Ann: Response to Ownership Matters Pty Ltd Report, page-242

Why should we look at the IT sector stock- iSignthis on ASX?

By
Team Kalkine
-

IT sector​

The IT sector is one of the competitive sectors in domestic as well as the global market. This sector is a major contributor towards developing the economy of the country. The sector has been providing wages, jobs and so forth to a bulk of people. On Australian Securities Exchange, the sector is known as S&P/ASX 200 Information Technology (Sector), which trades under the code XIJ. On 18 September 2019, it traded last at 1,367.4 points, up by 0.55 percent from the last close.
Let’s now have a discussion on one of the well know companies, iSignthis Ltd.

iSignthis Ltd​

iSignthis Ltd (ASX: ISX) offers on-boarding service for merchants, along with a unified payment and identity service through its ISXPay® solutions and Paydentity^TM. The market capitalisation of the company stood at $1.2 billion (as on 18^th September 2019).

Response on Report by Ownership Matters Pty Ltd​

As per the release dated 17^th September 2019 the company stated that:

• On 10^th September 2019, the company updated the market that it was aware of the report which was circulated by Ownership Matters Pty Ltd and authored by James Samson, CFA & Dean Paatsch to numerous shareholders of iSignthis and other parties.
• It was also mentioned in the release that ISX was not invited, to make any comment during the drafting of the report on ISX by Ownership Matters Pty Ltd. The company further added that till the date of the release, it did not receive a copy of the report from Ownership Matters Pty Ltd and relied upon the copies forwarded by the shareholders.
• The company further added that the report under discussion includes several statements that were false, materially misleading and/or misleading or deceptive.

Change in Substantial Holdings and Director’s Interest​

• Recently, the company announced that Select All Enterprise Limited has made a change to its substantial holdings in the company on 13 September 2019, and post the change, the voting power stands at 41% in comparison to the previous voting power of 41.43%.
• In another update, the company announced that one of its directors, Timothy Hart made a change in his interests in the company by acquiring 500,000 ordinary shares after the conversion of performance rights. Post-change, the number of securities held by Timothy Hart stands at 16,141,220 fully paid ordinary shares.

European Patent​

On 16 September ISX updated the market and mentioned the following:

• The subsidiary company ISX IP Ltd of iSignthis Ltd has been notified that the European Patent Office intends to grant patent number EP2553642 ‘Methods and Systems for Verifying Transactions’. It was mentioned that the patent would be granted throughout the thirty-eight (38) EPO member states.
• It was further mentioned that the intention to grant patent coincides with the European Union’s Directive requiring Strong Customer Authentication under the Payment Services Directive 22 for cards as well as access to account services, which became effective 14^th September 2019.
• The European Patent includes ways for SCA or Strong Customer Authentication as well as KYC or Know Your Customer.
• ISX Patents enhanced 3DSecure V1 for compliance in order to PSD2 SCA or Payment Service Directive 2 Strong Customer Authentication.
• The company’s strong customer authentication has already been incorporated into Paydentity™, ISXPay® and Probanx®.

Annualised Gross Processing Turnover Volume (GPTV)​

The company recently through a release dated 9^th September 2019 provided its operational update as follows:

• ISX stated that on 31^st August 2019, the annualised monthly gross processing turnover volumes had surpassed $1.1 billion, reflecting a rise of 160% against 30^th June 2019.
• It further added that the actual processed transactional volumes continued to grow in accordance, with the anticipations as the new business customers were on-boarded within the Europe and Australia networks.
• The business customer approvals at the end of August posted an increase of 28%, and the figure that stood at 270.
• The underwriting/approvals team remained to work via the increasing pipeline of business consumer applications, developed by the sales team.

Quarterly Rebalance of the S&P/ASX Indices​

As per the release dated 6^th September 2019 of S&P Dow Jones Indices made a few changes as follows:

• It was mentioned in the release that iSignthis Ltd would be added to the S&P/ASX 300 Index.
• The changes would be effective from 23^rd September 2019.

Agreement with Visa Inc​

The company recently through a release dated 8^th August 2019 announced:

• It inked and Australian Principal Member licensing agreement with the regional subsidiary of Visa Inc, based in Asia Pacific Singapore.
• The agreement enables iSignthis Ltd to perform as a merchant’s card procuring institution and make settlements on behalf of the merchant from cards issued from any part of the world through other Visa Principal or Associate member institutions as well as to process card unavailable online/remote payments.

New Appointment​

On 31^st July 2019, the company announced that it had appointed Elizabeth Warrell for the designation of Chief Financial Officer of the group. Warrell has experience in banking and financial services of 20 years in Australia as well as internationally.

A look at the Half-Year Report​

The company updated the market through a release, dated 28^th August 2019, on half-yearly results for the period ended 30^th June 2019, some of the highlights from financial and operational performance for the same are as follows:

• ISX reported total operating revenue amounting to $7.5 million, reflecting a rise of 49% on YoY from the figure of $5.0 million.
• The total revenue, including other income stood at $8.2 million with an increase of 48%.
• For the half-year ended 30^th June 2019, the company reported a statutory loss after tax amounting to $0.7 million, reflecting a decline of 75% as compared to the figure of $2.9 million in 1H FY18.
• It stated that in mid-May, ISX had a positive cash flow position.
• The cash balance of the company stood at $9.9 million as on 30^th June 2019.

Operational Performance for the Half-Year​

• The actual annualised monthly Gross Processing Turnover Volume on 31^st July 2019 stood at around $830 million, reflecting a rise of 96% as compared to 30^th June 2019.
• The company added that the operating cost of the company was revised in the month of August to around $11.0 million per annum.

Stock Performance​

When it comes to the performance of the stock, iSignthis stock last traded at a price of $1.010 per share with a decline of 7.763% on 18^th September 2019. It witnessed a remarkable rise of 336.54% in the time frame of six months. On Year to date basis, the stock produced a return of 656.67%.