Welcome everybody. Good morning. Welcome to the 2022 EML Payments Annual General Meeting. My name's Peter Martin. I'm the Non-Executive Chairman of EML and Chairman of the meeting here today. I'd like to start the meeting by acknowledging the traditional owners of the land on which we meet today, the Gadigal people of the Eora Nation, pay my respects to their elders past and present. I extend that respect to Aboriginal and Torres Strait Islander people here today. Thanks for attending today's meeting. It's hard to believe that this is the first in-person AGM since the COVID-19 pandemic began in March 2020. It's a pleasure for the EML board to be present in Sydney today to meet investors in person once again.
May I ask you to make sure your mobile phones are switched to silent while the meeting's in progress. I'll also ask you to note where your nearest exit is in the unlikely event that it becomes necessary to evacuate the building. In the event of an emergency, please follow the instructions of the venue staff. The notice to convene this meeting has been made available to all registered shareholders. The necessary quorum is present here today. I'm pleased to declare this meeting open. Today's meeting is being conducted as a physical meeting. For shareholders unable to attend in person, we've provided an opportunity to lodge a proxy or a direct vote and ask questions in advance of the meeting. We'll film the meeting for the purposes of making it available to shareholders unable to attend.
A recording of the AGM will be available on our website as soon as possible after the meeting. I'll now explain the running order for today's meeting before making my main address. Emma Shand, EML's Managing Director and Group CEO, will then provide her presentation. We'll then attend to the formal business of the meeting. I'd like to take this opportunity to introduce my fellow directors joining us here today. Emma Shand is the Managing Director and Group CEO. Tony Adcock, Independent non-exec Director and Chairman of the Audit and Risk Committee. David Liddy, Independent non-exec Director and Deputy Chairman. Melanie Wilson, Independent Non-Executive Director and Chair of the Remuneration Committee. We also have today Brent Cubis, an incoming Independent Non-Executive Director, who puts himself forward for election at today's meeting to join the board effectively on the 6th of February, 2023.
I'd also like to introduce Rob Shore, our Chief Financial Officer, Sonya Tissera-Isaacs, Company Secretary, Ryan Chellingworth, Group Investor Relations Officer, and Stephen Tarling of Deloitte Touche Tohmatsu, the company's current auditor, who are also present. During the formal part of the meeting, I'd ask you to restrict your questions to matters concerning the resolutions. Shareholders will be given the opportunity to ask questions in relation to each resolution. Following the conclusion of the formal business of the meeting, shareholders will be given an opportunity to ask any further questions of the board and management. Turning to my main address, what a year it's been. The world has changed dramatically in the last 12 months. We've seen many countries in the world, including Australia, slowly emerge from COVID restrictions. There's a horrific war in Ukraine. There's global supply issues.
Interest rates are rising across economies, and there's global energy security issues, all contributing to global uncertainty. Stock markets in general have taken a big hit. In particular, the fintech sector has retreated in dramatic fashion. As far as EML is concerned, it's been one of the toughest years in our history. Our market cap is the lowest since 2016. It's clear that uncertainty about EML's future prospects has led to a loss of confidence and contributed to the fall in market value. I'm referring particularly to the continuing regulatory issues in our Irish subsidiary, PFS Card Services, and our U.K. subsidiary, Prepaid Financial Services, and also the related costs associated with those issues. As previously advised, we've already taken a provision for potential fines from any enforcement action.
Despite our genuine efforts, there's been a lack of clarity about what these issues mean to EML and how we're going about fixing the problems. I and the board do take full responsibility, and we're determined to rectify both of those issues. Just to clarify, these particular business units contribute 45% of fiscal 2020 revenues, so not the entire business. It's important for shareholders to understand that the respective regulators, being the Central Bank of Ireland and the Financial Conduct Authority in the U.K., have actually given approval for them to grow, although with some restrictions. That's during the remediation processes, which we now expect to complete during 2023. Clearly, EML is also wearing significant costs to fix the regulatory issues we face in our General Purpose Reloadable business.
However, in the medium term, we anticipate that the overheads to income, to income ratio will decline, driven by cost savings and growth across the businesses, as outlined in the strategic review that you'll hear more about from Emma shortly. The board is very cognizant of the impact of the share price decline on our shareholders. Thanks to you for your patience and sticking with us. We're determined to reverse the trend. Realistically, that won't happen overnight. It's become very clear to the board that EML needs to fundamentally transform and streamline our business to successfully compete and grow in what is a hyper-competitive global fintech environment. In July of this year, Emma Shand, our new CEO, took the reins from the outgoing CEO, Tom Cregan, who resigned after being in the role for 11 years. Emma is eminently suited to this role.
She's had 25 years of experience in international management, and particularly financial market infrastructure. She's led complex technology and transformational change programs. She's worked around the world as a senior executive with NASDAQ for over 17 years. EML is extremely fortunate to have a leader of her caliber in these times. She leads by example, and the company will benefit hugely from her knowledge, commitment, and drive. Whenever Emma was appointed, the board approved undertaking a comprehensive root-and-branch strategic review of the company's operations. In finalizing the strategic plan for EML's future, the board has decided to not proceed with the buyback at this time, although capital management remains an important agenda item for the board in the future. Emma's brief was to formulate a strategic plan to transform the business, plus review and strengthen our technology platform and data. No stone has been left unturned.
A critical part of the plan is to embed a robust risk, compliance, and regulatory culture in all aspects of EML's business operations. Emma and her team have also identified the most attractive growth segments available to the company. She'll talk more about the strategic plan and some of those initiatives shortly. EML's also had some significant successes in 2022. Our gifting business is growing steadily. Our businesses in Australia and the U.S., and our Sentenial Nuapay open banking business in Europe, are unaffected by the regulatory concerns in our U.K. and Irish subsidiaries. Despite the challenges, payment volumes are up over 300%, primarily due to the acquisition of Sentenial. Group revenues grew 21% to AUD 234 million. The EBITDA declined 4% due to the increase in costs, primarily across our European business.
We're also winning top-tier customers, including major banks and governments in the U.K., Europe, and Australia. Given the very significant future opportunities we see for the company, we're substantially strengthening our senior management team, particularly in Europe. Fiona Flannery, who is CEO of our Irish subsidiary, PCSIL, is here today sitting in the front row. We're also adding senior management talent across a range of areas of the company. Board renewal is also a significant item on my agenda. We recently announced Brent Cubis as a new non-exec director commencing in February next year. Brent's here today and will introduce himself later. Brent Cubis brings deep experience as a non-executive director, advisory board member, and international chief financial officer across a variety of sectors, including health, financial technology, media, and hospitality. I'm delighted to welcome Brent Cubis, who will make an excellent addition to the board.
Given the center of gravity of the EML business is now actually in Europe, we're presently seeking European based non-exec directors with deep payments, regulatory, and technology expertise to add to the board. I anticipate we'll make a further European director appointment announcement in the very near future. In conclusion, I'd like to thank all our EML employees for working incredibly hard to deliver to our customers through some very challenging times. The board and I would also express thanks to our shareholders for investing in the company and your patience as we work through this difficult period. I'm confident that the changes we're making will strengthen EML and return us to a strong and sustainable growth path. I'd also like to thank our board members for their support, hard work, and commitment during the past year.
It's now my pleasure to invite Emma, your Group CEO, to address you. Following Emma's presentation, we'll move to the formal part of today's meeting. Emma Shand.
Good morning, ladies and gentlemen. Welcome. I thank those of you who have joined us today for your continued interest and investment in EML. I'm honored to address shareholders at my first AGM as CEO of EML. This is an important day in EML's journey. We are turning a new chapter. I want to share with you today the outcomes of the strategic review, which I have led, after having a good firsthand look at the company's global operations. I want to make it clear from the outset that this strategic review is not simply my observations with a fresh set of eyes. The review has been an enterprise-wide, data-driven review of the global business and broader market setting.
