EML Payments Limited (EML) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the EML Payments Limited FY '22 Interim Results Presentation. [Operator Instructions] I would now like to hand the conference over to Mr. Tom Cregan, MD and Group CEO. Please go ahead.

Thank you. Good morning, and welcome to the first half results for the financial year 2022. As you know, my name is Tom Cregan, MD and CEO, and I'm joined by Rob Shore, our CFO. We're also joined today in the room by David Curneen, our Chief Operating Officer; and Ryan Chellingworth, Head of Treasury, if there are any questions after this that we need to fire to Ryan or David. Jumping to Slide 4, our gross debit volume has grown significantly in the half to $31.6 billion. And courtesy of our Sentenial, Nuapay acquisition, we now operate in 32 countries around the world. Slide 6 has our headline numbers and key takeaways. As I mentioned, our gross debit volumes were up 209% to $31.6 billion, which drove a 20% increase in revenue to $114.4 million. Our underlying EBITDA of $26.9 million was 4% behind the prior comparative period, which is a reasonable result when considering an increase in overheads in our European business of approximately $6 million, particularly in risk and compliance. The impact of Omicron on our European Malls business in December, which drove lower foot traffic in sales than we would have liked. Negative net interest revenue of $2.7 million versus the prior comparative period associated with negative interest rates on our euro-denominated float. Establishment fees, which were $2.4 million lower than the prior comparative period. And we're implementing our remediation plan with the Central Bank of Ireland, which obviously required significant resources and management focus. So to grow revenue at 20% in the midst of a regulatory investigation talks to the revenue diversity of the business and our ability to generate revenue growth from existing customers. Negative interest rates on our European float are outside of our control, but it's not taking a massive leap to say that if we hadn't seen the impact of Omicron in the Malls segment and we'd been able to sign new contracts in Europe and generate a similar establishment fee, our revenue growth would have been closer to 25% and our EBITDA would have been north of 30%. In the second half of the year, we would expect to see a recovery in revenue growth rate and gross margins as we signed and launched new programs in Europe. We were able to sign and launch 22 programs in December. But from an establishment fee perspective, they were programs predominantly signed in the prior financial year. So the establishment fees were in the prior financial year and not in this first half. We'll talk about interest rates later in the presentation, but the 2 recent target cash rate increases put through by the Bank of England is worth more than $2.5 million per annum to us straight off the bat, offsetting a large part of the negative net interest that we experienced in the first half. And with $2.7 million in float as of December 21, we're very well in place to benefit from an increasing rate environment globally. And we start to migrate our 2 largest European customers across to the TRACE platform, which will commence in April, and we expect to realize savings of $3 million in FY '23. So that's starting to deliver against the synergy benefits that we originally outlined when we acquired PFS. In terms of overheads, it was the largest increase in a half that we have seen. But this was driven largely by our remediation plan, increases in our risk and compliance costs and 3 months of overheads from Sentenial post our acquisition on the first of October. The remediation expenditure will cease once the project is completed by the end of June and won't be carried into FY '23. We also said last year that we expected our compliance costs to increase by an annual $5 million per annum due to more resources, but we then expect future cost growth to be more in line with our historical trends rather than looking at FY '22 first half and predicting that overhead growth on a go-forward basis. I'd also make the point that our ability to launch programs in Europe in December and submit new contracts for approval has come about in part because of our commitment to the remediation plan. So the priority for us was not about expense management in the half, but making the investments needed, hiring senior executives to the team and employing independent directors for the PCSIL Board. Our cash at bank fell to $86.2 million, and Rob will take you through this in his section. The $28 million was injected back into our FCA safeguarded accounts in August last year, which we advised the market about at the time and $16 million of cash was used for the Sentenial acquisition. So there's $44 million of outflows on those 2 items alone. We remain very well capitalized with a strong balance sheet and cash position. On Slide 7, we've got our mall volumes outlined, and gross debit volume was up 26% on the prior comparative period and was up 6% on the FY '20 kind of Christmas season, which was the last non-COVID-impacted year, but it was below our expectations. And we thought, based on our growth rates, leading into the key Christmas week without the impact of Omicron, we would have generated another $100 million or so in GDV, which would have corresponded to an approximate EBITDA lift of around $3.6 million. Of course, it is difficult to be [ prescriptive ] about that because proving causality solely on Omicron is hard to do. But that's our view, certainly looking at lower foot traffic and restrictions in the U.K. and Germany as 2 key markets. So that is our view. And the timing of it was unfortunate, obviously, for the second year in a row. On Page 8, as shareholders would know, we closed our acquisition of Sentenial on October 1 and have moved to the open banking and account-to-account payment industry in Europe, which was a fundamental part of Project Accelerator and becoming a digital payments business. And we see this as a long-term driver of growth and value for the company. If shareholders have followed recent capital raises in the industry, particularly from TrueLayer and GoCardless, which raised $312 million a week before last, they would see significant private equity investments into open banking in Europe because they also see the long-term growth and value opportunity, and that's the same opportunity that we need to now execute on. Since acquiring Sentenial, we've implemented our integration plan and agreed our growth -- our $5 million growth investment that we previously outlined to shareholders. Our open banking gross debit volume is growing at 30% and will be supported by some of the new business wins outlined on this slide. As investors should recall, given historically limited capital as a private business, Nuapay employs a sales model that works with larger enterprise distribution partners. Hence, customers such as Citigroup, Worldpay and Elavon. And Visa CyberSource is another such partner. And so FedEx, the Economist and Fiat Chrysler have come from that partnership, and CyberSource alone have 450,000 active merchants. So they're the kind of scale partners that Nuapay has historically targeted. The upside of this distribution model is partnering with customers with significant customer bases and volumes like the ones above. But the downside is that we are reliant on those partners prioritizing open banking. So our growth investment is about increasing our business development team and internal resources to be able to target both direct and enterprise customers and account manage our enterprise distribution partners to identify the opportunities that will allow us to scale. We'll be announcing further wins in the coming months, and I look forward to sharing those with you. I think the team at Nuapay have been very active on the sales front. And in the next couple of months, the market will see the fruits of that. On Slide 9, we have the key highlights for the first half, some of which I've mentioned already. But some others obviously include the approval from the CBI to allow us to launch programs in Europe under the material growth framework. We launched 22 programs in December, and some of those were -- as I've mentioned before, were signed prior to May 21 that were awaiting launch when we received the initial [indiscernible] letter from the CBI. So they will prioritize for launch. And from a revenue perspective, the establishment fees for those programs were charged in FY '21. Again, we've made significant investment into our European Risk and compliance function including the hiring of several senior execs. And in the next few months, we will welcome a new Head of Compliance, a new General Counsel and recently welcomed the new company Secretary and Head of Corporate Governance for our regulated entities. We've also entered into an outsourcing arrangement with HCL in India who will be assisting us with various reviews, which they can do at scale more effectively and efficiently than we can do internally because they're providing those same services for a host of banks and financial institutions. Our remediation plan is continuing, and we expect to fully complete it by June 30. And whilst we are still under remediation, and we still have months of work to do, ultimately, this will position us with a stronger business with more resources to support our future growth objectives in Europe. In the first half, we signed 33 new contracts and implemented 85 programs with 6 of those being Sentenial, and Sentenial signed 34 contracts in the first half, both pre and post our ownership. I'd also make the point that we resigned PCS, one of our largest customers in Europe for a further 3 years, which is a great show of faith by them in our European business and the direction that it's heading. One of the reasons we are able to maintain our full year guidance today is the impact of multiple initiatives that we worked on in the last 6 to 12 months. And in part, this was very much in recognition that our operating expenses in Europe would increase and that we would need to overcome that on an ongoing basis. Some of the changes implemented or soon to be implemented include a change in our acquiring partner, saving us an estimated $1.2 million per annum, implementation of monthly inactivity fees on dormant accounts, generating an estimated $5 million per annum bond purchases in Europe, which we expect will have a net $1 million uplift to the P&L in the second half, improved COGS as a result of the new agreement with Mastercard in Australia and Europe, contract renegotiations that will improve our margin outcomes and processing savings, as mentioned before, from April as our 2 largest European customers transition to the TRACE platform. On Page 10, we have our sales pipeline, which now includes Sentenial. And despite our regulatory challenges in Europe, I think our sales team have done a great job in continuing to build out the pipeline. Having looked at this recently, our win rate on the prepaid business is holding at 40%. In the prior comparative period, we signed 79 contracts with 55 of those being GPR. So our GPR new contracts in the first half was more than 50% down. But that shouldn't be too surprising given Europe is our largest market by some margin, and we were unable to sign new contracts in the first half. We are focused on the second half on getting back to our historical cadence of contract wins in the -- within the pipeline. From Page 11, we talk about some of those new programs, which I won't belabor because it's probably more important that we get into some of the other slides. But Slide 11, you'll see some new programs, both in our mall space, which is probably the first digital gift card program for a Malls customer that we've implemented with Cadillac Fairview, you got CoinJar in the U.K. and you've got Crosspay, which is a cross-border payments company that entered into an agreement recently with Nuapay. Slide 12, we talk about earned wage access, which we have talked about before, but it's 1 of the evolving opportunities we see, and we have some new partners there in that segment. And I believe that, that segment will be a significant growth driver for us because I think you're going to see a lot of disruption in the way that the payroll operates over the course of the next kind of 3 to 5 years. On Slide 13, we signed Banco Sabadell, a Spanish bank that will be utilizing our payments technology. And we signed Flexischools, a leading Australian provider of payments for children who have launched effectively a GPR card for children in helping them to understand the management of money. On Slide 14, investors would know that we've partnered with MoneyMe for the last couple of years, and that has seen GDV increased from $6 million in year 1 to $45 million in year 2 and is on track for $100 million this year. And this is a key part of our business plan that we've mentioned before, working closely with our customers so that their growth and success becomes ours. We're excited to announce that MoneyMe will be extending the Freestyle product in both the auto lending business and also into SocietyOne, which they recently acquired. It's that balance of organic growth from existing customers and growth from new business that drives the revenue flywheel at AML. On Slide 15, we outlined our partnership with AptPay in Canada, who we are working with to grow our GPR business in Canada. And again, on Slide 16, as I mentioned earlier, we've re-signed PCS, one of our largest customers in Europe for a further 3 years. Moving to Slide 17. Investors will be aware that Shine Lawyers filed a class action proceeding in the Supreme Court of Victoria. In the half, we have worked with our specialist counsel to determine what our likely legal expenses are over the expected duration window. We have taken a provision of $10.5 million. We will be asking the court to have Shine deposit this amount with the court so that they can cover our costs when we win. And given this is linked to the CBI issue, we've excluded the provision from underlying EBITDA. In general terms, we consider this to be both baseless and opportunistic, but it's in the commercial interest of Shine to drag this out and maximize their fees. So we've taken the provision and investors should expect this to play out over the next 3 years. I'm sure it's in the commercial interest of some to maximize media coverage of the action. But as it will be before the court, and I'm not a class action lawyer, I don't expect to be providing a running update on this, and we'll leave it to our General Counsel to meet any continuous disclosure obligations. On the next slide, we have a short Accelerator update. And in summary, we're making very good progress. We can now support visa programs in all regions. We launched Seamless in the U.S.A. which is our payments portal in conjunction with Interchecks. And we ended the open banking accounts for [ account ] industry in Europe. We've continued to invest in TRACE that we acquired as part of the PFS acquisition, TRACE has continued to scale up and obviously supported 1.4 million cards for the Northern Ireland stimulus package. And in April, as mentioned before, we begin transitioning volume from our outsourced processor across to TRACE. And the third leg of accelerator, our FINLABs investments have performed well. Remember, when we make these investments, it is about mutual access to technology and distribution, not acting as a private equity investor focused on investment return. But with Interchecks, as mentioned before, we have launched our payment portal Seamless, which incorporates our card payment technology with their noncard payment technologies such as Direct Debit, Visa Direct, Mastercard Send and PayPal. Interchecks recently closed a USD 16 million raise at $115 million post money versus the $20 million valuation when we invested 18 months ago. Our second investment Hydrogen launched their platform in the second quarter and have over 200 customers using the platform. They -- Hydrogen actually refers to them as [ tenants ]. So if you follow their -- follow them in the media, that's the way they will refer it to. We're steadily growing the number of users in GDV, and we're excited to see where this evolves to in the next 6 months. It's not material at the moment, but will grow and is showing some pretty promising signs. We continue to work on other FINLABs investment opportunities, and we'll update shareholders at the appropriate time. And with that, I'll hand to Rob to take us through the rest of the presentation.

