GINSMS Announces Financial Results For The Three And Twelve Months Ended December 31, 2023 And Provides Financial Forecasts For Year 2024
CALGARY, Alberta, Feb. 13, 2024 (GLOBE NEWSWIRE) -- GINSMS Inc. (TSXV: GOK) ("GINSMS" or the "Corporation") has announced its financial results for the fourth quarter and twelve months ended December 31, 2023.
The annual audited financial statements of the Corporation for the twelve months ended December 31, 2023 are currently under audit and in the process of preparation. As required under Canadian securities law regulations, the Corporation will be disclosing and filing on SEDAR its annual audited financial statements and the related management's discussion and analysis ("MD&A") within 120 days after the end of its year end of December 31, 2023.
This financial disclosure was done in advance of the filing of the audited financial statements of the Corporation to allow GINSMS' ultimate holding company, Beat Holdings Limited ("BHL"), a public company in Japan, to use certain of GINSMS' financial information in the preparation of BHL's financial statements and announcements.
The Corporation's financial information for the twelve months ended December 31, 2023 is prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). All amounts are expressed in Canadian Dollars unless otherwise noted.
Highlights include:
Revenue of $3,188,505 for the twelve-month period ended December 31, 2023 as compared to revenue of $3,024,133 for the twelve-month period ended December 31, 2022.
Revenue of $755,164 for the three-month period ended December 31, 2023 as compared to revenue of $878,346 for the three-month period ended December 31, 2022.
Gross Profit of $1,316,952 for the twelve-month period ended December 31, 2023 as compared to gross profit of $1,161,553 for the twelve-month period ended December 31, 2022.
Gross Profit of $347,799 for the three-month period ended December 31, 2023 as compared to gross profit of $357,697 for the three-month period ended December 31, 2022.
Operating expenses and finance costs of $1,450,602 for the twelve-month period ended December 31, 2023 increased from $1,185,701 for the twelve-month period ended December 31, 2022.
Operating expenses and finance costs of $636,353 for the three-month period ended December 31, 2023 increased from $402,644 for the three-month period ended December 31, 2022.
Net loss of $129,656 for twelve-month period ended December 31, 2023 as compared to a net loss of $32,284 for twelve-month period ended December 31, 2022.
Net loss of $280,939 for three-month period ended December 31, 2023 as compared to a net loss of $20,507 for three-month period ended December 31, 2022.
Selected Profit and Loss Information
Financial Highlights
Three-month period ended December 31, 2023 (Unaudited)
Three-month period ended December 31, 2022 (Unaudited)
Twelve-month period ended December 31, 2023 (Unaudited)
Twelve-month period ended December 31, 2022 (Audited)
Revenues $
A2P Messaging Service
162,229
371,524
986,715
1,428,885
Software Products & Services
592,935
506,822
2,201,790
1,595,248
755,164
878,346
3,188,505
3,024,133
Cost of sales $
A2P Messaging Service
90,242
229,048
661,385
951,718
Software Products & Services
317,123
291,601
1,210,168
910,862
407,365
520,649
1,871,553
1,862,580
Gross profit $
A2P Messaging Service
71,987
142,476
325,330
477,167
Software Products & Services
275,812
215,221
991,622
684,386
347,799
357,697
1,316,952
1,161,553
Gross margin %
A2P Messaging Service
44.4%
38.3%
33.0%
33.4%
Software Products & Services
46.5%
42.5%
45.0%
42.9%
46.1%
40.7%
41.3%
38.4%
Adjusted EBITDA(1)$
(264,350)
(17,987)
(38,624)
75,120
Adjusted EBITDA margin
(35.0)%
(2.0)%
(1.2)%
2.5%
Net loss $
(280,939)
(20,507)
(129,656)
(32,284)
Net loss margin
(37.2)%
(2.3)%
(4.1)%
(1.1)%
Net earnings profit/(loss) per share $
Basic and Diluted (in Canadian cents)
(0.149)
(0.009)
(0.069)
(0.020)
(1) Adjusted EBITDA is a non-IFRS measure which does not have any standardized meaning under IFRS. Adjusted EBITDA is related to cash earnings and is defined for these purposes as earnings before income taxes, depreciation and amortization (in both cost of sales and general and administration expenses), interest expenses and also excludes certain non-recurring or non-cash expenditure and income. This non-IFRS measure is not recognized under IFRS and accordingly, shareholders are cautioned that this measure should not be construed as an alternative to net income determined in accordance with IFRS. The non-IFRS measure presented is unlikely to be comparable to similar measure presented by other issuers. The Corporation believes that Adjusted EBITDA is a meaningful financial metric as it measures cash generated from operations which the Corporation can use to fund working capital requirements, service interest and principal debt repayment and fund future growth initiatives.
