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EML Payments — Major source of losses stemmed

EML Payments (ASX: EML)

Last close As at 01/11/2024

AUD0.67

▲ 0.02 (2.29%)

Market capitalisation

AUD254m

More on this equity

Research: TMT

EML Payments — Major source of losses stemmed

As part of its strategy to focus on profitable, cash-generative businesses, the boards of EML Payments and PFS Card Services Ireland Limited (PCSIL) have decided to wind down the PCSIL business. This removes a source of considerable cash burn and management distraction and leaves the group better positioned to support the Gifting and the Australian and UK General Purpose Reloadable (GPR) businesses. The strategic review is ongoing and management noted it had received several expressions of interest for Sentenial. FY24 guidance given in November is maintained despite the PCSIL liquidation. We have revised our forecasts to reflect the November trading update and the PCSIL liquidation, upgrading our underlying EBITDA forecasts by 14.9% in FY24 and 6.0% in FY25.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

EML Payments

Major source of losses stemmed

Corporate update

Software and comp services

5 February 2024

Price

A$0.83

Market cap

A$311m

€0.60/A$

Net debt (A$m) at end FY23

20.4

Shares in issue

374.9m

Free float

93%

Code

EML

Primary exchange

ASX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

3.1

(31.3)

28.9

Rel (local)

2.3

(38.5)

25.6

52-week high/low

A$1.26

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

H124 results

February 2024

Analyst

Katherine Thompson

+44 (0)20 3077 5700

EML Payments is a research client of Edison Investment Research Limited

As part of its strategy to focus on profitable, cash-generative businesses, the boards of EML Payments and PFS Card Services Ireland Limited (PCSIL) have decided to wind down the PCSIL business. This removes a source of considerable cash burn and management distraction and leaves the group better positioned to support the Gifting and the Australian and UK General Purpose Reloadable (GPR) businesses. The strategic review is ongoing and management noted it had received several expressions of interest for Sentenial. FY24 guidance given in November is maintained despite the PCSIL liquidation. We have revised our forecasts to reflect the November trading update and the PCSIL liquidation, upgrading our underlying EBITDA forecasts by 14.9% in FY24 and 6.0% in FY25.

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

24.4

6.5

06/23

254.2

(22.8)

(27.0)

(4.9)

0

N/A

8.9

06/24e

251.0

25.1

26.5

5.2

0

15.9

6.1

06/25e

242.9

37.3

31.2

7.8

0

10.7

5.5

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.

Major progress in restructuring the group

With the announcement that it has decided to wind down the European GPR business (PCSIL) using a court appointed liquidator, EML has taken a major step forward in its quest to return the group to profitable growth and cash generation. The business will be deconsolidated from 16 January 2024, with an estimated further cash outlay of A$20m to settle intercompany loans and a non-cash write-down of A$25m the final amounts to affect EML’s financials.

Upgrading forecasts on trading and PCSIL wind down

For the four months to 31 October 2023, EML reported gross debit volume (GDV) growth of 55% y-o-y, revenue growth of 39% and underlying EBITDA growth of 279%. The company expects to generate underlying EBITDA in the range of A$52–58m for FY24 (+40–56% y-o-y) and to be broadly cash flow neutral, despite c A$20m cash burn expected for PCSIL. We have upgraded our forecasts to reflect the trading update and the PCSIL liquidation, resulting in an FY24 underlying EBITDA forecast in the middle of the A$52–58m guidance range.

Valuation: PCSIL liquidation removes major block

After the November 2023 AGM, the stock declined 30% to 77c, in our view reflecting concerns about the timing and cost of the Irish regulatory remediation process. Since the liquidation announcement the stock has gained 11% but continues to trade at a material discount to global payment processor and prepaid card peers on an EV/sales and EV/underlying EBITDA basis. Evidence of positive progress with the UK regulator and growth in the remaining business will be key to reduce this discount, with the potential sale of Sentenial another possible trigger for upside.

