EML Payments Limited (EML) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the EML Payments Limited Fiscal Year 2021 Results Investor Presentation. [Operator Instructions] I would now like to hand the conference over to Mr. Tom Cregan, Managing Director and CEO. Please go ahead.

Thank you very much. Good morning, and welcome to the EML Payments Limited results call for the 2021 financial year. I'm Tom Cregan, Managing Director of EML Payments. And I'm joined today by Rob Shore, our Chief Financial Officer. On today's call, we will reverse the order that we've historically used and have Rob lead off with our financial results and FY '22 guidance before I go through a business update, and then we can open it up for questions. The 2020 financial year, going back 1 year, was a strong year for us before the impacts of COVID in the fourth quarter took the wind out of our sails in terms of our statutory results, albeit we still grew EBITDA in excess of 30%. The 2021 financial year, unfortunately, had some parallels to that despite continuing impacts from COVID-19 in different parts of our business, particularly in the Gift & Incentive segment with most shopping malls closed in Europe and North America from really the middle of December onwards until mid-April and into late May and into June in some cases. On an underlying basis, the company met or exceeded the guidance that we had in markets, including a GDV of $19.7 billion, an increase of 42% on the prior year. And at the top end of our guidance range, a beat on revenue of $194.2 million versus a guidance range of $180 million to $190 million; underlying EBITDA of $53.5 million at the top end of the guidance range of $50 million to $54 million; and underlying operating cash flows of $46.7 million or a conversion rate of 87% also in the top half of our guidance range. In an operational sense, we had a number of highlights, which we'll discuss in more detail later in the deck. And in a strategic sense, we launched Project Accelerator, and we'll talk about those outcomes later in the deck as well. But the shareholders would know on May 13, May 14, we received notification from the Central Bank of Ireland in what they referred to as a minded to letter in relation to concerns that they had with respect to regulatory and compliance practices. I mean, as a leader in this industry, we take our regulatory and compliance obligations extremely seriously. And indeed, we believe that it's our commitment and our investment in that area that has kind of established the foundation for growth that we've enjoyed in the last 9 years. Our commitment to best practice in that area is unwavering. That's what we've communicated to the Central Bank, and we're actively engaged with the Central Bank on a remediation program, which we we'll be looking to substantively complete by the end of the 2021 calendar year, with remaining items to be completed by the end of March 2021. It's important to note that in the ensuing audit of our European business, there's been no evidence brought to our extension of money laundering or counterterrorism finance activities being evident nor any failings with respect to capital adequacy, solvency or the safeguarding of consumer funds. The financial impact of our response to the minded to letter in terms of legal advice, advisory costs and the potential for an enforcement action is $11.4 million, which reduced our statutory or reported EBITDA to $42.2 million, also an increase of 30% up on the prior year, but a lot less than the 60% it would be on an underlying basis. We're not splitting out. I'm sure we'll get a question on this today, but we're not splitting out that $11.4 million into its constituent parts, particularly in relation to what we've -- what we are looking for in terms of what we've accrued or what we budgeted for in terms of potential fines. You would understand that would make no sense for us to put that in the marketplace. But it is -- our assessment of that is within the $11.4 million. We understand that these types of events create uncertainty for the company, they create uncertainty for shareholders. What we'll endeavor to do today is to provide you with as much information as possible to help address that. What we cannot do and we haven't done since May is get into a running commentary on our dialogue with the Central Bank of Ireland or to speculate on a certain outcome. Our focus is on the remediation project, and we're well underway with this, as you'd expect, given, as I said, the data that I mentioned before. I'd also make the point that whilst these events are disruptive to the business, we are approaching it from the perspective that the changes that we put into place will be beneficial and will allow us to continue to be a leader in the prepaid space in Europe in the years to come. And with that, I'll hand over to Rob, and he can take us through the financials.

