Goldmoney Inc. (XAU.TO) (XAUMF) (“Goldmoney” or the “Company”), a precious metal financial service and technology company, today announced financial results for the quarter ended December 31, 2018 (the Company’s third quarter of its fiscal year-end of March 31, 2019). All amounts are expressed in Canadian dollars unless otherwise noted.
- Consolidated Revenue of $84 million, a 21% increase Quarter-over-Quarter.
- IFRS Net Income of $28.6 million ($0.37 per share), a quarterly record for the Company.
- Non-IFRS Adjusted Gain1 of $28.4 million, a quarterly record for the Company.
- Currency loans totaling $20.4 million of balance sheet capital extended to borrowers against their pledged precious metals earning interest rates ranging from 3.55% to 5.05%.
- Corporate precious metal position of $15.5 million at December 31, 2018 as directly owned precious metals. An additional $11.9 million gold and platinum loans are extended to Menē Inc. at quarter end.
- Total balance sheet precious metal exposure of $27.4 million as of December 31, 2018, a new Company record, reflecting the Company’s long-term commitment to grow precious metal ownership per share.
- Non-Balance Sheet Client assets under custody stable at $1.82 billion.
- Tangible Common Equity2 of $131.9 million, a new Company record.
Menē Stock Exchange Listing
On October 30, 2018, Menē Inc. completed its reverse takeover transaction with Amador Gold Corp. and separation from Goldmoney. On November 6, 2018, Menē Inc.’s subordinate voting shares (the “Class B Shares”) were listed on the TSX Venture Exchange under the symbol: MENE. On December 7, 2018, Goldmoney distributed 3,989,947 million Class B Shares to the shareholders of Goldmoney on a pro-rata basis.
Menē Inc.’s public listing, the appointment of additional independent directors to the Menē board, and the decision by Goldmoney’s directors to distribute 3,989,947 Class B subordinate voting shares of Menē pro rata to the shareholders of Goldmoney, resulted in a loss of control and a change in IFRS accounting treatment to investment in associate. This change in accounting treatment contributed a $31.8 million gain to Goldmoney’s quarterly results in Q3 2019.
Goldmoney currently holds approximately 76.6 million Class B Shares, representing a 33% of the total issued and outstanding shares of Menē on a non-diluted basis. The Class B Shares held by Goldmoney will be marked to market on Goldmoney’s balance sheet in subsequent quarters.
|IFRS Consolidated Income Statement Data|
|(expressed in $000s except loss per share)||FY 2019||FY 2018||FY 2017|
|Gross profit excl. revaluation of precious metals inventories||2,749||3,092||3,321||3,286||9,692||2,648||4,403||1,996|
|Gross profit Incl. revaluation of precious metals inventories||4,152||2,182||3,978||5,178||9,630||2,676||3,695||2,075|
|(1)||In accordance with IFRS, the Company has prospectively changed its revenue accounting policy and has provided retrospective application. The Company restated revenue as net basis instead of gross for fees from exchange services. Transfer of fiat currency to the customer and receipt by the Company of precious metals, crypto assets or other fiat currency, were treated as an exchange service (net basis), instead of revenue from the sale of the fiat currency (gross basis). There is no impact to gross margin and net income.|
Refer to “Use of Non-IFRS Financial Measures” and “Reconciliation of Non-IFRS Financial Measures” in the MD&A.
Please visit our SEDAR profile to view the Company’s consolidated financial statements and MD&A.
Statement from the CEO
“We are pleased to report a record quarter not only in IFRS earnings and tangible common equity, but also in total assets under management. When combining the tangible assets on our balance sheet with our non-balance sheet assets under custody, our group has crossed the $2 billion mark in total assets under management or custody. When considering that over 90% of these assets are precious metals, one can appreciate that we are very well exposed economically to rising precious metal prices. I am pleased with this result and look forward to further growing our long-term economic exposure to precious metals and tangible assets. Menē Inc. is becoming an incredible business, having delivered Goldmoney a substantial return on our $2 million investment from only two years ago. From where I sit, the future of Menē Inc. appears very bright and I believe the business can scale to substantial revenue in a few years and produce significant operating margins and profits. Companies within the same industry as Menē generally trade at a multiple to sales of 4-7 times during their growth years (e.g. Warby Parker, FarFetch, Moncler, Canada Goose) and I believe that Menē is no different than any of those businesses in terms of the quality of the brand which is being built. The Goldmoney.com business continues to be well run by COO Paul Mennega who is improving and optimizing the core business offering. In this 2019 year we will see a clearer focus on the part of separating Menē from Goldmoney from an accounting perspective. While this quarter was a good first step, there were still significant operating expenditures associated with Menē Inc. during the quarter. Schiff Gold continues to perform extremely well, and we are seeing increased synergies from the combination of Goldmoney.com and SchiffGold, primarily in the physical precious metal redemption space. We would like to thank our shareholders for their continued support and confidence. We believe our corporation will continue to deliver long-term shareholder value which is now well apparent through our financial results.” - Roy Sebag, Chairman and Chief Executive Officer
Statement from the CFO
“This was a great quarter for Goldmoney Inc. It is important to remember that these quarterly results consolidate Menē Inc until the end of October, which as a relatively recent start-up is still in its ramp up phase. The good news is that following the Menē spinoff, our next quarterly financials will account for Menē as an associate, thereby removing its revenue and expenses from Goldmoney’s consolidated balance sheet. I am proud of the work our team has done on Menē and believe there exists great potential to further develop this business. This transition in accounting will better highlight Goldmoney’s core business operations and earnings potential. As our CEO, Roy Sebag has advised, we are considering several opportunities to further optimize our core business structure, and we look forward to presenting these achievements in future quarters.” Steve Fray – CFO & Corporate Secretary
The selected financial information included in this release is qualified in its entirety by, and should be read together with, the Company's unaudited condensed consolidated interim financial statements for the three and six months ended September 30, 2018 prepared in accordance with International Financial Reporting Standards ("IFRS") and the corresponding management's discussion and analysis, which are available under the Company's profile on SEDAR at www.sedar.com.
