A Game Changer, page-9

your concerns are all valid pat.

I don't know why the call or the EMLcon preso wasn't released to the market, but the AGM was available for all to attend. I attended all 3 (obviously) and can confirm for your piece of mind that there wasn't any ground breaking info available that creates an advantage to any of us. in fact, EMLcon was mostly fluff (but the good kind of fluff ) and mostly the AGM addressed all of your concerns.

Tom and the chairman were asked exactly your concerns.

with any large acquisition there are risks of integration, board provided comfort that EML has a long history of integrating acquired companies and they emphasized the length of time they take before buying a company. they spoke about the importance of culture. this is definitely not fluff talk and I have spoken to many EML staff from acquired businesses and their excitement and passion is clearly evident !!

the board confirmed that dividend was about to be paid in the absence of an acquisition. with the level of debt in EML now all free cashflow should be used to pay that down. I'm a big advocate for a dividend and yet I totally agree here.

GPR weakness was also addressed. Tom said they weren't happy with the performance of GPR division although partly impacted by Luluroe continued free fall in volumes and a prior year large card order in Q1. they expect new programs launched to improve GPR growth in 2nd half of year.

Tom did highlight that gaming programs in Europe and US will provide many year of runway for growth but he also emphasized that he never wanted EML to be known as a gaming company. in fact he's quite happy that gaming revenue will decline to low single digit percent following PFS deal. the market is obsessed with gaming upside but Tom explained the regulatory risks and perception in gaming generally as a reason why.

he highlighted the diversified nature of EML programs and how different divisions of the business at each particular year can drive growth and compensate for others. this is the beauty of the EML business !! this year a classic example is Gift and Incentives and VANS taking off while GPR is slow. next year (2021FY) GPR should do well and potentially all divisions will be firing again.

the PFS acquisition immediately fixes the GPR division of EML. cash conversion will be much better and PFS growth rates are astounding and with recent large customer wins (Avios has 8 million members !!) we can expect accelerated growth for PFS next 3 years and which is why CEO and COO have a large earnout.

arguably, PFS is a better quality business than EML, and is reflective in the multiple EML paid.

Even if PFS ceo left after a year (I expect that to happen) there will be no relationship issues at risk as the COO apparently is highly involved.

the $20 million escrow relates to some possible future indemnity from some past issues highlighted in risk section of preso. Tom and the board said they did a lot of due diligence there and you would think that their EML share holding is enough reason to make sure no more skeletons in closet

what you haven't highlighted is footnote number 2 on page 23 of the acquisition preso from Monday....... something big is coming soon

happy whinging