Whilst the review has identified a number of shortcomings which must be addressed as an absolute priority, I'm confident that we can address these challenges and build EML into a highly competitive value proposition for our stakeholders. It won't happen overnight, as Peter said. We can do it. I will start with the observations and current assessments. Then address the plan for action and change. For those new to EML, we serve a broad range of corporates, governments, banks, and payment service providers across Australia, Europe, the U.K., and the U.S. We offer gift, incentive, disbursement, and reloadable cards. Newer innovations in payments, including open banking and real-time payments. The breadth of EML's offerings in industry sectors is unrivaled in the payments space. We're highly regarded for our tailored, feature-rich, white-labeled solutions.
Of EML's seven acquisitions between FY 2015 and FY 2021, six were prepaid card businesses. There are challenges. The acquired businesses have largely been left to operate in silos, missing an opportunity to integrate, extract synergies, and align culturally. We have regulatory remediations underway in our European and U.K. prepaid reloadable card businesses. Unintegrated acquisitions bring with it fragmented technology and processes, many of which are manual, and a longer time to market for our solutions. Data is also fragmented, impacting operational efficiency and masking valuable insights into customer and product profitability. Our employees have sought a clear vision for the future, and a remote-first working stance has limited opportunities for genuine collaboration. Finally, while EML's point solutions are well appreciated by our loyal client base, these highly bespoke point solutions are not easily scaled, and we currently serve across 10+ industry verticals.
These are challenges that we have identified and will be addressed by our new strategy. The strategic review also looked beyond the business and into its global markets. In the hyper-competitive world of payments, it is essential to business strategy to be sure we have an objective view of what forces are at play and how EML should position itself to win. It is clear that the future of payments will be different. I believe the payments industry will go through a period of radical transformation. Traditional players will need to challenge their payment strategies and operating models to ultimately offer value beyond the confines of traditional transactions. Several forces are reshaping payments. They are becoming more instant, frictionless, and embedded within customer journeys. Technology advances and an often prescriptive stance taken by governments and regulators to introduce market competition have heralded new infrastructure approaches.
These new infrastructures are real-time payments, message and transportation protocols, and more affordability in cross-border flows. Open banking is set to become a game changer. Adoption rates are certainly increasing. In the U.K., for example, there were 2.8 million users at December 2020. Today, there are more than 6 million users. At current growth rates, almost 2/3 of the adult population of the U.K. will be users of open banking by the end of next year. Open banking puts customers firmly in control of their data, identity, and ability to initiate payment disbursements rather, and/or collections. Despite recent headwinds, buy now, pay later will continue to evolve and grow. However, players in this space will need to maintain a viable operating model to deliver sustained profitability and consumer protection, given the rising cost of capital and increased regulatory scrutiny.
Digital wallets and the drive towards a holistic customer experience before and after payments have seen the rise, particularly in Asia, of the super app as a one-stop shop, not just for managing finances, but supporting the lifestyle journey of users. Embedded payments are expected to scale, constituting the largest sub-sector within embedded finance, where their market value is estimated to be approximately AUD 4.5 trillion by 2030. Embedded payments are associated with business models where non-financial services companies, think Uber, Shopify, offer payments functionalities to their business customers. Businesses, be they B2B2C or B2B2B, are themselves adopting a platform or marketplace approach, providing their customers with more personalized frictionless experiences. No conversation about the future of payments would be complete without touching on digital currencies.
Importantly, it's the initiatives underway from central banks worldwide in their evolution of central bank digital currencies, which is of greater interest. This signals not only a new payment method, but new infrastructure enabling instant atomic settlement through distributed ledger technology. This brings with it programmability, smart contracts and tokenization. It's a space to keenly track over coming years. The bottom line from all of these developments is that to have an enduring right to play in the future, payments companies will have to offer specialized product and customer value propositions. These products and value propositions will need to be driven by meaningful data insights, underpinned by scalable technology, and have compliance and operational capabilities that allow quick time to market and quick time to value. Given this backdrop, EML certainly has a clear strategic imperative to develop new capabilities and offerings and also to change.
I and the EML team are truly excited by that opportunity. Firstly though, we must rebuild confidence and trust with all our stakeholders. We must focus on today's customer needs and innovation while operating within our risk appetite. We must be clear on purpose and vision and empower our people to deliver on it every day. We must continuously assess megatrends and public policy reshaping payments. We must foster financial safety and inclusion in the community. Today, we start a three-year transformation to focus the business for responsible growth and to be future fit to successfully compete in the world of payments over the coming 5+ years. The three pillars of our transformation are elevate, streamline, and reposition for growth. We will elevate our European, U.K. and remediation efforts, embedding a strong risk-aware culture in our business.
This is the strengthening of the core that will hold us in good stead as we navigate a rapidly evolving payments and regulatory landscape. We will streamline customer and operational efficiencies. There are levers we are looking to pull to drive better operating margin. Repositioning for growth entails transitioning the base and evolving from prepaid cards into an embedded finance leader in four sectors. Our transformation strategy will be driven by five key enablers. We will define and clearly articulate 1 set of purpose and values to define and reinforce our culture across all operations and regions. We will be a product-led company, compliant by design and with strong technology capabilities in paytech and regtech. Data is both a key enabler and asset from which to unlock value, helping us deliver on strategy.
With that overall strategic framework, let me now describe each of our three transformation pillars in some more detail, starting with elevate. The current regulatory remediations are a clear catalyst for this pillar of our transformation strategy. However, it's important to understand that our efforts and the implementation of technology, processes, and controls will endure long past remediation. The Irish subsidiary remediation program commenced in June 2021, as many of you know. We expect a full embedding of controls and completion of a third-party assessment prior to the expiry in December next year of the Central Bank of Ireland's material growth restriction on the business. Given commonality of framework design and controls, the remediation of our U.K. subsidiary, PFS, it's commenced and has targeted a completion in line with that of its Irish subsidiary, PCSIL.
The remediation itself is focused on design framework and controls across five key areas that I thought I'd share with you today. One, proportionate governance and risk management control mechanisms and procedures. Two, conduct and culture guided by robust risk management frameworks and consumer duty policy and procedures. Three, an accretive and sustainable business model with adequate financial resources and timely regulatory returns. Four, operational resilience. Five, f inancial crime prevention through robust anti-money laundering and counter-terrorism financing control frameworks and risk assessment. Moving to our streamline pillar of the strategy. As Peter said, an examination of all aspects of EML's business and operations revealed a significant opportunity to enhance customer and operational effectiveness. The priorities fall into six key areas across our business. Customer journey and service delivery will be transformed, including automated onboarding, lifecycle management, and customer self-service portals.
We'll be rightsizing the organization with a structure aligned to strategy and simplifying operations over time. For example, consolidating regulated and non-regulated entities, ensuring we responsibly optimize tax benefits and R&D in jurisdictions in which we operate. We will also rationalize legacy and duplicative technology and modernize technology and operating platforms. We'll create a single source of data, which will provide operational insights to inform decision-making and automated and low-touch processes spanning finance, regulatory reporting, customer, and partner services. We'll also form a centralized technology, operations, innovation, and delivery hub to serve EML's targeted business lines as well as new payments frontiers. This will focus on more disciplined supplier and vendor management via global procurement to drive cost savings.
Finally, we will strengthen compliance, which will be based on tech-enabled behavioral science modeling to enhance controls and regulatory horizon scanning to inform our product roadmaps and preparedness for new developments. To our third pillar, reposition for growth. There is a significant and exciting opportunity to evolve our business over time, from being predominantly in prepaid cards to an embedded finance leader within the next five years. We've identified four attractive sectors. The first is financial services with embedded payment solutions. Secondly, human capital management, which is the way people get paid and also get rewarded for their work. Thirdly, retail, which is more than gift cards. Finally, government, where there is a growing drive to really replace cash and paper-based payments with digital alternatives.
The global addressable payments market for the four sectors is large at AUD 704 billion. This represents 70% of the total addressable payments revenue globally. Our serviceable market, which looks specifically at the regions we want to focus our growth opportunity, is AUD 114 billion. Today's penetration of this serviceable market for EML is 0.15%. We have a great opportunity to grow our share of customer wallet and capture new business. These four sectors are strategically a great fit for EML. They house a significant portion of our customer base and product offerings today. Focusing on these four sectors will enable us to bring together previously siloed solutions into a more feature-rich product that services an industry.
