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Irish laundering concerns flow through to EML earnings

Brisbane financial services company EML Payments has posted record revenue despite the lingering impact of damaging allegations relating to money laundering within its Irish subsidiary.

 

Feb 16, 2022, updated Feb 16, 2022
Concerns about EML's Irish gift card business are still costing the company

Concerns about EML's Irish gift card business are still costing the company

The allegations relate to the company’s Irish subsidiary PFS Card Services and an investigation by Ireland’s central bank into potential risks of money laundering and terrorism financing, which were strongly denied by the company. However, it now faced a class action from Shine Lawyers over claims it misled shareholders in relation to the investigation and did not comply with disclosure obligations.

It has set aside $10.5 million to fight the claims and in November the central bank allowed the company to sign new customers and launch new programs within material growth restrictions.

Today, EML reported record revenue of $114.4 million for the December half-year, a rise of 20 per cent on the same period last year.

Its underlying EBITDA was $26.9 million, a fall of 4 per cent, which was attributed to costs associated with its investment in “additional resources” to meet the concerns of the Irish regulators.

During the acquisition of the Irish business, EML predicted synergies of $5 million and expects to find $3 million in savings by the end of this year.

“We have been working on several initiatives over the last 12 to 18 months which will now benefit the second half of 2022, including projects to increase out interest income, reduce scheme costs and introduce new fees on dormant balances,” EML said.

The company also said underlying overheads increased $48.5 million and the Irish business accounted for about two-thirds of that.

“EML operates in a highly regulated industry abd making these investments now positions the group to support continued rapid revenue growth in future periods,” the company said.

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It has confirmed its guidance for the full year of revenue of between $230 million and $250 million and underlying net profit of between $27 million and $34 million.

It said it was expecting to sign new customers and create new programs and that revenues would improve in the second half of 2022.

Shares in the company plunged by up to 10 per cent after the announcement.

 

 

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