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Moving forward

EML Payments 20 August 2021 Update
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EML Payments

Moving forward

FY21 results

Software & comp services

20 August 2021

Price

A$3.81

Market cap

A$1,379m

€0.62:A$1

Net cash (A$m) at end FY21

103.0

Shares in issue

361.8m

Free float

93%

Code

EML

Primary exchange

ASX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

0.3

37.1

20.8

Rel (local)

(2.0)

27.0

(1.4)

52-week high/low

A$5.75

A$2.69

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.

Next events

Q122 trading update

October 2021

Analyst

Katherine Thompson

+44 (0)20 3077 5730

EML Payments is a research client of Edison Investment Research Limited

EML Payments reported a strong underlying performance in FY21 driven by volume growth in the General Purpose Reloadable division and higher breakage revenue in the Gift & Incentive business. EML is working with the Irish regulator to resolve the issues within PFS’s European operations and, subject to French regulator approval, expects to complete the Sentenial acquisition in September. This deal will bring open banking technologies to the group, enabling EML to offer both card-based and direct-from-bank-account technologies to its customer base.

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

69.4

42.3

06/21

192.2

30.2

21.0

6.6

0.0

57.9

32.6

06/22e

235.3

43.3

31.1

9.2

0.0

41.5

22.6

06/23e

290.1

65.8

54.6

13.9

0.0

27.4

15.5

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.

Good underlying performance in FY21

Excluding the A$11.4m costs incurred/provided for the issue with the Irish regulator (Central Bank of Ireland (CBI)), EML reported underlying EBITDA and NPATA at the upper end of guidance and ahead of our forecasts. Gift and Incentive (G&I) suffered from lower footfall in malls due to COVID lockdowns, but higher breakage revenue contributed to stronger gross profit than we had forecast. General Purpose Reloadable (GPR) volumes were in line with our expectations; a combination of higher yield and lower gross margin resulted in gross profit in line with our forecast. Virtual Account Numbers (VANs) had a relatively stable performance in the year, with higher-margin customers partially compensating for lower-than-expected volume. Management continues to work with the CBI to reach a resolution, with remediation plans expected to be substantially complete by the end of CY21.

FY22: Exploit open banking opportunity

EML has already received approval for the Sentenial acquisition from the FCA in the UK and is awaiting approval from the French regulator. Completion of this deal will bring open banking technology and a blue-chip customer base to the group, giving EML access to the high-growth European open banking market.

Valuation: Awaiting resolution of regulatory issue

Since bouncing back from its low of A$2.80, the share price has traded in the range A$3.30–3.90. In FY23 (the year in which we expect a positive contribution from Sentenial), EML is trading at a discount to global payment processor peers on an EV/EBITDA and P/E basis, reflecting the scale and profitability of peers. EML trades at a premium to prepaid card peers on all metrics, reflecting its higher growth prospects. Prior to the CBI issue, EML’s valuation metrics for FY23 were an EV/EBITDA multiple of 21.4x and a P/E multiple of 37.5x. If the regulatory issue is successfully resolved without further costs being incurred over and above the A$9.3m already provided for, then we would expect the stock to re-rate upwards.

Review of FY21 results

Exhibit 1: FY21 results highlights

FY21e

FY21a

Diff

y-o-y

Revenues

A$m

182.7

192.2

5.2%

58.9%

Gross profit

A$m

125.4

128.4

2.4%

45.8%

Gross margin

68.6%

66.8%

-1.8%

-6.0%

EBITDA

A$m

50.1

42.2

-15.8%

29.6%

EBITDA margin

27.4%

21.9%

-5.5%

-5.0%

Add back CBI costs

A$m

11.4

Underlying EBITDA

A$m

50.1

53.5

6.9%

64.5%

Underlying EBITDA margin

27.4%

27.8%

0.4%

0.9%

Normalised operating profit

A$m

36.1

31.6

-12.5%

41.3%

Normalised operating profit margin

19.8%

16.4%

-3.3%

-2.0%

Reported operating profit

A$m

0.6

-4.8

-840.9%

-43.2%

Reported operating margin

0.4%

-2.5%

-2.9%

4.5%

Normalised PBT

A$m

34.7

30.2

-13.1%

39.5%

Reported PBT

A$m

-33.1

-23.3

-29.8%

196.1%

Normalised net income

A$m

27.8

24.1

-13.1%

40.6%

NPATA

A$m

29.2

21.0

-27.9%

0.1%

Add back CBI costs

A$m

2.0

11.4

Underlying NPATA

A$m

31.2

32.4

3.9%

54.2%

Reported net income

A$m

-26.5

-28.7

8.2%

301.7%

Normalised basic EPS

A$

0.08

0.07

-12.9%

18.6%

Normalised diluted EPS

A$

0.08

0.07

-12.6%

19.9%

Reported basic EPS

A$

-0.07

-0.08

8.4%

238.9%

NPATA/share

A$

0.08

0.06

-27.5%

-25.4%

Net debt/(cash)

