EML Payments Limited (EML) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the EML Payments Limited Half Year 2023 Results Briefing. [Operator Instructions] I would now like to hand the conference over to Ms. Emma Shand, CEO. Please go ahead.

Thank you, and Good morning, everyone, and welcome. Thanks for your time today and your ongoing support of EML. With me today is our Interim Group Chief Financial Officer, Jonathan Gatt. For those who haven't met yet, Jon, he's been our EML's European CFO based in the U.K., which represents the largest part of our customer and employee base. Today, we will take you through our financial performance for the half year and give you an update on the early progress of our strategic initiatives to transform EML following the announcement 3 months ago of our new strategy. Jon will take you through the details of our financial results. And following that, I will talk about our current strategic initiatives. Our financial results for the half year were in line with expectations, reflecting the heavy set of challenges the company has faced over the past 2 years, and reinforcing the importance of our transformation strategy. Like many other global technology companies, we are also seeing the sales cycle extend due to the growing economic uncertainty. The challenges of rising costs due to inflation and demand for good talent in key areas is also impacting EML. However, increasing rate rises by central banks is offsetting some of the downside risk. Gross debit volumes were up 55% to $49 million, which can mostly be attributable to our Sentenial acquisition included for the full year. Revenue was up by 2% on the prior corresponding period to $116.6 million, including significant growth in interest income of $7.1 million. Underlying EBITDA dropped 50% to $13.4 million versus the prior comparable period. This was due to a 35% increase in overheads, primarily from our inclusion of our Sentenial business for the full 6 months, and additional investment in our European business. Underlying NPATA was $0.7 million, down 95% for similar reasons to the impact on EBITDA. During the half, we have recognized non-cash impairment expenses of $86.2 million in relation to the PFS Group and $35.1 million in relation to the Sentenial Group. The impact of these impairments was that the group recognized a net loss of $129.9 million for the half. Jon will provide more detail on the impairments in his summary of the financial results. Our cash at bank is $79.2 million, up 7% in the half due to the settlement of our stake in Interchecks announced at the FY '22 full year results. In relation to the performance of our business segments, in summary, gross debit volume, or GDV, was up versus the prior year in all of our segments with our General Purpose Reloadable business up 4%, Gift & Incentive up 16% and our Open Banking volumes up 71%. Our General Purpose Reloadable business maintained momentum, growing revenue 4% to $72 million despite the European regulatory matters, which is impacting our ability to launch new programs. We are seeing growth in our strategic vertical Human Capital Management in Australia, specifically our salary packaging market, where volumes were up 8%. While volumes were up in our Gift & Incentive segment, revenues were down by 8% to $34 million as we had some one-off revenues in the prior period. Loan volumes continue to recover post COVID, and it was pleasing to see the majority of growth coming from the incentive side of the business. Open Banking and Digital Payments revenue grew 37% to $10.5 million, which was mostly attributable to the addition for the full half of our Sentenial business. I will hand over to Jon to talk you through the detail of our half year results, and then we'll update you on our transformation strategy progress.

