I received an email from Qantas Money yesterday;

We are writing to advise you of upcoming changes to Qantas Travel Money. The below changes are effective from 27 February 2024 and are summarised as follows:  

• the Issuer will be changing from Heritage and People's Choice Limited trading as Heritage Bank (ABN 11 087 651 125, AFSL 244310) (HPC) to EML Payment Solutions Limited (ABN 30 131 436 532, AFSL 404131) (EML); 
• the Terms and Conditions for your Card will be moved to EML (called a novation). This means that your contract with HPC will end and be replaced with a contract between you and EML (New Terms and Conditions); and ... blah blah blah etc.

An additional one customer is nothing big - even though QFF as linked through Qantas Money is one of the largest rewards programs in the whole country - and it got me thinking. So I googled EML's ABN. Fascinating to see it pop up in a long list of different company websites because the ABN is listed in their T&C aka the fine print. Note to self, an interesting way of gathering data.

Hooray! EML are exiting its long standing problem child subsidiary in Ireland, PCSIL.

A seemingly originally rash decision to purchase (as covid started if my memory is correct) that has been an epic journey thats seen; years of ongoing augments with the Irish regulator, the booting of founding CEO Tom, and share price depreciation from ~$4 to ~$0.40!! All distracting from a good little ticket clipping payments enabler.

I'm excited for the next 12 months at EML, where value creation will improve their share price.

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02763491-2A1500267

EML released their AGM vote results today. Very spicy.

EML received their first strike on their remuneration report. Check out the link if you don't know what that is. I think the board ... I really hope the board listens.

One director got the boot, 49.5% for and 51.5% for the boot (aka against). Not sure what he did wrong, but I'm not against a refresh.

Resolution 4, passed, only just. Sign-on rights or short term incentives (STI) for CEO Emma. 52% for, 47% against.

Resolution 5 passed strongly, Long Term Performance Incentives (LTI) for Emma, 74% for, 25 against.

There's a message in that for you Emma.

EML announced an update to their ongoing CBI issue today (CBI has issues with EML's Irish GPR brand PCSIL).

The restrictions will "continue to be limited to growth of 10% above annualised baseline volumes between January to September 2022. This restriction will apply to PCSIL’s total payment volumes for a further period of twelve months until December 2023. This restriction only applies to EML’s European General Purpose Reloadable programs under the PCSIL eMoney institution license".

Here is my thoughts.

When I looked at the annual report. Of the three business segments (GPR, G&I, DP), GPR across all regions accounts for 15% of total revenues, so sorta meaningful, but also not. It is also the lowest margin at ~60%, with the other two (G&I and DP) at ~80%.

When I looked at the revenue by region, the report has disaggregated revenue from contracts with customers by geography, with UK/Europe region being the biggest region, and providing 66% of revenue by region.

So growth is limited in the lowest margin revenue segment of the largest revenue region.

EML also announced recently that the UK regulator (FCA) is looking into the EML GPR brand in the UK (PFS). The impact, according to the meeting transcript, will be $5mil, or ~6% of total revenue, which would be about half of the total GPR revenue of ~$12mil.

So all the issues are with GPR, which is where EML started and how many investors view 'what the company does".

But the biggest future growth opportunity will come from the Digital Payments (DP) segment, not the GPR segment and this segment is not 'speed limited' in UK/Europe region.

I hold in RL. And I am a buyer at these prices ~$0.50.

EML has released the FY22 result. I am happy with them, however note I am an EML bull, look for positive bias, and remain a long term (bag) holder.

I found it odd , and it triggered me that they referred to the share buy-back as a 'capital return' to share holders... classic attempt on spin, almost fakenews!

Also, saying it will be opportunity based over the next 12 months... yes the price can always go lower, but I believe theres a pretty strong value proposition in the price currently so why wait the next 12 months as the new CEO 'rights the ship', but what would I know as a retail holder vs the board! (/sarcasm).

And $20mil, at an average price of $1, is 20mil shares on a registery of 373mil shares is not really a meaningful value improvement for shareholders.

A 1%er I know. I guess its a flag for me to pay close attention to Emma Shand and the words she uses. If i hear continuing odd bs like this, I need to reconsider my thesis.

There are three reasons I’m buying EML today. I am not a complex investor.

1.      I first bough EML in August 2018 for ~$1.77. EML has continued to grow revenue (i.e. value) meaningfully since then and it now back at the price (not value, price) I paid in 2018. Bargain.

2.      EML is caught up in the lot of bad news, but its underlying industry will continue to grow, and remains a critical pick and shovel to businesses. “Mr Market” is short sighted on a revenue downgrade given the macro conditions (resolved CBI issue, Tech shares selloff, “inflation”, post-covid world, Ukraine’s impact on the global economy (not the war part)).

 3.      EML is a buy and hold thesis for me. This dip is a great opportunity.  The core thesis remains intact, so top up or “dollar cost average” it is.