A$m

(45.1)

(103.0)

128.4%

24.8%

Gross debit volume (GDV)

A$bn

19.8

19.7

-0.8%

41.8%

Yield

bp

92

99

7

11

Source: EML Payments, Edison Investment Research

EML reported FY21 GDV substantially in line with our forecast. A higher-than-expected yield of 99bp versus our 92bp forecast resulted in group revenue 5% ahead of our forecast. Gross profit grew at a slower rate than revenue, reflecting the higher proportion of lower-margin GPR business in the mix, with PFS included for a full 12 months in FY21 versus three months in FY20. On a reported basis, EBITDA grew 30% y-o-y to A$42.2m. This figure is after accounting for $11.4m in costs relating to the CBI issue (EML incurred costs of A$2.1m and provided for a further A$9.3m in remediation costs) . Adjusting for this, underlying EBITDA was A$53.5m (+65% y-o-y), at the upper end of the company’s guidance range (A$50–54m) and 7% ahead of our $50.1m forecast. NPATA of A$21.0m was flat y-o-y (we note that FY20 NPATA has been restated from A$24.0m to A$21.0m, described in more detail on page 4). Adjusting for the CBI costs, underlying NPATA of A$32.4m was ahead of our $31.2m forecast and at the upper end of company guidance (A$30.0–33.5m).

EML closed the year with a cash position of A$141.2m; offsetting this is the $3829m owing to PFS in deferred consideration (fair value of A$40m obligation) to arrive at a net cash position of A$103.0m. As we had previously expected the Sentenial acquisition to close on 30 June, our net cash forecast at the end of FY21 was after a A$60.3m cash payment for the acquisition; compared to our adjusted net cash forecast of A$105.4m, net cash was only marginally lower.

We discuss divisional performance in more detail on page 3.

Exhibit 2: Divisional performance

FY21a

FY21e

FY20a

Diff

y-o-y

GDV (A$bn)

G&I

1.11

1.12

1.18

(1%)

(6%)

GPR

9.74

9.74

4.23

0%

130%

VANS

8.83

8.98

8.47

(2%)

4%

Group GDV

19.68

19.83

13.88

(1%)

42%

Yield (bp)

G&I

635

575

580

60

55

GPR

117

110

99

7

18

VANS

12

12

13

(1)

(1)

Revenue (A$m)

G&I

70.2

64.2

68.2

9%

3%

GPR

113.5

107.1

41.9

6%

171%

VANS

10.3

11.1

10.7

(8%)

(4%)

Net interest contribution

0.1

0.3

0.9

(62%)

(90%)

Group revenue

194.2

182.7

121.6

6%

60%

Less: bond amortisation

(2.0)

0

(0.7)

Reported group revenue

192.2

182.7

121.0

5%

59%

Gross profit (A$m)

G&I

57.0

51.3

56.8

11%

0%

GPR

65.7

65.9

25.0

(0%)

163%

VANS

7.6

7.9

6.9

(3%)

10%

Group

130.4

125.4

88.7

4%

47%

Gross margin

G&I

81.2%

80.0%

83.4%

1.2%

(2.2%)

GPR

57.9%

61.5%

59.7%

(3.6%)

(1.8%)

VANS

74.3%

71.0%

64.9%

3.3%

9.4%

Group

67.1%

68.6%

73.0%

(1.5%)

(5.8%)

Source: EML Payments, Edison Investment Research

Gift & Incentive benefits from high breakage recognition

G&I saw a 6% decline in GDV in FY21 due to repeated lockdowns around the world, particularly around Christmas time. Q420 had already experienced weakness in volumes due to COVID and H221 GDV was 6% higher y-o-y, showing that trading is starting to recover. Revenue was actually 3% higher y-o-y; the yield of 635bp resulted from higher breakage rates, particularly in the US where an additional A$11.1m was recognised, as there was an increased level of funds left on cards at expiry. The company noted that mall volumes made up 56% of GDV, with the remaining 44% from the incentives business, which grew 11% y-o-y. Due to the higher contribution of breakage compared to FY20, gross profit was 11% ahead of our forecast and flat y-o-y.