The financial services market is significant, and we believe the serviceable market size is AUD 23 billion with a five-year CAGR of 6% within the regions we serve. Real-time banking, 24/7 banking and digital payments, and the growing importance for identity security in the digital world are all key trends that will drive opportunities and revenue for a provider like EML. We've invested in integration and connectivity with most U.K. and European banks through open banking, and also provide more traditional account-to-account processing services to three of the top seven U.K. banks. Combined, this gives us the platform to reposition our prepaid wallet service to actually move into FinTech bank loan on-lenders or non-bank lenders, I should say, and corporates, creating a more embedded payment experience for customers.
There's a clear pathway to replicate this offering as open banking adoption continues apace while growing our embedded suite of payment services. Human capital management is a market that is growing and evolving rapidly with an estimated total revenues of more than AUD 53 billion and a five-year CAGR prediction of 6%. Employees are increasingly wanting on-demand pay. Essentially, people receiving their wages as they earn them, allowing them to better manage their cash flows. They also see work as being more than just money, and our solutions help employers enhance their employee value proposition. EML has a strategic advantage to play in this area.
We have an established footprint and credibility with the large enterprise customers in this space, and here, especially in Australia, where we service over 90% of the salary packaging market. Again, linking identity and account-based EML solutions with our traditional white-labeled prepaid solutions enhances how we serve both employers and employees. Retail is the third sector we'll focus on. We have relationships with over 1,000 customers across retail, a service or a sector rather, that has a serviceable market size of AUD 23 billion with strong growth over the next three-five years, a 7% CAGR. EML currently serves predominantly shopping mall clients with well-packaged repeatable product offerings across cards. There is an opportunity to transition and expand into account to account and open banking offerings.
We have the potential to serve brands and wholesale clients and move further into e-commerce, especially in Europe and North America, where 50% of our existing customers already have an e-commerce presence. Government is our fourth sector, with the serviceable market being AUD 12 billion and growing at 8% CAGR. Governments are undertaking major digital transformation strategies, including the digitization of cash and paper-based payments, particularly in Europe. The rising cost of living is driving a greater need for welfare support and inclusion programs in the community. We are recognized today as a leader in the U.K. with a proven track record working with national government agencies and over 100 councils. Moving beyond cards and focusing on identity and account-based disbursement solutions, we will be able to lift the experience of beneficiaries to more mainstream payment solutions, driving real financial inclusion.
We also see opportunities for open banking to offer new ways to service government's wider payment needs, for example, supplier payments. What does success look like for EML in the next one, three, and five years? Our business will look fundamentally different. We will be focused on four sectors and be a leader in the embedded finance space. We will optimize operations. Our structure, aligned to strategy, will be leaner, and we will have more standardized, scalable products. We will have the right talent in the right roles, and we'll have fewer technology platforms. We will have one source of data to drive our decision-making and build stronger relationships with our customers, at the same time as delivering them a better customer experience.
We will have successfully concluded our remediation programs in Ireland and the U.K., and we will also have robust risk and compliance frameworks with a risk-aware culture across our whole organization. We have a target of controllable cost out of the business of 10%-15% commencing in FY 2024, with full impact in FY 2025. We will deliver our first sustainability report with benchmarking against recognized ESG standards in FY 2024. I am confident we have a strategy to build a strong and resilient and profitable company delivering long-term value for shareholders. I look forward to updating you on the execution of our strategy at our half year results in February and every six months thereafter. If we now look back over the financial year of 2022, it was a mixed year for EML.
Gross debit volumes increased 308% to AUD 80.2 billion. This included a nine-month contribution from Sentenial Nuapay acquisition. Revenue was up 21% to AUD 234.1 million. While the underlying performance of the business was solid, significantly increased costs impacted EBITDA down 4% to AUD 51.2 million. Underlying business overheads increased 41% due to a need to increase resources in our European operation to manage regulatory challenges. Moving on to the Q1 update for you. Performance in Q1 FY 2023 has been challenging, with results significantly behind the prior corresponding period on an underlying basis. We have presented the results on an underlying basis to exclude the impact of AUD 14 million of costs relating to European regulatory matters, one-off restructuring, executive retentions, and European fraud costs.
Revenue was down 5% or AUD 2.3 million versus PCP. The period, the prior period included AUD 5.3 million of once-off revenues relating to several non-recurring items, including breakage and establishment income relating to the one-off stimulus programs that we had that year. The impact of those items also reduced gross profit by AUD 3.5 million. Overheads were up 29% on PCP. Q1 FY 2023 overheads were behind Q4 FY 2022 overheads, we expect further costs to be incurred throughout FY 2023 in managing our regulatory matters. Looking at Q1, we saw General Purpose Reloadable volumes were up 9% on PCP, with solid growth in core Australian and European programs. The GPR revenue yield was lower than PCP as it was impacted by the non-recurring items outlined previously.
On a positive note, the gifting segment has commenced the key seasonal trading period pretty strongly. GDV is up 30% on PCP for the six weeks leading up to 20 November, driven by incentives and with malls up 20%. Given the seasonality in this segment, GDV in the two weeks leading up to Christmas will drive segment performance. In Digital Payments segment, which includes Sentenial, volumes were lower than Q4 FY 2022, and this was due to lower direct debit volumes. The focus of this segment is very much on open banking, where volumes were up 40% on PCP. Open banking annualized revenue as at October is now running at AUD 6 million versus AUD 4 million at March 2022.
Nuapay has been successful in contracting with many large organizations. The focus is now very much on revenue conversion, aided by the recruitment of a partnership success team and measures introduced today in our strategy. As we move through FY 2023, the interest benefits we flagged at the full year results are being delivered with AUD 2.5 million of net interest income in Q1 FY 2023 versus AUD 1.4 million throughout the full 12 months of FY 2022. We had previously forecast interest of AUD 10 million in FY 2023. As interest rates continue to rise, for the month of November, we now estimate that EML will make AUD 1.8 million of net interest income, which equates to an annualized run rate of AUD 21 million.
Consequently, we have increased our FY 2023 interest rate guidance from AUD 10 million in August 2022 to a range of AUD 17 million-AUD 21 million. Turning to our FY 2023 guidance. Further investment is required to complete the remediation programs and commence streamlining our business. As previously noted, non-recurring account maintenance fee revenue of AUD 17.9 million will not reoccur in FY 2023. We assume that gifting volumes will not be impacted in a similar way to FY 2022 when there was the impact of the Omicron variant. As noted, we expect benefits from the normalization of interest rates to their historic low levels, or from rather their historic low levels, and expect this to add between AUD 16 million-AUD 20 million to EBITDA.
Annualization of our investments made in FY 2022 and further investment that is required to transform the cost base in the medium to longer term will result in an increase to the cost base of AUD 27 million-AUD 37 million in FY 2023. Our guidance for FY 2023 is revenue of between AUD 240 million-AUD 260 million, gross profit margin of approximately 67%, overheads of AUD 135 million-AUD 145 million, underlying EBITDA of AUD 26 million-AUD 34 million. The guidance numbers exclude the AUD 14 million of once-off costs we previously noted. We will adopt a similar approach for the rest of the year. While it's a tough period for the company, I wanna recap the key points of the strategy. We have a three to five-year plan to transform this business.
It will be fundamentally different. It will be stronger, more efficient, and more profitable in the future, creating long-term value for you, our shareholders. We are changing this business to be an embedded finance leader over time, so that we can be a strong competitor and stay at the forefront of the payments industry. We will have a laser focus on the execution of this strategy. The hard work starts now. Thank you for your support.
Thanks very much, Emma. It's now time to address the formal business of the meeting. I want to make some comments on the second item on today's agenda, the remuneration report, Resolution 2. I hope you can see that. It's very difficult to see even from here. Based on the direct votes and proxies lodged ahead of the meeting, EML is likely to receive a first strike on the rem report. This is obviously a disappointing result, but we'll take this outcome into account and review our remuneration structure in FY 2023 to consider opportunities to further align the structure with company performance and longer-term shareholder value. Proxies received.
