EML PAYMENTS LIMITED - Investor Presentation 2021

07 April 2021

ASX Market Announcements 20 Bridge Street SYDNEY NSW 2000

INVESTOR PRESENTATION

EML PAYMENTS LIMITED (ASX: EML) (“EML”) is pleased to provide the attached investor presentation for release to the market.

About EML Payments Limited

+61 (07) 3557 1100 Level 12 333 Ann Street Brisbane QLD 4000 EML Payments Limited

EML provides an innovative payment solutions platform, helping businesses all over the world create awesome customer experiences. Wherever money is in motion, our agile technology can power the payment process, so money can be moved quickly, conveniently and securely. We offer market-leading programme management and highly skilled payments expertise to create customisable feature-rich solutions for businesses, brands and their customers.

We encourage you to learn more about EML Payments Limited, by visiting: https://www.emlpayments.com/

This announcement has been authorised for release by the Board of Directors.

For further information, please contact:

Robert Shore Group CFO

EML Payments Limited (ASX: EML)

[email protected] +61 (0) 419 590 128

Investor Presentation

Acquisition of Sentenial Limited

Important Notice & Disclaimer

This investor presentation (Presentation) is dated 7 April 2021 and has been prepared by EML Payments Limited (ABN 93 104 757 904) (EML or the Company).

By attending an investor presentation or briefing, or accepting, accessing or reviewing this Presentation, you acknowledge and agree to the terms set out below. This Presentation has been prepared in relation to EML’s acquisition of all of the share capital in Sentenial Limited, a company incorporated in Ireland, and its subsidiaries (‘Sentenial’) (‘the Acquisition’).

Summary Information

This Presentation is for information purposes only and is a summary only. It should be read in conjunction with EML’s most recent financial report and EML’s other periodic and continuous disclosure information lodged with the Australian Securities Exchange (‘ASX’), which is available at www.asx.com.au.

The content of this Presentation is provided as at the date of this Presentation (unless otherwise stated). Reliance should not be placed on information or opinions contained in this Presentation and, subject only to any legal obligation to do so, EML does not have any obligation to correct or update the content of this Presentation. Certain information in this Presentation has been sourced from Sentenial, its representatives, advisers or associates.

While steps have been taken to review information presented, no representation or warranty, expressed or implied, is made as to its fairness, accuracy, correctness, completeness or adequacy. Certain market and industry data used in this Presentation may have been obtained from research, surveys or studies conducted by third parties, including industry or general publications. Neither EML nor its representatives have independently verified any such market or industry data provided by third parties or industry or general publications.

Not financial product advice or offer

This Presentation does not and does not purport to contain all information necessary to make an investment decision, is not intended as investment or financial advice (nor tax, accounting or legal advice), and must not be relied upon as such. Any decision to buy or sell securities or other products should be made only after seeking appropriate financial advice.

This Presentation is of a general nature and does not take into consideration the investment objectives, financial situation or particular needs of any particular investor. Any investment decision should be made solely on the basis of your own enquiries. Before making an investment in EML, you should consider whether such an investment is appropriate to your particular investment objectives, financial situation or needs. EML is not licensed to provide financial product advice in respect of its shares.

Investment Risk

An investment in EML shares is subject to known and unknown risks, some of which are beyond the control of EML and its directors. EML does not guarantee any particular rate of return or the performance of EML nor does it guarantee any particular tax treatment.

forma historical and forecast financial information provided in this Presentation is for illustrative purposes only and is not represented as being indicative of EML’s views on its, nor anyone else’s, future financial position and/or performance. The pro forma historical and forecast financial information has been prepared by EML in accordance with the measurement and recognition principles, but not the disclosure requirements, prescribed by the Australian Accounting Standards (AAS).

Investors should be aware that certain financial measures included in this Presentation are ‘non-IFRS financial information’ under ASIC Regulatory Guide 230: ‘Disclosing non-IFRS financial information’ published by ASIC, and are not recognised under AAS and International Financial Reporting Standards (IFRS). The non-IFRS financial information financial measures include earnings before interest, tax, Depreciation and amortisation (EBITDA), net profit after tax before acquisition related amortisation and expenses (NPATA), earnings per share before amortisation (EPSA) and gross debit volume (GDV). Such non-IFRS financial information/non-GAAP financial measures do not have a standardised meaning prescribed by AAS or IFRS. Therefore, the non-IFRS financial information may not be comparable to similarly titled measures presented by other entities, and should not be construed as an alternative to other financial measures determined in accordance with AAS or IFRS. Although EML believes these nonIFRS financial measures provide useful information to investors in measuring the financial performance and condition of its business, investors are cautioned not to place undue reliance on any non-IFRS financial information/non-GAAP financial measures included in this Presentation.

Certain figures, amounts, percentages, estimates, calculations of value and fractions provided in this Presentation are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this Presentation.

