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:

  1. 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.
  2. 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.
  3. 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.
  4. Timely completion and launch of certain additional value-added services for the Corporation’s customers.
  5. 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.

For further information, please contact:

GINSMS Inc.
Joel Chin, CEO
Tel: +65-6441-1029
Email: [email protected] 

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.


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