EML PAYMENTS LIMITED — Capital/Financing Update 2015

Jun 29, 2015

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30 June 2015

ASX Market Announcements Australian Securities Exchange Limited 20 Bridge Street SYDNEY NSW 2000

STORE FINANCIAL EUROPE MEETS PERFORMANCE TARGETS – ISSUE OF SHARES

Emerchants Limited ( ASX: EML ) is pleased to advise that Store Financial Europe ( SFE ) has now fully implemented the multi-year shopping mall gift card programs for its clients MFI, a leading property developer and manager of shopping malls, headquartered in Germany, and Hammerson, a UK-based property developer and manager of regional shopping centres, retail parks and designer outlet villages. The implementation of these programs brings the total gift card programs SFE services to over 160 across 9 countries.

By way of background, on 1 December 2014 Emerchants completed its acquisition of 100% of the issued capital of SFE. The Share Sale Agreement provided that the purchase price for SFE shares was A$24.9 million[1] , comprising 50% cash and 50% Emerchants shares and was calculated at 9.3x the expected CY2015 EBITDA[2] , based on contributions from existing contracted clients only.

In addition to the purchase price, the Share Sale Agreement provided that retention share grants would be made to SFE personnel (refer to the Company’s Appendix 3B lodged on 3 March 2015) and post-completion shares would be granted to one of the sellers of SFE, DKS Investments LLC, on the execution and implementation of contracts with MFI and Hammerson, which were at the time of completion of the acquisition, not yet finalised. These terms of the Share Sale Agreement were disclosed in Emerchants ASX announcement of 26 September 2014 and the explanatory memorandum to its Notice of Annual General Meeting on 20 October 2014.

Calculation of the post-completion shares

The value of the post-completion shares was calculated at 3x the expected first year EBITDA contribution from both contracts post-implementation, with the share issue price based on the 5- day VWAP of Emerchants shares at the dates the contracts were executed. The forecasted first year EBITDA post-implementation amounts to $1.1 million at present exchange rates, with a total number of 5,820,016 post-completion shares to be awarded at a combined average 5-day VWAP of 58 cents.

1 Forecast EBITDA for CY2015 representing the first full 12 months under Emerchants management. Assumed AUD: GDP of 0.55.

2 Excludes transaction costs associated with the acquisition and capital raising, retention share grant and subsequent event shares.

Head Office| Level 2, 26 Commercial Road, Newstead, QLD 4006 Phone 07 3607 0100| Free Phone 1300 739 889 Emerchants Limited ACN | 104 757 904

www.emerchants.com.au

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The issue of the 5,820,016 post-completion shares, as set out in the Appendix 3B attached to this announcement, represents the final issue of shares (and any other consideration) pursuant to the Share Sale Agreement and are to be held in voluntary escrow for 12 months from the date each contract was implemented.

Impact on FY2015 results and FY2016 outlook for SFE

Due to the subsequent trading performance of SFE since the acquisition, the inclusion of the significant contribution of the MFI and Hammerson contracts and the appreciation of the British Pound against the Australian Dollar, Emerchants forecasts that the acquisition multiple, after increasing this by the value of the post-completion shares, would be approximately 5.5x the expected FY2016 EBITDA, at present exchange rates.

Under the Australian Accounting Standards the award of the 5,820,016 post-completion shares will be treated as a share based payment and expensed in full in the Emerchants FY2015 financial statements. Emerchants expects the Australian operations to generate taxable income in FY2016 and consequently intends to recognise the historical carried forward tax losses in the FY2015 financial statements under the Australian Accounting Standards. The recognition of the Australian tax losses will offset the expense related to the post-completion shares and consequently Emerchants earnings will not be significantly impacted by these two non-cash transactions.

ABOUT EMERCHANTS

Emerchants is a payments solutions provider of prepaid financial card products and services in Australia. By using their proprietary payments software and processing platform, the Company provides its clients with innovative financial service payment solutions for reloadable and nonreloadable prepaid card programs, in Australia and in the United Kingdom and Europe through its wholly owned subsidiary, Store Financial Europe. Emerchants has offices in Brisbane, Australia and Birmingham, United Kingdom.