Thanks, Tom, and good morning, everyone. I'm going to take you through the financial results review. So we're starting on Slide 7 of the pack. As Tom outlined today, we reported a really strong set of results for 2021 financial year, delivering a record for all key measures, including GDV, revenue, EBITDA and NPATA. I'll talk more about our balance sheet and cash flow shortly, but we've also reported strong cash flow numbers. We've got underlying cash inflows of $46.7 million at the operating level or an 87% conversion of EBITDA, underlying EBITDA. We've used the same operating measures for some time now on all key operating measures. These are record results. We've achieved this strong result despite some challenges, including the regulatory matter involving the Central Bank of Ireland and our PFS Card Services business in Ireland. Remediation, advisory and other costs relating to this matter have resulted in a material impact to the group in the year. So to assist investors understand the operating performance of the company, we've presented both the underlying measure, which excludes $11.4 million of expenses relating to this matter, alongside to our more usual EBITDA definition we've presented for a number of years. On the preferred EBITDA measure, which includes the cost of the CBI matter, where it was $42.2 million, up for 30% on FY '20. So throughout these results, there are a couple of things to bear in mind. PFS, we acquired on the 31st of March 2020, is consolidated into the financial results for the full 12 months of the FY '21 year as opposed to being consolidated for 3 months of FY '20. PFS is just 1 of 6 acquisitions we have made since 2012. With the Sentenial acquisition expected to close in the next 45 days, our financial statements are impacted by AASB 3 acquisition accounting, the number of noncash items in that. And so as a result, we've disclosed information excluding the noncash impact of AASB 3 in this presentation. Looking at Slide 8 now, the segment performance. There were some key takeaways I'd like to highlight to you. Starting with the General Purpose Reloadable segment. I'd like to reiterate that this is our largest segment in terms of gross debit volume at $9.7 billion of GDV. Generated revenues of $113.6 million in FY '21, it's the largest segment in terms of revenue and gross profit and our fastest-growing segment with both -- with strong acquisitive growth and organic growth. So firstly, PFS. It performed well in most of its key verticals, particularly the U.K. government verticals with local council welfare management. During the year, they also -- they launched the Aspen program for the U.K. Home Office, the Jersey stimulus program, amongst others, and they were both done on our new TRACE processing platform. Existing programs in France and Spain also continued to perform strongly, and PFS grew 20% over the prior comparative period. And that sort of including a period prior to our acquisition just gives investors flavor of its growth rate. PFS did see a direct financial impact from the CBI matter through lost establishment income in May and June, just somewhere north of $1 million of lost revenue in that period. Organic growth in the non-PFS, remainder of the GPR segment, was also strong. We had growth of approximately 34% over the PCP. The transition of salary packaging programs in Australia from a competitor has completed, and we closed the year with over 320,000 benefit accounts live at the end of June, and that will annualize through into higher revenues in FY '22. Our gaming winnings disbursement programs grew strongly in all markets with GDV up 53% in the period. And we expect to see further gaming disbursement programs launched in FY '22, and that will support continued growth in this vertical. In the Gift & Incentive segment, we saw a clear impact from -- due to footfall up in the malls, translating to lower GDP. Conditions varied throughout the year. And from country to country, the different markets experienced lockdowns and social distancing at different times. We saw trading conditions deteriorate in kind of key periods for the annual result in that early to mid-December period as Canadian and European lockdowns became more severe. Although in FY '21, we're down about $100 million of GDV against FY '20, don't forget in FY '20, we're also impacted by COVID restrictions as well. So comparing to the pre-COVID run rates, it's actually a more significant drop than that. We are seeing now much more positive signs in load volumes coming through in June and July with evidence of improved trading performance in North America and Europe. Not all malls are back to pre-COVID volumes on a like-for-like. But across the portfolio, we saw Gift & Incentive volumes were about 18% up in June and 27% up in July and up over the FY '19 year as well. So we saw some pretty strong improvements in conditions, and we hope that will continue through the remainder of the FY '22 year. It's impossible to accurately quantify the impact of COVID on the segment but we'd estimate several hundred million dollars of GDP. Although volumes were down in FY '21, which we're attributing to lower footfall in the malls, it was somewhat offset by higher breakage rates, particularly in North America. And we recognized an additional $11.1 million of revenue and profit to do with COVID breakage. This is reflected in the revenue yield, which increased to 635 basis points in the year, up from 581 the prior period. The impact of the $11.1 million of additional breakage rates -- high breakage rates is about 100 basis points on the yield. So stripping this out, you can see the decline in the segment yield that we forecasted, driven by higher volumes of incentive programs, which is a much bigger market but at lower revenue conversion rate. We did see during the year continued sustained growth in incentives or the non-mall programs, and they made up 44% of the segment GDV in the year. Incentive programs were up 11%, with the new programs launching -- with new programs launching and often taking advantage of our digital solutions for employee engagement, customer engagement, marketing programs and the like. We expect to see continued growth in this segment with the FY '21 program launches delivering growth in FY '22, alongside a stronger retail environment in the FY '22 year. In the VANS segment, it was relatively flat volumes, and I'd describe it as a steady state, though a customer mix shift improved GP margins for the segment on a slightly lower revenue base. And in April, we announced the acquisition of Sentenial. Tom will give an update on that in his remarks shortly. Sentenial is a leading open banking and account-to-account payments provider, and we think it will bring approximately $90 billion of annualized volumes and so it's going to be consolidated into the VANS segment. And as a result of that consolidation to VANS, we're going to rename the VANS segment to be Digital Payments in FY '22, which reflects the broader product offerings that, that segment will provide. Moving on to Slide 10. The year delivered -- record revenues were up 60% to $194.2 million. This is excluding $2 million of noncash amortization of AASB 3 fair value uplift on the bond portfolio that we acquired. The majority of our revenues are generated from recurring revenue streams in the GPR segment. The GPR segment accounts for about 58% of group revenues in the year, with PFS contributing $78.3 million for its full 12 months of consolidation, which was up from $15.6 million in FY '20. Organic growth was also strong at 34% for the year. Revenue yield in GPR segment was up to 117 bps for the year, slightly higher than the first half, which was 112 basis points. The Gift & Incentive segment contributed 36% to group revenues. And in the year, we made about 19% from breakage. So that's well down on the PCP despite the higher breakage rates that we saw in this year. We flagged previously, we spent a significant amount of time evaluating with our third-party statisticians in North America, our North American sponsored banks, evidence of low redemptions on our Gift & Incentive mall programs. We've attributed this to lockdowns, social distancing and the impacts of that on lower foot traffic in the malls and that consequently reduced card spend over sort of 12- to 18-month period post activation of the cards through the pandemic. That translates into higher breakage rates. We continue to be conservative, and we're doing this in conjunction with third-party statisticians and banks who both review the data alongside us. Globally, Central Bank interest rates on the cardholder float we manage have been a headwind across all the segments as we continue to see low interest rates in the U.K., Australia and North America, and we see negative interest rates in the Eurozone. And we see banks -- the banks that we deal with and we leave our float with keen to pass that through. And so we've incurred net negative interest rates on our European float balances in the year, and that increased in the second half of the year. Our global treasury team worked hard to minimize the impact through term deposits or government-backed bond investments, but it is a cost. And whilst we're optimistic rates will rise in the FY '23 and beyond periods in some of our jurisdictions, we hold a total float of $2.1 billion. So it is a cost to our business. We would benefit, of course, if we were to see rising interest rates in future years. We've been a beneficiary of that. Looking on Slide 11. At a headline level, gross profit rose to $130.4 million, margins slightly lower at 67% due to segment mix towards GPR and the dilutive impact of consolidating PFS. We also saw impacts on that of negative interest rates and the increased cost of those negative interest rates in the second half. And then we saw the impacts of lower establishment revenue in May and June due to the CBI matter in the PFS business. PFS will be a lower margin business until we can move their payment processing and in-source their payment processing and -- as well as it's bringing its faster payment connections directly to the Bank of England. They pushed down the gross profit margins for that business. Those were 2 gross profit synergies we identified in our acquisition thesis. So a quick update on those. The direct connection to faster payments became fully online this month. We expect savings of approximately GBP 0.5 million in FY '22, which will impact the GP margins -- improve the GP margins. And the project to bring the processing in-house remains on track. As I said earlier, we launched the Home Office program on the TRACE platform. We also launched the Jersey stimulus program on the TRACE platform. So you'll see more programs launch onto that TRACE platform in FY '22 and then the target completion date of the end of FY '23 for that project. We continue to regard cash overheads as a percentage of revenue as a key metric of operating performance. So in the period, the employee cost as a percentage of revenue was 28%. It was down from 32% in last year. The majority of the decrease over the prior period relates to the acquisition of PFS being consolidated in the year, and scale synergies in relation to that coming in. Employment-related expenses make up 70% of group cash overheads, and that's reflective of the nature of our business model. Employment costs included in accrual for short-term incentive payments