- Record Group Gross Debit Volume of $80.2 billion, up 308% on PCP;
- Record Group Revenue1 of $234.1 million, up 21% on PCP;
- Group Underlying EBITDA2 of $51.2 million, down 4% on PCP;
- Group Underlying NPATA of $32.1 million, down 1% on PCP; and,
- Continuing strong Balance Sheet and Cash position – $20 Million Buy-Back to be conducted over next 12 months;
EML Payments Limited (ASX: EML) today released its FY22 Financial Results and Annual Report.
Today’s result demonstrates the substantial growth opportunities across both EML’s global markets and its range of payments solutions and services. However, the respective 4% and 1% lower underlying EBITDA and NPATA performance for FY22 underscore the importance of the Strategic Review (”Review”) to be driven by EML’s newly appointed Managing Director and CEO, Emma Shand.
Ms Shand, who commenced in the role in July this year, will lead the Review through September and October with a particular focus on business growth strategy, development of a more customer-centric, streamlined and strengthened operating model, including enhanced compliance and regulatory processes. The Board recognises that improvement is needed, particularly in these aspects of the business, to underpin reliable growth in both revenue and earnings for shareholders over the next three to five years.
Ms Shand will present the outcomes of the Review to shareholders at EML’s Annual General Meeting in late November this year.
Highlights for the year ended 30 June 2022 include:
Gross Debit Volume (‘GDV’) of $80.2 billion, up 308% on PCP
GDV represents the volume processed by the Group through its proprietary processing platforms, indicating demand for its payment services. In the year, it saw both organic growth in all segments alongside acquisition growth as it consolidated the Sentenial Group into the Digital Payments segment from 1 October.
- General Purpose Reloadable (‘GPR’) segment organically grew global volumes by 27% to $12.4 billion (PCP: $9.7 billion);
- Gift & Incentive (‘G&I’) segment organically grew volumes by 21% to $1.3 billion as it recovered from the impacts of Covid-19 (PCP: $1.1 billion);
- Digital Payments (‘DP’) segment grew volumes by 654%, predominantly through the acquisition of Sentenial, which was consolidated from 1 October 2021, to $66.6 billion (PCP: $8.8 billion);
Revenue of $234.1 million, up 21% on PCP
The Group achieved record revenue of $234.1 million1, which is growth of 21% on the PCP. The Group benefitted from the introduction of new Account Maintenance Fees (‘AMF’) on certain European GPR programs where the account has been inactive for more than 12 months. This resulted in revenue of $23.5 million of new AMF income stream, and $17.9 million of this is non-recurring related to the inactive cards’ back book. Revenue came from:
- GPR revenue grew 30% to $148.1 million, benefitting from the new AMF revenue stream;
- The G&I segment generated $68.4 million of revenue, down 3%. This was a positive result noting that the prior comparable period included $11.1 million in elevated breakage rates in the North American business;
- The DP segment increased revenue, through the acquisition of Sentenial, to $17.6 million, up 71% on PCP. The Open Banking product, Nuapay, is strategically important and expected to demonstrate a strong growth profile over the next 10 years;
The Group generated a gross profit margin of 68%, up 1% on the PCP
EML’s Gross profit margins were 68% as the contribution of General Purpose Reloadable increased relative to the other segments, with 57% of gross profit generated from the General Purpose Reloadable segment.
EML expects to benefit in the short to medium term from the expected continuation of interest rate increases by central banks generally. EML holds $2.2 billion in stored value (FY21 $2.1 billion) generating interest income. EML has been impacted by negative interest in Euro balances in the current and previous periods.
Underlying overheads increased 41% to $108.4m (PCP: $76.8 million)
Underlying overheads increased as the Company invested in its European operations to meet regulatory resourcing expectations. Consolidation of Sentenial overheads for 9 months from 30 September 2021 also contributed to this increase.
Underlying EBITDA $51.2 million2, down 4% on PCP
The Group has seen a reduction in underlying EBITDA of 4% to $51.2 million, largely reflecting increased investment in EML’s European operations.
Strategic Review
Over the six weeks since stepping in as MD and CEO, Ms Shand has visited EML’s global operations to get first-hand observations on the company’s strengths and weaknesses as perceived by both long term and newly appointed management and staff members as well as customers, shareholders, business partners and importantly, key regulators.
”My early conversations with key stakeholders have been very constructive and helpful in shaping my immediate focus. It validates to me that whilst we have a strong base, it is time for a proactive strategic review of all aspects of the business,” Ms Shand said.
”From what I have already learned, I am highly enthusiastic about EML’s growth and value potential. However, we won’t successfully deliver improved value of those opportunities for our shareholders if we don’t take a good hard look at how best to set our operating structure and align our capabilities, systems and processes to execute effectively for growth.
We have already taken some early steps to improve operating focus, elevate a culture of regulatory compliance to support sustainable growth and in optimising balance sheet strength.
I look forward to reporting the outcomes and initiatives from our strategic review to shareholders at the AGM in November,” Ms Shand said.
About EML Payments
EML provides an innovative payment solutions platform, helping businesses all over the world create awesome customer experiences. Wherever money is in motion, our agile technology can power the payment process, so money can be moved quickly, conveniently and securely. We offer market-leading programme management and highly skilled payments expertise to create customisable feature-rich solutions for businesses, brands and their customers.
Come and explore the many opportunities our platform has to offer by visiting us at: EMLPayments.com
Read more EML stories by visiting our Newsroom: https://www.emlpayments.com/newsroom/
Footnotes:
1 Bond investments include a reduction of $1,736,000 (2021: $1,958,000) for the non-cash amortisation of the AASB 3 fair value uplift of the PFS bond portfolio at the acquisition date.
2 EML generates interest income on Stored Value balances and, as such, is a source of core revenue. Earnings Before Interest, Tax, Depreciation and Amortisation (‘EBITDA’) is used as the most appropriate measure of assessing the performance of the Group. Underlying EBITDA includes R&D tax offset and excludes share-based payments, acquisition costs, foreign exchange gains or losses and non-recurring costs related to the CBI remediation and Shine group proceedings. Underlying EBITDA is reconciled to statutory profit and loss within the FY22 Annual Report.
