Waga Energy : Consolidated IFRS Financial Statements 31 December 2023

Waga Energy Group

Consolidated IFRS Financial Statements

31 December 2023

Annual Report - 31 December 2023

TABLE OF CONTENTS
IFRS Financial Statements
BALANCE SHEET	2
INCOME STATEMENT	3
STATEMENT OF COMPREHENSIVE INCOME	3
STATEMENT OF CHANGES IN EQUITY	4
CASH FLOW STATEMENT	5
NOTES TO THE FINANCIAL STATEMENTS ....	7

1. Description of the Group and its business

activities	7
2.	Basis of preparation	7
	2.1 Statement of compliance	7
	2.2	Changes in accounting standards	7
	2.3 Use of estimates and judgments	8
	2.4 Basis of measurement	9
	2.5	Functional and presentation currency	9
3.	Significant events of the period	10
	3.1	Significant events of 2023	10
	3.2	Geopolitical backdrop of the conflict in
	Ukraine	12
	3.3 Going concern	13
4.	Subsequent events	13
	4.1 Sales development	13
	4.2 Operational development	13
	4.3	Share capital transactions and subsidiaries
	.........................................................................	13
	4.4	Financing	13
5.	Consolidation scope	14

5.1 Accounting policies relating to the

consolidation scope	14
5.2 Consolidation scope	14
6. Segment information	15
6.1 Revenue segmented by geographical area -
31 December 2023	15

6.2 Non-current assets segmented by

geographical area - 31 December 2023

15

7.11 Cash and cash equivalents	24
7.12	Equity and dilutive instruments	24
7.13	Provisions	25
7.14	Borrowings and financial liabilities	27
7.15	Fair value of financial instruments	30
7.16 Trade and other payables	31
7.17	Tax liabilities	31
7.18	Other liabilities	31

8. Notes to the consolidated income

statement	32
8.1 Revenue	32
8.2 Other operating income	34
8.3	Purchases of goods and changes in
inventories	35
8.4	External expenses	35
8.5 Personnel expenses	35
8.6 Share-based payments (IFRS 2)	36
8.7	Other recurring operating income and
expenses	36
8.8	Other non-recurring operating income and
expenses	37
8.9	Net financial income (expense)	37
8.10 Income tax	38
8.11 Earnings per share	39
8.12 Off-balance sheet commitments	40
8.13 Transactions with related parties	40
8.14 Statutory Audit Fees	41
9. Risk management	42
9.1	Liquidity risks	42
9.2	Interest rate risk	43
9.3	Credit risk	43
9.4	Currency risk	43

10. Fair value of financial assets and liabilities 44

7. Notes to the Consolidated Balance Sheet

16

7.1	Intangible assets	16
7.2 Property, plant and equipment	17
7.3 Asset impairment	20
7.4	Financial assets	21
7.5	Deferred tax assets	22
7.6	Other non-current assets	22
7.7	Inventories	23
7.8	Trade and other receivables	23
7.9	Tax receivables	23	1
7.10 Other current assets	24

Annual Report - 31 December 2023

BALANCE SHEET

ASSETS

(in EUR thousands)

Intangible assets

Property, plant & equipment

Non-current financial assets

Deferred tax assets

Other non-current assets

Non-current assets

Inventories

Trade and other receivables

Current financial assets

Tax receivables

Other current assets

Cash and cash equivalents

Current assets

Total assets

EQUITY AND LIABILITIES (in EUR thousands)

Share capital Share premium Reserves

Foreign currency translation reserves

Profit (loss) attributable to owners of the Company Equity attributable to owners of the Company Non-controlling interests

