XAU GoldMoney Inc

Goldmoney Inc. (TSX:XAU) (US:XAUMF) (“Goldmoney” or the “Company”), a precious metal financial service and technology company, today announced financial results for the second quarter ended September 30, 2021. All amounts are expressed in Canadian dollars unless otherwise noted.

Quarterly Highlights

• Quarterly Gross Profit of $1.7 million, a decrease of 84% Year-over-Year (“YoY”).
• Quarterly Gross Profit excluding revaluation loss on precious metals of $4.5 million, a decrease of 53% YoY.
• Fee Revenue decreased by 11% YoY to $1.6 million.
• Net and Comprehensive Loss of $2.9 million, a $10.9 million (136%) decrease YoY.
• Basic and Diluted Earnings per share of ($0.04).
• Revenue of $69.0 million, a decrease of 72% YoY.
• Goldmoney.com Gross Profit decreased $7.3 million or 89% YoY and Operating Income decreased $9.6 million or 150% YoY
• SchiffGold Revenue decreased $66.3 million or 60% YoY, and Operating Income decreased $0.9 million or 102% YoY.
• Investee Company Menē Inc. (TSXV:MENE) continued to grow its client and revenue base, reporting Quarterly Revenue of $5.8 million, or 67% increase YoY, for its Quarter ended June 30, 2021.
• Corporate Metal Position consisting of Coins, Bullion, and Bullion Denominated Loan increased by $6.2 million, or 13% from March 31, 2021, to $53.7 million as at September 30, 2021.
• Goldmoney.com Group Client Assets of $2.1 billion as at September 30, 2021.
• Tangible Capital decreased 2% QoQ to $125.0 million.

Business Highlights

• On October 7, 2021, Totenpass Inc. ("Totenpass"), a 60% owned subsidiary of Goldmoney Inc., announced the launch of its digital storage drive solution in beta. Totenpass allows for the permanent storage of precious digital data, thereby eliminating any future dependence on the internet and the vast amounts of energy required presently to store content.
• The Company successfully transitioned its operations to Canada in June 2021 and has effectively discontinued all operating activity in Jersey during Q2 2022. The Company expects to realize the full benefit of expected cost savings and efficiencies in the subsequent reporting periods.

   

IFRS Consolidated Income

 

 

 

 

 

 

 

 

Statement Data

 

 

 

($000s, except earnings per share)

FY 2022

FY 2021

FY 2020

 

Q

Q1

Q4

Q3

Q2

Q1

Q4

Q3

Revenue

69,013

94,706

139,709

97,592

243,609

173,500

164,441

108,161

Gross margin

2,845

3,977

2,453

3,401

7,566

5,981

3,232

2,188

Fee revenue

1,585

1,412

1,844

2,905

1,776

2,351

2,489

719

Interest income

100

103

211

195

217

239

374

461

Gross profit Excl. revaluation of precious metals inventories

4,530

5,492

4,508

6,501

9,558

8,570

6,095

3,368

Gross profit Incl. revaluation of precious metals inventories

1,661

6,167

2,146

4,917

10,421

10,615

6,999

4,088

Net income (loss)

(3,284)

951

(5,947)

4,041

7,509

6,049

(7,892)

(2,958)

Basic earnings (loss) per share

(0.04)

0.01

(0.08)

0.05

0.10

0.08

(0.10)

(0.04)

Refer to “Use of Non-IFRS Financial Measures” and “Reconciliation of Non-IFRS Financial Measures” in the MD&A

Statement from Roy Sebag, Chairman and Chief Executive Officer:

Last quarter, I discussed the important milestone which our group achieved in exiting and transitioning from our Jersey operations. I had also noted that the financial impact from this important development would be fully captured in the subsequent two quarters. In this past quarter (Fiscal Q2 2022), we can see the final charges associated with the unwinding of the Jersey business throughout our financial statements. When we report our next quarter (Fiscal Q3 2022), investors will be able to analyse our improved business model and perceive with significant clarity into our long-term operational expenditures and earnings power.

I would like now to turn to another essential aspect of Goldmoney Inc. that I believe long-term shareholders should be aware of when thinking of our company, its results and its future prospects. As a company that is, for the most part, entirely focused on the precious metals industry, it is necessary that our operating results be viewed within the wider context of the industry. Irrespective of our ability to outperform industry trends over the long-run due to our innovative business model, it is nevertheless to be naturally expected that our core activity of precious metal retailing (both via online accounts and coins) will be tethered to the state and health of the wider industry. We must also consider another feature of our company when examining the quarterly results, and that is our growing precious metal position. The accounting treatment of this position requires that we mark these positions to market, even when we do not sell; as such, this position will naturally fluctuate alongside the precious metal markets. As I mentioned in the prior shareholder letter, our Board of Directors has made the wise decision to grow our precious metal position over time from our earnings, thereby pursuing a return on metal weight strategy as the guiding metric for our company’s performance. We must consider the results of this quarter in the light of these wider features of our parent industry in addition to the one-off final charges associated with the Jersey exit. There was a decline in top-line revenue and trading activity on the platform because of the attenuation of the precious metal markets. Similarly, the decline of precious metal prices is the primary cause of the mark-to-market loss on our precious metal position of nearly $3 million.