Thanks, Emma, and Good morning, everyone. I'm going to take you through the financial results for the half year, starting on Slide 5 of the pack. I'm really pleased to present my first set of results as interim CFO. You can see from the results that we have more work to do and key to that is ensuring we continue to focus on implementing the strategy Emma announced at the AGM. Whilst it's been a challenging half, we have continued to see volume growth across the business. The full period impact of Sentenial and the volumes passing through the Direct Debit product has resulted in GDV increasing to $49.4 billion in the 6 months to 31 December, up 55% on the prior comparable period. Excluding Sentenial, we've also seen organic GDV growth of 8%. Revenues grew 2% over the prior comparative period to $116.6 million. Our business model is one where we derive revenue through various streams and after a long period of declining interest rates, the business has benefited from the rising rate environment in the first half with an additional $9 million of net interest income versus $2.3 million across the whole of FY '22. I'll talk more about interest later in the presentation. Revenue also benefited by $2.9 million from the inclusion of Sentenial for the full 6 months versus PCP. These amounts were offset by one-off fees of $4 million recognized in the prior period in the Gifting business. The regulatory matters experienced across our European PFS business also continued to impact our ability to launch new programs, contributing to establishment income being down $4 million on the PCP. Underlying gross profit margins were higher at 68%, up by 1% relative to the PCP as the improved interest revenue offset establishment income, lower reception income. For underlying overheads, the first half came in at $65.5 million. This was up 35% on the PCP. We expect to continue to track slightly higher in the second half as we invest in ensuring we meet our regulatory obligations. The main contribution to the increase was due to including Sentenial for the full period and the continued investments in the business, which we have previously foreshadowed. We've also seen an increased travel expense post COVID. And like most businesses, we continue to deal with inflationary cost pressures, particularly in the labor market. From a cash flow perspective, our cash balance was up $5.5 million to $79.2 million as the proceeds from the Interchecks sale flowed through. Additionally, our underlying operating cash flows as a percentage of underlying EBITDA were at 102%. This reflects a normalization of this metric to more historic levels as the FY '22 metric was impacted by the introduction of the Account Management Fee or AMF. We have taken up a non-cash impairment on goodwill in both the PFS and Sentenial group of companies. This is reflected in our statutory accounts and not included in the underlying numbers presented on the page. This is largely driven by an accounting assessment and the impact of the macro environment and a lower ramp than originally envisaged. Moving to the next page. We've spoken about underlying results and on this page, we walk between reported and underlying. Here, you see the business has incurred a number of costs during the first half that we expect not to repeat, namely remediation costs, non-recurring fraud losses and restructuring and strategy costs. We see the impact of the previously mentioned impairments in coming to our net loss after tax. Whilst these costs are material, underlying EBITDA better represents the trading performance of the group in the year. The effect of these adjustments is that, underlying EBITDA was $13.4 million and underlying NPATA was $0.7 million during the first half. Later in the presentation, we will talk through our FY '23 guidance. Moving on to Slide 7 to look at our GPR segment. It's continued to be a challenging time for our European GPR business. Our GPR segment services a range of customers across a number of verticals, including government, financial services and Human Capital Management. Our gross debit value for the segment rose to $6.5 million, up 4%. Revenue was $72.1 million, exhibiting growth of 4%. This was despite lower establishment income in our European businesses, which is offset by improved interest income. Gross profit margins were 59%, driven by improved interest income, partially offset by higher scheme costs from cross-border consumer spending post COVID. We move to Slide 8 now. Our Gifting segment continued its volume recovery. As we noted at the AGM, volumes in our Gifting segment were running above the prior period in the 6 weeks up to mid-November. These results continued through the key December period. Our G&I segment volumes were up $0.2 billion or 16% on the PCP. The upside, however, largely came from our incentive programs, which grew 31%, resulting in a mix shift with the incentive part of the business now accounting for 44% of the total volumes. We have previously noted the opportunities in the incentive space and have been expecting this mix change. One such opportunity driving the growth in our incentive segment has been in Ireland, where an increase in the threshold for tax-free incentives to EUR1,000 per employee drove higher demand in the lead up to Christmas. Looking at revenue, although it declined at the headline level, the prior year benefited from a $4 million one-off fee impact and the final impacts of COVID on breakage. The additional volume growth in the incentive space and the subsequent mix shift has resulted in revenue yield reducing as incentive programs are typically lower yielding, but do provide additional opportunities for growth. Gross profit margins were largely flat on the PCP at 80%. On Slide 9, the Digital Payments segment included a full 6 months of the Sentenial business, which consolidated from 30 September 2021 in the PCP. Investors will recall that the acquisition of the Sentenial business brought EML an established low-growth Direct Debit business, which has large GDV that operates at a very low revenue