Investors braced for details of 'regulatory concerns' on EML arm

George Lekakis

The ASX-listed scrip of pre-paid and loyalty card provider EML Payments is expected to come under pressure when trading resumes this morning.

EML’s shares were placed in a trading halt before the market opened on Monday after the company revealed that an Irish subsidiary was being monitored by the Central Bank of Ireland.

In the filing to the ASX requesting the trading halt, EML said it had received a notification from the central bank that raised “significant regulatory concerns” about Prepaid Financial Services Limited (PFSL) – a company it acquired in March last year.

EML did not explain what the regulatory concerns related to but indicated it expected to release further information this morning.

PFSL is a provider of white label payments products and banking-as-a-service technology to clients in the UK, Ireland, Spain and other parts of Europe.

One of its core products is a prepaid Mastercard marketed to customers of leading European retailers.

EML said it requested the ASX trading halt to “facilitate an orderly market in EML’s securities pending a further announcement”.

Pre-market quotes for EML scrip on Monday indicate that the share price was poised to take a tumble with sellers offering to offload their holdings at a discount to the last traded price of A$5.15.

EML’s share price has surged this year after the release of the company’s interim results in February which revealed a net loss of $32 million for the six months to the end of December compared to a profit of $6 million in the previous corresponding period.

The company also reported a current asset deficiency of around $300 million at the end of December.

In the weeks following the release of the half year accounts a string of institutional investors including REST Super, Challenger and Greencape Capital ceased to be major shareholders in the business.

However, retail shareholders appear to have poured into the stock, with the share price climbing more than 30 per cent since the interim profit announcement on 17 February.

EML is based in Brisbane and boasts a high-profile board that includes former Bank of Queensland chief, David Liddy and former Rothschild Australia Asset Management CEO, Peter Martin.