Quarterly Report for the Period Ending December 2014
Sydney, Jan 22, 2015 AEST (ABN Newswire) - Emerchants Limited (
ASX:EML) (EMCHF:OTCMKTS) Announce the "Quarterly Report" for the quarter (Q2FY15) and 6 months to 31 December 2014 (1HFY15).
The following are additional explanatory notes to be read in conjunction with the Report.
Positive EBITDA result for Q2FY15 and 1HFY15
We are pleased to announce that the Group has generated a positive EBITDA for the quarter of A$1.1M and 6 months to December 2014 of A$0.5M. This will be formally reported in the Group's half year financial report we intend to release to the market on 12 February 2015 and represents the first time the Group has become EBITDA positive for either a quarter or full half year, confirming the guidance previously provided that the Group would be EBITDA positive for FY15. The EBITDA result for the quarter was positively impacted by contributions from both our Australian and European operations.
Australian operations
We experienced strong growth in all our Australian operating metrics (see Charts above and Table 1 below), but in particular in our re-loadable products, with active accounts increasing by 120%; Total Funds Loaded up 215%;
Transactions up 239% and Stored Value up 109% over the prior comparative period, largely driven by growth in a number of our clients' card programs, including Ingogo, Ladbrokes Digital, Sportsbet, Nimble and CC Investment Group (Cash Converters Franchisee).
Our non-reloadable business also performed well above the neutral growth guidance we have previously provided to the market, as we continue to work closely with our distribution partners to enable them to win larger, more accretive opportunities. We achieved an increase in all metrics, with Loads increasing by 18%; Transactions increasing by 25%; and Stored Value balances increasing 24%.
The growth in Australian metrics and the receipt of establishment fees from newly signed online wagering and consumer lending customers (including Bet365 and MoneyMe), combined with our ongoing focus on expense management, has resulted in the Australian operations generating an inaugural positive EBITDA for the quarter and close to a neutral EBITDA for the half year, notwithstanding A$0.3M of one off acquisition expenses related to the acquisition of Store Financial Services UK Limited (SFUK). Excluding those one off acquisition expenses, the Australian operations would have generated a positive EBITDA for the half year.
European operations
The Group finalised the acquisition of SFUK on 1 December 2014 and consequently we have included the results of this business for the single month of December. The business performed strongly in December, with Total Funds Loaded in the month totalling A$37.2M, and end of year Stored Value balance of A$47.6M and an active card portfolio of 0.95M cards at the end of December. December is the key sales month for SFUK and shopping mall gift cards, and the business out-performed management expectations.
During December we announced the signing of MFI, an operator of 25 shopping malls in Germany. The implementation of that contract was completed in early January 2015 and we are progressing well with the execution of another key contract in the shopping mall segment. Due to the large scale of these clients, we expect that both of these transactions will materially impact the EBITDA contribution from the European operations in FY16. The addition of SFUK saw the Group end the quarter and half year with 1.6M Active Accounts (175% increase on 1HFY14), and A$91.2M in Stored Value (207% increase on 1HFY14). It should be noted that interest rates on the on the European Stored Value float are significantly lower than in Australia given prevailing European interest rates, however if and when European interest rates rise we will be well positioned to leverage such change.
Our European operations also contributed significantly on a financial level, generating over A$0.6M in EBITDA in December.
To view the full quarterly report, with figures and tables, please visit:
http://media.abnnewswire.net/media/en/docs/ASX-EML-706998.pdf
About Emerchants Ltd
Emerchants Ltd (ASX:EML) (OTCMKTS:EMCHF) is a payments solutions provider of prepaid financial card products and services in Australia. By using its proprietary Secure Account Management (SAM) system, the Company provides its clients with innovative financial service payment solutions for reloadable and nonreloadable pre-paid card programs.
Emerchants' proprietary technology, processing capabilities and program management services offers clients more control and flexibility in managing corporate expense programs, funds disbursement, petty cash, per diems, emergency payments, disaster/welfare programs and many other individual and bulk payment scenarios. Emerchants partner with well-established banking institutions and card associations (eftpos, Visa) to ensure card programs are fully compliant, scalable and easy to implement for clients.
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