GSTechnologies Ltd (LON:GST) has announced the Company’s reviewed interim results for the six months ended 30 September 2020.
Period Highlights
· Revenue for H1 reduced to US$769,000 (H1 2019:US$2,594,000) due the impact of the Covid-19 pandemic.
· Received grants and other income of approximately US$295,000 from government to mitigate the impacts of the Covid-19 lockdown.
· At 30 September 2020 the Company had US$1,789,000 of cash and cash equivalents (30 September 2019: US$398,000), after taking out a loan of US$1,842,000 during the period.
· Comprehensive loss for the period of US$412,000 (H1 2019: US$505,000 loss), with financial performance expected to recover in the second half as the Covid-19 related restrictions eased.
Post Period Highlights
• Grant of approximately US$200,000 awarded to EMS from Enterprise Singapore to develop a prototype liquid film cooling system for data centers.
• EMS secured a contract for the installation of an integrated security system in a Singapore data centre valued at approximately US$1 million.
• Subscription by a Singapore based investor group led by Jack Bai, a blockchain fintech specialist, raising £198,000.
• Appointment of Mr Bai GuoJin (“Jack Bai”) and Mr Tan Guan Han, Shayne (“Shayne Tan”) as Executive Directors of the Company to help facilitate the strategic transformation of the Company.
Chairman’s Statement
Following the successful completion of our financial year ended 31 March 2020, we almost immediately went into the Singapore government’s mandatory ‘Circuit Breaker’ lockdown, due to the Covid-19 pandemic, and the associated restrictive measures applied by the Singapore Government and other countries around the globe did, unfortunately, negatively impact the business of our wholly owned Singapore based subsidiary, EMS Wiring Systems Pte Ltd.
The Covid-19 pandemic has posed a serious challenge for our management team and the whole business at every level. I would like to take this opportunity to thank all of our employees, consultants and the management team for their hard work and dedication through these difficult times.
With the onset of the pandemic our top priority became the health and safety of our employees and customers. We also immediately implemented strict cost controls and cash preservation measures in order to run the business at a ‘cash flow break even’ position whilst the full impact of the new operating environment on our business was better calibrated. EMS also utilised appropriate Singapore Government Covid-19 related economic assistance and relief programmes.
The changes required in response to the pandemic were executed as planned and allowed a much stronger operating model to be implemented in record time. It included ensuring our essential services team was available to response rapidly as needs arose.
As seen globally, lockdown measures have accelerated changes in the online environment and working from home trends look set to continue. This has required EMS to be more creative in its ICT solution offerings. Our key management team have utilised their depth of knowledge of the market and products to quickly react to the transformation with the goal of maximising both profitability and long-term shareholder value.
For the six month period ended 30 September 2020, the Group generated revenue of US$769,000, a 70% decrease from $2,594,000 in H1 2019. With the government grant and other income of US$295,000, the net operating loss for period was US$561,000 (H1 2019: US$470,000).
Post the period end, sales picked up substantially in the last three months of 2020, as the worst effects of the pandemic reduced in Singapore. A particular highlight was the US$1 million contract EMS secured for the installation of an integrated security system in a Singapore data centre that was announced on 14 December 2020. We believe this contract highlights EMS’ wide ranging capabilities and we look forward to securing further significant business in 2021.
Another highlight post the period end was the award of a grant to EMS valued at approximately US$200,000 from Enterprise Singapore, to develop a prototype liquid film cooling system for use in data centres. In Southeast Asia, in particular, due to the high ambient temperatures, significant issues are faced in providing air cooling for servers. Switching to a liquid cooled method eliminates the need for large and expensive chillers and reduces the amount of associated equipment, space and power required, while still providing more flexibility for housing the servers either inside or outside the conventional white space. By using EMS’ liquid cooling method the Company believes it can help businesses manage the total cost of data centre and computing asset ownership by reducing the cost to provide and maintain a high degree of cooling efficiency. Once commercialised we believe this solution will be attractive to both new and existing data centre operators and EMS is well placed to provide both the solution, together with ongoing service, maintenance and training support.
Post period end we were delighted to secure a strategic investment from a group of investors led by Jack Bai and for Jack Bai and Shayne Tan to join the Company’s board as Executive Directors. Both have significant fintech experience, particularly in relation to blockchain and we look forward to them bringing their considerable skills to GST as we seek to develop the business.
Summary
Despite the effects of the Covid-19 pandemic, we are confident that the business is well placed for the future. In particular the addition of Jack Bai and Shayne Tan to the board will help us drive our future growth. The Company intends to focus strategically on disruptive technologies applicable to the data centre sector with high scalability and significant profit margin prospects, including the application of blockchain technologies where appropriate. We look forward to reporting on our progress during 2021.
Tone Kay Kim GOH
Chairman