Valid proxies have been received from shareholders for a total of 164,053,673 shares, representing 43.8% of the company's voting shares. The notice of meeting sets out five items of business. A poll will be conducted on each resolution. Conducting the formal voting by poll will ensure that the views of all shareholders who wish to vote are represented, including those who've lodged valid proxies and direct votes in advance of today's meeting. The direct and proxy votes for each individual resolution will be displayed on the screen. As far as voting procedures are concerned, upon registering your attendance of the meeting, you'll be handed a registration card, or have been, by a representative from the company share registry.
It's only those shareholders with a green card who can vote on the items of business at the meeting. If you have a yellow card, you can ask questions, but you can't vote. As a reminder, visitors holding a red card are not eligible to vote or speak at the meeting. It's a bit like the World Cup. For efficiency, I'll put all resolutions to the meeting and advise the proxy voting for each and provide shareholders with an opportunity to ask questions in relation to each of the resolutions. I'll then ask all those shareholders with a green voting slip to follow the instructions on that paper and vote on all five resolutions. I've nominated Emma Curry of Link Market Services to act as Returning Officer for today's meeting. Once you've completed your voting slip, please hand it to Emma Curry for processing.
While the votes are being calculated, we'll take questions from the floor before determining the outcome of the poll vote. Votes will be counted and the results notified to the ASX before the end of today and posted on the company website. Does anyone have any questions on the proposed format of today's meeting? Now turning to the first order of business, the financial statements. The first order of business on today's meeting deals with the presentation of the annual financial report of the company for the financial period end of 30 June 2022, together with the declaration of the directors, the director's report and the auditor's report. No resolution is required to be moved in respect of this item.
Shareholders are now invited to ask questions and make comments on the accounts and on the business, operations and management and performance of the company. Shareholders may also ask the company's auditor, Stephen Tarling of Deloitte Touche Tohmatsu, questions relevant to the conduct of the audit, the preparation and content of the independent audit report, the accounting policies adopted by the company in relation to the preparation of the accounts, the independence of the auditor in relation to the conduct of the audit. If you have any questions, please put up your hand. Yes, sir.
Peter, I've got a question that relates to governance issues. Very briefly, I'd like to say, can the EML board and chair explain circumstances around the resignations of two EML directors two weeks apart in July 2021? For one director, Kirstin Ferguson, Chair of Culture, Governance and nominations committee to resign may be considered unfortunate. For a second well-credentialed U.S.-based director, George Gresham, of 14 months on the board to shortly follow that resignation, in my view, raises potential red flags. Mr. Gresham's resignation in such a short period of time is highly unusual. Was there any discord amongst the board prior to these resignations that would explain those resignations? Did the discord relate to share sales by directors potentially breaching company's governance rules?
Would the board be prepared to cooperate in enabling an examination under Section 247A of the Companies Act, the minutes of board meetings and any external advice the board may have received on such issues since July 1, 2021?
Okay. I can certainly answer the first questions. Kirstin Ferguson did resign from the board. At the same time, she also resigned from another board. She advised the board that she was completing a book and that she had to free up her time to complete the book, which actually, I think, was published a number of months later. George Gresham certainly resigned from the board. George's reasons for resigning were his, let's say, he was an American-based director, resident in Colorado. He found the demands of the activities there incredibly time-consuming and demanding. We had, I think that particular year, we had, I can't remember how many board meetings, but we had a lot of board meetings, and George was on the calls almost 24/7.
Of course, not every day, but many, many different calls. The issues of share trading, we have explained to the market numerous times that EML has a share trading policy and that we are very careful to ensure that any share trading that occurs occurs in relation to that policy. That is, in fact, what happened in that instance. Personally, I've made it very clear to the market that I will trade shares periodically.
In fact, I made a statement about three years ago, I think, saying I will trade periodically small parcels of shares. As you know, I think as is my right, seeing I've been a shareholder for over 10 years and still hold 6.6 million shares, and that was made very clear to the market. We always enforce the share trading policies of the company to the letter.
I take it you'd have no objection, incorporating with the Section 247A, making the company's books and minutes available for inspection by shareholders as requested.
That would be a question I'd have to hand pass to our general counsel. Okay. Thanks, thanks, Paul. Any other questions? Yes, sir.
Can I just clarify 100%, you are saying that there has been no director trades in closed windows?
Correct.
That is my understanding. That's correct?
Yes.
Okay. Can I just clarify with you, I presume, sir, that you are a very thorough reader of board papers and management reports. That would be the case?
Yes.
In April this year, one presumed you would have read that report, that the budget papers or financial reports would have told you the business was tracking forward to budget, yet you executed a trade, setting aside that intelligence two weeks before an earnings downgrade.
Could you explain that to me again? What's your. You're saying that.
Well, I'm trying to understand that your decision to trade in April when the company was nine months into a financial year, presumably your board papers addressed the financial performance against budget. Yes?
Go on.
You chose to set aside that intelligence to execute a trade that then two weeks later we see an earnings downgrade. I think.
A number of shareholders that are concerned about that conduct. The window may have been open, but it goes to your personal judgment.
I think if you will recollect, we made an announcement to the market relating to that share trading. The share trading was done absolutely in complete accordance with the internal policies of the company. The reality with a company like EML, which I think has been explained, is that it is never clear until the numbers are put together exactly where the company is gonna be at any period of time. If there's any inside information, we're in a trading blackout. That's something I enforce rigorously for myself. Our company secretary enforces, our general counsel. We have very strong policies around that. That what you're implying did not occur, and that was explained very clearly to the market at the time.
A quick review of the minutes of that meeting would have showed that you were making AUD 30 million.
Sorry?
If you asked to review the minutes of that meeting, would it show that you were making AUD 30 million at that stage?
It may not show any of those things because those conclusions are made at the time just prior to an announcement as we gather information from our global operations.
The meetings all already happened, so it wasn't showing you used to that at the stage or.
Can I just explain? If there was any information that wasn't, was material, it would have been made available to the market, or there would have been no trading occurring. Our policy is to look very carefully at all the information available to directors and employees of the company. If there's any information that's not available to the market, we don't trade.
Can I ask this in another way? At the time, just before you sold your shares, would you have been aware that the company was relying on getting the CBI to approve its new bond issuance in order to get a AUD 6 million interest benefit in order to meet guidance? Were you aware that the company was on track to get that in order to meet guidance or were you or not?
That's a difficult question to answer. I can't remember the specifics of those sort of line transactions that you're referring to.
Would the board, minutes show that the management was indicating that the company was running behind, meeting or ahead of budget, and was it dependent on this CBI approval of this bond issue?
I'd have to go back to those board minutes to see what those board minutes are saying, because I mean, that's a level of detail that I don't carry around in my head. All I can stress is we and I, and any members of the board and management do not trade shares if there's relevant material information that the market should be aware of. Any other questions? Okay, let's move on to Resolution 2. Which is the director's remuneration report. The second item of business concerns the adoption of the remuneration report for the company for the year ended 30th of June, 2022.
I put to the meeting that shareholders consider, and if in favor, to pass the following advisory resolution under Section 250R(2) of the Corporations Act that the remuneration report for the financial year ended 30th of June 2022 be adopted. Proxy votes received in respect to this resolution are displayed on the screen. Look, I'm sorry, they're very difficult to read.
Any way we can blow that up a bit, Mr. Chairman?
Look, I'm not certain. I don't think we can actually.
Okay.
Yeah. I can't even read them from here, to be honest.
Yeah, okay. Report. Remuneration report. Votes for, 148,0 59,0 47. Open, 1,089,742. Against, 42,909,080. Total votes cast are 148,557,869, which is 39% of issued capital. The percentage of for votes is 70.38%, and against votes is 28.88%.
The resolution requires, for 75%.
Are there any questions on the resolution? If there's no further questions, I'll move on to the next resolution. I think this is relating to my re-election. I'll turn over to the Deputy Chairman, Mr. Liddy.
Thanks, Peter. Look, before I put the resolution to you, I'd like to make some comments. You know, as you can see from the proxy votes, or maybe you can't, I'll read them out. Can you read them out?
