric businesses. So as you can see there, we bought, two very large businesses, one which was, fleet management solutions. So that is for the dispatcher, where are your trucks, are they going in the right direction, making sure that they're on time, making sure they're filling up at the right station. So we bought WebEye.

11:08 And then more recently, we've acquired Inello, which is, again, fleet management solutions, work time management. And we've now also got transport management systems, which is more about when you accept a load until the invoice, how does that all kind of process together. Move a bit forward and over the last few years, we've actually been trying to, again, in house create a financing and e wallet solution. So that's, for example, a kind of a revolute within the system. If you think about the trucking industry today, as I said, multiple suppliers, multiple systems, trying to understand your cash flow all in separate systems. What we're trying to do here is putting everything together so they can see all of their transactions, all of their credits, all of their invoices in one place, and that's effectively what we've launched this year. So as you can see, our addressable market today is 9,000,000,000, but there is a significant amount, to go in the foreseeable future once we've digitized all of these solutions into one place.

12:12 So bring to life a little bit of what what why sort of you may have heard about Eurovag Office. And I say this is this platform that we are trying to create to put all of these mission critical services into one, system. It's not just about bringing these products into one place. It's actually about bringing the you know, some of these products might come together. We can try and pull them together and create digital solutions for our for the trucking owners using AI and various tools for their operations. So if you wanna think about the the Eurovag office on the right hand side, we've got three different users. You've got the driver, the owner, and the dispatcher. We need to make sure that these tools service these different users in various fashions. And as you can see there, there's desktop, mobile, and actually in the cockpit today, we're working with some of the manufacturers to ensure that some of our applications are in are in the infotainment.

13:06 And as you say on the left hand side, you can see that we're bringing all of these mission critical services all onto one platform. Before I move on to our financial results, as I we we mentioned last week, I thought we I would kind of give you a a sort of a snapshot in time of where we are today. We have been investing heavily and I'll I'll come back to where we've been investing in. But effectively, where we are today with bringing all of these sort of products and solutions together is, last year, we launched, sort of the first phase of this platform, and that had your navigation, and it had a bit of a a a fleet management solution. We've been testing and trialing with our customers how to you know, does does the migration work for them? You know, the the the tools that they use for their everyday needs to be migrated very seamlessly.

13:58 And if you think about the fleet management solutions, there's multiple across different markets that look very different. We today have seven fleet management solutions through the various acquisitions, and therefore bringing them together is is quite a a a complicated process. So last year when we launched it, it was about kind of testing and trialing sort of the the fleet management solutions and how we bring that into the platform. This year, our priority has been energy and toll and you'll see from our results why why it is a priority. But effectively, it's again bringing those you this is sort of a a phased approach is if you have to bring the the product into the platform, and then we slowly need to migrate those customers onto the platform, and then we can start to digitally onboard new customers.

14:45 Where we sit today is, as I said, we've acquired, multiple businesses over the last few years. Our sales teams go together, they sell the individual products. But, again, every all the user interfaces are still separated, and this is how we're now bringing it all together. So there's only one user experience for our customers. The other piece, let's say, this year is about the e wallet. I mentioned that, shortly is that, again, bringing everything into one, all the transactions. Today, if you're an energy and toll customer, we invoice you twice a month, and that's the only parts of the process that you will see is through an invoice. This allows them real time, visibility of their transactions. And because they have a credit effectively with Eurovag, they can also manage their cash a lot better because they can see their credit history. They can see where they are in terms of their cash, and that will enable them to help with their management of their operations.

15:45 Digital onboarding is a new one for us. For those, again, who don't know us, we've got 600, sort of sales and marketing teams across Europe in 19 countries. The the industry is very much door to door sort of marketing and sales still. So we have people on the ground going to meet customers and selling these products, as I said, on an individual basis today. This will dramatically change the industry because there will be digital onboarding. So today, you might go meet a customer. You manually input it into the into the system. And again, two weeks later, so three weeks later, you might get your physical card or your your service might be initiated. With digital onboarding, it happens within sort of two to three days. They're able to use their sort of their credit and their services.