Thanks, Tom, and good morning, everyone. I'm going to take you through the financial results review starting on Slide 24 pack. As Tom mentioned in the highlights, the results of the first half of the financial year delivered strong GDV growth. We're up 209%. We've seen organic growth in all segments and the acquisition growth as we consolidated the Sentenial Group from the first of October 21. We've also seen revenue growth of 20% over the prior comparative period with growth in all segments. Organic revenue growth offset low interest revenue. It's been a feature through the first half and also delayed establishment fee revenue in our Irish regulated businesses and a significant increase in our overheads which we put on to address concerns raised for the Central Bank of Ireland late financial year -- last financial year. The consolidation of Sentenial contributed $2.7 million of revenue and $200,000 of EBITDA. So 86% of the first half revenue growth was organic in nature. It's been a challenging 6 months, and the results are kind of really further evidence of the resilience of the EML business model. So I mean gross debit volume was up to $31.6 billion. It's a record result for the group and includes $19.5 billion from Sentenial, so say, we've only consolidated for 3 months of the year from the first of October. Volumes translate to revenues at different rates depending on the segment, but the GDV volumes indicate demand for our payment services. And in the period, we saw both the organic growth in all segments which contributed $1.9 billion of GDV growth or it's at 18% growth on the PCP alongside the acquisition growth. It's not all acquisition growth. There's a strong growth from organic sources too. GDV from our GPR segment demonstrated strong organic growth, we're up 29% in that segment, and is on $6.3 billion. We particularly saw strong performance in the Digital Banking, Salary as a Service and the government verticals, which were driving that segment result. Our Gift & Incentive segment saw a significant recovery from the impacts of COVID in the prior year. We saw record first half GDV. And although to a lesser extent than in prior periods, we did still see the segment impacted by social distancing restrictions, which were introduced in Canada, Germany and the U.K. in late November and December, which was in response to the Omicron variant. GDV was up 21% on the prior year with more volumes up 26%. Reward and incentive programs grew 4% on the PCP because we had some tougher comparatives with the prior period was benefiting from some nonrecurring COVID program such as the [indiscernible] program we saw in Ireland in the prior year. So in the early part of half 2, we've seen continuing challenging trading conditions, particularly in Germany, where key customer service desks remain closed, but we've seen incentive programs perform well with employers offering digital incentives to try to get employees back into offices. In the Digital Payments segment, this was our VANs segment in previous years following the Sentenial acquisition, we've renamed the segment to sort of better reflect what the segment does. GDV has increased by 431% to $24.4 billion with the acquisition of Sentenial driving 98% of that growth. It's pleasing to see the Nuapay open banking volumes have grown 30% year-on-year. This is prior to EML's investments being made to drive additional growth, which is happening now and what will be a feature through the FY '23 year. They were somewhat bootstrapped in terms of their spend on growth initiatives prior to EML acquisitions, as Tom said, the money that we're investing will help drive that forward into future periods. Moving on to revenue now on Slide 27. We grew 20% over the PCP to record first half revenues of $114.4 million. The group revenue yield is driven by segment mix. So that moved to 36 basis points through the consolidation of the Sentenial Group. Group revenues exclude $900,000 of noncash amortization, which is AASB 3, fair value uplift on the bond portfolio. That's an acquisition-related accounting. The majority of our revenues are generated from recurring revenue streams in the GPR segment. So GPR represented 61% of group revenues in the first half. So we are still a majority GPR business. The GPR segment grew wholly organically 28% revenue growth, up to $69.6 million in the period. the segment revenue yield flat at 111 basis on interest revenue and the loss of establishment fee revenue in the half in our regulated businesses. So we had a couple of headwinds that had to overcome in the last 6 months. The 6% over the prior comparator period, we saw increased volume, improved volumes in the period, offsetting the higher breakage rates due to COVID we saw last year. But the restrictions in Germany, Canada and the U.K. and our expectations for that 6-month period. Revenue yield, 408 basis points is impacted by the timing of revenue recognition. We're carrying over $4.2 million, which will be recognized in half 2 under AASB 15 compared to $3.8 million last year. Digital Payments segment consolidated $2.7 million of revenue through the acquisition of Sentenial and generated 7% of group revenues, the segment is strategically important to the group's growth prospects with the open banking product Nuapay is expected to [indiscernible] period. Moving to Slide 28 and looking at gross profit margins. Saw margin compression of 5% over the PCP to 66% in interest revenue in the first half. We dropped $2.7 million versus the same period last year to just $600,000 this period, that's approximately half the margin compression we've seen. We've guided to this previously, we've been challenged by historically low central bank rates in all of our key markets for some time. More pleasingly though, in December 2021 and more recently, just a week or so ago in February, we've seen the Bank of England raise the cash rate by 40 basis points in the U.K. on GBP. That's going to have an immediate benefit to group earnings in the second half. These moves by the Bank of England are worth more than $2.5 million in annualized interest rates. So they're one of the first central banks to start moving late and it's going to have an immediate impact on future interest revenue streams. So the headwinds we've been facing for several years now are already starting to turn. We expect to see further interest rate rises in many of our [indiscernible] -- we'll talk about this more in review guidance. But on Page 36, we've outlined the breakdown of our $2.7 billion float into the currencies in which they're held and given an estimate of the certainty be a direct beneficiary of interest rate rises with a small amount of debt denominated in euros and we've got a large liquid float balance to earn as interest. So it will be a net beneficiary from interest rate rises. Group gross profit margins were also impacted by a reduction in set-up fee revenue due to simply revenue in the second half as new programs gradually launch through this next 6-month period. Restrictions only impacted the European operations of prepaid Financials business unit and translated into a reduction in the overall GPR segment margins. It's significant because the set-up fees compared to gross profit at 100% margin. It is better, both through interest, immediate interest rate rises impacting interest revenue, but also better in establishment fee income, but then also through a number of initiatives that we've been working on some in the second half. During our acquisition of PFS, we had predicted synergies from the in-sourcing of payment processing, currently a cost of more than $5 million per annum, and we've been working hard to develop that internal processing platform since we acquired the business. We've now, in the last 6 months, had successful launches in Northern Ireland stimulus, which is more than 1.4 million cards and the Aspen program with the U.K. Home Office, which has proven the capability of that processing platform. So now we'll see starting in the next few weeks, volumes from our -- 2 of our major European customers will already start to transition through the second half, and that will generate at least $3 million of total savings in FY '23. We've also agreed price discounts with our key payment schemes in both Australia and Europe. These take effect from 1 January and improved margins through lower transactional costs from our scheme partners. We've commenced reactivation campaigns to encourage customers with dormant accounts to recommence using their accounts, and we've also introduced account maintenance fees to offset the increase in cost of compliance and the negative interest rates on our euro float. We'll talk more about that in just