SumUp Ltd - German Branch

SumUp Ltd - German Branch

Berlin

Befreiender Jahresabschluss zum Geschäftsjahr vom 01.01.2023 bis zum 31.12.2023

Registered Number: 505893

Annual Report For the year ended 31 December 2023

SumUp Limited

Dublin/Irland

Contents

General Information

Directors' report

Directors' responsibilities statement

Independent auditor's report

Statement of comprehensive income

Statement of financial position

Statement of cash flows

Statement of changes in equity

Notes to the financial statements

General Information For the year ended 31 December 2023

SumUp Limited

Block 8,

Harcourt Centre,

Charlotte Way,

Dublin 2,

Ireland

Company Number: 505893

Board of Directors

Daniel Klein

Gareth Walsh

Conor Sheehan

Ken Shanahan

Ian Dunne, resigned as of January 22 ^nd , 2024

Niall Mac an tSionnaigh, appointed as of October 3 ^rd , 2023

Oliver Ryan, resigned as of January 13 ^th , 2023

Secretary

Catriona Byrne

Registered office

Block 8,

Harcourt Centre,

Charlotte Way,

Dublin 2,

Ireland

Bankers

J.P. Morgan Bank Luxembourg S.A., Dublin Branch

200 Capital Dock,

79 Sir John Rogerson's Quay,

Dublin 2

Ireland

Auditors

PricewaterhouseCoopers

One Spencer Dock, North Wall Quay,

Dublin 1,

Ireland

Directors' Report For the year ended 31 December 2023

The Directors present herewith their report together with the audited financial statements for the year ended 31 December 2023.

Principal Activity

The principal activity of the Company is to provide technical and processing services connected to the acceptance of credit and debit card payments from micro- and nano-merchants with a payment software application and a mobile card reader, which, when coupled, turn smartphones and tablets into POS terminals.

Business review

The principal activities of the Company are the sale of hardware, monetary intermediation (payment services) and data processing. The Company was authorised by the Central Bank of Ireland in 2020. In addition, the Company's provides support services and compliance expertise to the SumUp Group.

Results

The financial report for the year ended 31 December 2023 and the results herein are prepared in accordance with IFRS as adopted by the European Union. The statement of comprehensive income for the year ended 31 December 2023 and the statement of financial position as at 31 December 2023 are set out on pages 11 and 12 respectively. The total comprehensive income amounts to a profit of EUR 150,098 thousand (2022 - loss of EUR 40,617 thousand).

Dividends

No dividend is proposed for the year ended 31 December 2023 and 31 December 2022.

Principal risks and uncertainties

Risk management is an integral part of the Company's business process. The executive Directors review risks on a regular basis and report to the Board of Directors. Risk assessment and reporting criteria are designed to provide management and directors with a consistent perspective of the key risks. Reports to the board include an assessment of the probability and impact of risks materializing, as well as risk mitigation initiatives and their effectiveness.

The risks and uncertainties which are currently judged to have the largest impact on the Company's performance is noted below:

The Company is responsible for identifying, assessing, and managing the risks they face with appropriate assistance, review and challenge of the Group Risk function as necessary. Risks are managed through a robust framework of risk policies, organizational structures and processes that are standardized, considering local regulatory requirements.

Comprehensive risk assessments are undertaken regularly to re-evaluate the impact and probability of each materializing and the financial and strategic impact of the risk. Where the residual risk is determined to be outside of appetite, appropriate action is taken.

Directors

The Directors shown below have held office as Directors of the Company throughout the period and until the date of this report:

Mr. Gareth Walsh

Mr. Daniel Klein

Mr. Conor Sheehan

Mr. Ken Shanahan

Mr. Ian Dunne (appointed 25/10/2022, resigned 22/01/2024)

Mr. Oliver Ryan (appointed 25/10/2022, resigned 13/01/2023)

Mr. Niall Mac an tSionnaigh (since 03/10/2023)

Directors' and Secretary's interests in shares

The directors and secretary who held office at 31 December 2023 and 2022 had no interests in shares in, or debentures of, the Company or any group undertaking of the Company at the end of the financial year, or at the beginning of the financial year (or date of appointment, if later) requiring disclosure in the Directors' Report under section 329 of the Companies Act 2014.

Financial risk management

Details of the Company's financial risk management objectives and policies are set out in note 32 to the financial statements.

Future developments

The Company is focused on balancing growth with efficiency. As an organization, the Company will prioritise autonomy, purpose and mastery. This framework will ensure that it moves towards achieving its purpose - to empower small merchants - whilst building a disciplined and enduring company for the long term.

Events after the reporting period

There were no significant events between the year-end date and the date of signing of the financial statements, affecting the Company, which require adjustment to or disclosure in the financial statements.

Going concern

The financial statements of the Company have been prepared on a going concern basis.

In 2023 despite significant market volatility and headwinds driven by both economic and geopolitical factors, the Company successfully shifted its strategy to profitability. The Company is profitable for 2023 and stronger operationally and financially, but also a better business partner to its millions of existing and future customers.

As of 31 December 2023, the Company is in a net asset position of EUR 262,296 thousand. The Company has the continuous financial support of its immediate and ultimate parent companies. In the foreseeable future, the Company's activities will be financed through proceeds from the continued sale of services, and additional capital contributions from the Parent if needed. The Company received a letter of support from the ultimate parent on 27 June 2024 that guarantees to fund its operations and meet its obligations as they fall due for at least 12 months from the date of the letter.

The Directors, in light of the assessment of expected future cash flows, remain confident that the Company will continue its operations and settle its obligations in the ordinary course of business. As a result of this, the Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future. They have not identified any material uncertainties about the Company's ability to continue as a going concern. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

Research and development

The Company is developing software in the form of a payment processing platform and auxiliary applications used in the core business activities.