Past performance

Past performance, including past share price performance of EML and pro forma financial information given in this Presentation, is given for illustrative purposes only and should not be relied upon as (and is not) an indication of EML’s views on its future financial performance or condition. Past performance of EML and Sentenial cannot be relied upon as an indicator of (and provides no guidance as to) the future performance of EML. Nothing contained in this Presentation nor any information made available to you is, or shall be relied upon as, a promise, representation, warranty or guarantee, whether as to the past, present or future.

Future performance and forward-looking statements

This Presentation contains certain “forward-looking statements”. The words “expect”, “anticipate”, “estimate”, “intend”, “believe”, “guidance”, “should”, “could”, “may”, “will”, “predict”, “plan” and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Forwardlooking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies that are subject to change without notice and involve known and unknown risks and uncertainties and other factors that are beyond the control of EML, its directors and management. This includes statements about market and industry trends, which are based on interpretations of current market conditions.

looking statement may have been prepared or otherwise. Readers are cautioned not to place undue reliance on forward-looking statements and except as required by law or regulation, none of EML, its representatives or advisers assumes any obligation to update these forward-looking statements. No representation or warranty, express or implied, is made as to the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in relation to future matters contained in this Presentation. The forward-looking statements are based on information available to EML as at the date of this Presentation. Except as required by law or regulation (including the ASX Listing Rules), none of EML, its representatives or advisers undertakes any obligation to provide any additional or updated information whether as a result of a change in expectations or assumptions, new information, future events or results or otherwise. Indications of, and guidance or outlook on, future earnings or financial position or performance are also forward-looking statements.

Disclaimer

To the maximum extent permitted by law, EML and their respective related bodies corporate and affiliates, and their respective officers, directors, employees, agents and advisers:

disclaim all responsibility and liability (including, without limitation, any liability arising from fault, negligence or negligent misstatement) for any loss arising from this Presentation or reliance on anything contained in or omitted from it or otherwise arising in connection with this Presentation;
disclaim any obligations or undertaking to release any updates or revision to the information in this Presentation to reflect any change in expectations or assumptions; and
do not make any representation or warranty, express or implied, as to the accuracy, reliability, completeness of the information in this Presentation or that this Presentation contains all material information about EML or that a prospective investor or purchaser may require in evaluating a possible investment in EML or acquisition of shares in EML, or likelihood of fulfilment of any forwardlooking statement or any event or results expressed or implied in any forward-looking statement.

Financial information

All financial information in this Presentation is in Australian dollars ($ or AUD) unless otherwise stated. This presentation includes certain financial information relating to Sentenial which is derived from financial information made available by Sentenial in connection with the Acquisition (for which EML does not take any responsibility). This Presentation includes certain pro forma financial information. The pro

Forward-looking statements are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Actual results, performance or achievements may differ materially from those expressed or implied in such statements and any projections and assumptions on which these statements are based. These statements may assume the success of EML’s business strategies. The success of any of those strategies will be realised in the period for which the forward-

Executive Summary

Transaction Details

EML Payments Limited ( EML ) has entered into a binding agreement to acquire 100% of Sentenial Group ('SG’ or ‘Sentenial’) for an enterprise value of €70.0 million (A$108.6 million) ( Upfront Enterprise Value ), plus an earn-out component of up to €40.0 million (A$62.1 million) ( Earn-out Consideration ) (together the Acquisition )
SG, through its regulated subsidiary Nuapay, operates in the fast growing European Open Banking sector and is expected to be accretive in year three Financial Year (FY) 2024, with EML intending to reinvest profits into growth opportunities in FY22 and FY23.
SG was founded in 2003, building out a technology platform to be a leading provider of account-to-account (A2A) payments across the United Kingdom (UK) and Europe. They service major banking customers including Barclays, Lloyds and Citibank with a bank-grade platform and innovative suite of solutions.

Sentenial Group Overview

SG has serviced major banks, blue chip enterprises, small-medium size businesses (SMEs) and payment service providers for nearly two decades. The majority of the business is the provision of direct debit, credit transfers and instant payments for major European banks with annual volumes of more than €45 billion in Calendar Year (CY) 2020. Sentenial provides the software platform through a Software-as-a-Service (SaaS) revenue model with charges for access to the platform, as such the yield is low, at circa 1-2 basis points (bps).

− In 2018, the platform was extended to Open Banking and has connected to over 1,750 banks and financial institutions across Europe; servicing key customers such as Worldpay. This fast growing Open Banking product is integrated within Nuapay’s A2A capabilities which in CY20 processed volumes of more than €700 million. Nuapay typically provides regulated services using Payment Institution licences issued by the Financial Conduct Authority (FCA), UK and L'Autorité de contrôle prudentiel et de résolution (ACPR), France and generates higher yields of circa 10-50 bps.