a moment. Moving on to Slide 29 now, in overhead. We're slightly ahead of our guidance range for costs. We had overheads in the first half, $48.5 million, so 45% of the midpoint of our overheads guidance. We're up 24% on the PCP, and we still expect costs to increase in the second half as new roles recruited in the first half and starting in the second half will impact this future 6-month period. It's worth reflecting on the context of the overhead increases though in the achievement of the remediation project in the period. So whilst the increase in overhead is significant, the rapid actions taken and the new roles recruited have been essential in regaining the confidence of our regulator. So we've demonstrated our commitment to meeting their expectations, and that's led to the path forward that we announced in November. Without the commitments to these spends and a significant increase in the spend on people, controls, technology overheads, we could have been stuck in a challenging regulatory dialogue with this regulator for a much longer period. The majority of the increase in costs is related to PFS and, to a lesser extent, the consolidation of Sentenial for 3 months. So the increase in the PFS cost base will support growth in future periods. And so whilst we're at the forefront of the evolving regulatory requirements, we're expecting all industry participants or all of our customers to face the same challenges in the future period. Looking at Slide 30. Underlying EBITDA of $26.9 million was down $1.2 million, down slightly on the PCP as we were unable to entirely offset the impact of the cost increases, the lower interest and less setup fee revenue in the first half despite strong revenue growth. The slowdown in late November for the gift volumes due to Omicron was really the gap, we're expecting to close it in the second half with the initiatives I outlined earlier. These aren't new initiatives, these have been worked on for over 6 months, and they were started because it was clear that our cost base in Europe would increase markedly, and we can't sit by and not respond to that. So we've been working on all the levers, on customer pricing, contract renegotiation and new fees on dormant accounts. We were impacted, as Tom mentioned, by nonrecurring fees associated with the CBI remediation project. It's about $2.2 million and by class action litigation initiated by Shine in late December 2021, so we've taken up a provision. As Tom outlined, Shine Lawyers filed group proceedings in the Supreme Court Victoria in December and EML vigorously defend them. We've recognized a $10.5 million provision for the likely legal costs that will be expected to be incurred in defense of these claims. We intend to seek an order for security to such costs from the class action plaintiffs and we also hold an insurance policy, but it has not yet reached the necessary accounting criteria for recognition at this time. So including these nonrecurring costs, group EBITDA was $14.2 million. Moving to Slide 31. We bridge the movements between EBITDA and NPAT and -- NPATA. But we still consider 9 million to better represent the trading performance of the group in the period. Looking at the balance sheet on Slide 32. We remain in a very strong balance sheet position with $86.2 million of cash on hand, and we have $30 million of breakage accruals, which is the contract asset of which 64% of this will convert to cash within 12 months. As Gift & Incentive volumes have improved in FY '22 year-to-date, this has led to a working capital outflow into the contract asset as compared for the inflows we saw in FY '21 when our volumes were impacted by COVID. We've split out cardholder assets of $2.06 billion and a liability owed to our cardholders of the same amount. These are the amounts held on behalf of our customers and cardholders, and the direct -- and the amount to be self-issued for these products under our own licenses. And so it's less than our total float of $2.7 billion, which includes the North American business where it's issued by our partner banks. So when we look at the interest rate potential upside, it's a $2.6 billion that's the more important immediate number that we'll benefit from positively of the $2 billion, that's significantly weighted to GBP where we're already starting to see interest rates move upwards. Trade receivables grew in the period. We had some delayed receipts of approximately $8.6 million from 2 customers. We've already received 75% in the half -- in the second half. It's already in our bank. And the remaining is just a timing difference both from the Northern Ireland stimulus package for the 0 risk of noncollection. We don't have an issue of receivables. We typically sit on client funds. So these are just timing issues in the first half that have already corrected themselves in the second half we speak today. Intangibles increased with the acquisition of Sentenial and the valuation of their software and goodwill being brought onto our books. So associated with this acquisition was also the drawdown of $48.2 million of interest-bearing borrowings from our banking in the period. Mentioned the provisions we've taken up, we've got $19.7 million there as at 31st December, and that will fund the expected future cost of the PFS regulatory matter and the legal phase associated with the class action. So trying to draw a line under the class action by fully providing for it in this period. On Slide 33, we show underlying operating cash flow of $14.7 million, which is impacted by the delayed receipt of those 2 large customer balances totaling $8.6 million. As I say, 75% of this has already been received in the second half. So we'll see this come through with the cash flow in the second half. Slides 34 and 35 now thinking about guidance, underlying guidance for FY '20 -- FY '22 as follows, we're talking revenue of $230 million to $250 million. That's up between 18% and 29% on FY '21. And still expecting gross profit margins of around 69% for the year, overheads between $103 million to $112 million, which is up 34% to 46% from FY '21. And that result of that is underlying EBITDA forecast, which we're maintaining. We're reaffirming our guidance range of $58 million to $65 million for the full year FY '22. There's obviously some assumptions that underpin that guidance range. We're assuming the Gift & Incentive segment will perform in line with seasonally adjusted trends. So we're not expecting to see a significant impact from COVID-19, a new variant or some other issue cropping October '19. We're implementing opportunities to reduce dormant state balances, including the activation programs or which will drive interchange revenue or dormancy fee if the money is not reactivated. So subject to finalization of this initiative, we expect a new recurring revenue stream, and we expect a nonrecurring catch-up in the second half with the new fees on dormant accounts. So we're not seeing any pushback on these. There's no competitive pressures there because they're dormant accounts. And they have been so for some time. We expect to be able to continue to launch new European programs under our CBI license, and we don't expect a material impact from the growth directions which have been imposed. Overheads are tracking in line with expectations announced at our AGM in November with higher overheads driven by new roles in Europe to address the CBI matters, higher insurance costs and higher internal and external audit fees. Detail on the potential interest rate benefit. I don't have a crystal ball, but there is a strong rhetoric around interest rate rises at present. So we provided the breakdown of the cash balances by currency. So investors, you can really do your own modeling and your own expectations of where you think interest rates can go, we obviously have our own views on that. Bear in mind always forecast to write for the medium term. It's been 3 years, you could see multiples of this. We've seen several years of headwinds from interest rates and FX rates, which follow interest rates primarily. So it's pleasing to see this start to turn into a tailwind in future periods. If you look back on our results from several years ago, interest was a much more significant core revenue stream. And so I can't predict the timing, but if we saw a 50 basis points rise across the board at $7 million to $8 million, if we achieve the sort of consensus economic forecast and we see the interest rate rises that the smart comments are predicting, then you could be looking at a $30 million revenue stream in 3 to 5 years' time based on current volumes that we're seeing. And so with that, I'll hand it back to the operator to open up for any questions.