16:32 So again, just thinking to not just the efficiencies of our customers, but actually Eurovag as a business. And as I said, we are starting to look at our other products and how we slowly migrate those onto onto the onto the, the platform. I'll move on to our financial results. But again, for those who are new to to Eurovac, I wanted to just quickly brief you and sort of brief you on how we look at not just our revenues, but our KPIs. What are the key KPIs within our it was in our business? So as I mentioned to you, we've got a lot of different types of products. And with those different types of products come different types of revenue. So on the left hand side, we've grouped our energy and toll payments, which are very much transactional into what we call payment solutions. And on the right side, we call them mobility solutions. So those are very much your data centric services that are subscription based, so monthly recurring revenue.

17:29 Over time, we're sort of talking about subscription revenues because those are sticky, but actually energy and toll are equally as sticky as as the sort of the mobility solutions. But as you can see, we've come a long way. As I mentioned to you, energy made up 75% of our revenues just three, four years ago. We're now at 6040% of those are our mobility solutions. In terms of KPIs, again, it's quite key in terms of the way we look at our business and the decisions we make within our business. As you can see, there's sort of the two core KPIs that we do look as a business is number of active trucks. When we say active trucks, a truck or a owner or a dispatcher has to use our services within a month, and that's what we call active.

18:15 And we talk about number of active or sort of products per active truck. So how many products of ours are using using our services? As you can see today, we've still got quite a way to go. We have a north star of a million trucks. And today, we've got just over 300,000 trucks using actively one or more of our products. And as you can see on on the, on the right is that 2.8, products are being used from our customers on average. And we've got more than, eight plus products that we can sell to our customers. And again, our ambition is obviously using more than six products over time. When we've done some cohorts in terms of, customers taking one, two, three, or four products of ours, we know that after we've sort of cross sold them another product.

19:07 So if they've got two products, the churn halves. If you offer them a third product, the churn halves. And we know after sort of three products that actually we've got the customer for life. And that's effectively the the the the model that we're using in terms of the forward looking piece. And particularly when you've when you've acquired the customers through the digital application where we will have, you know, a lot more of their data in one place, that will certainly be encouraging for customers to take more than one product of ours. When we also look at the sort of the the the customer acquisition costs, those will come down over time. As I just mentioned to you, this is sort of the the the industry is very much a a manual and door to door process. With this digital platform, we can now start to acquire and cross sell our products to customers. So we would hope that the acquisition cost would come down over time.

20:03 And ARPU, as you know, and a good example is, you know, the the telecom industry has also moved to this sort of, you know, multiple product bundling. And then and we know that ARPUs, average revenue per truck, will go up every product that you add into their portfolio. The the the average revenue per truck will go up. So as you can see, we've got a long way to go, but it's a a very exciting journey that we've been on. So if I now move to our results for last week, as I said, taking these key KPIs as our as our focus going forward. As I mentioned, we've got now, over 300,000 trucks connected to one or more of our services. That's up 5% on the year. Net promoter score is important to us. So are we engaging with our customers? Are our customers happy with our, customer service?

20:54 That's improved over the last year to 43 points. Industry average, if we take an amalgamation of different industries because Eurovag unfortunately doesn't sit within just one industry. It's around sort of 90, sorry, 39% points. So we're just above average in terms of the industry. Monetize, as I mentioned to you, is very important to us. So how are we cross selling our products? And as you can see, we've actually made good progress there. It might look small. However, if you think about it, every time we add a new truck to the portfolio, they might start with one product, and over time, we can then cross sell. So that will be, you know, a number that we will keep focused on. And as I say, if that gets diluted from, you know, more trucks being added, we will obviously make sure that the cohort is being communicated properly. But we're doing a good job in terms of the the cross selling of our products to to our current customers.

21:50 Retain, as I mentioned to you, our revenue model subscriptions is the sort of the recurring, that was up in the year, and now contributes to sort of 2424% of our total revenues. As I said, we will be looking at this, metric. As I say, for us, it's about the recurring or reoccurring revenue. So the stickiness of our revenues, and we do feel that majority of our revenues is sticky. As I said, that's why we talk about sort of active customers. Those that are actually, you know, giving us generating revenue on a monthly basis. And the final piece is about optimization of our internal processes. We've acquired 14 businesses over the last seven years. And as you can imagine, every company comes with, you know, different customer services, different accounting platforms, HR systems, finance systems, and we're now trying to make sure that we can put all of this into into one Eurovag operating model. So we've made good progress there.

