EML Payments — Turning the ship around

EML Payments (ASX: EML)

Last close As at 17/05/2024

AUD1.05

0.02 (1.45%)

Market capitalisation

AUD394m

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Research: TMT

EML Payments — Turning the ship around

EML Payments reported FY23 revenue and underlying EBITDA ahead of the top-end of its guidance range, benefiting from higher interest income and improvements to customer contracts in H223. The company is making good progress with its short-term priorities, and while the Barrenjoey strategic review is ongoing, management has started taking action to return loss-making activities to profitability and to reinvigorate growth in its core businesses. We have upgraded our forecasts to reflect better-than-expected performance in FY23 and identified cost savings.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

EML Payments

Turning the ship around

FY23 results

Software and comp services

14 September 2023

Price

A$1.13

Market cap

A$423m

Net debt (A$m) at end FY23

20.4

Shares in issue

374.0m

Free float

93%

Code

EML

Primary exchange

ASX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

39.4

63.6

4.9

Rel (local)

43.3

63.3

3.5

52-week high/low

A$1.21

A$0.41

Business description

EML Payments is a payment solutions company managing thousands of programmes across 32 countries in Europe, North America and Australia. It provides payment solutions for banking, credit and disbursement services, earned wage access, gifts, incentives and rewards, and open banking and FX.

Next events

AGM

November

Analyst

Katherine Thompson

+44 (0)20 3077 5700

EML Payments is a research client of Edison Investment Research Limited

EML Payments reported FY23 revenue and underlying EBITDA ahead of the top-end of its guidance range, benefiting from higher interest income and improvements to customer contracts in H223. The company is making good progress with its short-term priorities, and while the Barrenjoey strategic review is ongoing, management has started taking action to return loss-making activities to profitability and to reinvigorate growth in its core businesses. We have upgraded our forecasts to reflect better-than-expected performance in FY23 and identified cost savings.

Year

end

Revenue
(A$m)

PBT*
(A$m)

NPATA** (A$m)

Diluted EPS* (c)

DPS
(c)

P/E
(x)

EV/EBITDA***
(x)

06/22

232.4

16.0

19.3

3.4

0

33.3

8.7

06/23

254.2

(22.8)

(27.0)

(4.9)

0

N/A

12.09

06/24e

277.8

13.6

12.3

2.8

0

39.9

9.3

06/25e

302.7

32.9

27.7

6.9

0

16.5

7.9

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. ***Based on underlying EBITDA.

Stronger close to FY23; upgrading FY24 forecasts

For FY23, EML reported revenue of A$254.2m (+9% y-o-y), underlying EBITDA of A$37.1m (-28% y-o-y) and underlying NPATA of A$4.9m (-85% y-o-y). These results were ahead of our forecasts (which were at the bottom end of the guidance range) and ahead of the top end of guidance. Higher interest income due to rising interest rates and renegotiated facilities more than offset lower establishment fees. Reported metrics reflect the one-off costs incurred for regulatory remediation, fraud, litigation and restructuring as well as impairment charges for PFS and Sentenial. We have revised up our FY24 forecasts, raising revenue by 10% and underlying EBITDA by 65%. We introduce forecasts for FY25 that assume revenue growth of 9% and underlying EBITDA growth of 19%.

Focus: Controlling costs, reinvigorating growth

After a thorough analysis of costs across the group, EML has identified potential cost savings of A$10m for FY24. It has also decided to split the UK and European activities of PFS within the General Purpose Reloadable (GPR) division, leaving the profitable UK business to focus on its corporate and government customers and the loss-making consumer-focused European business, regulated by the Central Bank of Ireland (CBI), to complete its remediation process and target profitability. The company expects to report on the strategic review and provide FY24 guidance at or before its AGM in November.

Valuation: Recent rise recognises progress made

The share price has risen 51% since FY23 results were announced but continues to trade at a small discount to global payment processor and prepaid card peers on an EV/underlying EBITDA basis for FY24 and FY25. Evidence of positive progress with the Irish and UK regulators as well as the outcome of the strategic review could trigger upside from this point.

Review of FY23 results

Exhibit 1 summarises performance in FY23.

