Gstechnologies Regulatory News (GST)

28 July 2022

GSTechnologies Limited

("GST" or the "Company" or the "Group")

Results for the year ended 31 March 2022

GSTechnologies Limited (LSE: GST), the fintech and information technology solutions company, is pleased to announce the Company's audited results for the year ended 31 March 2022.

Period Highlights 

· Focus on the Company's expansion into blockchain-related technologies, specifically its plans to launch a borderless neobanking platform providing next-generation digital money solutions

· Collaboration agreement signed with Wise MPay to provide the Company with software and services to facilitate the Company's fintech plans

· Completion of the acquisition of Angra Limited, a UK-based foreign exchange and payment services company

· Entering into a legally binding sale and purchase agreement to acquire the whole of the issued share capital of UAB Glindala, a holder of a Crypto Currency Exchange Licence registered in Lithuania

· Appointment of Jack Bai as CEO, Shayne Tan as COO and Galvin Bai as an Executive Director

· Three equity fund raises, each at incrementally higher prices, providing gross proceeds of £3.74 million to fund the Group's fintech expansion plans

Post Period Highlights 

· On 17 July 2022 the Company entered into a binding agreement to sell EMS Wiring Systems

· Significant further progress in implementing the Group's stated strategy to roll-out a suite of offerings under its GS Money banner

CHAIRMAN'S STATEMENT

During the year, the primary focus of the Group was on developing the 'GS Fintech' subsidiaries in the UK and Singapore, established just before the start of the financial year. This involves the Company's expansion into blockchain-related technologies, specifically its plans to launch a borderless neobanking platform providing next-generation digital money solutions. This expansion was undertaken whilst still retaining sufficient focus on our EMS Wiring Systems Pte Ltd ("EMS Wiring Systems") business as it recovered from the worst of the Covid-19 pandemic.

GS Fintech

In May 2021 the Company entered into a collaboration agreement with Wise MPay Pte, Ltd ("Wise MPay"), the Singaporean blockchain payment solution provider, with a view to Wise MPay providing the Company with software and services to facilitate the Company's fintech plans. Under the agreement, Wise MPay is supplying the Company with a number of standard and bespoke software packages which include, inter alia, software to enable the Company to establish a remittance portal (GSend), an eWallet app (GS Money), Know Your Client (KYC) administration and an encryption engine. These software packages being supplied by Wise MPay are being integrated on the Company's cloud server, together with software supplied by the Company and third-party payment gateway packages.

Additionally, Wise MPay supplied during the year four enterprise blockchain consensus nodes that came with 25 million stake tokens each, based on the Coalculus blockchain platform, to enable transaction validation on the Coalculus network for transactions undertaken by GST's proposed customers in US dollars, Euros, Sterling and Chinese Yuan. On 30 November 2021, we reported that we had successfully tested all four of the enterprise chains provided by Wise MPay, together with implementing a mainnet upgrade on the Coalculus platform, provided by Wise MPay. This marked the launch of the GS Money protocol. This was followed on 17 December 2021 by GST receiving 100 million COAL tokens from Wise MPay and the enabling of the COAL token staking capability on four full nodes managed by the Company. The web remittance portal and complex blockchain e-wallet application is currently under development in conjunction with Wise MPay. 

The four digital currencies are strictly pegged to the US Dollar, the Pound, the Euro and the Yuan which has allowed GST to carry out transactions through blockchain ledgers, which can be used in place of wire transfers that generally take several days to complete. The four enterprise chains work alongside one another to form a decentralised and highly efficient multicurrency cross border payment system for digital transactions that utilise the Coalculus blockchain ledger technology. Additionally, each enterprise chain's total supply will allow GST to issue up to 10 billion digital currency units.

The future roll-out of GS Money is intended to be focused on three initial use-cases: international money transfers, borderless accounts and private stablecoins. GS Money will initially be used in restricted cross-border payment testing before being gradually expanded to include commercial activities. Ultimately it is intended that GS Money will also be focused on private stablecoin. The objective is to establish public trust, maintain stability, and enable claims backed by reserves. By establishing a private stablecoin ecosystem, GST intends to encourage market players to allow transactions to settle in GS Money digital currencies, as well as be integrated into various other payment services. The Company is aware of the regulatory treatment of GS Money's stablecoins and is exploring the possibility of providing the proposed services in strategic jurisdictions, including the UK.

