In addition, the Company announces that Chief Executive Officer (CEO) Hank Uberoi will become Executive Chairman on 1 January 2018 to fully focus on a growing number of strategic opportunities and partnerships. The Board has commenced a search for a new CEO and in the interim period Phil Hickman, Non-Executive Chairman, will become interim CEO.

Update on Revenue Performance and Pipeline

Revenue Performance
Earthport’s anticipated revenues are expected to be 10%-15% below current expectations for the financial year ending 30 June 2018 (“FY2018”). This adjustment reflects several factors including:

• Delays in some expected contracts and client implementations
• A recent change at one of our leading e-commerce clients.

Many of these contracts and implementations are expected to complete within the current financial year, but will result in lower revenues for FY2018. In addition, a recent change at one existing e-commerce client has resulted in a loss of approximately 5% of 2018 projected revenues as this client changed its plans for a UK corridor for domestic payments for reasons specific to them. They remain a client and expect to work with Earthport for other international corridors.

EBITDA is expected to be broadly in line with current market forecasts.

Pipeline
Earthport continues to navigate the course between significant medium-term revenue and strategic value growth and the short-term timing challenges of contracting and on-boarding regulated businesses. The new business pipeline is currently stronger than at any time in the firm’s history. An increasing number of banks and corporate entities are in active discussions with Earthport, including large ecommerce companies and banks in the US, financial institutions in Europe, India, Australia and Southeast Asia, and existing clients who are planning expansion activities.

• Several large existing clients are seeking to expand international corridors and offerings including a major banking client in the USA targeting over 1 million incremental transactions annually into Asia which started this month and will ramp up over the coming months.

• The weighted and unweighted new business pipeline for FY2019 is already over 2 times that of FY2018 and continues to grow.

Earthport continues to invest in sales capacity and the pipeline is expected to have a positive impact on revenues by the end of FY2018 and accelerated growth into FY2019. As a result, Earthport confirms its expectation to reach cash flow break-even during FY2019.

Strategic Update

The market for cross-border payments continues to be transformed as financial institutions accelerate their move from the traditional correspondent banking model and wires and as digital payment models continue to advance. This change is attracting increasing competition to the Company’s market with a variety of new entrants and increasing investment being committed to the industry.

Over the past three years Earthport has emerged as a significant new presence in the cross-border payment landscape. The Company is well positioned compared to its competitors through its regulatory, compliance and payments domain expertise, its data and validation infrastructure, and the strength and reach of its network, which currently provides direct local access to 67 countries (and growing) and overall payments access to over 190 countries. The brand value of Earthport is strong, as evidenced by receptivity at global industry conferences (SIBOS, Money2020, and IIF in particular) and growing sales opportunities across multiple geographies.

The Company is well positioned to play a significant role in enabling, participating in or leading a diverse range of initiatives by Asian, US and European institutions and platforms to accelerate cross border payments capabilities. These include leveraging its existing infrastructure in partnership with deep pocketed strategic partners to capture larger scale outsourcing opportunities with global banks.

Board Changes

In recognition of the immediacy and importance of these opportunities the Board has asked Hank Uberoi, currently CEO of the Company, to take direct responsibility for developing wider strategic, commercial and investment initiatives and partnerships. With effect from 1st January 2018, Hank will become Executive Chairman of the Company and the Board has initiated a search for a new CEO. Phil Hickman, currently Non-Executive Chairman of the Board, has agreed to act as interim CEO.

Mr. Hickman spent over 32 years as a banker with HSBC, and has experience across many commercial activities including Managing Director of Transaction Services for Europe. Phil was also the CEO for iPSL, a joint venture between Unisys, Barclays, Lloyds and HSBC, set up to process cheque and credit clearings of 13 million items per day and accounting for 70% of the UK market.

Hank Uberoi, CEO of Earthport, commented: “We are in a fast changing environment for cross border payments and many of the trends we have identified are now accelerating. Earthport is in an excellent market position and commands significant assets to take advantage of the growing opportunities but scale will be an important factor going forward. We have identified emerging partnership opportunities and I expect the next period of time will be both exciting and challenging, given our ambitions and the pace of change within the payments sector.”

Phil Hickman, Non-Exec Chairman of Earthport, stated: “Despite a temporary setback in revenue growth rates, impacting full year 2018 revenue expectations, Earthport’s pipeline and brand profile has never been better. The market is increasingly open to alternative solutions to correspondent banking and, as a leader in this field, it is imperative Earthport takes advantage of the many strategic opportunities presented by the current environment.

“As Hank focuses his full attention on pursuing these opportunities, I look forward to utilising my experience in guiding the Company. The Board will provide an update on our search for a new CEO in due course.”