Political donations

The Company made no political donations or incurred any political expenditure during the financial period that require disclosure under the Electoral Act, 1997.

Accounting records

The measures that the Directors have taken to secure compliance with the requirements of section 281 to 285, with regard to the keeping of accounting records, include the provision of appropriate resources to maintain accounting records throughout the Company, including the appointment of personnel with appropriate qualifications, experience and expertise.

The Company's accounting records are maintained at the Company's registered office at Block 8, Harcourt Centre, Charlotte Way, Dublin 2.

As of 31 December 2023, the Company has registered branches in Germany, Bulgaria, the Netherlands, and the United States of America.

Audit Committee

Section 167 of the Companies Act 2014 requires the directors of a large company (as such term is defined in the Companies Act 2014) to establish an audit committee or to state the reasons for not establishing such a committee.

The Board of Directors have concluded that there is currently no need for the Company to have an audit committee in order for the Board to perform effective monitoring and oversight of the internal control and risk management systems of the Company in relation to the financial reporting process and the monitoring of the statutory audit and the independence of the statutory auditors, as the Company has appointed an Internal Auditor who has the support of the Group Audit Committee and deals directly with the Company board of Directors. Accordingly, the Company has availed itself of the exemption under Section 1551(11)I of the Companies Act 2014 not to establish an audit committee.

Non-financial statement

Description of the Company's business model

SumUp's primary business is to offer card processing services to small businesses. It also offers a suite of supporting products including hardware, invoicing and merchant & consumer wallets. SumUp Limited is regulated by the CBI as an electronic money institution. The Company mainly operates on the European market. Our key target market is the long tail as we focus on small, micro, and nano businesses. This market segment is green fields and most new customers that we onboard have never taken a card payment before.

Environmental matters

The business model and the operations of the Company are not considered to be of a major impact on the climate, natural resource scarcity, pollution, waste, and other environmental factors and do not lead to exposure of significant environmental risks to the Company itself. SumUp considers the environmental issues and is dealing with waste generation separately in all its offices and regularly participate in different initiatives worldwide to support important environmental matters.

Social and employee matters and respect for human rights

The Company's values and business relationships are mainly maintained by the Code of Conduct. Culture and ethics are promoted by leveraging the resources of the people team. Training is delivered on induction and regularly thereafter. There is also a confluence page with information on expected professional behaviour from SumUp's employees. In addition to this each employee agrees to the Company's Code of Conduct on an annual basis.

The Code of Conduct is the key document which acts as a guiding principle for employee behaviour. This document is circulated to all employees on an annual basis, and it must be accepted and agreed to on an internal platform. In addition, there is induction training given to all employees with a module devoted to the Company's Values. This information is also available on the Company's internal confluence page.

The rights and safety of all employees is safeguarded by a settled whistleblowing policy, circulated annually and the Company has a contract with an external vendor to manage the whistleblowing process.

There are a number of policies guaranteeing the employees' health and safety, product quality and safety, privacy and data security, and diversity and inclusion policies and efforts of the Company. These policies are distributed and available for all employees. All relevant employees are trained through an e-learning webpage on an annual basis or once they start working for SumUp.

Bribery and corruption

SumUp has an Anti-Bribery and Corruption Policy that is distributed to all employees on an annual basis in the same way as the other policies mentioned above. This is complemented by the Code of Conduct which sets out the gift thresholds.

Non-financial KPIs

The main non-financial KPIs established by management in SumUp relate to service levels, AML metrics, customer NPS and retention, effectiveness in managing fraud risks.

Directors' compliance statement

The directors of the Company who held office at the date of approval of these financial statements are responsible for securing the Company's compliance with its relevant obligations.

The directors confirm that the following matters have been done under section 225(2) of the Companies Act 2014 in fulfilling its responsibilities:

Statement as to disclosure of information to auditors

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing its report of which the auditor is unaware. Having made enquiries of fellow directors and the auditor, each director has taken all the steps that he/she is obliged to take as a director in order to make himself/herself aware of any relevant audit information and to establish that the auditor is aware of that information.

Independent auditor

PricewaterhouseCoopers (PwC) Chartered Accountants and Statutory Audit Firm were appointed as Auditor during 2022 and will continue in office in accordance with Section 383(2) of the Companies Act 2014.

On behalf of the Board of Directors:

Directors' responsibilities statement For the year ended 31 December 2023

The Directors are responsible for preparing the directors' report and the financial statements in accordance with applicable law and regulations.

Irish company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities and financial position of the Company as at the end of the financial year, and the profit or loss for the financial year, and otherwise comply with the Companies Act 2014.

In preparing each of the Company's financial statements, the directors are required to:

The directors are responsible for ensuring that the Company keeps or causes to be kept adequate accounting records which correctly explain and record the transactions of the Company, enable at any time the assets, liabilities, financial position and profit or loss of the Company to be determined with reasonable accuracy, enable them to ensure that the financial statements and the Directors' Report comply with the Companies Act 2014 and enable the financial statements to be audited. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

On behalf of the Board of Directors:

Independent auditors' report to the members of SumUp Limited

Report on the audit of the financial statements

Opinion

In our opinion, SumUp Limited's financial statements:

We have audited the financial statements, included within the Annual Report, which comprise:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (Ireland) ("ISAs (Ireland)") and applicable law.

Our responsibilities under ISAs (Ireland) are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Ireland, which includes IAASA's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions relating to going concern

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from the date on which the financial statements are authorised for issue.

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the company's ability to continue as a going concern.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements and our auditors' report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Directors' Report, we also considered whether the disclosures required by the Companies Act 2014 (excluding the information included in the "Non Financial Statement" as defined by that Act on which we are not required to report) have been included.

Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (Ireland) and the Companies Act 2014 require us to also report certain opinions and matters as described below:

Responsibilities for the financial statements and the audit

Responsibilities of the directors for the financial statements

As explained more fully in the Directors' responsibilities statement, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.

The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.

A further description of our responsibilities for the audit of the financial statements is located on the IAASA website at:

https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8fa98202dc9c3a/Description of auditors responsibilities for audit.pdf

This description forms part of our auditors' report.

Use of this report

This report, including the opinions, has been prepared for and only for the company's members as a body in accordance with section 391 of the Companies Act 2014 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Other required reporting

Companies Act 2014 opinions on other matters

Other exception reporting

Directors' remuneration and transactions

Under the Companies Act 2014 we are required to report to you if, in our opinion, the disclosures of directors' remuneration and transactions specified by sections 305 to 312 of that Act have not been made. We have no exceptions to report arising from this responsibility.

Prior financial year Non Financial Statement

We are required to report if the company has not provided the information required by Regulation 5(2) to 5(7) of the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 in respect of the prior financial year. We have nothing to report arising from this responsibility.

Statement of comprehensive income For the year ended 31 December 2023

The notes from page 15 to 52 form an integral part of these financial statements

Statement of financial position As at 31 December 2023

The financial statements were approved by the Board of Directors and were signed on its behalf by:

The notes from page 15 to 52 form an integral part of these financial statements.

Statement of cash flows For the year ended 31 December 2023

The notes from page 15 to 52 form an integral part of these financial statements

Statement of changes in equity For the year ended 31 December 2023

The notes from page 15 to 52 form an integral part of these financial statements.

Notes to the financial statements

1. Corporate information

The financial statements of SumUp Limited (the Company) for the year ended 31 December 2023 were approved by the Board of Directors and authorised for issue on 27 June 2024.

SumUp Limited is a private limited company registered in Ireland, company number 505893, with registered office at Block 8, Harcourt Centre, Charlotte Way, Dublin 2, Ireland.

The Company's head office is at Block 8, Harcourt Centre, Charlotte Way, Dublin 2, Ireland. The Company is principally engaged in sale of hardware, monetary intermediation (payment services) and data processing. The Company was authorised by the Central Bank of Ireland in Q4 2020. The Company also provides technical and consulting services rendered to different payment services providers together with software development services.

In addition to the head office, the Company is organized and operating through an established branch structure in Germany, Netherlands, Bulgaria, and USA.

The Company is a 100% subsidiary of SumUp Holdings Luxembourg S.à.r.l., the Company's holding company. As at 31 December 2023 and 2022 the Company's immediate parent undertaking and controlling party was SumUp Holdings Luxembourg S.à.r.l., a company registered in Luxembourg with a registered office at Rue du Kiem 153-155, 8030 Strassen, Luxembourg.

The Company's ultimate parent undertaking and controlling party ("Parent") is SumUp Holdings S.à.r.l., with a registered office at 20, rue Michel Rodange L-2430 Luxembourg .

The parent undertaking of the smallest and largest group of undertakings for which group financial statements are drawn up, and of which the Company is a member, is SumUp Holdings S.a.r.l., with a registered office at 20, rue Michel Rodange L-2430 Luxembourg.

2. Material accounting policy information

2.1 Basis of preparation

The financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"), as adopted by the European Union (the "EU") and those parts of the Companies Act 2014 applicable to companies reporting under IFRS. The financial statements are presented in euro and all values are rounded to the nearest thousand (€000 or EUR '000), except when otherwise indicated.

The financial statements are prepared on a historical cost basis.

The financial position, financial performance and cash flows for the year ended 31 December 2022 of the Company are presented in these financial statements as comparative information.

Going concern

The financial statements of the Company have been prepared on a going concern basis.

In 2023 despite significant market volatility and headwinds driven by both economic and geopolitical factors, the Company successfully shifted its strategy to profitable growth. The Company is profitable for 2023 and stronger operationally and financially, but also a better business partner to its millions of existing and future customers.

As of 31 December 2023, the Company is in a net asset position of EUR 262,296 thousand. The Company has the continuous financial support of its immediate and ultimate parent companies. In the foreseeable future, the Company's activities will be financed through proceeds from the continued sale of services, and additional capital contributions from the Parent if needed. The Company received letter of support from the ultimate parent on 27 June 2024 that guarantees to fund its operations and meet its obligations as they fall due for at least 12 months from the date of the letter.

The Directors, in light of the assessment of expected future cash flows, remain confident that the Company will continue its operations and settle its obligations in the ordinary course of business. As a result of this, the Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future. They have not identified any material uncertainties about the Company's ability to continue as a going concern. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

Current versus non-current classification

The Company presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is:

All other assets are classified as non-current.

Current versus non-current classification

A liability is current when:

The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

2.2 Material accounting policy information

a) Foreign currencies

The Company's financial statements are presented in Euros, which is also the Company's functional currency. The functional currency of the branches is also Euro for the German and Netherlands branches, Bulgarian Lev (BGN) for the Bulgarian branch and American dollar (USD) for the US branch, the presentation currency of the branches for the purposes of these financial statements is Euro.

Transactions in foreign currencies are initially recorded by the Company at their respective functional currency spot rates at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.

The Company is applying the foreign exchange rates published by European Central Bank. As of December 31, 2023, and December 31, 2022 the following exchange rates to Euro are applied:

Average rates are as follows:

b) Revenue recognition

Revenue from contracts with customers is recognised under IFRS 15 when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent. The Company has concluded that is executing payments on the behalf of its customers and for their account and is thus acting as an agent in all contracts with customers related to processing revenue. In all other contracts with customers the Company is the principal because it typically controls the goods or services before transferring them to the customer.