Cost of Sales
Three-month period ended December 31, 2023 (Unaudited)
Three-month period ended December 31, 2022 (Unaudited)
Twelve-month period ended December 31, 2023 (Unaudited)
Twelve-month period ended December 31, 2022 (Audited)
Depreciation - Property, plant and equipment
11,340
7,693
40,610
26,754
Salaries and wages
283,763
272,155
1,118,788
851,008
Subcontractor costs
102,769
229,048
673,912
951,719
Software and hardware
-
-
1,951
114
Others
9,493
11,753
36,292
32,985
407,365
520,649
1,871,553
1,862,580
Operating Expenses and Finance Costs
Three-month period ended December 31, 2023 (Unaudited)
Three-month period ended December 31, 2022 (Unaudited)
Twelve-month period ended December 31, 2023 (Unaudited)
Twelve-month period ended December 31, 2022 (Audited)
Salaries and wages
343,367
188,030
617,261
406,284
Directors' fees
10,000
10,000
40,000
40,000
Professional fees
61,517
109,281
271,009
304,262
Foreign currency exchange loss
34,650
30,755
50,584
228,541
Other general & administrative expenses
69,289
32,379
312,666
121,168
Allowance for doubtful debts
104,666
12,932
104,666
12,932
Depreciation
- Property, plant and equipment
86
86
356
3,486
- Right-of-use assets
11,542
16,553
46,901
63,295
Lease interest on right-of-use assets
1,236
2,628
7,159
5,733
636,353
402,644
1,450,602
1,185,701
Selected Balance Sheet Information
The figures reported below are based on the unaudited consolidated financial statements of the Corporation which have been prepared in accordance with IFRS.
December 31, 2023 (Unaudited) $
December 31, 2022 (Audited) $
Current Assets
Accounts receivable
635,568
557,495
Deposits and prepayments
63,439
61,375
Current tax assets
330
199
Bank and cash balances
239,824
191,126
939,161
810,195
Non-Current Assets
Right-of-use assets
30,954
75,879
Property, plant and equipment
83,061
61,853
TOTAL ASSETS
1,053,176
947,927
Current Liabilities
Accounts payable and accrued liabilities
827,380
601,456
Advances from related parties
698,935
647,639
Loans from related parties
1,390,642
1,372,730
Lease liabilities
25,354
41,445
Promissory note payable
580,000
580,000
Current tax liabilities
3,972
7,130
3,526,283
3,250,400
Non-Current Liabilities
Lease liabilities
-
28,860
TOTAL LIABILITIES
3,526,283
3,279,260
Equity
Share capital
15,148,160
15,148,160
Deficit
(17,913,638)
(17,785,068)
Accumulated other comprehensive income
307,289
319,183
Total deficiency attributable to equity shareholders
(2,458,189)
(2,317,725)
Non-controlling interests
(14,918)
(13,608)
TOTAL DEFICIENCY
(2,473,107)
(2,331,333)
TOTAL LIABILITIES & EQUITY
1,053,176
947,927
Total assets of GINSMS including cash, accounts receivable, deposits and prepayment, current tax asset, property, plant and equipment and right-of-use assets as at December 31, 2023 amounted to $1,053,176 compared to $947,927 as at December 31, 2022. Bank and cash balances amounted to $239,824 as at December 31, 2023 an increase of 25.5% compared to $191,126 as at December 31, 2022. The increase was mainly due to more net cash inflow from operating activities during the year.
