Last close As at 05/08/2026
AUD0.33
▲ 0.01 (1.54%)
Market capitalisation
AUD127m
Research: TMT
The Irish regulator has extended the growth cap on European General Purpose Reloadable (GPR) volumes for an additional 12 months to the end of CY23. This limits growth of volumes in Europe (ex-UK) to 10% over the baseline volume in the first nine months of CY22. This restriction could be lifted early, if third-party assurance of ongoing remediation work is finalised before the end of CY23. We have revised our forecasts to reflect slower volume growth in GPR and higher compliance-related overheads.
EML Payments |
Irish regulator extends growth cap |
Regulatory update |
Software and comp services |
15 November 2022 |
Share price performance
Business description
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Analysts
EML Payments is a research client of Edison Investment Research Limited |
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The Irish regulator has extended the growth cap on European General Purpose Reloadable (GPR) volumes for an additional 12 months to the end of CY23. This limits growth of volumes in Europe (ex-UK) to 10% over the baseline volume in the first nine months of CY22. This restriction could be lifted early, if third-party assurance of ongoing remediation work is finalised before the end of CY23. We have revised our forecasts to reflect slower volume growth in GPR and higher compliance-related overheads.
Year end |
Revenue |
PBT* |
NPATA** (A$m) |
Diluted EPS* |
DPS |
P/E |
EV/EBITDA |
06/21 |
192.2 |
30.2 |
21.0 |
6.6 |
0.0 |
8.0 |
4.9 |
06/22 |
232.4 |
16.0 |
19.3 |
3.4 |
0.0 |
15.5 |
6.0 |
06/23e |
244.1 |
7.3 |
1.4 |
1.5 |
0.0 |
34.3 |
6.8 |
06/24e |
273.9 |
12.5 |
12.0 |
2.6 |
0.0 |
19.9 |
5.2 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **NPATA = net profit after tax, excluding acquisition-related costs.
Growth cap extended for European GPR
EML has announced that it has had further clarification from the Central Bank of Ireland (CBI) relating to the growth cap applied to its Irish subsidiary, PFS Card Services (Ireland) Limited (PCSIL). This cap was originally put in place to last until the end of CY22. When EML reported in July that it was required to undertake more comprehensive remediation work to satisfy the regulator, it noted that third-party assessment of this work would shift into CY23 rather than the originally targeted deadline of end June 2022. The CBI has decided that PCSIL will be limited to growth of 10% above the annualised baseline volumes between January and September 2022, with this restriction applying to PCSIL total payment volumes for a further period of 12 months to the end of CY23. The restriction may be lifted sooner if the remediation programme is completed and independently verified before December 2023. This cap only applies to GPR volumes in Europe (ex-UK).
Forecasts revised to reflect growth cap
The extended growth cap in Europe combined with the restriction on new business in the UK (both for GPR only) has prompted us to revise down our revenue forecasts for FY23 and FY24. Combined with higher overheads to deal with compliance issues, this reduces our FY23 EBITDA by 28% and FY24 by 25%. EML is due to present the outcome of its strategic review at its AGM on 25 November at which point it is also likely to provide guidance for FY23.
Valuation: Regulatory resolution key to upside
EML is trading at a material discount to global payment processor peers on all metrics and at a discount to prepaid card peers on an EV/sales and EV/EBITDA basis. Repeated downgrades have reduced confidence in EML’s outlook. Factors that could drive a return to an upgrade cycle and a re-rating of the stock include lifting of the growth constraints on the European business, clawback of the costs of the Sentenial fraud and the outcome of the strategic review.