Exhibit 1: FY23 results highlights

FY22a

FY23e

FY23a

Change

y-o-y

Revenues

A$m

232.4

240.3

254.2

5.8%

9.4%

Gross profit

A$m

157.8

154.1

165.1

7.1%

4.6%

Gross margin

67.9%

64.1%

64.9%

0.8%

-3.0%

Underlying gross profit

A$m

157.8

162.4

174.2

7.3%

10.4%

Underlying gross margin

67.9%

67.6%

68.5%

1.0%

0.6%

EBITDA

A$m

34.3

(0.2)

(2.6)

1140.0%

-107.6%

EBITDA margin

14.8%

-0.1%

-1.0%

-0.9%

-15.8%

Add back one-off costs

A$m

16.9

26.6

39.7

49.1%

N/A

Underlying EBITDA

A$m

51.2

26.4

37.1

40.4%

-27.5%

Underlying EBITDA margin

22.0%

11.0%

14.6%

3.6%

-7.4%

Reported operating profit

A$m

0.3

(158.9)

(302.0)

90.1%

N/A

Reported operating margin

0.1%

-66.1%

-118.8%

-52.7%

-118.9%

Reported PBT

A$m

(0.3)

(143.9)

(281.8)

95.8%

82770.0%

NPATA

A$m

19.3

(22.0)

(27.0)

22.5%

-239.4%

Add back one-off costs

A$m

12.7

20.7

31.9

Underlying NPATA

A$m

32.1

(1.3)

4.9

-469.6%

-84.7%

Reported net income

A$m

(4.8)

(144.3)

(284.8)

97.3%

5832.6%

Normalised basic EPS

A$

0.03

(0.05)

(0.05)

-1.5%

-241.1%

Reported basic EPS

A$

(0.01)

(0.39)

(0.76)

97.3%

5782.6%

NPATA/share

A$

0.05

(0.06)

(0.07)

21.2%

-236.9%

Net debt/(cash)

A$m

9.7

(1.7)

20.4

N/A

110.0%

GDV

A$bn

80.2

99.3

129.6

30.5%

61.5%

Yield

bp

29

24

20

-5

-10

Source: EML Payments, Edison Investment Research. Note: NPATA, net profit after tax excluding acquisition-related costs.

EML reported revenue, underlying EBITDA and underlying NPATA ahead of guidance (revenue A$235–245m, underlying EBITDA A$26–34m, underlying NPATA -A$4m to A$4m). The company noted that revenue was higher than expected due to a combination of customer contract improvements and renegotiation of treasury arrangements resulting in higher interest income on float. Reported and underlying gross profit were 7% ahead of our forecast and the underlying gross margin improved 0.6pp y-o-y. As we wrote after the H123 results, underlying gross profit excludes an A$8.5m cost relating to one-off fraud events in the Sentenial and GPR businesses (A$6.2m and A$2.3m, respectively). Underlying operating costs of A$137.4m were 27% higher year-on-year and resulted in underlying EBITDA of A$37.1m, 40% ahead of our forecast and 9% above the top end of the guidance range. As well as reflecting cost and salary inflation, underlying overheads include increased headcount to meet higher ongoing regulatory requirements, a full 12-month contribution from Sentenial, higher bad debt provisions reflecting slower payers in GPR and increased post-COVID travel.

We show below the adjustments made to arrive at underlying EBITDA and NPATA. The class action suit against EML, brought in the Supreme Court of Victoria, is ongoing. As at the end of FY23, the company had a A$15.1m litigation provision, up from A$9.7m at the end of FY22, reflecting an increase in the provision of A$7.6m and usage of the provision of A$2.2m. We discuss the regulatory remediation process below.

Exhibit 2: Underlying profit metrics

A$m

FY23

FY22

FY23

FY22

EBITDA

(2.6)

34.3

NPATA

(27.0)

19.3

Regulation remediation & litigation costs

23.9

16.9

20.4

12.7

Fraud losses (Sentenial and GPR)

8.5

0.0

6.4

0.0

Restructuring costs

7.3

0.0

5.1

0.0

Underlying EBITDA

37.1

51.2

Underlying NPATA

4.9

32.1

Source: EML Payments

As a result of the ongoing issues in the PFS business and the slower progress of the Sentenial business, the company reassessed the value of intangible assets related to both businesses, resulting in a total impairment charge in FY23 of A$262.9m (goodwill A$230.6m, other intangibles A$32.3m). EML had already written down goodwill for PFS and Sentenial in H123 by a total of A$121.3m; in H223 it reassessed the value of intangibles and wrote PFS goodwill down to zero, wrote Sentenial goodwill down by a further A$28.6m to A$22.8m and wrote other acquired intangibles down by A$32.3m. The company also reassessed the contingent consideration owing to Sentenial, reducing it from A$28.9m at the end of FY22 to A$7.0m at the end of FY23. The total reduction in contingent consideration in FY23 was A$23.4m, which has been treated as a one-off credit to profit before tax.