Selected Liquidity and Capital Resources Information
Financial Highlights
Three-month period ended December 31, 2023 (Unaudited) $
Three-month period ended December 31, 2022 (Unaudited) $
Twelve-month period ended December 31, 2023 (Unaudited) $
Twelve-month period ended December 31, 2022 (Audited) $
Cash, beginning of period/year
115,252
231,142
191,126
183,941
Operating activities
Net loss before tax
(288,554
)
(44,947
)
(133,650
)
(24,148
)
Interest expenses
1,236
2,628
7,159
5,733
Foreign currency exchange loss
34,650
30,755
50,584
228,541
Allowance for doubtful debts
104,666
12,932
104,666
12,932
Depreciation of property, plant and equipment
11,426
7,779
40,966
30,239
Depreciation of right-of-use assets
11,542
16,553
46,901
63,296
Changes in working capital items
294,595
(87,594
)
41,902
42,602
Interest expenses on lease liabilities
(1,236
)
(2,628
)
(7,159
)
(5,733
)
Income tax refunded/(paid)
5
(65
)
884
1,552
Net cash generated from / (used in) operating activities
168,330
(64,587
)
152,253
355,014
Financing activities
Advances from related parties
55,470
88,534
431,853
89,056
Repayment of advance from related parties
(75,592
)
(74,368
)
(385,951
)
(348,646
)
Principal elements of lease payments
(12,058
)
(19,211
)
(46,816
)
(72,078
)
Net cash used in financing activities
(32,180
)
(5,045
)
(914
)
(331,668
)
Investing activities
Purchase of property, plant and equipment
(5,467
)
(11,357
)
(61,919
)
(60,247
)
Net cash used in investing activities
(5,467
)
(11,357
)
(61,919
)
(60,247
)
Effect of exchange rate changes on cash held in foreign currencies
(6,111
)
40,973
(40,722
)
44,086
Increase / (Decrease) in cash
124,572
(40,016
)
48,698
7,185
Cash, end of period/year
239,824
191,126
239,824
191,126
SEGMENTED INFORMATION
a) Revenue by customers
Twelve-month period ended December 31, 2023 (Unaudited)
Twelve-month period ended December 31, 2022 (Audited)
$
% of total revenue
$
% of total revenue
Customer A
1,510,790
47.4
985,373
32.6
Next five top customers
Customer B
478,672
15.0
446,002
14.7
Customer C
341,984
10.7
436,752
14.4
Customer D
148,235
4.6
122,189
4.0
Customer E
123,004
3.9
153,224
5.1
Customer F
116,706
3.7
230,616
7.6
All other customers
469,114
14.7
649,977
21.6
Total
3,188,505
100.0
3,024,133
100.0
b) Revenue by geographical location (by location of operations)
Twelve-month period ended December 31, 2023 (Unaudited)
Twelve-month period ended December 31, 2022 (Audited)
$
% of total revenue
$
% of total revenue
Singapore
2,013,538
63.1
1,456,620
48.2
Indonesia
413,811
13.0
489,437
16.2
Other Asia countries
372,061
11.7
431,058
14.3
Europe
200,917
6.3
248,129
8.2
United States
182,531
5.7
387,783
12.8
Other regions
5,647
0.2
11,106
0.3
Total
3,188,505
100.0
3,024,133
100.0
c) Total non-current assets by geographical location
As at December 31, 2023 (Unaudited)
As at December 31, 2022 (Audited)
$
% of total assets
$
% of total assets
Indonesia
100,787
88.4
125,074
90.8
Other Asia countries
13,228
11.6
12,658
9.2
Total
114,015
100.0
137,732
100.0
d) Financial information by business segments
Messaging
Software products and services
Unallocated
Total
$
$
$
$
Twelve-month period ended December 31, 2023 (Unaudited)
Revenue
986,715
2,201,790
-
3,188,505
Intersegment revenue
35,469
273,994
-
309,463
Amortization and depreciation
-
87,867
-
87,867
Interest income
314
524
-
838
Interest and finance expenses
-
7,159
-
7,159
Income tax credit
(893
)
(3,101
)
-
(3,994
)
Segment profits/(losses)
44,417
90,206
(264,279
)
(129,656
)
Additions to segment non-current assets
-
61,919
-
61,919
At December 31, 2023 (Unaudited)
Segment assets
120,626
907,460
25,090
1,053,176
Segment liabilities
(401,139
)
(1,784,184
)
(1,340,960
)
(3,526,283
)
Messaging
Software products and services
Unallocated
Total
$
$
$
$
Twelve-month period ended December 31, 2022 (Audited)
Revenue
1,428,885
1,595,248
-
3,024,133
Intersegment revenue
18,593
282,161
-
300,754
Amortization and depreciation
-
93,535
-
93,535
Interest income
81
243
-
324
Interest and finance expenses
-
5,733
-
5,733
Income tax expense
-
8,136
-
8,136
Segment (losses)/profits
(193,143
)
500,986
(340,127
)
(32,284
)
Additions to segment non-current assets
-
153,224
-
153,224
At December 31, 2022 (Audited)
Segment assets
240,217
686,685
21,025
947,927
Segment liabilities
(435,726
)
(1,689,510
)
(1,154,024
)
(3,279,260
)
Outlook
The Corporation announces its financial forecasts for the next twelve months ending December 31, 2024. The information included in this news release represents management's guidance as approved on February 13, 2024. The financial outlook was prepared for BHL, the ultimate holding company of the Corporation, for its public company reporting obligations in Japan.