On 7 March 2022, just before the period end, we were delighted to complete the acquisition of Angra Limited ("Angra"), a UK-based foreign exchange and payment services company. This followed the UK Financial Conduct Authority ("FCA") approval for the change of control of Angra.

Angra, which operates under the AngraFX brand name, is an established FCA approved Authorised Payment Institution ("API"), conducting fast, secure and low-cost foreign exchange business and payment services internationally. We intend to utilise Angra as the basis on which to build the UK arm of the Group's planned blockchain-enabled neobanking business. Since the completion of the acquisition Angra has been successfully integrated within the Group and is trading in line with the GST Board's expectations.

To further enhance the Group's neobanking offerings, the Company announced on 20 January 2022 that it had entered into a legally binding sale and purchase agreement to acquire the whole of the issued share capital of UAB Glindala ("Glindala"), a holder of a Crypto Currency Exchange Licence registered in Lithuania. Glindala's Crypto Currency Exchange Licence is supervised by the Lithuanian Financial Crime Investigation Service ("FCIS") and completion of the acquisition is subject only to the approval of the FCIS. The Company understands that approval will be granted shortly upon the completion of certain administrative matters by the Lithuanian authorities. The Company believes the exchange will be a significant enabler for its GS Money stablecoin business, forming the third pillar for GS Money, and will integrate well with Angra and its other activities.

During the year the Company has made significant progress in implementing its stated strategy to roll-out a suite of offerings under its GS Money and this progress has continued at a rapid pace post period end.

EMS Wiring Systems

Following the unprecedented events in the previous financial year with the onset of the Covid-19 pandemic, 2021/22 was a year of gradual recovery for our EMS Wiring Systems business as the worst of the pandemic receded. EMS Wiring Systems remained a predominantly Singapore focused business providing wireless, electronic cabling, security, and other solutions to clients operating in the infrastructure development space. Whilst its revenue for the year recovered to US$4.19 million (2021: US$2.83 million), it continued to be loss making and made a net loss of US$0.56 million (2021: net loss of US$0.13 million, after receiving US$0.58 million of Covid-19 related financial assistance from the Singapore Government).

Post period end on 18 July 2022 the Company announced that on 17 July 2022, it had entered into a binding agreement to sell EMS Wiring Systems, to Teo Chiah Chiu Raphael ("Raphael Teo"), the Chairman of EMS. The consideration payable by Raphael Teo for the entire issued share capital of EMS Wiring Systems, which is currently held by the Company, will be the transfer to the Company, by way of a share buyback, of 60,000,000 ordinary shares in GST held by him. The Company intends to hold the consideration shares in treasury for future issue or cancellation in due course. Completion of the disposal is conditional, inter alia, on completion of the buyback of the consideration shares, and the Company and EMS Wiring Systems entering into a deed of agreement to waive all outstanding liabilities between the Company and EMS Wiring Systems.

We look forward to completing the disposal shortly, which is in line with our strategy to concentrate on our blockchain enabled neobanking activities. In particular, it removes a lossmaking subsidiary from the Group, that is not part of our future plans, and will enable us to focus all our resources on accelerating the roll out of our suite of GS Money offerings.

Fund Raising

During the year the Company undertook three fund raises, each pleasingly at incrementally higher prices to fund its fintech expansion plans: on 6 September 2021 the Company raised gross proceeds of £1.41 million through a placing of 141,500,000 ordinary shares at a price of 1.0p per share; on 19 November

2021, with a placing of 50,000,000 ordinary shares at a price of 2.0p per share, the Company raised gross proceeds of £1.00 million; and on 11 January 2022 a placing and subscription raised gross proceeds of £1.33 million through the issue of 63,576,190 ordinary shares at a price of 2.1p per share.

