Ann: ASX Update on Suspension, page-189

For mine, the SOR makes for tough reading. The arguments outlined by the ASX and the ISX responses and counter arguments paint a damning picture of ISX management. I can’t escape the belief that JK cooked up the deals with the ‘Key Customers’ solely to meet the performance targets.

I’ll take a bit more time to digest but a couple of things leapt out:

At 6.4 the ASX reference ISX announcement in Feb 2018 in which they announce the intention to no longer release key details associated new customer contracts. The ASX go on to explain that failure to release the details of the signing of the ‘Key Customers’ was a breach of disclosure rules. My question is, why didn’t the ASX flag concerns when ISX announced the policy change in Feb 2018?

Sections 9 and 10 discuss revenue recognition and raises suspicions that JK may have undertaken certain actions (including production of Certificates of Completion) to satisfy the auditors. With 300m performance shares at issue and how questionable these key contracts look based in the info presented in the SOR (info the auditors had access to) I am stunned that the auditors were able to sign this off. It isn’t spelt out but 10.2 appears to suggest that ASIC may have had discussions with the auditors prior to raising their concerns with the ASX. I wonder if we will hear more on this?

As things stand I am expecting ASIC to take action against the directors of ISX. If JK did cook the books to obtain a significant financial benefit surely he will be disqualified from being a public company officer. I’m under the impression that JK is the key driver of this business so what would his departure mean to the value and future prospects of the business?

plenty to ponder.