GSTechnologies Limited (LON: GST), the fintech and information technology solutions company, has announced the Company’s audited results for the year ended 31 March 2022.
Period Highlights
· Focus on the Company’s expansion into blockchain-related technologies, specifically its plans to launch a borderless neobanking platform providing next-generation digital money solutions
· Collaboration agreement signed with Wise MPay to provide the Company with software and services to facilitate the Company’s fintech plans
· Completion of the acquisition of Angra Limited, a UK-based foreign exchange and payment services company
· Entering into a legally binding sale and purchase agreement to acquire the whole of the issued share capital of UAB Glindala, a holder of a Crypto Currency Exchange Licence registered in Lithuania
· Appointment of Jack Bai as CEO, Shayne Tan as COO and Galvin Bai as an Executive Director
· Three equity fund raises, each at incrementally higher prices, providing gross proceeds of £3.74 million to fund the Group’s fintech expansion plans
Post Period Highlights
· On 17 July 2022 the Company entered into a binding agreement to sell EMS Wiring Systems
· Significant further progress in implementing the Group’s stated strategy to roll-out a suite of offerings under its GS Money banner
CHAIRMAN’S STATEMENT
During the year, the primary focus of the Group was on developing the ‘GS Fintech’ subsidiaries in the UK and Singapore, established just before the start of the financial year. This involves the Company’s expansion into blockchain-related technologies, specifically its plans to launch a borderless neobanking platform providing next-generation digital money solutions. This expansion was undertaken whilst still retaining sufficient focus on our EMS Wiring Systems Pte Ltd (“EMS Wiring Systems”) business as it recovered from the worst of the Covid-19 pandemic.
GS Fintech
In May 2021 the Company entered into a collaboration agreement with Wise MPay Pte, Ltd (“Wise MPay”), the Singaporean blockchain payment solution provider, with a view to Wise MPay providing the Company with software and services to facilitate the Company’s fintech plans. Under the agreement, Wise MPay is supplying the Company with a number of standard and bespoke software packages which include, inter alia, software to enable the Company to establish a remittance portal (GSend), an eWallet app (GS Money), Know Your Client (KYC) administration and an encryption engine. These software packages being supplied by Wise MPay are being integrated on the Company’s cloud server, together with software supplied by the Company and third-party payment gateway packages.
Additionally, Wise MPay supplied during the year four enterprise blockchain consensus nodes that came with 25 million stake tokens each, based on the Coalculus blockchain platform, to enable transaction validation on the Coalculus network for transactions undertaken by GST’s proposed customers in US dollars, Euros, Sterling and Chinese Yuan. On 30 November 2021, we reported that we had successfully tested all four of the enterprise chains provided by Wise MPay, together with implementing a mainnet upgrade on the Coalculus platform, provided by Wise MPay. This marked the launch of the GS Money protocol. This was followed on 17 December 2021 by GST receiving 100 million COAL tokens from Wise MPay and the enabling of the COAL token staking capability on four full nodes managed by the Company. The web remittance portal and complex blockchain e-wallet application is currently under development in conjunction with Wise MPay.
The four digital currencies are strictly pegged to the US Dollar, the Pound, the Euro and the Yuan which has allowed GST to carry out transactions through blockchain ledgers, which can be used in place of wire transfers that generally take several days to complete. The four enterprise chains work alongside one another to form a decentralised and highly efficient multicurrency cross border payment system for digital transactions that utilise the Coalculus blockchain ledger technology. Additionally, each enterprise chain’s total supply will allow GST to issue up to 10 billion digital currency units.
The future roll-out of GS Money is intended to be focused on three initial use-cases: international money transfers, borderless accounts and private stablecoins. GS Money will initially be used in restricted cross-border payment testing before being gradually expanded to include commercial activities. Ultimately it is intended that GS Money will also be focused on private stablecoin. The objective is to establish public trust, maintain stability, and enable claims backed by reserves. By establishing a private stablecoin ecosystem, GST intends to encourage market players to allow transactions to settle in GS Money digital currencies, as well as be integrated into various other payment services. The Company is aware of the regulatory treatment of GS Money’s stablecoins and is exploring the possibility of providing the proposed services in strategic jurisdictions, including the UK.