yield. In addition, it added a higher growth, but currently small GDV business focused on Open Banking called Nuapay. The Open Banking business grew 19% over the prior period, including the period before EML ownership and now represents 2% of the overall Digital Payments volume. The Nuapay business has been working hard to recruit and onboard additional resources since our acquisition. It has performed well in signing a large number of large acquirers and the challenge ongoing will be additional resources to help drive continued adoption. Excluding Sentenial and Nuapay, the remainder of the segment grew volumes approximately 6%. Total segment revenues increased 37% to $10.5 million. The Sentenial and Nuapay businesses are high gross profit margin businesses with few direct costs, which led to segment gross profit margins increasing to 89% for the year. Moving on to Slide 10 and to group underlying overheads. On this slide, we're presenting the group overheads, excluding nonrecurring costs associated with the European regulatory matters and restructuring and strategy formulation costs. These costs are non-recurring and total $13.1 million. Underlying overheads increased 35% on the same prior period, primarily reflecting the inclusion of Sentenial for the full 6 months and the investments in that business is sales and marketing teams to drive growth in Open Banking. In addition, we've continued to invest in the resources required to ensure our ongoing compliance with our regulatory obligations. Like most companies, we are also seeing inflationary impacts, tight labor markets, particularly in Ireland impacting our costs. Likewise, professional fees were driven higher due to increased cost of audits and other professional advisory. These investments are necessary and prudent as we continue to build sustainable business focused on delivering our regulatory obligations. We continue to be of the view that the evolving regulatory landscape will require companies in the payment services space to adhere to more stringent ongoing regulatory requirements. Sentenial costs were up -- were $6.8 million for the period, and we expect the cost base of that business to continue to increase across the remainder of FY '23 as additional resources joined to drive growth in Nuapay. We committed to investing EUR5 million of additional resources when we acquired Sentenial, and we expect more than half of that incremental spend to be incurred in FY '23. ICT costs increased as owned IT hardware transition to the cloud, particularly for the Australian business. Moving to Slide 11 and looking at our balance sheet. We remain in a strong balance sheet position with $79.2 million of cash on hand and over $50 million of contract assets. At least 40% of this will convert to cash within 12 months. We've split out our cardholder assets of $2.7 billion and the corresponding liability owed to our cardholders at the same amount. These are the amounts held on behalf of our customers in cardholder float where we self-issue these products under our own licenses. It's less than our total flow of $2.9 billion, which includes the North American business where it's issued by our partner bank. As of December, we have current provisions of $15 million in relation to expected future costs of the PFS regulatory matters and legal fees associated with the class action. Moving to Slide 12. I mentioned earlier in the presentation that we've taken non-cash impairment write-downs in relation to both PFS and Sentenial businesses. A partial offset to the Sentenial impairment has been the reduction in the contingent consideration liability relating to the Sentenial acquisition. This has lead to the expected earn-out payable in relation to calendar year 2023. We move on to Slide 13 and look at our cash flows for the half year. Operating cash flow conversion percentage of EBITDA improved to be in line with more historic levels at 102%. Cash flow conversion from the AMF previously recognized as income is flowing through in FY '23. In addition to the improved underlying operating cash flow conversion, we also received cash inflows from the sale of Interchecks during the period. Turning to Slide 14 and interest. We continue to see increasing benefits from the interest we generate on our stored value float, which was $2.9 million at the end of December. That balance typically peaks in December in line with increased seasonal volumes. As we noted at the AGM compared to the $1.4 million we made across all of FY '22, we have made $2.5 million in the first quarter and then increased that to $6.5 million in the second quarter of FY '23. The run rate has further increased in January following further interest rate rises such that the annualized interest run rate is now $29 million. Given central banks continue to note challenges around taming inflation, we expect central banks to continue to increase interest rates across the remainder of FY '23. Moving to Slide 15. We are reconfirming our underlying EBITDA guidance provided at the AGM. On the slide, we've provided a waterfall of how the first half performance translates to that range. On revenue, we have adjusted the range based on first half performance and the upswing we expect in interest. Our base case assumes rates remain in line with their current levels and any further rate rises would provide further income upside. GP margins, we expect to remain fairly stable. On overheads, we have reduced the range to between $133 million to $140 million. Based on our first half run rate and expectations for the second half, including additional costs we expect to come through as we continue to onboard resources to complete the remediation program in Europe. This results in providing our guidance range of revenue of $235 million to $245 million, GP margin at 67%. Overheads at $133 million to $140 million. Underlying EBITDA unchanged at $26 million to $34 million, and we have included underlying NPATA range of negative $4 million to $4 million. I will now pass back to Emma to talk through transformation strategy.