For more information please visit: www.emerchants.com.au

For further information please contact:

Tom Cregan , Managing Director Emerchants Limited

M: 0488 041 910 E: tcregan@emerchants.com.au

Head Office| Level 2, 26 Commercial Road, Newstead, QLD 4006 Phone 07 3607 0100| Free Phone 1300 739 889 Emerchants Limited ACN | 104 757 904

www.emerchants.com.au

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX’s property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

Emerchants Limited

ABN

93 104 757 904

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1 +Class of+securities issued or to be issued 2 Number of+securities issued or to be issued (if known) or maximum number which may be issued 3 Principal terms of the+securities (e.g. if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)	Ordinary
	5,820,016 fully paid ordinary shares
	Fully paid ordinary shares to be issued to one of the sellers of Store Financial Services UK Ltd (SFUK), the entity acquired by Emerchants in December 2014, and held in voluntary escrow.

• See chapter 19 for defined terms.

Appendix 3B Page 1

04/03/2013

4 Do the+securities rank equally in all respects from the+issue date with an existing+class of quoted+securities? If the additional+securities do not rank equally, please state: • the date from which they do • the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment • the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 5 Issue price or consideration 6 Purpose of the issue (If issued as consideration for the acquisition of assets, clearly identify those assets) 6a Is the entity an+eligible entity that has obtained security holder approval under rule 7.1A? If Yes, complete sections 6b – 6h in relation to the+securities the subject of this Appendix 3B, and comply with section 6i 6b The date the security holder resolution under rule 7.1A was passed 6c Number of+securities issued without security holder approval under rule 7.1 6d Number of+securities issued with security holder approval under rule 7.1A	Yes
	0.62 per share for 3,051,392 shares 0.53 per share for 2,768,624 shares
	Shares issued as the post-completion component of the Share Sale Agreement the Company announced to ASX on 26 September 2014.
	Yes.
	19 November 2014
	5,820,016 fully paid ordinary shares
	N/A

6e Number of+securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting) 6f Number of+securities issued under an exception in rule 7.2 6g If+securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the +issue date and both values. Include the source of the VWAP calculation. 6h If+securities were issued under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements 6i Calculate the entity’s remaining issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements 7 +Issue dates Note: The issue date may be prescribed by ASX (refer to the definition of issue date in rule 19.12). For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A. Cross reference: item 33 of Appendix 3B.	N/A	N/A
	N/A
	N/A
	N/A
	Remaining capacity under 7.1 – 20,155,868 Remaining capacity under 7.1A – 17,799,398 Total:37,955,266
	30 June 2015
	Number	+Class

• See chapter 19 for defined terms.

Appendix 3B Page 3

04/03/2013

8 Number and +class of all +securities quoted on ASX (_including_the +securities in section 2 if applicable)	172,893,989 120,000 4,980,000 2,768,624 3,051,392 500,000 223,214	EML fully paid ordinary shares EML fully paid ordinary shares in escrow to 9/8/2015 EML fully paid ordinary shares in escrow to 30/11/2015 EML fully paid ordinary shares in escrow to 02/01/2016 EML fully paid ordinary shares in escrow to 01/02/2016 EML fully paid ordinary shares in escrow to 1/07/2016 EML fully paid ordinary shares in escrow to 19/11/2016 Total: 184,537,219
	Number	+Class

9 Number and +class of all +securities not quoted on ASX (_including_the +securities in section 2 if applicable) 10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)	10,250,000 100,000 2,500,000 500,000 2,100,000 1,212,121 100,000 500,000 100,000 500,000	$0.15 options expiring 30/9/2015, vesting 21/9/2015 $0.56 options expiring 18/11/2015, vesting 11/11/2015 $0.10 options expiring 31/3/2016, vesting 1/3/2016 Nil exercise price options expiring 30/6/16, vesting 28/2/16 $0.40 options expiring 30/9/2016, vesting 1/9/2016 Nil exercise price options expiring 30/9/2016, vesting 1/9/2016 $0.56 options expiring 18/11/2016, vesting 11/11/2016 Nil exercise price options expiring 30/6/17, vesting 28/2/17 $0.56 options expiring 18/11/2017, vesting 11/11/2017 Nil exercise price options expiring 30/6/18, vesting 28/2/18
	N/A

• See chapter 19 for defined terms.