22:50 We hired a COO last year who's been sort of making sure that we can start to streamline some of these processes. And, again, for us as as a company, it's it's a, we can scale once we are fully sort of aligned on our operating model. But equally, there's a lot of cost synergies that we can go for still in terms of some of these acquisitions that we've acquired. From a financial highlights perspective, net revenue's grown 15% against strong net revenue growth. Cash EBITDA, we look at cash EBITDA and again I'll come on to on why cash EBITDA not just EBITDA but that's again growing very nicely at 14%. Eurovag has always been a sort of a cash a strong cash generator.

23:38 We I guess, we've not been able to see it fully because of the acquisitions that we've made more recently as well as investing back into the into the business and the platform. And again, I'll come on to that shortly. But again, we've been able to deliver really quickly to two times net debt to EBITDA. And finally, we paid a three p special dividend. I will talk about our capital allocation later on in the presentation, but obviously that has been received well from our shareholders. And then finally, we've obviously reiterated our full year guidance and I'll come on to that shortly. Quickly taking you on a bit of a journey in terms of our, sort of financial, performance since IPO. Eurovag has always, grown at double digits even before the IPO, as I say, you know, as as Martin's grew grown his business, not just in fuel cards, but also the other services, it's always growing very nicely. Twenty four k car also includes our acquisitions.

24:36 But as you can see there, I've as I've already mentioned, our acquisitions were very much data centric and therefore mobility has grown as an absolute mount, as well as a sort of the contribution to total revenue. If I take the m and a out and sort of look at underlying growth, we've continued to grow double digit growth, since the IPO two. This year, so half last year on this year is a is a clean number, I would say, compared to the previous years. We've had no lapping of of m and a. So the underlying, as you can see there, is growing at 15% year on year. And as I said, mobility 40% now and and 60% with payments. Cash EBITDA, as I say, is is an important metric for us. It's a metric that's actually been just put into our new LTIP plans that was agreed at the AGM last year last week.

25:27 That's very much about looking at the cash, of our business and making sure that we are, being efficient in our operations. And as you can see there, again, from a CAGR perspective, 29% over the last four years, year on year, at 14%. If I just break down our revenue in in terms of where the growth is coming from, in in the first half, as you can see there, you know, very strong growth from energy and toll. Toll, is a is a key growth driver for us going forward. EATS, which is a European, electronic, toll service provider, We have now got 13 markets where we are the collector of toll on behalf of the authorities, and that is is is growing.

26:16 So as a toll, you know, a lot of investment has gone into the the system and the onboard unit, which is to say the the the board on the onboard unit that's on your on the truck. And so strong growth, and we exited last year also at 50% growth in 2024. In terms of our mobility sort of solutions, say, still strong growth. If you strip out the noncore CRT revenue. So with some of our acquisitions we bought, they are smaller fleets within that. SIJ complete management solutions will be sort of people carriers, light vehicles. Eurovag is very much focused on the CRT industry. So those are the heavy vehicles, international, therefore, over time, those revenues will decline. If we strip these out, our actually, our mobility solutions grew almost 8%.

27:13 Looking at cash EBITDA, for those again who trying to understand sort of the p and l, we look at net revenue. So whilst you might see our gross revenue reported, we look at net revenue. Our net revenue as a suggested sort of grew 15%, and then you take our costs off which usually include credit losses, employee expenses, and then technology and other OpEx that gets you to our EBITDA number. Historically, that's been the focus of the business. But as I said, with all this investment in the business, and actually as a company that's been now listed for four years, the the share based payments are also growing. So what we've done in terms of our cash EBITDA is you take your EBITDA, you add your capitalized r and d. Again, you know, we're we are investing in the business.