The disclosures of significant accounting judgements, estimates and assumptions relating to revenue from contracts with customers are provided in Note 3.

Payment processing revenues and Sale of card readers and other equipment

Payment processing revenues are mainly generated by payment transactions (from merchants) and commission income from a range of services it provides to its customers.

The Company sells card readers to merchants for a fixed price so they can accept card payments and use the payment processing services of the Company, where the Company is charging processing fees.

The sale of the card reader and the revenue (fees) from payment services represent a single performance obligation that is satisfied over time. The Company determined that the transaction price at initiation is the fixed price of the reader. The variable component depends on the transaction volume. The Company determined that the progress towards satisfaction of the performance obligation is directly related to the delivery of the card reader, when the Company recognizes the revenue to the extent of the fixed price and then recognises the variable component of the revenue (from fees) over time on successful completion of the underlying transaction.

Card issuing revenue

Card issuance business refers to SumUp card product for merchants. With the product SumUp merchants receive IBAN and plastic card (also available to work with mobile wallets). Revenue that the Company generates have two main components: income related to ATM cash withdrawals, and income related to payment processing. Revenue from card issuing is related to actual usage of card product by customers and is recognized over time on successful completion of the underlying transaction.

Revenue from sale of goods and non-payment related services

Rights of return

Contracts provide a customer with a right to return the goods within a specified period. The Company uses the expected value method to estimate the goods that will not be returned because this method best predicts the amount of variable consideration to which the Company will be entitled. The requirements in IFRS 15 on constraining estimates of variable consideration are also applied in order to determine the amount of variable consideration that can be included in the transaction price. For goods that are expected to be returned, instead of revenue, the Company recognises a refund liability. A right of return asset (and corresponding adjustment to cost of sales) is also recognised for the right to recover products from a customer.

Rendering of other services

The Company provides services to related parties related to technical and processing services connected to the acceptance of credit and debit card payments by SMEs with a payment software application and mobile card reader. Revenues from the sales of services are recognised in the accounting period in which the services are rendered based on the rate of completion determined as a percentage of the services performed to date from all the services to be provided.

Revenue from rendering of other services, is related to income from merchant cooperation agreements and co-marketing campaigns and is recognised by using of input method to measure progress towards complete satisfaction of the service, because the customer simultaneously receives and consumes the benefits provided by the Company.

Types of revenue from rendering of other services are such that the Company recognize revenue over time in accordance with the respective contracts with customers and where applicable on a straight - line basis, while paid in advance amounts are recognized as contract liabilities.

Cost to obtain a contract

The Company pays sales commission to its employees and to third parties for contracts that they obtain as part of short - term incentive package. The Company has elected to apply the optional practical expedient for costs to obtain a contract which allows the Company to immediately expense sales commissions (included under employee benefits and hired services) because the amortisation period of the asset that the Company otherwise would have used is one year or less.

No assets have been recognized related to costs to obtain contracts with customers.

Revenue from Software-as-a-Service

Revenue from rendering of other services is related to subscription income from Software-as-a- Service (SaaS) solutions. Given the customer simultaneously receives and consumes the benefits provided by the Company, this revenue is recognised by using the input method to measure progress towards complete satisfaction of the service. Types of revenue from rendering of other services include efforts and inputs which are expended evenly throughout the performance period. The Company recognizes revenue over time in accordance with the respective contracts with customers and where applicable on a straight - line basis, while paid in advance amounts are recognized as contract liabilities.

c) Taxes

Current income tax

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Company operates and generates taxable income.

Current income tax relating to items recognised directly in equity is recognised in equity and not in the profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in Other comprehensive income or directly in equity.

The Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to offset and the Company intends either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Sales tax

Revenue, expenses and assets are recognised net of the amount of sales tax, except when the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

d) Employee benefits

Short-term employee benefits include salaries, interim and annual bonuses, social security contributions and paid annual leave of current employees expected to be settled wholly within twelve months after the end of the reporting period. They are recognised as an employee benefit expense in the profit or loss or included in the cost of an asset when service is rendered to the Company and measured at the undiscounted amount of the expected cost of the benefit. Information on short-term employee benefits is disclosed in Note 10 and Note 24.

e) Investments in associates

An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but it is not control or joint control over those policies.

The considerations made in determining significant influence are similar to those necessary to determine control over subsidiaries.

The Company's investments in its associates are accounted for at cost.

f) Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the profit or loss when the asset is derecognised.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

g) Leases

The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Company as a lessee

The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

i) Right-of-use assets

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the lease term, as follows:

The right-of-use assets are also subject to impairment. Refer to the accounting policies in section (m) Impairment of non-financial assets.

ii) Lease liabilities

At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.

Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a Realised gains on sales and leaseback transactions are recognised on a deferral basis for the period of the lease, while losses are recognised immediately in the profit and loss.

change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

iii) Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e ., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of lowvalue assets recognition exemption to lease of office equipment that are considered to be low value. The Company uses EUR 5,000 threshold for low-value assets. Lease payments on shortterm leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

h) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in profit and loss in the period in which the expenditure is incurred.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the profit or loss as the expense category that is consistent with the function of the intangible assets.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the profit or loss when the asset is derecognised.

Research and development costs

Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Company can demonstrate:

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete, and the asset is available for use. It is amortised over the period of expected future benefit.