[Operator Instructions]

Had a couple come through from the webcast. The first one was if interest rates would rise tomorrow by 1% globally, how quickly will the earnings benefit the group? It will happen immediately. So it's on the liquid float, we've broken out our float into liquid as well as the sort of bond investments, those bonds are very fixed. Majority of our portfolio is held in liquid and so you see it start to rise immediately.

The first question comes from Steven Kwok from KW -- KBW.

I guess just the first one I have was just around the CPI investigation. I think you mentioned that in June, you'll have more. I guess, like what are the steps going forward? In June, if everything is remediated, is that the end of the investigation and there's a -- you can continue to grow and sign up new clients? Just wanted to get a clarification on the CBI side.

Yes. It's Tom Cregan, speaking. Yes, that's correct. So the plan has always been for us to implement the full steps in the remediation plan by June 30. Now included within that is customer notification. So if you're changing limits to certain customer programs or changing terms and conditions, that requires a 60-day notification to comply with consumer law in most countries. So that is included within that time frame. And the process is really that the remediation plan is completed internally and then gets independently reviewed in what's just called an independent assurance process. So that -- so the first step is the Board of PCSIL sign the remediation plan off as having been fully implemented. It then goes through a kind of independent assurance process, which just validates that all of the steps and changes have been made. And then effectively, the program is over because at that point, the CBI's expectation is that it's been what they call internalized. And so all of that -- all those changes to policies and procedures and so forth are then part of the BAU, not part of an ongoing remediation plan. We are able to -- I mean, obviously, bankers have [indiscernible] with others. So we are signing other customers in Europe as we speak, and we're able to put those forward to the CBI for approval as well as the ones that were launched late last year. So I mean, I think the good news is kind of competitively, we're not kind of stuck in the concrete there, we're able to talk to customers and actively prospect and sign. I don't think -- I'll just make one point that I made before. And part of this is luck and good fortune, but the nature of this industry in terms of the sales cycles mean that when we receive notification in May, the original notification from the CBI, there were -- obviously, these programs that had already been signed that were waiting kind of implementation. For those customers, it's obviously not ideal that they had to wait to launch them. But in their shoes, they would have had a couple of options, and one of those options was to wait and to trust us to get the issues resolved and get their programs live or to go and find an alternative provider. But in doing so, you're then starting the process again. So you then have to find a different provider, redo all of your technical integration work, which might take 6 to 12 months. So we didn't see any real defection of signed customers because they're in that -- I guess, in that between stage where it was just easier for them to work with us and expect us to get their program live. Similarly, for new business that you're signing, the CBI have -- and most regulators have to approve new customers. So if we were signing customers today and putting that forward there's no expectation really of that customer that it would be any less than 90 days, right, to get regulatory approval. And obviously, that customer then has development work on their side. So on average, that's kind of a 6- to 7-month process for the customer to do work -- the development work on their end. So again, I think our prospects and the customers are in the pipeline. Just expected us to have this done and have the remediation plan done such that it wouldn't impact the timing of their launch. And that's where it sits.