The slide.
Yeah. Oh.
Okay. Can everyone hear me? Okay. For there's 76,536,404 votes for. Open, 1,094,103, and abstain, 79,826,489. The percentages are 48.61% for, 0.69% for open, and 50% against. Sorry.
Could you repeat that again?
It's the number of shares?
No, the percentages.
Oh, the percentage. It's 50.7% against and 48.61% for.
What's the number of votes against?
79,826,489. That's the total amount of issued capital that was available is 42.10%.
As you can see from the proxy votes that we've just read out, Mr. Martin's re-election is a very close call, and a successful outcome really does rest with your votes to be conducted by poll today. I feel it's really important to point out that Peter's chosen or elected not to vote his own personal shares, which are about 6.6 million, in favor of his own re-election. I think that's a really important point of independence that Peter's displaying. We all acknowledge the decline in share price that the company suffered. I can absolutely confirm that at all times, our board did not lose focus on our key responsibility to you, our shareholders. However, as I know you will appreciate, it is the role of management to manage and the role of the board to set the strategic direction and oversee management.
The board can really only operate effectively if provided with appropriate information from management and, where necessary, challenge that information. As Peter has said, it's clear that uncertainty about EML's future prospects has led to a loss of confidence in our business, leading to a significant fall in market value. Our past two years' difficulties relating to the continuing regulatory issues in our Irish subsidiary, PFS, our card services and our U.K. business, Prepaid Financial Services, have been well announced to the market. Peter has led the way forward in addressing our issues, particularly with the CBI remediation program. He has led from the front on all aspects of restoring future value for our shareholders and is absolutely committed to the future success of EML.
He has personally involved himself with the CBI and FCA, having met with them recently, and is guiding our new CEO, Emma Shand, in developing our strategic direction and embedding successful business model for future shareholder benefit. Peter is the right person to lead a revitalized board and management team towards success, and I encourage you to support Peter in his reelection. The resolution is that Peter Martin, who retires by rotation in accordance with Rule 3.6A of the company's constitution and being eligible, offers himself for reelection to be reelected as a director of the company. You've already seen the proxy votes or heard the proxy votes. Mr. Martin will not vote on this matter. Are there any questions on the resolution? Yes.
My question goes to the tenure of the board. You've got a board that's been in position for some of the directors have been there for more than 10 years. The ASX listing requirements or suggestions that directors have a maximum of three non-short term. Where is the renewal coming from and when is it going to happen? We've had lots of promises. I, this is for the CEO's report here today. There's no costs involved in what that's going to cost us, the shareholders. The buyback is going to suspend. Why has that been suspended? I suspect that's because the capital is going to be allocated to this cost. What we shareholders are looking at for the next 12 years of profit slide.
No dividends. There's nothing in that to tell us exactly where the costs are going to be. In fact, the suggestion I take away from the presentation is they're probably going to be asset sale of hot properties. This is funded through continued operations. There's not enough detail for shareholders there to understand what's going on. You, the board, are in charge of this, and this CEO, you know, blind that to the problems that could be picked off. I go back to my original point. If there is a board renewal and the directors aren't accelerating that process with what might be the proposed nominee, it simply not enough. If you could suggest that it's time for Mr. Martin to go, because I've made that suggestion to some of the other board members as well.
Okay. I take your point. Look, there is a renewal process in place. As the Chairman indicated, Brent Cubis will join our Board in February or earlier. We're in the process of electing in the long end of it, one director in Europe, and we're reasonably confident there's another director that we'll be able to appoint in the near future. As we appoint these new directors, the longer-term directors of our company, which includes me, will gradually roll off the Board, certainly within the next 12-18 months. We have a renewal process in place, and that's been led by Peter Martin.
Can I ask, Tony, wouldn't there have been a trading blackout in the at least fortnight to a month after the Sentenial acquisition was announced, given that it was subject to regulatory approval?
Look, I can't recall the exact dates of any blackout. I'm sorry. We'd have to go back through the minutes to identify that. I can reassure you-
Any of the board members.
On the basis of Peter's-
Company secretary have a view on that? I mean, it was an acquisition subject to regulatory approval. Would that not automatically warrant a trading blackout?
Well, as the chairman indicated, no board member has traded in a blackout period.
there was no blackout period after the Sentenial acquisition?
I can't recall that. All I'm saying is, and I'm repeating what the chairman said, that no director's traded in a blackout period. Okay, next question.
This question relates to, I guess, all board members, but specifically to Peter Martin. You know, this is about shareholders having trust in the board and to realize full value for shareholders in this company. Now, we know that Bain Private Equity approached the company late last year, and they made a takeover offer for the company, around November last year. Can the board confirm what was the takeover price at the time, considering the shares were trading around in the AUD 2?
You've made a couple of assumptions there. We never received a takeover offer from any company in the last 12 to 18 months. We've received some unsolicited, highly conditional proposals to look at whether companies may wish to make firm offers for EML. If we'd have received proposals that were material and were firm and fixed, we would, for obvious reasons, we were obligated to make those known to the market and to our investors. We, you know, there's a lot of people on this board with a lot of financial background. We have very good advisors working with us in Goldman Sachs and Herbert Smith Freehills. We run very comprehensive financial models on the business, which are adjusted according to market circumstances. As interest rate rises, the discount rate in the model rises. That reduces the underlying fundamental value of the company.
As we go along, we're always tracking. What is fundamental value of the company? We have never received an offer that in any way was firm and fixed, that represented the fundamental value of the company. It would have been presented to shareholders. The board's obligation is to ensure that we don't. We do the right thing by our shareholders, but we don't present to shareholders open-ended, unsolicited, highly conditional offers that may come in.
Let me rephrase that. Did the board receive a non-binding, conditional, potential change of control, approaches? You know, obviously, it was reported in the media. It was confirmed by the company that Bain did approach the company.
Absolutely.
Yeah.
Absolutely. We did receive highly conditional proposals that were open-ended, non-binding proposals from more than one, including Bain and others, but none of them were of such, you know, could meet the criteria to take back to you, the shareholders, or to take to the market.
I mean, most companies on ASX receive the same type of conditional, non-binding proposals. We've seen a lot of them recently. Majority of boards actually tell shareholders that they received these offers. EML board chose not to disclose any of them and was forced by media leaks in the Financial R eview to disclose these approaches to shareholders. How can shareholders, you know, trust the board to engage with any potential suitor for this business if you don't disclose these approaches to the market and only after the media and newspapers leak it to investors?
Well, I should stress what I just said before. Unsolicited, highly conditional offers that don't meet our analysis and our advisor's analysis of what is fair value won't be presented to shareholders. I think your assumption that all the companies do it, I think is totally incorrect. The job of the board is to assess any offer and say, "Does it meet the conditions, you know, the valuation of the business? Is it firm enough to take to shareholders as a proposal or is it not?
You're saying that those.
The approaches we received were neither fixed nor firm, were highly conditional and were proposals.
The potential prices which were conditional and non-binding that were offered, you're saying they weren't materially above the share price at the time?
If the offer. Well, there's two issues there, isn't there? Is the price in the valuation range of the company, or is it fixed and firm so we can go out to the market and say, "We've received something that's realistic that we need to take to shareholders"? If the board receives realistic offers that meet our valuation criteria, we're obligated to go to shareholders and say, "We've received an offer that we think stacks up, that is fixed and firm in the way it's structured." When you receive, you know, there's plenty of offers in the market. Not offers, proposals floating around the market that are just, you know, highly conditional. The board receives those proposals. We look at them very carefully.
We do a lot of analysis, we determine, and we have plenty of internal debates about the nature of the proposal we've received and whether we should take it out to the market. We haven't received any proposals that meet the criteria to take them to the market.
All I would say finally is that you look at the share price of EML at AUD 0.50. I think maybe the board, you know, view of the company's real value is not realistic. That's all.