Amortization is calculated on a straight-line basis over the estimated useful lives of the assets as follows:

The only individually significant intangible assets to the Company is the software and website development costs. The total useful life of the internally developed software is 5 years.

j) Impairment of non-financial assets

The Company assesses at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

For assets, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset's recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the profit and loss.

k) Inventories

Inventories held by the Company include card reader devices, mobile printers, peripheral devices and packages. Inventories are valued at the lower of cost and net realisable value. Net realisable value includes instances when sales of inventories used solely as a tool for the access and use of the Company's payment and non-payment related services are sold at a loss, but overall financial results are profitable. The Company writes down idle and obsolete inventories to their net realisable value. The definition of the write-down requires the management to assess the turnover rate of inventories and their possible realisation through sale.

Cost of acquisition of inventories includes all costs incurred in bringing each product to its present location and condition.

Cost of goods sold is measured using the weighted average method.

I) Financial instruments

Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss. As at 31 December 2023 and 2022 the Company does not have financial assets at fair value.

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Company's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price determined under IFRS 15.

In order for a financial asset to be classified and measured at amortised cost, it needs to give rise to cash flows that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

The Company's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified as financial assets at amortised cost (debt instruments). The Company measures financial assets at amortised cost if both of the following conditions are met:

The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

The Company's financial assets at amortised cost includes cash, trade and other receivables, receivables from related parties and receivables from acquirers.

Interest income

For all financial instruments measured at amortized cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the statement of comprehensive income.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Company's statement of financial position) when:

When the Company has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership.

When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.

Impairment of financial assets

Expected credit losses (ECLs) are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12- month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

The Company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as loans and borrowings or payables, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company's financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.

Subsequent measurement

The measurement of financial liabilities depends on their classification.

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.

This category generally applies to interest-bearing loans and borrowings.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

m) Fair value measurement

The Company does not report any financial instruments, as well as non-financial assets such as property, plant and equipment, at fair value at each reporting date.

n) Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at banks (net of outstanding deficits on current bank accounts) and on hand and short-term deposits with an original maturity of three months or less.

As required by regulation, being a payment institution, the Company's cash and cash equivalents balances contain cash that is held in "safeguarded" bank accounts that will be used for settling payments to merchants and for holding outstanding electronic money balances. The regulation requires those funds to be deposited in separate bank accounts and not to be comingled at any time with other funds. They shall be insulated in the interest of the payment service users (merchants) and electronic money holders against the claims of other creditors of the Company, in particular in the event of insolvency. The cash balances held in those accounts meet the definition of cash and cash equivalents. The balances of safeguarded funds are disclosed in Note 18.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above.

o) Share capital

Share capital represents the par value of shares issued. The proceeds from issued capital above share par value are recorded as premium reserves. Any difference between issued price and contribution actually received is recorded as receivable for issued but not paid in capital in the statement of financial position.

p) Provisions and contingent liabilities

General

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

The expense relating to any provision is presented in the profit or loss, net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

q) Share-based payments

Employees (including senior executives) of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).

In accordance with IFRS 2, the cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details of which are given in Note 24.

That cost is recognised in employee benefits expense (Note 10), together with a corresponding increase in equity (Shared based payment reserves), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company's best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Company's best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be nonvesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.

No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

3. Significant accounting judgments, estimates and assumptions

The preparation of the Company's financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Judgments

In the process of applying the Company's accounting policies, management has made the following judgments which have the most significant effect on the amounts recognised in the consolidated financial statements:

Revenue recognition - Company as an agent

Based on the arrangements with its customers in particular the fact that the Company is executing payments on their behalf and for their account of its customers, the management has assessed that the Company is acting as an agent in all its contracts with customers related to processing transactions. Consequently, the reported gross revenue comprises the agent commission received for processing card payments.

Estimates and assumptions

The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Provision for expected credit losses of receivables from acquirers and cash and cash equivalents Receivables from acquirers and Cash and cash equivalent balances are assessed for impairment based on publicly available credit ratings and internally developed models assessing probabilities of default.

Deferred tax

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. The timeframe in which these accumulated losses can be utilised depends on the time period specified in the jurisdictions of the territories in which the Company operates and it varies. Information is provided in Note 15.

As of 31 December 2023 the Company recognised deferred tax asset totalling 33,682 thousand (31 December 2022: nill) for the tax loss carry forwards amounting to EUR 154,412 thousand (31 December 2022: 253,859 thousand). The Company realised taxable profit in 2023 and utilised tax losses carried forward from previous years in 2023 amounting to 17,733 thousand (2022: 7,186 thousand). Management prepared a forecast of the future taxable profits, taking into account one-off and non-recurring items and history and expectations for future earnings. Utilisation of tax losses are estimated based on the forecasts and local utilisation periods and limits. Based on the projections, the Company will fully utilise the remaining tax losses in the next 1 to 3 years. Management considers forecasting within the three year period to be reasonably certain for the purpose of tax loss utilisation. For further details, please refer to Note 15.

Development costs

Development costs are capitalised in accordance with the adopted accounting policy. Initial capitalization of costs is based on management's judgment that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised, management makes assumptions regarding the technical feasibility and intention to complete the intangible asset and expected future cash generation of the project. At 31 December 2023, the carrying amount of capitalised development costs was EUR 27,756 thousand (2022: EUR 24,906 thousand). Further details are provided in Note 17.

4. Changes in accounting policy and disclosures

A) New and amended standards and interpretations adopted by the Company

The Company applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2023.

The amendments to IAS 1 had limited impact on the disclosure of accounting policies of the Company, following the change that requires disclosing material accounting policy information instead of significant accounting policies. All other changes of the adopted standards listed above have no impact on the amounts recognized in previous periods and are not expected to have a significant impact on the Company during the current or future reporting periods as well as in the foreseeable future transactions.

B) New standards and interpretations not yet adopted by the Company

Certain new accounting standards and interpretations that are not mandatory for the reporting period at 31 December 2023 and have not been previously adopted by the Company have been published. The Company does not plan to implement any of those standards ahead of their official effective date. The Company's assessment of the impact of these new standards and interpretations is set out below.