Closing down PCSIL

On 17 January, EML announced that it had decided to put PFS Card Services Ireland Limited into liquidation. This follows a multi-year period of trying to remediate the business to meet the compliance requirements of the Irish regulator, the Central Bank of Ireland (CBI). The company made this decision for a number of reasons (more detail below).

PCSIL will be deconsolidated from the group from 16 January 2024. EML’s remaining cash exposure to the business will be A$20m in intercompany loans, equivalent to the expected cash burn of PCSIL in FY24. This includes the operating result of the business as well as the payment of one-off expenses that had previously been provided for in relation to the remediation. These payments are expected to be made towards the end of the liquidation process in nine to 12 months. In FY24, the group will also make a one-off non-cash A$25m impairment of the net assets of PCSIL and any associated intangible assets.

Strategic review ongoing

Prior to its AGM on 29 November, EML provided an update on progress with its strategic review. When we last wrote post the company’s FY23 results, EML was focused on determining the stand-alone profitability and cash flow performance of each business line, as well as reviewing the regulatory position, prospects for growth and EML’s suitability as owner.

EML decided to focus on those business lines that are currently profitable and generate positive cash flow, with the potential for that to continue, namely Gifting, Australia GPR and UK GPR (PFSL UK). The company considers that each of these businesses has:

■

strong EBITDA margins and free cash flow conversion;

■

long-term client contracts;

■

meaningful commercial footprints and credibility in attractive industry verticals;

■

a reduced regulatory risk profile and associated costs; and

■

a platform from which to build increased shareholder value over time with refreshed leadership and the potential for targeted investment for growth.

Two parts of the group do not fit the criteria: the European GPR business (PCSIL) and Sentential.

PCSIL: Court approves appointment of liquidator

In November 2023, the company confirmed that PCSIL was unlikely to reach break-even in FY24 and at that point estimated that cash burn was likely to be c A$20m in FY24 with elevated cash burn in the medium term. In September 2023, two directors of PCSIL resigned; on 28 November the CBI provided regulatory permission for the appointment of two EML group directors and two new independent non-executive directors. With the new PCSIL board in place, the company was able to complete a detailed review into the business and concluded that liquidation was the best option for PCSIL and the group. The reasons for this include:

■

ongoing losses and substantial cash burn;

■

deteriorating trading performance from some of PCSIL’s key customers who account for c 70% of PCSIL revenue, which could not be offset by new customers due to the CBI-imposed growth cap;

■

continued challenges with the effectiveness and scheduling of regulatory remediation works with an uncertain completion date;

■

severe challenges with staff retention and attracting new employees;

■

limited commercial attractiveness to new customers due to challenged operating environment; and

■

significant and unsustainable capex requirements for IT and operational systems to ensure they satisfy regulatory requirements, operational efficiency and commercial competitiveness.

PCSIL engaged with the CBI, and with approval from the EML board, made a successful application to the High Court of Ireland for the appointment of a provisional liquidator. The court appointed Interpath Advisory to this role effective 15:35 GMT on 17 January 2024. Interpath is now in control of the entity, its day-to-day operations and its winddown.

Sentenial: Expressions of interest received

The company has received several expressions of interest from third parties for Sentenial. The company is engaging with these potential buyers, although there is no guarantee that a disposal will happen. At the same time, the company is strengthening the business’s commercial and operational frameworks with the goal of reaching break-even in H224.

As a reminder, EML paid cash of A$63m and issued shares worth A$37m to acquire Sentenial on 1 October 2021. At the end of FY23, it also owed a contingent consideration of A$7m.

Management noted that the strategic review for the group continues.

Trading update

In November, EML provided a trading update for the four months ended 31 October.