GPR volumes and gross profit in line

GDV growth of 130% y-o-y reflects the full year inclusion of PFS, versus three months in FY20. The company noted that PFS contributed GDV of A$6.4bn (+20% y-o-y on a like-for-like basis) and revenue of A$78.3m, and the original GPR business GDV of A$3.3bn (+13% y-o-y) and revenue of A$35.3m (+34% y-o-y). The transition of salary packaging accounts from Smartgroup and NSW Health is complete and EML now manages 320k accounts. Gaming payout programmes saw increased volume in all markets with revenue 87% higher y-o-y. Gross profit increased 163% y-o-y, while gross margin declined by 2pp to 58%. PFS has lower gross margins as it currently outsources payment processing. EML has developed an in-house payment processor, TRACE, and initially is adding new customers to the platform. Over time, existing PFS customers will be brought onto the TRACE platform resulting in lower processing costs for the division. EML was recently approved as a direct member of the Faster Payments Network (FPN) and has just gone live, reducing fees from 20p to 2p for those transactions using the FPN. Over the next three years, the combination of TRACE and FPN should drive GPR gross margins up by c 5%.

Management noted that the CBI issue has resulted in delays to programme launches in Europe, reducing establishment fees during Q421 by c A$1m.

Update on regulatory issue in Ireland

We have previously written about the CBI investigation into PFS Card Services (Ireland) Limited (PCSIL), the entity through which PFS’s European (ex-UK) business has operated since 19 December 2020. The company provided an update confirming that it continues to work with the CBI and has provided a detailed remediation plan to address concerns raised. EML expects this plan to be substantially complete by the of CY21, with the remaining items to be addressed by the end of March 2022. EML noted that prior to the CBI letter, it had already been strengthening the risk and compliance functions of PCSIL, including expanding the board, implementing a fraud detection tool and adopting KYC and AML tools from third-party providers.

EML is currently restricted from materially growing PCSIL’s business and is discussing this with the CBI. Management expects that this restriction will be lifted once the remediation phase is complete. On the results call, management highlighted that the CBI requires PCSIL to be managed locally, with a strong board, and for risk and compliance to be staffed locally.

VANS steady state

The VANS business saw a 4% increase in GDV y-o-y. With a slightly lower yield, revenue declined 4% y-o-y. However, due to the customer mix, gross profit increased 10% y-o-y, with the gross margin improving 9pp to 74%.

Explanation of restatements

EML has restated FY20 accounts because of an issue arising in PFS relating to the recognition of breakage. The company recently discovered that prior to acquisition, PFS had been recognising breakage revenue more quickly than it should. This means that the completion balance sheet as originally recorded understated the liability to cardholders (ie cardholders who may yet use the balance on their cards) by A$28.2m and also understated the intangible asset ‘Customer contracts’ by A$15.9m. In July, EML injected A$28.2m of cash into segregated funds to cover this amount. Over the course of FY22–28, the company expects this cash to be released back to EML as the dormant funds and expired eMoney balances meet the conditions to be transferred to EML ownership.

EML also revisited the contingent consideration due to PFS (based on estimates of EBITDA achievable by PFS in FY21, FY22 and FY23) and revised the amounts due as at the end of FY20 and FY21. The company now estimates that PFS did not hit its EBITDA target in FY21 (we assume because of the costs incurred in dealing with the CBI issue) and has revised its expectations for FY22/23. In addition, certain costs incurred by EML are deemed to have arisen pre-acquisition so reduce the amount due to the PFS vendors (A$13.2m in FY21). Prior to the discovery of the CBI issue and breakage recognition issue, in H121, strong performance by PFS had led EML to revise up the amount of contingent consideration due by A$24.0m, resulting in a fair value loss reported as an exceptional item. This has now been revised down to A$16.6m for FY21. Overall, the contingent consideration recorded on acquisition has been revised down from A$76.2m to A$12.5m and at the end of FY21 stands at A$14.3m (compared to our previous forecast of A$97.4m).