There are no other standards that are not yet adopted, and which are expected to have a significant impact on the Company during the current or future reporting period as well as in the foreseeable future transactions.

5. Revenue from contracts with customers

The Company provides its merchants with subsequent discounts and flexi pricing arrangements that depend on the volume of transactions processed. Such discounts are presented net of gross processing revenue.

The revenue from services is homogenous in terms of timing of revenue generation and most types of revenue are represented by services provided over time.

Timing of revenue recognition

6. Other income

In 2023 the Company changed the presentation of Interest income to be included as part of Other income and Operating profit (Interest income from cash and cash equivalents totaling EUR 560 thousand and Interest income on intercompany loans totaling EUR 372 thousand were presented as separate line item in the Statement of comprehensive income for 2022).

7. Purchase value of equipment sold

8. Payment processing cost

9. Hired services

The audit fees incurred by the Company are in the amount of EUR 88 thousand (2022: EUR 80 thousand). Included within this amount are the statutory audit fees of the Company, amounting to EUR 26 thousand (2022: EUR 25 thousand), which is paid to PwC Ireland, the Statutory auditor of the Company. There are no non-audit services provided by the auditors of the Company.

HR related expenses include recruitment fees, relocation costs, company and team events related costs.

10. Employee benefits

The average number of staff for 2023 is 1,086 employees (2022: 1,139). For the year ending 31.12.2023 the Company has on average 38 sales employees (2022: 97) and 186 software developers (2022: 190), and 862 support and operations employees (2022: 852).

Salaries and social security expenses includes, social security expenses totalling EUR 4,451 thousand (2022: EUR 4,573 thousand). Expenses related to defined contribution plans for 2023 are EUR 5,177 thousand (2022: EUR 5,219 thousand).

Other employee benefits include predominantly payments over termination and additional health insurance costs.

Directors' emoluments are disclosed in Note 30.

In addition to the employee benefits disclosed above treated as an expense, there are salary expenses totalling EUR 7,755 thousand (2022: EUR 7,066 thousand) and social security expenses totalling EUR 1,091 thousand (2022: EUR 1,001 thousand) capitalized into internally developed software and website development.

11. Other expenses

12. Net impairment gains/ (losses) on financial assets

13. Other gains, net

14. Finance costs

15. Income tax expense

Tax losses are available for offset against future profits in which the losses arose. The period of availability of the tax relief with regards to tax losses is in accordance with the applicable tax legislation for each entity. The tax losses carried forward by countries are as follows:

In 2023 the deferred tax asset on tax losses carried forward has been recognized for the amount of EUR 33,682 thousand. No deferred tax assets for tax losses carried forward was recognized as at 31 December 2022. Management's assessment is disclosed in Note 3.

The timeframe in which these accumulated losses can be utilised depends on the time period specified in the jurisdictions of the territories in which the Company operates and it varies, as follows:

The table below provide details for the utilization period and amount of losses for each jurisdiction:

The Company is within the scope of the Organization for Economic Co-operation and Development (OECD) / G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) addresses the tax challenges arising from the digitalisation of the global economy. The Global Anti-Base Erosion Model Rules "Pillar Two model rules" apply to multinational enterprises (MNEs) with revenue in excess of EUR 750 million per their financial statements. Pillar Two was enacted in Ireland, the jurisdiction in which SumUp Ltd. is incorporated, and will come into effect for the Company for fiscal years starting on or after 31 December 2023. Since the Pillar Two legislation was not applicable at the reporting date, the Company has no related current tax exposure. The Company applies the exception to recognizing and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023.

The Company is expected to be in scope of Pillar Two model rules as from 2025 (tested year) as the revenue threshold is met for 2 years (2023 and 2024) out of the 4 preceding years (2021- 2024).

Under the legislation, the Company is liable to pay a top-up tax for the difference between its Global Anti-Base Erosion (GloBE) effective tax rate per jurisdiction and the 15% minimum rate. The Company have a nominal tax rate that exceeds 15% in the jurisdictions where operates, except for the branch established in Bulgaria and the principal in Ireland. For 2023, the CIT rates in Bulgaria is 10% and in Ireland is 12.5%.

The Company is in the process of assessing its exposure to the Pillar Two legislation for when it comes into effect. The Company is currently engaging with tax specialists to assist with applying the legislation.

16. Property, plant and equipment

17. Intangible assets

18. Cash and cash equivalents

The cash in safeguarded bank accounts totalling EUR 442,161 thousand (31.12.2022: EUR 295,150 thousand) is related to merchants' funds (Note 2.2n).

As of 31 December 2023, the amount of the restricted cash that is classified as receivables (note 22) is EUR 1,677 thousand (31 December 2022: EUR 1,954 thousand). It is blocked as collateral related to bank guarantees provided to business partners (Note 31).

19. Receivables from acquirers and payables to merchants

An acquiring bank is a bank or financial institution that processes credit or debit card payments on behalf of a merchant. The acquirer allows merchants to accept credit card payments from the card-issuing banks within an association. The acquirer approves or declines the debit or credit card purchase amount. If approved the acquirer will then settle the transaction by placing the funds into the SumUp's account. At year end the receivables from acquirer represent the accumulated balance of approved transactions processed in the last days of the year. Such balances are then settled in SumUp's account within the first few days of the following year.

The Company is principally engaged in the provision of financial, payment, technical and consulting services rendered to merchants and different payment service providers together with software development services. Payables to merchants are recognised on completion of the underlying payment service transaction or issuance of e-money, as this is when the payments are due to the merchants. At year end the Payables to merchants are the accumulated balance of approved transactions processed and not settled in the last days of the year and e-money issued by the Company to its clients but not spent yet. The balances are either settled to the Merchant's accounts in the following year, or when e-money are spent.