The material factors and assumptions used to develop the financial outlook include:
Continued business from the Corporation's major customers. The actual gross margin of the Software Products and Services segment achieved 45.0% for the year ended December 31, 2023 and with the expected increase in revenue earned from business with key customers of the Corporation, the forecasted gross margin of 41.2% in 2024 is reasonable and achievable. The man-hour rates in 2023 were in line with prevailing market rates hence the increment in man-hour rates in 2024 will be at reduced rate while the salary increments are factored in the 2024 budget. Management believes that the forecast revenue and gross margin is conservative and reasonable.
The actual traffic growth rate of A2P business for the year ended December 31, 2023 decreased by 30.2% compared to the year ended December 31, 2022. Both the South East Asia and North Asia regions suffered lower growth due to stiff competition. The Corporation also adjusted the prices of its products and services to maintain gross margin. Revenue for the year ended December 31, 2023 decreased by 30.9% while annual gross margin of 33.0% is comparable with gross margin of 33.4% for the year ended December 31, 2022.
No significant changes in the environment (including competition) where the Corporation operates that will significantly affect the pricing of the Corporation's services resulting in changes of the gross margin for the various business segments, except what is disclosed in notes a and b above.
Timely completion and launch of certain additional value-added services for the Corporation's customers.
Continued ability to obtain financing through loans and cash advances to support the sales operations of the Corporation.
The purpose of this financial outlook is to allow the Corporation's ultimate holding company, BHL, to make reference and/or to use such outlook in its own financial disclosure. The operation of GINSMS is a major part of the growth strategy of BHL. As such, BHL believes that disclosing such information would be useful for its shareholders. Consequently, readers of this press release are cautioned that the financial outlook of GINSMS concerning its expected gross margin and revenue is forward looking information and may not be appropriate for other purposes.
Financial Highlights
Forecast
Forecast
Forecast
Forecast
($)
Jan – Mar 2024
Apr – Jun 2024
Jul – Sep 2024
Oct – Dec 2024
Revenues $
A2P Messaging Service
117,060
118,235
119,421
120,619
Software Products & Services
753,000
753,000
753,000
753,000
870,060
871,235
872,421
873,619
Cost of sales $
A2P Messaging Service
98,169
99,154
100,148
101,153
Software Products & Services
442,738
442,738
442,738
442,738
540,907
541,892
542,886
543,891
Gross profit $
A2P Messaging Service
18,891
19,081
19,273
19,466
Software Products & Services
310,262
310,262
310,262
310,262
329,153
329,343
329,535
329,728
Gross margin %
A2P Messaging Service
16.1%
16.1%
16.1%
16.1%
Software Products & Services
41.2%
41.2%
41.2%
41.2%
37.8%
37.8%
37.8%
37.7%
Selling, general and administrative expenses
(323,085)
(323,085)
(323,085)
(323,085)
Operating profit
6,068
6,258
6,450
6,643
Non-operating income (1)
-
-
-
-
Non-operating expenses (1)
(1,544)
(1,544)
(1,595)
(1,698)
Ordinary profit
4,524
4,714
4,855
4,945
Extraordinary gains
-
-
-
-
Extraordinary losses
-
-
-
-
Profit before tax and non-controlling interest
4,524
4,714
4,855
4,945
Income taxes
-
-
-
-
Non-controlling interest
-
-
-
-
Net profit for the period
4,524
4,714
4,855
4,945
Adjusted EBITDA (2)
26,204
26,394
26,586
26,779
(1) Non-operating income included interest income and other non-operating income. Non-operating expenses included loss on foreign exchange and interest expense.