Yes. Tim, I'd like to look at the comments you made, in your, in your reply about the fundamental value of EML. Could you perhaps share the board's view with us shareholders as what you, what you determine the fundamental value of EML to currently be? I mean, someone must have sat down and done some of the parts and valuation and said, "If we receive a takeover bid tomorrow, it would have to be in this range to satisfy our valuation." Can you share those thoughts with us?
No, at this stage, I can't.
You can't do it right now, then sir.
No, I can't. If and when we received a proposal, we would...
What I-.
look at the valuation of the company.
What I'm suggesting is the board sits at the top of the tree. The board should have some idea of what the valuation of the company is. Every part of the board does, because the share price reflects, is the living breathing of a company's worth. You as chairman and the rest of the board must have some idea of what the valuation of EML is today and what the valuation of EML is going to be next week if these plans are going to work. I want you to share those insights with us.
I think every investor has a view as to what a company is worth, and every investor takes into account different criteria. When and if we receive a proposal, we understand what you're saying, but what I'm saying is we don't sit here as a board and run numbers on the company daily and look at the share price. We run the company to be successful in the medium to long term. If a proposal comes across to us, we will then look at what we believe is a fair value for the company at that time. We're not doing it, we're not doing it daily. We don't watch the share prices. Obviously, we're very concerned to make sure the share price represents fair value for the company, but it's not something the board spends its time concerned about.
What is fair value for the company?
Well, that's for you as an investor to determine.
I'm seeking some guidance from the board because you're sitting there with the CEO's reports, the line management reports to be able to assess exactly where what the business is doing. We've had presentations from the CEO today that has given us no idea of what the long-term profitability of this company might be, what the costs of this implementation might be, where the costs are going to be in three years' time. There's been lots of heartfelt words about the transformation . He wants to, you know. I'd like to see some use from the board about how that's going to be accomplished and how it's going to be achieved in longer terms. We're not just going to blindly follow piper down the road because there's been a presentation.
That's why the questions are being asked today, because there's been so much value destruction that's happened in this company in the last two years. The share price is down some 400%. We, you know, we are, as shareholders, angry about the performance of the board because that's who is responsible for this. You're our custodians. You don't seem to be doing a very good job of looking after our money.
There's a lot of questions and assertions wrapped up in your question. I'd say once again, the board is focused on transforming the business, as Emma said. You will see as the transition rolls out...
What guarantees do we have? We've had a presentation.
I think it's like talk the talk and walk the walk. If you need to wait and see the execution of the strategy. There is no. We've done a truckload of very detailed work, pulling apart the business, putting it back together, deciding what the value drivers.
Explain to me why the share buyback has been canceled?
I think the strategy. We had to look.
If you believe in this company's value, why would you not be executing a buyback at these sorts of prices? What does that signal to the market? It signals to the market the company believes that the shares are undervalued, therefore, you want to take a buyback. Why would you not be doing that?
The share buyback decision, we have to look at the strategy of the company, the use of its capital in this period of time. Given the strategy of the company, we've elected to postpone the share buyback for this present time. We haven't canceled the share buyback. We've postponed it. I'm sorry?
Does this mean there's a cash reverse issue and EML may need to raise additional capital just to build this transition program that's been outlined here today?
No.
What you're saying is the buyback has been canceled. That cash is being allocated to the buyback transformation. The rest of the transformation will need to be funded.
No, that's not what I'm saying. What I'm saying is the buyback's been canceled for the moment. That's what we said, postponed. It hasn't been canceled permanently. That's what I said. I think we should move on to the next question.
I have a question. Prior to Emma's appointment, was there an official succession, plan in place that was, board endorsed and approved that outlined the skills and experience required, for such a unique business? Another one. As part of the succession plan, were any other external candidates interviewed for the CEO role?
EML has a succession plan in place for our senior executives. When Tom Cregan resigned, we weren't interviewing external candidates because he resigned. He elected to resign at a certain period of time. We are fortunate to have Emma on the board. We've been talking to Emma about working with us on our European business with her expertise on you know, obviously on technology, et cetera. She was the obvious candidate for the job. She's highly qualified. She meets all the criteria we needed for a new CEO. It was pretty clear to the board that we had the candidate we needed in place at the time of Tom's resignation. We appointed her. We weren't out looking for a new CEO externally.
I mean, obviously, you know, the payments business, and just from looking at Emma's resume, she doesn't have direct, any direct payments industry experience. Why wasn't there an official and pre-planned succession for CEO, and why wasn't she appointed as an interim CEO and then you can go through an external review of other potential CEOs that have direct payments experience?
Well, they're good questions, the reality is, payments is going into a new realm. We're talking about digital currencies. We're talking about technology-driven businesses. The expertise to run a business like EML doesn't come from having 20 years in the payments industry. That is beneficial, you'll be seeing people added to the board who have 20 and + 30 years of payments experience in Europe. We're very close to appointing one now, and there's another one we're talking to. All these people have got technology skills, payment skills. They understand where this is going. What we have to do as a company is look beyond today. I mean, it's like saying, "Hey, I'm in locomotives, therefore, I'm not gonna worry about airplanes." We have to worry about where the business is going in five years.
A transformational CEO is someone who can take the experience they've had, particularly technology, which is really critical to the future of business like EML, capture our data, which we're not using particularly effectively now, and think about where the business is going in the future. In fact, Emma's, you know, personal characteristics are ideal to lead this business in the view of the board.
It's the last question for me. Are there any other regulatory issues at present that have not been disclosed to the market?
We're always dealing with regulators, if any issues come up that are disclosable in our businesses, they will be disclosed. Yeah. Emma's just saying she'd be happy to respond to anybody to talk about her background and expertise in transforming technology businesses. Okay, any other questions, please?
It looked like the appointment happened over a weekend. That's what we're trying to get to the bottom of.
Well.
Sorry. I wanted to ask your point about fair value. The board having a fair value assessment and assessing bids makes so much sense. Just in terms of any of these bids, have any of them got into due diligence with the company?
No. The board didn't believe the offers that we received were fixed and firm enough to go forward. To be honest, the board, the proposals, not offers, the proposals were highly conditional, subject to so many conditions, so many uncertainties. The board decided that they weren't firm enough to even proceed. I think everyone understands. Perhaps I'm just adding a bit of flavor to that. Everyone understands that once you proceed into full due diligence, that is a situation where you really are opening the kimono to an external party. You have to be sure that they're genuine. They actually wanna proceed with the acquisition. They're not gonna put up a notional proposed price and then come back, you know, three months later with a price that's half of what they put on the table in the beginning.
We use highly qualified professional advisors to advise us on the nature of the bid, the conditions that are put on any proposal, and, you know, in essence, they will help us determine whether we should go forward and whether we shouldn't. In some cases, partial, well, I say partial due diligence was started, but very, let's say, how would you describe it? Well, non-conclusive partial due diligence. Can we move on? Yes, sir.
Sorry. just going back to the buyback thing. When you announced that in August, the stock was trading around AUD 1, and now it's, you know, trading around half that. You said you've got these sort of internal models from Goldman Sachs that you had evaluation from. Surely it just makes so much sense that when stock's trading around half of what it was when you made that notification, you would execute that. You know, it just seems like the only reason you wouldn't execute that is from a cash reserve standpoint. It just would be really helpful to understand exactly why you're putting it on hold for now.
Can I just have a break in the meeting for a second? This is about the resolution of the reelection of Peter as a director. I suggest we stick to that resolution. We're open to asking any other questions at the conclusion of the meeting, which is open to shareholders. Let's just move with this resolution. Park any other questions not related to that resolution till the end of the meeting.
The answer is.
You might be voted against resolution 3A.
Exactly. It's not relevant.
Yeah.
Okay. What I'm saying is, I think you've had a fair go on this resolution.
Well, I think it's a very close call, and I think it's important that everyone gets to ask all the questions because that could determine the outcome.
Okay. What's your next question?
Just why? Why not execute the buyback? I mean, it seems like it's, you know. It seems like a very clear reason to do it.
We've covered the question of the buyback. You're literally just asking the same question all over again. The answer is, we relooked at our strategy for the company. We determined that the buyback should be put on hold for the present time, and that it's not off the table, and that's the answer. It's a simple answer.
It's not really a why.
Any other?