Investor Relations Questions
As is our Company’s tradition, we only host two conference calls per year. Our next call will be held on the reporting date for our Year End results. Investors with interim questions may send them to: firstname.lastname@example.org.
This news release contains non-IFRS financial measures; the Company believes that these measures provide investors with useful supplemental information about the financial performance of its business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating its business. Although management believes these financial measures are important in evaluating the Company's performance, they are not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with IFRS. These non-IFRS financial measures do not have any standardized meaning and may not be comparable with similar measures used by other companies. For certain non-IFRS financial measures, there are no directly comparable amounts under IFRS. These non-IFRS financial measures should not be viewed as alternatives to measures of financial performance determined in accordance with IFRS. Moreover, presentation of certain of these measures is provided for year-over-year comparison purposes, and investors should be cautioned that the effect of the adjustments thereto provided herein have an actual effect on the Company's operating results.
Non-IFRS Adjusted Gain1 is a non IFRS financial measure. This figure excludes from IFRS Net Income the impact of non-cash items, including the amortization of intangible assets and stock-based compensation. Refer to the MD&A for a detailed breakdown of these items.
Tangible Common Equity2 is a non-IFRS measure. This figure excludes from total shareholder equity (i) intangibles, and (ii) goodwill, and is useful to demonstrate the tangible capital employed by the business.
Adjusted Gross Profit3 is a non IFRS financial measure, also referred to as Gross profit excluding gain/(loss) on revaluation of precious metals inventories. This figure excludes from Gross profit the gain (loss) on revaluation of precious metals inventories.
For a full reconciliation of non-IFRS financial measures used herein to their nearest IFRS equivalents, please see the section entitled "Reconciliation of Non-IFRS Financial Measures" in the Company's MD&A for the year ended March 31, 2018.
About Goldmoney Inc.
Goldmoney Inc. (XAU.TO) is a precious metal focused investment company. Through its ownership of various operating subsidiaries, the company is engaged in precious metal investment, custody and storage, jewelry, coin retailing, and lending. Goldmoney manages and oversees in excess of $1.8 billion in assets for clients around the world. The company’s operating subsidiaries include: Goldmoney.com, Menē Inc. (TSXV: MENĒ), SchiffGold.com, and Lend & Borrow Trust. Through these businesses and other investment activities, Goldmoney gains long-term exposure to precious metals. For more information about Goldmoney, visit goldmoney.com.
This news release contains or refers to certain forward-looking information. Forward-looking information can often be identified by forward-looking words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “estimate”, “may”, “potential” and “will” or similar words suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. All information other than information regarding historical fact, which addresses activities, events or developments that the Goldmoney Inc. believes, expects or anticipates will or may occur in the future, is forward-looking information. Forward-looking information does not constitute historical fact but reflects the current expectations the Company regarding future results or events based on information that is currently available. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking information will not occur. Such forward-looking information in this release speak only as of the date hereof.
Forward-looking information in this release includes, but is not limited to, statements with respect to: service times for transactions on the Goldmoney network; growth of the Company’s business, expected results of operations, and the market for the Company’s products and services and competitive conditions. This forward-looking information is based on reasonable assumptions and estimates of management of the Company at the time it was made, and involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. Such factors include, among others: the Company’s operating history; history of operating losses; future capital needs and uncertainty of additional financing; fluctuations in the market price of the Company’s common shares; the effect of government regulation and compliance on the Company and the industry; legal and regulatory change and uncertainty; jurisdictional factors associated with international operations; foreign restrictions on the Company’s operations; product development and rapid technological change; dependence on technical infrastructure; protection of intellectual property; use and storage of personal information and compliance with privacy laws; network security risks; risk of system failure or inadequacy; the Company’s ability to manage rapid growth; competition; the ability to identify opportunities for growth internally and through acquisitions and strategic relationships on terms which are economic or at all; effectiveness of the Company’s risk management and internal controls; use of the Company’s services for improper or illegal purposes; uninsured and underinsured losses; theft & risk of physical harm to personnel; precious metal trading risks; and volatility of precious metals prices & public interest in precious metals investment; and those risks set out in the Company’s most recently filed annual information form, available on SEDAR. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company undertakes no obligation to update or revise any forward-looking information, except as required by law.