GSTechnologies Limited (LSE: GST), the fintech company, is pleased to announce the Company's audited results for the year ended 31 March 2023.
The Company's Annual Report for the financial year ending 31 March 2023 will shortly be available on the Company's website at https://www.gstechnologies.co.uk/annual-reports.
Highlights
First full year reporting period following the completion of the acquisition of Angra Limited ("Angra") in February 2022, a UK-based foreign exchange and payment services company
Completion of the acquisition of UAB Glindala ("Glindala"), a holder of a Crypto Currency Exchange Licence registered in Lithuania, in August 2022
Completion of the disposal of EMS Wiring Systems Pte Ltd ("EMS"), a non-core loss-making business, to a member of its management team, in September 2022
GS20 Exchange soft launch
Net loss for the year of US$1,628,000 (2022: US$1,430,000 loss) as loss making EMS consolidated until completion of its disposal and the Company continued to invest in developing its GS Money solutions
As of 31 March 2023, the Company had US$4,252,000 in cash and cash equivalents (31 March 2022: US$5,104,000)
Post Period Highlights
Company admitted to UK Financial Conduct Authority ("FCA") Innovation Pathway Programme to assist the progression of its GS Money Stablecoin plans
Company entered into a legally binding sale and purchase agreement on 20 July 2023 to acquire the entire issued share capital of PAYPT Finance Ltd ("PAYPT"), a Canadian company holding a Canadian Money Services Business ("MSB") licence. The acquisition is subject to approval by the Financial Transactions and Reports Analysis Centre of Canada ("FINTRAC"), the regulatory authority overseeing financial transactions in Canada.
CHAIRMAN'S STATEMENT
During the year GST made further significant progress as the Company focused on its plans to launch a borderless neobanking platform providing next-generation digital money solutions. In particular, the disposal of EMS, completed in September 2022, has removed a loss-making business from the Group and has transformed GST to be a 'pure play' fintech group.
GS Fintech
The primary focus for the Group has, since early 2021, been on the 'GS Fintech' subsidiaries in the UK and Singapore and the Company's expansion into blockchain related technologies applied to the financial services sector, specifically its plans to launch a borderless neobanking platform providing next-generation digital money solutions. During the year the Company has made significant progress in implementing its stated strategy to roll-out a suite of offerings under its GS Money banner based on three initial use-cases: international money transfers, borderless accounts, and private stablecoin.
Following the completion of the acquisition of Angra, a UK-based foreign exchange and payment services company, in March 2022, Angra has been successfully integrated within the Group and was a consolidated subsidiary throughout the year.
Angra, which operates under the AngraFX brand name, is an established Financial Conduct Authority ("FCA") approved Authorised Payment Institution ("API"), conducting fast, secure, and low-cost foreign exchange business and payment services internationally, the first pillar of GS Money. Angra has provided the Group with an operating business in the UK and an API licence in order to be able to connect to traditional banking payment systems and agent networks, operate a remittance business in the UK and ultimately grow revenues from the stablecoin network and applications that are being developed. During the first full year as part of the Group, Angra performed well and in line with the Board's expectations.
On 24 August 2022, the Company completed the acquisition of Glindala, a holder of a Crypto Currency Exchange Licence, registered in Lithuania. Glindala's Crypto Currency Exchange Licence is supervised by the Lithuanian Financial Crime Investigation Service ("FCIS") and it covers two types of crypto activities, cryptoasset exchange services, both crypto-fiat and crypto-crypto, and cryptoasset depository wallet services, including generating and storing encrypted client keys.
Following the acquisition of Glindala, GST entered into an agreement with an exchange infrastructure technology partner to provide the technology and software to run the exchange and integrate it with the Company's other offerings. This led to the soft launch of the Company's GS20 cryptoasset exchange in November 2022. Glindala has also been renamed to GS Fintech UAB, trading as the GS20 Exchange. GS Fintech UAB is being led by Shayne Tan, the Company's COO, who has been appointed as the CEO of the GS20 Exchange.
