EML runs up €7m in costs linked to Central Bank investigation

Central Bank is investigating EML’s Irish subsidiary, PFS Card Services (Ireland) Ltd

Australian fintech EML Payments has incurred costs and provisions of $11.4 million (€7.06 million) to date in relation to the Central Bank's investigation into its Irish unit.

Shares in EML tumbled 46 per cent on May 19th as it revealed the Central Bank was considering taking action against Trim, Co Meath-based PFS Card Services (Ireland) Ltd, part of Prepaid Financial Services (PFS), which the Australian group bought last year in a deal worth up to £186.5 million (€216.2 million).

The Central Bank’s concerns relate to anti-money-laundering and counter-terrorism financing matters, risk, control frameworks and governance at PFS Card Services (Ireland).

In its annual report for the 12 months to the end of June, which was published on Tuesday, EML said it has been “working constructively” with the Central Bank in relation to its concerns.


It said the bank “has investigated various aspects” of the PFS Card Services (Ireland) business from a “governance, resourcing, reporting, risk methodologies, controls and risk frameworks, capital adequacy, safeguarding and transaction monitoring perspective”.

EML said it has “responded in significant detail to the CBI on all matters and has provided CBI with a detailed remediation plan addressing the concerns raised by the CBI. EML is engaged in regular contact with the CBI in the implementation of this plan.”

The firm said it hopes to complete a substantive part of the remediation by the end of this year.

The fintech also said it will not recognise any claims under the share purchase agreement entered into last year as part of the deal to acquire the Irish subsidiary, unless recovery is “virtually certain”.

EML originally announced a deal to acquire Prepaid in a deal valued at 453.6 million Australian dollars (€280.9 million). However, it subsequently secured a A$189.1 million (€117.1 million) discount on the deal due to the impact of the Covid-19 crisis.


EML said earnings before interest, taxes, depreciation, and amortisation (ebitda) rose 30 per cent to $42.2 million (€36 million) during the year despite the costs associated with the Central Bank investigation.

Excluding the investigation costs, underlying ebitda totalled $53.5 billion (€45.6 billion), which was at the top of its previous guidance range of $50-$54 million (€42.6-€46 million).

Group revenue totalled $194.2 million (€165.7 million), up 60 per cent on the previous year and above the previously guided range of $180-$190 million (€153.6-€162.1 million). Prepaid contributed $78.3 million (€66.8 million) towards turnover, up from $15.6 million (€13.3 million) a year earlier.

EML is forecasting turnover of between $220-$255 million (€187.7-€217.6 million) for the next financial year with underlying ebitda in the range of $58-$65 million (€49.5-€55.4 million).

It recently retained solicitors Arthur Cox and professional services firm PwC to help it deal with the Central Bank investigation.

EML warned in May that the Central Bank had indicated it might restrict the activities of PFS Card Services (Ireland), which is responsible for PFS’s European business and accounted for 27 per cent of group revenues in the first three months of the year.

The European business mainly operated through PFS’s UK-regulated subsidiary until the end of last year, when it was transferred to the Irish unit as a result of Brexit.

Charlie Taylor

Charlie Taylor

Charlie Taylor is a former Irish Times business journalist