EML Payments Limited Tracks Steady Recovery Despite May Trading Halt

Industry News

& Articles

EML Payments Limited Tracks Steady Recovery Despite May Trading Halt

Facebooktwitterlinkedin
  • FY21 Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) up 65 per cent at $53.5 million
  • FY21 underlying Net Profit After Tax plus Amortisation (NPATA) is up 54 per cent, at $32.4 million
  • FY22 EBITDA guidance between $58 to $65 million

Digital payment solutions have fast become a feature throughout the ‘contactless’ pandemic, even gaining in popularity along with the rise of global e-commerce businesses, and well before COVID-19. While payment solutions developed by industry leaders such as EML Payments Limited (ASX:EML) and Afterpay Limited (ASX:APT) have quickly and easily captured the fascinations of investors, they have likewise attracted the scrutiny of regulators, as seen with EML’s May announcement of its PFS Card Services (Ireland) Limited (PCSIL) subsidiary addressing regulatory concerns in Ireland.

As a result, the company presented shareholders with a request for a trading halt, while it addressed correspondences by the Central Bank of Ireland (CBI). Specifically, the CBI’s regulatory concerns originally pertained to PCSIL’s anti-money laundering and counter terrorism financing risk and control frameworks and governance. Yesterday, the EML released an update to the original compliance request by CBI, clarifying that regulatory concerns for PCSIL were more limited to its remediation plan and material growth. Specifically, CBI noted that the Irish subsidiary’s proposed material growth policy was much higher than what the regulator expects.

The material impact of these compliance concerns raised by CBI are estimated to amount for 27 per cent of EML’s global consolidated revenue, between the period of 1 January to 31 March 2021. While ongoing dialogue continues between the regulator and PCSIL, it will next see a development on 28 October 2021, when the company presents additional submissions in accordance with given directions. 

Just prior to the CBI announcement, EML shares tracked a new all-time high of $5.80 per security in April. However, the 19 May CBI correspondence was seen to correlate with a steep selling off of its shares, plunging the company’s stock price to a lows of $2.80. At the time of writing, EML’s price correction has since stabilised at around $3.20 per share, just 1.52 per cent lower as compared to the prior corresponding year.

Anticipating Steady Gains through Strategic Acquisition

EML’s global operations sees it focused on three primary business segments: General Purpose Reloadable,  Gift & Incentive, and Virtual Account Numbers. Each of its segments presented gross profits of between 58 to 81 per cent for FY21. In its FY21 reporting, the company presented a record year with underlying EBITDA of $53.5 million, up 65 per cent compared to FY20. Additionally, its underlying NPATA is up 54 per cent, at $32.4 million.

In line with its growth strategy, EML recently announced the completed acquisition of Sentenial Limited, and its open banking product suite, Nuapay. This scalable bank-grade addition to EML’s existing suite of payment solutions sees the group well-positioned to provide a unique set of product capabilities within its European market.

For FY22, the group expects its underlying EBITDA to be within the range of $58 to $65 million. These are based on a handful of assumptions which include economies rebounding from COVID-19, starting as early as Christmas, no material changes to central bank interest rates within the UK, Europe, US or Australia, and that its acquisition of Sentenial will contribute to its overall EBITDA for the coming year.

Caroline Wong

Caroline Wong is a Research Analyst at KOSEC – Kodari Securities. She writes on markets and focuses on ASX Top 300 companies. Email Caroline at c.wong@kosec.com.au.

Comment on this company

Latest Stories

Service Stream Makes Key Lendlease Acquisition

Transformational acquisition of Len……

Bluescope Steel Upgrades FY22 Earnings Guidance To Over $2 billion

Bluescope Steel (ASX:BSL) build……

BHP AGM all about positioning for the future

BHP is a world leader in processing minera……

More for you

CIMIC Group Spends Big On Public Infrastructure

CIMIC Group, formerly Leig……

Rio Tinto To Move On Decarbonization; Spending Big On The Green Push

Rio Tinto Limited is enga……

Super Retail Group Increases Inventory Ahead Of Lockdowns Easing

Super Retail Group (‘……

IDP Education Sees Strong Market Recovery Ahead

Technology innovation and d……

Brickworks Lays Solid Performance Ahead of Pandemic Recovery

Brickworks Limited (ASX:…..

Kogan.com Announces September Results, Soars Past $300 Million Sales

Kogan.com is a portfolio of r……

KOSEC Terms & Conditions

Kodari Securities Pty Ltd (CAR 399556) trading as KOSEC is regulated by the Australian Securities and Investment Commission (ASIC). KOSEC is a financial services company and any information provided by its platforms, portals, reports and documents is protected by copyright. Any unauthorised production of this information is prohibited.
KOSEC reserves the right to change or remove any information provided on our website, reports or any documents including these terms and conditions at any time without notice. The change or modification to the terms and conditions will be effective immediately upon posting an updated version on our website, necessary platforms and documents. It is recommended that you review the information provided on our website, including these terms and conditions frequently for any changes.

Disclaimer
KOSEC provides general advice only. The information provided is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. KOSEC recommends that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances. Please make sure you read our Financial Services Guide (FSG).

KOSEC does not guarantee any returns. Past performance of any product discussed is not indicative of future performance. (We urge that caution should be exercised in assessing past performance. All financial products are subject to market forces and unpredictable events that may adversely affect their future performance). Investing in the stock market can incur huge losses. Please also be aware that fees will incur on every transaction regardless of the performance of your investments or returns generated. Employees and or associates of KOSEC may hold one or more of the stocks, securities or investments reviewed by the company.

Your use of information from our website, reports, documents and from talking to our representatives/associates is at your risk. Under no circumstance should the investment be based solely on KOSEC information and general advice. You should seek professional financial planning advice.
KOSEC aims to maintain the accuracy of the data and information provided on this website, by using information prepared from a wide variety of sources, which KOSEC to the best of its knowledge and belief, considers accurate and does not make any representations or warranties of any kind, expressed or implied, about the completeness, accuracy, reliability, suitability or availability of the information provided.

We may at times refer to third parties, which the details of these third parties have been provided solely for you to obtain further information about other relevant products and entities in the market. KOSEC has no control over the information third parties have, or the products or services offered, and therefore make no representations regarding the accuracy or suitability of such information, products or services. You are advised to make your own enquiries in relation to third parties. Our inclusion of any third party content is not an endorsement of that content or the third party.

Fees
As a client you will be charged a yearly service fee and a set brokerage fee per transaction. Your service fee will automatically renew at the end of your agreed 12 month period at the same rate advertised at the time. Your credit card or bank account will be charged for a further year following which will again auto renew until you cancel your yearly service fee. You can cancel the auto renewal at any time in advance of the renewal date by contacting us. KOSEC is aware of the need to ensure the security of your credit card details and our payment systems are compliant with the Payment Card Industry (PCI) Data Security Standard.

Privacy
You consent to receiving email correspondence from KOSEC, as well as companies KOSEC has an association with. These emails will be sent by KOSEC and third party companies. You can opt out of receiving any category of emails at any time by contacting us. We may from time to time inform you of special offers, or even ask your opinion of the services we provide, but your involvement is optional. Should you request us to do so, we will archive your details.

Indemnity and Liability
You indemnify KOSEC from all claims or threatened claims, suits, demands, damages, costs as well as including legal costs incurred in dealing with any threatened claim, expenses made by any person or corporation against KOSEC and any other amounts which is caused by KOSEC providing information, execution and General Advice.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from a decision made by you on the basis of information obtained through the use of our portal, reports, documents or any General Advice given and any transaction taken place.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from delays in executing orders for the client and acknowledges KOSEC makes no guarantees about the time taken to execute an order on behalf of the client. You acknowledge that KOSEC relies on third parties in providing technology and release KOSEC from any harm, loss or damage you may suffer as a result of the failure of such information technology.

Cookies and Links
KOSEC website, and its portal uses cookies, which lets us identify your browser while you are using the site or our portal. Cookies do not identify you personally. They simply allow us to track your usage patterns. If you prefer not to receive cookies, you can configure your browser to reject them or to notify you when they are being used. The functionality of the KOSEC website may be impacted if you restrict the use of cookies.

Fill up the form below and we will get back to you as soon as possible.

CLAIM YOUR FREE E-BOOK &
7 DAY ACCESS TO LOTUS BLUE

STOCK MARKET SUCCESS

KOSEC’s CEO, Michael Kodari’s new book, “Stock Market Success” valued at $39.95, available at Dymocks book stores with all the proceeds going to Dymocks Children’s Charities.

CLAIM YOUR FREE E-BOOK WHEN YOU LOGIN TO LOTUS BLUE INVESTMENT PORTAL

Latest TV Commercial