After year in hell, EML plans radical move to new markets

Brisbane financial technology company EML said it had to fundamentally transform following one of its toughest ever years that included regulatory action in Ireland and the UK over anti-money laundering and terrorism financing breaches.

Nov 25, 2022, updated Nov 25, 2022
EML chief executive Emma Shand.

EML chief executive Emma Shand.

The company has foreshadowed major strategic moves, including “right sizing” the business and rationalising and modernising technology as well as evolving beyond its base of pre-paid card services.

Its plans led to a 13 per cent jump in its share price this morning. The company also announced the appointment of former BoQ boss David Liddy as chairman.

It has forecast it would strip about 15 per cent of its costs in a dramatic move into four new areas of business, but also said its performance in the first quarter of the financial year was already behind the same time last year.

Chairman Peter Martin said it was clear that uncertainty about EML’s prospects had led to a loss of confidence over the regulatory issues.

“Despite genuine efforts, there has been a lack of clarity about what this means for EML and how we are going to go about fixing the problems. I and the board take full responsibility and we’re determined to rectify the issues,” Martin told the company’s annual general meeting.

He said the company was “wearing significant costs” to fix the issues and the board was aware of the impact on investors because the share price was at its lowest in six years.

“We are determined to reverse the trend. Realistically it won’t happen overnight,” he said.

The company initiated a strategic review to untangle its mess in the UK and Ireland where its subsidiary, PFS Card Services, brought on the problems. The review has also set out a path for its future.

The company’s main business is in gift, incentive and reloadable cards and other payments systems including open banking and real-time payments.

New chief executive Emma Shand said the company would embark on a three-year transformation to keep up with a quickly evolving market.

“We will elevate our European and UK remediation efforts, embedding a strong risk aware culture,” she said.

“Repositioning for growth entails transitioning the bases and evolving from prepaid cards into an embedded finance leader in four sectors.”

She said it was expected that the remediation in the Irish business before December next year.

Shand also said there was significant opportunity to evolve the business into four areas: embedded payment solutions, human capital management (which was the way people were paid), retail and government “where there is a growing drive to replace cash and paper-based payments with digital alternatives”.

“Our serviceable market, which looks specifically at the regions we want to focus our growth opportunity, is $114 billion,” Shand said.

“Today, EML’s penetration of this serviceable market is 0.15 per cent. So, we have a great opportunity to grow our share of customer wallet and capture new business.

“These four sectors are strategically a great fit for EML.”

Shand said its performance in the first quarter of 2023 was “challenging”. Revenue was down $2.3 million and overheads were up 29 per cent.

It has forecast underlying EBITA of $26 million to $34 million.




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