GSTechnologies Limited (LSE: GST), the fintech company, announces the Company's interim results for the six months ended 30 September 2023.
Further significant progress for the Group as it focused on developing a borderless neobanking platform providing next-generation digital money solutions, both organically and through complementary acquisitions
Completion of the acquisition of PAYPT, a Canadian company holding a Canadian Money Services Business licence, in August 2023
Establishment of Angra Global, following the acquisition of PAYPT, which began onboarding customers from 1 September 2023
The soft launch of the Company's GS20 Exchange was successfully completed and a wider roll-out was commenced
Company admitted to the UK Financial Conduct Authority ("FCA") Innovation Pathway Programme to assist the progression of its GS Money Stablecoin plans
Placing to raise £750,000 in May 2023 at 1.0 pence per share
Net loss for the period of US$737,000 (H1 2022: US$1,153,000 loss) as the Company continued to invest in developing its GS Money solutions, both organically and through acquisition
As of 30 September 2023, the Company had US$2,198,000 in cash and cash equivalents (30 September 2022: US$3,334,000)
Post Period Highlights
On 29 November 2023, the Company entered into an option to purchase agreement to acquire 60% of the share capital of EasySend, an FCA approved Authorised Payment Institution conducting cross-border payment services
On 6 December 2023 the Company entered into an agreement to acquire 66.67% of the issued share capital of Semnet, a profitable cybersecurity company based in Singapore, for a total consideration of US$1.8 million, payable through US$0.8 million in cash and US$1.0 million in new shares in the Company
Placing to raise £847,000 in November 2023 at 1.1 pence per share
I'm pleased to present on behalf of the board of directors of GST (the "Board") the interim report of the Company for the six months ended 30 September 2023.
The period was again one of significant progress for the Group as it focused on developing a borderless neobanking platform providing next-generation digital money solutions, both organically and through complementary acquisitions. This is being undertaken under the Company's GS Money banner, primarily through the Group's Angra Global and GS20 Exchange businesses.
In particular, the period saw the establishment of Angra Global Ltd ("Angra Global") following the completion of the acquisition of the entire issued share capital of PAYPT Finance Ltd ("PAYPT"), a Canadian company holding a Canadian Money Services Business ("MSB") licence. Completion of the acquisition, and its renaming to Angra Global, followed the receipt of approval from the Financial Transactions and Reports Analysis Centre of Canada ("FINTRAC"), the regulatory authority overseeing financial transactions in Canada, for the change of control. The MSB licence held by PAYPT encompasses a range of financial activities, including: foreign exchange dealing; cryptoasset dealing; money transfer services; and authorisations for the issuance of debit cards and IBANs.
Angra Global has been combined operationally with the Group's existing UK-based foreign exchange and payment services company, Angra Limited ("Angra"), an FCA approved Authorised Payment Institution ("API"), as part of the Group's strategic intention for the combined Angra entities to be a B2B-focused Neobank. The Group now offers a multi-currency e-wallet service, initially covering Sterling, Euro, US Dollar, Canadian Dollar, Chinese Yuan Renminbi and US Dollar Tether Token transactions. Angra Global started onboarding customers for this service from 1 September 2023 and it enables Angra customers to securely store their funds within Angra Global business accounts and facilitate seamless foreign exchange conversions and fund transfers through Angra's established and reliable banking partnerships, akin to a conventional business bank account, utilising technology developed by the Group's subsidiary in Singapore, GS Fintech Pte Ltd. Additionally, the MSB licence enables Angra to issue Sterling local accounts and Euro SEPA IBAN accounts to its clients, thereby providing a comprehensive one-stop business banking solution.
Aligned with its overarching strategy, the Group is focused on accelerating Angra's revenue while simultaneously bolstering the Angra team to expand its B2B Neobank operations beyond the UK, serving companies of all sizes worldwide. As part of this expansion strategy, post period end on 29 November 2023, the Company entered into an option to purchase agreement to acquire 60% of the share capital of EasySend Ltd ("EasySend"), a Northern Ireland incorporated company operating a cross-border payments business. EasySend is a an FCA approved API, conducting cross-border payment services.