On 7 March 2022, just before the period end, we were delighted to complete the acquisition of Angra Limited (“Angra”), a UK-based foreign exchange and payment services company. This followed the UK Financial Conduct Authority (“FCA”) approval for the change of control of Angra.
Angra, which operates under the AngraFX brand name, is an established FCA approved Authorised Payment Institution (“API”), conducting fast, secure and low-cost foreign exchange business and payment services internationally. We intend to utilise Angra as the basis on which to build the UK arm of the Group’s planned blockchain-enabled neobanking business. Since the completion of the acquisition Angra has been successfully integrated within the Group and is trading in line with the GST Board’s expectations.
To further enhance the Group’s neobanking offerings, the Company announced on 20 January 2022 that it had entered into a legally binding sale and purchase agreement to acquire the whole of the issued share capital of UAB Glindala (“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 completion of the acquisition is subject only to the approval of the FCIS. The Company understands that approval will be granted shortly upon the completion of certain administrative matters by the Lithuanian authorities. The Company believes the exchange will be a significant enabler for its GS Money stablecoin business, forming the third pillar for GS Money, and will integrate well with Angra and its other activities.
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 and this progress has continued at a rapid pace post period end.
EMS Wiring Systems
Following the unprecedented events in the previous financial year with the onset of the Covid-19 pandemic, 2021/22 was a year of gradual recovery for our EMS Wiring Systems business as the worst of the pandemic receded. EMS Wiring Systems remained a predominantly Singapore focused business providing wireless, electronic cabling, security, and other solutions to clients operating in the infrastructure development space. Whilst its revenue for the year recovered to US$4.19 million (2021: US$2.83 million), it continued to be loss making and made a net loss of US$0.56 million (2021: net loss of US$0.13 million, after receiving US$0.58 million of Covid-19 related financial assistance from the Singapore Government).
Post period end on 18 July 2022 the Company announced that on 17 July 2022, it had entered into a binding agreement to sell EMS Wiring Systems, to Teo Chiah Chiu Raphael (“Raphael Teo”), the Chairman of EMS. The consideration payable by Raphael Teo for the entire issued share capital of EMS Wiring Systems, which is currently held by the Company, will be the transfer to the Company, by way of a share buyback, of 60,000,000 ordinary shares in GST held by him. The Company intends to hold the consideration shares in treasury for future issue or cancellation in due course. Completion of the disposal is conditional, inter alia, on completion of the buyback of the consideration shares, and the Company and EMS Wiring Systems entering into a deed of agreement to waive all outstanding liabilities between the Company and EMS Wiring Systems.
We look forward to completing the disposal shortly, which is in line with our strategy to concentrate on our blockchain enabled neobanking activities. In particular, it removes a lossmaking subsidiary from the Group, that is not part of our future plans, and will enable us to focus all our resources on accelerating the roll out of our suite of GS Money offerings.
Fund Raising
During the year the GSTechnologies undertook three fund raises, each pleasingly at incrementally higher prices to fund its fintech expansion plans: on 6 September 2021 the Company raised gross proceeds of £1.41 million through a placing of 141,500,000 ordinary shares at a price of 1.0p per share; on 19 November
2021, with a placing of 50,000,000 ordinary shares at a price of 2.0p per share, the Company raised gross proceeds of £1.00 million; and on 11 January 2022 a placing and subscription raised gross proceeds of £1.33 million through the issue of 63,576,190 ordinary shares at a price of 2.1p per share.
Management Changes
In October 2021 we were delighted to announce that Mr Bai GuoJin (“Jack Bai”), an existing Executive Director, was appointed as the Company’s new Chief Executive Officer. Jack Bai, who joined the GST board in January 2021, has over 30 years’ experience in software development for the financial and telecommunication industries. He is a successful technology entrepreneur, who has successfully built and exited multiple companies, including in fintech and payment solutions. He is a co-founder of Wise MPay, the Company’s collaboration partner, and leads the development of the Coalculus blockchain technology. He is leading the Group’s blockchain technology activities and its plans to launch a borderless neobanking platform providing next-generation digital money solutions.
Later in October 2021, we were also delighted to announce that Mr. Tan Guan Han, Shayne (“Shayne Tan”), an existing Executive Director, was appointed as the Company’s new Chief Operating Officer. Shayne Tan, who joined the GST board in January 2021, holds a Bachelor of Business Management Degree from Singapore Management University and has more than five years of sales, operations, and management experience in growth-stage companies operating exclusively within the blockchain and cryptocurrency sector. He is, alongside Jack Bai, a co-founder of the Coalculus blockchain platform.
The Company’s board was further strengthened from 1 March 2022 with the appointment of Mr Bai Zhencong (“Galvin Bai”) as an Executive Director of the Company. Galvin Bai has over 15 years’ experience in a variety of business development and process implementation roles, including at All Best Enterprise Pte Ltd, the Singapore based regulated money transfer and exchange company. Galvin has considerable experience of the workflows and processes involved in payment and remittance businesses, including the implementation of Know Your Client (“KYC”) and Anti-Money Laundering (“AML”) processes. Galvin has a degree in Manufacturing Engineering from Boston University in the USA.
Summary
The year to 31 March 2022 was a pivotal one for the Company and one in which we made great progress in implementing our strategy to drive forward our GS Fintech plans. With the signing of the collaboration agreement with Wise Mpay we have been able to access the required knowledge and resources to build a world-class blockchain-enabled neobanking platform. The acquisition of Angra, completed just before the end of the financial year, has added an established UK platform for our activities and coupled with the anticipated completion of the acquisition of Glindala shortly we believe we are very well positioned for the next stage of our development with the role out of our GS Money offerings commercially.
In closing I would like to take the opportunity to thank all our staff for their outstanding commitment and hard work during the year, and our shareholders for their continuing support. GST has come a long way in a very short period of time and I believe we are very well positioned to roll out our borderless neobanking platform. Following the completion of the disposal of EMS Wiring Systems the Group will be able to focus all its resources on developing its blockchain enabled neobanking activities and it will be a ‘pure play’ fintech group. I look forward to the remainder of 2022 and beyond with confidence.
Tone Kay Kim GOH
Chairman
FINANCIAL REVIEW
The Group’s financial statements include a full 12-month contribution from EMS Wiring Systems and Angra has been consolidated from 7 March 2022.
Income Analysis
For the 12-months ended 31 March 2022 the Company had operating revenue of US$4.24 million (2021: US$2.83 million). The Group’s operating loss before tax for the financial year is US$1.43 million, compared to the operating loss incurred in previous financial year of US$0.50 million. In addition, the Group received grants and other income during the year of US$0.24 million (2021: US$0.58 million), leading to total income recognised in the year of US$4.47 million (2021: US$3.41 million).
Angra for the period from 7 March to 31 March 2022 had US$10.28 million in transaction volume, which contributed US$0.05 million in revenue to the Group. EMS Wiring Systems, despite slowly recovering sales to record US$4.19 million for the year (2021: US$2.83 million), remained loss making due to margin pressures, bad debts and the requirement for continued research and development.
Balance Sheet Analysis
Net assets as at 31 March 2022 amounted to US$6.01 million (2021: US$1.82 million).
As at 31 March 2022, the Group had available cash of US$5.10 million, an increase of US$3.36 million from the preceding financial year (2021: US$1.74 million) due to new share issuance proceeds during the year.
The Directors believe that GSTechnologies 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.
