Goldmoney Inc. Reports Financial Results for First Quarter 2020 and Announces a New Gold-Linked Dividend PolicyAug 13, 2019
TORONTO – (August 13, 2019) – Goldmoney Inc. (TSX:XAU) (US:XAUMF) (“Goldmoney” or the “Company”), a precious metal financial service and technology company, today announced financial results for the first quarter ended June 30, 2019. All amounts are expressed in Canadian dollars unless otherwise noted.
- IFRS Gross Profit of $4.1 million compared to $2.1 million for Q4 2019 and $4.0 million for Q1 2019, an increase of 98% and 9% respectively.
- Non-IFRS Cash Gain of $1.5 million, compared to a loss of $0.03 million in the previous quarter.
- Total Comprehensive Income of $0.46 million, a 168% increase year-over-year (“YoY”).
- Currency Loans totaling $20.1 million of balance sheet capital extended to users against their pledged precious metals, earnings a minimum interest rate of 3.75%.
- Corporate Precious Metal Exposure of $25.9 million at quarter end, a 3% quarter-over-quarter increase.
- Tangible Common Equity grew to $129.9 million from $113.1 million in Q1 2019, a 14.9% increase YoY.
- Client Assets Under Custody stable at $1.8 billion as at June 30, 2019.
- Gold Linked Dividend Policy Approved by the Board of Directors.
In accordance with IFRS, the Company has prospectively changed its revenue accounting policy in Q3 2019 and has provided retrospective application. The Company restated revenue prior to Q3 2019 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. The current revenue accounting policy is consistent with the March 31, 2019 year end policy.
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 Chief Executive Officer
It has been four years since Goldmoney Inc. was listed on the TSX Venture exchange, embarking on a mission to democratize access to physical precious metals. That mission was borne out of a thesis that precious metals would play a pivotal role in shielding one’s savings from the punitive policies implemented in the post-2008 financial crisis era by global central banks, politicians, and academic economists. As a business enterprise, our belief was that building long-term businesses oriented around our central thesis would not only help clients around the world who would be experiencing the negative ramifications of this new normal but also be rewarding to our long-term shareholders.
Over this past year and more specifically the past few weeks, it is becoming apparent that our central thesis is proving to be correct. We are witnessing a monumental failure on the part of the mainstream narrative that has been proselytized since the financial crisis, and as a result, confidence in fiat currencies and financial abstractions of all sorts are fading. In response, gold has reached an all-time high when measured in most of the world’s fiat currencies and recently has been moving rapidly toward its high watermark in US dollars. Our four core businesses, (a) Goldmoney.com, (b) Mene.com, (c) SchiffGold.com, and (d) LendBorrowTrust.com, offer our shareholders asymmetric leverage to a rising gold price by earning demonstrable returns on capital from revenue earned in storage, trading, jewelry, coins, lending, and transactions involving physical precious metals.
Though this quarter ended before some of the major jumps in gold and silver prices occurred, we can already see how well our group’s earnings power and intrinsic value is leveraged to such moves. This quarter saw our gross profit from normal operations reach an all-time high in terms of % margin. The decline in nominal revenue this quarter and in general over the past few quarters are banal in my view and relates to seasonal factors. Moreover, what can now be seen more clearly is the normalization of our cash costs being better reflected in our results because the effects from Menē Inc. have been isolated from its deconsolidation. Even in this quarter, there is over $1.1 million in non-cash costs being accounted for and by my estimation, an additional $1 million of non-core cash costs which are either being invested in new ventures and growth or reflect regulatory and professional fees we expect will diminish. In short, our core business is becoming observably profitable on a cash basis and even on an IFRS accounting basis.
The good news is continuing beyond the quarter date. At the time of writing, the total of Goldmoney Inc.’s client assets and our balance sheet is approaching $2.2 billion, an all-time record. Precious metals on our balance sheet is nearing $30 million. The combination of core business delivering earning streams and a golden balance sheet capable of earning demonstrable returns has given myself and your board confidence to implement policies that will reward long-term shareholders.
In this regard, your board has agreed to a dividend policy. The dividend for this first quarter of 2020 is $0.003215 per share. The dividend will be paid on August 27, 2019 to shareholders of record on August 20, 2019.
Going forward, the Company will implement quarterly dividends (the “Gold Linked” dividends) which will be “Linked” to a benchmark price of gold set at US$1,500 per gold ounce. The aggregate dividend payment during each quarter will rise or fall by the same percent as the percentage change of the average daily closing gold price for the quarter against the Linked price. For example, if the average of the quarter’s daily closing price were US$1,650, which is 10% above the Linked price, the total aggregate cash value of the dividend for the quarter would increase by 10%. Assuming a US dollar gold price of US$1,500 per ounce, the annual dividend payment will be approximately $1 million, representing about a 0.65% yield to our current market cap.
The Gold-Linked dividend policy and all quarterly Gold-Linked dividend payments are subject to board review and may be adjusted at the discretion of the board from time to time.
Should our financial situation continue to improve, I will recommend to your board to consider increasing the Gold-Linked dividend amount above $1 million.
In closing, we would like to thank all our clients, shareholders, and colleagues for their continued hard-work and dedication to our group companies.
Roy Sebag, Chairman and Chief Executive Officer
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 June 30, 2019 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 Relations Questions
Shareholders of Goldmoney are encouraged to submit questions to management by emailing [email protected]. The Company will periodically publish responses to selected questions received in order to allow all investors ongoing access to information about Goldmoney’s strategy, operations, and business plans.
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 quarter ended June 30, 2019.
About Goldmoney Inc.
Goldmoney Inc. (TSX: XAU) 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.
Media and Investor Relations inquiries:
Director of Global Communications
Chief Financial Officer
+1 647 499 6748
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.