20. Other non-financial assets

21. Deferred expenses

Deferred expenses represent mainly subscription fees and annual licences for software, platforms and applications used by the Company.

22. Trade and other receivables

As of 31 December 2023, the amount of the restricted cash is EUR 1,677 thousand (31 December 2022: EUR 1,954) blocked as collateral related to bank guarantees provided to business partners (note 31).

23. Share capital and reserves

The share capital of the Company as at 31.12.2023 is EUR 372,110 thousand (31.12.2022: EUR 372,110 thousand) divided into:

In July 2022, the Company allotted and issued 400,000 ordinary shares of €0.01 each that were subscribed by the sole owner of the Company SumUp Holding Luxembourg S.a.r.l., at total price per share of €100 (nominal value of €0.01 per share with an attaching premium of €99,99 per share), for the total consideration of €40,000 thousand that has been fully paid.

In Q1 2022 the sole owner settled in cash EUR 47,000 thousand (EUR 12 thousand related to nominal value and EUR 46,988 thousand related to share premium) its payables to the Company for subscribed shares that were allotted and issued in 2021.

Foreign currency translation reserve

Foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign branches in Euro in the financial statements of SumUp Ltd. The cumulative translation differences are reclassified to profit or loss in the period in which the foreign branch is wound up and dissolved. As of 31 December 2023, the foreign currency translation reserve amounted to EUR (2,762) thousand (31 December 2022: EUR (2,797) thousand) and is related to the US branch of the Company.

24. Share-based payment

Equity-settled share option plan

The Company has implemented a share option plan for members of the management and key employees of the Company.

The virtual option plan is managed by a shareholder of SumUp Holdings S.à.r.l., namely SumUp Participations Ltd. Allotment letters are signed off by SumUp Participations Ltd. with the Option Holders meaning the virtual option plan provides with contractual claims against SumUp Participations Ltd. to payment in cash or granting of non-cash consideration providing exercise conditions are met. However, the virtual option plan does not grant to Option Holders upon exercise of the virtual options the right to assume shares of SumUp Participations Ltd.

The options carry neither rights to dividends nor voting rights.

Options may be exercised only in case of Exercise events to the date of their expiry. Exercise events are defined as:

Options are exercisable at a strike price agreed on the date of granting the virtual options. Usually grants are with a vesting period between zero and 48 months, but also may vary on individual agreements and can include certain cliff or signing vesting. If the options remain unexercised after a period of fifteen years from the date of grant the options expire. Not vested options are forfeited if the employee leaves the SumUp Group of companies before the options vest. Upon separate approval options can be exercised without exercise event, usually upon leave or request.

Details of the share options outstanding during the year are as follows.

The measurement date for the transactions with the Option Holders, employed by the Company, is the grant date, i.e. the date when the allotment letter is signed. As of the grant and measurement date the ultimate parent is not listed. The fair value of the virtual options is estimated at the grant date using the Black-Scholes model, taking into consideration the terms and conditions of which the virtual options were granted.

The weighted - average value of options granted during the year was EUR 4.21 (2022: EUR 2.41).

In 2023 408,145 options are exercised (2022: 1,040,296).

The following table list the inputs to the models used for the virtual option plan for the years ended 31 December 2023 and 2022, respectively:

The Company recognised total expenses of EUR 6,705 thousand (2022: EUR 870 thousand) related to equity-settled share-based payment transactions in 2023 (Note 10). The balance of Other reserves as at 31.12.2023 is EUR 10,968 thousand (31.12.2022: 4,263 thousand).

In case that expected volatility related to options granted in the current financial year increase by 5%, Company's expenses related to equity-settled share-based payment transactions will decrease by EUR 66 thousand. In case that expected volatility related to options granted in the current financial year decrease by 5%, Company's expenses related to equity-settled share-based payment transactions will increase by EUR 68 thousand.

In case that share price increase by 5%, Company's expenses related to equity-settled sharebased payment transactions will increase by EUR 188 thousand. In case that share price decrease by 5%, Company's expenses related to equity-settled share-based payment transactions will decrease by EUR 193 thousand.

In case that Risk - free interest rate related to options granted in the current financial year increase / decrease by 1%, Company's expenses related to equity-settled share-based payment transactions will increase / decrease by EUR 2 thousand.

25. Lease liabilities

All such lease liabilities are related to office rent agreements. These lease liabilities are measured at present value of remaining lease payments, discounted with incremental borrowing rate of the Company.

Set out below are the carrying amounts of lease liabilities and the movements during the period:

The following are the amounts recognized in profit or loss:

Maturity analysis of undiscounted cash future cash flows are disclosed in note 32.

26. Trade and other payables

27. Contract liabilities

28 Provisions

Provisions movement is as follows:

Provisions movement is as follows:

29. Other non-financial liabilities

30. Related party transactions and outstanding balances

List of related parties

Entities under common control are under the control of the ultimate controlling party.

In 2023, the Company signed a loan agreement with SumUp Services GmbH for an amount up to EUR 50,000 thousand. During 2023, SumUp Services GmbH has received a gross amount of 69,989 thousand and has made voluntary principal repayments equal to 15,000 thousand by cash and 5,000 thousand by an offset with other balances with the Company. The loan matures in 2034 but the Company may request prepayment on not less than one month's notice. The interest rate is equal to 13.02%. Interest accrues on the total principal amount and is payable on a quarterly basis. SumUp Services GmbH can, at its discretion, capitalise and add to the loan any amount of accrued interest. No payments of interest have been made in 2023. The total interest income for 2023 is equal to 1,875 thousand and it is capitalised as of 31.12.2023.