Yes. Got it. And I had a follow-up question around just the guidance. As we look at the first half results, and I was just wondering like how much was like Omicron impact? And then you kept the guidance the same. So I was thinking of relative to your prior guidance, like what are some of the new things you've implemented. I think you've called out like acquiring fees, the dormant fees. Were those back into your previous guidance? I was just wondering to see like how much of a headwind did you have? And then where would the areas of offset to get you back to your guidance for the full year?

Yes, that's a great question. So I mean the Omicron impact is always very hard to say what volumes you didn't see come through. But I mean, based on the run rate that we were seeing through November, which you've got Black Friday going in there through for the sales there. So you've got a decent amount of lift of volume going through. We'd estimate it's around about $100 million of volume. So that's about $6 million of revenue, just under $5 million of GP that was the headwind, we think, from Omicron through last week in November and through first 3 weeks through the Christmas in December. That's the headwind. How have we offset that? I mean I think we'd factored in an element of dormancy phase, but I think it's going -- the project is progressing well. It's a complicated project. You're working in multiple countries to work for consumer law onto it. That's progressing better than and faster than expected. We've seen interest rate rises are going faster than expected. I mean, the Bank of England probably moved faster than most economic forecasters who are typically quite conservative, and that will immediately benefit earnings. And we had factored in the Mastercard agreement in Australia. And so I mean, partially built into guidance previously, we'd obviously left ourselves some room for things not happening exactly to plan. So I think most investors have heard me talk about certain banks on 365 days of sunshine. I think that's really what you're seeing there. So yes, we definitely -- we're a little bit disappointed in terms of the GDV in through from malls, but the actions that we can control have been going better than expected, and that's what we can focus on what we can do. Tom, there's been a couple of questions as well on interest to the chat, which I can probably weld into a little bit more dialogue. And while part of it is we've got a $2.7 billion float, a 1% rise doesn't seem to correlate directly to $27 million EBITDA. It doesn't because of the U.S. dollar float, which we don't own interest until we -- until the U.S. Central Bank rate goes above 2%. And so that's a big gap. And then there's -- Canadian, I think, is 65%, 70% of the interest we get to keep. So there's some nuances in that. But broadly, we took $2 billion of the amount that's on our balance sheet. We get the interest rate benefit on that immediately, washing through. So we're already starting to see improved interest on our GBP balances, which is a significant part of that flow that's already coming through now.

The next question comes from Elijah Mayr from CLSA.

Can we just sort of go into more detail on the overheads? I guess, going into sort of the full year guidance, it's implying, I guess, around $60 million for second half '22. Can you sort of maybe give us a bit of color on how you expect that to progress in third quarter and fourth quarter? Just trying to get a sense of what that exit rate for overheads will be towards the end of financial year '22?

Yes. I think your exit rate is going to be your second half run rate. I mean the -- you've got -- you're consolidating up Sentenial overheads for a full 6-month period, not a 3-month period, that's part of your lift. We're also investing heavily in the Nuapay product and building our open banking position in that market as well. So that's part of the lift. And finally, you've got the roles Tom has called out. A new Head of Compliance is a significant -- the recent expensive roles that we're putting in place. And so that's really our run rate through -- if you took your second half OpEx run rate, that is your run rate through into FY '23.

When -- I think, Elijah, when we're hiring the people that we've hired in Europe in that space, so just for the benefit of most on the call. So regulated businesses over there have what they call PCF functions, so control functions. So the CFO will be a designated PCF, our head of compliance will be a designated PCF. Any of those PCF roles have to be approved by the regulator. And so what we've done is hire some really seasoned people who have been in the industry for a long time, have held multiple PCF roles across different companies in the industry so that they're basically already known to the regulator, right, because they would have worked with them in various roles. So some of these people we've hired have got a 20-year track record. They're not cheap. But at the end of the day, that's not really the point. We're hiring people there to the now. And so the other thing I would say is we -- historically, whenever we've looked at adding senior executive into the business or growing expense in some part of the business, we've always looked at how you self-fund that, right? But this first half is not a period to think about self-funding. We could have been really, really cute and said how do we minimize overhead additions? And -- but that wouldn't have got us back in business with new programs in December, and that's really the crux, right? I mean I'm not going to worry too much about overheads in the half versus our long-term competitive position, which would be impacted if you were unable to launch programs and unable to sign new customers. So the run rate as of June will include those individuals. So that will be the starting point. But you're not going to see the same kind of growth in -- Sentenial will be net new, which you'll have to model. But after that, I think the kind of expense growth will just return to what the historical levels were previously.

I think that's key because you're going to see we've managed to maintain strong revenue growth, we're up 29% in the GPR business. You can outgrow a step change in this overhead base from FY '22 year, you can outgrow that. And so this isn't unusual. We've had a strong track record of holding the line on -- in terms of leveraging the cost base. This is the first year we've had to put in place a pretty significant increase, but we've managed to maintain the revenue growth. So the overheads will correct themselves over time.

Yes. I appreciate the color. And then maybe a second one, just on the sales pipeline increased to -- in terms of the projected 3- to 4-year GDV to $13.6 billion from, I think, $10.5 billion. This period seems to be including Sentenial, can you give us a sense of that $13.6 billion, how much of that is sort of from underlying -- the underlying pipeline and how much Sentenial, I guess, contributes to that projected GDV?

Yes, the prepaid section is probably in the $10 billion range and Sentenial will be $3.5 billion in that kind of magnitude. So if you look at the pipeline, if you went back a year ago, we would have, call it, $10 billion in the pipeline. You've got a 40% win rate. Our GDV this year is up 20% to 40%. So you've always got conversion of what you said a year ago kind of coming through. And then you've got your future conversion coming through as well. So the prepaid side would be around the $10 billion mark and Sentenial would be in that $3 billion-and-a-bit mark, I think.

Tom, I'll close it there and let some other questions come through. Thank you guys.

The next question comes from Tim Plumbe from UBS.

Just a couple of questions from me, if that's all right. And largely follow-ups from Elijah. But we spoke about the uplift in costs, Tom. How do we think about the operating leverage opportunity for this business in FY '23 and beyond now that you've had an extremely material uplift in FY '22? Is there significant further investment that's required? Or should you get pretty strong operating leverage with top line growth thereafter?