The group had cash of A$71.4m at the end of FY23 and, taking account of bank debt of A$50m and loan notes owing to PFS vendors worth A$41.8m, net debt was A$20.4m.

One-offs mask cash generation from operations

The group consumed A$2.6m cash from operating activities, spent A$0.4m on tangible fixed assets, capitalised development costs of A$11.3m and made lease payments totalling A$2.2m. To offset this, the company sold its stake in Interchecks in August 2022 for A$10.9m. We note that operating cash flow included c A$32.2m expenditure relating to remediation, litigation and restructuring, which implies underlying cash generation of A$29.6m.

Revenue to benefit from growing float and rising interest rates

Net interest income earned in FY23 was A$33.1m (H123: A$9.4m, H223: A$23.7m), making up 13% of group revenue, compared to A$5.1m/2% of revenue in FY22.

At the end of FY23, EML held a total float of A$2.6bn, of which A$2.0bn was held in cash and A$0.6bn in bonds. With rising central bank interest rates across the globe, the value to EML of this float has risen significantly, and management has focused on optimising the returns it can earn on these funds. It has renegotiated the margin it can earn with some of its existing banks and expects to continue to optimise treasury management in FY24, whether from existing or new banks.

Divisional performance

Divisional performance is summarised in Exhibit 3.

Exhibit 3: Divisional performance

FY22a

FY23e

FY23a

Difference

y-o-y

GDV

Gifting

A$bn

1.34

1.5

1.7

13%

24%

GPR

A$bn

12.4

13.3

12.8

-4%

3%

Digital Payments

A$bn

66.6

84.5

115.1

36%

73%

Revenue

Gifting

A$m

68.4

68.2

74.6

9%

9%

GPR

A$m

148.1

150.8

158.5

5%

7%

Digital Payments

A$m

17.6

21.0

21.7

3%

23%

Yield

Gifting

5.10%

4.60%

4.46%

-0.14%

-0.64%

GPR

1.20%

1.13%

1.24%

0.11%

0.04%

Digital Payments

0.03%

0.02%

0.02%

-0.01%

-0.01%

Gross profit

Gifting

A$m

54.6

54.2

60.5

11%

10.7%

GPR

A$m

90.0

87.5

93.5

7%

3.8%

Digital Payments

A$m

14.9

12.2

11.9

-3%

-20.5%

Gross margin

Gifting

79.8%

79.5%

81.1%

1.6%

1.3%

GPR

60.8%

58.0%

59.0%

1.0%

-1.8%

Digital Payments

84.9%

57.9%

54.7%

-3.3%

-30.2%

Source: EML Payments, Edison Investment Research

Gifting: Strong growth from malls and employee incentives

The Gifting division reported gross debit volume (GDV) 13% ahead of our forecasts, equating to growth of 24% year-on-year. Mall GDV increased 13%, partially reflecting improved footfall post-COVID but also reflecting the launch of its cards in 56 new malls in Europe. Incentives GDV increased 41%, benefiting from strong demand for EML’s Perx product for employee incentives. In Ireland, the annual tax-free threshold for employee incentive vouchers increased from €500 to €1,000, driving demand. The company noted that in H223 it streamlined the management of this division, and going forward, it is focused on rebuilding the commercial team and deepening relationships with its existing customers.

Divisional revenue grew 9% y-o-y (mall revenue +6%, incentives revenue +14%). Breaking down the revenue in FY23, transaction-based revenue increased 5.0% y-o-y to A$32.0m, service-based revenue (account management fees (AMFs), breakage) increased 17.5% y-o-y to A$33.0m, establishment fees declined 49% y-o-y to A$4.9m (a one-off project fee of A$4.5m was reported in FY22) and interest income increased 13-fold to A$4.7m, reflecting the increase in central bank interest rates over the last year. Gross margin of 81.1% was ahead of our 79.5% forecast and 1.3pp higher year-on-year.