28:01 And I'll come shortly on to where we've been investing our our money. And then you add back the noncash based payments, which do impact EBITDA, but we take that out as a noncash. It's a noncash impact, and therefore, you get to a a cash EBITDA number. And as I said, that's a a key metric for our management team going forward. So as you can see, 14% up. We had a one off settlement last year, which was 2,200,000. Extracting this. So for on a like for like basis, actually, cash EBITDA was up 20% year on year. Before I go into the CapEx, again, what we spent this half year and and and last year, We often get asked, you know, we've got quite a a high capital investment program and has done so for some time.

28:53 As I've alluded to, you know, we've done a lot of acquisitions. There is a lot of work that needs to be done within the products portfolio. So it's not just about maintaining the products, but actually it's about advancing, developing it, making sure we remain competitive within the various industries. So if I look at this, slide, we actually showed it at the Capital Markets Day two years ago. This is effectively our tech stack. This is what we've been building over the last few years. On the front end, you can see we've got the digital digital front front end. That's about the application. That's about customers coming to us through a digital form. As I mentioned, it's been very sort of manual and and there's a multiple user experiences. We've now created one user experience where customers can come in through through one platform.

29:38 And as I already mentioned, you've got multiple users who are using it, which is the owner, the dispatcher, and the driver. So making sure that they have, accessibility to to this application. Services. So say the integrated business services, those are all of the products that we have today. As I said, it's about not just migrating them to the platform, but making sure that actually we can start to create more tools with these products. So how do we bring some of these together so that, again, the operations for our customers are seeing this from end to end rather than sort of having to jump from from system to system. Tech and the data platform have been key. Technology platform is all about our sort of financial systems, the HR systems. Our customers is, say, using their, you know, real time transactions.

30:27 We've been investing in an SAP project for the last three, four years. We've got another year to go. This is about putting all of these financial systems together from all of these different acquisitions. And again, it's about making sure that it's modern. And then when we can scale, it's it's a it's it's it's an easier platform to scale from. And finally, the data is super, you know, it's it's super important for us in terms of this digital platform. It's about bringing all of our different customers' data, which again sits on different systems today through the different acquisitions. It's about bringing it all together so that the customer can see their data in one place. They don't have to look at multiple systems to find the information they're looking for. And I think once we bought all of this together, we're starting to look at AI tools that we can help our customers with their operations.

31:15 You won't get this from any other service provider, in the industry. This is a quite a unique platform that we're trying to build together. Yes. You might have, you know, the separate individual service providers providing fleet management solutions, you know, work time management, fuel cards, but they're all different customer different suppliers, different So this is really, really key that we get this right in terms of integrating our platform into one place. I haven't really mentioned the hardware and infrastructure. And again, with some of our solutions like fleet management solutions and our toll, you need a box within the truck, and that's what we call our hardware. And this is key about now bringing all of our hardware together from, again, all the acquired businesses, all procuring differently. It's all about bringing that together and and procuring together and making one simple box for our our our customers.

32:10 So jumping back into the last half year, as you can see there, we have grown our capitalized r and d. So we talk about capitalized r and d as our tech and data and platform and products. And that capital r and r and d has grown sort of 5%. We gave guidance that we want to make sure that we are controlling our our CapEx. And therefore, at the beginning of the year, we communicated we need we will cap the capitalized r and d at 50,000,000 per year. As you can see, we're we're nowhere near there in the half year. And so we do anticipate a little bit higher CapEx in the second half. But again, we won't be using that hope that sort of full 50,000,000 in this financial year. As I already mentioned, our onboard units is key to grow to grow our growth. It will our sort of our growth drivers, which is toll as a fleet management solutions.

33:03 That has increased slightly. But as you say, if you looked at our 50% growth in our toll, that's partly because of these onboard units and putting them into our customers' hands so that we can grow our own revenue. So slightly up on our onboard units. And our infrastructure is at 1.4 for the half. That includes some of our truck parks. So we do have a few truck parks across Europe that we put our own fuel into and I say that that's kind of what we call infrastructure. Going back to cash, net leverage is is a is a is an important metric for us. We know speaking to UK institutional shareholders that leverage, especially over the last few years with interest rates being high is not liked so much by UK shareholders.