Thanks very much, Jon. Now to update you on the process or the progress rather, of our strategy execution. I announced our new strategy at the Annual General Meeting in late November last year. While it's only been 3 months since that time, our teams are working hard to rebuild and strengthen our foundation and execute on our key priorities. To recap our strategy, we have a vision to be a payments leader in embedded finance over the next 5 years in 4 target segments: Human Capital Management, Financial Services, Government and Retail and Gifting. Our strategy is underpinned by 3 pillars: Elevate, Streamline and Reposition for Growth. We will Elevate our European and U.K. remediation efforts, embedding a strong risk-aware culture in our business. This is the strengthening of our core that will hold us in good stead as we navigate a rapidly evolving payments and regulatory landscape. We will streamline customer and operational effectiveness to drive better operating margins, including rightsizing our business over time, building a centralized technology operations and innovation hub, transforming the customer journey, rationalizing legacy and duplicated technology, modernizing our technology and operating platforms, creating a single source of data to drive better decision-making and strengthening compliance. Our third pillar, Repositioning for Growth is about repositioning the base and evolving into an embedded finance leader in 4 sectors over the next 5 years, which I mentioned earlier. I want to give you an update now on the progress of our strategic initiatives, starting with Elevate, which is our #1 priority, and our remediation efforts, as I know for our investors, our customers, our people and our regulators is top of mind. As I mentioned at the start of this presentation, we're making solid progress on our remediation in our Prepaid businesses in Ireland and the U.K., which we are committed to completing by the end of December this year. We will have completed our distributor reviews by the end of February, which is reviewing the business models and key operational and structural arrangements to identify and mitigate risk. We have launched the data platform with Elevate as a key initial priority. We'll have a single ontology covering all of our Irish subsidiary distributors, cardholders and transactions dating back 5 years, enabling dynamic risk scoring. We have strengthened our board governance with increased interactions with the group board and group executive across both PCSIL in Ireland and PFS U.K. Indeed, our substantial progress on governance has been acknowledged by the Central Bank of Ireland. In our Irish entity, we have scoped a third-party assessment and are aligned with a designated third-party to perform the critical remediation assessment to our plan. This assessment is paramount in satisfying the regulators that we have completed and embedded the remediation program and its control to their satisfaction before growth restrictions may be lifted. Both entities continue to enhance outsourcing governance, a key plank of the remediation program, which is around clarity and documenting the scope of services, arrangements and policies from external and internal outsourcing vendors. In our PFS U.K. entity, a risk matrix has been approved and enterprise-wide risk assessment methodology adopted, facilitating risk identification and the mapping of internal controls. EML is not alone in tackling financial crime. Financial crime is increasing and is impacting banks, financial and payments institutions across the world. The regulatory environment is also fast changing. Our banking partners in Europe and Australia have been really open with us in sharing best practices in tackling this industry problem, and we are committed to playing our part. If I move on to our strategic pillar, Streamline. There are 6 levers we said we would focus on to drive customer and operational effectiveness. A key efficiency and value leader for EML will be better organizing and harnessing our data. In this vein, we have accelerated the launch of a sophisticated data platform to support Elevate as a priority. To be clear, our data initiatives in 2023 will be concentrated on supporting the efficacy of our regulatory remediation. For example, we have ingested data from 5 disparate systems into a single ontology to give us a 360-degree view of distributors and cardholders. This translates to millions of cardholders where we can apply dynamic risk scoring to drive evidence-based decision-making and actions in line with our regulatory obligations. Staying with data and towards strengthening our compliance, we have appointed a Data Protection Officer and have successfully piloted behavior analysis technology for anti-financial crime purposes. Moving on to our other Streamline initiatives. We have completed a new global organizational structure aligned to our strategy focused on 4 key business units, product and customer experience, all service by a central technology data operations and innovation hub. This will be rolled out in February and March. This is different to how we're currently structured, which