Appendix 3B Page 5

04/03/2013

Part 2 - Pro rata issue

art 2 - Pro rata issue
11 Is security holder approval required? 12 Is the issue renounceable or non- renounceable? 13 Ratio in which the+securities will be offered 14 +Class of+securities to which the offer relates 15 +Record date to determine entitlements 16 Will holdings on different registers (or subregisters) be aggregated for calculating entitlements? 17 Policy for deciding entitlements in relation to fractions 18 Names of countries in which the entity has security holders who will not be sent new offer documents Note: Security holders must be told how their entitlements are to be dealt with. Cross reference: rule 7.7. 19 Closing date for receipt of acceptances or renunciations 20 Names of any underwriters 21 Amount of any underwriting fee or commission 22 Names of any brokers to the issue 23 Fee or commission payable to the broker to the issue	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A

24 Amount of any handling fee payable to brokers who lodge acceptances or renunciations on behalf of security holders 25 If the issue is contingent on security holders’ approval, the date of the meeting 26 Date entitlement and acceptance form and offer documents will be sent to persons entitled 27 If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders 28 Date rights trading will begin (if applicable) 29 Date rights trading will end (if applicable) 30 How do security holders sell their entitlements_in full_through a broker? 31 How do security holders sell_part_ of their entitlements through a broker and accept for the balance? 32 How do security holders dispose of their entitlements (except by sale through a broker)? 33 +Issue date	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

34 Type of[+] securities ( tick one )

• See chapter 19 for defined terms.

Appendix 3B Page 7

04/03/2013

(a) +Securities described in Part 1

(b)[All other ][+][securities ]

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

35 If the[+] securities are[+] equity securities, the names of the 20 largest holders of the additional[+] securities, and the number and percentage of additional[+] securities held by those holders 36 If the[+] securities are[+] equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over 37 A copy of any trust deed for the additional[+] securities

Entities that have ticked box 34(b)

38	Number of+securities for which
	+quotation is sought
39	+Class of+securities for which
	quotation is sought

40 Do the[+] securities rank equally in all respects from the[+] issue date with an existing[+] class of quoted +securities?

If the additional[+] securities do not rank equally, please state:

• the date from which they do

• the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment

• the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment

• 41 Reason for request for quotation now

Example: In the case of restricted securities, end of restriction period

• (if issued upon conversion of another[+] security, clearly identify that other[+] security)

Number +Class 42 Number and +class of all +securities quoted on ASX ( including the[+] securities in clause 38)

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX’s absolute discretion. ASX may quote the[+] securities on any conditions it decides.

• 2 We warrant the following to ASX.

• The issue of the[+] securities to be quoted complies with the law and is not for an illegal purpose.

• There is no reason why those[+] securities should not be granted +quotation.

• An offer of the[+] securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

• See chapter 19 for defined terms.

Appendix 3B Page 9

04/03/2013

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any[+] securities to be quoted and that no-one has any right to return any[+] securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the[+] securities be quoted.

• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the[+] securities be quoted.

• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

• 4 We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

Sign here: Date: 30 June 2015 (Company secretary) Print name: Louise Bolger

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Appendix 3B – Annexure 1

Calculation of placement capacity under rule 7.1 and rule 7.1A for eligible entities

Introduced 01/08/12 Amended 04/03/13

Part 1

Rule 7.1 – Issues exceeding 15% of capital

Step 1: Calculate “A”, the base figure from which the placement capacity is calculated