EasySend has a current estimated yearly transaction volume of approximately £120 million, with 35% coming from approximately 40,000 individual customers and 65% from approximately 350 active corporate customers. We believe the acquisition of a majority stake in EasySend will assist with growing the customer base for the Company's existing GS Money activities, in particular Angra Global, and provide access to additional technology, including EasySend's mobile terminal technology. It is intended that EasySend's founder and management team will remain with the business and that the 40% minority holding will be retained by EasySend's founder. Completion of the acquisition of EasySend is conditional, inter alia, on final due diligence, the entering into of definitive sale and purchase documentation and also on GST obtaining approval from the FCA for the change of control of EasySend, a regulated entity.
Post period end on 6 December 2023 we also announced that the Company had entered into an agreement to acquire 66.67% of the issued share capital of Semnet Pte Ltd ("Semnet"), a cybersecurity company based in Singapore, for a total consideration of US$1.8 million, payable through US$0.8 million in cash and US$1.0 million in new shares in the Company.
Semnet is a profitable cybersecurity business that will provide the Company with expertise and licences that the Board believe are a critical component to the advancement of the Company's GS Money and B2B Neobanking operations. Cybersecurity is of particular importance to the Company's developing global Neobank ecosystem. With Angra Global having started onboarding customers on 1 September 2023, Semnet's cybersecurity expertise will enable the Company to build a dedicated cybersecurity team to support client onboarding and its operational activities, including the wider provision of white-label software solutions to global money service businesses. In addition, Semnet will continue to support and grow its client base in other sectors, providing an additional profitable revenue stream for the Group. Semnet is licensed by the Cyber Security Regulatory Office (CRSO) in Singapore. Completion of the Semnet acquisition is subject, inter alia, to the agreement of a completion assets statement, which may require adjustment of the consideration upwards or downwards, and no material adverse change having occurred in the Semnet business. Completion is expected to occur in early February 2024, or earlier as may be agreed between the parties.
Following the acquisition of Glindala (now GS Fintech UAB), a holder of a Crypto Currency Exchange Licence registered in Lithuania, in August 2022, GST soft launched the Company's GS20 cryptoasset exchange in November 2022. The GS20 Exchange is offering spot trading and over-the-counter trading desk services for popular cryptoassets, although it is not a pure cryptocurrency exchange. The soft launch has been successfully completed and the development of the GS20 Exchange has progressed in accordance with the Board's expectations, with a wider roll-out now being undertaken. There has been a progressive build-up of signed-up users, and the Company are greatly encouraged by the market traction the GS20 Exchange is enjoying. The GS20 Exchange is generating revenue for the Company via trading commissions at varying levels depending on the type and size of transaction undertaken.
As a further key pillar of the stablecoin activities that the Group intends to carry out in strategic jurisdictions, including the UK, the Company applied to the FCA for the Company's stablecoins to be admitted to the FCA Regulatory Sandbox. In June 2023, the Company was informed by the FCA that they had concluded that the Company's stablecoin application did not currently meet the FCA's strict criteria for admission to the FCA Regulatory Sandbox. As an alternative the FCA offered the Company a place on their Innovations Pathway programme, an initiative designed to support financial services firms in launching innovative products and services, which the Company was pleased to accept. Under the FCA Innovation Pathway programme, the Company is being provided with a dedicated FCA case officer and a comprehensive range of support services, designed to assist GST to further develop the appropriate path for the progression of its stablecoin plans. This may involve a future Regulatory Sandbox application or preparation for regulatory authorisation without the need for supervised testing. Although the Company initially viewed admission of its stablecoins to the FCA Regulatory Sandbox as an appropriate next step, the Innovations Pathway programme is enabling GST to benefit further from the guidance of the FCA and progress its stablecoin plans.
