Eml Payments Ltd. · ASX:EML
Eml Payments — Investor Day (November 2019)
71 slides from Eml Payments's investor day presentation, Nov 18, 2019
Slide 1: Investor Presentation – part 2
18 November 2019 ASX Market Announcements 20 Bridge Street SYDNEY NSW 2000 For personal use only Investor Presentation – part 2 EML PAYMENTS LIMITED (ASX: EML) (“EML”) is pleased to provide investors with this PART 2 of copies of the presentations made at EMLCON, EML’s 2nd annual investor day, held
Slide 2: For personal use only
For personal use only
Slide 3: Welcome back.
For personal use only Welcome back.
Slide 4: Clayton Howes keynote
For personal use only K E Y N O T E F I V E 2019 X CEO & Co-Founder Clayton Howes. F I V E K E Y N O T E
Slide 5: EMLCON presentation – Clayton Howes, MoneyMe
For personal use only Non deal Clayton Howes EMLCON roadshow presentation September November 2019 2019 PRIVATE & CONFIDENTIAL
Slide 6: About MoneyMe
About MoneyMe For personal use only We are a growing fintech delivering innovative credit products to a tech-savvy generation with evolving banking needs Clayton Howes $46m FY20F revenue ~ 5 min automated application process $1.1b+application value 55
Slide 7: Competitive landscape
Competitive landscape The evolution of the Australian consumer credit sector reflects changing consumer preferences, increasing regulatory For personal use only scrutiny and activity arising from the Banking Royal Commission, and the increasing role of technology Clayton Traditional Lenders Non-Bank
Slide 8: Why customers choose MoneyMe
Why customers choose MoneyMe For personal use only 1 2 3 4 Clayton Howes Flexible credit products 5-minute application Available 24/7 Convenience and trust Flexible products for a range of The user experience is simple, Apply anytime, anywhere with cash Personalised pricing with repayments customer
Slide 9: Our products are designed for the modern consumer
Our products are designed for the modern consumer Products for the modern consumer with risk-based lending across the loan book For personal use only Fixed Clayton Instalment Howes Loans The Virtual Credit Account CREDIT RANGE CREDIT RANGE $2,100 - $25,000 $1,000 - $10,000 TERM TERM Up to 3 years Re
Slide 10: For personal use only
For personal use only Howes Clayton
Slide 11: For personal use only
For personal use only Howes Clayton
Slide 12: Freestyle – the credit account for the new generation
Freestyle – the credit account for the new generation For personal use only Clayton Howes 61
Slide 13: Our diversified loan book
Our diversified loan book For personal use only 10% 10% 11% Construction, Building, and Architecture Other 35% Age 51+ 9% 10% NSW 42% Age 18 – 30 Admin/Office Support Clayton WA 19% Age 41 – 50 8% Howes Geographical Customer Employment Hospitality, Travel and Tourism Spread Age Spread 57% 8% Manufac
Slide 14: Proprietary credit decision technology
Proprietary credit decision technology1 For personal use only Clayton Howes 63
Slide 15: Marketing & customer acquisition
Marketing & customer acquisition For personal use only We focus on direct to consumer distribution, through search engine optimisation (SEO) and search engine marketing (SEM) to keep our customer acquisition cost low Clayton Digital channel Mix Customer Acquisition Cost Howes • Strong direct to cons
Slide 16: Growth in new products and markets
Growth in new products and markets Our technology enables rapid rollout of new products and expansion into new markets For personal use only New Products New Geographies Clayton Howes CREDIT RANGE $1,000 - $25,000 TERM 60 days INTEREST RATE RANGE Interest free UPFRONT FEES 4% plus GST (service fee)
Slide 17: Key strengths
Key strengths For personal use only Clayton Strong unit economics Large addressable market Strong growth Diversified loan portfolio Howes Attractive loan unit economics Consumer credit originated by non-bank Strong track record of revenue growth (42% Diverse range of customers across Australia benef
Slide 18: @ EMLCON
For personal use only Clayton Howes @ EMLCON 67
Slide 19: For personal use only
For personal use only
Slide 20: Tom Cregan.