Yes. Look, I just think our expenses will just come back to their normal cadence. I mean you're not going to have the cost of remediation, which, from a cash flow -- I mean, we obviously provisioned them last year. But from a cash flow point of view, is still pretty significant. And so I think by the end of June, we've really got the kind of Europe business kind of rebased, I would think with the increased costs around that. The rest of our businesses is on budget for OpEx and just in line with normal historical standards. So I think look, when you look at leverage, you look at things like processing savings being banked next year, which we're pretty confident of because when your 2 largest customers are migrating in April, then it becomes more definitive that you're going to obtain those savings in the next couple of years. And when we bought PFS, we said there was about $6 million of third-party processing saving, but it's still GBP 3.2 million a year as we sit here, right? So there's -- given exchange rates 6.7, something of that magnitude, million. So you start to get that leverage come through. Interest rates will give us leverage that we haven't had before. In fact, if you just take quarter on, if you just take a half on half, we had to eat $2.7 million of negative net interest, which we didn't have to eat in the prior comparative period because we weren't European regulated, right? So we only moved to -- it was Brexit, so we had only moved there in December. So you didn't have $2.7 million to -- of both revenue and margin to -- which we've had to outrun in the first half. But obviously, you can't outrun it because it is what it is. So you got to find ways of addressing that. So part of that is interest rate recovery. Part of that is bond purchases that we talked about earlier, which had about $1 million in the second half. So you start to get that coming through. So that's where some of that leverage comes. If you're growing revenue at 20%, 25%, and you're starting to -- you just get back to more of a normal cost OpEx cadence than I start, I think -- and you get margin improvement from those items, I think you start to see the EBITDA margin is going to move up accordingly.

Got it. And then just the second one, a follow-up in terms of the sales pipeline. Maybe are you able to give any color in terms of potential new vertical opportunities that sit within that bucket? Or how we should think about the timing around that potential sales pipeline? And is there a significant portion of that should come up for decision-making over the next 6 months?

I don't know if that's a significant portion. But I mean, we're kind of -- I know it will sound a bit cheesy, but if we were doing this call in a month's time, we might have a few more to announce. But we certainly think material opportunities that were in the pipeline last year because we often get asked out of a $10 billion pipeline, what are the bigger opportunities within that. There's always ones that are small and there's always ones that are larger on the bell curve. But on the Nuapay side, I think in the next kind of couple of months, 6 weeks, they've got some pretty sizable deals that I think would be ASX worthy of announcement. In terms of materiality on the prepaid side, I'd expect a couple as well in the next -- I'll say in the next month that are ASX worthy. Obviously, the more deals -- the more customers we have -- you can't use the ASX as a marketing platform, right? So you can't go and put every new deal on there because they'll just knock you back. But I'd be surprised if we don't have probably 4 announcements in the next month. So I said in a month's time, we would have a few others. And the key -- they're, I'll just say, more sizable and if you can get them in, then obviously, you're getting -- they're the kind of, how would I call it? They're not foundational, but they're the ones that scale you quicker, right? I mean you can add a lot of programs that in year 2, it might be $10 million, $20 million or you can add some that could be 200, 300, 400. And obviously, the other ones that we're aiming for. So I think it's a bit of a watch this space, but in the next month, I'd expect we have 3 or 4, yes.

I'm sorry, just in terms of any color you can give us in terms of new vertical opportunities that sit within that pipeline? Or should we be thinking similar verticals that you're already servicing such as Nua banks, online gaming, et cetera?

Yes, I think -- well, I mean the -- I'll go to Nuapay first, then I'll do the GPR piece, but certainly on Nuapay, it's -- it covers acquirers, it covers aggregators, it covers payment gateways who want to use open banking services because their merchants are asking them to have open banking services available, and they're expecting that at a lower cost, right. So you've got kind of competitive tension there. Obviously -- there was a company yesterday called Banked, which we looked at as a FINLABs investment before deciding to acquire Sentenial. I mean they raised $20 million, their key customer is Bank of America. So you've got Bank of America looking at adding open banking into their kind of merchant services, the same way that Nuapay has done with Elavon, Citi, Worldpay and a bunch of others. And so they're making -- SafeCharge, et cetera. So they're making good progress on getting through there. So that will be the kind of decent ones on the Nuapay side. On the prepaid side, honestly, it's still pretty varied like there's one that I can't go into, but I will go into when we announce it, which is a new -- it will be the first time we've been -- we've gone into that vertical in Europe, but it's probably -- it will probably be our largest vertical by opportunity, size, and there's a lot of data on it. And therefore, we can provide some more color on that when that gets announced. But yes, earned wage access, several customers in that space, digital lending. I mean as we said here, we signed a contract as we said here with another digital lender in Australia. So I would say lending, earned wage access, disbursements. I don't think there's any particular skew in the pipeline. I think it's pretty balanced, pretty varied.

The next question comes from Garry Sherriff from RBC.

Tom and Rob, a couple of quick questions on reloadables and also supply chain and wage costs in loadables. Some of those 3 verticals you called out, gaming, salary, packaging and government, any tailwinds or headwinds that you see for those verticals in the next 12 months?

No, not really. I mean, I think our gaming is always a pretty resilient right to most of those -- to most cycles. We didn't call it out in the deck, but we just -- we already had [ 365 ] as a customer in the U.K. and we've launched it into Italy and Spain. So you've got customers that are kind of increasing or launching it in different countries, but I don't really see any good times, bad times. I think gaming is pretty resilient in our business. In [indiscernible] is brand new. I think I said last year that I think in years to come, it will change the way all of us get paid. And then this concept of you get paid once a month because that's just convenient for your payroll team is gone right now. you've seen lots of companies attack that vertical in different ways. So you've seen companies that are attacking it as a quasi-lender, kind of lending new money against your against your future payroll. We've got all -- they're more of a platform provider. So an HR ERP system that has payroll functionality that's added in wage access and won't charge for your salary to be drawn down because they make their money on the SaaS fee on the platform itself, right? So one of our larger opportunities in the next month will be in that space. And it's early days, but my gut feel is that the platforms will win out in that space. I just think that charging people for the access to their salary, I think, won't stand the long-term testers of regulators and what have you. Certainly, in the U.S. in different states, you can't do that because labor laws would preclude you're doing that. So I think the platforms are the way to go. We're certainly pretty active in that space. So excited about that. Government. I don't see any real change in that position going forward. Northern Ireland was obviously one of our larger stimulus programs, but we're talking to other governments about similar programs. But the Northern Ireland government was pretty -- was excellent actually in terms of promoting the success of that program. So there was just a ton of media in Europe on that, which has driven inquiry from other governments in different countries, so that's positive for us. So no, I don't know if you see any segments that are kind of subject to any kind of economic headwinds. And that's -- Rob, if you've seen any, but...

No. I think what I'd add is that we've reiterated for a while that we've got incredibly low customer churn. I mean, it's fractions of 1% over a 3-year cycle. It's a very low customer churn. And so when you've got GDV and revenue growth in GPR segment of just under 30%, you will always see a larger second half to the first half. That's the normal trend of our results is a bigger second half to first half. So I don't see any particular headwinds, but I also see that you're building off a bigger base. So all the programs that we've been adding in the first half will contribute more to the second half than the first and so on. So salary packaging vertical in Australia is -- it's incredibly resilient. It's doctors and nurses payroll. So no, I don't really see any macroeconomic headwinds. I see a lot of benefits. We see a lot of benefit from interest rates. And I see a benefit from FX rates on the back of the interest rate term. And if you look at the GBP, the Bank of England now 25 basis point increase in the exchange rates moved from 1.8 to 1.9. On the back of that, and we've got a significant amount of offshore earnings. So we faced headwinds for a number of years, which has sort of been -- we've outgrown largely in previous years. Now we're going to get some tailwinds, which is going to be helpful.