Management Changes

In October 2021 we were delighted to announce that Mr Bai GuoJin ("Jack Bai"), an existing Executive Director, was appointed as the Company's new Chief Executive Officer. Jack Bai, who joined the GST board in January 2021, has over 30 years' experience in software development for the financial and telecommunication industries. He is a successful technology entrepreneur, who has successfully built and exited multiple companies, including in fintech and payment solutions. He is a co-founder of Wise MPay, the Company's collaboration partner, and leads the development of the Coalculus blockchain technology. He is leading the Group's blockchain technology activities and its plans to launch a borderless neobanking platform providing next-generation digital money solutions.

Later in October 2021, we were also delighted to announce that Mr. Tan Guan Han, Shayne ("Shayne Tan"), an existing Executive Director, was appointed as the Company's new Chief Operating Officer. Shayne Tan, who joined the GST board in January 2021, holds a Bachelor of Business Management Degree from Singapore Management University and has more than five years of sales, operations, and management experience in growth-stage companies operating exclusively within the blockchain and cryptocurrency sector. He is, alongside Jack Bai, a co-founder of the Coalculus blockchain platform.

The Company's board was further strengthened from 1 March 2022 with the appointment of Mr Bai Zhencong ("Galvin Bai") as an Executive Director of the Company. Galvin Bai has over 15 years' experience in a variety of business development and process implementation roles, including at All Best Enterprise Pte Ltd, the Singapore based regulated money transfer and exchange company. Galvin has considerable experience of the workflows and processes involved in payment and remittance businesses, including the implementation of Know Your Client ("KYC") and Anti-Money Laundering ("AML") processes. Galvin has a degree in Manufacturing Engineering from Boston University in the USA.

Summary

The year to 31 March 2022 was a pivotal one for the Company and one in which we made great progress in implementing our strategy to drive forward our GS Fintech plans. With the signing of the collaboration agreement with Wise Mpay we have been able to access the required knowledge and resources to build a world-class blockchain-enabled neobanking platform. The acquisition of Angra, completed just before the end of the financial year, has added an established UK platform for our activities and coupled with the anticipated completion of the acquisition of Glindala shortly we believe we are very well positioned for the next stage of our development with the role out of our GS Money offerings commercially.

In closing I would like to take the opportunity to thank all our staff for their outstanding commitment and hard work during the year, and our shareholders for their continuing support. GST has come a long way in a very short period of time and I believe we are very well positioned to roll out our borderless neobanking platform. Following the completion of the disposal of EMS Wiring Systems the Group will be able to focus all its resources on developing its blockchain enabled neobanking activities and it will be a 'pure play' fintech group. I look forward to the remainder of 2022 and beyond with confidence.

Tone Kay Kim GOH

Chairman

FINANCIAL REVIEW

The Group's financial statements include a full 12-month contribution from EMS Wiring Systems and Angra has been consolidated from 7 March 2022.

Income Analysis

For the 12-months ended 31 March 2022 the Company had operating revenue of US$4.24 million (2021: US$2.83 million). The Group's operating loss before tax for the financial year is US$1.43 million, compared to the operating loss incurred in previous financial year of US$0.50 million. In addition, the Group received grants and other income during the year of US$0.24 million (2021: US$0.58 million), leading to total income recognised in the year of US$4.47 million (2021: US$3.41 million).

Angra for the period from 7 March to 31 March 2022 had US$10.28 million in transaction volume, which contributed US$0.05 million in revenue to the Group. EMS Wiring Systems, despite slowly recovering sales to record US$4.19 million for the year (2021: US$2.83 million), remained loss making due to margin pressures, bad debts and the requirement for continued research and development.

Balance Sheet Analysis

Net assets as at 31 March 2022 amounted to US$6.01 million (2021: US$1.82 million).

As at 31 March 2022, the Group had available cash of US$5.10 million, an increase of US$3.36 million from the preceding financial year (2021: US$1.74 million) due to new share issuance proceeds during the year.

The Directors believe that the Group is in a stable financial position and has the financial resources to enable it to expand and grow its current operations and meet all its current liabilities, together with the ability to access further capital should an appropriate need arise.

