The EML Payments Ltd (ASX: EML) share price has been among the best performers on the ASX 200 index on Wednesday.
At one stage today, the payments company's shares were up as much as 16% to $1.49.
The EML share price has pulled back slightly since then but remains 11% higher at $1.43 at the time of writing.
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Why is the EML share price rocketing higher?
As well as getting a boost from a rebound in the tech sector following a strong night of trade on Wall Street's NASDAQ index, the release of a positive announcement has given the EML share price a lift.
According to the release, the company has signed an agreement with key European client, Correos. It is Spain's national post office network.
EML will support Correos with the issuing of a government contract known as the Bono Cultural Joven 2022 (Youth Cultural Bonus) tender. This tender is supporting the cultural sector, which was adversely impacted during the pandemic.
The release explains that approximately 500,000 virtual prepaid cards will be loaded with 400 euros each and will then be issued to eligible 18-year-olds. These funds will be able to be spent on various cultural products and activities, including the performing arts, live music, films, libraries, museums, festivals, sheet music, records, books, audiobooks and magazines.
The total value loaded under the stimulus program is projected to be 210 million euros or approximately A$320 million at current exchange rates.
Management commentary
EML's Head of Spain, Emilio Gutierrez, commented:
Our business relationship with Correos goes back a long way, and we've achieved many milestones together. We're delighted to continue to build on this partnership with such a significant and important initiative in helping support the arts sector across Spain.
Management expects the program to contribute to revenue and EBITDA in the FY 2023 financial year.
It also advised that it is expected to utilise a material proportion of the growth cap imposed on its European licence by the Central Bank of Ireland. As things stand, this growth cap remains in place until December 2022.