given the strong results in most business units that wasn't there last year due to COVID. We flagged increased investment in new roles, including at PFS, and we saw this eventuate through into the results. Although the timing of recruitment has been challenging, particularly given strong competition in the labor market in Europe -- in our European operations, we saw increased cost overhead such as insurance, internal and external audit fees and IT costs, and we'd expect that to continue through into FY '22. We previously estimated $76 million to $80 million of overhead costs back in February, so we came in at the lower end of that range, excluding the costs associated for the CBI matter. Costs of the CBI matter include those incurred in the year of about $1.5 million and a provision for just under $10 million of costs, which we expect to incur in a future period, predominantly FY '22, to bring the matter to a resolution. Examples of those costs include those relating professional advisory fees and remediation activities. On Slide 13, the outcome of all this is an underlying EBITDA of $53.5 million for the year, continues our track record of strong growth, which translates to a 5-year cumulative annual growth rate of 65%. On a reported basis, our EBITDA still grew at 30% over the PCP to $42.4 million. We'd estimate we incurred an FX headwind of about $3 million against the basket of currency rates we saw in the prior year, and that's due to the strength of the Aussie dollar. Again, most of the currency impacts are against GBP, euro and USD in particular. Nevertheless, the underlying EBITDA was towards the top end of the guidance we provided in February, which is $50 million to $54 million, so $53.5 million is a good result. On Slide 14, we reconcile between EBITDA and NPATA. There's a couple of points to mention. Depreciation and amortization of $29.8 million at the statutory level, 68% of that relates to amortization of acquired intangibles. So that's a fair value uplift that we do when we buy a business. The business as usual element of that, therefore, is $9.6 million, which included NPATA, and you'll see that on the bridge. And this was offset by about $11.5 million of internally developed software in the year as we continue to invest in the business. So it's pleasing to see it was investing slightly higher than the amortization rate. Share-based payments related to executive STIP and senior leadership LTIP, long-term incentive plans, and the full amount of $5 million is included in the NPATA number. Finance costs include costs relating to the group's syndicated debt agreement and vendor loan notes. Other expenses are mostly unrealized foreign exchange on the translation of foreign currency balance sheet items. Now when we did restate the acquisition balance sheet, and we'll discuss that in more detail shortly, one of the results was that the contingent consideration, the earnout on the PFS business was reduced to 0 on acquisition. At 30 June, we had to reanalyze the expected performance and that resulted in an estimated earnout liability against the predetermined targets we agreed in March 2020. So with that, that's come up, up slightly from 0. We had a tax expense in the year of $6.4 million, excluding the R&D recovery, and we've used all of our European tax losses, and we've started to utilize losses in the U.S. and in Australia. If you follow the statutory profit line below the chart, you'll see the full reconciliation to EBITDA and NPATA as well. But given the significant impact of noncash acquisition accounting, we continue to believe that nonstatutory measures give a better reflection of our operating performance, particularly evident when you compare the NPATA loss of $28.7 million to the statutory operating cash inflows of $48.8 million, and that's why we think the nonstatutory measures give a better indication. Looking at the balance sheet on Slide 15, there's a few things to highlight. We split out cardholder assets of $1.7 billion and liability to cardholders of the same amount. These are the amounts held on behalf of our customers and a direct offset by the liabilities to the same cardholders. On 30 July, we announced the identified various irregularities with respect to length of time accounts are being safeguarded prior to our acquisition in PFS. And as a result, we've injected $28.2 million into the cardholder float following year-end. Whilst this is a cash outflow now, it will be released back to the group in cash and revenue in the periods from FY '22 to FY '28. The restatements discussed on the next slide, and as previously announced, the adjustment related to the pre-acquisition period. And it's resulted in a correction to the acquisition balance sheet. The impacts of this to the contingent consideration which is reduced by $63.7 million in the acquisition balance sheet to 0. The customer contracts in intangible assets increased by $15.9 million. And liabilities to stored value account holders increased by $28.2 million, with the balance moving through goodwill. We ended the year with surplus cash of -- total cash balances of $141.2 million and no secured debt drawn down from our group syndicated debt facility, which is established in connection with the Sentenial acquisition this year. Our businesses are cash generative, and we're also holding a contract asset or a breakage accrual asset of $26.6 million, of which $16.4 million is expected to convert to cash over the next 12 months. The group funded a premium on purchasing bond investments. These are what the European regulator deems as 0 risk investments, so the very low-risk government-backed assets where we invest cardholder funds. But the group receives the economic returns. We have a policy of not actively trading the bonds, and we hold them through to maturity. So this is more than $5.8 million of group cash, which will convert back in future periods. The bonds are an important part of our treasury policy to offset lower negative central bank interest rates on the cardholder float. But the premium has been increasing, as you'll be aware, due to the extremely low interest rates in the European market on euro deposits in particular. As discussed earlier, we have provisions of $10.8 million to fund the expected future costs of the 2 PFS regulatory matters. So moving on to the cash flow on Slide 17. The business continue to generate significant operating cash inflows with new record underlying cash inflow of $46.7 million in the year at 87% of the underlying EBITDA result, slightly below our guidance in February due to the timing of breakage receipts and remittances of customer share alongside improvements in Gift & Incentive volumes in quarter 4 driving up the working capital reinvestment into the contract asset line. We continue to invest in internally generated software development, and we capitalized $11.5 million of CapEx relating to building the technology that is going to drive the group's growth in future periods. So as we've mentioned previously, investors should expect this to increase in FY '22 as some of the accelerated projects move from the design phase into more of the build phase. You'll see that fall through into that line. We've made 2 FINLAB investments in the FY '21 year, which we announced previously, Interchecks and Hydrogen, which totals $9.7 million in the period. So moving on to Slide 18 now, looking at our guidance for the next financial year. There's a number of moving parts, and investors should appreciate this drives the guidance range for the year, which we intend to tighten in a future period. We expect to close the Sentenial acquisition at the end of next month in September and consolidate it for 9 months in FY '22. This is subject to regulatory approval by the French regulator, the ACPR, and we're expecting to assess it in early September, which triggered the end of month of completion. So our FY '22 guidance on key metrics is as follows: group gross debit volume of $93 billion to $100 billion, including $24 billion to $27 billion from prepaid and $69 million to $74 billion of volume coming from accounts or account payments from the Sentenial business; $220 million to $255 million of revenue, including $10 million to $15 million from Sentenial; and EBITDA of $55 million (sic) [ $58 million ] to $65 million result of the underlying, including breakeven to a $3 million loss from Sentenial. So we're going to be investing to drive growth in that business in line with our acquisition strategy and an operating cash flow in the 80% to 90% range conversion of EBITDA. It would not be our preference to give guidance now. We typically provide guidance in November when we have more information and we've got some of the start of the year, the results from the start of the year to use. We've chosen to provide guidance earlier than usual for a few reasons. It does drive an increased range at this point in time. So firstly, the consensus numbers haven't been updated by the analysts since the CBI investigation in May. So we felt it would help investors understand that the additional European overhead cost is a one-off step-up in spend in FY '22, but it's not a change in the growth rate assumptions to the increased overhead base in future years. It's a one-off step-up is the important piece to note. Secondly, we want to provide some information as to our plans for the Sentenial business, which is to increase the spend on sales and marketing earlier, and back the management team in that business to deliver strong revenue growth expectations for that business. And so we're forecasting somewhere between a breakeven to a $3 million loss in that business, and that's going to drive revenue growth in the future period, which is slightly different to the consensus. There's a few assumptions in our guidance as well we should think about. The reopening of European and North American economies is already apparent in the GDV we've seen in the early part of FY '22. We're only 6 weeks in, but we're seeing that already. It's a key assumption, though. The trading conditions continue to improve, and we do not see significant lockdowns in FY '22 in those key European and North American markets. Our Australian business is not materially exposed to the Gift & Incentive segment, and the Australian results have not been materially impacted by the recent Australian lockdowns. We do expect to see a higher cost base driven by the requirement to add roles in Europe in connection with the CBI's expectations, expect to see higher insurance costs, and we've expanded the scope for our internal audit function alongside higher external audit fees given the complexity of the business. We're forecasting overheads of between $85 million to $92 million, excluding Sentenial, and $96 million to -- $97 million to $106 million, including the Sentenial business. There are also key assumptions with respect to Ireland. Firstly, that the provisions we've taken up in the FY '21 year is sufficient to cover the actual costs that we're going to incur in FY '22. And also that the remediation plan we've outlined to CBI is completed on schedule, which is predominantly by December 2021, but does not extend beyond March 2022. We haven't forecast any material change in Central Bank interest rates or foreign exchange rates in this guidance as well. So that could also impact the eventual outturn. So with that, I'll hand back to Tom to take you through the business update.