GPR: Modest growth despite regulatory caps

The GPR business grew GDV 3% y-o-y, despite growth caps in place in PFS Card Services Ireland Limited (PCSIL) imposed by the CBI (no growth in payment volumes for the period 31 March 2023 to 30 March 2024 compared to the volume processed in the period January to December 2022) and PFS Limited imposed by the Financial Conduct Authority (FCA - no onboarding of new customers), as the Australian salary packaging business grew 12% y-o-y. This translated to revenue growth of 7% and a yield of 1.24%, up 4bp y-o-y. This breaks down as: transaction-based revenue up 10.2% y-o-y to A$108.9m, service-based revenue (AMFs, dormant account fees) down 63.4% yoy to A$9.2m (one-off AMFs of A$14.8m were reported in FY22), establishment fees down 33.7% y-o-y to A$12.9m as the growth caps prevented new customer onboarding and interest income up 488% to A$27.5m. Gross profit increased 4% y-o-y and excluding the impact of a one-off fraud, underlying gross profit increased 9% y-o-y to generate an underlying gross margin of 60.4%.

Digital Payments: Benefit from full year inclusion of Sentenial

In FY23, Digital Payments (DP) saw GDV rise 73% y-o-y to A$115.1bn, with a A$104.1bn contribution from Sentenial (acquired in September 2021, contributed for nine months of FY22). The original virtual account numbers (VANs) business generated GDV of A$11.0bn, up 13% y-o-y. Sentenial contributed significantly more GDV in H223 than we expected. However, the revenue model for Sentential is different to the rest of EML’s businesses, which tend to earn revenue based on the value of transactions processed. Sentential typically earns a per transaction fee for direct debits or open banking payments, regardless of the size of the transaction. The business also generates some monthly or annual service fees that similarly are not linked to GDV. Consequently, DP revenue only increased 23% y-o-y and yield declined 1bp to 0.02%. Most divisional revenue (91%) is generated from transaction-based revenue, which increased 18% y-o-y. Gross profit declined 21%, but adjusting for the one-off fraud in Sentenial, underlying gross profit increased 21% y-o-y with an underlying gross margin of 83.4%.

Strategic update

The company provided an update on its four strategic priorities:

Regulatory remediation: close out and return to growth;

Cost optimisation: create a leaner, more responsive business;

Growth of the core business: reignite the sales machine; and

Talent retention and management: rebuild core capability.

Regulatory remediation

As announced in April, a board sub-committee was created to oversee remediation activities, headed by director Peter Lang.

Irish-regulated PCSIL continues to work on its remediation programme. Additional resources have been provided to ensure it can work through this programme on a timely basis. The company expects to resolve the final sequence of events and timeline with the CBI in the near term. On 11 September, the PCSIL directors indicated their intention to resign their directorships. They will remain on the subsidiary board for a transition period and management is working with the regulator through this change.

PFS Limited (PFSL), the UK-regulated part of PFS, is currently operating under a growth cap imposed by the FCA and is undertaking a similar remediation programme to that in Ireland. It has made progress and is moving to the ‘embed phase’; it expects a-third party assessment to start in September.

The provision for remediation increased from A$8.1m at the end of FY22 to A$14.5m at the end of FY23, reflecting an increase in the provision of A$10.6m and usage of the provision of A$4.3m.

Cost optimisation: Savings identified

Management has undertaken a comprehensive cost analysis and has identified A$10m of cost savings that could be made in FY24. It has paused further investment in the long-term strategy to focus on short-term priorities.

Growing the core business

Management is keen to protect and grow the core profitable businesses, particularly Gifting and the Australian GPR business (which includes salary packaging). It focused on performance in Q4, which drove upside to guidance. The rebuild of the commercial teams has started for both the Gifting and GPR businesses.

Attracting and retaining talent

The company has strengthened its executive and leadership teams. A new CFO, James Georgeson, has been appointed (effective 1 September) and the interim CFO, Jonathon Gatt, has returned to his position as European CFO. Peter Lang (previously a non-executive director) has been appointed chief corporate development officer and will remain on the board as an executive director. An outcomes-based incentives plan has been put in place for key personnel.