Equity

Non-current provisions

Non-current loans and borrowings

Other non-current liabilities

Deferred tax liabilities

Non-current liabilities

Current provisions

Current loans and borrowings

Trade and other payables

Tax liabilities

Other current liabilities

Current liabilities

Total equity and liabilities

Notes	31 December 2023	31 December 2022
7.1	2,057	804
7.2	112,630	70,331
7.4	724	2,137
7.5	(0)	0
7.6	8,933	6,562
	124,344	79,835
7.7	11,498	4,867
7.8	9,139	4,143
7.4	1,610
7.9	405	315
7.10	8,934	8,356
7.11	38,655	91,659
	70,240	109,339
	194,584	189,174
Notes	31 December 2023	31 December 2022
	205	205
	150,241	150,090
	(39,521)	(31,119)
	220	16
	(15,990)	(10,076)
	95,154	109,115
	2,718	2,912
7.12	97,873	112,028
7.13	910	585
7.14	52,331	43,185
7.18.1	7,669	4,678
	0	0
	60,910	48,448
7.13	629	0
7.14	8,424	9,420
7.16	8,337	5,413
7.17	0	42
7.18.2	18,411	13,823
	35,801	28,698
	194,584	189,174

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Annual Report - 31 December 2023

INCOME STATEMENT

INCOME STATEMENT (in EUR thousands)

Revenue

Other income

Revenue

Cost of sales and change in inventory External expenses

Taxes, duties and similar payments Personnel expenses

Other recurring operating income and expenses Depreciation, amortisation and provisions

Profit (loss) from recurring operations

Other non-recurring operating income and expenses Impairment of non-current assets

Operating profit (loss)

Cost of net financial debt

Other financial income and expenses

Financial income (expense)

Profit (loss) before income tax

Income tax expense

Deferred taxes P&L

Profit (loss) for the year

Profit (loss) attributable to:

Owners of the Company

Non-controlling interests

Basic earnings per share (in EUR)

Diluted earnings per share (in EUR)

Notes	31 December 2023	31 December 2022
8.1	33,262	19,159
8.2	777	397
	34,038	19,556
8.3	(18,349)	(7,948)
8.4	(9,348)	(6,845)
	(354)	(190)
8.5	(14,610)	(9,961)
8.7	658	(59)
7.1 & 7.2	(6,524)	(2,725)
	(14,488)	(8,171)
8.8	352	34
	0	0
	(14,136)	(8,137)
	(1,844)	(1,238)
	803	21
8.9	(1,041)	(1,217)
	(15,177)	(9,354)
8.10	(266)	(325)
	0	0
	(15,442)	(9,679)
	(15,990)	(10,076)
	548	396
8.11	(0.78)	(0.50)
8.11	(0.78)	(0.50)

STATEMENT OF COMPREHENSIVE INCOME

	STATEMENT OF COMPREHENSIVE INCOME	Notes
	(in EUR thousands)
	Profit (loss) for the year
	Foreign currency translation differences
	Interest rate swaps	7.6 & 9.2
	Total Items subsequently recycled through profit and loss
	Actuarial gains	7.13
	Total Items that may not be recycled through profit and loss
	Total comprehensive income (loss)
	Attributable to owners of the Group
	Attributable to non-controlling interests

31 December 2023

(15,442)

(365)

(1,435)

(1,800)

19

19

(17,224)

(17,586)

362

31 December 2022

(9,679)

(238)

1,698

(238)

174

174

(8,045)

(8,864)

820

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Annual Report - 31 December 2023

STATEMENT OF CHANGES IN EQUITY

STATEMENT OF CHANGES IN EQUITY	Number of	Share		Share	Reserves and	Other	Equity	Non-
	attributable to	Total equity
shares (in		comprehensive	controlling
(in EUR thousands)	thousands)	capital		premium	profit (loss)	income	owners of the	interests
					Group
Balance at 31 December 2021	19,752		198	126,879	(11,109)	(53)	115,914	1,676	117,590
Profit (loss) for the year					(10,076)		(10,076)	396	(9,679)
Foreign currency translation differences						(249)	(249)	11	(238)
Hedging instruments						1,286	1,286	412	1,698
Actuarial gains and losses						174	174		174
Total comprehensive income for the year					(10,076)	1,211	(8,864)	820	(8,045)
Share capital increase	75		1	238			239		239
Acquisition of non-controlling interests	656		7	22,973	(23,393)		(413)	413	(0)
Share-based payments					2,241		2,241		2,241
Other changes								3	3
Balance at 31 December 2022	20,483		205	150,090	(42,337)	1,158	109,115	2,912	112,028
Balance at 31 December 2022	20,483		205	150,090	(42,337)	1,158	109,115	2,912	112,028
Profit (loss) for the year					(15,990)		(15,990)	548	(15,442)
Foreign currency translation differences						(365)	(365)		(365)
Hedging instruments						(1,249)	(1,249)	(186)	(1,435)
Actuarial gains and losses						19	19		19
Total comprehensive income for the year					(15,990)	(1,596)	(17,586)	362	(17,224)
Share capital increase	42		0	151			151	5	156
Cancellation of treasury shares						(247)	(247)		(247)
Share-based payments					3,789		3,789		3,789
Dividends								(561)	(561)
Other changes					(69)		(69)		(69)
Balance at 31 December 2023	20,526		205	150,241	(54,607)	(685)	95,154	2,718	97,873