is complex, regionally focused and siloed. This clear new structure will drive accountability and performance. We'll have the right people in the right roles and performance measures will be aligned to the new strategy. Our people are critical to the success of our strategy and investing in them is part of that. Over the last 2 months, we've been holding focus groups, one-to-one interviews with leaders and surveys with our employees as we seek to reset our ambition or purpose and our values to align to the EML we want to be. More than 50% of our employees have participated in one of those forums and the energy, the passion and the frankness of the feedback has been heartening in wanting to make EML a great place to work. We are in the final stages of testing our ambition and values, and we will be looking to launch them into our organization in March and embedding them thereafter to drive cultural transformation to be more customer focused and higher performing. We are also transforming the customer journey and our service models based on customer segmentation, profitability, risk profiling and aligning our sales and new account management roles to our targeted industry verticals. We've also created a new role, General Manager, Global Customer Experience with an appointment imminent, which shows the importance we're placing on enhancing customer experience. On the technology front, if we move to our lever of rationalizing and modernizing technology, we successfully moved 100% of our Australian PayTech into the cloud, and we'll be looking to do this across our technology state over time. In Europe, an initiative to decompose our payments middleware is showing early signs of improving latency and resiliency of our payment system. On cost, we have a target to reduce controllable costs by 10% to 15% starting in FY '24. While we need to invest in technology, in products and our people as part of EML's transformation, we've begun to identify cost savings starting with a review of our supplier and vendor procurement policies or priorities, rather, to see where we can extract cost efficiencies. Finally, to our Reposition for Growth strategic pillar to be an embedded finance leader in 4 key segments: Human Capital Management, or HCM, Financial Services, Government and Retail and Gifting. We've just launched a new Human Capital & Payroll product suite with a strategic customer and digital road map. We've recently gone live with a major HCM enterprise, Ceridian, with 2 of our payment products in the U.K. EML has a strategic advantage to play in this area. We have an established footprint and credibility with large enterprise customers, especially in Australia where we service over 90% of the salary packaging market. The serviceable addressable market for HCM globally is estimated to be $26 billion a year with a CAGR of 6%. Key to our strategy and growing our business responsibly is to expand our offering of both in banking to our prepaid card customers. In the U.K., there were 2.8 million adopters of Open Banking in December 2020. You may recall at the AGM in November, we reported this number to be near 6 million users. A report out from the Open Banking implementation entity overnight suggests just over 7 million consumers and small businesses used Open Banking in the U.K. during January. That's 1.2 million new users in January. Open Banking gives customers greater access to and control over information in relation to their data and identity to affect payments. EML via Sentenial Open Banking business has a strong foothold in the European financial services market with 4 out of the 7 major banks in the U.K. as clients. In this first half of the financial year, we have won new business, including corporates such as Volvo and payment service provider, PaySafe. In the Government sector, we remain the partner of choice in the U.K., winning the North Eastern Purchasing Organisation, NEPO, which is the largest procurement framework for local government authorities. So we're making early progress. And at our full year results in 6 months' time, my expectation is that, we will be further progressed on our remediation programs in both Ireland and in the U.K. We will have rolled out our organizational strategy or structure, rather, and have clear performance measures aligned to our strategy. We will have a new ambition statement and values, embedding them across the global organization to drive cultural change. We will have made progress on improving the customer experience, outlined steps towards rationalizing and modernizing our technology estate, and we will have further sequenced cost efficiency initiatives to commence in FY '24. I am excited about the future for EML. There is a lot of work to be done to rebuild the business and grow responsibly. At the AGM, I said that in 5 years' time, EML will be a different company to the one that it is today. I am confident we have a strategy to build a strong, resilient and profitable company, delivering long-term value creation for shareholders. On behalf of the EML team, I thank you for your support. I'll hand back to the operator now for questions.