Strategic review ongoing

In April, the company announced that a strategic review had been launched to consider all options available to the board, including a potential sale of all or parts of the business to maximise shareholder value. Since then, the company has received numerous approaches and continues to work with Barrenjoey to assess interest and determine the next steps.

Splitting out UK and European PFS operations

As well as the focus on growing the core businesses, management is working with loss-making entities to determine whether they still fit into the group strategically and to return them to profitability. With a view to strengthening and simplifying the business, the board has decided to operationally split the PFS Group into independent stand-alone units (ie separating the UK and European businesses). The two businesses serve different markets and customer bases (UK: corporate and government focus; Europe: retail consumer loaded cards) and there are no scale benefits to keeping them combined.

While PCSIL generates higher GDV than PFSL (A$5.1bn versus A$3.6bn) it has significantly higher headcount (236 vs 72) reflecting the extra staff needed to manage the remediation process with the CBI and meet ongoing regulatory requirements. Management noted that PFSL is already EBITDA positive while PCSIL is loss-making at the EBITDA level, with underlying overheads of A$35m in FY23. The split should allow better accountability for the business performance of each unit.

Outlook and changes to forecasts

While the company has not provided specific guidance for FY24, it expects to be able to achieve cost savings of A$10m in the year and has identified further opportunities to improve operating margins from FY25. We have applied these cost savings to temper the growth of underlying overheads. We also assume that there will be further one-off costs incurred in FY24, relating to restructuring and remediation, and we have factored in A$12m for this. Reflecting the better-than-expected performance in H223, we have upgraded our revenue and gross profit forecasts which results in an upgrade to our underlying EBITDA forecast in FY24.

Exhibit 4: Changes to forecasts

FY24e old

FY24e new

Change

y-o-y

FY25e new

y-o-y

Revenues

A$m

253.2

277.8

9.7%

9.3%

302.7

8.9%

Gross profit

A$m

172.4

190.4

10.4%

15.3%

207.4

8.9%

Gross margin

68.1%

68.5%

0.4%

3.6%

68.5%

0.0%

EBITDA

A$m

28.8

35.4

23.2%

-1465.7%

56.3

59.0%

EBITDA margin

11.4%

12.8%

1.4%

13.8%

18.6%

5.9%

Add back one-off costs

A$m

0.0

12.0

N/A

N/A

0.0

N/A

Underlying EBITDA

A$m

28.8

47.4

64.9%

28.0%

56.3

18.8%

Underlying EBITDA margin

11.4%

17.1%

5.7%

2.5%

18.6%

1.5%

Normalised operating profit

A$m

5.8

17.2

197.0%

-189.5%

36.5

112.7%

Normalised operating margin

2.3%

6.2%

3.9%

13.7%

12.1%

5.9%

Reported operating profit

A$m

(13.7)

(2.3)

-83.0%

-99.2%

17.0

-829.4%

Reported operating margin

-5.4%

-0.8%

4.6%

118.0%

5.6%

6.5%

Normalised PBT

A$m

2.0

13.6

564.1%

-159.7%

32.9

142.5%

Reported PBT

A$m

(17.5)

(5.9)

-66.1%

-97.9%

13.4

-327.2%

Normalised net income

A$m

1.6

10.9

564.1%

-159.7%

26.3

142.5%

NPATA

A$m

3.0

12.3

304.0%

-145.5%

27.7

126.2%

Add back one-off costs

A$m

0.0

9.6

0.0

Underlying NPATA

A$m

3.0

21.9

620.2%

346.7%

27.7

26.9%

Reported net income

A$m

(14.0)

(4.7)

-66.1%

-98.3%

10.7

-327.2%

Normalised basic EPS

A$

0.00

0.03

564.0%

-159.7%

0.07

142.5%

Normalised diluted EPS

A$

0.00

0.03

557.3%

-158.2%

0.07

142.5%

Reported basic EPS

A$

(0.04)

(0.01)

-66.1%

-98.3%

0.03

-327.2%

NPATA/share

A$

0.01

0.03

299.9%

-145.5%

0.07

126.2%

Net debt/(cash)