It's just a what, really.
Any other questions?
Did the board actively engage with every bid? If you did or didn't, what would you do differently this time?
I don't think we'd do anything differently, to be honest. We engaged with every proposal that came in and, you know, we held extensive discussions with the proposers. The honest truth is, we wouldn't do anything different. We just followed the process. We used our external advisors comprehensively, both legal and investment banking. We would do exactly the same thing today. 'Cause the rules don't change. I mean, we understand the rules. We understand our obligations to you as shareholders and also to keep the market informed, and we follow them religiously. The answer is no, wouldn't make any change. Hindsight's a great thing. You can look back and say, "Oh, I should've, would've, could've." In fact, we just followed the same process all the way through.
What was the initial indicative bid that you received?
That's not for public consumption. I'm not gonna talk about that because it was a, you know, highly conditional, open-ended proposal.
I would've thought you'd wanna talk about it, considering the prices that have been floated in the press.
It's not relevant to what we're discussing today. It was a highly conditional proposal. It was actually confidential, highly confidential, on behalf of the other, the proposer. Any other questions? I'm more than happy to answer any questions you've got of me before you make up your mind to vote one way or the other. Thank you.
Thanks, Peter. As there's no other questions on the resolution, I'll now stand down and pass over the meeting to the chairman. Thank you.
Resolution 3 B, Election of Brent Cubis as a director of the company. I'd like to invite Brent to say a few words.
Yep. Hi. Thank you, Peter, for the opportunity to outline my credentials and support my election as a non-executive director of EML Payments. As a non-executive director, I will draw on over 20 years' experience in senior executive roles across a broad range of industries and companies, where I dealt extensively with all the boards. These companies included, most recently, the CFO for Cochlear, and prior to that, at PBL Media, which is the old Channel Nine ACP Magazines, the PE firms Oaktree and Bankers Trust and Westfield, and recently, a couple of fintechs. I've been a non-executive director for the ASX-listed Prime Media before, and also chaired their Audit and Risk Committee prior to it being sold to Seven West Media earlier this year.
I'm currently a director and chair of the Audit and Risk Committee for the ASX-listed Adacel, and for the privately-owned Silver Chain Group, which is a national home care provider which services over 100,000 patients a year around Australia. Together with the other directors on the board, I will apply a high level of diligence and commitment in serving the interest of all EML shareholders. Thank you.
Thanks, Brent. I now put to the meeting that the shareholders consider, and if in favor, to pass the following resolution as an ordinary resolution: That Mr. Brent Cubis, who is in accordance with Rule 3.4 of the company's constitution, and being eligible, offers himself for election, be elected as a director of the company with effect from 6th of February, 2023. Now I notice it's We're gonna have to call these out.
Percentage is currently at 4.52%. Yes, 15.8%.
Are there any questions on the resolution? If there's no further questions or no questions, I'll move to the next resolution. This is Resolution 4, Grant of Sign-on Service Rights to the Group Chief Executive Officer and Managing Director. Resolution 4 deals with the approval to grant sign-on service rights to the Group Chief Executive Officer and Managing Director. I put to the meeting that shareholders consider, and if in favor, to pass the following resolution as an ordinary resolution. For the purposes of the ASX Listing Rule 10.14, and all other purposes, approval is given for the company to grant to the company's Group Chief Executive Officer and Managing Director
Ms. Emma Shand, 1,612,903 service rights under the EML Payments Limited rights plan on the terms set out in the explanatory notes to this notice of meeting. Proxy votes received in respect to this resolution are again displayed on the screen.
Percentage for, 51.9%. Against, 27.44%.
Are there any questions on this resolution? Okay, if there's no questions, I'll move on to the next resolution. Resolution 5 is the grant of long-term incentive performance rights to Chief Executive Officer and Managing Director. Resolution 5 deals with the approval to grant long-term incentive performance rights to the Chief Executive Officer and Managing Director. I put to the meeting that shareholders consider, if in favor, to pass the following resolution as an ordinary resolution. For the purposes of ASX Listing Rule 10.14, all other purposes, approval is given for the company to grant to the company's Group Chief Executive Officer and Managing Director, Ms. Emma Shand, 1,827,957 performance rights under the ERLRP on the terms set out in the explanatory memorandum to this motion of a notice of meeting. Proxy votes received in respect to this resolution are displayed on the screen.
Percentage for is 73.66%. Against, 25.68%.
Are there any questions in relation to this resolution? Yes.
When you appointed your restructuring was actually started in the market. What was the impact of the sensitivity?
Well, that's. I'll turn to our.
When did the restructuring start? Yeah. When you announced the appointment, when was the restructuring or the actual start of that?
Not on that day.
No, no. Was there any process to tell your market you were going to disclose it on the announcement? No.
No, it's just normal.
No.
Normal process.
[inaudible]
No. The answer is no.
What were you looking out for positions?
That was the board ex Emma. Okay, if there are
Can I just, Peter, was the MD's remuneration package in accordance with or supported by the remuneration consult?
It was in line with market. We set the remuneration according to what we believe was an appropriate level for someone of Emma's capabilities and track record to take the company forward.
That, is that a yes? That's a no? I mean, the remuneration consult, did you support that package?
I think, I don't think we.
Did you use one?
We didn't use the REM consultant at all. I mean, we have, obviously we have industry comparables, and we do understand the numbers, but no, we didn't use them. Are there any other questions? Yes, sir.
As part of this transition program going forward, obviously senior management is going to be critical to that role. As shareholders, why are we not considering these types of incentive plans for the other remaining senior executives in development plan to make sure that they are part of this, part of this process going forward?
Well, in fact, the senior executives, all participate in the short-term incentive plan and the long-term incentive plan of the company. That's a good question. You've got to make sure that
How do those incentive plans stack up with the one for the CEO?
They're obviously different, and they relate to the roles of the various people in the company, like any normal company. The CEO is a standalone package, and it's all in the, covered in the remuneration report. Look, we're very concerned about making sure we get the best senior management bench, and we keep them. A transition plan, I mean, you're right to point out, the qualities of the senior management are critical, and the alignment of the senior management with the plan, working with Emma, is critical. Okay, any other questions on this resolution? Okay, I think that's it. Yes. That's the final resolution to be put to the meeting.
I'll now open the poll and ask all shareholders and proxy holders who are entitled to vote at today's meeting to complete your voting card and hand it to Emma Curry, who's wandering around, will collect them up. These green forms, make sure you tick the boxes at the back and hand them to Emma. We'll just wait for Emma to collect the voting cards. It'll probably take up to 15, 20 minutes or so for Link to process the votes. In the meantime, any further questions you may have or any questions you may have to address to myself or Emma or we're more than welcome to take questions.
Sorry.
Sorry.
Yeah. Hi. Oh.
Yes, sir.
This question is to Emma. In terms of, previously the company disclosed its new business pipeline opportunity to the market. Just wanted to know sort of what's the current new business pipeline? If you can quantify it, is it lower or higher or what is it compared to the previous disclosure by the company?
Okay, thanks for the question. I don't actually have the previous disclosure on the pipeline that was made. What I can tell you is that there's been a huge amount of focus by the company around our open banking business and converting those many connections that we have into revenue and also being focused, especially at this time of year in our gifting segment. You saw just on the Q1 numbers and the latest update up to November, those numbers are pretty promising. As we go into the holiday season, the gifting area looks, we're quite confident that should be quite nice numbers coming out of gift and incentive.
Also spent quite a bit of time on product packaging, and one of the new products which we have out to the market is called Perks, and that's had a massive increase in prior year in terms of its distribution. It's digital cards, digital gifting cards, and it's also really leveraging some of the government incentives around tax-free gifting by employers. Ireland's a great example. You can have a EUR 500, now it's up to EUR 1,000 tax-free gift to employees. I think we're very focused on our products and packaging, good go-to-market solutions. That's been our focus for the last few months. Pipeline-wise, can't give you that across each of our business segments at the moment.
I can assure you that we're very focused on our customers, particularly as we go through this transformation, because it's those customers that will benefit a lot from some of these, transformation, priorities which we've announced today.
Another one then. The reloadable business in Europe, my understanding is the largest customer by far is Correos in Spain. I think it's 30% or 40% of the business, correct me if I'm wrong. What are you doing to make sure that that client, that customer, doesn't leave EML in the near term, considering the regulatory issues with Ireland and that customer being a government-owned entity and wanting, you know, the regulation of its progress being within Spain rather than in Ireland? How are you addressing that risk of that customer?
Again, a good question, and we are looking at the risk profile of all of our customers and making some decisions as to, you know, has the products and services that we've been providing those customers within the level of commercial terms that we'd be satisfied with to measure it with our risk, and also, if we're aligned on our product roadmap. I myself have met with Correos and I've been down there in Madrid and they have a lot of exciting things on the go. Do we. We need to look at our product roadmaps and see how they align. Yes, they're very strong customer of ours and we look forward to working with them well into the future.
I guess my question is: Is there a risk that customer will leave because you decide to remain regulated with the CBI?
I'll address the regulatory issue, and I really think it's important for you just all to understand because there's been so much talk about should we look at light touch jurisdictions, and they don't exist. This is payments regulation, e-money licenses. It's European, pan-European, I'd suggest to you. The FCA and their e-money licenses are not much different to the European licenses. We are absolutely fine to be held to the highest standards of our regulatory obligations. Moving jurisdictions does not solve that. I just would ask you all to be quite thoughtful when we're thinking about licensed jurisdictions in Europe or elsewhere.
We keep all of our options open and it would be in your interest that we're always looking at different jurisdictions, different licensed. We have different strategy, perhaps when it comes to our open banking business versus our prepaid business. That will have license implications as well. We're constantly looking at where we can best serve our customers in the most optimal cost-effective jurisdiction.
Can I add a comment on this regulatory issue? I think there's a real lack of understanding about what regulation is happening in Europe. We are not the lone ranger. Most companies, including major banks, are going through a very serious regulatory scrutiny in Europe. The bar is being lifted across all jurisdictions. The idea that, oh, we can move from Ireland to Spain or over to Lithuania or somewhere else, it's really a figment of people's imagination. Yes, the personalities of the individuals in the regulator will change because of the nature of the culture of that country, et cetera, but they're all living under European regulations.
When I was in Madrid with Fiona, we actually went to a conference, we listened to the president of the European Central Bank talking about the fact that European regulation is going to increase in intensity as digital currencies come on. They were talking about cybersecurity, they were talking about Bitcoin, you know, all these things. The bar is being lifted for everybody. The key message to all our shareholders is we are determined to get across the bar. Quite a few of our competitors are hitting the wall on regulation. They can't jump the bar.
It's expensive, and you've got to commit to it, and then you've got to determine that you can offset the cost with savings and alignment of the rest of your business, and you can grow the business aggressively to ensure that you're getting a really solid payback from your compliance and your regulatory framework that you've got to put in place. This is not trivial.
As far as I'm aware, and maybe you can name any other European payments business that currently has a growth restriction on its license. Can you name one?
Well-
Apart from EML.
All these things are confidential. I mean, we don't know. We hear in the market, but we don't know because these things aren't announced publicly. Companies like us who are publicly listed in the framework of continuous disclosure in Australia have to announce these things. Many other companies, this is just business as usual. This is going on in the background. The major banks, it's going on all the time. They don't announce it unless they're mega issues. We're announcing you know, what we believe are important issues to announce in the environment of Australia because we're a listed public company.
The regulators do not come out publicly and say, "We're, you know, doing this to these people, and we're investigating those people." In fact, we wouldn't know how many companies are being investigated or have growth restrictions put on their business at all. All we know is that we have to live within the framework. As we remediate and transform, we have to live within some restrictions that our regulator puts on us. By the way, they're nowhere near as acute as they could possibly be. We are allowed to grow our businesses, which I don't think the market here understands. We actually are allowed to grow both our British business and our Irish business within constraints.
Do you know how many non-bank fintechs are regulated with the CBI compared with Lithuania, for example?
No.
As to you, Emma.
There's a lot that hold an e-money license in Ireland with the Central Bank of Ireland. I don't know the Lithuanian numbers. There's well over, I think, 20 or 30 in Ireland, but I don't have the exact number.
Multiples of that in Lithuania.
I had heard there was something like 86 in Lithuania, but I mean, that's just scuttlebutt. I don't have any evidence of that.
Fifth biggest player in the world.
Yeah.
Like relevance to them.
It's interesting. As we understand it, the Lithuania environment was, if you like, very gentle compared to the Irish environment. That's all changed. You have a look at Lithuania now. What tends to happen is they all talk to each other. One regulator will lift the bar or a new rule comes in across Europe. They've all got to jump that, and they all talk to each other, and it tends to be a leveling of the, of regulatory standards across the board. What we're seeing, and what we've seen, talking to the regulators and also going, you know, going to some of the conferences, is that, as Emma said, there's no soft touch. There's no, "Let's go to Malta, and those guys are soft because they've got all those gambling companies over there.
You know, we can get away with it." No, it doesn't exist. Why would you? We're trying to build a world-class, highly competitive business here. If we wanna compete in Europe, we've got to be world-class. I mean that seriously. That's not motherhood. We have to compete with the biggest and the best. We're determined to do it. Therefore, the regulatory compliance and framework is critical. This is a key success factor of this business. This is not, "Oh, yeah, it's nice to do because the regulator says we have to do it." This is an absolute key success factor for EML to meet the minimum standards and exceed them. Be shown to be... Hopefully, we'll be a poster child for CBI or the FCA in meeting their requirements.
That's why we're putting so much time, money, and effort into it, because we believe it's the foundation stones of the business. Yes, sir.
Is it fair to say that creates a pretty hefty cost for you if you continue to base in Ireland?
Absolutely. There's no doubt that you have to put serious resources into like an Irish business to meet the standards of the Irish regulator. Because the Irish regulator basically says, "We don't want a bunch of people sitting in London as part of the administration of this license. We want a local board. We want local executives like Fiona," who lives in Galway, by the way. "We want local Irish people running that business." The trick for EML, it's not a trick, we have to leverage their skillsets over as much as we can without, you know, doing the wrong thing by another regulator, over our other regulated entities. So a lot of what we learn in Ireland is being transferred to the work we're doing for the FCA in the U.K., which is all very similar.
I mean, None of this stuff varies that much. It's pretty much the same thing. If you're putting policies and procedures and systems for the Irish business, you're actually doing a lot of the work that might be required for the FCA in the U.K. The FCA in the U.K. doesn't need. Someone put to me, "Oh, you've gotta put AUD 30 million worth of resources into the U.K. business." I sort of fell off my seat. We need. The regulator in the U.K. will require a certain minimum number of people to live in that jurisdiction, like a, an independent board with, I think, three individuals on it. There could be two or three, four or five other people needed to be in that business.
It doesn't mean recreate all the infrastructure we've got in Ireland and do it again in London. We have to amortize our investment over multiple jurisdictions while still meeting the requirements of that particular regulator in their own jurisdiction.
Can I just ask a follow-up question to that then?
Sure.
If I think about the cost of you occurring in Ireland, and just coming back to the cash reserve question that was kind of bouncing around the share price happening, what are the cash reserves at the moment in Ireland?
Well, I think we've shown our balance sheets. We've got AUD 68 million on the balance sheet. Rob, do you want to talk to that one? Yeah.
Yeah. Okay. Peter. Yes. Sorry, a comment that it's pleasing that the market seems to have reacted very positively to the announcements this morning, with the share price up 15%. Maybe it's a start. Well, maybe it's a beginning, and there's a long way to go. Thanks for the observation.
Good.
It looks like the votes are gonna take some time, so unless there's further questions, and I'm more than happy to take them, we'll close the meeting, and we'll be informing the market and all of you via our website, what the results of the resolutions are. I'm sorry?
The ASX. The ASX, I should say.
Look, thanks for coming. It's been a tough year. We're doing our best. We'll get this company back on the road and, you know. It'll take some time. Please be patient, but we're working flat out to deliver the results. Thanks very much.