33:55 But again, you know, Eurovag has been a very highly cash generative business. It has gone to m and a and it has gone back into the business. But here you can see we've got leverage down to two times. It was three times only eighteen months ago. So again, we are whilst we are investing, we are being able to pay that down pretty quickly. The only other sort of number on this slide that I'd like to kind of highlight is our working capital. So again, for those that don't understand Eurovag, our working capital is based on the payables and receivables of our operations. The gross revenue is about 4,000,000,000 in the year and that is majority of our toll and fuel transactions.

34:40 So that is the invoice that we get sent to the the customers and is what they effectively pay. Our working capital, on a 4,000,000,000 over the year can swing in any direction on either day. The when we offer our customers a thirty day terms, we might be paying off your, supplies on a thirty five or a forty day terms. So as you can see that working capital could swing in on on a any any given point in time. This is just a snapshot of our working capital. So as of the June 30, and we do it as of the December 31. In our appendix slides and our presentation on the website, you will see that we give an average of the year because they say these can be very tricky. We've done a lot of initiatives internally in terms of supplier and contracts with our customers to make sure that these sort of movements are are aligning over time.

35:36 But as I say, we're we're proud to see that our working capital on this given snapshot is neutral. And I say that does definitely help towards our our our cash flow. This is again for those that don't know Eurovag, well, but, again, in terms of our capital allocation. So how does the board and management look at, our our capital allocation? Our priority, as as always, is the organic growth. So that's investing back into the business. As I've already sort of shown you, where our investment has gone is definitely into technology, this platform, and we need to start, as I say, in terms of our processes. This has helped us to continue to grow double digit growth on an underlying basis. It's improving margins, cash margins, and it's about the generation of cash.

36:23 Deleveraging, as we mentioned, is important. So say we were glad to see it down at two times. For the full year, we will remain at two times because we've just paid the dividend in the second half of the year. M and a has obviously historically been important to us. It's about accumulating all of these different data centric platforms. Once the platform is fully integrated and we've got everything in one place, we do think there will be some opportunities for smaller bolt ons. So for example, if we buy a fleet management solution with 10,000 trucks that are connected to its solution, we can easily buy that, plug that into our system, and then cross sell. So we do see going forward that if we do see some opportunities with some either similar products or they enhance the product, we will be able to integrate that into the platform.

37:11 And finally, if we've got some cash left over, we will return that to shareholders. And as I say, we we showed that as as a special dividend this year and that we returned to say in the second half of this year. And as I say, once we have you know, if the the board will continue to to look at this and see if we can be have a sustainable dividend that might be something that they might consider in the future. For, our financial guidance, as I said, we've kind of reiterated it. So we do think that this year we can maintain our double digit, top line growth. Margins, let's say, margins will remain in line with last year. With the new LTIP that was agreed, by shareholders last week, there is a non cash, EBITDA impact in the second half. So that will move it to 40% margins for the year.

38:01 CapEx, as I mentioned, we remain the cap at 50,000,000. Adjusted cash EBITDA at the beginning of the year, we gave a guidance range that we thought we would come between 90 and a 100,000,000. We're already into September, and so we've kind of we've moved that goal post slightly the middle of the range of 90 to 100,000,000. And finally, as I said to you, the net leverage, we will remain around two times. Our guidance is between one and a half and two and a half. And so as you can see, we're well within that range now. And finally, with the with the, long term incentive plan that we agreed last, week by shareholders, the key metric there is cash, so cash EBITDA. So we have given, a new guidance, medium term guidance where we see, cash EBITDA on a CAGR of low teens.

38:52 So just to summarize, a really strong half first year continuing our kind of momentum, I would say, from from 2024. Top line, double digits and cash EBITDA growth. Energy solution is now within the platform and as well as EWallet, and our focus now for the second half is on toll. I haven't touched on the indirect channel and that is through some of our OEMs or some of our track manufacturers. Now with we have a digital platform, we can start to sell through digital means and that's partly through some of our our dealerships across Europe. So we started to trial a process in in Spain and Italy through one of our manufacturers. Once we've got this fully tested, we can then start to roll up that further out, across Europe.