For personal use only Tom Cregan. Managing Director & Group CEO
Slide 21: Acquisition of Prepaid Financial Services and Equity Raising
Acquisition of For personal use only Prepaid Financial Tom Services and Equity Cregan Raising Investor Presentation 11 November 2019 –1 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 22: Important notice and disclaimer
Important notice and disclaimer This investor presentation (Presentation) is dated 11 November 2019 and has been prepared by EML Payments Limited (ABN 93 104 757 904) (EML or the Company). By attending an investor presentation or briefing, or accepting, accessing or reviewing this Presentation, you
Slide 23: Important notice and disclaimer
Important notice and disclaimer This Presentation is for information purposes only and is not a prospectus, product disclosure statement or other offering document under Australian law or any other law (and will not be lodged with the Australian Securities and Investments Commission (ASIC) or any ot
Slide 24: Important notice and disclaimer
Important notice and disclaimer Past performance Past performance, including past share price performance of EML and pro forma financial information given in this Presentation, is given for illustrative purposes only and should not be relied upon as (and is not) an For personal use only indication o
Slide 25: Agenda
For personal use only 01 Appendices Executive Summary A Tom 02 Overview of PFS Key Risks Cregan B 03 International Offer Restrictions Acquisition Rationale 04 EML Financial Update and Acquisition Impact 05 Acquisition Funding –5 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 26: Executive Summary
Executive Summary ‒ EML Payments Limited (EML) has entered into a binding agreement to acquire 100% of Prepaid Financial Services (Ireland) Limited (PFS) for an enterprise For personal use only value of £226 million (A$423 million) (Upfront Enterprise Value), plus an earn-out component of up to £55m
Slide 27: Executive Summary
Executive Summary ‒ Upfront Enterprise Value of £226 million (A$423 million) comprising £41 million (A$77 million) in EML shares to the vendors2, issued at A$3.55 per share, and £185 For personal use only million (A$346 million) cash Acquisition Consideration1 ‒ Earn-out Consideration comprising up
Slide 28: Overview of PFS
Overview of PFS For personal use only Tom Cregan –8 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 29: PFS at a Glance
Overview of PFS PFS at a Glance For personal use only PFS’s prepaid payments and digital banking capabilities, regulatory GDV (£bn) Electronic Money Institution status in the UK and Europe alongside 46% flexible software enables financial institutions and non-financial CY16 – CY19E GDV CAGR2 institu
Slide 30: Key Investment Highlights
Overview of PFS Key Investment Highlights For personal use only Tom Leading e-Money company and Banking- as-a-Service provider Attractive client base Deep-rooted client relationships including blue-chip BaaS technology embeds sticky, long term relationships Cregan Pan-European footprint with strong
Slide 31: Solution Suite
Overview of PFS Solution Suite Digital Banking & Government, Local Corporate Solutions Multi-Currency Travel Instant Issue & GPR For personal use only Current Accounts Authority & NGO & Incentive Schemes Cards 43% of GDV 42% of GDV 7% of GDV 6% of GDV 1% of GDV Issuance to unbanked and Customised e-
Slide 32: Awards / Customers
Overview of PFS Awards / Customers PFS has received numerous industry awards, which recognise product leadership and growth, and has an attractive and international client base For personal use only Awards Key Customers Tom Cregan Recent Client Wins – 12 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED
Slide 33: Highly Experienced Management Team
Overview of PFS Highly Experienced Management Team For personal use only Noel Moran Lee Britton Tom Founder and Chief Executive Officer Chief Commercial Officer Cregan Noel has spent his career in Financial Services. He worked with two of the main Before joining Noel at PFS in 2011 Lee held several
Slide 34: Financial Performance
Overview of PFS Financial Performance For personal use only 12 months to 12 months to 12 months to CY2018A Net Revenue by Geography1 31 December 31 December 31 December 20171 20181 20191,2 Actual Actual Forecast GDV growth from in place and new programmes 12% France Tom Gross debit volume (£bn) 1.2
Slide 35: Acquisition Rationale
Acquisition Rationale For personal use only Tom Cregan Title line 1 Title line 2 Presentation subtitle – 15 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 36: Strategic Rationale
Acquisition Rationale Strategic Rationale For personal use only Tom Cregan CUSTOMER FINANCIALLY LEADING GLOBAL BROADENS DIVERSIFICATION & OPERATING ATTRACTIVE MANAGEMENT TEAM PLAYER SOLUTION SUITE REVENUE MIX LEVERAGE COMBINED GROUP ALIGNMENT • Leader: Post-Acquisition • New Solutions: Adds • Divers
Slide 37: Expanded Solutions