The main changes were:

• Hedging instruments, namely interest rate swaps for €1,435 thousand;
• Share-basedpayments of €3,789 thousand following the exercise of founders' share warrants (BSPCE);
• A dividend payment of €1,100,000 at Sofiwaga 1, including €561,000 to non-controlling shareholders.

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Annual Report - 31 December 2023

CASH FLOW STATEMENT

	CASH FLOW STATEMENT	Notes	31 December 2023	31 December 2022
	(in EUR thousands)
	Profit (loss) for the year		(15,442)	(9,679)
	Adjustments for:
	Depreciation, amortisation and provisions	7.1, 7.2, 7.12	6,668	2,832
	Gains or losses from the disposal of assets		(7)	0
	Share-based payments	8.6	3,789	2,241
	Other income and expense		(5)	(231)
	Cost of financial debt	8.9	1,844	1,238
	Tax expense (incl. deferred tax)	8.10	266	325
	Operating cash flow before income tax and change in working capital		(2,888)	(3,275)
	Income taxes paid		(127)	(76)
	Effect of change in inventories	7.7	(6,656)	(3,471)
	Effect of change in trade and other receivables	7.8 to 7.10	(5,638)	(4,952)
	Effect of change in trade and other payables		2,392	4,384
	Net cash from (used in) operating activities		(12,917)	(7,391)
	Acquisition of property, plant and equipment and intangible assets	7.1, 7.2	(49,164)	(40,938)
	Acquisition of financial assets	7.4	(207)	(917)
	Effect of changes in payables to suppliers of fixed assets		4,568	(917)
	Effect of changes in advances for fixed asset acquisitions	7.6	(3,624)	3,312
	Disposals and transfers of fixed assets		8	(1,460)
	Investment grants received	7.18.1	3,416	0
	Net cash from (used in) investing activities		(45,005)	(36,982)
	Effect of change in consolidation scope (NCI contributions)		0	0
	Share capital increase (net of capital increase costs)	7.12.1	151	239
	Proceeds from borrowings and repayable advances	7.14	14,169	35,884
	Repayment of borrowings and repayable advances	7.14	(7,159)	(23,098)
	Dividends paid		(561)	0
	Cost of debt (excluding accrued interest)		(1,634)	0
	Net cash from financing activities		4,966	13,024
	Effect of change in exchange rates on cash held		(48)	85
	Net increase in cash and cash equivalents		(53,004)	(31,264)
	Cash and cash equivalents at 1 January		91,659	122,913
	Cash and cash equivalents at 31 December		38,655	91,659

Increases in non-cash assets and liabilities are eliminated. Consequently, assets financed through finance leases are not included in investments for the period. The decrease in financial liabilities relating to finance leases is included in loan repayments for the period.

Advances and down payments on fixed assets and the change in payables to suppliers of fixed assets are recognised under net cash used in investing activities, as they mainly concern Wagabox© units.

Cost of net debt (excluding accrued interest) is now presented separately in net cash from financing activities. At 31 December 2022, it was presented on the same line as repayment of borrowings and amounted to €1,638 thousand.

The Sofiwaga subsidiary distributed €1,100,000 in dividends, including €561,000 to non-controlling shareholders.