Thanks, Rob. I'll try and speed through some of these slides in the interest of time so we can then get into questions. The first page of the business update, you'll see a number of highlights there. But I would call out the launch of Project Accelerator, certainly, the acquisition of Sentenial as we push into open banking and account to account payments. As Rob mentioned before, becoming a member of Faster Payments in the U.K. with our first transaction to be processed next week. As shareholders will recall, when we acquired PFS, there are a number of projects underway to drive kind of long-term earnings creation, including the launch of the Aspen card for the Home Office in the U.K., which went live; the launch of the Avios multicurrency card program, which also went live during the year; becoming a member of Faster Payments, which we were approved during the financial year and then, as I said, first transaction next week; and the launch of TRACE which Rob mentioned before. So that came online and was certified during the year. It has managed volume for several new programs. It will also manage the volume for the Northern Ireland stimulus program. But circa 5% of existing volumes have been converted over at this point. So as Rob mentioned before, that was a 3-year synergy target to get rid of $6 million plus in external processing costs. So that conversion process will now kind of become more in earnest over the next kind of 24 months. And in between that, as I mentioned before, we managed the impact of COVID and Brexit to the team, particularly in Europe and in our group execs certainly had their hands full in '21. On the following slide, you'll note a brief update on the Sentenial acquisition. It is a growth investment for us. Clearly, the earnout consideration is based on revenue growth 3 years out. So the earnout period, I think, finishes December of 2023. And that earnout target was EUR 27 million of revenue, which would correspond to roughly EUR 15 million of EBITDA depending on how much we would reinvest into growth. Our shareholders have become familiar, I think, with our competitors in the prepaid space over time. But they should certainly become more familiar with names that we compete with in the open banking space, such as Modulr, TIC, Trustly, TrueLayer as other early movers in the open banking space and pay attention to the valuations that those companies are receiving, the kind of the -- particularly where they're being acquired and look at that relative to what we paid for Sentenial and where we think that will be in some of the out years. Moving to the business development slide. I think we had a pretty good year in terms of this development. We signed 121 contracts. So that's a pretty good cadence, in my view of, 2 contracts a week. Importantly, 85 of those were in our GPR segment. So that's where we are focused on driving that growth from. We put out 144 programs in the year, 21 of which were signed in FY '20. So that will give you an idea of just the lag that exists between signing contracts and the implementation of those programs. And that lag exists for a raft of reasons. By and large, we'll sign a contract with a customer. That customer will then have their own development work to do to integrate to our platform. They've got their own launch time frames, which would include how and when they intend to market and promote their programs. You've got scheme approvals with Mastercard or Visa to achieve. And regulatory approvals prior to programs being launched. So there's a process there that every contract we sign go through. So put another way, we implemented 123 programs that were signed in FY '20. So -- and then we start the year with roughly 100 programs that are in various stages of implementation and will drive GDV in the out years if those programs scale. And that's just the nature of pipeline management. We will always have new business expectations in our pipeline, contracts being signed that will be implemented 6 months post any other programs being implemented that were signed 6 months earlier. So that's just the nature of how the pipeline will work. In a pipeline sense, we have seen continued momentum, will slightly increase the GDV that we would see at maturity. Noting that our historical win rate is 40%. I think we went through that on our half year call. We haven't reassessed but that 40% is higher. I don't think it is. So I think between February and now, our win rate is similar to where it was. I'd make the point at this point that we're yet to see any customer defections in the wake of the CBI matter, which is pleasing but we haven't launched new programs in Europe in the last 12 weeks as we focus on those remediation efforts, and we're in discussion with the CBI around that. We haven't seen any of those customers exit. We haven't seen any kind of contagion impact, if I can call it that, from existing clients with programs and market, which is very positive. But we've not modified our pipeline data to take the CBI matter into account. So the triangle on the right-hand side of the pipeline is as it stands. We haven't kind of sensitized that to the CBI. But as I said before, in May, I think at a previous investor conference, continued uncertainty with respect to sign new programs or implement new programs, could ultimately impact pipeline and future growth rates. And that's just logical to assume. And so that's obviously something we're discussing pretty closely with the Central Bank. So that, that uncertainty can be removed, and customers and programs have certainty about being launched. Moving to the following slide, you'll see a number of callouts in the government and NGO space, which is certainly a [indiscernible] I mean, a key part of PFS' business is government, not only in the U.K. but in other countries, Finland and others. The Jersey stimulus program is a pretty small program. It's a GBP 100 gift card to 100,000 residents. So it was GBP 10 million. But importantly, right on TRACE and had a couple of -- the TRACE processor has certain controls on it that enable that spend to be put in -- to be locked down to the island of Jersey. That -- the success of that, I think, even though that was a pretty small program of GBP 10 million, certainly positioned us well to win the Northern Ireland program, which is GBP 150 million. I think cards go out at a rate of a couple of hundred thousand a week, commencing to the middle of September. There's 1.4 million-ish cards that go out over that -- the ensuing weeks. So that's roughly GBP 150 million or AUD 273 million kind of current exchange rates. And I'll say it's early days as European economies reemerge from lockdown that we are working on other opportunities as we speak with other countries. So I think the success of the Northern Ireland stimulus program hopefully builds confidence in that kind of program for other governments to look at. Moving to the next slide, we'll see some of the key program launches for the year, including Avios, which I mentioned before, you've got Laybuy and Humm in the buy now pay later space in the U.K. and Australia, which people would be familiar with. And Zeller, which you may be familiar with, just from looking at advertising on TV. But Zeller completed a large private raise recently and is targeting the merchant POS markets. So kind of competing with the likes of Tyro. So a merchant gets a POS terminal, have our payment card attached to that. So a debit, credit transactions occur, the proceeds from those transactions are cleared in real time to our card, providing the merchant with immediate access to cash flow versus the settlement through a bank that will occur at the end of the day or on the following Monday. Moving to the following slide. We look at some of the key launches. Rob mentioned the completion of the Sal Pack program. The launch of gaming program with Paddy Power in Ireland and our launch with Zenith, a large marketing and media agency in Australia with a history of offering prepaid card programs. And some of the ones that are on the right-hand side that we're pretty optimistic about. So CherryHub is a company we're working with for the pubs and clubs solution in Australia, which is a kind of a compliant payment loyalty solution. Raise.com has kiosks in Walmart stores in the U.S. that enable you to convert the balances on various closed loop gift cards onto a new open loop gift card. And we think the GDP potential there is pretty significant. And a company called M3T, which also operate kind of thousands of kiosks in the U.S. And our cards could be used for a variety of things. In one hand, to the gaming machine so they can be used for gaming payouts. But there are also lottery terminals, so there's discussions with different state governments in the U.S. for lottery payouts. And in some states, they're used for welfare payments as well as food stamps and other things like that. So we're pretty bullish that when that program goes live, it, over years, going to evolve into a pretty broad-based payment distribution. Investors have also [ an issue with ] Betmakers, I think, given recent media activity and we're working with them to launch a gaming program in Australia as well as the U.S. The following slide, we've provided some additional details in relation to the CBI matter, some of which I made in my introductory comments. What I would say is that we are in regular contact with the bank. Those meetings are not adversarial. They're completely aware of the remediation efforts that are underway and communication is regular. So that's positive, and I think working in the right direction. I think it's also worth noting that when we acquired the PFS business, in our investor deck at the time, so I'm going back to November 2019, I called out various compliance failings the firm had incurred in the past. And at our AGM in the same year, we were clear that we would work to bring the compliance function up to the standard that we're used to in our other businesses. And what investors should be mindful of is that, that work commenced post acquisition. So we recruited new heads of risk into our team. We onboarded new KYB, KYC suppliers. Obviously, those things have got to be -- there's an IT integration process to buy that kit and buy that software and then have it integrated. We implemented a new risk assessment tool. We, last year, licensed an enterprise-grade transaction monitoring system called Predator, which a lot of large banks use. It's a system from GBG. All of those things have gone live. They increased our resources in our compliance function from 22 at the start of last year to 45 and those things happened before receipt of the minded to letter. So they were investments and activities that we were undertaking to bring the PFS business and their compliance functions up to, I say, the kind of level that we would expect to see that in other regions. But clearly, we've got more work to do, and that's where the remediation program is focused on, particularly governance and the incorporation of the Board of PCSIL, which is the European regulated entity. It really is PCSIL that the CBI regulates. And as far