EML, which came under the jurisdiction of the Irish central bank when it moved its operations out of the United Kingdom during Brexit, has been put under growth restrictions until the end of calendar year 2023, when it plans to satisfy the regulator with improved governance.
The interim results pointed to other risks, including a longer sales cycle in a tough environment for technology companies, while audit costs and professional fees were sharply higher as payments companies face tighter regulation.
“It has been a tough set of numbers in some respects, but probably not surprising,” Ms Shand said.
“With the change in leadership, I have taken the opportunity to have a look at balance sheet and business units, as I said I would… [and] our priority is to elevate the remediation program in both the UK and Ireland.”
EML shares fell 8 per cent on Wednesday morning to 59¢ as the numbers missed expectations; the stock is down 76 per cent over the past year.
“EML is still firmly in turnaround phase and has a long way to go, in our view, as we await evidence of improvement,” said RBC Capital Markets analyst Garry Sherriff.
Regulatory woes
The share wipeout and regulatory woes triggered the unplanned exit of former chief executive Tom Cregan last year, while chairman Peter Martin’s re-election was vetoed by investors at last November’s annual general meeting.
Mr Martin was said to have rebuffed takeover advances from Canada’s Nuvei Corp at $2.20 – when EML stock was trading at $1.20 – and last November, private equity giant Bain was believed to be sniffing around at $5 when the stock traded at $3.60.
EML has also faced fraud in its open banking acquisition Sentenial and additional regulatory imposts in the United Kingdom.
Ms Shand said the company was restructuring management to “embed a strong risk aware culture” while making “solid progress” on remediation.
A positive for the company was growing open banking volumes, driving underlying gross profit in that business up 45 per cent to $9.1 million, as it worked to provide alternatives to card payments under a data sharing regime in Europe.
EML also said it wanted to become a leader in “embedded finance” to “empower our customers to spend less time on payments and focus more time on their core business”.
