EML Payments Limited (EML) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the EML Payments Limited Half Year 2025 Results Briefing. [Operator Instructions] I would now like to hand the conference over to Mr. Anthony Hynes, Executive Chairman. Thank you. Please go ahead.

Thank you, and good morning, everyone. Welcome to the EML Payments Limited FY '25 First Half Results Telecall. I'm Anthony Hynes, Executive Chairman. It's great to be here with our CFO, James Georgeson, to report our interim results for FY '25 and provide an update on EML 2.0 progress. Following our presentation, we'll open the call to questions. I'll refer you to the ASX announcements, which were issued by EML Payments Limited this morning, which form the basis for this call. So let's kick off, and we'll move to Slide 4. The first half of FY '25 saw the company largely emerge from its structural challenges over the last 3 years and turn its focus to industrializing the business and recapturing a growth mindset, which really has been missing for some time. Whilst there was an unplanned leadership change during the period, energy momentum is high and a more productive operating cadence is in place today, courtesy of a settled and capable leadership team and Board. I'll touch on operational momentum shortly. Financial performance for the period was in line with expectations. Revenue was up 15% on PCP to $115.1 million with customer revenue, excluding slight interest income, up 6% to $82.3 million. We continue to see growth in our existing customers and are very focused on doing more with them. The loss of a number of customers for various reasons in the second half of FY '24 suppressed customer revenue growth somewhat. We continue to benefit from our well-managed float with interest income tracking to target and the downward curve on cash rates remaining consistent with our projections. Profitability also improved significantly on PCP with underlying EBITDA up 50% to $33.4 million and NPAT improving from negative $4.7 million to positive $9.5 million. Our cash balance is $50.6 million with a net improvement of $7.5 million in the half. Moving now to Slide 5. The team is making good progress on our EML 2.0 strategy, which we shared with shareholders and the investment community at our AGM in late November 2024. Reminding you, there are 3 key pillars supporting our growth and efficiency agenda through to FY '28: firstly, building a global operating model to move away from silos and drive efficiency and scale benefits; secondly, reviving our revenue engine by rebuilding our commercial and product teams to capture the significant opportunities that we see in the market; and finally, deploying a single technology platform across EML to dramatically increase our speed, digitize manual processes and drive consistency of our offering across all of our markets. Going forward, I'll share an update on each of these pillars as we present our financial results to the market each reporting period. Firstly, on our global operating model, we've deployed this, which aligns life resources together to build scale, synergy and quality. Each region will be led by a commercial team and regional CEO to ensure we stay close to opportunities and our customers. However, the operating engine will be configured along functional lines for the benefits I've previously described. There's virtually been 0 historical integration of these businesses, and that is coming to an end. Our executive leadership team, or ELT, is largely in place with final negotiations on outstanding roles. Next to our revised revenue engine, our commercial team is now aligned under one global leader. We've added to our business development team, up from 6 people to 10, with a number still to be appointed over the coming months. Our pipeline is up to $45 million, and our target is to double that by Christmas this year. It's really pleasing to welcome new customers in Adidas and the JLL Mall Group in Canada. These will be important programs in the years ahead. JLL is a particularly pleasing win as they left EML in 2018. So it's fantastic to have them back. And we have a number of new vertical opportunities in development. Some of these will advance and some won't after a period of research and validation. But what's important is that we are active in developing these blue-ocean opportunities for EML to underpin our double-digit revenue targets. And on our single technology platform, Project Arlo, the team is in place, and we're gradually adding resources internally and externally as the work program builds. We expect an initial deployment in Q1 of FY '26 and progressive deployments thereafter. The project is in its initial phase, but it's building good momentum and remains on track financially and time line-wise. In summary, we're still in the early phases of 2.0, but we're now advancing on the right trajectory and at the right pace. I'll now hand over to James to take you through the financial details.

