Eml Payments Ltd. · ASX:EML
Eml Payments — Merger or Acquisition (November 2019)
49 slides from Eml Payments's merger presentation, Nov 11, 2019
Slide 1: Acquisition of Prepaid Financial Services and Equity Raising
Acquisition of For personal use only Prepaid Financial Services and Equity Raising Investor Presentation 11 November 2019 –1 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: 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 3: 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 4: 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 5: Agenda
For personal use only 01 Appendices Executive Summary A 02 Key Risks Overview of PFS 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 6: 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 7: 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 8: Overview of PFS
Overview of PFS For personal use only –8 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 9: 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 10: Key Investment Highlights
Overview of PFS Key Investment Highlights For personal use only Leading e-Money company and Banking- Attractive client base BaaS technology embeds sticky, long as-a-Service provider Deep-rooted client relationships including blue-chip term relationships Pan-European footprint with strong underlying
Slide 11: 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 12: 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 Recent Client Wins – 12 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 13: Highly Experienced Management Team
Overview of PFS Highly Experienced Management Team For personal use only Noel Moran Lee Britton Founder and Chief Executive Officer Chief Commercial Officer 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 senior mana
Slide 14: 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 Gross debit volume UK 1.2 2.0 2.5
Slide 15: Acquisition Rationale
Acquisition Rationale For personal use only 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 16: Strategic Rationale
Acquisition Rationale Strategic Rationale For personal use only 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 • Diversification:
Slide 17: Expanded Solutions
Acquisition Rationale Expanded Solutions For personal use only • Adds Digital Banking and Multi-currency offerings to EML’s solution suite Reloadable (GPR / Payout Cards) • Ability to cross-sell PFS’s solutions into EML’s global footprint • PFS deepens EML’s presence in reloadable cards Non-Reloadab
Slide 18: Expanded Capabilities
Acquisition Rationale Expanded Capabilities For personal use only Licences AFSL & CBOI CBOI & FCA Fully Scale UK and European Footprint 26+ currencies supported, with new currency offerings including HKD, Rand, Currencies 15 26 Shekel, Swiss Franc, the Yen and more Provides entry into 8 new markets,
Slide 19: 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 30% across Europe 50% 20% EML + PFS overlap EML + PFS (FY19) Programmes PFS additions Live in 1624 30% Countries 58% 12% America Aust
Slide 20: EML Financial Update and Acquisition Impact
EML Financial Update and For personal use only Acquisition Impact – 20 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 21: 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 2% 7% 8% 22% A$3.21bn A$23.2m up 76% up 35% on pcp Gift & Incentive on pcp Establishment Revenue General Purpose Reloadable Recurring Operating Revenue
Slide 22: 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 23: FY2020 Financial Guidance (excluding PFS)
EML Financial Update and Acquisition Impact FY2020 - Financial Guidance (excluding Prepaid Financial Services) EML expects underlying EBITDA1,2 Assumptions: For personal use only 04 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 24: 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$5.3bn driven component of operating expenses at ~24% 2020
Slide 25: Unaudited Pro Forma Combined Statements
EML Financial Update and Acquisition Impact Unaudited Pro Forma Combined Statements as if the Acquisition had been completed on 1 July, 2018 Aggregated5 For personal use only A$m, June year end PFS FY20 forecasts are based on FY2019 FY2020 FY20194 FY20204 FY2019 FY2020 EML management estimates GDV $
Slide 26: 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 Contract asset 31.8 - - 31.8 Receivable from fina
Slide 27: Acquisition Funding
Acquisition Funding For personal use only 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 28: 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$340 million) cash Acquisition ‒ Earn-out Considerati
Slide 29: Sources and Uses
Acquisition Funding Sources and Uses For personal use only Sources of Funds A$m Uses of Funds A$m Scrip issued to PFS vendors $77 PFS Upfront Enterprise Value $423 Placement and Entitlement Offer $250 Repayment of current EML debt $15 New debt facility drawn $130 Fees & expenses $17 EML cash on bala
Slide 30: 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 31: 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 Institutional Entitlement Offer and Placement clos
Slide 32: A – Key Risks
Appendix A – Key Risks For personal use only 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 33: 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 34: 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 35: 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 of Ireland. There is a risk
Slide 36: Key Risks: Acquisition and Business 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 37: Key Risks: Business Risks
Appendix A – Key Risks Key Risks For personal use only Business Risks Topic Summary 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 sports su
Slide 38: 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 39: Key Risks: Business Risks
Appendix A – Key Risks Key Risks For personal use only Business Risks Topic Summary 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, third
Slide 40: Key Risks: Business Risks
Appendix A – Key Risks Key Risks For personal use only Business Risks Topic Summary 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 EML may be involved in econom
Slide 41: 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 42: 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 43: Key Risks: General Investment Risks
Appendix A – Key Risks Key Risks For personal use only General Investment Risks Topic Summary 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 Dividends may not be paid h
Slide 44: B – International Offer Restrictions
Appendix B – International For personal use only Offer Restrictions 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 45: 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 46: 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 47: 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 48: 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 49: 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