Thank you for standing by, and welcome to the EML Payments Limited Full Year 2023 Results Briefing. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key, followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Kevin Murphy, Interim Group CEO. Thank you. Please go ahead.
Thank you, Jody. Good morning, ladies and gentlemen, and welcome to EML Financial Results presentation for the 12 months ended June 30, 2023. I'm Kevin Murphy, Interim Group CEO, and I'm joined on this call by our Interim CFO, Jonathan Gatt. Jon and I are looking forward to taking you through our presentation for the next 30 minutes or so, and then we will be pleased to take questions. Today, I'll outline the EML group results, some perspectives on the business from my short time as CEO, and an update on the operational priorities and strategic review announced by the renewed board in April this year. Jon will then provide more details on our financial performance before I finish off with our focus for FY 2024. To begin today, I wanted to give an outside-in view of EML's business after my first few months as Interim CEO.
Our new shareholders may also benefit from me spending a few minutes restating the commercial fundamentals of your company. Despite a number of headwinds and challenges, which we acknowledge and have been well-documented over the last 18 months, my clear assessment is that EML has strong core business attributes, and with effort, focus, and financial discipline, can capture much more of the attractive markets in which we operate. We are operating in a large and growing payments vertical, where innovation in B2B and B2C payments remains strong. Our core infrastructure remains relevant and attractive. As an example, the global prepaid card market today is estimated at $3.5 trillion and expected to nearly double to $6.7 trillion by 2028.
We are also seeing contracting competition due to tightened capital markets, together with the new cost-based realities of operating regulated e-money businesses globally, which severely impacts subscale competitors. I believe our investments and risk and compliance capabilities in response to the new regulatory reality will translate to a competitive advantage for EML as the e-money market continues to rationalize. This puts us in good stead. Indeed, in Europe alone, new EMIs have reduced from 206 in 2018 to 31 in 2022, while closed EMIs have increased from nine to 17 in the same period. From a financial perspective, we have a track record of organic growth. In our core business, we have strong margins and profitability, particularly our gifting business and general purpose reloadable cards, the foundations of this business for many years.
We also have a diverse set of revenue streams across the customer's life cycle. Establishment fees on sign-on, annual recurring account management fees, transaction-based fees, breakage, and float interest. This allows us to effectively hedge our revenue streams. Our client base of over 1,800 customers is engaged, long-standing, with depth in corporate, retail, government, and employee benefit sectors. And importantly, we have a renewed board and leadership team with discipline and a focus on addressing the challenges the business faces today. Resolving remediation and regulatory needs swiftly, retaining and developing our 600+ experienced workforce, implementing a plan to control and rightsize our cost base and manage loss-making businesses to become sustainable, and reigniting the growth machine, where focus has been lost following leadership change in July 2022. FY 2023 had a number of key changes throughout the year to the business.
Challenged acquisitions, disappointing financial performance, ineffective leadership change, and a complex organizational restructure were catalysts for shareholder-led change. A new chair, board, and interim CEO joined in H2 FY 2023. The new board set aside the long-range strategy previously announced to focus on the challenges of today, including retaining leadership close to our customers and remediating operational challenges weighing on the business. While we have much work to do, we see encouraging early progress in cost optimization, with further opportunities to improve margin from FY 2025 onwards. Our senior leadership team is being rebuilt at speed and will be in place in H1 2024. And at the AGM, we will articulate EML's future shape together with FY 2024 guidance, if not sooner. Despite the difficult year, we have delivered an FY 2023 financial result ahead of guidance.
In FY 2023, our core business strengths have shone through, and I'm pleased to report that EML has exceeded guidance. At a revenue level, we have exceeded the top end of our guidance range by 4% and 9.1% at an underlying EBITDA level. Outperformance on guidance was driven by a number of factors, including renewed contracts, upside from renegotiated float interests, and the commencement of our cost rationalization activities. We remain committed to returning to our historical track record of meeting and beating earnings guidance. Today is the first step. Turning to our financial highlights for the year. Despite a challenging year of headwinds, we have recorded total revenue of AUD 254.9 million, which is up 9% on FY 2022 and a GDV uplift of 62%.