Thank you, Anthony, and good morning, everyone. I will walk through our financial results during the half year and explain some of the key drivers before I hand back to Anthony to cover our current business priorities and outlook. There are 2 important elements I want to touch on upfront as to how we have presented our results today. They are in relation to discontinued operations and new segment reporting. In relation to discontinued operations, all the numbers in the presentation exclude the impact of both PCSIL and Sentenial in 1H '25 and 1H '24. These businesses have both been classified as discontinued operations in accordance with accounting standards following PCSIL's entry into liquidation in January 2024 and the completion of the sale of Sentenial in September 2024. Where the numbers exclude the PCSIL and Sentenial businesses, we have referred to these as the continuing operations. Comparatives have been restated to exclude balances relating to PCSIL and Sentenial. The reconciliation to the prior period reported numbers, including these 2 businesses, is shown in the appendix of the presentation. In relation to our new segment reporting, as previously flagged at the AGM in November and as part of our release of the restated historic financials last week, we've modified our segment reporting to show geographic segments in accordance with our new global operating model. This approach reflects the focus of the team selling all products in all markets. I will start on Slide 7 where we show our key operating performance metrics. As you can see, pleasingly, most metrics have improved half-on-half. Underpinning the improvement in most metrics was higher customer revenue and higher interest revenue, as Anthony has called out. Customer revenue increased 6% at the group level, reflecting good growth in Europe and Australia, whilst the North American outcome was more subdued. Europe also benefited from $3 million of nonrecurring revenues in the half. Interest revenue was up 49% from a combination of higher bond returns, the flow-through of our treasury management activities and higher float balances. Net overheads at the group level were up 3% half-on-half to $53.3 million, reflecting the new leadership team and investments to deliver the EML 2.0 strategy. As a result, underlying EBITDA for the continuing business, a core measure of performance, improved 50% to $33.4 million in the half. Our statutory net profit after tax for the continuing operations shows a considerable improvement in 1H '25 to a net profit of $9.5 million compared to 1H '24 where we reported a net loss of $4.7 million. Cash increased by $7.5 million in the 6 months, reflecting operating cash flows, partly offset by risk management improvement, class action defense and restructuring costs as well as the repayment of debt post the receipt of the Sentenial sale proceeds. Moving to Slide 8 where we show the results for Europe. Our European segment, which is our largest segment, comprises our operations in the U.K. and across the rest of Europe. We have just under 500 customers across our European segment. From a product perspective, we offer a range of payment solutions across the government, financial services and human capital management verticals with approximately 60% of the business being GPR products and approximately 40% being Gift & Incentive products. GDV or gross debit volume was broadly stable at $3.2 billion, reflecting a gradual return to growth now that prior restrictions on our U.K. business have been removed. Total revenue for the European segment was $68 million, reflecting a 30% increase over the period. This growth was underpinned by a 13% uplift in customer revenue, principally in the government vertical, as growth in our Gift & Incentive products was more subdued and a 71% increase in interest revenue. The strong uplift in interest revenue reflects a combination of higher bond yields, the flow-through of our better treasury management and higher float balances. As I mentioned earlier, Europe benefited from $3 million of nonrecurring revenues in the first half. Net overheads of $28.4 million are broadly flat on the prior corresponding period as cost reduction measures have been offset with investments in people. As you can see, we've separated out intercompany management fees charged from corporate to the segments. The increase on year-on-year reflects the higher effort and support provided to our European business relative to the other segments. Revenue margins and gross profit margins benefited from the higher interest revenue and the $3 million of nonrecurring revenue, with underlying customer margins remaining broadly similar half-on-half once the one-off revenue is adjusted for. On Slide 9, we show the performance of our Asia Pacific segment. The Asia Pac segment comprises our Australian and New Zealand businesses, which are predominantly GPR product businesses approximately -- with approximately 80% of the revenue currently with a large presence in the human capital management vertical. We also offer a range of Gift & Incentive products in Australia and New Zealand. Across the Asia Pac segment, we have just under 200 customers across the region. This segment achieved steady growth with customer revenue up 6% half-on-half. Pleasingly, active benefit accounts within the human capital management vertical increased 12%, which underpinned the growth in customer revenue. Over the half, interest revenue was broadly flat. GDV was 15% lower, reflecting a change in the customer product mix with one particularly high-volume, lower-margin customer being replaced with a sizable client where we do not include their GDV in our reported metrics. Gross profit margins were impacted by several one-off additional operating costs, largely shown in selling costs, which are not expected to repeat in the second half. These totaled approximately $1 million. Normalizing to remove these one-off costs, the gross profit margin would have been approximately 68% and the EBITDA margin would have been approximately 30%. Accordingly, underlying customer margins remained broadly similar half-on-half. The increase in net overheads to $10.2 million in the half reflects investments in people to support the growth in the EML 2.0 strategy. Turning to our North American segment shown on Slide 10. The North American segment comprises our U.S. and Canadian businesses, which operate predominantly in the retail Gift & Incentive vertical, which comprises approximately 75% of total revenue for the North American segment. These products are distributed through shopping malls and corporate programs. In addition, the North American business participates in the financial services vertical, predominantly via the VANs product, which is a high-velocity digitized expense payment offering. We also target the gifting -- sorry, the gaming vertical in this region as well. Across our North American business, we have just under 500 customers currently. Underlying EBITDA for North America was broadly flat in the half at $4 million. This result reflects total revenue was down 7% on the first half