[Operator Instructions] Your first question comes from Elijah Mayr with CLSA.

Maybe just firstly, can you give a little bit more detail on the decision by Up Spain to no longer work with EML? And is there a risk of other clients and customers sort of walking away also?

Okay. Thanks very much for the question. We obviously don't want to speak towards any specific customer. But what I will say is that, obviously, the strategy of our customers is something we try to closely align with in terms of our product road maps and so forth. So in this case, we're very confident we delivered all of our obligations towards Up Spain. We'd love to have the opportunity to work with them again in the future. But at this point in time, they've obviously got a strategy which they are executing against, and we remain open to collaborating with them in future.

So is there any commentary from Up Spain that you could share? Just trying to sort of get a sense on what the core reason was.

So Up Spain hasn't launched as a customer at this point in time. So, as I said, we fulfilled our obligations. We are in close dialogue with them, and we'll continue to try and support them if their future needs change, for sure.

Is there any risk, I guess, the reason sort of Up Spain walked away that could relate to any existing customers on EML?

So I suppose you're asking about some sort of contagion risk, and I would just say, on behalf of the team at EML, we're very, very focused on our remediation program, our Elevate program. And in doing so, we've obviously had to, I suppose, take trade-off. And if it's in enhancing our products and so forth, that is taking a backseat to our execution of the Elevate program. So in a really constructive dialogue with most of our customers, some have been impacted by some of our remediation program decisions, and we don't walk back from that. Our key motivation is to get through the remediation program in a very solid way. We're making solid progress now. We'll see -- are committed to concluding that successfully by the end of this calendar year. And to the extent that we take decisions based on our risk appetite and regulatory requirements, that's going to be our key focus.

No problem. And then maybe just -- are you able to comment on the expectations for breakage endowment fees that feed into the FY '23 guidance?

I'll take that one, Elijah. We don't typically provide forward-looking details in that level of detail. So I think what you can see in the first half is, breakage just picked up aligned with volumes increasing in the Gifting segment. And we would expect that to translate at some point in the future, but we wouldn't give specific guidance on that.

No problem. And then maybe just one final one. Just on the comment around cost out in FY '24 of 10% to 15%. Is that sort of an aspirational net number that you're trying to achieve on the FY '23 base? Or is that sort of more specific to certain costs within the business?

It's of the FY '23 base. What we -- as Emma mentioned, as she went through the transformation and strategy section, we're taking a look at how we structure the business, how we resource the business to ensure that we're deploying all our resources in the most efficient way to deliver our obligations to our customers and to our stakeholders as well. So, we are undertaking that review at the moment, and we'll share more details at the appropriate time.

So the target there is to have FY '24 OpEx 10% to 15% lower than FY '23 OpEx? Just wanted to confirm.

Our aim will be that we will have the actions that get the full year impact of those overheads quantified. The impact of which will occur in FY '24, but will continue into FY '25 as well. So the full impact may not occur in FY '24.

[Operator Instructions] Your next question comes from Tim Plumbe with UBS.

Emma, Jonathan, can you give me, okay? Hello?

Yes. Sorry, we sure can.

Sorry, this is Lucy dialing in on behalf of Tim Plumbe. He's just been caught up with 3 results. I've just got 2 quick questions. The first one is around the guidance for overheads. What's driving that reduction in overheads compared to the guidance you provided at the AGM update?

Yes. I think primarily, as we flagged in our half year results, we are seeing challenges in the labor market, and that is causing some delays in recruitment. We expect that to be addressed as we go through the second half. I think really, that's the primary driver of that. So it's just delay in recruitment.

Okay. Great. And the second question is around interest income. So at the AGM, I think the expectation was for $17 million to $21 million of interest income across FY '23, and that's obviously been revised up. Is that dropping down at 100% margin, what's keeping that GM at 67% and also the underlying EBITDA guidance unchanged?

Yes. So interest does fall straight down to the bottom line. I think really the reason for the change there is the underlying business has seen slower ramp due to the economic climate, but also just the cost of -- costs incurred in getting our regulatory environment up to where it needs to be and making sure that we're signing the right customers within our risk appetite. So I think definitely, interest income is part of our revenue model, and it is what we would expect to come through in normal circumstances. However, we are seeing challenges on our core -- on our other revenue streams just as we deal with the current economic crisis within Europe.

And I think that's very much reflective of the economic cycle we're in. And certainly, we are seeing a little bit more of a lag on the sales cycle. That's what we're witnessing in some parts of our business. And actually, that is where the team is very focused on building up the pipeline for really programs to be launched next calendar year, which would tie in with our restrictions lifting in Ireland, we hope, and also coming out of the voluntary requirement with the FCA in the U.K.

There are no further questions on the phone. I'll now hand back to Ms. Shand.

Just holding there for one minute. We do have some questions that have come through on the webcast. So first question, if we can is, can you break down the $15 million in professional fee spend for the half? How much of that will repeat in the second half? And why are you spending so much on consultants?

Yes. So I'll talk to that one. So underlying professional fees includes cost of audit. With the regulatory requirements that are evolving, as we mentioned in Europe and around the world, this has required us to undertake specific tasks in a relatively short period of time. The resources that are needed and the skill sets that are needed in that short period of time have needed us to engage subject matter expertise that currently don't exist within the company. On an overall -- on an ongoing basis, as part of our Streamline pillar of our strategy, we're going to review all our costs, all our requirements and obligations and make a decision on the best way for EML to resource that, be it to continue to engage external resources or bring that skill set in-house by hiring an appropriately skilled people.