Acquisition Rationale Expanded Solutions For personal use only • Adds Digital Banking and Multi-currency offerings to EML’s solution suite Reloadable • Ability to cross-sell PFS’s solutions into EML’s global footprint (GPR / Payout Cards) Tom • PFS deepens EML’s presence in reloadable cards Non-Relo
Slide 38: Expanded Capabilities
Acquisition Rationale Expanded Capabilities For personal use only Licences AFSL & CBOI CBOI & FCA Fully Scale UK and European Footprint Tom 26+ currencies supported, with new currency offerings including HKD, Rand, Cregan Currencies 15 26 Shekel, Swiss Franc, the Yen and more Provides entry into 8 n
Slide 39: Deepening of EML's European Footprint
Acquisition Rationale Deepening of EML’s European Footprint Geography Mix by Net Revenue For personal use only EML Standalone (FY19) Adds Cash Loading Locations 100k Tom across Europe 30% Cregan 50% 20% EML + PFS overlap EML + PFS (FY19) Programmes PFS additions Live in 16 24 30% Countries 58% 12%
Slide 40: EML Financial Update and Acquisition Impact
EML Financial Update and For personal use only Acquisition Impact Tom Cregan – 20 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 41: Q1 FY20 Financials Update
EML Financial Update and Acquisition Impact Q1 FY20 Financials Update For personal use only Group Gross Debit Volume (GDV) Group Sources of Revenue Tom 2% 7% 8% Cregan 22% A$3.21bn A$23.2m up 76% up 35% on pcp Gift & Incentive on pcp Establishment Revenue General Purpose Reloadable Recurring Operati
Slide 42: Q1 FY20 Financials Update
EML Financial Update and Acquisition Impact Q1 FY20 Financials Update For personal use only Gift & Incentive General Purpose Reloadable (GPR) Virtual Account Numbers (VANS) GDV Revenue * GDV Revenue * GDV Revenue * A$223m A$13.6m A$715m A$6.4m A$2,276m A$3.1m $139m (Q1 FY19) $9.3m (Q1 FY19) $709m (Q
Slide 43: FY2020 Financial Guidance (excluding PFS)
EML Financial Update and Acquisition Impact FY2020 - Financial Guidance (excluding Prepaid Financial Services) EML expects underlying EBITDA1,2 Assumptions: 04 For personal use only to be in a range of Seasonal gift card GDV growth in line with 01 A$38.5m-A$42.5m Underlying EBITDA now excludes acqui
Slide 44: FY2020 Financial Guidance (Prepaid Financial Services)
EML Financial Update and Acquisition Impact FY2020 - Financial Guidance (Prepaid Financial Services) Assumptions: 04 For personal use only 01 Staff costs are forecast to remain the largest 12 months to 30 June GDV is expected to increase to A$5.3bn driven component of operating expenses at ~24% Tom
Slide 45: Unaudited Pro Forma Combined Statements
EML Financial Update and Acquisition Impact Unaudited Pro Forma Combined Statements as if the Acquisition had been completed on 1 July, 2018 Aggregated5 For personal use only A$m, June year end PFS FY20 forecasts are based on FY2019 FY2020 FY20194 FY20204 FY2019 FY2020 EML management estimates GDV $
Slide 46: Unaudited Pro Forma Balance Sheet
EML Financial Update and Acquisition Impact Unaudited Pro Forma Balance Sheet For personal use only FYE 30 June (A$m)1 EML PFS Transaction Pro Forma 30 June 2019 30 June 2019 Adjustments2,3 30 June 2019 Cash and cash equivalents 33.1 15.8 (17.0) 31.9 Tom Contract asset Receivable from financial inst
Slide 47: Acquisition Funding
Acquisition Funding For personal use only Tom Cregan Title line 1 Title line 2 Presentation subtitle – 27 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 48: Acquisition Funding and Terms
Acquisition Funding Acquisition Funding and Terms For personal use only ‒ Upfront Enterprise Value of £226 million (A$423 million) comprising £41 million (A$77 million) in EML shares to the vendors2, issued at A$3.55 per share, and £182 million (A$340 million) cash Acquisition ‒ Earn-out Considerati
Slide 49: Sources and Uses
Acquisition Funding Sources and Uses For personal use only Sources of Funds A$m Uses of Funds A$m Tom Scrip issued to PFS vendors $77 PFS Upfront Enterprise Value $423 Cregan Placement and Entitlement Offer $250 Repayment of current EML debt $15 New debt facility drawn $130 Fees & expenses $17 EML c
Slide 50: Overview of the Placement and Entitlement Offer
Acquisition Funding Overview of the Placement and Entitlement Offer For personal use only ‒ Fully underwritten institutional placement and fully underwritten 1 for 5 pro-rata, accelerated, non-renounceable entitlement offer to raise approximately A$250 million (the Offer Structure Offer) ‒ Approxima
Slide 51: Placement and Entitlement Offer Timetable
Acquisition Funding Placement and Entitlement Offer Timetable For personal use only Offer Structure Date Trading halt and announcement of the Offer Monday, 11 November 2019 Institutional Entitlement Offer and Placement opens Monday, 11 November 2019 Tom Institutional Entitlement Offer and Placement
Slide 52: Appendix A – Key Risks
Appendix A – Key Risks For personal use only Tom Cregan Title line 1 Title line 2 Presentation subtitle – 32 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 53: Key Risks
Appendix A – Key Risks Key Risks For personal use only This section discusses some of the key risks associated with any investment in EML, which may affect the value of EML shares. The risks set out below are not listed in order of importance and do not constitute an exhaustive list of all risks inv
Slide 54: Key Risks – Acquisition Risks
Appendix A – Key Risks Key Risks For personal use only Acquisition Risks Topic Summary Following completion of the Acquisition, EML will be responsible for any outstanding liabilities that PFS has incurred prior to the Acquisition, including any liabilities that were not identified during EML’s due
Slide 55: Key Risks – Acquisition Risks
Appendix A – Key Risks Key Risks For personal use only Acquisition Risks Topic Summary Completion of the Acquisition is conditional on certain matters, including certain approvals that are required from the United Kingdom’s Financial Conduct Authority and the Central Bank Tom of Ireland. There is a
Slide 56: Key Risks – Acquisition Risks
Appendix A – Key Risks Key Risks For personal use only Acquisition Risks Topic Summary The Payment Systems Regulator (“PSR”) notified PFS in February 2018 that it had commenced an investigation under the Competition Act 1998 into anti-competitive conduct in relation to a minor part of its’ business.
Slide 57: Key Risks – Business Risks
Appendix A – Key Risks Key Risks For personal use only Business Risks Topic Summary Tom EML’s customers are also EML’s customers are also subject to a range of legal and regulatory regimes in the jurisdictions in which they operate, and such laws may be evolving. For example, the regulation of sport
Slide 58: Key Risks – Business Risks
Appendix A – Key Risks Key Risks For personal use only Business Risks Topic Summary EML has in part historically grown its business by acquisition (including the recent acquisitions of Flex-e-Card and PerfectCard), and growth through acquisition is likely to remain an important part of EML’s strateg
Slide 59: Key Risks – Business Risks
Appendix A – Key Risks Key Risks For personal use only Business Risks Topic Summary Tom EML relies on the effective Technology is the key enabler of EML's services. EML and its clients are dependent on the effective performance, reliability and availability of EML's technology platforms, software, t
Slide 60: Key Risks – Business Risks
Appendix A – Key Risks Key Risks For personal use only Business Risks Topic Summary EML may be involved in EML may in the ordinary course of business become involved in litigation and disputes, for example with its suppliers or clients. Any such litigation or dispute could involve significant econom
Slide 61: Key Risks – Business Risks
Appendix A – Key Risks Key Risks For personal use only Business Risks Topic Summary EML is exposed to changes in general economic EML’s customers and the end users of EML’s products (including customers of EML’s customers) may be impacted by changes in general economic conditions, such as movements
Slide 62: Key Risks – General Investment Risks
Appendix A – Key Risks Key Risks For personal use only General Investment Risks Topic Summary There are general risks associated with investments in equity capital such as EML shares. The trading price of EML shares may fluctuate with movements in equity capital markets in Australia and internationa
Slide 63: Key Risks – General Investment Risks
Appendix A – Key Risks Key Risks For personal use only General Investment Risks Topic Summary Dividends may not be paid The payment of dividends by EML is determined by the Board from time to time at its discretion, depending on the profitability and cash flow of EML's business. While EML does not h
Slide 64: Appendix B – International Offer Restrictions
Appendix B – International For personal use only Offer Restrictions Tom Cregan Title line 1 Title line 2 Presentation subtitle – 44 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 65: International Offer Restrictions
Appendix B – International Offer Restrictions International Offer Restrictions This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, For per
Slide 66: International Offer Restrictions
Appendix B – International Offer Restrictions International Offer Restrictions The following is a summary of the statutory rights of rescission or to damages, or both, available to purchasers in Ontario. In Ontario, every purchaser of the New Shares purchased pursuant to this document (other For per
Slide 67: International Offer Restrictions
Appendix B – International Offer Restrictions International Offer Restrictions Hong Kong For personal use only WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it b
Slide 68: International Offer Restrictions
Appendix B – International Offer Restrictions International Offer Restrictions Singapore For personal use only This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore.
Slide 69: International Offer Restrictions
Appendix B – International Offer Restrictions International Offer Restrictions United Kingdom For personal use only Neither this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within th
Slide 70: For personal use only
For personal use only
Slide 71: Thank you.
For personal use only Thank you. Now you’ve experienced what awesomeness is, let’s grab a drink and have chat.