Changes to forecasts
Exhibit 1: Changes to forecasts
FY23e |
FY23e |
FY24e |
FY24e |
||||||
Old |
New |
Change |
y-o-y |
Old |
New |
Change |
y-o-y |
||
Revenues |
A$m |
256.7 |
244.1 |
-4.9% |
5.1% |
287.8 |
273.9 |
-4.9% |
12.2% |
Gross profit |
A$m |
174.3 |
166.7 |
-4.3% |
5.6% |
196.5 |
188.1 |
-4.3% |
12.8% |
Gross margin |
67.9% |
68.3% |
0.4% |
0.4% |
68.3% |
68.7% |
0.4% |
0.4% |
|
EBITDA |
A$m |
42.1 |
30.4 |
-27.7% |
-11.3% |
52.6 |
39.3 |
-25.2% |
29.3% |
EBITDA margin |
16.4% |
12.5% |
-3.9% |
-2.3% |
18.3% |
14.4% |
-3.9% |
1.9% |
|
Normalised operating profit |
A$m |
22.7 |
11.0 |
-51.5% |
-40.2% |
29.5 |
16.3 |
-45.0% |
47.9% |
Normalised operating margin |
8.8% |
4.5% |
-4.3% |
-3.4% |
10.3% |
5.9% |
-4.3% |
1.4% |
|
Reported operating profit |
A$m |
-7.8 |
-19.5 |
148.9% |
-N/A |
7.0 |
-6.2 |
N/A |
-68.0% |
Reported operating margin |
-3.1% |
-8.0% |
-4.9% |
-8.1% |
2.4% |
-2.3% |
-4.7% |
5.7% |
|
Normalised PBT |
A$m |
18.9 |
7.3 |
-61.7% |
-54.6% |
25.8 |
12.5 |
-51.5% |
72.6% |
Reported PBT |
A$m |
(11.6) |
(23.2) |
100.9% |
6736.9% |
3.3 |
(10.0) |
N/A |
-57.1% |
Normalised net income |
A$m |
15.1 |
5.8 |
-61.7% |
-54.6% |
20.6 |
10.0 |
-51.5% |
72.6% |
NPATA |
A$m |
10.7 |
1.4 |
-86.9% |
-92.7% |
22.6 |
12.0 |
-46.9% |
755.9% |
Reported net income |
A$m |
(9.3) |
(18.6) |
100.9% |
287.3% |
2.6 |
(8.0) |
N/A |
-57.1% |
Normalised basic EPS |
A$ |
0.04 |
0.02 |
-61.7% |
-55.0% |
0.06 |
0.03 |
-51.5% |
72.6% |
Normalised diluted EPS |
A$ |
0.04 |
0.02 |
-61.7% |
-55.0% |
0.05 |
0.03 |
-51.5% |
72.6% |
Reported basic EPS |
A$ |
-0.02 |
-0.05 |
100.9% |
284.5% |
0.01 |
-0.02 |
N/A |
-57.1% |
NPATA/share |
A$ |
0.03 |
0.00 |
-86.9% |
-92.8% |
0.06 |
0.03 |
-46.9% |
755.9% |
Dividend per share |
A$ |
0.00 |
0.00 |
N/A |
N/A |
0.00 |
0.00 |
N/A |
N/A |
Net debt/(cash) |
A$m |
(21.2) |
(13.3) |
-37.3% |
-237.1% |
(11.6) |
6.7 |
-157.4% |
-150% |
GDV |
A$bn |
103.4 |
102.3 |
-1.1% |
27.5% |
110.2 |
108.9 |
-1.1% |
6.5% |
Yield |
bp |
25 |
24 |
-1 |
-5 |
26 |
25 |
-1 |
1 |
Divisional data |
|||||||||
GDV |
|||||||||
G&I |
A$bn |
1.5 |
1.5 |
0% |
9% |
1.6 |
1.6 |
0% |
10% |
GPR |
A$bn |
14.2 |
13.1 |
-8% |
6% |
15.6 |
14.4 |
-8% |
10% |
Digital Payments |
A$bn |
87.8 |
87.8 |
0% |
32% |
92.9 |
92.9 |
0% |
6% |
Revenue |
|||||||||
G&I |
A$m |
75.7 |
75.4 |
0% |
10% |
84.1 |
83.7 |
0% |
11% |
GPR |
A$m |
156.3 |
144.1 |
-8% |
-3% |
173.5 |
159.9 |
-8% |
11% |
Digital Payments |
A$m |
24.5 |
24.5 |
0% |
32% |
30.0 |
30.0 |
0% |
23% |
Gross profit |
|||||||||
G&I |
A$m |
60.6 |
60.3 |
0% |
67.3 |
67.0 |
0% |
||
GPR |
A$m |
93.0 |
85.7 |
-8% |
104.1 |
95.9 |
-8% |
||
Digital Payments |
A$m |
20.5 |
20.5 |
0% |
24.9 |
24.9 |
0% |
||
Gross margin |
|||||||||
G&I |
80.0% |
80.0% |
80.0% |
80.0% |
|||||
GPR |
59.5% |
59.5% |
60.0% |
60.0% |
|||||
Digital Payments |
83.6% |
83.6% |
83.0% |
83.0% |
Source: Edison Investment Research
Exhibit 2: Financial summary
A$m |
2018 |
2019 |
2020 |
2021 |
2022 |
2023e |
2024e |
||
30-June |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||||
Revenue |
|
|
71.0 |
97.2 |
121.0 |
192.2 |
232.4 |
244.1 |
273.9 |
Cost of Sales |
(17.7) |
(24.2) |
(32.9) |
(63.8) |
(74.6) |
(77.4) |
(85.8) |
||
Gross Profit |
53.3 |
73.0 |
88.1 |
128.4 |
157.8 |
166.7 |
188.1 |
||
EBITDA |
|
|
21.0 |
29.7 |
32.5 |
42.2 |
34.3 |
30.4 |
39.3 |
Normalised operating profit |
|
|
18.1 |
25.6 |
22.4 |
31.6 |
18.4 |
11.0 |
16.3 |
Amortisation of acquired intangibles |
(7.2) |
(7.5) |
(11.1) |
(20.2) |
(16.5) |
(20.0) |
(20.0) |
||
Exceptionals |
(0.3) |
(3.0) |
(13.6) |
(11.2) |
1.4 |
(8.0) |
0.0 |
||
Share-based payments |
(5.0) |
(4.2) |
(6.1) |
(5.0) |
(3.0) |
(2.5) |
(2.5) |
||
Reported operating profit |
5.6 |
10.9 |
(8.5) |
(4.8) |
0.3 |
(19.5) |
(6.2) |
||
Net Interest |
(0.1) |
(0.0) |
(0.7) |
(1.4) |
(2.4) |
(3.7) |
(3.7) |
||
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
(0.5) |
(1.8) |
1.3 |
(17.1) |
1.8 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
17.9 |
25.6 |
21.6 |
30.2 |
16.0 |
7.3 |
12.5 |
Profit Before Tax (reported) |
|
|
5.0 |
9.0 |
(7.9) |
(23.3) |
(0.3) |
(23.2) |
(10.0) |
Reported tax |
(2.8) |
(0.6) |
0.7 |
(5.4) |
(4.5) |
4.6 |
2.0 |
||
Profit After Tax (norm) |
14.4 |
20.5 |
17.2 |
24.1 |
12.8 |
5.8 |
10.0 |
||
Profit After Tax (reported) |
2.2 |
8.5 |
(7.1) |
(28.7) |
(4.8) |
(18.6) |
(8.0) |
||
Minority interests |
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 |
||
Net income (normalised) |
14.4 |
20.3 |
17.2 |
24.1 |
12.8 |
5.8 |
10.0 |
||
Net income (reported) |
2.2 |
8.3 |
(7.1) |
(28.7) |
(4.8) |
(18.6) |
(8.0) |
||
Basic ave. number of shares outstanding (m) |
246 |
249 |
304 |
360 |
371 |
373 |
373 |
||
EPS - basic normalised (A$) |
|
|
0.058 |
0.081 |
0.056 |
0.067 |
0.035 |
0.016 |
0.027 |
EPS - diluted normalised (A$) |
|
|
0.057 |
0.078 |
0.055 |
0.066 |
0.034 |
0.015 |
0.026 |
EPS - basic reported (A$) |
|
|
0.009 |
0.033 |
(0.023) |
(0.080) |
(0.013) |
(0.050) |
(0.021) |
Dividend (A$) |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
||
Revenue growth (%) |
22.5 |
36.9 |
24.4 |
58.9 |
20.9 |
5.1 |
12.2 |
||
Gross Margin (%) |
75.1 |
75.1 |
72.8 |
66.8 |
67.9 |
68.3 |
68.7 |
||
EBITDA Margin (%) |
29.6 |
30.6 |
26.9 |
21.9 |
14.8 |
12.5 |
14.4 |
||
Normalised Operating Margin |
25.4 |
26.4 |
18.5 |
16.4 |
7.9 |
4.5 |
5.9 |
||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
108.0 |
162.9 |
872.1 |
685.3 |
827.3 |
943.6 |
973.7 |
Intangible Assets |
65.8 |
104.6 |
371.7 |
350.1 |
448.5 |
430.9 |
412.1 |
||
Tangible Assets |
3.5 |
5.4 |
14.6 |
11.2 |
12.7 |
9.7 |
11.5 |
||
Investments & other |
38.7 |
53.0 |
485.8 |
323.9 |
366.1 |
503.1 |
550.1 |
||
Current Assets |
|
|
131.6 |
313.8 |
1,008.6 |
1,603.5 |
1,855.1 |
1,963.7 |
2,109.5 |
Stocks |
12.6 |
18.2 |
22.3 |
16.4 |
21.5 |
15.9 |
17.4 |
||
Debtors |
8.9 |
14.4 |
21.7 |
22.0 |
35.8 |
33.6 |
37.6 |
||
Cash & cash equivalents |
39.0 |
33.1 |
118.4 |
141.2 |
73.7 |
96.7 |
56.8 |
||
Other |
71.1 |
248.2 |
846.2 |
1,424.0 |
1,724.1 |
1,817.4 |
1,997.7 |
||
Current Liabilities |
|
|
(90.5) |
(299.0) |
(1,357.8) |
(1,792.8) |
(2,100.1) |
(2,342.9) |
(2,570.1) |
Creditors |
(21.2) |
(33.9) |
(47.5) |
(62.9) |
(65.7) |
(69.6) |
(76.4) |
||
Tax and social security |
0.0 |
(0.8) |
(2.6) |
(6.0) |
(2.8) |
(2.8) |
(2.8) |
||
Short term borrowings |
0.0 |
(15.0) |
0.0 |
(1.4) |
(1.8) |
(1.8) |
(1.8) |
||
Other |
(69.3) |
(249.4) |
(1,307.7) |
(1,722.5) |
(2,029.8) |
(2,268.7) |
(2,489.1) |
||
Long Term Liabilities |
|
|
(19.3) |
(33.5) |
(82.6) |
(81.1) |
(145.2) |
(143.3) |
(97.6) |
Long term borrowings |
0.0 |
0.0 |
(35.8) |
(36.9) |
(81.6) |
(81.6) |
(61.6) |
||
Other long term liabilities |
(19.3) |
(33.5) |
(46.8) |
(44.2) |
(63.6) |
(61.7) |
(35.9) |
||
Net Assets |
|
|
129.8 |
144.2 |
440.2 |
414.9 |
437.1 |
421.0 |
415.5 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
129.8 |
144.2 |
440.2 |
414.9 |
437.1 |
421.0 |
415.5 |
CASH FLOW |
|||||||||
Op Cash Flow before WC and tax |
19.7 |
28.4 |
31.2 |
41.2 |
33.3 |
29.5 |
38.4 |
||
Working capital |
(9.2) |
2.0 |
3.6 |
31.7 |
(68.4) |
10.2 |
(5.7) |
||
Exceptional & other |
(1.2) |
(0.7) |
(12.7) |
(17.3) |
0.4 |
(8.4) |
0.0 |
||
Tax |
(2.8) |
(0.6) |
0.7 |
(5.4) |
(4.5) |
4.6 |
2.0 |
||
Net operating cash flow |
|
|
6.5 |
29.2 |
22.8 |
50.2 |
(39.2) |
36.0 |
34.7 |
Capex |
(5.3) |
(5.8) |
(11.0) |
(12.6) |
(14.1) |
(17.9) |
(20.1) |
||
Acquisitions/disposals |
(0.7) |
(44.0) |
(142.5) |
(3.5) |
(57.1) |
10.6 |
(28.9) |
||
Net interest |
(0.1) |
(0.0) |
(0.7) |
(1.4) |
(2.4) |
(3.7) |
(3.7) |
||
Equity financing |
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 |
||
Other |
(0.6) |
(0.4) |
(7.0) |
(11.0) |
(1.9) |
(1.9) |
(1.9) |
||
Net Cash Flow |
(0.2) |
(20.6) |
102.3 |
22.2 |
(114.6) |
23.1 |
(20.0) |
||
Opening net debt/(cash) |
|
|
(39.9) |
(39.0) |
(18.1) |
(82.5) |
(103.0) |
9.7 |
(13.3) |
FX |
(0.6) |
(0.3) |
(2.0) |
0.6 |
(1.1) |
0.0 |
0.0 |
||
Other non-cash movements |
0.0 |
0.0 |
(35.8) |
(2.4) |
3.0 |
(0.0) |
0.0 |
||
Closing net debt/(cash) |
|
|
(39.0) |
(18.1) |
(82.5) |
(103.0) |
9.7 |
(13.3) |
6.7 |
Source: EML Payments, Edison Investment Research
|
|
Research: Healthcare
In a positive signal for its developmental pipeline, Midatech Pharma has announced the first patient recruitment in the Phase I study evaluating MTX110 (using a convection-enhanced delivery (CED) system) in recurrent glioblastoma (rGBM) at the Preston Robert Tisch Brain Tumor Center, Duke University, United States. Despite the aggressive nature of the cancer (average survival is 12–18 months with treatment) the rGBM space remains underserved (no new drug has been approved in over a decade) with development stymied by the challenges of crossing the blood brain barrier. MTX aims to overcome this issue by using a CED system to deliver therapeutic doses directly to the tumour site. We expect the release of preliminary data from the study (anticipated in H123) to be a key upcoming catalyst for the stock.