The biggest driver of revenue growth was the normalization of interest yields on our float, a core part of our contract pricing and revenue mix that was significantly impacted during the COVID period, including negative rates in some markets. We also saw modest growth in all three business segments, with two operating entities remaining subject to growth caps by their respective regulators. Our gifting segment performed strongly, up 24% in growth volumes versus PCP. This was driven by growth in malls post-COVID and strong year-on-year performance of the Australian business and our European incentive product Perks. Our digital payment segment also performed well, with a full year of Sentenial represented in these numbers, realizing an uplift of 73% on growth volumes and an uplift of 24% on revenues. Our GPR segment was impacted by regulatory growth restrictions on our European business, PCSIL, and U.K. business, PFSL.
From an underlying EBITDA perspective, we delivered AUD 37.1 million in earnings, down 28% on PCP. For PCP comparative purposes, shareholders should note that FY 2022 included a once-off material revenue recognition of AUD 17.9 million, which dropped fully to the EBITDA line. We also took an impairment charge in relation to our PFS Group and Sentenial Group acquisitions of AUD 189.7 million and AUD 69.2 million, respectively. I would note that these are non-cash items and do not impact our underlying profit. I would now like to address the strategic priorities of the business under the new board and outline our progress to date. It is clear that the 2020 acquisition of the European business, PFS, has led to several major challenges for the group over the past few years.
These challenges include a complex remediation program in PFS, unrelated to EML's foundational businesses, materially increased overheads and significant reduction in group profits, disproportionate operational distraction for management, and a complicated matrix organizational design not aligned to financial outcomes. These challenges created a need for change to protect and grow EML's foundational businesses, Australia and global gifting, which remains strong, and to resolve the European challenges. In FY 2023, the previous board and management developed a long-range strategy, a new organizational and operating structure, despite the business facing material current day challenges around remediation and regulatory reviews, global operating cadence, growth challenges, and workforce attrition, particularly at the ExCo level. We acknowledge these events had a significant negative impact on the share price.
In February, a new board was appointed, and in April, they announced a new strategic focus, squarely aimed at solving the issues in the business today and simplifying the EML business. While the business remains subject to significant headwinds, notably continued regulatory imposed growth restrictions, the board and senior management are in lockstep on delivering substantive progress on the four operational priorities set out by the board in April: remediation, cost optimization, growth in our core businesses, and talent retention. In the four months to June, EML made tangible progress on the board's four operational priorities. I would like now to step through each of these in more detail. Firstly, remediation. To date, the board has established a subcommittee to oversee the remediation programs and general regulatory activity across the group, which includes reviews by the French regulator, ACPR, and Spanish regulator, Sepblac, in calendar 2022 through calendar 2023.
This subcommittee will also oversee the standard regulatory audits by regulators. We have progressed U.K. remediation and are stepping through the embedding phase towards third-party assessment, expected to start around September 2023. We've also uplifted our capability within the Central Bank of Ireland remediation program and await the finalization of key scheduling matters over the next few months to determine the timelines and future state of this business. On reducing our overheads, EML has embarked on an enterprise-wide cost optimization program that will streamline our operating model, making it leaner and more efficient. To date, we have conducted a comprehensive analysis of the cost drivers within our business to inform the program. So far, we have simplified our group operating model, removed matrix structures, and identified headcount reductions.
In FY 2023, overhead increases were the result of ongoing investment in headcount, regulatory remediation activity in Europe, and technology cloud migration across all regions. We acknowledge overhead growth over the last three years is unsustainable. I will touch more on this when I speak to our future priorities later in the presentation. The third priority, targeted growth in core businesses, is about unlocking growth in our most profitable business lines, where our products and services are well placed to serve customer needs. This is namely our gifting and incentive business and our Australian business. In the last four months, we have been rebuilding our regional commercial teams and will continue this into FY 2024.
Lastly, talent retention is focused on rebuilding core capabilities, particularly across senior management and business unit leadership, and the commercial functions in our core businesses, as I have mentioned, which is a particular area of focus for me. Incentive plans have been activated with our key people to drive commercial outcomes, including remediation milestones, cost saving, growth, and strategic review-related matters. Whilst only a few months into this plan, we've made good progress, and I look forward to sharing more on what this means for FY 2024 shortly. Further, the new board announced a strategic review to simplify the EML business and maximize shareholder value. The review remains ongoing and continues to assess the potential sale of all our parts of the business. To date, EML has received a number of approaches.
