FRC Research Report - BUY 82c val, page-4

LCH Capital (Sub holder of ISX) just released their monthly newsletter and made their first reference to their holding of ISX:

http://www.lhccapital.com/files/monthly/201903 - LHC_ monthly_ Mar _19.pdf

During the month, the Fund’s holding in Isignthis Ltd (ISX) was a material contributor to performance.

ISX represents a relatively new position for the Fund and comes after years of closely following the progress of the company. During March, shares in ISX increased by +31.1% after the company announced an acquisition of a European fintech company, conducted an institutional road show and released their 2018 annual report which confirmed “confidence to reaching significant milestones of profitability and cash generation in the coming months”. ISX listed on the ASX via a reverse listing in 2015 with a single patented process for performing compliance services to establish identity for card-not-present transactions for online merchants.

Since then ISX has been granted an Electronic Money Institution licence in the EU/EEA, has built a payment gateway, secured principal membership licencing of the world’s leading payment schemes and purchased a core banking software business. Most recently, ISX has integrated its compliance product into a comprehensive banking services offering (account issuing, deposit taking, payment processing, merchant acquiring) and commenced marketing this service to regulated online merchants. This customer set has been traditionally underserviced and overcharged by financial institutions. We expect ISX to make significant traction in attracting these customers to its services over the coming months and years.

With a fixed cost base, clip the ticket style business model and no major capital expenditure requirements, any success with customers will very quickly be transformed to strong and recurring free cash flow.