ASX 200 sinks, EML plunges, Appen soars

The S&P/ASX 200 Index (ASX:XJO) sank today. The EML Payments Ltd (ASX:EML) share price plunged, whilst Appen Ltd (ASX:APX) jumped.

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The S&P/ASX 200 Index (ASX: XJO) dropped almost 2% today, falling to 6,932 points.

Here are some of the highlights from the ASX:

EML Payments Ltd (ASX: EML)

The EML share price was the worst performer in the ASX 200 by far today.

It came out of its trading halt after giving investors an update about its correspondence from the Central Bank of Ireland.

EML told that market that its Irish regulated subsidiary, PFS Card Services (Ireland) Limited (PCSIL), has received correspondence from the Central Bank of Ireland (CBI) raising significant regulatory concerns.

The CBI concerns relate to PCSIL’s anti money laundering and counter terrorism financing, risk and control frameworks and governance. The correspondent states that the CBI is minded to issue directions pursuant to section 45 of the Central Bank (Supervision and Enforcement) Act 2013.

The correspondence does not concern EML’s Australian or North American operations, or the operations of PFS’ UK subsidiary, or EML’s other Irish regulated subsidiary (EML Money DAC).

Before Brexit, the European business was primarily operated through its FCA regulated subsidiary. But Brexit meant EML was required to transfer its non-UK programs out of the UK. On 19 December 2020, all of the European programs were transferred to the CBI regulated PSCIL.

The directions, if made, could “materially impact” the European operations of the PFS businesses, including restricting PCSIL’s activities. In the quarter ending 31 March 2021, around 27% of EML’s global revenue was derived from programs operating under PCSIL’s Irish authorisation.

PCSIL and the CBI are closely communicating about the concerns raised.

EML wasn’t able to estimate the potential costs and impacts of the CBI correspondence. Aside from that, it said it’s on track to achieve its previous guidance, including underlying full year revenue of between $180 million to $190 million.

Appen Ltd (ASX: APX)

Appen announced a new organisational structure and new reporting segments today. It was the best performer in the ASX 200, rising over 17%.

Its new organisation structure will have four customer-facing business units – global, enterprise, China and government.

The global unit will focus on providing data annotation services and products to major US global tech customers.

Appen’s enterprise unit will be responsible for driving growth outside of its global customers by leveraging its product suite to serve new customers and AI use cases.

The China and government units will continue to try to capture market share in those high-growth markets.

Appen said that the new leadership structure, combined with profit and loss responsibility, will increase performance.

Management believe that the organisation alignment and technology-enabled productivity will allow resources to be optimised for the company’s future needs.

The tech company also said that there’s going to be new segment reporting for investors to get a better understanding on performance, growth and market dynamics.

There’s two segments – ‘global services’ for the services provided to global customers using data annotation tools and ‘new markets’ for global customers using annotation products and the enterprise, government and China businesses.

Reporting will be in US dollars, to enable easier comparison of financial performance between periods.

The ASX 200 technology business also gave a trading update.

The company’s year to date revenue plus orders in hand for delivery in FY21 is approximately US$260 million at the end of April 2021. Appen said this US dollar figure was consistent with the same methodology and timing used for the update provided at the annual general meeting in May 2020.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for FY21 is expected to be between US$83 million to US$90 million.

ASX 200 resource shares sink

Many of the biggest contributors to the ASX 200 decline today were resource businesses.

The BHP Group Ltd (ASX: BHP) share price fell more than 3%, the Rio Tinto Ltd (ASX: RIO) share price fell 3.75%, the Fortescue Metals Group Limited (ASX: FMG) share price dropped 3.2% and the Mineral Resources Limited (ASX: MIN) share price declined almost 3%.

There were also declines in the gold mining space. The St Barbara Limited (ASX: SBM) and Resolute Mining Limited (ASX: RSG) share prices fell around 7% and 6% respectively.

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Tristan Harrison owns shares of Fortescue Metals Group Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends EML Payments. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Appen Ltd. The Motley Fool Australia has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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