Enquiries:

For more information please see: https://gstechnologies.co.uk/

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME

For the financial year ended 31 March 2022

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 March 2022

CONSOLIDATED STATEMENT OF CASH FLOWS

For the financial year ended 31 March 2022

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the financial year ended 31 March 2022

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the financial year ended 31 March 2022

1. General Information

1.1 Corporate information

The consolidated financial statements of GSTechnologies Ltd (the "Company") and its subsidiaries (collectively referred to as the "Group") for the financial year ended 31 March 2022 were authorised for issue in accordance with a resolution of the Directors on 27 July 2022. The shares of the Company are publicly traded on the London Stock Exchange.

The registered office of GSTechnologies Ltd, the ultimate parent of the Group, is Ritter House, Wickhams Cay II, Tortola VG1110, British Virgin Islands.

The principal activity of the Group is data infrastructure, storage and technology services.

2. Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) as adopted by the European Union (EU) as they apply to the financial statements of the Group for the year ended 31 March 2022.

The consolidated financial statements have been prepared on a historical cost convention basis, except for certain financial instruments that have been measured at fair value. The consolidated financial statements are presented in US dollars and all values are rounded to the nearest thousand except when otherwise indicated.

2.1 Consolidation

The consolidated financial statements comprise the financial statements of the Group as at 31 March 2022, and for the year then ended.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases.

The financial statements of the subsidiaries are prepared for the same reporting period as the GSTechnologies Ltd. (parent company), using consistent accounting.

All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.

Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if it results in a deficit balance. A change ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

Business Combinations

Business combinations occur where an acquirer obtains control over one or more businesses. A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exceptions).

When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not re-measured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is re-measured in each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date.

All transaction costs incurred in relation to business combinations are expensed to the statement of comprehensive income. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.

3. Significant accounting judgements, estimates and assumptions

The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes would differ from these estimates if different assumptions were used and different conditions existed.

In particular, the Group has identified the following areas where significant judgements, estimates and assumptions are required, and where actual results were to differ, may materially affect the financial position or financial results reported in future periods. Further information on these and how they impact the various accounting policies is located in the relevant notes to the consolidated financial statements.

Going concern

This report has been prepared on the going concern basis, which contemplates the continuation of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.

At 31 March 2022, the Group held cash reserves of $5.10 million (2021: 1.74 million).

The Directors believe that there are sufficient funds to meet the Group's working capital requirements.

The Group recorded a loss of US$1.43 million for the year ended 31 March 2022 and had net assets of US$6.01 million as at 31 March 2022 (2021: loss of $0.49 million and net assets of US$1.82 million).

With the disposal of the unprofitable subsidiary EMS, the continuing subsidiaries will be Angra Ltd and GS Fintech subsidiaries which are expected to contribute profit to the Group.

Accruals

Management have used judgement and prudence when estimating certain accruals for contractor claims. The accruals recognised are based on work performed but are before settlement.

Contingencies

By their nature, contingencies will only be resolved when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgement and the use of estimates regarding the outcome of future events. Please refer to Note 25 for further details.

The preparation of the Company's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of each reporting period. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in the future periods.

Judgements made in applying accounting policies

Management is of the opinion that there are no significant judgements made in applying accounting estimates and policies that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period are discussed below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Provision for expected credit losses (ECL) on trade receivables and contract assets

ECLs are unbiased probability-weighted estimates of credit losses which are determined by evaluating a range of possible outcomes and taking into account past events, current conditions and assessment of future economic conditions.

The Company uses a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns. The provision matrix is initially based on the Company's historical observed default rates. The Company will calibrate the matrix to adjust historical credit loss experience with forward-looking information. At every reporting date, historical default rates are updated and changes in the forward- looking estimates are analysed.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Company's historical credit loss experience and forecast of economic conditions may also not be representative of customer's actual default in the future.

The carrying amount of the Company's trade receivables at the end of the reporting period is disclosed in Note 13 to the financial statements.

Revenue recognition

The Company uses the percentage-of-completion method to account for its contract revenue. The stage of completion is measured in accordance with the accounting policy stated in Note 5. Significant assumptions are required in determining the stage of completion, the extent of the contract cost incurred, the estimated total contract cost and the recoverability of the contracts. In making these assumptions, management has relied on past experience and the work of specialists.