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Annual Report - 31 December 2023

Details of changes in cash flow

					Change in operating Change in	Change in suppliers	Foreign
		31 December 2022	31 December 2023	Change	currency
		activities	grants	of fixed assets	translation
								differences
Inventories	4,867	11,498	(6,631)		(6,656)		25
Trade and other receivables	4,143	9,139	(4,996)		(5,014)		18
Other current assets	8,356	8,934	(578)		(533)		(45)
Current tax receivable (tax credits)		315	405	(91)		(91)
						(5,638)		(26)

Trade and other payables

5,413

8,337

2,924

2,858

66

Other non-current liabilities	574	420	(155)	(104)	(51)
Investment grants		4,104	7,053	2,949		2,949
Financial instruments			196	196		196
Total other non-current liabilities		4,678	7,669

Other current liabilities Investment grants Suppliers of fixed assets

Total other current liabilities

6,636	6,190
146	612
7,042	11,609
13,823	18,411

(446)

467

4,568

(362)

2,392

467

3,416

4,568

4,568

(84)

100

Investment grants received by Waga Energie Canada and Waga Energy in the reporting period, classified under "Other non-current liabilities" in the balance sheet, are included in investing activities in the cash flow statement for €3,416 thousand.

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Annual Report - 31 December 2023

NOTES TO THE FINANCIAL STATEMENTS

1. Description of the Group and its business activities

Waga Energy is a public limited company (société anonyme) with a Board of Directors, registered and domiciled in France (hereinafter referred to as "the Company").

Its registered office is located at 5 avenue Raymond Chanas, 38320 Eybens, France. The consolidated financial statements of Waga Energy include those of the Company and the subsidiaries it controls (collectively referred to as "the Group"). The consolidation scope is presented in Note 5.2.

Formed in 2015 and located in Grenoble, the Waga Energy Group is the European leader in the production of biomethane from landfill gas. The Group has developed a breakthrough technology that purifies biogas from landfills to transform it into biomethane, which is then injected into gas grids as a replacement for natural gas of fossil origin.

Waga Energy is strongly committed to the energy transition.

Its mission is to provide an immediate solution to reduce greenhouse gas emissions by providing abundant green, renewable, readily available energy.

Wagabox® units are small refineries or gas plants installed in landfills. They are classified under French regulations on environmental protection (ICPE).

The unique technology combining membrane filtration and cryogenic distillation is protected by several patents.

Waga Energy SA's financial statements for the year ended 31 December 2023, prepared in accordance with the IFRS, were approved by the Board of Directors on 26 April 2024.

2. Basis of preparation

2.1 Statement of compliance

The financial statements of the Company for the reporting period ended 31 December 2023 have been prepared in accordance with the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) and adopted by the European Union.

All the IFRS adopted by the European Union are available for viewing on the European Commission's website at the following address: https://eur-lex.europa.eu/eli/reg/2008/1126/2016-01-01.

2.2 Changes in accounting standards

The following new standards, amendments and interpretations were mandatory for the Group at 31 December 2023:

• Amendments to IAS 12 - Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective for annual reporting periods beginning on or after 1 January 2023
• Amendments to IAS 12 - International Tax Reform - Pillar Two Model Rules (effective for reporting periods beginning on or after 1 January 2023)
• Amendments to IAS 1 and Practice Statement 2 - Disclosure of Accounting Policies (effective for annual reporting periods beginning on or after 1 January 2023)

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Annual Report - 31 December 2023

• Amendments to IAS 8 - Definition of Accounting Estimates (effective for financial years beginning on or after 1 January 2023)
• IFRS 17 - Insurance Contracts (effective for reporting periods beginning on or after 1 January 2023).

The following new standards, amendments and interpretations have been issued but were not mandatory for the Group at 31 December 2023:

• Amendments to IAS 1 - Presentation of Financial Statements: Classifying Liabilities as Current or Non- current (effective for annual reporting periods beginning on or after 1 January 2024 (a proposal to change this to a later date is currently underway) - subject to approval by the EU)
• Amendments to IAS 7 and IFRS 17 - Supplier Finance Arrangements (effective for annual reporting periods beginning on or after 1 January 2024, subject to EU approval)
• Amendments to IFRS 16 - Lease Liability in a Sale and Leaseback (effective for annual reporting periods beginning on or after 1 January 2024)
• Amendments to IAS 21 - Lack of Exchangeability (effective for annual reporting periods beginning on or after 1 January 2025, subject to EU approval).