as they are concerned, PCSIL is EML, right? The fact that PCSIL is part of the global business is fine, but they expect PCSIL, the Board, an independent -- with independent directors that manages risk and directors and resources that are local and are part of what they call the hearts and minds strategy, along with people in defined PCF functions, which are kind of control functions because the Irish government have a very similar system to the bank exec accountability regime in Australia. It's called SEAR, Senior Executive Accountability regime, that comes into place late this year, kind of October, November time frame. So there's a clear -- with their hearts and minds strategy, there's a clear preference for directors to be independent, to be Irish and for the PCF functions to be in country. I don't think that's bubble, right? I think we will see that in other markets as well. We've got a branch license in Spain, for example, I think it's Sentenial, the license in France. I think that that's the way that most of the entities will go, right, which is the new European Banking Association, just to divert for a second, has brought in a rule at the end of this year that effectively says branch licenses and entities got to be resourced to locally manage those -- the kind of risk and compliance functions. So I don't think what we're seeing in Ireland is unique in terms of how other regulators will expect resourcing and roles to be local and the independent directors to be in country. As shareholders will remember, when we acquired PFS, that was originally for AUD 425 million, along with a GBP 55 million earnout. So call that AUD 100 million to AUD 110 million earnout. We subsequently renegotiated the price down by $170 million given COVID-related uncertainties, which certainly resulted in a strong balance sheet with cash reserves to trade through economic uncertainties. The result of the costs incurred and accrued as part of the remediation plan, which has gone through the PFS P&L statement, have seen us adjust the contingent consideration down. And our assessment today, and this assessment is very detailed, is that the likely earnout within the region of about GBP 8 million now, so AUD 15 million to AUD 16 million, down from the maximum of $100 million to $110 million. Moving on to our strategy slides. Some of those you'll be familiar with from previous presentations. I'll skip through to the slide on our platform capabilities because, as I've said before, our platform is our product. At the end of the day, that's how customers integrate with us. That's how they offer their programs to their customers. It's highly developed. We continue to invest in it. The more features and functionality it has, the broader our opportunity will be. The following slide in terms of our Accelerator, and Rob has mentioned a couple of these, particularly Sentenial and others. But we have undertaken the work to integrate to the Visa network. That was one of the key projects. So that we are able to support the same product, a gift, a GPR, they're physical, they're tokenized, they're digital on both networks, which just gives our consumers choice and puts us in the payment flow of programs that have predefined Visa on heir scheme, which ultimately should increase our market opportunity. EML Connect launched, which allows customers to integrate through our APIs. TRACE we've mentioned before. The FINLABS investments we mentioned before. So we made a fair bit of progress in that. On the following slide there, we talk about what we're doing to drive new business through the use of data as digital payments grow. The decision makers are not necessarily CEOs and senior managers, but software engineers. So we're looking at how easy it is to develop a solution, integrate onto a platform and use our APIs. And then increasingly, they are making the recommendation as to which suppliers to use. So you've got the traditional sales channel that we have today, which is direct selling through our business development execs to prospective customers and you've got a whole other subset of programs you may not see because they're being driven by IT software engineers, who are [indiscernible] road testing different platforms and different providers and then recommending that to their management teams as to which one to use. On this page, we've got -- we call a Dev Hub, which launches in September. So Dev Hub is a fully exposed open access API platform, which allows those same software developers and engineers to access, develop, test, document, pull up documentation in one place, which we think will catch up some ground relative to competitors. A topic for the sandbox environment as well. So sometimes the terminology is -- you might see it referred to as that. But -- so that goes live in September. We relaunch our website in September. So a prospect can move from our website to our Dev Hub and think we can increase our sales conversion from our website, which is -- isn't where it needs to be. That's pretty small, so there's an opportunity for us. And we then implemented HubSpot and ZoomInfo, which allow us to track our prospect's interactions with us and who that prospect is and understand that customer in more detail. So that's about getting more insight into the companies and the prospects that are looking at our website, looking at our development environment. And then allowing us to kind of reach out proactively. All of that at the end of the day is about us selling digitally as well as physically. So it's all about, again, just increasing our pipeline, increasing our close rates and ultimately organic revenue growth, which was the driver for Accelerator. I won't go through the next 2 slides on FINLABS because you can read that at your leisure. Following that, we've got slides on Sentenial and just open banking. I'll probably skip through those as well, and you can read those through in your own time. But I think it's worth looking at the use cases. I mean open banking can be demystified. It's really real-time bank payments between a consumer and a merchant. It's that simple, whether that be in-country or cross-border. So therefore, it's an alternative for merchants to look at ways of getting money in other than through credit or debit card, which obviously has high interchange cost for them. And for the consumer, it's for those consumers who don't have or don't choose to use debit, credit or buy their payload or other facilities, right? But that's what it is, I mean, in a nutshell. It's been easier, I think, for investors to look at the kind use cases because that gives you an idea of why we're excited about it and why we think there's a really strong fit between open banking and our GPR segment. For example, on Slide 39, I think you'll see that the gaming payout program. So investors will be familiar with that. We've been running those programs for quite some time, which allows a customer, when funds are won, to access the winnings from their gaming wallet to our card. This now allows us to facilitate the money in as well to that gaming wallet, which, again, when turned over, so when spent, that allows the winnings again to be withdrawn to their card. So today, we're on the money outflow. The potential with open banking is to get on to the monthly inflow as well, which increases our opportunity, adds more value to our customer. And increasingly, we think those customers will look for 1 supplier to do the multifunctions as opposed to having 2 vendors for each different solution. The following slide, you look at things like bill payments and subscription payments, which is a significant opportunity in Europe. Most of us know the frustration of signing up a DD authorization only to find it's bloody hard to cancel that same DD authorization going forward. But open banking really puts the customer in charge of recurring payments. So we think subscription payments and bill payments have become a big driver of growth in open banking. In the following slide, we look at things like earned wage access, which we really do think will be one of the biggest transformations we see. There's a myriad of companies in the space working on that. We're engaged in multiple discussions with people in that space. And today, we could provide a card payout for customers who are drawing part of their salary on to it. But with open banking, we can obviously facilitate payments in and payments out, be that to their card or their bank accounts. So those opportunities that we're working on live. And the following slide is really just fact that we'll be integrating the Nuapay platform to TRACE. And then the intent is to kind of multi-instance that platform so that in the course of the next kind of 12 to 18 months, all of our regions will have TRACE operation with it as our preferred GPR platform with open banking capabilities. And that was really the -- that's the gist of that project. The Sentenial, I mean, I think there'll be questions from investors on Sentenial. I think our thinking on this, I know markets are short term in their thinking and their expectations, but if you looked at the -- yes, I think our communication has been pretty clear about the timing and where we see that really benefiting EML in terms of growth. I think the recent revenue multiple for Tink, which was acquired recently in Europe, was 50x. So we -- which obviously, we didn't pay for Sentenial. So we see that as a long-term growth asset. But we're not going to manage it with short-term thinking. So if it means we're investing $2 million into sales and marketing, which we're electing to do this year, then that's what we're going to do because this isn't about next month or 3 months from now, it's about 3 years from now. [indiscernible] that, I want to make that point clear that it's not -- we don't look at that as a short-term asset at all. Finally, the last slide. I think we've had some questions from investors, which is good, in the last kind of 6 to 12 months on ESG and particularly people, what if things like engagement rates and so forth. So we'll include these more now as kind of as outstanding items. In all honesty, we should change the priorities of these slides and put this #1 because the -- I've run this business for 9 years, but we've got a dedicated team who take it really personally when challenges are thrown their way. And in the last 18 months, I think we've had our fair share of those challenges. But what I'm confident in is that the team that runs the business is pretty battle tested, right? And that might sound a bit corny, but you see the capabilities of people when times are tough, not when times are good. And I think that the challenge is that we have overcome, be that Brexit, be that COVID and we now look at the CBI, but ultimately that's just another challenge that will be overcome. As I said, the rubber hits the road when people are working and managing those challenges as well as their [ core roles ]. So I'm certainly grateful for team that I run and for their work ethic and commitment because it enables to provide these results that we have today. And with that, operator, I'll open it up for the questions.

