iSignThis lowers EBIT guidance ahead of ASX lawsuit

9 December 2019

Payments and know-your-customer (KYC) solutions provider iSignThis has lowered its earnings before interest and tax (EBIT) guidance for 2019 to AUD$6.5m (£3.4m/€4.0m/USD$4.4m) amid a dispute with the Australian Securities Exchange (ASX).

The business originally announced projected EBIT of AUD$10.7m at its annual general meeting in November 2018, but in a letter to shareholders, chief executive John Karantzis announced that much lower earnings will be expected this year.

ISX said the suspension of its shares from trading on the ASX had led to slower growth and hit volume in its forward sales pipeline, but added that it expects this to be a short-term issue that will be resolved once trading resumes. The provider said that its gross processed turnover volume, the amount of transations that took place using the platform, is forecast to be flat for November and December due to the impact of the ASX suspension.

The shares of iSignThis were suspended from trading on 2 October and the provider said it has not yet been given a reason by the ASX for the move. Upon announcing the decision to suspend trading, the ASX said this was due to fluctuations in ISX’s share price. ASX Listing Rule 17.3 states that shares may be suspended if an entity is suspected of breaking a listing rule, if a continued listing will lead to a disorderly or uninformed market, or if there is another appropriate reason.

In Federal Court documents filed in the state of Victoria, ISX noted that since suspension, it has answered a number of questions from the ASX about it shares, such as why it selected a European bank to hold client funds and how its revenue is broken down by country. However, its shares were not reinstated. Last week ISX launched legal action against the stock exchange, as it looks to resolve the situation.

Karantzis added that he was still happy with the provider’s results, after making a profit in its first year in operations, despite an operating period of less than 11 months, and was optimistic about its prospects in 2020.

“The work done by the ISX team to complete the Tier 1 card network rollout in the EU, whilst integrating to a number of third-party trading platforms during 2018 has paid off," Karantzis explained. "We are now considering integration of popular accounting and gaming platforms to further increase the interconnectivity and appeal of our platforms.

“Given the headwinds caused by the ASX’s suspension of the company from quotation, this set of numbers is a credit to the iSignthis team. We are on track to deliver a maiden profit, we have in excess of $14 million of cash, and we can give consideration to issuing our first dividend.”