of '24, reflecting lower breakage revenue across some of our incentive customers. Normalizing for this change, revenue was steady in the corporate incentives area, but increased pleasingly in the retail shopping malls area. Interest revenue was slightly lower, reflecting lower interest -- U.S. interest rates as the Fed Reserve entered a period of rate loosening. Net overheads reduced 12% half-on-half, largely reflecting lower levels of operational improvement investments in the first half of '25. Lower intercompany management fee charges in the first half of '25 also reflects a focus on other regions. Whilst GDV has grown strongly at 16%, this is predominantly due to increased volume from our VANs product, which is a high-volume, low-revenue yield product. As a result, the total revenue yield was lower in the first half of '25, but gross profit margin has remained relatively stable. Revenue margins for our other North American products have actually improved compared to the prior period. We are focusing on addressing the reduction in customer revenue by revamping our go-to-market strategy to improve customer retention as part of the EML 2.0 strategy. Moving to Slide 11, which shows our overhead costs. Underlying overhead costs net of cost recoveries increased 3% versus the prior period and have now remained broadly steady across the last 3 half years. This steadying of overhead is in line with our guidance at the AGM in November last year, where we stated we are targeting a flat cost base across the next few years as we reshape the business by driving operating efficiencies as well as investing in additional sales and customer activities. Overhead costs are shown net of cost recoveries from the PCSIL business as accounting standards require the amounts to be grossed up, yet the costs are managed on a net basis operationally. The 3% or $1.7 million increase half-on-half in net overhead costs reflects investment in leadership talent and sales areas to support the build-out of the EML 2.0 strategy, partly offset by savings across our technology, professional fees and travel-related cost categories. The impact of higher interco charges reflects lower recoveries from the -- to the discontinued entities post the exit of these businesses. Whilst intercompany charges eliminated at the group level, given the results on this slide are for the continuing businesses, they are shown gross out. Driving operating efficiencies will continue across the next few periods as part of the EML 2.0 strategy work. As previously guided, the cost of Project Arlo, our single platform technology solution, are excluded from net overhead costs and underlying EBITDA. The cost incurred in the first half of '25 was only about $300,000. On this slide, we show an overview of our interest income and stored float balances. Interest income is a conscious and key source of revenue for EML. During the period, interest revenue increased by 49% to $32.8 million. This reflects the flow-through of our yield negotiations, higher float and higher returns on the reinvestment of bond investments. The float balance increased materially from $1.9 billion to $2.5 billion when compared to the first half of '24, following the onboarding of a number of Mastercard programs, which have a combined float of approximately $500 million. EML does not earn any interest on this large float balance increase. For the first half of '25, our annualized yield was 3.7% compared to 2.5% in the same time last year. This yield excludes the noninterest-bearing float I just referred to. The exit yield as at December 2024 was slightly lower at only 3.4%, reflecting the impact of announced Central Bank rate reductions. We expect the interest yield to moderate further through the second half of '25, given further rate changes already announced and a number of further rate reductions are expected from a number of central banks. However, given the weight of float to GBP and AUD where the rate outlook is more stable and the size of our U.K. government bond investments in our European segment, the impact on interest revenue is likely to be somewhat tempered by these factors. In particular, our bond portfolio makes up 40% of the group's total interest-earning float balance and is currently earning at approximately 3.9% and has an average duration of about 1.8 years. On Slide 13, we show the movements in our cash position. Overall, cash increased by $7.5 million in the 6 months, reflecting positive operating cash flows, partly offset by risk management improvement, class action defense and restructuring costs as well as the repayment of debt post the receipt of the Sentenial sale proceeds. From an operating cash flow perspective, the underlying EBITDA of $33.4 million generated $4.6 million of net cash inflows across the half, as shown in the waterfall on the slide. Excluding the impact of the risk management improvement, class action defense and restructuring costs, the underlying operating cash generation was $14.7 million or 44% of underlying EBITDA. The 44% of EBITDA to cash conversion ratio is lower than our long-term average of approximately 60% as the 1H '25 result was impacted by timing differences on the receipt of bond interest income. To that point, as at the 31st of December 2024, we had a large bond interest receivable balance shown within the working capital movement, which was collected post balance date. Normalizing for these, the cash conversion rate would have been 63% at the half. Overall, the strength of the balance sheet and our net cash position has improved materially post the sale of Sentenial and a number of other initiatives. The $41.4 million of net investing cash inflows primarily relates to the net cash received from the sale of Sentenial, less the associated disposal costs and the cash just deconsolidated on exit of that business. The $40.2 million of net financing cash outflows reflects the net repayment of external borrowings of $38.5 million, including the second tranche of the PFS vendor loan notes. These cash flow dynamics reflect the impact of one-off outflows and strategic actions we've taken during the last few periods. And as we move forward, we remain focused on improving our cash conversion rate and optimizing cash flow management to drive greater financial stability and shareholder value. The result of the improvement from a net debt to a net cash position and the $30 million of undrawn committed debt facilities currently available reflects the materially improved balance sheet strength. Stepping back, the 1H '25 results have improved across most metrics and reflect a further stabilizing of the business. The execution and completion of the actions to exit PCSIL and Sentenial and the result in repayment of debt have improved the financial performance and balance sheet of the business. Our underlying EBITDA was up 50%. Our cash generation is improving, and the new leadership team is in place to set up EML for the next phase of growth under the EML 2.0 strategy. I'll now pass back to Anthony, so he can cover our 2H '25 priorities and our outlook for the business.

Thanks, James. As we look into the second half of the financial year, we have a number of key priorities, as outlined on Slide 15. On the commercial front, we want to build our sales pipeline to circa $65 million by the end of the financial year towards an overall benchmark of $90 million. Key members of the leadership team are spending materially more time on business development and innovation. With an expanded business development team, we see momentum building strongly here. Whilst our pipeline is not presently as full as we'd like it to be, it's not empty. The team is focused on closing deals to carry the momentum of recent wins. We're also active in several product and market expansion opportunities as we look to bring new solutions to market in FY '26 and regularly thereafter. The team sees significant opportunities to expand market and product offerings into new TAMs, initially leveraging existing customer demand, both in Australia and globally. You should expect us to be biased towards this growth, supported by a new operating model, which frees up some of our best talent to focus on these initiatives, something EML has not done in years. On operating efficiency, the team is focused on embedding our new global structure and identifying opportunities to dramatically improve our operating rhythm, which in turn serves to enable more business from more customers across more products and more markets. We are moving at pace in this regard. I'll provide more detail at the full year once things are bedded down and the benefits of same are evident. But I can tell you, the velocity of decision-making and activity in this company has changed immeasurably over the past 60 days. As part of our new global structure, we are bringing procurement and key supplier contracting together under one roof to minimize the duplication that happens today and improve commercial outcomes. Project Arlo is a critical strategic enabler for EML, whether it be global product platforms, removing manual tasks or reducing our cost base. The team is focused on creating our MVP for deployment early in the new financial year. Thereafter, we will test, learn and iterate at warp speed. We aren't banking on Arlo to solve everything for us, and we'll continue to prudently deploy enhancements to our current environment, which includes initiatives like full NPP integration in Australia, which will open up a number of use cases for the sales team here. Finally, and most importantly, on our people, we will relentlessly drive the One EML culture across this company, and this has been warmly received to date. Part of that culture is getting back to basics, operating as one team, encouraging and empowering people to make decisions and trust each other's judgment, being accountable to ourselves and each other so as to drive iteration and innovation within our customers and partners. This will be supported by a strong operating system and rhythm, a world-class technology platform, an effective product development function and a sustainable growth mindset. So moving now to Slide 16 for some key takeaways. I wanted to finish the formal part of today's presentation with a brief summary from the first half of FY '25. Firstly, the ELT is settled and advancing our 2.0 plan at pace, all wrapped in a One EML culture. We are talking growth and operational efficiency every day to things that increase earnings and create margin expansion. Secondly, there are encouraging green shoots in our commercial team with recent wins and a building pipeline. We have much to do here with both our existing customers and partners and to get our pipeline to the right level, but we are underway properly, and we're energized on new verticals for the first time in a long time. Our balance sheet remains in a strong position, enabling us to make prudent efficiency and growth-driving investments. And finally, our financial performance is running to plan and our FY '25 guidance of $54 million to $60 million in underlying EBITDA remains on track. I'd like to take this opportunity to thank our hard-working team, our customers, our partners and, of course, our shareholders for their continued support of EML. Thank you for listening to James and I this morning. We're now happy to take questions. Thank you, moderator.

[Operator Instructions] Your first question is from Ross Barrows from Wilsons Advisory.

I've got a couple actually. So just in terms of the pipeline, you've indicated that that's going to grow to $65 million, I guess, by the end of the second half, and you also called out a $90 million goal. Can you elaborate on the pipeline either by, I guess, business or geography and perhaps also some indication on the expected pipeline conversion rates?

Sure. Ross, thank you for your question. In terms of the geography, we've got some -- a lot of the growth that we're seeing in the pipeline right now is coming out of the U.S.A., and that's really encouraging because it's been a region that hasn't shown us a great deal over the last couple of years. In terms of how we convert, I don't yet have a full kind of breakdown of exactly how we expect that to convert. But essentially, we look at a pipeline of -- $90 million is our aim, and we'd expect to convert 20% of that.

Okay. That's helpful. Just to expand a little bit, so you mentioned just in your closing remarks there about you're focused on new verticals for the first time in a long time. Can you just elaborate on that comment in terms of verticals, just expand to help us understand that a bit better?

Well, the core part of the strategy that we announced in November was that we would look to drive more from the core. We would look at new markets and we'd look at new verticals. And I think I've said this before to shareholders in one-on-one meetings, I expect our emphasis will be on new verticals versus new markets. There's absolutely more from the core. It's critical to what we need to do today. But we see opportunities in new verticals. And that is -- I mean, we don't have anything to announce today, but we're certainly spending a lot more energy and effort in looking at those and trying to figure out which ones make the most sense for us. But you should expect that we're going to have a greater focus on new verticals over new markets.

Your next question is from Jack Lynch from RBC Capital Markets.

Two questions from me. The first one, just on the earnings guidance. Clearly, a strong result today for first half earnings. Should we think about the guidance potentially being conservative now? Just trying to get some thoughts around how we should think about second half OpEx and top line growth. And the second one, just around the FY '28 targets. Just working through the numbers, it looks like it should be sort of around a 9% book growth on a CAGR basis after FY '28. How should we think about the composition of that book growth as we move out to those outer years? Should we think of more GPR or more Gift & Incentive?

Thanks for the question, Jack. Look, in terms of guidance, we've reaffirmed the range today in the $54 million to $60 million. There's still a number of months to go as we close into the full year. So we still feel comfortable where we're in that range. If we -- if that changes closer to the close of the year, we'll update the market accordingly. Just as a reminder, obviously, our first half is always a little stronger than our second half given the seasonality in the gifting business, particularly in North America, but our gifting products where the holiday season drives a lot of that volume. We've also seen interest rates already start to come off from their peaks with some rate reductions already announced and some further still to come. And the one-off revenue I called out in the European segment also sort of impacts the numbers. So whilst, yes, we've got a strong result at the half that we still think the guidance for the full year is still the right range for today. In terms of the full year '28 numbers, look, we're still obviously very committed to those targets that we put out in November. In terms of the composition, look, I think you'd see us sort of perform probably reasonably consistently across the various regions. Clearly, that split of GPR and gifting will depend on how that goes in the region. Clearly, the North American region is more gift-focused, whereas the sort of Australian and European margins are more GPR-focused. But that being said, we do want to sort of sell all products in all markets. And so that will sort of be how we would start to look at the strategy over the next couple of years. And as sort of Anthony's response to Ross' question, clearly looking at new verticals as well, which will probably be probably more across the GPR sort of segment. But again, we'll sort of see how they evolve. So look, again, probably a bit early to give you more specifics than that. But I think the key message is trying to do more across all our markets and particularly trying to take some existing products to all our markets.

[Operator Instructions] We have a further question from Ross Barrows from Wilsons Advisory.

Just a couple maybe for you, James. Just in terms of the operating cash flow conversion, you noted the average is around 60% and kind of below that at this time. Do you have a kind of indication of where that materially could fall in the second half? Should it normalize back towards the 60%?

Yes. Look, Ross, I think that's definitely where we would go. We had about $6.5 million to $7 million of bond interest receivable that was outstanding as at 31 December. It came in through January. So we'll catch that up, obviously, in the second half. So we would expect the number to be back towards our longer-term average. I think the things we just were weighing up is we're seeing the velocity of spend of Project Arlo. We obviously didn't spend very much on that in the first half at all, about $300,000, just over $300,000. We would expect that to be $3 million or $4 million through the second half of the year. So that would be the only one thing that would sort of go against the trend going back towards the 60%. But from what we can see at the moment, that the cash generation should be reasonably strong in the second half.

So just confirm the second half should trend back towards 60%, yes?

Yes, that's right. Yes.

And just on Slide 12, maybe just one other comment just around the treasury side of things and the float. Historically, quite a few -- or quite a lot of the balance has been variable, but there's also some bonds that actually have a fixed interest rate. So can you maybe just expand on that a little bit just to help people understand and myself how much is kind of locked in for a certain period of time and how much is variable? And obviously, you can see between the pound and the euro, it's more than half of the float. So maybe some observations on that, please?

Sure. So of the float, approximately 40% of the interest-earning float is in U.K. government bonds. So that's sort of -- and that is the average duration at the moment of our bond portfolio is just under 2 years, so 1.8 years, and it's earning about 3.9%. So effectively, we've got fairly strong natural hedge in the portfolio for about 40% of that sort of 40% of that float. The rest is in cash, which is typically earning cash rates across all the various jurisdictions. As we said previously, we normally target a sort of 50 basis points less than cash as the targeted return in most markets. In Australia, we actually do a little better than that. But on the flip side, we do share some of that with customers in the Australian market. So overall, probably across all the markets, we probably earn a similar net rate. But to your point, about 40% of the float is locked in with bonds at a higher rate than the cash rate and with a duration of just under 2 years. So it does provide us some tempering. So effectively, any interest rate reduction or raise from here from cash is probably only 60% of that is flowing through to the total interest revenue line given the bond portfolio.

Your next question is from Charlie Kingston from K Capital.

Just a few quick questions. Firstly, around capital management, and good to see that the company is generating a profit again, but how do you think about capital management from here? Because I suppose if you adjust for all the one-offs and clearly, with your longer-term free cash flow targets or even the business as it stands today, if those one-offs don't reoccur, the business seems to be spinning out plenty of genuine free cash. We don't have any net debt anymore. I think we're trading at around 5 to 6x earnings. So yes, is there any prospect or maybe even a fully franked dividend, noting I suppose it's been a pretty wild ride for the investors in EML? So just how do you think about capital management from here?

Thanks, Charlie, for your question. Definitely something that we've started to turn our mind to. Look, as you rightly say, first statutory profit in a number of periods, which is a positive. And definitely, the trajectory of the business is much improved. I guess probably we would say it's early days in that recovery. So look, it's definitely something that's on our minds, but we definitely come back probably by the full year results and give more clarity on what we'd be thinking. Obviously, we're weighing out the various options that would be there, obviously, looking at what opportunities there are in the market, but also thinking about our investment spend on our Project Arlo. Your point on franking, given some of the challenges of the group, we generally haven't generated much franking credits or have very -- we actually don't have really franked credits at all at the moment and have a tax loss position in Australia, which would eat up -- we'd be able to utilize and save tax for the next couple of years. So franking is not -- franking dividend is probably lower on the priority at this stage given where the business has been. But all those things are in the mix around how we would think about capital management going forward.

Okay. But just a follow-up, I suppose noting that the acquisition history of the group and you're speaking to new verticals today, I'm not sure if that implies just those comments, then maybe you're looking at inorganic opportunities. I suppose I probably hope not given the wild ride that EML has been on and some of the acquisitions that have led to where we are today. But in terms of your priority, I know you've got that, what was it, $15 million one-off CapEx to reach your targets. But in terms of how you prioritize capital management, new growth relative to -- because again, if the stock continues, I suppose had a bit of a bounce today, which is good, but clearly, it's miles off the highs and obviously not that the current team have inherited all of this. But yes, how should we think about the prioritizing of inorganic opportunities relative to capital management? And I suppose that, yes, there was a bit of press recently on an investor calling for the sale of the company, just highlighting how cheap it does seem. So maybe just on the priority future capital management and maybe a comment on that press speculation and letter that was published, please?

Charlie, let me take the first bit of that on the sort of inorganic. Look, clearly, it's not lost on us of the challenges of the group have been heavily influenced and impacted by acquisitions, particularly in Europe. So we will be -- and the Board is very disciplined in relation to a number of those however we would approach that. So look, we're not looking to -- there's nothing on the radar in that perspective. We're very mindful of getting back to our knitting effectively of running the business well, getting it back to growth and doing the work that Anthony sort of talked about in his slides. Maybe I'll just pass to him to make a comment on the speculation you referred to.

Yes. Thanks, James. Charlie, I'd say the Board will be responsive and professional should we receive a credible approach for the sale of the company or individual assets for that matter. We'll always act in the best interest of shareholders, as you'd expect. And I'd be surprised if shareholders had a different view to that. But I would tell you that our absolute focus is on optimizing the performance of this business irrespective of corporate transactions or the potential of one. And that in and of itself should create value for shareholders. So that's where we're spending our time currently. And should we receive an approach, then we'll consider it, of course.

And then just on the cost base, I suppose another point of contention has been the ever-increasing overhead. Is there an opportunity for cost out going forward, noting how much simpler the business is today once you've killed all those legacy-type issues?

Look, Charlie, we're definitely looking to drive efficiency across the operations. I think as Anthony said in his speech, we have definitely been a business that has not had levels of integration, been very siloed in its approach and thinking. And so we're definitely looking to address that. The global functional team that we've got in place now has to drive consistency across all the regions. So look, that -- we're definitely going to drive efficiency. But equally, we've had almost limit -- very, very small limited investment in sales and customer areas. I think we had 6 sales-focused people over the last couple of years. We're moving that more towards 10. We'll need to increase that further. So we will be recycling some of that cost efficiency into customer and sales areas. And we did say last year in November in the strategy presentation, we look to keep the cost base broadly flat from here, and that would be reinvesting efficiencies. I guess the other thing that unlocks the efficiencies is that single global platform as well, which will unlock efficiencies in technology and in our operations. Anthony, do you want to add anything?

No, I think I would perhaps restate most of that. But I would say that, look, generally, in my mind, the cost base is too high. We've been overcooked in some areas and undercooked in others. So technology definitely needs to do more for us, and we've obviously got plans there. There will be some swings and roundabouts as we add talent and drive better outcomes over the next 3 to 6 months. But our ambition is to outperform and we just, I guess, need a little bit of time for the leadership team to get embedded and drive the One EML model. Breaking down the silos that have created some of this cost structure is really important. And I'd say to you that we'll have plenty more to say on this at the full year.

And then just finally, regarding the leadership changes and, Anthony, now that you're Exec Chair, I believe, maybe just a comment on -- I mean those targets that you put out when the previous CEO was in place, was that his plan? Or was this your plan? And yes, maybe just on a personal level, are you fully committed to this business, well done on your previous successes? It seems like you had a huge amount of those, which is great given you're now running EML. But yes, going forward, do we need another CEO? Or are you fully reengaged to go again, rebuilding EML like you have done so well with your previous successes in the industry? Just a comment around leadership would be great.

Sure. Let me say that the strategy that we presented in November and the targets embedded in that was not the doing of one individual. That was a collective effort putting that together, and the Board signed off on it after their engagement in it. So definitely, that plan is my plan or our plan. And in short, I'm not going anywhere, mate. I'm very energized about what we're doing. I think I've just spent 2 weeks going around the world to meet everybody, customers and partners and our team. I'm incredibly energized by the opportunity ahead of us and look forward to driving some positive outcomes for everybody.

[Operator Instructions] There are no further questions at this time. I'll now hand back to Mr. Hynes for closing remarks.

Thank you, Jody, and thank you, everybody, for joining our call this morning. I look forward to catching up on the road show in the next week or so or at the full year.

Thanks very much. Thank you. That does conclude our conference for today. Thank you all very much for participating. You may now disconnect your lines.