(2) Adjusted EBITDA is a non-IFRS measure which does not have any standardized meaning under IFRS. Adjusted EBITDA is related to cash earnings and is defined for these purposes as earnings before income taxes, depreciation and amortization (in both cost of sales and general and administration expenses), interest expenses and also excludes certain non-recurring or non-cash expenditure and income. This non-IFRS measure is not recognized under IFRS and accordingly, shareholders are cautioned that this measure should not be construed as an alternative to net income determined in accordance with IFRS. The non-IFRS measure presented is unlikely to be comparable to similar measure presented by other issuers. The Corporation believes that Adjusted EBITDA is a meaningful financial metric as it measures cash generated from operations which the Corporation can use to fund working capital requirements, service interest and principal debt repayment and fund future growth initiatives.
About GINSMS
GINSMS is a mobile technology and services company focusing on 2 areas namely its A2P Messaging Service and its Software Products and Services. GINSMS operates a cloud-based A2P messaging service that allows the termination of SMS to mobile subscribers of more than 200 mobile operators globally. GINSMS also develops and distribute innovative software products and services for mobile operators and enterprises and have successfully deployed more than 100 solutions worldwide. GINSMS has offices in China, Singapore, Hong Kong, Malaysia and Indonesia.
Forward Looking Statements
Certain information included in this press release may contain forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "could", "will", "expect", "intend", "estimate", "anticipate", "believe", or "continue" or the negative thereof or variations thereon or similar terminology. These statements are not historical facts, but reflect management's current beliefs and are based on information currently available to management regarding future results and events. Particularly, these forward-looking statements are based on management's estimate of future events based on technological advances relating to the Corporation's services, current market conditions and past experiences of management in relation to how certain contracts will affect revenues. Forward-looking statements, by their very nature, involve significant risks, uncertainties and assumptions.
A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to dependence on major customers, system failures, delays and other problems, increasing competition, security and privacy breaches, dependence on third-party software and equipment, adequacy of network reliance, network diversity and backup systems, loss of significant information, insurance coverage, capacity limits, rapid technology changes, market acceptance, decline in volume of attractions, retention of key members of the management team, success of expansion into Chinese and other Asian markets, credit risk, consolidation of existing customers, dependence on required licenses, economy and politics in countries where the Corporation operates, conflicts of interest and residency of directors and officers. Although the Corporation has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Although the forward-looking statements contained herein are based upon what management believes to be reasonable assumptions, the Corporation cannot assure the reader that actual results will be consistent with these forward-looking statements.
In particular, forward-looking statements include the following assumptions:
Management's belief that the Corporation's software products and services are expected to take on a different focus based on an outsourcing model approach leveraging on the lower cost base in Indonesia and Malaysia. Therefore the revenue for the software segment in Indonesia and Malaysia should continue to increase. On the other hand, management's belief that the future growth in messaging is in the area of A2P Messaging Service is affected by stiff competition and hence profitability of the business in the future is uncertain.
Management's belief that the Corporation is able to generate sufficient amounts of cash through operations and financing activities to fulfil the working capital requirements of its present operations.
These forward-looking statements are made as of the date of this press release and the Corporation assumes no obligation to update or revise them to reflect new events or circumstances except as may be required by law. Accordingly, readers should not place undue reliance on the forward-looking statements. Forward looking statements are presented in this news release for the purpose of assisting investors and others in understanding certain key elements of our expected fiscal 2023 financial results, as well as our objectives, strategic priorities and business outlook for fiscal 2024, and in obtaining a better understanding of the Corporation's anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes. All forward-looking statements contained in this press release are qualified by this cautionary statement.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.