Business development update

EML signed 121 new contracts in FY21, of which 21 programmes were implemented. In total, 144 new programmes were implemented in the year: 95 in GPR, 46 in G&I and three in VANS. The company has had particular success with government and NGO programmes, including the ASPEN card for the UK Home Office and stimulus programmes for the Jersey government and the Northern Ireland government. Programme launches in other sectors include:

AptPay: a Canadian disbursement app;

Avios: a reloadable travel card which allows Avios members to link their loyalty programme to transactional activity on spend;

Laybuy and Humm buy-now-pay-later platforms; and

VGW and Paddy Power gaming programmes.

Sentenial acquisition progress

Since we last wrote, the deal has been approved by the FCA in the UK. The ACPR in France is currently reviewing the deal. The company hopes to receive approval in September, and if this is forthcoming, plans to complete the acquisition on 30 September. Since the acquisition was announced, Sentenial has won several new customers including Nuvei, Ecommpay, Hertz, Games Workshop (via Visa Cybersource) and Touchnet.

Outlook and changes to forecasts

The company has issued guidance for FY22 (see Exhibit 3), which assumes that the Sentenial acquisition completes on 30 September and is consolidated from 1 October.

Exhibit 3: FY22 guidance

Group

Of which Sentenial

GDV

A$bn

93–100

69–74

Revenue

A$m

220–255

10–15

Overheads

A$m

97–106

12–14

Underlying EBITDA

A$m

58–65

0 to -3

Underlying NPATA

A$m

27–34

Gross margin

c 69%

Source: EML Payments

Our forecasts had assumed that the deal would be consolidated from 1 July, so we have revised our assumptions to reflect consolidation from 1 October. We have also updated our Sentenial forecasts to reflect the current euro/A$ exchange rate. This accounts for the majority of the changes to our forecasts.

Exhibit 4: Changes to estimates

FY22e

FY23e

FY24e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

New

y-o-y

Revenues

A$m

243.2

235.3

-3.2%

22.4%

291.7

290.1

-0.6%

23.3%

340.7

17.4%

Gross profit

A$m

173.1

163.3

-5.7%

27.1%

210.8

206.7

-1.9%

26.6%

247.2

19.6%

Gross margin

71.2%

69.4%

-1.8%

2.6%

72.3%

71.3%

-1.0%

1.9%

72.6%

1.3%

EBITDA

A$m

67.8

60.8

-10.3%

44.2%

93.9

88.4

-5.9%

45.4%

118.1

33.6%

EBITDA margin

27.9%

25.8%

-2.0%

3.9%

32.2%

30.5%

-1.7%

4.6%

34.7%

4.2%

Normalised operating profit

A$m

50.2

45.9

-8.5%

45.4%

71.4

68.8

-3.7%

49.7%

94.8

37.9%

Normalised operating profit margin

20.6%

19.5%

-1.1%

3.1%

24.5%

23.7%

-0.8%

4.2%

27.8%

4.1%

Reported operating profit

A$m

31.7

13.9

-56.1%

-389.7%

54.9

46.3

-15.7%

232.3%

72.3

56.3%

Reported operating margin

13.0%

5.9%

-7.1%

8.4%

18.8%

16.0%

-2.9%

10.0%

21.2%

5.3%

Normalised PBT

A$m

47.2

43.3

-8.2%

43.6%

68.4

65.8

-3.8%

51.8%

91.9

39.6%

Reported PBT

A$m

27.2

11.3

-58.4%

-148.7%

50.9

43.3

-15.0%

282.0%

69.4

60.2%

Normalised net income

A$m

37.8

34.7

-8.2%

43.6%

54.7

52.6

-3.8%

51.8%

73.5

39.6%

NPATA

A$m

38.3

31.1

-18.8%

47.7%

55.7

54.6

-2.0%

75.9%

75.5

38.2%

Reported net income

A$m

21.8

9.1

-58.4%

-131.6%

40.7

34.6

-15.0%

282.0%

55.5

60.2%

Normalised diluted EPS

A$

0.10

0.09

-7.7%

39.5%

0.14

0.14

-3.3%

51.7%

0.19

39.6%

Reported basic EPS

A$

0.06

0.02

-58.3%

-130.7%

0.11

0.09

-14.9%

281.7%

0.15

60.2%

NPATA/share

A$

0.10

0.08

-18.4%

43.4%

0.15

0.14

-1.5%

75.7%

0.20

38.2%

Net debt/(cash)

A$m

(47.8)

(51.1)

7.0%

-50.4%

(65.7)

(103.3)

57.3%

102.3%

(112.1)

8.5%

GDV

A$bn

105.0

93.5

-10.9%

375.2%

121.9

126.1

3.5%

34.9%

145.6

15.5%

Yield

bp

23

25

2

-74

24

23

-1

-2

23

0

Divisional data

GDV

G&I

A$bn

1.2

1.2

-1%

1.4

1.3

-1%

1.5

GPR

A$bn

12.2

13.6

12%

14.0

15.7

12%

17.3

Digital Payments

A$bn

91.6

78.7

-14%

106.5

109.1

2%

126.9

Revenue

G&I

A$m

73.7

73.0

-1%

81.0

80.3

-1%

88.3

GPR

A$m

133.9

136.4

2%

154.0

156.9

2%

172.5

Digital Payments

A$m

35.4

25.7

-27%

56.4

52.7

-7%

79.6

Gross profit

G&I

A$m

58.9

58.4

-1%

64.8

64.2

-1%

70.7

GPR

A$m

85.0

83.9

-1%

100.1

99.6

0%

112.2

Digital Payments

A$m

28.8

20.7

-28%

45.7

42.6

-7%

64.1

Gross margin

G&I

80.0%

80.0%

80.0%

80.0%

80.0%

GPR

63.5%

61.5%

65.0%

63.5%

65.0%

Digital Payments

81.5%

80.7%

80.9%

80.9%

80.6%

Source: Edison Investment Research

Valuation

After the initial shock when the CBI letter was received in May and the stock fell from A$5.15 to A$2.80, the share price has traded in the range A$3.30–3.90. Exhibit 5 shows how EML is trading in relation to three groups: global payment processors, pre-paid card companies and Australian fintechs. In FY22, we are forecasting Sentenial to make a small loss at the EBITDA level, depressing group EBITDA, so comparison to peers is less helpful. In FY23, we expect that Sentenial will generate positive EBITDA. In FY23, EML is trading at a discount to global payment processor peers on an EV/EBITDA basis and on a P/E basis, reflecting the scale and profitability of peers. EML trades at a premium to prepaid card peers on all metrics, reflecting its higher growth prospects. Prior to the CBI issue, EML’s valuation metrics for FY23 were an EV/EBITDA multiple of 21.4x and a P/E multiple of 37.5x. If the issue is successfully resolved without further costs being incurred over and above the A$9.3m already provided for, then we would expect the stock to re-rate upwards.

Exhibit 5: Peer group valuation metrics

Currency

Market cap

EV/Sales (x)

EV/EBITDA (x)

P/E (x)

(m)