Significant judgement is also required to assess allowance made for foreseeable losses, if any, where the contract cost incurred for any job exceeds its contract sum. The carrying amounts of contract balances at the reporting date are disclosed in Note 16 to the financial statements.

Allowance for inventory obsolescence

The Company reviews the ageing analysis of inventories at each reporting date and makes provision for obsolete and slow-moving inventory items identified that are no longer suitable for sale. The net realisable value for such inventories are estimated based on the most reliable evidence available at the reporting date. These estimates take into consideration market demand, competition, selling price and cost directly relating to events occurring after the end of the financial year to the extent that such events confirm conditions existing at the end of the financial year. Possible changes in these estimates could result in revisions to the valuation of inventories. The carrying amounts of the Company's inventories at the reporting date are disclosed in Note 14 to the financial statements.

4. Adoption of new and amended standards and interpretations

The Group adopted all of the new and revised Standards and Interpretations issued by the IASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 April 2021. It has been determined by the Group, there is no impact, material or otherwise, of the new and revised standards and interpretations on its business and therefore no change is necessary to Group accounting policies.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

5. Summary of significant accounting policies

Plant and equipment

Plant and equipment are shown at cost less accumulated depreciation and impairment losses. The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, any incidental cost of purchase, and associated borrowing costs. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset. Directly attributable costs include employee benefits, professional fees and costs of testing whether the asset is functioning properly. Capitalised borrowing costs include those that are directly attributable to the construction of assets.

Property, plant and equipment relate to plant, machinery, fixtures and fittings and are shown at historical cost less accumulated depreciation and impairment losses. Depreciation of property, plant and equipment are computed on a straight line basis over the estimated useful life of the assets.

The depreciation rates applied to each type of asset are as follows:

Subsequent expenditure is capitalised when it is probable that future economic benefits from the use of the asset will be increased. All other subsequent expenditure is recognised as an expense in the period in which it

is incurred. Assets that are replaced and have no future economic benefit are derecognised and expensed through profit or loss. Repairs and maintenance which neither materially add to the value of assets nor appreciably prolong their useful lives are charged against income. Gains/ losses on the disposal of fixed assets are credited/charged to income. The gain or loss is the difference between the net disposal proceeds and the carrying amount of the asset.

The asset's residual values, useful lives and methods of depreciation are reviewed at each reporting period and adjusted prospectively if appropriate.

Inventories

Inventories are valued at the lower of cost and net realisable value.

Financial instruments

a) Financial assets

(i) Classification, initial recognition and measurement

The Company classifies its financial assets into the following measurement categories: amortised cost; fair value through other comprehensive income (FVOCI); and fair value through profit or loss (FVPL).

Financial assets are recognised when, and only when the entity becomes party to the contractual provisions of the instruments.

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at FVPL, transaction costs that are directly attributable to the acquisition of the financial assets. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Trade receivables are measured at the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third party, if the trade receivables do not contain a significant financing component at initial recognition.

(ii) Subsequent measurement

Debt instruments

Subsequent measurement of debt instruments depends on the Company's business model for managing the asset and the contractual cash flow characteristics of the asset. The Company only has debt instruments at amortised cost.

Financial assets that are held for the collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Financial assets are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the assets are derecognised or impaired, and through the amortisation process.

Debt instruments of the Company comprise cash and cash equivalents and trade and other receivables.

Equity instruments

On initial recognition of an investment in equity instrument that is not held for trading, the Company may irrevocably elect to present subsequent changes in fair value in other comprehensive income which will not be reclassified subsequently to profit or loss. Dividends from such investments are to be recognised in profit or loss when the Company's right to receive payments is established. For investments in equity instruments which the Company has not elected to present subsequent changes in fair value in other comprehensive income, changes in fair value are recognised in profit or loss.

(iii) Derecognition

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income for debt instruments is recognised in profit or loss.

b) Financial liabilities

(i) Initial recognition and measurement

Financial liabilities are recognised when, and only when, the Company becomes a party to the contractual provisions of the financial instrument. The Company determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value plus in the case of financial liabilities not at FVPL, directly attributable transaction costs.

(ii) Subsequent measurement

After initial recognition, financial liabilities that are not carried at FVPL are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

Financial liabilities measured at amortised cost comprise trade and other payables.