Last 2 questions on supply chain. Any shortage issues for plastics or physical cards or any increased costs that we should factor into for the second half '22 and '23? And I guess a similar question in relation to wage costs.

No on the plastics. So we did hear of some companies that were struggling to source cards in the U.S. in particular, but we haven't had an issue, I think, just given the amount we buy, our suppliers at a global supplier like GND really prioritize our business, pay a lot of attention to it. So no issues on that front. On the wages front, now, it's not really disruption, I would say. I mean, I think most companies are seeing more turnover from staff, this kind of so-called great resignation seen and pay is under pressure. And then I think I was talking to someone recently in the last week, who was -- didn't work for us, but was in an HR role on 135 and got recruited for 250, right? So you're seeing that happen, but we just don't pay those southwest front. So we wouldn't be hiring in that business. So I mean, our rent structures are pretty fixed. We've just got to work with them. So in some cases, that might mean you see a bit more turnover because you're hiring people and, a year later, they're getting poached for more money, that's okay. But we can't really compromise the written framework or we'll just be chasing tail nonstop. So I think it's a reality out there, but it's not really influencing the way we're paying people.

Mr. Sherriff, does that answer your question?

Yes, it does.

Before we go to the next one on the call, maybe we'll just quickly do 1 from the chat that's come through, Tom, on the question about are the CBI approving the new programs and what are the impacts of the material growth restrictions?

Yes. So the material growth is in place until October which is actually December -- I think about early December. And we haven't gone into detail with the market around what that restriction is and how it would kind of impact our business. What we said last year and what we have done is create -- if you think about it like a professional sports team creates salary cap space by exiting certain programs that had significant volume but very low yield in order to replace that volume with higher-yielding programs. So we have done that and created significant enough space to put it that way that our -- we don't see any the likelihood of exceeding or having that impact in our business for this calendar year. We think we'll be able to operate under that material growth policy, but obviously continue to grow our business organically with the customers we have as well as our new business. I think the second question was, are we submitting new contracts? We are. So as we're signing new contracts and they're going through a kind of revised risk review process, we will be submitting them. They -- as I said before, there's 90 days that the regulator has to approve those programs. So that's pretty standard whether -- with different regulators in Europe. So you wouldn't see new business having been approved because we wouldn't have even submitted it until January. So I think you'll be looking for that in kind of the March, April time frame. But in order not to be kind of tone deaf, we're going to follow that to the regulator. We -- our agreement is that we will only put in or only submit programs that kind of meet a certain risk threshold. And when I say that, it's more -- it's not financial risk or anything like that, it's just the kind of the framework of how programs are assessed in Europe. And so most of the programs that we'll be submitting are going to be pretty vanilla, if I can say that, in terms of the countries in which they're in, which removes kind of geopolitical risk as a consideration. So there's a bunch of stuff we're doing there. But long and short of it is, we don't see that based on programs that we expect to sign and the pipeline we're in, that we would have that, that material growth restriction would be an impediment to us.

Thanks, Tom. I think the operator can go back to a question from the phone?

The next question comes from William Cunning from Carter Bar Securities.

Tom, Rob thanks for all you've provided so far. I've got a couple of quick questions. Just firstly, just could you maybe provide a bit of color just on your outlook for the multicurrency business? Just as we look at sort of travel resuming especially around Europe, I think that business is to do maybe $120 million volumes, if I'm remembering correctly. What -- how much of that is sort of baked into the second half? And maybe how can we think about that going into FY '23?

Yes. Not much is baked in of the second half. It's really kind of a very heavily skewed. I mean, last part of June, but far more skewed in July and August. We've -- because in our multicurrency programs, I mean, we signed a large customer that used to be a wire card a customer called [ Vale, ] which we signed last year. But obviously, the volumes of that won't -- just haven't come through. And a lot of the programs, if you look at Centtrip and Vale and these type of programs, a lot of them are like expense management solutions for people that are in the travel industry. So for example, both Centtrip and Vale, you're talking about corporate expense cards for one of a better word that multicurrency for shipping operators and people that run op fleets and yacht rentals and things like that all throughout Europe in those kind of summer months. You've got Avios, which is obviously more of a B2C model, which I think will do far better. I mean really last year, we didn't do anything because of restrictions. But I think you're going to expect to see that better. So a couple of cards really since we bought PFS, it was about 10% of their earnings, and that disappeared with the advent of COVID. But I think that we'd be looking forward to that coming back in FY '23. We just haven't had that in the last 2 years. So again, probably back to one of the previous questions, I mean, we see that there's a bit of upside but a bit of leverage, too, given the margins are higher in that product segment.

Yes. And I guess that sort of feeds in perfectly to my next question. Just on the GPR business, just the whole combined business. Should we see some degree of revenue margin uplift if we think about the maybe faster growing programs of U.S. gaming, obviously, multicurrency? My understanding was that they transacted a higher margin than maybe some of the other programs that you've got. Should we see that maybe progressively build year-on-year from '23 to '24?

Look, I think it will build, but I wouldn't be putting any real aggressive forecast into the yield because the yield is just a mix of different programs, right? So if you looked at -- gaming in the U.S. is higher than gaming elsewhere for us because of the interchange rates. So you've got benefits in certain markets, programs in Australia, and we might do some of these overseas that the salary packaging programs that are more fixed price models, if you like, so you're charging fee per month for the card irrespective of volume. Obviously change of the yield. You've got government programs in certain markets. In the U.K., for example, where the program might be 40 basis points, but part of our earnings stream is more funds are predeposited with us by the government, which we then invest in government bonds. And so the collective gets you to the same number of yield. So where the yield is, I would try to keep it steady or I'll slightly increase it, but I wouldn't be going too crazy because even in -- with multicurrency that's north of 200 bps, it was 10% of PFS where we boarded. PFS is obviously a much bigger business now, so it that might 5 -- it might be that 5%. So it's kind of -- it will move the needle a little bit but not usually.

Yes. And then I guess my final question is just on the Nuapay business. I mean you had that for a couple of months now. Just off the back of COVID and what you've seen in sort of uptake in open banking, do you have any more sort of learnings from that over the last couple of months? Or any sort of improved view on the open banking market going forward?