Rule 7.1 – Issues exceeding 15% of capital	Rule 7.1 – Issues exceeding 15% of capital
Step 1: Calculate “A”, the base figure from which the placement capacity is calculated
Insertnumber of fully paid+ordinary securities on issue 12 months before the +issue date or date of agreement to issue	124,668,047
Addthe following: • Number of fully paid+ordinary securities issued in that 12 month period under an exception in rule 7.2 • Number of fully paid+ordinary securities issued in that 12 month period with shareholder approval • Number of partly paid+ordinary securities that became fully paid in that 12 month period Note: • Include only ordinary securities here – other classes of equity securities cannot be added • Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed • It may be useful to set out issues of securities on different dates as separate line items	245,614 fully paid ordinary securities issued on 2 January 2015 under an exception to Listing Rule 7.2. 180,328 fully paid ordinary securities issued on 3 February 2015 under an exception to Listing Rule 7.2. 28,000,000 fully paid ordinary securities issued on 24 November 2014 as approved by shareholders at the AGM on 19 November 2014. 24,900,000 fully paid ordinary securities issued on 1 December 2014 as approved by shareholders at the AGM on 19 November 2014. Nil partly paid ordinary securities that became fully paid in the 12 month period
Subtractthe number of fully paid+ordinary securities cancelled during that 12 month period	Nil
“A”	177,993,989

• See chapter 19 for defined terms.

Appendix 3B Page 11

04/03/2013

Step 2: Calculate 15% of “A”

Step 2: Calculate 15% of “A”	Step 2: Calculate 15% of “A”
“B”	0.15 [Note: this value cannot be changed]
Multiply“A” by 0.15	26,699,098
Step 3: Calculate “C”, the amount of placement capacity under rule 7.1 that has already been used
Insertnumber of+equity securities issued or agreed to be issued in that 12 month period_not counting_those issued: • Under an exception in rule 7.2 • Under rule 7.1A • With security holder approval under rule 7.1 or rule 7.4 Note: • This applies to equity securities, unless specifically excluded – not just ordinary securities • Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed • It may be useful to set out issues of securities on different dates as separate line items	223,214 fully paid ordinary securities issued on 20 November 2014. 500,000 fully paid ordinary securities issued on 25 November 2014. 5,820,016 fully paid ordinary securities, which are the subject of the Appendix 3B to which this form is annexed.
“C”	6,543,230
Step 4: Subtract “C” from [“A” x “B”] to calculate remaining placement capacity under rule 7.1
“A” x 0.15 Note: number must be same as shown in Step 2	26,699,098
Subtract“C” Note: number must be same as shown in Step 3	6,543,230
Total[“A” x 0.15] – “C”	20,155,868 [Note: this is the remaining placement capacity under rule 7.1]

placement capacity under rule 7.1
“A” x 0.15	26,699,098
Note: number must be same as shown in
Step 2
Subtract“C”	6,543,230
Note: number must be same as shown in
Step 3
Total[“A” x 0.15] – “C”	20,155,868
	[Note: this is the remaining placement
	capacity under rule 7.1]

Part 2

Part 2	Part 2
Rule 7.1A – Additional placement capacity for eligible entities
Step 1: Calculate “A”, the base figure from which the placement capacity is calculated
“A” Note: number must be same as shown in Step 1 of Part 1	177,993,989
Step 2: Calculate 10% of “A”
“D”	0.10 Note: this value cannot be changed
Multiply“A” by 0.10	17,799,398
Step 3: Calculate “E”, the amount of placement capacity under rule 7.1A that has already been used
Insertnumber of+equity securities issued or agreed to be issued in that 12 month period under rule 7.1A Notes: • This applies to equity securities – not just ordinary securities • Include here – if applicable – the securities the subject of the Appendix 3B to which this form is annexed • Do not include equity securities issued under rule 7.1 (they must be dealt with in Part 1), or for which specific security holder approval has been obtained • It may be useful to set out issues of securities on different dates as separate line items	Nil
“E”	Nil

• See chapter 19 for defined terms.

Appendix 3B Page 13

04/03/2013

Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A

Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A	Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A
“A” x 0.10 Note: number must be same as shown in Step 2	17,799,398
Subtract“E” Note: number must be same as shown in Step 3	Nil
Total[“A” x 0.10] – “E”	17,799,398 Note: this is the remaining placement capacity under rule 7.1A