39:38 I said net leverage now well within sort of middle of the range. Looking forward to our second half, again, our platform is priority. I said toll is is a priority, and we also now need to start to migrate our customers so we can then start to cross sell some of those customers on the platform and equally start to introduce new customers through through the platform. We do think that by the early next year, we will have 30% of our customers using the platform, and we aim for end of twenty twenty six to have 80% of customers using our platform. As I said to you, the sort of the digital onboarding, we continue to develop that and and and roll that across Europe. And then the final piece, as I said to you, is is key for for Eurovag is the standardization and optimization of our processes across the group. Still quite a way to go in terms of integrating some of our acquisitions.

40:34 So, again, that's going to be key to driving our long term growth. I will pause there and I will now open up to Q and A. Perfect. Carla, if I may just jump back in there. And thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that have been submitted already, just like to remind you that a recording of this presentation, along with a copy of the slides and the published q and a can all be accessed via your investor dashboard. Carla, as you can see there, we have received a number of questions throughout your presentation this morning, and thank you to all of those on the call for taking the time to submit their questions. But, Carla, at this point, if I may just hand over to you just to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that'd be great. Thank you.

41:27 Great. Thank you. And thanks for all those that have submitted, some questions. So Michael, has asked me, the churn rate within the core SME fleets and how does this compare against the large enterprise clients. So I would say, the large enterprise clients have their own sort of systems and processes. And so, therefore, where we focus as I mentioned at the very beginning, you know, 90% of the industry is actually small SMEs rather than these larger sort of enterprise businesses. And so, you know, these small SMEs don't have digital solutions. As I say, they've got multiple systems that they'll have to kind of, you know, flick between. Hence, why we're trying to create this one digital sort of platform for them. If you talk about the churn rate, I would have to take each individual product individually.

42:17 And what we look at is actually when we look at our fuel card, that is the most highly churned product. Help saying that, most truck drivers have two or three cards. One is their main card that they will use. The second might be there might be a cheaper rate for them on the road on any given day, which they might use. And then the final one is kind of, you know, if they're looking for more credit or if they, you know, they've used their first two and they need some more, that's kind of the third. So I would say, whilst we have churn and that's why we give active tracks. So that is tracks using our card on a monthly basis. If they don't use our card on a given month, that is taken out of our numbers. However, they still have our card and can use it again. So actually, we've been quite you know, we we are being very transparent.

43:06 So if you take fuel card, for example, that could be 20 percent churn. However, as I've suggested, we've done, you know, a lot of cohorts within our own operations in terms of adding new services to our customers. So if you think about fuel card customer, if we then add toll, the churn rate comes down to to 10%. If we then add on fleet management solutions, that comes down to 5%. So we are very proactive at once we've sold them one one product, we then cross sell. So that gives you a bit of a a sort of a flavor. In terms of the mobility, it's less churn because, let's say, it's more of a monthly subscription. So once they're locked in, it's usually sort of, you know, sort of two to three years depending on the product. So, again, sort of the the churn rate is is is lower there. As I say, for us, our focus now is is definitely once they've got one product, it's about the cross sell and being able to manage that churn better.

44:01 I'll move on to the next one. So, Paul, it says, with SMEs being highly fragmented across Europe, what is your most effective route to market digital tales partnership or m and a? So that's a great question, Paul. I would say, if I go back a few years ago and actually the industry today as I already mentioned on the presentation, it's very much about door to door salespeople. And so so we've got 600 marketing and sales across our kind of 19 offices who are there going to to our customers. So at this moment in time, it's very much die direct sales. We did start to, a few years ago, look at at our sort of digital sales and that has improved, dramatically.

44:47 So, again, how many, of our kind of customers coming in are from direct from digital means. So that is growing. But as I said, once we've got a platform that we can launch, that will be a lot easier. In terms of the indirect is what we call indirect. We have now partnered with three truck manufacturers to put our navigation within their infotainment. So every new truck coming off the the the factory floor will have our navigation within that. So we are starting to build partnership with some of our our OEMs as we call them, truck manufacturers. We are also work with them in terms of selling our fuel card. So at any given time when a a loaner comes and buys a truck, we will then ask to sell a fuel card at the same time. And this is what I was alluding to in the sort of the the the indirect digital platform that we've now created, which we're now trialing in Spain and Italy through some dealerships. So our OEMs don't necessarily have their own, you know, dealerships.

45:50 There's kind of independent dealerships across Europe. So we're now trialing of digital onboarding. So when a when an owner comes and buys a truck, they'll also have a salesperson at the same time selling Eurovag products. We're still in early stages, but we do see that as quite a key driver for us in terms of, the the revenue and and growth in revenues through these sort of indirect, channels. M and a, as I mentioned, I guess, in the last slide, I think once we have a fully digital platform, this will be a lot easier in terms of acquiring new customers. So today, when we think about the direct sales, it's about €500 to acquire one customer. When we look at the digital means, that comes down significantly because you're probably only just doing the sort of sales commission.

46:37 And then when you look at m and a, we will need to understand, you know, how those customers, you know, versus kind of just organic, which is a lot slower. So when we look at our 1,000,000 as our kind of North Star trucks connected to our platform, there is obviously some m and a in that to, you know, accelerate, the the tracks onto the platform. But as I it's key once they're in that platform and we can get them in quite quickly, it's about cross selling the further products, to them. I'll move on to Martin. What leverage range do you aim to maintain and what would prompt moving below or above it? So as I mentioned, we've got a range which we have one and a half to two and a half. We were at three when we acquired our Inello business, which I know a lot of people were were nervous at.

47:29 But as I said, we've been able to deliver pretty quickly back to sort of, you know, the two times. We will continue, as I say, you know, we don't whilst, you know, m and a is is is key to us. I think the cash generation today can fund our our investment into the business. And as I say, over time, that will come, you know, say, we've got two times now that will come down further next year. But there will be some small bolt ons, but we aim to maintain that sort of one and a half to two and a half net debt to adjusted EBITDA. Edwin, thank you for your questions. So at high in terms of subscription revenue, it went up as a percent of net revenue, but your mobility solutions were growing slower than payment in h one. How do you reconcile that?

48:18 So, Edwin, I think if you look at the absolute subscription revenues, they grew. So that 1% is the absolute amount of our subscription revenues. To your point, you are right. So I think at the full year, it was as a contribution to the full to total revenue. I think it was at about 26%. So the percentage contribution has come down, but we still look at it on an absolute basis. So the absolute net revenue or contribution from subscription revenues went up. If you look at my chart when I when I did the revenue chart, if you go back there, you'll see that the absolute year on year has grown. Yuri, why did Eurovag stop publishing trading updates?

49:04 We used to for those that don't know, we used to do q ones and q threes. It's not a legal requirement as a as a listed company anymore on the London Stock Exchange. Whilst we are not reporting q ones and q threes, it was only revenue. And I've you know, I think that a lot of the times people were trying to understand then sort of, you know, low down on the p and l or certain KPIs. We are trying to see whether we can publish some information on a quarterly basis, but it won't be our revenues anymore. We don't feel that it was kind of, you know, helpful in terms of the other metrics. But as I we will sort of, you know, make sure that we can keep continue to give some information, you know, on the platform, be it, you know, some of the KPIs.

49:50 So that will hopefully over time come back in terms of quarterly. But right now, half one, half two is kind of is key to us for for publication. And I'll move to the final question from Michael. Hi, Carla. Can you please talk about the progress of the Yervak office and onboarding of products such as well as feedback from users, positives, surprises, negatives? Okay. Yeah. Michael, again, good good question. I didn't cover that so much on the on the presentation. I was obviously trying to to make use of of our time. Where we are right now, as I said, is the the platform is very much up and running. We have some fleet management solutions using it. We wanted to do fleet management first because that was the the key, user journey that was most important for our customers. So when we try and migrate a a dashboard that might look different from the one that we might have in the platform, you know, these dispatches are using it all the time. And therefore, these slight tweaks be it, you know, a color or, you know, a font size or, you know, when we have our applications or banking applications change, we don't know what to do. It could be quite frustrating. But these are very important to their day to day operations. And so what we've done is we created the the the platform.

51:10 We migrated a few customers and tested in trials and went back to them to understand what they liked, didn't like, why they didn't like it. And then once we felt that we had it in a good sort of shape, we then started to migrate a few more of our sort of fleet management's customers. What we have done for them though is we put a little icon on the dashboard that would take them back to their original view. That just gives them the sort of the knowing that they can go back. We would again monitor that and understand why they went back. And again, slowly but surely, we've monitored that most people now go straight to our dashboard and don't necessarily go back. So that's something we're we're working on. As I said, energy is now in the in the office and being used from, again, a cohort of our our customers. Again, we don't we need to make sure that our growth and our results today are very much a reflection of our our historical business, not necessarily the business that we're getting through the platform.

52:05 And so it's, you know, making sure that we can continue to grow our our current base whilst we, you know, migrate these customers slowly. So you so energy is now within the platform. Navigation is within the platform. Half two is about toll, and as you can see, growing at 50%. You know, we really need to make sure that we maintain that momentum whilst sort of taking customers onto the platform. One thing to note about these products is the FMS solution is probably the the hardest because let's say you've got a user of Journey that you are aware of. All of the others all of the other services like toll, energy, work time management, sort of the back office VAT is not necessarily such a difficult user journey to to migrate into the platform and for customers to keep using.

52:54 So, again, that's, you know, that's what we've been doing and and and and very much, you know, there is no one else and I need to reiterate, there is no one else who's creating such a platform for this industry. So there is no need to rush. As I said, we need to make sure that we're maintaining our growth in the business as well as then slowly migrating customers onto the platform. So, you know, you need to think about the full integration. We also need to make sure that we migrate customers at the right time. So for example, if we've only got energy and toll, you know, we can only migrate customers who have those two products into the platform. So if they've got fleet management solution as well, we need to make sure once the fleet management solution's within the platform, we then migrate the customer onto that. It's about making sure, obviously, all their data is also in one place. So a bit of a complex journey, but I say we're quite well kind of within our journey of of putting this into one platform.

53:48 But I would say, you know, even when we've migrated the fleet management solutions, we've not had that much churn. It's about making sure, as I say, the customers are are understanding, the new user experience. And over time, we will be giving them new tools to use, which they would have never used before. So this is very much an education for them. But I want to reiterate these are mission critical solutions for them, and they do need to use them on a daily basis. And so, therefore, if we are offering them something that's better than what they have just with one simple solution for, I don't know, the telematics or for their work time management, You know, we do feel that this will be something quite new to the industry and something that will be, you know, will will change the industry quite significantly. So say we are on track.

54:33 We obviously, there will always be on that road map that we created where we might have some delays or we might move around, you know, which which, products we prioritize. But as I we're doing this very, you know, we're taking our time. We're making sure that we're not actually losing the the revenue growth and all the customers as we migrated onto the platform. I don't see any more questions. But, obviously, I'm very happy to take any other questions after after this call. But I hope I have answered everyone's questions appropriately. Absolutely. Carlo, if I may just jump back in there. Thank you very much indeed for being so generous of your time then addressing all of those questions that came in for investors this morning. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But, Carla, perhaps before really now just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. I If could please just ask you for a few closing comments just to wrap up with, that'd be great.

55:38 Sure. So thank you for all of those again who've joined me today. I'd say Eurovag is on a quite an interesting journey. I think there are not many other companies with such interesting journeys. I think we've got a long way to go in terms of what we were able to achieve, but as you can see, very strong results that we can continue to maintain. I didn't mention, obviously, the, you know, the macro environment that we're sitting in, you know, very little GDP growth. The industry's, you know, growing sort of, you know, flat to slightly up, and yet we are able to deliver double digit growth. We've got a diversification of revenues. You know, we're we're creating something something that's quite unique to the industry. We will get there in time, but as I say, we don't see anyone else doing what we are doing. So we are confident that this is something that, again, customers will want.

56:28 And as I say, we're we're we're on our journey, and, we see that there's quite a lot more to do, which makes us very excited. So, again, thank you for joining me today. As I said, any further questions, please feel free to reach out to us. Perfect, Carla. That's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Eurovac, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.