We are working with Barrenjoey to assess this interest and determine the appropriate next steps with a view to maximizing shareholder value and minimizing disruption across the group. The review is focused initially on loss-making entities to assess their strategic fit within the EML group and resolve operating losses from business units. The board and myself are determined to complete this work by no later than the end of the first half of FY 2024. As part of the strategic review, the board has also determined to separate the U.K. and Europe general purpose reloadable business. The U.K. business, PFSL, will be a standalone business from the Irish-domiciled European business, PCSIL, which I'll pause on for a few minutes to provide further color on. The separation of PFSL from PCSIL under EML's GPR segment is well progressed and is expected to be completed by January 2024.
PFSL and PCSIL are inherently different businesses in different geographies. There are no scale benefits being derived from this grouping, so it makes sense for them to operate on a standalone basis, given their fundamentally different client and risk profiles and remediation status. Focus, execution speed and quality, and financial accountability are fundamental to the new board's desired operating cadence. Today's organizational structures that do not support this are being actively dismantled to improve performance and unlock value. Should note that PCSIL remains loss-making, while PFSL enjoys positive EBITDA. For now, I will hand over to our Interim CFO, Jonathan Gatt, to go through the financial results in more detail.
Thanks, Kevin, and good morning, everyone. I'm going to take you through our financial results. Starting with revenue, which is up 9%. The business has seen positive tailwinds coming from a return to more normalized levels of interest rates, having been adversely impacted by negative rates in Europe over the last few years. This, however, is partially offset by lower establishment income, as growth restrictions continue to impact the ability to onboard new distributors in Europe. Notwithstanding this, once you adjust for one-time account maintenance fee recognized in FY 2022, revenue is up 17%. We continue to have costs linked to the class action, regulatory matters, and restructuring and strategy, which drove overheads in EBITDA. And while these costs are material, underlying EBITDA better represents the trading performance of the group.
When we exclude these non-recurring costs, underlying EBITDA is down 28% versus PCP, with increases in underlying overheads offsetting revenue upside. These increased costs has primarily come from our continued investment into the Sentenial business, our support of the turnaround of the PFS business, and general cost pressures relating to employees, investment in IT, and expected credit losses. I'll go through, through these in more detail later in the presentation. As Kevin mentioned, we ended the year with a net loss after tax of AUD 284.8 million, which is primarily as a result of impairments, which I will go through on the next slide.
As foreshadowed in our announcement on the thirty-first of March, the imposition of further restrictions on the PFS business by the Central Bank of Ireland, as well as changes in the macroeconomic environment, has required the business to further moderate the growth assumptions underpinning its impairment analysis. This has required an impairment of AUD 189.7 million for the year. In relation to Sentenial, while the business is growing strongly, the timing underpinning acquisition growth assumptions, combined with the slower growth we have seen in the overall market, has required an impairment on that CGU of AUD 69.2 million for the year. As Kevin mentioned, both of these are non-cash. We look closer at our three segments. Our gifting segment continued its volume recovery. This segment's volumes were up 24% on PCP.
As I mentioned at the half year, this upside largely came from our incentive programs, which grew 41%, and our growth in our traditional gifting product, up 13%. We expect this segment will further benefit from a more focused and simplified operating structure going forward to deliver further growth in FY 2024. Looking at revenue, and notwithstanding the prior year benefiting from one-off fees, we have seen growth overall of 12% coming from volume improvements, as well as some upside on interest. Also highlighted at the half year, the increasing proportion of our incentive product and the subsequent mix shift, has resulted in revenue yields reducing and margins remaining largely flat on the PCP at 81%. Looking at our general-purpose reloadable segment, we have seen growth in our Australian and UK businesses, which we expect to continue.
However, the European GPR business continues to be challenged by ongoing regulatory matters impacting overall growth. As a result, we've seen modest growth in GDV, up 3% on prior year to AUD 12.8 billion. Revenue was AUD 157.8 million, up 8%, and that was primarily driven by a key revenue source for which this business is the largest contributor, which is interest. That's partially offset by lower establishment income. When the non-recurring revenue in the PCP is adjusted for, revenues are actually up 17% in this segment. Gross profit margins were flat against the PCP and interest offset by one-time income in FY 2022. Moving to digital payments. This includes a full year of the Sentenial business, which was consolidated at 30 September 2021 in PCP.