The Company does not expect the new standards to have a significant impact on the financial statements.

2.3 Use of estimates and judgments

The preparation of the consolidated financial statements requires Management to use judgments and accounting estimates, which affect the Company's accounting policies and the reported amounts of assets and liabilities and income and expense items.

The estimates and underlying assumptions are regularly reviewed to ensure they are reasonable based on the Company's past performance. Estimates may be adjusted if the circumstances on which they are based change or if new information comes to light. Actual values may differ from estimates due to changes in assumptions and economic circumstances. The effect of changes in estimates is recognised prospectively. Consequently, the actual amounts reported in the Group's future financial statements may differ from current estimates.

2.3.1 Judgments

Information on the judgments made in applying accounting policies, which have the most significant effects on the amounts recognised in the financial statements, is included in the following notes:

• Determining the costs that may be included when measuring property, plant and equipment in accordance with IAS 16 "Property, Plant and Equipment" (Note 7.2),
• Assessing control over subsidiaries (Note 5.2) and Wagabox® units sold to subsidiaries,
• Determining revenue flows and whether an entity is acting as an agent or principal in accordance with IFRS 15 (Note 8.1),
• Measuring the recoverable amount of Wagabox® units and estimating their useful life (Note 7.3),
• Determining stage of completion, revenue and losses at completion for onerous contracts, using the stage of completion method for equipment sales (Notes 8.1 and 7.13).

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Annual Report - 31 December 2023

2.3.2 Assumptions and estimation uncertainties

Information on assumptions and estimation uncertainties at the reporting date that have a significant risk of resulting in a material adjustment in the carrying amounts of assets and liabilities for the year ended 31 December 2023 is included in the following notes:

• Measuring the fair value of founders' share warrants (BSPCE) (Notes 7.12.2 and 8.6): The fair value of share-based payments is determined using the Black & Scholes option pricing model, which factors in assumptions on complex and subjective variables. The variables include share price, expected volatility of share price over the life of the instrument and the current and future behaviour of the holders of the instruments.
• With regard to convertible bonds, estimates are made to:
• • Determine the fair value of conversion options (Note 7.14);
  • Determine the effective interest rate (EIR) of the debt component of conversion options, taking into account the most probable time horizon for conversion into shares or redemption (Note 7.14).
• Measuring interest rate swaps used to manage exposure to interest rate risk (Note 9.2).
• Measuring provisions, including for retirement benefits and site dismantlement (Note 7.13).
• Determining the discount rate and lease term when assessing lease liabilities in accordance with IFRS 16 "Leases" (Note 7.2).
• Measuring provisions for the impairment of trade receivables in accordance with IFRS 9 (Note 7.8).
• Assessing whether to capitalise deferred tax assets (Note 7.5).

Actual values may differ from estimates due to changes in assumptions and economic circumstances.

These estimates may be adjusted if the circumstances on which they are based change or if new information comes to light.

2.4 Basis of measurement

The financial statements have been prepared on the historical cost basis except for derivative financial instruments and plan assets which are measured at fair value.

The financial statements of Waga Energy SA for the year ended 31 December 2023 have been prepared on a going concern basis for a minimum period of twelve months from the date of the financial statements in line with the net cash position currently available and the growth prospects reflected in the product business plan (Note 3.3).

2.5 Functional and presentation currency

The financial statements are presented in euros, which is the Company's functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated.

Transactions in foreign currencies are translated into euros at the exchange rates effective at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into euros at the exchange rate effective at the reporting date.

Foreign currency translation gains or losses are recognized in the income statement, except for amounts that can be considered net investments in a foreign operation as defined by IAS 21, for which foreign exchange gains and losses are recognized in other comprehensive income.

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