[Operator Instructions] Your first question comes from Steven Kwok of KBW.

The first one I had was around the CBI regulatory matter. I guess like as we think about it, what are the next steps that we should be looking out for? And then secondly, are there any constraints around capital or investments that you can make under the proposed matter?

Yes. Thanks, Steven. No, there's no constraints around capital or investment. So there's no constraints there. I think the thing that investors will be looking for in relation to the CBI, I mean, they'll be pleased to hear that, obviously, the remediation plan is in place and the CBI is comfortable, obviously, with us saying that we're actively engaged in that process. We communicate all of this wording, proposed wording, to them in advance, obviously. I think that what investors will be looking for is certainty around the ability to onboard new business. We are in discussion with them. I mean part of their response to us is, look, the firm will continue to grow organically and through new programs and what have you. But we're working on kind of what that growth -- what number that growth might look like during the remediation period. And bear in mind that the remediation period would substantially be finished by the end of December, which is why we're putting that time frame in place. So I think investors will be pleased to see that it's not adversarial and that it's being worked through. And I think the comfort fact that they'll be looking for is when the kind of pipeline of business that's been presubmitted starts to -- kind of starts to be implemented. When that is, I can't really speculate on that in terms of specific timing, but I can tell you that it's something that is -- yes, we're in regular conversation [ with the bank ].

Got it. And just my follow-up question is just as we think ahead on the PFSI acquisition, there's no changes around the long-term synergies, right? It's just that it could take a little bit more time given what's going on, but nothing has changed from a longer-term perspective?

No, correct. I mean the probably the Faster Payments piece, I can't honestly remember when that was meant to go live. I think it was meant to go live earlier in the calendar year, kind of January time frame. But the Bank of England only has 1 slot per month for companies to go live on the network. So you've got -- yes, that's managed by the BOE. So you've got a bunch of companies that want to become direct members, and you've only got a certain number of slots to get positioned into. So the fact that now live tomorrow is a good thing. That means that there's a synergy saving for our business. I mean I think we paid something like 20p per transaction that comes down to 2p. So that was AUD 800,000 annualized synergy that we announced when we did the deal. Sentenial also outsources its faster payments access as well. So part of our project between now and when we close that deal is to try and -- we'll become the provider of faster payments for Sentenial. So there should be some kind of uplift there to -- in terms of synergies. And then on TRACE. The synergy saving was AUD 6 million there kind of by the end of year 3. And I think we'll get there. We've had 1 year effectively of getting TRACE certified by the schemes, bringing volume across. Obviously, no one -- you don't do that gung ho. I mean you bring programs on and you load balance, and you test and then you kind of build it out from there. So most of the volume is new business that's going on it. And then over the course of the next couple of years, we'll start to migrate that kind of existing programs across to it. And that's when you start to see the synergy benefits going to flow through, which help the -- they help the overall number, but they also help the gross margin number because when you take AUD 6 million out of processing cost away and AUD 800 million is part of faster payments away and you put that onto the PFS business, the gross margin, excluding negative interest rate, the gross margin doesn't look much different to what our other businesses there.

Your next question comes from Elijah Mayr of CLSA.

Just a quick one on the Sentenial and Nuapay. Just with the increased marketing spend that you guys sort of called out. Is that required to reach the previous revenue and GDV expectations? Or have those expectations been being rebased or changed?

When we bought the business, we'd -- part of the SPA was for us to invest $5 million over 3 years to kind of grow the business rather than -- part of why they wanted to be part of a bigger group was to have access to capital to enable them to expand because as a private business, they're trying to run the thing on the smell of an oily rag, right, because as they had generated EBITDA, they've reinvested that EBITDA into growth. So we always had a commitment to make that investment. The -- I don't think it's necessarily linked really to the earnout. The earnout is based on what we negotiated with the -- in the SPA. But I think we said back in -- I think we said when we announced the deal that if you took EUR 27 million as the kind of incremental revenue number on which the earnout is based, which is 40-odd million, and that number at the end of the day is EUR 20 million, then it means you're not paying that earnout. So at the end of the day, that becomes a $70 million deal with a pretty low multiple. I don't think it's still generating a fair chunk of incremental revenue. So that $2 million of sales and marketing investment won't be the difference that gets into $27 million revenue line. But it would be stupid for us not to invest in it. I mean if you look at -- to give you an idea, a company like Nuapay has 3 or 4 sales people and then we've got people in Europe on our side but they're on the biz dev front as well. The private companies that they'd be competing with that are PE-owned are companies like GoCardless, have 100 people just in the U.K., right? Because they're raising money at the valuations that support it. So if you can raise $80 million on $1 billion valuation, and you don't have to worry about profit, you don't have to worry about return, then you could hire 100 salespeople and some of those companies that I mentioned before have pretty sizable sales and marketing team. So it would just be kind of intuitive for us to buy as a growth asset. I just expected to happen by itself magically and in 3 years' time, lo and behold, EUR 27 million falls out of the sky. I mean we get a lot of it. We're going to have to run it. We're going to have to invest in it. As I say, $2 million and the other $3 million that we'll invest over the next few years won't be the difference between them getting EUR 27 million of revenues. But be silly for us not to invest in it. We've got a balance sheet that enables us to do that. And it's a long-term growth asset, we need to treat it that way.

Yes. Understood. And just a second one, if I could. Just on PFS and following on from the previous question in terms of the long-term perspective of that acquisition. For FY '21, the revenue was around $78 million. Pre-COVID, the guidance of the acquisition was $84 million. Is that shortfall? And can that purely be attributable to the COVID impact and CBI matter? Or is there any sort of change in the underlying business from your expectations at acquisition time?

No, I think most of the -- I think CBI, the thing that was probably the most immediate impact -- so not [indiscernible] COVID a year ago was multicurrency travel cards, right, because that was 10% of their volume. So that was in their numbers when we bought the business because it was obviously historical in the year prior. And then when COVID came along, lockdowns, no travel, then we got 0 from that. That 10% was effectively nothing, right? So the -- in FY '21, it's very seasonal. I mean clearly, it's most now, right, July, August, September during the kind of European holidays. And we're seeing that now actually. So I think July was the record month. But for PFS in terms of volumes, August will surpass that. And so you're seeing some of that seasonal volume come back, which is pretty pleasing. But by and large, I think the rest of the business, if you took away multicurrency, by and large, most of the business is performing pretty well. On the CBI matter, the impact was more -- I think Rob mentioned at the start of the call, $1 million of revenue. So you'll set up maybe some programs that are signed, where we've just had to wind back, reverse, basically, the setup fee. And then when the program launches, you'll re-charge it, right? Because if you can't provide certainty for customers as to when to -- when launch -- when the launch date is, we didn't think it was right to be charging them and sitting on it and not being able to give uncertainty. But hopefully, when we get that certainty, then that amount will be re-charged. So that was probably the immediate impact to the year as well as just programs that would have launched in that last month. So I don't think the CBI had an impact really other than that $1 million directly on revenue in the group. It was probably more COVID related in those particular segments.

Your next question comes from Garry Sherriff of RBC.

Tom and Rob, a few quick questions. Firstly, the GP margins. FY '23 and '24, can you maybe just give us a range on how we should think about it? And what specifically could drive the improvement in GM? So I guess that's question number one. The second question about the ongoing permanent compliance costs. Can we be a little bit more specific on what we should assume? Is it $5 million to $10 million incremental cost going forward in terms of systems, processes, controls? And I guess the final question is in relation to open banking. Big market in its infancy, I guess, very competitive, certainly will be. Interested to know why you think Nuapay will win. And maybe if you are able to frame up who the other competitors are out there in the market that you see as being [ gauntlet ] competitors.

Yes.

Do you want me to...

Well, let me answer. I can -- I'll take this one, Rob, then I'll hand it next to you, so people don't get sick of hearing from me. I'll probably answer that, Garry, in -- so I'll answer that in terms of the compliance cost. The -- and I'll answer it in a kind of a roundabout way that if you looked at consensus for -- because the ongoing cost in relation to head count and so forth, which aren't onetime, will flow into the -- well, they do flow into the EBITDA guidance. And so I think if you looked at where we're at, from the analyst consensus, [ through 72 ]. Our insurance went up $1.1 million courtesy of noted class actions. So when you've got a couple of firms who are trolling around for litigation funding, unsurprisingly, your insurer gets to be nervous about that. So you get $1 million higher insurance bill off the bat that wouldn't have otherwise been in our numbers. You've got increased legal costs that you've got to accrue for along the same lines because you've just got to make the assumption that you're going to have to accrue and you're going to have a higher legal cost bill than you've had in years gone by. The remediation -- the incremental head count in Europe will be somewhere in the around AUD 3.5 million on an annualized -- or in this year. And then that will grow in the following year because we won't obviously have all those people on the payroll for a 12-month period. But that will be the kind of the ballpark number. So if you look back 72 gets you to 71 on insurance gets you a 70. If you've got higher legal costs, kind of 66, by looking at higher head count costs in Europe on remediation. And the delta of the guidance is really because of uncertainty about the ability to onboard new business and when that will happen. And so you've just to build in a conservative buffer of what that might be. And we also had the benefit last year, obviously, $11.1 million worth of higher breakage with COVID, and we were $100 million less in GDV. So if you took our malls business and you kind of added a normal take rate on that at our normal gross margin, that $100 million of GDV is worth $6 million-ish in EBITDA. So you've got -- there's obviously a delta between the $11.1 million and that $6 million. So we expect volumes to recover this year and certainly in the first couple of months, that looks pretty positive. But you've got something to outgrow there, right, on the breakage front. And then you've got those costs. So I think that's the number that we would see that kind of panning out. So hopefully, that answers a couple of questions there around just elevated costs as a result of the matter that aren't onetime. So the $11.4 million that we accrued, we certainly consider that onetime around legal and advisory and consulting and whatever the rest will just flow through the P&L as normal. Beyond the Nuapay piece. Yes, I mean it's -- I think the thing that attracted us to it in the first place was like us, they are a payments company. So when you look at a lot of those companies I mentioned before, they're not necessarily payment companies, they're focused on doing different elements within the industry. So Trustly, for example, which was due to IPO in April and that IPO was put on hold because of some regulatory concerns I think that the Swedish regulator had. I think they were going public at an EUR 8 billion valuation. A big chunk of their revenues comes from customer validation. So if I'm in the U.S., if I'm Spotify, Netflix, if I'm a subscription company, they'll be paid a fee to validate that Garry Sherriff is, in fact, Garry Sherriff and almost use it a KYC tool, right, because they've got access to identify that you have a bank account, there's money in the bank account, there's cash coming into the bank account. You would have had to have 100 point ID to get a bank account in the first place. So think of it as a kind of a de facto KYC tool. Nuapay is a payments business. So there'll be numerous, numerous companies that are in that space. I think it's so big that there's room for many of them. Nuapay's piece and expertise is really on the payment side. So when you look at their customers in the wake of a deal, some of our investors actually making some of the largest customers, Worldpay and Elavon and CyberSource, which Visa owns. I mean these are sort of the largest payment companies in the world. And their feedback was "really great engineering, really s***** marketing." Well, that was a quote that came back from a customer. And so we look at that -- so that's the kind of business we want because we want -- now the other way around, great marketing, poor engineering. So the fact that they're an enterprise-grade business carrying that much volume today builds a lot of credibility with banks and builds a lot of credibility with merchants. So we think that that's why they will be successful. Are there the only one that's going to be successful? No, I mean it's going to be an immense market, so there'll be many players in there. We've got to be smart in how we compete. Because like I mentioned before, GoCardless, TrueLayer, Modulr, Tink just got bought by -- recently, Trustly still, I mean most of them are private, right? And so they're living in private equity land where you can just keep raising that at a higher valuation. And I think GoCardless' valuation was $1 billion, I think, that they raised the money on and they're quite not [indiscernible], but I think their revenue was -- that was maybe 2 or 3x what -- 4x maybe what Sentenial was, but valuation was 15x what Sentenial was at. These things are valued differently in private land. Obviously, we're not going to buy Sentenial and hire 100 salespeople. So we can't compete. We've just got to compete smarter, which is cross-selling Nuapay into the EML customer network, vice versa, where we've got our programs, cross-selling it into their network, increasing that investment in our sales and marketing. But we've got to do it in a smart way is how I would say. But I think they've got pedigree, they've got expertise in payments and I think that will bring a lot of credibility and trust to consumers and to merchants, right? If you're a merchant that's doing $1 billion a year of payments, and I'm making a choice between different providers that can provide me with an open banking solution, you'd like to think that the company that -- I mean they're now doing EUR 5 billion a month. So you'd like to think that the company doing EUR 60 billion a year of payments has a fair bit of credibility going forward, yes?

Understood. And the last one was just the GP margins for '23 and '24, the range, or how we should think about it?

Yes. Rob, you want to take that one?

Yes. I don't mind taking that one. I mean I think there's a few things impacting our margin right now, but yes, negative interest is a big one in Europe. It's many millions of dollars of negative interest we're incurring on the float. I think by the time you look out to '23, '24, you're starting to actually see interest rates -- inflationary pressures in Europe drive up those negative interest rates. So that's going to be a major benefit to our margins. I wouldn't go and anticipate 3% interest rate in Europe. I'd love it if that happens because then we make a lot of money out of that. But I certainly see the negative interest rates starting to unwind over that FY '23, FY '24 kind of period. You'll see processing come in house, that's $5 million or $6 million GP savings on the historical run rates. So going forward a few years, we have a benefit of that coming into '23, '24. And then you've got faster processing. So those items alone are kind of worth 5% increase in GP over sort of that elongated sort of 2- or 3-year horizon. So you should be thinking about margins into the low 70s for EML when you're looking to that 3-year out period. That's pretty good. I mean if you compared it to our competitors, if you look at Marketo's GP margins, Marketo is up 40%. So our GP margins are typically very strong with our business model. So that just gives you a bit of a flavor. I don't want to put an exact range on that. We'll obviously do that in the future period. But just to give you a flavor as to where margins are heading in the future periods.

Yes. No, that's perfect. That's exactly what I was looking for.

I think, Garry, that is a key point to make today because the margin number is down, right, and most people attribute gross -- lower gross margin to kind of price compression, competitive tension things like that, that are driving it down. And typically, margins only go one way. But in our case, the bulk of the gross margin is negative interest rates, we can't do anything about in Europe other than trying to re-charge it on to our customers, right, which is an option for us, but you wouldn't want to do that without really understanding what your competitors were doing. Or you effectively try to force your customers into paying you smaller amounts more frequently, right? You're not holding kind of large balances. But again, as you look at gross margin to gross margin, and you've got $1 million of that which would be 100% margin being the delayed establishment fees in the U.K. -- sorry, in Europe, and negative interest rates, they're the biggest driver of it. So it's not competitive tension or price tension or anything like that. It's -- they're the 2 biggest drivers in kind of non-BAU, if I can call them that. So I think they hopefully change in future periods.

Your next question is from Tim Plumbe of UBS.