The Sentenial business, including Nuapay, grew 84%, and the remainder of the segment grew volumes 13%. Total segment revenues increased 23% to AUD 21.7 million, while margins were impacted by higher scheme costs. If we now take a look at interest. As we mentioned earlier, interest income is a fundamental revenue generator for EML, and it has been adversely impacted by the protracted negative interest rate environment we've seen over the last 10 years, particularly in Europe. This year, however, has seen most central banks issue successive rate rises, and given central banks continue to note challenges around taming inflation, we expect to see further upside into FY 2024. This has resulted in net interest income for FY 2023 of AUD 32.7 million, versus only AUD 1.4 million last year.
This result has been further improved by action taken to improve yields, which we will continue in FY 2024. If we move to the next slide, we'll look in more detail at underlying overheads, which increased 27% versus PCP. As Kevin mentioned earlier, management reviewed that the growth in costs needs to be addressed, and Kevin has touched on the work done so far towards this. Controlling and reducing costs where they are not tied to achieving our operational plan, will be our focus in FY 2024. As we look at the cost drivers in FY 2023, in addition to the full year inclusion and investment in Sentenial, we, like most companies, have been impacted by inflation, tightening labor markets, particularly in Ireland, impacting our cost base. Likewise, professional fees were driven higher due to increased costs of audits and our professional advisory.
Credit losses have increased by AUD 5.1 million versus PCP, where our clients, especially within the GPR segment, have been impacted by the tightening liquidity globally, driving collection delays. To address this, we have increased our focus on early identification of delinquencies and uplifted collection processes, including the engagement of third-party collection agencies to support our internal collection efforts. ICT costs have increased by AUD 4.2 million, as again, like many other firms, we have invested in improving the resiliency and security of our global tech assets. As I mentioned at the beginning, bringing down our rate of cost growth will be a key focus in the next financial year.
If we switch to cash, which has remained largely flat and included cash inflows from the sale of Intertex during the period, our cash flow out, our cash outflows linked to litigation, regulatory costs, and other one-time events largely offset otherwise positive underlying cash flows. When we look specifically at underlying operating cash flows, you will see that the business generated AUD 29 million during the year, underpinning the strong fundamentals of this business in the absence of the non-underlying impacts, and highlight the importance of resolving non-underlying drivers as quickly as possible. With that, I'll hand over to Kevin to wrap.
Thank you, Jon. I now wanted to touch on our operational priorities for FY 2024. Building on FY 2023, we will progress the four operational priorities with the objectives of closing out remediation work for PFSL, U.K., and PCSIL. Creating a leaner, more cost-optimized business. Reigniting our sales machine. Rebuilding our core talent capability. On remediation, we need to bring these projects to a successful conclusion, including the near-term cessation of operating losses, while simultaneously creating the right operating structure through separation of the PFS units, as I have discussed. This will remain top of my agenda with the board into FY 2024. Regarding cost optimization, the group will continue its work on organizational redesign to simplify the business.
EML will take AUD 10 million of cost savings in FY 2024 to arrest the trend line, circa 25% cost growth profile, thus ensuring cost growth is more akin to inflation. We are also targeting all subsidiaries to be breakeven or better in H1 2024. We are prioritizing investment and growth in our core business of gift and incentive and Australasian GPR businesses through building the sales team's capacity and go-to-market activities. We've also planned incremental technology improvements to expand our offering and will optimize treasury management across the group. Lastly, on talent management, we will continue to rebuild our senior leadership team and empower our operational teams through a simpler, flatter organizational design that drives greater accountability in our local teams. Making sure decisions are made closer to our customers and for the benefit of our customers and operational teams.
The board and leadership team acknowledge the challenging year that was 2023. We thank both our long-standing and new shareholders for their patience and support. Collectively, we are energized by the challenge and focused on leading a talented, hardworking, and committed team through these challenges, and emerging as an innovative, operationally excellent, and sustainable growth-orientated payments company in FY 2024. That ends today's formal presentation. Thank you for listening. I will now hand back to the moderator to open the call up to questions.
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Oh, okay, Jody, thank you, and thank you to the participants for listening to our call this morning. We wish you a good morning. Thank you.
Thank you very much. That does conclude our conference for today. Thank you all for participating. You may now disconnect your lines.