A$m

18.8

0.00

N/A

N/A

0.00

N/A

GDV

A$bn

102.0

157.4

54.4%

21.5%

179.8

14.3%

Yield

bp

25

18

-7

-2

17

-1

Divisional data

GDV

Gifting

A$bn

1.6

1.8

13%

10%

2.0

10%

GPR

A$bn

13.7

13.4

-2%

5%

14.5

8%

Digital Payments

A$bn

86.6

142.1

64%

23%

163.3

15%

Revenue

Gifting

A$m

77.5

81.8

6%

10%

88.0

8%

GPR

A$m

151.2

169.7

12%

7%

184.8

9%

Digital Payments

A$m

24.3

26.1

7%

20%

29.7

14%

Yield

Gifting

4.75%

4.45%

-0.3%

-0.01%

4.35%

-0.10%

GPR

1.10%

1.27%

0.2%

0.02%

1.28%

0.01%

Digital Payments

0.03%

0.02%

0.0%

0.00%

0.02%

0.00%

Gross profit

Gifting

A$m

61.6

66.3

8%

9.7%

71.3

7.5%

GPR

A$m

90.0

101.8

13%

9.0%

110.9

8.9%

Digital Payments

A$m

20.6

22.2

8%

87.5%

25.2

13.2%

Gross margin

Gifting

79.5%

81.1%

1.6%

0.0%

81.1%

0.0%

GPR

59.5%

60.0%

0.5%

1.0%

60.0%

0.0%

Digital Payments

84.9%

85.3%

0.4%

30.6%

84.7%

-0.7%

Source: Edison Investment Research

Exhibit 5: Financial summary

A$'m

2019

2020

2021

2022

2023

2024e

2025e

30-June

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

97.2

121.0

192.2

232.4

254.2

277.8

302.7

Cost of Sales

(24.2)

(32.9)

(63.8)

(74.6)

(89.1)

(87.4)

(95.3)

Gross Profit

73.0

88.1

128.4

157.8

165.1

190.4

207.4

EBITDA

 

 

29.7

32.5

42.2

34.3

(2.6)

35.4

56.3

Normalised operating profit

 

 

25.6

22.4

31.6

18.4

(19.2)

17.2

36.5

Amortisation of acquired intangibles

(7.5)

(11.1)

(20.2)

(16.5)

(18.2)

(17.0)

(17.0)

Exceptionals

(3.0)

(13.6)

(11.2)

1.4

(262.9)

0.0

0.0

Share-based payments

(4.2)

(6.1)

(5.0)

(3.0)

(1.8)

(2.5)

(2.5)

Reported operating profit

10.9

(8.5)

(4.8)

0.3

(302.0)

(2.3)

17.0

Net Interest

(0.0)

(0.7)

(1.4)

(2.4)

(3.6)

(3.6)

(3.6)

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

(1.8)

1.3

(17.1)

1.8

23.9

0.0

0.0

Profit Before Tax (norm)

 

 

25.6

21.6

30.2

16.0

(22.8)

13.6

32.9

Profit Before Tax (reported)

 

 

9.0

(7.9)

(23.3)

(0.3)

(281.8)

(5.9)

13.4

Reported tax

(0.6)

0.7

(5.4)

(4.5)

(3.1)

1.2

(2.7)

Profit After Tax (norm)

20.5

17.2

24.1

12.8

(18.2)

10.9

26.3

Profit After Tax (reported)

8.5

(7.1)

(28.7)

(4.8)

(284.8)

(4.7)

10.7

Minority interests

(0.2)

0.0

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)

20.3

17.2

24.1

12.8

(18.2)

10.9

26.3

Net income (reported)

8.3

(7.1)

(28.7)

(4.8)

(284.8)

(4.7)

10.7

Basic ave. number of shares outstanding (m)

249

304

360

371

374

374

374

EPS - basic normalised (A$)

 

 

0.081

0.056

0.067

0.035

(0.049)

0.029

0.070

EPS - normalised fully diluted (c)

 

 

7.812

5.489

6.579

3.398

(4.869)

2.833

6.869

EPS - basic reported (A$)

 

 

0.033

(0.023)

(0.080)

(0.013)

(0.762)

(0.013)

0.029

Dividend (A$)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

36.9

24.4

58.9

20.9

9.4

9.3

8.9

Gross Margin (%)