On 15 June 2023 Chong Loong Fatt Garies, Non-executive Director, resigned from the Board in order to focus on his other business endeavours. On behalf of the Board I would like to thank Garies for his contribution to GST and we wish him well in his future endeavours.
In order to accelerate the implementation of the Group's GS Money strategy, including via acquisition, the Company has undertaken fundraising activities as the Board has deemed appropriate to facilitate the maximisation of overall shareholder value.
During the previous year the Company entered into an unsecured convertible loan facility to receive funding of up to US$1.6 million (the "Loan Facility") with an institutional investor. US$800,000 of the Loan Facility was drawn down. The Loan Facility was cancelled on 29 March 2023, with the second instalment of US$800,000 undrawn. On 4 April 2023 the remaining US$285,000 principal amount of the Loan Facility and the associated interest of US$28,500 (10%), was converted into new ordinary shares of no-par value in the capital of the Company ("Ordinary Shares"). Following this conversion no principal amount or associated interest remains outstanding under the Loan Facility.
On 17 May 2023 the Company has raised gross proceeds of £750,000 through a placing of 75,000,000 Ordinary Shares at a price of 1.0 pence per share.
Post period end, on 14 November 2023, the Company raised gross proceeds of £847,000 through a placing of 77,000,000 Ordinary Shares at a price of 1.10 pence per share.
The Board is mindful of dilution for existing shareholders, and the Company will only undertake further fundraising activities if the Board believes additional capital is required to achieve the Company's strategic goals.
Following the completion of the disposal of EMS Wiring Systems in October 2022 the Group's revenue for the period from operations of US$256,000 (H1 2022 US$1,799,000) was purely generated from the Company's GS Money activities, primarily Angra Limited in the UK during the period. Revenues were limited whilst the GS Money offerings were rolled out and the Board anticipates revenues to grow in the second half of the financial year.
With a strong focus on cost control the Group's net loss for the period reduced to US$737,000 (H1 2022: US$1,153,000 loss) as the Company continued to invest in developing its GS Money solutions, both organically and through acquisition.
The Group had US$2,198,000 in cash and cash equivalents as at 30 September 2023 (30 September 2022: US$3,334,000), with the cash resources bolstered by the net proceeds of the £847,000 (approximately US$1,100,000) equity fund raise undertaken in November 2023.
Our stated strategy with GS Money is to make cross-border payments quick and affordable to an addressable market of millions of participants by netting and settling trades through a stablecoin-based payments network. With the formation of Angra Global, the Group has both an FCA approved API and a Canadian MSB licence to enable the Group to conduct fast, secure, and low-cost foreign exchange business and payment services internationally, together with the ability to offer further services. Additionally, with the GS20 Exchange we have a regulated, operational, trading platform offering spot trading and over-the-counter trading desk services for popular cryptoassets, although it is much more than a pure cryptocurrency exchange, providing the clearing and settlement needs of both retail and institutional customers with high compliance and security standards.
In the second half of the financial year we are looking to grow revenues substantially from these businesses and to complete the two acquisitions that will both add additional customers and capabilities to the Group.
With the Angra Global and GS20 Exchange platforms in place, the FCA stablecoin plans being progressed, and two recently announced complimentary acquisitions to complete, these are exciting times for GST. We are a focused, 'pure play' fintech group with solid platforms on which build and to continue to role out our GS Money solutions. We will also continue to explore any further value enhancing acquisition opportunities that may become available and that can assist with accelerating the development of the Group.
I believe there is a very bright future for GST and I look forward to reporting on our further progress in the coming months.
Tone Kay Kim GOH Chairman
Download full set Interim Results here:
Tone Goh, Executive Chairman
+61 8 6189 8531
VSA Capital Limited
+44 (0)20 3005 5000
Simon Barton / Thomas Jackson
+44 (0)20 3003 8632
Financial PR & Investor Relations
IFC Advisory Limited
Tim Metcalfe / Graham Herring / Florence Chandler
+44 20 (0) 3934 6630