CY

NY

NY+1

CY

NY

NY+1

CY

NY

NY+1

EML Payments

A$

1,379

5.8

4.7

4.0

22.6

15.5

11.6

41.5

27.4

19.6

Payment processors

Adyen

71,376

70.9

50.9

37.4

115.9

81.2

59.4

165.8

115.5

84.1

FIS

US$

82,808

7.0

6.5

6.1

15.9

14.3

13.0

20.5

17.8

15.8

Fiserv

US$

73,915

6.2

5.7

5.3

14.8

13.4

12.1

20.0

17.1

14.8

Global Payments

US$

50,351

7.7

7.0

6.4

16.5

14.6

13.2

21.1

18.0

15.7

PayPal Holdings

US$

323,028

12.4

10.1

8.3

42.1

35.1

28.4

58.2

46.6

37.4

Square

US$

123,144

6.5

5.8

4.8

117.1

92.1

62.8

143.1

114.7

83.6

Worldline

21,216

5.0

4.6

4.3

19.7

17.0

15.1

31.1

25.8

22.6

Average

16.5

12.9

10.4

48.9

38.2

29.1

65.7

50.8

39.1

Prepaid card companies

Appreciate Group

£

51

0.2

0.2

0.2

2.7

2.1

1.8

9.0

6.8

5.9

Edenred

12,077

8.6

7.7

7.0

21.1

18.5

16.6

37.9

32.5

28.1

Euronet Worldwide

US$

7,041

2.3

1.9

1.7

16.3

9.3

7.6

36.2

16.4

13.0

Fleetcor Technologies

US$

21,683

9.2

8.2

7.4

16.3

14.1

12.5

20.3

17.4

15.1

Green Dot Corp

US$

2,524

2.6

2.5

2.3

16.0

13.3

11.8

20.6

16.8

14.3

WEX

US$

7,852

5.8

5.1

4.5

14.6

12.1

10.8

20.4

16.3

13.9

Average

4.8

4.2

3.8

14.5

11.6

10.2

24.0

17.7

15.1

Australian fintechs

Afterpay Ltd

A$

38,233

40.8

24.4

16.9

483.6

166.6

83.8

N/A

404.3

181.4

FlexiGroup Ltd

A$

471

5.7

5.0

4.6

22.7

25.5

20.7

6.6

8.2

6.5

Zip Co Ltd

A$

4,386

14.7

8.8

6.4

N/A

N/A

N/A

N/A

N/A

N/A

Average

20.4

12.8

9.3

253.1

96.1

52.2

6.6

206.2

94.0

Source: Edison Investment Research, Refinitiv (as at 16 August)

Exhibit 6: Financial summary

A$'m

2017

2018

2019

2020

2021

2022e

2023e

2024e

30-June

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

58.0

71.0

97.2

121.0

192.2

235.3

290.1

340.7

Cost of Sales

(13.7)

(17.7)

(24.2)

(32.9)

(63.8)

(72.1)

(83.4)

(93.5)

Gross Profit

44.2

53.3

73.0

88.1

128.4

163.3

206.7

247.2

EBITDA

 

 

14.5

21.0

29.7

32.5

42.2

60.8

88.4

118.1

Normalised operating profit

 

 

11.9

18.1

25.6

22.4

31.6

45.9

68.8

94.8

Amortisation of acquired intangibles

(8.9)

(7.2)

(7.5)

(11.1)

(20.2)

(20.0)

(20.0)

(20.0)

Exceptionals

0.2

(0.3)

(3.0)

(13.6)

(11.2)

(2.0)

0.0

0.0

Share-based payments

(5.3)

(5.0)

(4.2)

(6.1)

(5.0)

(10.0)

(2.5)

(2.5)

Reported operating profit

(2.1)

5.6

10.9

(8.5)

(4.8)

13.9

46.3

72.3

Net Interest

0.0

(0.1)

(0.0)

(0.7)

(1.4)

(2.6)

(3.0)

(3.0)

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

(0.5)

(1.8)

1.3

(17.1)

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

11.9

17.9

25.6

21.6

30.2

43.3

65.8

91.9

Profit Before Tax (reported)

 

 

(2.1)

5.0

9.0

(7.9)

(23.3)

11.3

43.3

69.4

Reported tax

2.1

(2.8)

(0.6)

0.7

(5.4)

(2.3)

(8.7)

(13.9)

Profit After Tax (norm)

8.9

14.4

20.5

17.2

24.1

34.7

52.6

73.5

Profit After Tax (reported)

0.0

2.2

8.5

(7.1)

(28.7)

9.1

34.6

55.5

Minority interests

0.0

0.0

(0.2)

0.0

0.0

0.0

0.0

0.0

Discontinued operations

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

8.9

14.4

20.3

17.2

24.1

34.7

52.6

73.5

Net income (reported)

0.0

2.2

8.3

(7.1)

(28.7)

9.1

34.6

55.5

Basic ave. number of shares outstanding (m)

245

246

249

304

360

371

372

372

EPS - basic normalised (A$)

 

 

0.036

0.058

0.081

0.056

0.067

0.093

0.142

0.20

EPS - diluted normalised (A$)

 

 

0.036

0.057

0.078

0.055

0.066

0.092

0.139

0.19

EPS - basic reported (A$)

 

 

0.000

0.009

0.033

(0.023)

(0.080)

0.024

0.093

0.15

Dividend (A$)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

148.6

22.5

36.9

24.4

58.9

22.4

23.3

17.4

Gross Margin (%)

76.3

75.1

75.1

72.8

66.8

69.4

71.3

72.6

EBITDA Margin (%)

25.1

29.6

30.6

26.9

21.9

25.8

30.5

34.7

Normalised Operating Margin

20.5

25.4

26.4

18.5

16.4

19.5

23.7

27.8

BALANCE SHEET

Fixed Assets

 

 

