GSTechnologies Ltd
Interim Results
Half-Year ended
30 September 2022
Interim Results for the six months ended 30 September 2022
GSTechnologies Limited (LSE: GST), the fintech company, announces the Company's interim results for the six months ended 30 September 2022.
Period Highlights
- First full reporting period following the completion of the acquisition of Angra Limited ("Angra") in February 2022, a UK-basedforeign exchange and payment services company. During the period, Angra traded profitably, in line with the Board's expectations
- Completion of the acquisition of UAB Glindala ("Glindala"), a holder of a Crypto Currency Exchange Licence registered in Lithuania, in August 2022
- Agreement entered into to dispose of EMS Wiring Systems Pte Ltd ("EMS"), a non- core loss-making business, to a member of its management team
- GS Money Stablecoin Regulatory Sandbox application process commenced
- Net loss for the period of US$1,153,000 (H1 2021: US$1,094,000 loss) as EMS continued to underperform and the Company invested in developing its GS Money solutions
- As of 30 September 2022, the Company had US$3,334,000 in cash and cash equivalents (30 September 2021: US$2,749,000)
Post Period Highlights
- Group's transition to focus purely on next-generation digital money solutions achieved with the completion of the disposal of EMS, just after the period end, on 5 October 2022
- GS20 Exchange soft launched in November 2022
Chairman's Statement
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 2022.
Board of Directors
Tone Goh, Executive Chairman
Jack Bai, Executive Director/CEO
Shayne Tan, Executive Director/COO
Galvin Bai, Executive Director
Malcom Groat, Non-Executive Director
Garies Chong, Non-Executive Director
The period was again one of significant progress for the Group as it focused on the Company's plans to launch a borderless neobanking platform providing next-generation digital money solutions. In particular, the agreement to dispose of EMS, completed just after the period end, will enable the Group to focus solely on its stated strategy as a 'pure play' fintech group and has removed a non-core loss making business from the Group.
EMS, based in Singapore, provides wireless, electronic cabling, security, and other solutions to clients operating in the infrastructure development space. In the period 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. The binding agreement entered into on 17 July 2022 has subsequently seen EMS 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 of no par value in GST 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. The Company intends to hold the Consideration Shares in treasury for future issue or cancellation in due course.
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 period 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, announced on 8 March 2022, Angra has been successfully integrated within the Group and was a consolidated subsidiary throughout the period.
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 period Angra traded profitably, 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. The Company believes the exchange will be a significant enabler for its GS Money stablecoin business and will integrate well with Angra.
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. Post period end, on 16 November 2022, the Company was pleased to announce the soft launch of its cryptoasset exchange, the GS20 Exchange. Glindala was also 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 cryptoasset exchange, based in Lithuania, will focus on offering spot trading and over-the-counter trading desk services for popular cryptoassets, such as Bitcoin, Ethereum and USDT, and other regulated stablecoins, to a controlled group of retail account holders, as well as a select number of institutional participants, including existing customers of Angra. The GS20 Exchange is not a pure cryptocurrency exchange, so users can expect to 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. During the soft launch period, participants have full access to the GS20 Exchange, serving as its first official users.
Those accepted by GS20 Exchange to take part in its soft launch and commence trading on the platform are required to give feedback on their experience using the exchange. This feedback is already providing substantive data which is allowing the GST team to better assess users' needs for the development of the finalised user experience of the GS20 cryptoasset exchange.
As a further key pillar of the stablecoin activities that the Group intends to carry out in strategic jurisdictions, including the UK, the Company appointed Pinsent Masons LLP as its legal advisor to assist with the Company's stablecoin application for admission to the FCA Regulatory Sandbox. Founded on the precept that innovation and technology can benefit