Goldmoney Inc. Reports Financial Results for First Quarter of Fiscal 2024 for the period ending in June 30, 2023Aug 11, 2023
Goldmoney Inc. (TSX:XAU) (US:XAUMF) (“Goldmoney” or the “Company”), today announced financial results for the financial quarter ended June 30th, 2023. All amounts are expressed in Canadian dollars unless otherwise noted.
- Group Tangible Capital of $143.5 million, an increase of $1.3 million, or 1% Quarter over Quarter (“QoQ”) and an increase of $13.9 million, or 10.7% Year over Year (“YoY”).
- Group Tangible Capital per Share increased to $10.30 from $10.15, or 1.5% QoQ and an increase of $1.68 per share, or 19.5% YoY.
- Group Precious Metal Position consisting of Coins, Bullion, and Bullion Denominated Loan of $23.3 million, representing 21% of Tangible Capital Exclusive of the Mene Inc. Shareholding.
- Gold-Adjusted Tangible Capital per 1 Goldmoney Inc. share of .126 grams an increase of 4% QoQ, or 7.2% YoY.
- Repurchased a total of 127,760 shares at an average purchase price of $9.45 during the quarter, reducing the share count by 0.9%.
- Quarterly Operating Income of $6.65 million, an increase of 8%.
- Net Income of $2.6 million, an increase of 158% YoY.
- Basic and Diluted Earnings per Share of $0.18, an increase of 163% YoY.
- Goldmoney.com Group Client Assets of $2.1 billion as at June 30, 2023.
- Menē Inc. reported results for the quarter ended March 31, 2023, generating $7.2 million in revenue and $1.8 million gross profit.
IFRS Consolidated Income Statement Data
($000s, except earnings per share)
|Precious metal revenue|
|Investment property rental income|
|Precious metal operating expenses|
|Other (income) expenses|
|Net income (loss)|
|Basic earnings (loss) per share|
Statement from Roy Sebag, CEO of Goldmoney Inc.
Goldmoney Inc. has embarked on a new phase as a listed company, owning a diversified group of businesses interests that are tethered to the real economy. I encourage shareholders to carefully review our financial reports this quarter as they now provide the clearest picture of the current state and health of our company. With the launch of Goldmoney Properties, our income statement now breaks out our sources of revenue by division, grouping precious metals operations and all their associated costs under one line item. The figure shown as ‘Total operating income’ reflects the net cash provided by our operational businesses over the quarter. Below that line in the Expenses section are two cash expense line items: ‘General and administrative’, which reflects the costs of being a public company, our C-Suite salaries and bonuses, and ‘Technology and development costs’. The other items are non-cash expenses such as depreciation and amortization, stock-based compensation, and impairment of goodwill and intangibles. Below this line, we now disclose all of the balance sheet fair value movements from precious metals to investment property to FX movements.
I believe this improved financial reporting format will assist shareholders in appreciating the distinction between our operating activities and the marked to market movements of certain assets on our balance sheet. I emphasised this distinction in the June 13, 2023 shareholder letter. While both activities are incorporated into the computation of our net income, these are in some sense two different activities in which we partake. The operational cash flow is recurring and has become increasingly predictable while the balance sheet movements reflect patient investments we make with permanent capital. With that being said, I remain convinced that the single best metric for measuring our success over the long run will is tangible book value per share, which is why we will continue leading with this metric. Ultimately it is this metric which reflects both our balance sheet and operational activity in relation to the latest quantity of shares outstanding which have been decreasing over the past few years.
In the June 30th Quarter, Goldmoney Inc. produced Net Operating Income of $4.2 million excluding the non-cash expenses. Since the quarter ended December 31, 2021, the company has produced positive net operating income in all of the seven quarterly periods when excluding goodwill impairment write-downs.
Our financial results for June 30th, 2023, validate our decision to diversify into new income streams within the real economy. Had we held on to our precious metals position from March 31, 2023, we would have missed an opportunity to compound our tangible book value per share (excluding the Menē position) by nearly 2% in the quarter. By contrast, we would have seen this metric drop by 2-3% based on our estimates.
As the quarterly data show, our liquidity position remains exceptional, even after acquiring our first investment property in an all-cash transaction. We have circa $50 million of excess liquidity and no debt as of June 30th. As regards the precious metals position, it stood at 21% of our tangible capital excluding the Menē position. This reflects the lower end of our target and we feel comfortable with this level of precious metal holdings given the strength of our operational precious metal businesses.
I would like to reiterate to our shareholders that we are under no illusion about the relative security of precious metals vs. property or fiat currency. Precious metals are always going to be safer in terms of liquidity and counterparty risk. However, as I discussed in the shareholder letter, we have reached a point in the growth of our company where diversification is necessary, and we feel confident in our liquidity position as well as our operational cash flow prospects to assume a durational risk with property. While these assets are indeed less liquid than precious metals, we have sufficient liquidity and operational earnings such that we are neither in a position where we need to sell, nor do we have plans or interests in selling our property assets. Finally, and perhaps most importantly, the properties we acquire are expected to return the cash expended on acquisition to our balance sheet within ten years.
It should also be noted that Menē repaid $2.15 million of its Precious Metal backed loan during the quarter. This is owing to Menē’s financial strength and the current transition in strategy which will require less of an inventory of working capital to realise. We anticipate that Menē is on track to repay more of its precious metal loan which will move the value from loans receivable to precious metal holdings. In any event, shareholders should rest assured that the Menē loan is repayable on-demand in the sense that we see this metal as liquidity that can be used if we should require it.
With nearly $50 million of excess liquidity plus the strength of our operational businesses which, given the new income stream from Goldmoney Properties, appear to be producing around $4 million of additional cash per annum, it should be noted that we are responsibly exploring further acquisitions of investment property.
We are also working on the potential opportunity for Joint Ventures with our HNWI clients and shareholders to acquire assets where Goldmoney Properties would earn a performance fee above our equity contribution. To that end, this new direction has been receiving resounding support from shareholders, both large and small. By my estimation, the ratio of positive vs. negative feedback we have received was 9:1. I have not been able to respond to all of you, but please know that I do receive your letters and am grateful for your feedback. We are truly fortunate at Goldmoney Inc. not only for our exceptional team but also for our loyal clients and supportive shareholders.
As regards to share buybacks, we will continue to be aggressive in repurchasing and canceling our shares so long as (i) our operational businesses keep producing cash flows; (ii) we compound our capital per share at rates that meet or exceed our estimation of long-run inflation; and, finally, so long as (iii) our shares trade at a moderate to significant discount to tangible book value. Such was the case after this quarter end date, and I am pleased to report that subsequent to the June 30th quarter, Goldmoney Inc. repurchased a further 124,200 shares reducing our shares outstanding to 13,808,000 at the time of this press release. This reflects a 2% reduction in our shares outstanding since March 31st. We have now repurchased and cancelled 2,009,475 shares since 2020 for a total of $18,128,307 or 13% of our outstanding shares from June 30th 2020.
We are seeing some interesting opportunities with Schiff Gold, our precious metals coin dealer. One of the benefits of our new reporting structure is that shareholders can now see the variable costs of Schiff Gold separately from Goldmoney.com. We think there is an opportunity to grow Schiff Gold as well as reduce some of the operating costs, thereby increasing its profitability. We have been working on a relaunch of the Schiff Gold website as well as other opportunities to expand our reach beyond North America.
In closing, we believe our core precious metals operations will continue producing returns on capital and compounding our tangible book value per share. In environments where precious metals do well, we will do better, but in environments where they do poorly, we will do worse. This is why growing Goldmoney Properties is important as we believe it is perfectly possible to nourish our property investment income stream to an inflation-adjusted $10 million per annum by 2025 with our current balance sheet structure, moderate leverage, and projected operating cash flows.
Of course, time does not stop in 2025. It is merely a milestone with potential further growth ensuing from higher cash flows. So, this is the plan we have in mind, and shareholders now have the full picture. We aspire to maintain our earnings power at the level reached when precious metals markets were roaring. We want to have this be the baseline of our earnings power so that if and when they roar again, we will set new earnings records and compound our capital at even higher rates. In my humble opinion, Goldmoney Inc. shares are not reflecting any of this future potential.
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 and fiscal year ended March 31, 2023 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.
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.
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, 2023.
About Goldmoney Inc.
Founded in 2001, Goldmoney (TSX:XAU) is a TSX listed company invested in the real economy. The leading custodians and traders of precious metals, Goldmoney Inc. also owns and operates businesses in jewelry manufacturing, coin retailing, and property investment. For more information about Goldmoney, visit goldmoney.com.
Media and Investor Relations inquiries:
Chief Financial Officer
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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, future business plans, including joint ventures and acquisitions of real estate, future plans to diversify the Company’s business, expectations on 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; real estate acquisition and maintenance risks; volatility of real estate prices & markets; precious metal trading risks; volatility of precious metals prices & public interest in precious metals investment; global financial conditions and the viability of the Company’s business strategy in response to them; 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.