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Bringing Sentenial into the fold

EML Payments 30 September 2021 Flash note
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EML Payments

Bringing Sentenial into the fold

Completion of acquisition

Software & comp services

30 September 2021

Price

A$3.89

Market cap

A$1,452m

Net cash (A$m) at end FY21

103.0

Shares in issue

373.1m

Free float

93%

Code

EML

Primary exchange

ASX

Secondary exchange

N/A

Share price performance

Business description

EML Payments is a payment solutions company specialising in the prepaid stored value market, with mobile, physical and virtual card offerings. It provides solutions for payouts, gifts, incentives, rewards and supplier payments, managing thousands of programmes across 27 countries in Europe, North America and Australia.

Analyst

Katherine Thompson

+44 (0)20 3077 5730

EML Payments is a research client of Edison Investment Research Limited

EML Payments closed the acquisition of Sentenial today, in line with its target to complete by the end of Q122. This marks a crucial step in the group’s evolution from a gift card company to a provider of a wide range of payment services, including reloadable cards, digital payments, open banking and account-to-account payments.

Year end

Revenue (A$m)

PBT*
(A$m)

NPATA** (A$m)

Dil. EPS*
(c)

DPS
(c)

P/E
(x)

EV/EBITDA
(x)

06/20

121.0

21.6

21.0

5.5

0.0

70.9

43.3

06/21

192.2

30.2

21.0

6.6

0.0

59.1

33.4

06/22e

235.3

43.3

31.1

9.2

0.0

42.4

23.2

06/23e

290.1

65.8

54.6

13.9

0.0

27.9

16.0

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Net profit after tax, excluding acquisition-related costs.

EML Payments announced plans to acquire Sentenial in April (see our update note, Open sesame). The deal required the approval of two regulators: the FCA in the UK, which was received in June, and the ACPR in France, just received. EML is paying a total of up to €110m/A$177.1m, consisting of upfront cash of €38.9m/A$62.6m, 9.6m shares (worth €31.1m/A$50.1m at the fixed price of A$5.01 per share) and an earnout of up to €40m/A$64.4m dependent on achieving incremental open banking revenues of €27m in CY23. €2.5m/A$3.9m of the upfront cash will be held in escrow for 12 months to cover any warranty or indemnity claims. Completion of this deal brings open banking technology and a blue-chip customer base to the group, giving EML access to the high-growth European open banking market. The two companies have already started working together on a go-to-market strategy that encompasses sales, marketing, product and technology.

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