The EML Payments Ltd (ASX: EML) share price closed in negative territory on Wednesday. This comes despite no news being released by the payments company since last Friday.
EML Payments shares finished the day down 2.86% to $3.73. In comparison, the S&P/ASX All Technology Index (ASX: XTX) is up 0.09% to 3,026 points.
What’s causing EML Payments share price to fall?
A possible catalyst for investors selling off EML Payments shares could be ongoing concerns about the company’s issues with one of its acquisitions.
Last week, EML Payments revealed it had identified historical deficiencies related to dormant and expired e-money accounts in its subsidiary, Irish-based business Prepaid Financial Services (PFS).
The company advised that the discrepancy was for periods prior to its acquisition of PFS. It said that normally these funds would be kept in “safeguarding accounts” for 6 years post expiry of the account.
The audit is not expected to impact EML Payments’ profit and loss account as the issues were before its acquisition. However, a cash injection of around £14.1 million ($26.6 million) will be required into safeguarded accounts held by PFS UK.
At the end of June, the company had an unaudited cash balance exceeding $140 million.
Pleasingly, EML Payments said that the monies may be released back over an extended period of time.
EML Payments share price summary
Over the course of the last 12 months, EML Payments shares accelerated to an all-time high in April before nosediving. The severe drop came as the Central Bank of Ireland cited significant regulatory concerns with PFS Card Services.
As a result, the EML Payments share price crashed below $2.80. Since then, the comany’s shares have moved sideways, down 11% year-to-date.
Based on valuation grounds, EML Payments presides a market capitalisation of roughly $1.34 billion, with 361 million shares on issue.