The loan is measured at amortised cost. Outstanding balances are unsecured and are repayable in cash.

The Company considers its directors to be key management personnel (noting that nonexecutive directors are not involved in the day-to-day activities of the Company). Compensation of key management personnel/directors:

The amounts disclosed in the table are the amounts recognized as expense during the reporting period related to directors/key management personnel, including EUR 102 thousand representing Share based payment related charges (2022: EUR 10 thousand). No gains from exercise of shares options have been realized by the Directors of the Company. The Company has not entered into other transactions with key management personnel, except the defined in the table above.

Retirement benefits are accruing to nil directors (2022: nil) under a defined benefit scheme and 3 directors (2022: 3 director) under a defined contribution scheme.

Other than as shown above any further disclosures in Section 305 and 306 of the Companies Act 2014 are EUR nil for the financial year presented (2022: EUR nil).

The remuneration of Daniel Klein is paid by other group companies. Daniel Klein's services to this Company are of a non-executive nature and his remuneration is deemed to be wholly attributable to his services to other group companies. Accordingly, the above details include no remuneration in respect of Daniel Klein.

Paget-Brown Trust Company Ltd. were paid EUR 16 thousand for 2022 for the making available of the services of Director Ken Shanahan to serve as a director of SumUp Limited. Since December 2022 Ken Shanahan retired from Paget-Brown Trust Company Ltd but continued to serve as nonexecutive director of the Company.

31. Contingent liabilities

As of 31 December 2023, the Company has provided a bank guarantee in the amount of EUR 1,677 thousand (2022: EUR 1,764 thousand) to an unrelated party for the performance in a contract by a related party (sister company). The bank guarantee is fully secured with cash blocked with the bank (note 22). No liability is expected to arise.

32. Financial risk management

This note explains the Company's exposure to financial risks and how these risks could affect the Company's future financial performance. The directors constantly monitor the financial risks to which the company is exposed, in order to detect those risks in advance and take the necessary action to mitigate them through regular review by the board. The following section provides qualitative disclosures on the effect that these risks may have upon the Company.

32.1. Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise two types of risk: interest rate risk and foreign currency risk. Financial instruments affected by market risk include received loans, cash and cash equivalents and deposits.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's is not exposed to risk of changes in market interest rates as at 31 December 2023 and as at 31 December 2022, as the Company does not have borrowings.

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (when revenue or expense is denominated in a foreign currency).

The sensitivity analyses in the following section relate to the position as at 31 December 2023 and as at 31 December 2022. In calculating the sensitivity analyses, assumption has been made that the sensitivity of the relevant statement of profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 December 2023 and 2022.

The Company's financial assets and liabilities are predominantly denominated in the functional currency EUR. To mitigate the Company's exposure to foreign currency risk, non-Euro cash flows are monitored in accordance with Company's risk management policies. Generally, Company's risk management procedures distinguish short-term foreign currency cash flows from long-term cash flows. No specific hedging activity is undertaken, because the amounts to be paid and received in a specific currency are expected to largely offset one another.

Foreign currency denominated financial assets and liabilities, translated into Euro at the closing rate are as follows:

As at 31.12.2023

As at 31.12.2022

The Company operates internationally and is exposed to foreign exchange risk, primarily the GBP, CHF, DKK and PLN for 2023 (GBP, USD, PLN and CZK for 2022). Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the functional currency of the relevant entity.

The following table demonstrates the sensitivity to a reasonably possible change in GBP exchange rate, CHF exchange rate, DKK exchange rate and PLN exchange rate, with all other variables held constant. The impact on the Company's profit before tax is due to changes in the fair value of financial assets and liabilities. There is no impact on the Company's pre-tax equity. The Company's exposure to foreign currency changes for all other currencies is not material.

32.2. Credit risk

Credit risk is the risk that counterparty fails to discharge an obligation to the Company. The Company's maximum exposure to credit risk is limited to the carrying amount of financial assets recognized at the reporting date, as summarized below:

As part of its business activities, the Company received proceeds from acquirers on 2 to 5 days basis. In relation to its software as a service business, payment terms are based on advance payments by the customers.

Impairment of financial assets

The Company has one main type of financial assets that are subject to the expected credit loss model - trade receivables for sales of inventory and from the provision of services.

While cash and cash equivalents and receivables from acquirers are also subject to the impairment requirements of IFRS 9, the identified impairment loss was immaterial.

Trade receivables

The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade and other receivables.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on the payment profiles of sales over a period of 36 months before 31 December 2023 and the corresponding historical credit losses experienced with this period.

On that basis, the loss allowance as at 31 December 2023 was determined as follows for trade receivables:

Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the company, and a failure to make contractual payments for a period of greater than 5 years past due.

Impairment losses on trade receivables are presented within operating profit. Subsequent recoveries of amounts previously impaired are credited against the same line item.

32.3 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

The Company has adopted a series of policies and procedures whose purpose is to optimise the management of funds and to reduce the liquidity risk, as follows:

The Company maintains cash to meet its liquidity requirements for 30-day periods at a minimum As at 31 December 2023 and 2022, the Company's undiscounted liabilities have contractual maturities (including interest payments where applicable) as summarized below:

32.4 Capital risk management

The Company aims to manage its overall capital so as to ensure that the Company continues to operate as a going concern.

33. Fair value of financial instruments

Management of the Company has assessed that the fair value of financial assets and financial liabilities as at 31 December 2023 and 31 December 2022 reasonably approximate their carrying amounts due to the short term maturities of the instruments and the lack of significant changes in the market variables.

34. Changes in liabilities arising from financing activities

35. Events after the reporting period

There were no significant events between the year-end date and the date of the approval of the financial statements, affecting the Company, which require adjustment to or disclosure in the financial statements.