− Broadens Solution Suite: Adds Open Banking offerings to EML’s solution suite; ability to cross-sell Nuapay Open Banking solutions into EML's digital banking and corporate customers across EML’s European footprint.

Leading Global Player: Post-completion of the Acquisition EML Payments Limited & all it’s subsidiary companies (Group) is expected to become one of the largest Fintech enablers in Open Banking and prepaid globally, with the pro forma Group processing in aggregate ~A$90 billion of Gross Debit Volume (GDV).

− Segment Diversification and Revenue Mix: Further diversifies EML’s segment mix to accelerate growth in the Virtual Account Numbers (VANs) segment, to be renamed to Digital Payments reflecting the range of payment solutions and capabilities EML can offer our customers.

Transaction Strategic Rationale & Financial OutcomesS

− Operating Leverage : Builds on scale of our European operations, enabling greater operating leverage, including improved scale and cost efficiency of EML’s direct Faster Payments connection via the Bank of England.

Financially Attractive: SG is expected to have an attractive three year forecast net revenue Compound Annual Growth Rate (CAGR) of 65%+ from FY21 – FY23 and strong 35%+ Earnings Before Interest, Taxes, Depreciation & Amortisation (EBITDA) margin for FY23. The acquisition is expected to be mid-teen pro forma EPSA accretive in FY23, inclusive of synergies. Achievement of earn-out targets would correlate to incremental Open Banking revenue growth of 900% or €27 million (A$41.9 million). The Group expects SG to achieve the earn-out targets and contribute EBITDA approximating €15 million (A$23 million) in year three. Assuming the full earn-out is achieved the total purchase price would be €110 million, representing a revenue multiple of less than 3 times.
Management Team Alignment: The earn-out structure and vendor scrip component of the Acquisition incentivises the management team of SG who will enter into ongoing Executive Service Agreements. Earn-out is focused on Open Banking revenue growth (from €3 million to €30 million) required by 31 December 2023 to achieve the full earn-out.

Executive Summary

Upfront Enterprise Value of €70 million (A$108.6 million) comprising €38.9 million (A$60.3 million) cash and €31.1 million (A$48.2 million) in EML shares .
to the vendors, issued at an estimated A$5.00 per share[1]
− Approximately 9.60 million shares are expected to be issued[1] , which is c. 2.9% of the issued share capital of EML. Approximately 60% of the upfront EML
Acquisition shares issued will be subject to a 6 month restriction from sale
Consideration[1] − Earn-out Consideration comprising up to €40 million (A$62.1 million) contingent on Nuapay (Open Banking) achieving a revenue target of €30 million in the 12 month period ending on 31 December 2023. Earn-out payable in cash or equity at EML's discretion in 2024.
− €2.5 million (A$3.9 million) will be held in escrow for 12 months following completion of the Acquisition for claims made under the Acquisition agreement alon side a Warrant & Indemnit Insurance Polic . g y y y
− The cash component of the Upfront Enterprise Value, transaction costs and target cash on hand at close is to be funded by a combination of: − EML existing cash on hand
− New senior secured term loan and revolving credit facilities of A$31 million. The Group has agreed a total facility of up to circa A$225 million with a three year
Acquisition Funding tenor to support working capital and future growth, which includes a A$100 million accordion facility. Covenants of gearing, senior debt and interest cover apply.
− The Earn-out Consideration, to the extent paid, will be funded either in cash from operating cash flows and available debt capacity, or equity issuance using a 10 day Volume Weighted Average Price (VWAP), calculated to the payment date.
− Completion of the Acquisition is subject to change of control regulatory approvals from the FCA (UK) and the ACPR (France). The Acquisition is expected to
Timing and Conditions complete in late FY21.
Issue price calculated as a 10 day Volume-weighted average price ending on the day of signing the Share Purchase Agreement, approximately $5.00 / share. 2. AUD:EUR rate set at 0.645

Introducing Sentenial & Nuapay

Leading Fintech group delivering bank-grade payments & Open Banking platform built for the future

Trusted market leading Fintech platform

Full suite of A2A payment solutions including open banking, credit transfers, direct debits, instant payment and bank accounts
Proven track record developing cutting edge payments technologies & innovative product solutions, trusted by global organisations
Scaled platform processing over €45 billion in volume annually
Owns regulatory licences to provide services across the UK & the European Economic Area (EEA)
Highly talented management team with a technology-led business of skilled experts
Proven track record servicing major European banking customers

With two complementary business models

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White Label Platform-as-a-Service

A pure play SaaS provider - white labelling the platform’s superior processing technology to tier one banks & corporates. Sentenial provide 24/7 critical services for global businesses.

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A2A Payments & Open Banking Platform

A directly marketed bank-grade platform providing regulated alternative payments & Open Banking to a variety of customers including Fintechs, global merchant acquirers, payment gateways, software providers & corporates.

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