Exhibit 1: Trading update for four months to 31 October 2023

A$m

4M24

4M23

y-o-y

GDV

48,659.8

31,359.4

55%

Revenue

92.9

66.6

39%

Underlying EBITDA

12.5

3.3

279%

% of FY23 GDV

24%

% of FY23 revenue

26%

% of FY23 underlying EBITDA

9%

Source: EML Payments

GDV increased 55% y-o-y for the four-month period – we assume the majority of this increase is from the Sentenial business, where GDV is not always directly linked to revenue. The company noted that recurring revenue increased 19% y-o-y with the remainder of the increase due to higher interest earned on float. Base rates for euro, sterling, US dollar and Australian dollar float balances were significantly higher in H124 compared to H123 (average increase ranges from 77% to 250%) and are also higher for H124 compared to H223 (average increase ranges from 10% to 40%). In FY23, underlying EBITDA for the first four months of the year made up only 9% of full-year EBITDA compared to c 25% for GDV and revenue, reflecting the impact that 100% gross margin interest income has on EBITDA (interest income in H123 was A$9.4m vs A$23.7m in H223).

Outlook and changes to forecasts

In November the company provided guidance for FY24, expecting underlying EBITDA in the range of A$52–58m (+40–56% y-o-y). This implies that 4M24 underlying EBITDA will contribute 22–24% of FY24e underlying EBITDA. The company expects to be broadly cash flow neutral in FY24, with a c A$20m cash outflow for PCSIL broadly offset by cash generated by the rest of the business.

Management has confirmed that the liquidation of PCSIL is not expected to have an impact on the guidance given above. We assume this means that PCSIL’s underlying EBITDA contribution in H224 would have been close to break-even, before any one-off charges relating to the remediation. Going forward, the liquidation of PCSIL stops a major source of operating losses and cash burn.

We estimate that the Sentenial business requires a much lower level of overheads and is closer to break-even, so disposal would have a more limited positive effect on profitability.

We have revised our forecasts to reflect higher GDV for Digital Payments and higher interest income and have stripped out PCSIL from H224 onwards. This results in an upgrade to our underlying EBITDA forecast, which now sits towards the middle of the guidance range.

We continue to forecast repayment of the loan notes relating to the acquisition of PFS (A$20m in FY24 and A$20m in FY25) as well as payment of the A$7m in contingent consideration for Sentenial in FY24.

Exhibit 2: Changes to forecasts

FY24e Old

FY24e New

Change

y-o-y

FY25e Old

FY25e New

Change

y-o-y

Revenues

A$m

277.8

251.0

-9.6%

-1.2%

302.7

242.9

-19.7%

-3.2%

Gross profit

A$m

190.4

176.2

-7.5%

6.7%

207.4

172.9

-16.6%

-1.9%

Gross margin

68.5%

70.2%

1.6%

5.2%

68.5%

71.2%

2.7%

1.0%

Underlying gross profit

A$m

190.4

176.2

-7.5%

1.1%

207.4

172.9

-16.6%

-1.9%

Underlying gross margin

68.5%

70.2%

1.6%

1.6%

68.5%

71.2%

2.7%

1.0%

EBITDA

A$m

35.4

46.5

31.2%

-1892.1%

56.3

59.7

6.0%

28.5%

EBITDA margin

12.8%

18.5%

5.8%

19.5%

18.6%

24.6%

6.0%

6.1%

Add back one-off costs

A$m

12.0

8.0

N/A

N/A

0.0

0.0

N/A

N/A

Underlying EBITDA

A$m

47.4

54.5

14.9%

47.0%

56.3

59.7

6.0%

9.6%

Underlying EBITDA margin

17.1%

21.7%

4.6%

7.1%

18.6%

24.6%

6.0%

2.9%

Normalised operating profit

A$m

17.2

28.7

67.2%

-249.7%

36.5

40.9

11.9%

42.4%

Normalised operating margin

6.2%

11.4%

5.3%

19.0%

12.1%

16.8%

4.8%

5.4%

Reported operating profit

A$m

(2.3)

(15.8)