75.1

72.8

66.8

67.9

64.9

68.5

68.5

EBITDA Margin (%)

30.6

26.9

21.9

14.8

-1.0

12.8

18.6

Normalised Operating Margin

26.4

18.5

16.4

7.9

-7.5

6.2

12.1

BALANCE SHEET

Fixed Assets

 

 

162.9

872.1

685.3

827.3

581.3

661.1

679.4

Intangible Assets

104.6

371.7

350.1

448.5

192.5

174.1

155.1

Tangible Assets

5.4

14.6

11.2

12.7

10.6

10.8

10.8

Investments & other

53.0

485.8

323.9

366.1

378.3

476.2

513.5

Current Assets

 

 

313.8

1,008.6

1,603.5

1,855.1

2,413.2

2,460.8

2,668.2

Stocks

18.2

22.3

16.4

21.5

27.5

29.9

31.5

Debtors

14.4

21.7

22.0

35.8

38.9

41.5

44.9

Cash & cash equivalents

33.1

118.4

141.2

73.7

71.4

43.5

45.9

Other

248.2

846.2

1,424.0

1,724.1

2,275.5

2,345.9

2,546.0

Current Liabilities

 

 

(299.0)

(1,357.8)

(1,792.8)

(2,100.1)

(2,709.9)

(2,858.6)

(3,070.3)

Creditors

(33.9)

(47.5)

(62.9)

(65.7)

(82.3)

(77.6)

(78.9)

Tax and social security

(0.8)

(2.6)

(6.0)

(2.8)

(3.1)

(3.1)

(3.1)

Short term borrowings

(15.0)

0.0

(1.4)

(1.8)

(23.0)

(23.0)

(3.0)

Other

(249.4)

(1,307.7)

(1,722.5)

(2,029.8)

(2,601.5)

(2,754.9)

(2,985.3)

Long Term Liabilities

 

 

(33.5)

(82.6)

(81.1)

(145.2)

(110.1)

(90.9)

(91.8)

Long term borrowings

0.0

(35.8)

(36.9)

(81.6)

(68.8)

(49.3)

(49.3)

Other long term liabilities

(33.5)

(46.8)

(44.2)

(63.6)

(41.3)

(41.7)

(42.5)

Net Assets

 

 

144.2

440.2

414.9

437.1

174.6

172.3

185.6

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

144.2

440.2

414.9

437.1

174.6

172.3

185.6

CASH FLOW

Op Cash Flow before WC and tax

28.4

31.2

41.2

33.3

(2.3)

35.4

56.3

Working capital

2.0

3.6

31.7

(68.4)

9.0

(17.6)

(10.7)

Exceptional & other

(0.7)

(12.7)

(17.3)

0.4

(2.6)

0.0

0.0

Tax

(0.6)

0.7

(5.4)

(4.5)

(3.1)

1.2

(2.7)

Net operating cash flow

 

 

29.2

22.8

50.2

(39.1)

0.9

19.0

43.0

Capex

(5.8)

(11.0)

(12.6)

(14.1)

(11.7)

(14.1)

(14.8)

Acquisitions/disposals

(44.0)

(142.5)

(3.5)

(57.1)

10.9

(7.0)

0.0

Net interest

(0.0)

(0.7)

(1.4)

(2.4)

(3.6)

(3.6)

(3.6)

Equity financing

0.4

240.8

0.6

0.0

0.0

0.0

0.0

Dividends

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

(0.4)

(7.0)

(11.0)

(1.9)

(2.2)

(2.2)

(2.2)

Net Cash Flow

(20.6)

102.3

22.2

(114.6)

(5.7)

(7.9)

22.4

Opening net debt/(cash)

 

 

(39.0)

(18.1)

(82.5)

(103.0)

9.7

20.4

28.7

FX

(0.3)

(2.0)

0.6

(1.1)

3.4

0.0

0.0

Other non-cash movements

0.0

(35.8)

(2.4)

3.0

(8.4)

(0.5)

0.0

Closing net debt/(cash)

 

 

(18.1)

(82.5)

(103.0)

9.7

20.4

28.7

6.3

Source: EML Payments, Edison Investment Research


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 £60,000 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.

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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 2023 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

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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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom


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 £60,000 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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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