Before moving onto the topic of our growth businesses, I would like to articulate my opinion of this quarter from my perspective as a long-term shareholder. First, the weakness of the precious metal market this past quarter does not cause me any great concern. I see it as a normal feature of the dynamics of the wider industry which we tend to see from time to time. Precious metals have always been and will continue to remain in great demand by both investors and industry in the future. Moreover, I do not believe that even the novel turn to cryptocurrencies will have any significant impact on the sustained demand for precious metals. With regard to this point, I am further consoled by the fact that, in spite of such a weak quarter, our core business performed well, excluding the movement of our precious metal position and the one-time costs associated with the Jersey exit. Second, I pay little attention to mark-to-market fluctuations in our precious metal position, as I remain convinced that this position will appreciate in fiat money terms over the long-run, especially in the face of rising inflation. It is important that during this quarter, in spite of the declines in mark-to-market movements, we still grew our precious metal position by weight; likewise, we will continue to grow our precious metal position by weight year-over-year. In short, it is my opinion that this quarter gives the appearance of looking far worse than it actually is, and that the health of our business as well as our ability to generate sustainable earnings remains wholly intact.

Turning to the subject of our growth businesses, Menē continued to perform exceptionally well, reporting another strong quarter. Note that Menē does not seem to be directly correlatable to the overall movements in the precious metal industry. This is a promising indicator that Menē is growing organically by disrupting the jewelry industry. Menē now enters its most important and lucrative period of the year, the holiday season, and it is prepared and well-stocked with a record amount of inventory. We hope that Menē will close this year with record revenues and impressive year-over-year growth figures.

Our second growth business, Totenpass, has now finally moved from the R&D phase to Beta launch. We are optimistic about what we have seen so far in response to this highly unique business. Customers are testifying to the infinitely interesting possibilities of the Totenpass and some have reported use cases that have already expanded our own understanding of the product’s capability. This is only the first test of establishing a good and sustainable business. We are not yet certain if Totenpass will succeed, although I believe this will become more evident over the course of 2022-2023. We will continue to notify shareholders of the development of Totenpass and will begin to report its financial results as they become material.

I would like to thank Paul Mennega and Mark Olson for their excellent leadership this quarter. I would also like to thank our clients and shareholders for their continued trust in our company, its mission, and its services.

Financial Information and IFRS Standards

The selected financial information included in this release is qualified in its entirety by, and should be read together with, the Company's consolidated financial statements for the quarter ended September 30, 2021 and 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 Questions

Shareholders of Goldmoney are encouraged to submit questions to management by emailing ir@goldmoney.com.

Non-IFRS Measures

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.

Tangible Capital 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.

Gross profit excluding gain/loss on revaluation of inventories is a non-IFRS measure, calculated as gross profit less gain/(loss) on revaluation of precious metals. The closest comparable IFRS financial measure is gross profit. Fluctuations in the value of its precious metal inventories caused by fluctuations in market prices are included in gross profit. Management believes that excluding such fluctuations more clearly illustrates the Company’s business operations.

Non-IFRS Adjusted Gain (Loss) is a non-IFRS measure, defined as total comprehensive income (loss) adjusted for non-cash and non-core items which include, but is not limited to, revaluation of precious metal inventories, stock-based compensation, depreciation and amortization, foreign exchange fluctuations and gains and losses on investments.

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 quarter ended September 30, 2021.

About Goldmoney Inc.

Goldmoney Inc. (TSX: XAU) is a precious metal focused global business. Through its ownership of various operating subsidiaries, the company is engaged in precious metal sales to its clients, including arranging delivery and storage of precious metals for its clients, coin retailing, and lending. Goldmoney clients located in over 150 countries hold approximately $2.1 billion in precious metal assets. The company’s operating subsidiaries include: Goldmoney.com, SchiffGold.com and Totenpass. In addition to the Company’s principal business segments, the Company holds a significant interest in Menē Inc., which crafts pure 24-karat gold and platinum investment jewelry that is sold by gram weight. Through these businesses and other investment activities, Goldmoney gains long-term exposure to precious metals. For more information about Goldmoney, visit goldmoney.com.

Forward-Looking Statements

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.

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Media and Investor Relations inquiries: Mark Olson Chief Financial Officer Goldmoney Inc. mark.olson@goldmoney.com