577.3%

-94.8%

17.0

21.4

25.6%

-235.3%

Reported operating margin

-0.8%

-6.3%

-5.5%

112.5%

5.6%

8.8%

3.2%

15.1%

Normalised PBT

A$m

13.6

25.1

84.9%

-210.4%

32.9

37.3

13.2%

48.5%

Reported PBT

A$m

(5.9)

(19.4)

227.7%

-93.1%

13.4

17.8

32.5%

-191.8%

Normalised net income

A$m

10.9

20.1

84.9%

-210.4%

26.3

29.8

13.2%

48.5%

NPATA

A$m

12.3

26.5

116.0%

-198.2%

27.7

31.2

12.6%

17.9%

Add back one-off costs

A$m

9.6

6.4

0.0

0.0

Underlying NPATA

A$m

21.9

32.9

50.4%

572.0%

27.7

31.2

12.6%

-5.0%

Reported net income

A$m

(4.7)

(15.5)

227.7%

-94.6%

10.7

14.2

32.5%

-191.8%

Normalised basic EPS

A$

0.03

0.05

84.7%

-210.3%

0.07

0.08

13.1%

48.4%

Normalised diluted EPS

A$

0.03

0.05

84.7%

-207.5%

0.07

0.08

13.1%

48.4%

Reported basic EPS

A$

(0.01)

(0.04)

227.4%

-94.6%

0.03

0.04

32.2%

-191.7%

NPATA/share

A$

0.03

0.07

115.8%

-198.1%

0.07

0.08

12.4%

17.8%

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

28.7

28.1

-2.1%

37.9%

6.3

0.8

-88.1%

-97.3%

GDV

A$bn

157.4

164.8

4.7%

27.2%

179.8

174.8

-2.8%

6.1%

Yield

bp

18

15

-2

-4

17

14

-3

-1

Source: Edison Investment Research

Exhibit 3: Changes to divisional forecasts

FY24e

FY24e

FY25e

FY25e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

GDV

Gifting

A$bn

1.8

1.8

0%

10%

2.0

2.0

0%

10%

GPR

A$bn

13.4

10.9

-19%

-15%

14.5

9.5

-35%

-13%

Digital Payments

A$bn

142.1

152.1

7%

32%

163.3

163.3

0%

7%

Revenue

Gifting

A$m

81.8

84.6

3%

13%

88.0

91.0

3%

8%

GPR

A$m

169.7

140.1

-17%

-12%

184.8

121.9

-34%

-13%

Digital Payments

A$m

26.1

26.1

0%

20%

29.7

29.8

0%

14%

Yield

Gifting

4.45%

4.60%

0.2%

0.14%

4.35%

4.50%

0%

-0.10%

GPR

1.27%

1.29%

0.0%

0.05%

1.28%

1.29%

0%

0.00%

Digital Payments

0.02%

0.02%

0.0%

0.00%

0.02%

0.02%

0%

0.00%

Gross profit

Gifting

A$m

66.3

68.7

4%

13.7%

71.3

73.9

4%

7.5%

GPR

A$m

101.8

85.1

-16%

-8.9%

110.9

73.8

-33%

-13.4%

Digital Payments

A$m

22.2

22.3

0%

88.0%

25.2

25.2

0%

13.2%

Gross margin

Gifting

81.1%

81.3%

0.2%

0.2%

81.1%

81.2%

0%

-0.1%

GPR

60.0%

60.8%

0.8%

1.8%

60.0%

60.5%

1%

-0.3%

Digital Payments

85.3%

85.3%

0.0%

30.6%

84.7%

84.6%

0%

-0.7%

Source: Edison Investment Research

Exhibit 4: 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

251.0

242.9

Cost of Sales

(24.2)

(32.9)

(63.8)

(74.6)

(89.1)

(74.9)

(70.0)

Gross Profit

73.0

88.1

128.4

157.8

165.1

176.2

172.9

EBITDA

 

 