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, so users will see greater technology integration with regulated stablecoins as well as the introduction of more convenient onramp and offramp services for those stablecoins in due course. The GS20 Exchange has initially been open to a controlled group of retail account holders, as well as a select number of institutional participants, including existing customers of Angra. The soft launch period has progressed in accordance with the Company's plans and valuable feedback has been received from the initial participants. Development of the GS20 cryptoasset exchange continues, utilising the substantive data provided during the soft launch period and the Company anticipates a wider rollout of the GS20 exchange in the second half of 2023.
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. Post period end, as announced on 30 June 2023, the Company was informed by the FCA that they had concluded that the Company's stablecoin application for admission to the FCA Regulatory Sandbox does 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 has accepted. Under the FCA Innovation Pathway programme, the Company will be provided with a dedicated FCA case officer, with 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 will enable GST to benefit further from the guidance of the FCA and progress its stablecoin plans.
After the year end, on 20 July 2023, the Company entered into a legally binding sale and purchase agreement to acquire the entire issued share capital of PAYPT Finance Ltd ("PAYPT"), a Canadian company holding a Canadian Money Services Business ("MSB") licence. The acquisition is subject to approval by the Financial Transactions and Reports Analysis Centre of Canada ("FINTRAC"), the regulatory authority overseeing financial transactions in Canada.
The MSB license held by PAYPT encompasses a range of financial activities, including: foreign exchange dealing; cryptoasset dealing; money transfer services; and authorizations for the issuance of debit cards and IBANs. Subject to FINTRAC's approval of the change of control, the Group plans to rename PAYPT to Angra Global Ltd ("Angra Global"), signifying the Group's strategic intention for Angra's transformation into a B2B-focused Neobank.
Assuming the successful completion of the Acquisition, following the change of control process, Angra Global would be combined with the Group's existing UK-based foreign exchange and payment services company, Angra, paving the way for the Group to launch a multi-currency e-wallet service. This service will enable 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.
Additionally, the MSB licence would enable 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 aims to accelerate Angra's revenue while simultaneously bolstering the Angra team to expand its B2B Neobank operations beyond the UK, serving companies of all sizes worldwide.
EMS
EMS, based in Singapore, provides wireless, electronic cabling, security, and other solutions to clients operating in the infrastructure development space. In the period before the completion of the disposal of EMS on 30 September 2022, when it was consolidated in the Group, it saw revenues decline and it continued to be loss making, as a limited number of new contracts were won and trading conditions remained difficult. EMS was disposed of to Teo Chiah Chiu Raphael ("Raphael Teo"), the Chairman of EMS. The consideration paid was the transfer to the Company, by way of a share buyback, 60,000,000 Ordinary Shares held by him (the "Consideration Shares"). At the closing mid-price of 1.09p of the Company's shares on 15 July 2022, the Consideration Shares were valued at £654,000 and they represented approximately 3.87 per cent. of the Company's issued share capital.
Fund Raising
During the 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 and was all subsequently converted into new Ordinary Shares in the Company. The Loan Facility was cancelled on 29 March 2023, with the second instalment of US$800,000 undrawn.
Post period end on 17 May 2023, the Company raised gross proceeds of £750,000 through a placing of 75,000,000 shares at a price of 1.0 pence per share.
Climate Change
The Board is, in addition to committing to a borderless neobanking platform providing next-generation digital money solutions, committed to setting strategic directions that are relevant to the management of carbon emissions.
Our management of carbon emissions starts with lowering our workplace carbon footprint by:
1) Measuring our office carbon footprint, reviewing our utility bills and travel information during our financial year; and
2) Encouraging the GST team to support recycling by installing "recycling stations" in the office.
We are also planning to reduce our carbon footprint by improving office lighting using LED bulbs instead of fluorescent technology.
As the Company expands its business activities, GST will consider the impact and risks its activities have on the climate and vice versa.
GST's energy consumption and carbon emissions were mainly based on electricity consumed per meter supplied by the municipality. Further, we have also included our business travel, which includes long-haul flights, vehicle rental and rail-travel. For the intensity ratio, we use revenue as a quantifiable factor as revenue will naturally drive increases or decreases in our energy consumption and emissions.
We follow the guidance and use the GHG emission conversion factors provided by the GHG Protocol.