A second question that's come through on the webcast. Can you break down your borrowings? And do you expect the PFS debt to be paid?

The breakdown of the borrowings is in our interim financial report. So I'll let you review that in your own time. What I would say is, the PFS debt is there and if there is a liability on our balance sheet, we will continue to show that and intend to pay that down as a liability that sits in there as we're required to do and as our obligations stayed under that borrowing.

Okay. The next question has come through. Is there any scope for you to be able to recover any of the fraud costs relating to the Sentenial business?

With regard to fraud costs, we try and recover all that we can so far as what's possible under the law and under the specific regimes that we exist in. So the answer is, yes, with best efforts, but we believe the loss that we've taken in our financials currently reflects our likelihood of recovery.

We have had a couple of others come through. Fantastic strategy. Would you comment on the impact of Sentenial Direct Debit declining? Is Direct Debit a strategic product to EML? Is there any investment in Open Banking recurring facility to replace U.K. Direct Debit? Are you expecting clients to leave Sentenial?

I'll take that one. So certainly, our Sentenial Direct Debit business is something which has been in place for a number of years. We do see that being overtaken by the Open Banking business. And I think the sort of growth figures you've seen in this half year is really promising and also the adoption figures that we -- that came in overnight from the U.K.'s Open Banking implementation entity. So we certainly are making investments into the Open Banking area, the Nuapay business, as Jon mentioned, we have leased up our sales and partnership relationship management team. And we just are readying ourselves for really that curve of adoption to really swing upward. As I say, some fantastic brand name customers, which we've managed to take on in this half. That's really encouraging. I think when we look at our strategy, it is about really combining our products. So that is combining optionality for our customers to choose Direct Debit, separate payments, Open Banking, faster payments or account-to-account payments or even the prepaid card rail, so the scheme rail. So that's the sort of optionality and interoperability we're looking to reinforce with our technology robustness today and into the future. And obviously, we need to make some investments in technology, but that's where we're heading. It's about choice, it's about interoperability and passing on cost savings to the end users and the communities.

We still have a couple more on the webcast. How much did the London office remodeling cost EML in the month?

We haven't incurred any remodeling costs in the first half.

No, we haven't. We've certainly gone through a remodeling of the office on the upside, but not yet inside.

Yes. Just to be clear, the building is not ours. [indiscernible].

So there's improvements happening across the board.

And is the CBI growth limitation behind the reason Up Spain left?

So Up Spain have made their own decisions around their future strategies. So I certainly could not speak on their behalf, that wouldn't be proper. Certainly, we are not hitting -- we have enough headroom, so we haven't hit that cap at the moment. So, I heard as early as this morning that we certainly have programs in the pipeline for the PCSIL business. So we're hopeful, obviously, as we work through our remediation that those customers can be onboarded at the relevant time.

There are no further questions. Emma, I'll hand back to yourself.

Okay. Thanks very much, Ryan. And so, I'd just like to thank Jon for taking us through the half year results. It's been a tough set of numbers in some respects. But I would just say probably not surprising. Obviously, with the change of leadership by taking the opportunity to have a look at the balance sheet and the business in all the areas as we said we would, we have obviously announced our strategy. The team is absolutely committed to executing on this strongly and our priority focus, as I've mentioned on this call, and I will keep reinforcing at any opportunity is for us to deliver on our Elevate programs of remediation in both the U.K. and in Ireland. So I think really, the outlook is positive for EML. We have to work through a number of challenges, and I think these results really have been a reflection of the challenges the businesses have faced in the past 2 years or so. But we have a strategy, we're really focused, new leadership team in place with a new org structure aligned to the strategy. So I think it's hopefully a positive path forward. And as I said, on behalf of the team, we're really looking forward to increasing shareholder value over time and really explaining our value creation story to shareholders. So thank you very much for your attention this morning, and we look forward to next addressing you at the full year results in August. Thank you.

That does conclude our conference for today. Thank you for participating. You may now disconnect.