90.6

108.0

162.9

872.1

685.3

1,012.0

1,053.7

1,087.9

Intangible Assets

60.1

65.8

104.6

371.7

350.1

507.9

490.2

471.3

Tangible Assets

2.8

3.5

5.4

14.6

11.2

7.7

3.9

4.9

Investments & other

27.6

38.7

53.0

485.8

323.9

496.4

559.6

611.7

Current Assets

 

 

96.9

131.6

313.8

1,008.6

1,603.5

1,961.8

2,270.4

2,439.0

Stocks

10.3

12.6

18.2

22.3

16.4

18.0

19.8

21.8

Debtors

6.3

8.9

14.4

21.7

22.0

26.9

33.1

38.9

Cash & cash equivalents

39.9

39.0

33.1

118.4

141.2

120.3

172.6

130.3

Other

40.4

71.1

248.2

846.2

1,424.0

1,796.6

2,045.0

2,248.0

Current Liabilities

 

 

(62.8)

(90.5)

(299.0)

(1,357.8)

(1,792.8)

(2,323.6)

(2,645.1)

(2,900.3)

Creditors

(23.8)

(21.2)

(33.9)

(47.5)

(62.9)

(71.4)

(82.5)

(91.0)

Tax and social security

(0.0)

0.0

(0.8)

(2.6)

(6.0)

(6.0)

(6.0)

(6.0)

Short term borrowings

0.0

0.0

(15.0)

0.0

(1.4)

(1.4)

(1.4)

(1.4)

Other

(39.0)

(69.3)

(249.4)

(1,307.7)

(1,722.5)

(2,244.8)

(2,555.2)

(2,801.9)

Long Term Liabilities

 

 

(4.2)

(19.3)

(33.5)

(82.6)

(81.1)

(167.1)

(158.7)

(48.2)

Long term borrowings

0.0

0.0

0.0

(35.8)

(36.9)

(67.9)

(67.9)

(16.9)

Other long term liabilities

(4.2)

(19.3)

(33.5)

(46.8)

(44.2)

(99.2)

(90.9)

(31.4)

Net Assets

 

 

120.6

129.8

144.2

440.2

414.9

483.2

520.3

578.3

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

120.6

129.8

144.2

440.2

414.9

483.2

520.3

578.3

CASH FLOW

Op Cash Flow before WC and tax

13.1

19.7

28.4

31.2

41.2

59.8

87.4

117.1

Working capital

4.9

(9.2)

2.0

3.6

31.7

1.0

1.9

(0.5)

Exceptional & other

(0.8)

(1.2)

(0.7)

(12.7)

(17.3)

(31.0)

0.0

0.0

Tax

2.1

(2.8)

(0.6)

0.7

(5.4)

(2.3)

(8.7)

(13.9)

Net operating cash flow

 

 

19.3

6.5

29.2

22.8

50.2

27.5

80.7

102.8

Capex

(2.9)

(5.3)

(5.8)

(11.0)

(12.6)

(14.1)

(17.1)

(19.4)

Acquisitions/disposals

0.0

(0.7)

(44.0)

(142.5)

(3.5)

(61.6)

(7.1)

(70.4)

Net interest

0.0

(0.1)

(0.0)

(0.7)

(1.4)

(2.6)

(3.0)

(3.0)

Equity financing

0.2

0.0

0.4

240.8

0.6

0.0

0.0

0.0

Dividends

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

(3.6)

(0.6)

(0.4)

(7.0)

(11.0)

(1.2)

(1.2)

(1.2)

Net Cash Flow

13.0

(0.2)

(20.6)

102.3

22.2

(51.9)

52.2

8.8

Opening net debt/(cash)

 

 

(26.9)

(39.9)

(39.0)

(18.1)

(82.5)

(103.0)

(51.1)

(103.3)

FX

(0.0)

(0.6)

(0.3)

(2.0)

0.6

0.0

0.0

0.0

Other non-cash movements

0.0

0.0

0.0

(35.8)

(2.4)

0.0

0.0

0.0

Closing net debt/(cash)

 

 

(39.9)

(39.0)

(18.1)

(82.5)

(103.0)

(51.1)

(103.3)

(112.1)

Source: EML Payments, Edison Investment Research

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This report has been commissioned by EML Payments and prepared and issued by Edison, in consideration of a fee payable by EML Payments. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

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New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by EML Payments and prepared and issued by Edison, in consideration of a fee payable by EML Payments. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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