Yes. Look, we were all pretty bullish anyway because it was our first acquisition, I think that was that was done, obviously tied into our project accelerated strategy. But you're buying a business without any earnings, which isn't kind of historically what we have done. And buying a business that was undercapitalized that required -- it required just funds for growth and it required someone like us with bigger scale to leverage some -- instead of them building out their business and having to hire people and finding if they can leverage people that are already in the e-mail finance team or the IT area or so on. But look, I just think in a simplistic way because I'll be a salesman for it because I'm a believer, and I led that acquisition. But I just reckon you've got to look at where I call it the smart money is going into that place, right? I mean when TrueLayer raised $100 million, GoCardless was $312 million. I think they raised $190 million, I think the last time when you look at the PE investors that are in there, I mean there are no falls, right? So they're seeing this as a 10-year transformation away in the way people pay. It's not there today, but that's why they get in early, right, so they can reap the value of that. So I think we're -- I take a lot of comfort out of that because they see huge growth prospects for those companies that are in the market and so do we. The -- and I think some of the things that they're working on that are really going to come to fruition, right? I mean when you're -- so one of these ones we have to announce kind of early April, all things being equal. But you can -- you've got different competitors there with different strategies. So you've got some that focus more on the data side of the equation. So a company like Trustly, for example, which -- I'll describe their business. They would describe it differently, but they make a lot of money out of account verification. So Spotify, Netflix, Disney. So when you go for a subscription payment they're kind of validating you and they're validating that you've got money in your bank and money in your card and so forth and for which they get a fee. You've got other companies that are like Nuapay that make more money out of the actual physical transference of funds. But there's plenty opportunities in that space that, to me, just have a perfect fit and things that aren't competitive to us. So I'll give you an example, crypto payments, for example, regulators are more and more interested in money going into a crypto exchange from a bank account, so they know where the money came from. And they're more interested in when the individual withdraws money from that crypto account that it goes back to their bank account. So that program, our card doesn't really fit the use case for that because our card kind of sits to the side. It's not -- it's not a core in a bank account. So I just see use cases evolving over time for that business. Things they're not even doing now, subscription payments and other things like that. So I'm as bullish as I was when we when we bought it. The biggest thing I'm bullish about, I mean, we're going to 3 months and 4 months, so it's kind of early days. But you always know whether these acquisitions are going to work within the first 90 days because if you buy them and everyone is nice to you when they're selling the business, right, because they want the check, and that's just the way it goes. Once you own it, you get a sense of just how the people will all be great and the culture and so forth, and the team there have been fantastic. I mean, you just don't see -- you see them really wanting to be part of a growth driver for EML. You've got -- by the end of June, I think we would have kind of integrated their IT teams and finance teams and HR teams into the broader European business. You don't see any political rubbish, they just want to get on with it. And to me, that's what gives me hope. Like if we'd spent the first 90 days haggling on roles and what my job title is and all that stuff, you go, oh my God, this doesn't all go well. State of the opposite. They're actually oriented. They're a really good team. They've got some great people, and they're just hungry, and that's exactly the kind of business we need.

The next question comes from Brendan Carrig from Macquarie.

Look, I'll just make a quick follow-up, really. So my question was just on the CBI. So around the independent sign-offs that you are looking to potentially get, is that still a prospect? Or Tom, your comments about the material growth limitations being in place until December. Does that effectively negate the potential for that independent sign-off for the CBI remediation plan?

No, no, we'll still do that. The sign-off is just part and parcel of the program. So the -- yes, so that will go in. That's not going to be a huge cost. I mean if we spent millions in round terms, it might be $150,000 or something like that for that 150 -- couple of hundred grand for that independent assurance, it's not a crazy number.

Does that not then -- if and when you get that say in the next couple of months, why then would the material gross limitations need to be in place until December of this year?

Yes. And the -- it's possible that they're not, but the -- so the CBI have said that they're willing to review that, right? So if -- when we get to June 30 and when that program is complete and has been signed off, then we're fully able to go back to the CBI at that point and try to have it removed. So that option is there. And has been acknowledged by the regulator that we're entitled to try and do that at the time. So probably the best way of answering that. So I think we probably would do that. But as it stands, if the kind of that restriction is there until early December.

Okay. And then just a quick follow-up on Sentenial. So the EBITDA contribution for the first 3 months was effectively 0 and then the guidance is 0 to minus 3 loss. So then is it fair to assume that now the spend, I guess, steps up, given the guidance range for the remainder of the guidance period? And then I mean, just following on some of the comments earlier, is it reasonable to assume that we should start to see a bit of a tick up in FY '23? Or -- because the counterargument to your sort of optimistic comments about money flowing into the sector is actually that it's becoming more competitive and actually might be more difficult to continue to win new clients and to gain momentum in the space?

That -- these things are start of a 10-year play. I mean this is miles and miles away of any competitive saturation coming apart. I mean you're talking about -- if you think about -- this way I look at our businesses as -- prepaid is inherently a niche business. I mean, you've got different niche applications and use cases in gaming and salary packaging and so forth, right? And this wouldn't be just us, but it's our competitors as well. Because it's niche, you see yields in the realm that we make because companies have got to have a business model. When you start looking at open banking, you're talking about the total size of banking payments in a region. It is just astronomical. So I don't think that -- I think of years before we're worried about kind of competitive tension or saturation. And you've got different companies targeting it in a different way. So as I said, you've got trustee who have a go-to-market strategy, TrueLayer, who are really good, look like a pretty good business who've built a reasonable volume. I think GoCardless have done well. GoCardless typically looks out for small merchants. So they have an integration with Zero, for example, right? So they're providing open banking services for small businesses that are attached to those platforms. So it's just miles, miles too early to worry about consolidation and competitive tension or like...

Can I ask then just how the rollout at Worldpay is going from that perspective because if they then push it out to all of their merchants? Obviously, that's a volume uplift from the Nuapay perspective. So how is that progressing?

Yes. Well, I think we'll probably update that in a month or so, I think. But the -- along with all of them, right, with Elavon and Citi and others. And what we are doing and what they are doing is obviously looking for their merchants that have sizable volume because that's the way to get benefits to both parties, right? So with Worldpay, we're not out there kind of incentivizing their reps to go and target the corner store who might be using Worldpay. It's kind of working with Worldpay to look at their kind of enterprise clients within their own portfolio and the same for Citi and the same for Elavon and the same for Nuvei, which is the Canadian business that bought SafeCharge. So I think that, that's what we'll start to see. And so I think the programs that will come through, will be names that people recognize and the volume is going to be sizable. But it's just early on, and it's open. The key to success over that long term is not going to be -- well, first of all, it's how many banks are you integrated to. So if you look at, I think, TrueLayer, and don't quote me on this number, it's just 1 that's in my memory, but I think they we're quoting that they integrated to 3,500 banks. I can't recall the -- so I just knew that, I can't recall the numbers for the competitors. Nuapay is connected to about 2,100, 2,200 and expanding rapidly and we'll work with other companies that have bank -- that already have connectivity to the banks to try to get to that same number by June. So you've got to have the table stakes, which is bank integrations. But I think their tech and their solutions are really good. When we bought it, I think I said this at the time, one of our institutional investors in Australia [indiscernible] plan said, why did you work with [indiscernible] plan, they said really great at engineering, really s*** at sales and marketing. And that was exactly what we wanted to hear because when you're doing the volumes they're doing, you want world-class payments infrastructure and engineering. And hopefully, we have the kind of icing on the cake on the sales and marketing piece. But early days, I think we've got upside as say.

Thanks. I think we're going to have to -- we'll have to wrap it up. I think we're running out of time, but definitely appreciate everyone taking the time to watch today. And so we look forward to talking to many of the people on the call later for the week.

Thanks, everybody. Much appreciated.

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect.