Last close As at 05/08/2026
AUD0.33
▲ 0.01 (1.54%)
Market capitalisation
AUD129m
Research: TMT
EML Payments has announced that the Irish regulator is investigating certain PFS activities that fall under its remit, as it has concerns relating to anti-money laundering and counter terrorism financing risk management and controls. This relates to business that made up just over a quarter of CY Q121 revenue. EML expects to provide further information to the regulator by 27 May. Aside from that issue for which the outcome is as yet unknown, EML is trading in line with management’s guidance for FY21.
EML Payments |
Irish regulator raises issues |
Trading update |
Software & comp services |
20 May 2021 |
Share price performance
Business description
Next events
Analyst
EML Payments is a research client of Edison Investment Research Limited |
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EML Payments has announced that the Irish regulator is investigating certain PFS activities that fall under its remit, as it has concerns relating to anti-money laundering and counter terrorism financing risk management and controls. This relates to business that made up just over a quarter of CY Q121 revenue. EML expects to provide further information to the regulator by 27 May. Aside from that issue for which the outcome is as yet unknown, EML is trading in line with management’s guidance for FY21.
Year end |
Revenue (A$m) |
PBT* |
NPATA** (A$m) |
Dil. EPS* |
DPS |
P/E |
EV/EBITDA |
06/19 |
97.2 |
25.6 |
20.6 |
7.8 |
0.0 |
37.2 |
35.6 |
06/20 |
121.0 |
21.6 |
24.0 |
5.5 |
0.0 |
52.6 |
32.5 |
06/21e |
182.2 |
34.7 |
30.8 |
7.5 |
0.0 |
38.7 |
21.1 |
06/22e |
249.4 |
50.7 |
42.6 |
10.7 |
0.0 |
27.3 |
14.9 |
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.
Irish regulator highlights AML/CTF issues
EML reported that the Central Bank of Ireland (CBI), the Irish regulator, has written to an Irish subsidiary raising significant regulatory concerns relating to anti-money laundering (AML) and counter terrorism financing (CFT) risk and control frameworks and governance. The subsidiary is PFS Card Services (Ireland) Limited (PCSIL), the entity through which PFS’s European (ex-UK) business has operated since 19 December 2020. The majority of this business operated through PFS’s UK subsidiary prior to Brexit and fell under the jurisdiction of the FCA. EML estimates that from 1 January to 31 March 2021, 27% of group revenue derived from programmes operated through PCSIL. The CBI has asked PCSIL to provide submissions in relation to the concerns, which PCSIL intends to do by 27 May.
Several possible outcomes
CBI has stated that it is minded to issue directions pursuant to section 45 of the Central Bank (Supervision and Enforcement) Act 2013. This could result in a fine being levied on EML. Other possible outcomes for EML could range from being required to remedy any breaches through to losing its licence to operate. As the outcome is as yet unknown, the company reiterated that trading so far this year is on track to meet previous guidance excluding the impact of this issue. We maintain our estimates pending further clarity on the situation.
Valuation: Stock has nearly halved
The stock is down 43% since the news was announced and is now trading at levels (excluding the COVID dip in March 2020) last seen in August 2019, before the PFS deal was announced. Without knowing the outcome of the investigation, it is not possible to estimate the impact on our forecasts, making comparisons with peers less meaningful.
Exhibit 1: Financial summary
A$m |
2017 |
2018 |
2019 |
2020 |
2021e |
2022e |
2023e |
||
30-June |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||||
Revenue |
|
|
58.0 |
71.0 |
97.2 |
121.0 |
182.2 |
249.4 |
298.9 |
Cost of Sales |
(13.7) |
(17.7) |
(24.2) |
(32.9) |
(56.8) |
(72.5) |
(83.5) |
||
Gross Profit |
44.2 |
53.3 |
73.0 |
88.1 |
125.4 |
176.9 |
215.4 |
||
EBITDA |
|
|
14.5 |
21.0 |
29.7 |
32.5 |
50.1 |
71.2 |
98.0 |
Normalised operating profit |
|
|
11.9 |
18.1 |
25.6 |
22.4 |
36.1 |
53.6 |
75.5 |
Amortisation of acquired intangibles |
(8.9) |
(7.2) |
(7.5) |
(10.6) |
(18.5) |
(14.0) |
(14.0) |
||
Exceptionals |
0.2 |
(0.3) |
(3.0) |
(11.2) |
(8.6) |
0.0 |
0.0 |
||
Share-based payments |
(5.3) |
(5.0) |
(4.2) |
(6.1) |
(6.3) |
(2.5) |
(2.5) |
||
Reported operating profit |
(2.1) |
5.6 |
10.9 |
(5.6) |
2.7 |
37.1 |
59.0 |
||
Net Interest |
0.0 |
(0.1) |
(0.0) |
(0.7) |
(1.4) |
(3.0) |
(3.0) |
||
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
(0.5) |
(1.8) |
(0.2) |
(32.4) |
(1.5) |
(1.0) |
||
Profit Before Tax (norm) |
|
|
11.9 |
17.9 |
25.6 |
21.6 |
34.7 |
50.7 |
72.5 |
Profit Before Tax (reported) |
|
|
(2.1) |
5.0 |
9.0 |
(6.6) |
(31.1) |
32.7 |
55.0 |
Reported tax |
2.1 |
(2.8) |
(0.6) |
0.7 |
6.2 |
(6.5) |
(11.0) |
||
Profit After Tax (norm) |
8.9 |
14.4 |
20.5 |
17.3 |
27.8 |
40.5 |
58.0 |
||
Profit After Tax (reported) |
0.0 |
2.2 |
8.5 |
(5.9) |
(24.9) |
26.1 |
44.0 |
||
Minority interests |
0.0 |
0.0 |
(0.2) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Discontinued operations |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net income (normalised) |
8.9 |
14.4 |
20.3 |
17.3 |
27.8 |
40.5 |
58.0 |
||
Net income (reported) |
0.0 |
2.2 |
8.3 |
(5.9) |
(24.9) |
26.1 |
44.0 |
||
Basic ave. number of shares outstanding (m) |
245 |
246 |
249 |
304 |
361 |
372 |
372 |
||
EPS - basic normalised (A$) |
|
|
0.036 |
0.058 |
0.081 |
0.057 |
0.077 |
0.109 |
0.156 |
EPS - diluted normalised (A$) |
|
|
0.036 |
0.057 |
0.078 |
0.055 |
0.075 |
0.107 |
0.153 |
EPS - basic reported (A$) |
|
|
0.000 |
0.009 |
0.033 |
(0.019) |
(0.069) |
0.070 |
0.118 |
Dividend (A$) |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
||
Revenue growth (%) |
148.6 |
22.5 |
36.9 |
24.4 |
50.6 |
36.9 |
19.8 |
||
Gross Margin (%) |
76.3 |
75.1 |
75.1 |
72.8 |
68.8 |
70.9 |
72.1 |
||
EBITDA Margin (%) |
25.1 |
29.6 |
30.6 |
26.9 |
27.5 |
28.6 |
32.8 |
||
Normalised Operating Margin |
20.5 |
25.4 |
26.4 |
18.5 |
19.8 |
21.5 |
25.3 |
||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
90.6 |
108.0 |
162.9 |
905.2 |
1,076.3 |
1,159.3 |
1,220.2 |
Intangible Assets |
60.1 |
65.8 |
104.6 |
404.7 |
554.6 |
541.8 |
527.3 |
||
Tangible Assets |
2.8 |
3.5 |
5.4 |
14.6 |
12.0 |
9.6 |
7.1 |
||
Investments & other |
27.6 |
38.7 |
53.0 |
485.8 |
509.6 |
607.9 |
685.9 |
||
Current Assets |
|
|
96.9 |
131.6 |
313.8 |
1,001.1 |
1,240.7 |
1,489.0 |
1,700.7 |
Stocks |
10.3 |
12.6 |
18.2 |
22.3 |
20.9 |
23.0 |
25.3 |
||
Debtors |
6.3 |
8.9 |
14.4 |
21.7 |
32.3 |
43.9 |
52.5 |
||
Cash & cash equivalents |
39.9 |
39.0 |
33.1 |
118.4 |
113.9 |
121.3 |
142.5 |
||
Other |
40.4 |
71.1 |
248.2 |
838.7 |
1,073.6 |
1,300.8 |
1,480.5 |
||
Current Liabilities |
|
|
(62.8) |
(90.5) |
(299.0) |
(1,326.3) |
(1,630.8) |
(1,973.7) |
(2,220.5) |
Creditors |
(23.8) |
(21.2) |
(33.9) |
(47.5) |
(62.5) |
(80.9) |
(91.1) |
||
Tax and social security |
(0.0) |
0.0 |
(0.8) |
(0.2) |
(0.2) |
(0.2) |
(0.2) |
||
Short term borrowings |
0.0 |
0.0 |
(15.0) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(39.0) |
(69.3) |
(249.4) |
(1,278.6) |
(1,568.1) |
(1,892.6) |
(2,129.1) |
||
Long Term Liabilities |
|
|
(4.2) |
(19.3) |
(33.5) |
(139.0) |
(218.4) |
(178.1) |
(157.4) |
Long term borrowings |
0.0 |
0.0 |
0.0 |
(35.8) |
(66.8) |
(66.8) |
(66.8) |
||
Other long-term liabilities |
(4.2) |
(19.3) |
(33.5) |
(103.2) |
(151.5) |
(111.2) |
(90.6) |
||
Net Assets |
|
|
120.6 |
129.8 |
144.2 |
441.0 |
467.8 |
496.5 |
543.0 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
120.6 |
129.8 |
144.2 |
441.0 |
467.8 |
496.5 |
543.0 |
CASH FLOW |
|||||||||
Op Cash Flow before WC and tax |
13.1 |
19.7 |
28.4 |
31.2 |
48.2 |
69.4 |
96.2 |
||
Working capital |
4.9 |
(9.2) |
2.0 |
3.6 |
6.5 |
3.8 |
(1.6) |
||
Exceptional & other |
(0.8) |
(1.2) |
(0.7) |
(12.7) |
(6.5) |
0.0 |
0.0 |
||
Tax |
2.1 |
(2.8) |
(0.6) |
0.7 |
6.2 |
(6.5) |
(11.0) |
||
Net operating cash flow |
|
|
19.3 |
6.5 |
29.2 |
22.8 |
54.4 |
66.7 |
83.6 |
Capex |
(2.9) |
(5.3) |
(5.8) |
(11.0) |
(13.1) |
(14.6) |
(17.6) |
||
Acquisitions/disposals |
0.0 |
(0.7) |
(44.0) |
(142.5) |
(73.6) |
(40.0) |
(40.0) |
||
Net interest |
0.0 |
(0.1) |
(0.0) |
(0.7) |
(1.4) |
(3.0) |
(3.0) |
||
Equity financing |
0.2 |
0.0 |
0.4 |
240.8 |
0.0 |
0.0 |
0.0 |
||
Dividends |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(3.6) |
(0.6) |
(0.4) |
(7.0) |
(1.8) |
(1.8) |
(1.8) |
||
Net Cash Flow |
13.0 |
(0.2) |
(20.6) |
102.3 |
(35.5) |
7.4 |
21.2 |
||
Opening net debt/(cash) |
|
|
(26.9) |
(39.9) |
(39.0) |
(18.1) |
(82.5) |
(47.0) |
(54.4) |
FX |
(0.0) |
(0.6) |
(0.3) |
(2.0) |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
0.0 |
0.0 |
0.0 |
(35.8) |
0.0 |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
(39.9) |
(39.0) |
(18.1) |
(82.5) |
(47.0) |
(54.4) |
(75.6) |
Source: EML Payments, Edison Investment Research
|
|
Research: Real Estate
Regional REIT (RGL) has published a trading update for the three months ended 31 March 2021 (Q121), including a 7% increase in the quarterly rate of DPS backed by continuing strong rent collection from its diversified portfolio of attractively yielding regional property assets. With the lockdown restrictions relaxing, RGL says it is seeing increasing engagement with potential occupiers.