Name of Subsidiary Measurement Intensity Ratio
Energy consumption 48,772 kWh 0.0215 kWh per dollar revenue
CO2 gas emissions 325.90 tonnes CO2 0.0001 tonnes CO2 per dollar revenue
Excluding EMS Wiring Systems Pte Ltd, which was disposed of on 30 September 2022, the total energy consumption and emissions is 1,383 kWh and 5.1 tonnes of CO2 respectively, and the intensity ratio is 0.0031 kWh per dollar of revenue and 0.0000 tonnes of CO2 per dollar of revenue respectively.
Board and People
I would like to take this opportunity to thank all of the GST Board and team for their hard work and dedication throughout the year.
Post the year end, in June 2023, Chong Loong Fatt Garies ("Garies Chong"), a Non-executive Director of the Company, resigned from the Board in order to focus on his other business interests. I would like to thank Garies for his contribution to GST and we wish him well for the future.
Summary
Following the disposal of EMS, GST is now a focused, 'pure play', fintech group with a solid operational platform on which to build and continue to role out our GS Money solutions. We also enjoy a healthy balance sheet to fund our continued expansion.
GS Money is intended to make cross-border payments quick and affordable to an addressable market of millions of participants by netting and settling trades through its stablecoin-based payments network. With Angra the Group has a fully operational, FCA approved API conducting fast, secure, and low-cost foreign exchange business and payment services internationally, and the first pillar of GS Money in place.
Unlocking the demand for a large user base also requires a platform that can meet the clearing and settlement needs of both retail and institutional customers, with high compliance and security standards. The GS Exchange provides such a platform that is designed offer users greater technology integration with regulated stablecoins as well as the introduction of more convenient onramp and offramp services for those stablecoins in due course, the second pillar of GS Money.
With the Angra and GS20 Exchange platforms in place and properly integrated, ongoing discussions with the FCA regarding the Company's UK stablecoin plans, and further progress being made on the development of the Company's GS Money solutions, coupled with the disposal of EMS, GST has come a long way in a short period of time.
Additionally, the recently announced proposed acquisition of PAYPT, which is only subject to FINTRAC's approval of the change of control, will pave the way for the Group to launch a multi-currency e-wallet service and enable Angra to issue Sterling local accounts and Euro SEPA IBAN accounts to its clients, thereby providing a comprehensive one-stop business banking solution.
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.
Whilst we will continue to invest in developing the Group's stablecoin-based cross-border payments network, with a firm focus on minimising costs, the disposal of EMS has removed a significant drag on our finances. I therefore 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
FINANCIAL REVIEW
The Group's financial statements include a full 12-month contribution from Angra and EMS for the period from 1 April 2022 to 30 September 2022.
Income Analysis
Despite the contribution from Angra, the continued poor performance of EMS and its disposal during the year resulted in a decrease in revenue for the 12-months ended 31 March 2023 to US$2.27 million (2022: US$4.24 million). The Group's operating loss before tax for the financial year is US$1.61 million, compared to the operating loss incurred in previous financial year of US$1.43 million. In addition, the Group received grants and other income during the year of US$0.05 million (2022: US$0.24 million), leading to total income recognised in the year of US$2.32 million (2022: US$4.47 million).
Angra had US$132.87 million in transaction volume during the year, which contributed US$0.43 million in revenue to the Group.
Balance Sheet Analysis
Net assets as at 31 March 2023 amounted to US$3.87 million (31 March 2022: US$6.01 million). As at 31 March 2023, the Group had available cash of US$4.25 million (31 March 2022: US$5.10 million).
The Directors believe that the Group is in a stable financial position and has the financial resources to enable it to expand and grow its current operations and meet all its current liabilities, together with the ability to access further capital should an appropriate need arise.
You may read our full year financial report below:
Enquiries:
The Company
Tone Goh, Executive Chairman
+65 6444 2988
Financial Adviser
VSA Capital Limited
+44 (0)20 3005 5000
Simon Barton / Thomas Jackson
Broker
CMC Markets
+44 (0)20 3003 8632
Douglas Crippen
Financial PR & Investor Relations
IFC Advisory Limited
Tim Metcalfe / Graham Herring / Florence Chandler
+44 20 (0) 3934 6630
gst@investor-focus.co.uk