(iii) Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. On derecognition, the difference between the carrying amounts and the consideration paid is recognised in profit or loss.

Offsetting

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and short-term deposits that are readily convertible to known amount of cash and that are subject to an insignificant risk of changes in their fair value, and are used by the Company in the management of its short-term commitments. For the purpose of the statement of cash flows, pledged deposits are excluded whilst bank overdrafts that are repayable on demand and that form an integral part of the Company's cash management are included in cash and cash equivalents.

Impairment

Financial Assets

The Company recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at FVPL and contract assets. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is recognised for credit losses expected over the remaining life of the exposure, irrespective of timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment which could affect debtors' ability to pay.

The Company considers a financial asset in default when contractual payments are past due for more than 90 days. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Non-financial assets

The carrying amounts of the Company's non-financial assets, other than inventories, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then

the asset's recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its estimated recoverable amount.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. For the purpose of impairment testing, the recoverable amount is determined on an individual asset basis unless the asset does not generate cash inflows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the CGU to which the asset belongs. If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.

The difference between the carrying amount and recoverable amount is recognised as an impairment loss in profit or loss.

An impairment loss for an asset other than goodwill is reversed only if, there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. The carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years.

A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss.

Trade and other payables

Trade and other payables are non-derivative financial liabilities that are not quoted in an active market. It represents liabilities for goods and services provided to the Group prior to the year end and which are unpaid. These amounts are unsecured and have 7-30 day payment terms. Trade and other payables are presented as current liabilities unless payment is not during within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

Interest-bearing loans and borrowings

Interest-bearing loans and borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost using the effective interest (EIR) method. The fair value implies the rate of return on the debt component of the facility. This rate of return reflects the significant risks attaching to the facility from the lenders' perspective.

Determination of Fair Values

A number of the Company's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Trade and other receivables

The fair values of trade and other receivables are estimated as the present value of future cash flows, discounted at the market rate of interest at the measurement date. Current receivables with no stated interest rate are measured at the original invoice amount if the effect of discounting is immaterial. Fair value is determined at initial recognition and, for disclosure purposes, at each annual reporting date.

Non-derivative financial liabilities

Non-derivative financial liabilities are measured at fair value at initial recognition and for disclosure purposes, at each annual reporting date. Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the measurement date.

Other financial assets and liabilities

The carrying amount of financial assets and liabilities with a maturity of less than one year is assumed to approximate their fair values.

Provisions

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax amount that reflects current market assessments of the time value of money, and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

Finance income

Interest income is made up of interest received on cash and cash equivalents.

Income tax

Tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred income tax is provided using the balance sheet method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences. Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses, can be utilised, except:

The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will be available to allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. 

Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

Foreign currencies

i) Functional and presentation currency

The consolidated financial statements are presented in US dollars, which is the Group's presentation currency.

ii) Transaction and Balances

Transactions in foreign currencies are initially recorded in the functional currency at the respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the spot rate of exchange ruling at the reporting date. All differences are taken to the profit or loss, should specific criteria be met.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

iii) Group Companies

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

Revenue Recognition

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

Revenue is recognised when the Company satisfies a performance obligation by transferring a promised good or service to the customer, which is when the customer obtains control of the good or service. A performance obligation may be satisfied at a point in time or over time. The amount of revenue recognised is the amount allocated to the satisfied performance obligation.

Rendering of services

Revenue from rendering of services is recognised as performance obligations are satisfied. Payments are due from customers based on the agreed billing milestone stipulated in the contracts or based on the amounts certified by the customers.

Where performance obligations are satisfied over time as work progresses, revenue is recognised progressively based on the percentage of completion method. The stage of completion is assessed by reference to the cost incurred relative to total estimated costs (input method). The related costs are recognised in profit or loss when they are incurred, unless they relate to future performance obligations.

If the value of services rendered for the contract exceeds payments received from the customer, a contract asset is recognised and presented separately on the balance sheet. The contract assets are transferred to receivables when the entitlement to payment becomes unconditional. If the amounts invoiced to the customer exceeds the value of services rendered, a contract liability is recognised and separately presented in the statement of financial position.

