From AFR:
EML says it is resolving Irish money-laundering concernsJames EyersSenior ReporterUpdated Aug 17, 2021 – 6.00pm,first published at 5.59pmSaveShareKEY POINTS
Revenue ($m): 192.2, up 59pc from year-earlier 121EBITDA ($m): 42.2 v 32.5Net loss ($m): 28.7 v 7.1EML Payments said a remediation plan offered to the Central Bank of Ireland to allay its concerns about anti-money laundering lapses will be “substantially” completed by the end of this calendar year with all issues to be resolved by the end of March 2022.EML provided an update to the ongoing CBI investigation, which cratered the EML share price when it was revealed in May, in its full-year results that were released after the market closed on Tuesday.Ireland’s Central Bank has raised concerns about EML’s subsidiary, which had to move to Ireland due to Brexit. APRevenue was supported by customers leaving more unspent funds on EML gift cards as COVID-19 lockdowns shuttered shopping centres around the world, which helped to offset depressed spending at physical retail outlets during the pandemic.
“The underlying result is good and remediation is underway. We are in active consultation with the [Irish] regulator. We are working hard to get that all resolved and the sooner we do, the sooner we get back to business,” said EML CEO Tom Cregan.EML said the costs of the Irish investigation, including remediation and advisory expenses, was $11.4 million. The company had said in a trading update on June 7 the “immediate one-off costs” relating to the case would be less than $2 million this financial year. “EML has responded in significant detail to the CBI on all matters and has provided the CBI with a detailed remediation plan and is actively engaged with the CBI in the implementation of this plan,” EML said in its results release.EML purchased Prepaid Financial Services (PFS) in Ireland in late 2019 for $425 million as part of a global expansion. Between January 1 and March 31 this year, around 27 per cent of EML’s global consolidated revenue came from its Irish business operations after it shifted its non-UK business out of Britain after Brexit.
It is understood the CBI’s focus has been on the number and background of PFS board directors, the board’s governance methodology and processes, and the controls and responsibilities of compliance leadership. CBI has not uncovered evidence of any actual money laundering or terrorism financing using EML products but wants to lift governance standards to prevent that occurring. EML said underlying EBITDA, removing the costs of the CBI investigation, was 65 per cent higher at $53.5 million for the year to June 30, and up 30 per cent including the one-off costs.
EML said earnings from “breakage”, or the unused amount left by consumers on re-loadable gift cards, rose to $24 million from $17 million a year earlier, or 12 per cent of overall revenue of $194 million, which was up 60 per cent over the year. Revenue for the full-year of 2022 is expected to be between $220 million and $255 million while underlying EBITDA in 2022 is expected to fall between $58 million and $65 million. The Brisbane-based firm operates in 28 countries, issuing digital gift cards, salary packaging and sports betting services. Its shares were down 1.4 per cent to $3.54 on Tuesday after 3 per cent falls on Monday ahead of the result. They’re still down 30 per cent on the price before the Irish action.
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