29.7

32.5

42.2

34.3

(2.6)

46.5

59.7

Normalised operating profit

 

 

25.6

22.4

31.6

18.4

(19.2)

28.7

40.9

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)

(25.0)

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)

(15.8)

21.4

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)

25.1

37.3

Profit Before Tax (reported)

 

 

9.0

(7.9)

(23.3)

(0.3)

(281.8)

(19.4)

17.8

Reported tax

(0.6)

0.7

(5.4)

(4.5)

(3.1)

3.9

(3.6)

Profit After Tax (norm)

20.5

17.2

24.1

12.8

(18.2)

20.1

29.8

Profit After Tax (reported)

8.5

(7.1)

(28.7)

(4.8)

(284.8)

(15.5)

14.2

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)

20.1

29.8

Net income (reported)

8.3

(7.1)

(28.7)

(4.8)

(284.8)

(15.5)

14.2

Basic ave. number of shares outstanding (m)

249

304

360

371

374

374

375

EPS - basic normalised (A$)

 

 

0.081

0.056

0.067

0.035

(0.049)

0.054

0.080

EPS - normalised fully diluted (c)

 

 

7.812

5.489

6.579

3.398

(4.869)

5.234

7.766

EPS - basic reported (A$)

 

 

0.033

(0.023)

(0.080)

(0.013)

(0.762)

(0.041)

0.038

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

(-1.2)

(-3.2)

Gross Margin (%)

75.1

72.8

66.8

67.9

64.9

70.2

71.2

EBITDA Margin (%)

30.6

26.9

21.9

14.8

-1.0

18.5

24.6

Normalised Operating Margin

26.4

18.5

16.4

7.9

-7.5

11.4

16.8

BALANCE SHEET

Fixed Assets

 

 

162.9

872.1

685.3

827.3

581.3

577.4

538.6

Intangible Assets

104.6

371.7

350.1

448.5

192.5

147.7

127.7

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

418.9

400.1

Current Assets

 

 

313.8

1,008.6

1,603.5

1,855.1

2,413.2

2,142.5

2,014.3

Stocks

18.2

22.3

16.4

21.5

27.5

28.5

28.2

Debtors

14.4

21.7

22.0

35.8

38.9

37.8

36.7

Cash & cash equivalents

33.1

118.4

141.2

73.7

71.4

44.1

22.2

Other

248.2

846.2

1,424.0

1,724.1

2,275.5

2,032.2

1,927.3

Current Liabilities

 

 

(299.0)

(1,357.8)

(1,792.8)

(2,100.1)

(2,709.9)

(2,516.7)

(2,332.1)

Creditors

(33.9)

(47.5)

(62.9)

(65.7)

(82.3)

(65.5)

(58.7)

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)

(72.2)

(22.9)

Other

(249.4)

(1,307.7)

(1,722.5)

(2,029.8)

(2,601.5)

(2,375.9)

(2,247.4)

Long Term Liabilities

 

 

(33.5)

(82.6)

(81.1)

(145.2)

(110.1)

(41.7)

(42.5)

Long term borrowings

0.0

(35.8)

(36.9)

(81.6)

(68.8)

0.0

0.0

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

161.5

178.3

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

161.5

178.3

CASH FLOW

Op Cash Flow before WC and tax

28.4

31.2

41.2

33.3

(2.3)

46.5

59.7

Working capital

2.0

3.6

31.7

(68.4)

9.0

(32.7)

(10.2)

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)

3.9

(3.6)

Net operating cash flow

 

 

29.2

22.8

50.2

(39.1)

0.9

17.8

46.0

Capex

(5.8)

(11.0)

(12.6)

(14.1)

(11.7)

(12.3)

(12.9)

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)

(7.3)

27.4

Opening net debt/(cash)

 

 

(39.0)

(18.1)

(82.5)

(103.0)

9.7

20.4

28.1

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

28.1

0.8

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.

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 2024 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


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 2024 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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