 Interest Income

Interest income is recognised using the effective interest method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income.

Contract assets and liabilities

Contract assets primarily relate to the Company's rights to consideration for work completed but not billed at the reporting date on project work. Contract assets are transferred to trade receivables when the rights become unconditional. This usually occurs when the Company invoices the customer.

Contract liabilities primarily relate to advance consideration received from customers and progress billings issued in excess of the Company's rights to the consideration.

6. Revenue

Transaction fees and charges are from the newly acquired Angra Ltd with transaction volume of US$10.28 million for period 7-31 March.

The disaggregation of revenue is as follows:

7. Net Operating Expenses

8. Key management personnel

9. Employee cost

10. Earnings per share

11. Segment Reporting

The consolidated entity's operating segments have been determined with reference to the monthly management accounts used by the chief operating decision maker to make decisions regarding the consolidated entity's operations and allocation of working capital.

Due to the size and nature of the consolidated entity, the Board as a whole has been determined as the chief operating decision maker.

The consolidated entity operates in one business segment, being information data technology and infrastructure.

The revenues and results are those of the consolidated entity as a whole and are set out in the statement of profit and loss and other comprehensive income. The segment assets and liabilities of this segment are those of the consolidated entity and are set out in the Statement of Financial Position.

12. Cash and cash equivalents

13. Trade and Other Receivables

(i) The collaboration agreement with Wise Mpay to supply the Company with software and services for its fintech plans is reflected as advances to supplier pending completion. The web remittance portal and complex blockchain e-wallet application is currently under development and is still a work in progress.

14. Inventories

The movement in the allowance for inventory obsolescence is as follows:

15. Property, plant and equipment

Lease liabilities recognized in the balance sheet

The balance sheet shows the following amounts relating to lease liabilities

Amounts recognized in the statement of profit or loss

The statement of profit or loss shows the following amounts relating to leases:

16. Work in progress

The contract assets primarily relate to the Company's rights to consideration for work completed but not billed at the reporting date. If the value of services rendered exceeds payments received from the customer, a contract asset is recognised and presented separately. The contract asset is transferred to receivables when the entitlement to payment becomes unconditional.

The contract liabilities primarily relate to advance consideration received from customers for contract revenue. If the amounts invoiced to the customer exceeds the value of services rendered, a contract liability is recognised and presented separately.

The changes in contract balances are due to the differences between the agreed payment schedule and progress of project work.

17. Intangible Assets

There was no impairment during the period.

The acquisition of Angra Limited for £800,000 on March 7, 2022 resulted in the creation of goodwill. Angra Limited is a UK Financial Conduct Authority (FCA) accredited Authorised Payment Institution ("API"), which runs under the AngraFX brand name.

18. Subsidiaries

Details of the Company's subsidiaries on 31 March 2022 are as follows:

19. Taxation

Unrecognised tax losses

Where the realisation of deferred tax assets is dependent on future taxable profits, losses carried forward are recognised only to the extent that business forecasts predict that such profits will be available to the companies in which losses arose.

The parent, GSTechnologies Ltd, is not liable to corporation tax in BVI, so it has no provision for deferred tax. However, GSTechnologies (Australia) Pty Ltd is liable to tax in Australia and EMS is liable for tax in Singapore.

The tax expense on the results of the financial year for the Company varies from the amount of income tax determined by applying the Singapore statutory rate of income tax on Company's profit.

20. Share capital and reserves

The share capital of the Company is denominated in UK Pounds Sterling. Each allotment during the period was then translated into the Group's functional currency, US Dollars at the spot rate on the date of issue.

21. Non-controlling equity interest

All entities within the group are currently 100% owned and accordingly a non-controlling interest does not arise.

22. Trade and other payables

Trade payables are non-interest bearing and are normally settled on 60-days terms.

23. Loans Payable

24. Auditor renumeration

During the financial year the following fees were paid or payable for services provided by Elderton Pty Ltd, the auditor of the Group:

25. Commitments and Contingencies

The Group is subject to no material commitments or contingent liabilities.

26. Related party transactions

The following is the significant related party transactions entered into by the Company with related parties on terms agreed between the parties: