EML’s shares fell 39 percent as the owner of Prepaid Financial shook again


EML, the Australian owner of Ireland’s Prepaid Financial Services, has suffered a recent stock price plunge after issuing a profit warning.

Shares of the Australian Stock Exchange-listed payments company have fallen nearly 39 percent in a single day – wiping nearly A$400 million off its valuation in the latest string of corporate upsets since its Irish takeover deal.

Shares fell after EML, led by CEO Tom Cregan, released fresh earnings forecasts during a presentation to investors at a conference organized by Goldman Sachs.

The latest hit comes just weeks after private equity giant Bain Capital backed off a potential takeover of EML. It also follows a litany of other bad news for the Australian company, largely attributed to Ireland’s acquisition of Prepaid Financial Services (PFS).

Most notably in May 2021, EML said that Prepaid Card Services, part of the former PFS, was the subject of an investigation by the Central Bank of Ireland into risk and control frameworks and governance in relation to anti-money laundering and countering terrorist financing measures.

News of the probe triggered an Aus$800 million fall in the value of EML’s shares and has resulted in the company piling up €7 million in legal and other costs before the issues are fully resolved, with EML in its Presentation said that it is expected to close by June 30 this year.

Amid fallout losses in EML shares after Irish regulatory news also prompted some shareholders to take legal action against the company.

EML’s most recent trading update did not include any major new regulatory developments, but suggests that a now more cautious approach is one of the reasons weaker numbers are expected.

“Operational execution issues in Europe and a more risk-averse approach to new programs impacted new program launches. We now expect further challenges into the fourth quarter, which has led to a reduction in the guidance range,” the company said.

Shares in Sydney fell nearly 39 percent on Tuesday after the trading update downgraded forecasts for most financial targets for this year, also on the back of higher costs. EML lowered its EBITDA guidance by 8% to Aus$52-55 million and cut expected operating cash flow by 30%.

Higher costs as a result of strengthening management after the Irish and other regulatory issues are also a factor.

EML’s other Irish purchase, Kildare-based fintech Sentenial, is proving to be a much more positive move, helping to boost the group’s opening banking revenue by 50 percent, the investor presentation shows. EML’s shares fell 39 percent as the owner of Prepaid Financial shook again

Fry Electronics Team

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