GINSMS Inc.-Performance Highlights for the Three Months Ended June 30, 2012
29 Agosto 2012 - 10:43PM
Marketwired Canada
GINSMS Inc. ("GINSMS" or the "Company") (TSX VENTURE:GOK) has announced its
financial results for the first quarter ended June 30, 2012.
PERFORMANCE HIGHLIGHTS FOR THE THREE MONTHS ENDED JUNE 30, 2012
-- A decline in revenue, an increase in professional fees, salaries and
notably professional and consultancy fees due its planned acquisition of
Inphosoft Group Pte Ltd, resulted in a loss of $45,035 for the three-
month period ended June 30, 2012. This represents a drop of 391%
compared to a net income of $16,509 for the corresponding quarter the
previous year. EBITDA was also affected dropping by 146.6% to a negative
$22,544.
-- The decline in revenue combined with an increase in the cost of sales
resulted in a drop in gross margin to 55% in the three-month period
ended June 30, 2012, compared to 64.4% in the same quarter the previous
year.
-- Volume of inter-SMS traffic for the three-month period ended June 30,
2012 was down by 29.4% to 23,784,375 million from the same period the
previous year. When compared to the previous quarter ended March 31,
2012, traffic is down 4.9%.
-- Despite the loss for the last quarter, liquidity was only mildly
affected with a working capital of $609,457 as at June, 30 2012,
compared to a working capital of $614,907 as at March 31, 2012. With the
substantial change in the balance between current assets and current
liabilities, principally the result of accounts payable dropping by 70%,
the working capital ratio improved from 5.1 times to one to 15 times to
one.
SECTION 1.4: RESULTS OF OPERATIONS
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Three-month
period ended Year ended
Financial June 30, March 31,
Highlights (Unaudited) (Audited)
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2012 2011 2012 2011
Revenues $ 157,089 181,810 686,934 785,615
Cost of sales $ (70,724) (64,689) (268,454) (347,184)
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Gross profit $ 86.365 117,121 418,480 438,431
Gross margin 55.0% 64.4% 60.9% 55.8%
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EBITDA (1) $ (22,544) 48,372 (345,348) 15,847
EBITDA margin (14.4)% 26.6% (50.3)% 2.0%
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Net earnings $ (48,035) 16,509 (493,704) (96,536)
Net earnings margin (30.6)% 9.1% (71.9)% (12.3)%
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(1) EBITDA is a non-GAAP measure related to cash earnings and is defined
for these purposes as earnings before income taxes, depreciation and
amortization (share-based compensation included).
Revenue for the first quarter ending June 30, 2012 was $157,089, representing a
reduction of 13.6% over revenue of $181,810 reported during the same three-month
period the previous year. The reduction in revenue is due essentially to a 29.4%
drop in SMS traffic during the quarter, compared to the corresponding quarter
the previous year. Note that in comparison with the immediately preceding
quarter ending March 31, 2012, revenue is virtually unchanged dropping by only
1% while traffic continued to show a slight downward bias.
As mentioned in more detail before, GINSMS believes that the lower trend in SMS
traffic is partly caused by cellphone users migrating to MIM applications such
as Research in Motion's BBM, Apple's Imessage or other cross-platform mobile
messaging applications such as WhatsApp, IM+, Skype or Google Talk.
Net income for the quarter dropped by 391% to a loss of $48,035. This is due to
three main factors (i) a 3.5 fold increase in professional fees (ii) an increase
of 67.4% in consultancy fees and (iii) an increase in salaries and wages of
40.2%. The length and complexity of the negotiations leading to the acquisition
of Inphosoft and the requirements and conditions imposed by the TSXV on GINSMS
to complete the acquisition of Inphosoft have resulted in a substantial increase
in the professional fees of GINSMS over the past several quarters. Salaries and
wages were up by 40.2%, the result principally of an increase in the workload
due to the planned acquisition of Inphosoft, necessitating an adjustment in
compensation. Finally cost of sales was up by 9.3% reflecting higher costs for
the operation and maintenance of the IOSMS platform.
EBITDA (earnings before interest, taxes, depreciation and amortization) is a
useful indicator in measuring the Company's ability to sustain long term viable
operations while resources are used to grow the Company in a difficult
environment. EBITDA for the three-month period ended June 30, 2012 amounted to a
negative $22,544 compared to a positive EBITDA of $48,372 for the corresponding
period the previous year. The incidence on net earnings resulting from the
increase in both professional and consultancy as well as the increase in
salaries and wages this past quarter is the main reason for the drop in EBITDA.
As a result of the loss for the year, liquidity contracted with cash on hand as
at June 30, 2012 amounting to $455.010, compared to $548,752 at year end.
Nevertheless, working capital changed only moderately dropping by less than 1%
to $609,452. With the substantial drop off in accounts payable, the working
capital ratio improved from 5.1 times to one to 15 times to one.
With the addition of Inphosoft, the Company will be able to immediately
introduce a series of VAS that will enhance GINSMS' product offering and
transform it into an innovative revenue-powering mobile service and solution
provider. GINSMS expects that the acquisition will boost its revenue in Hong
Kong and create renewed interest on its IOSMS platform. The acquisition of
Inphosoft will result in synergies and immediate cost savings as Inphosoft is
expected to take over software maintenance work associated by the Company's
IOSMS platform.
Forward-Looking Information
Certain information included in this press release may constitute
forward-looking statements. Forward-looking statements generally can be
identified by the use of terms such as "may", "could", "will", "expect",
"intend", "estimate", "anticipate", "believe" or "continue" or the negative
thereof or variations thereon or similar terminology. Forward-looking
statements, by their very nature, involve significant risks, uncertainties and
assumptions. A number of factors could cause actual results to differ materially
from the results discussed in the forward-looking statements, including, without
limitation, the risks factors discussed in the section entitled "Risk Factors"
in GINSMS's long form prospectus dated November 12, 2009 which is available
under GINSMS's profile on SEDAR at www.sedar.com. Although the forward-looking
statements contained herein are based upon what management believes to be
reasonable assumptions, GINSMS cannot assure the reader that actual results will
be consistent with these forward-looking statements. These assumptions are
further described in GINSMS's management discussion & analysis for the three and
twelve-month periods ended March 31, 2011, which is also available on SEDAR at
www.sedar.com. These forward looking statements are made as of the date hereof
and GINSMS assumes no obligation to update or revise them to reflect new events
or circumstances except as may be required by law. Accordingly, readers should
not place undue reliance on the forward-looking statements.
About GINSMS
GINSMS owns 100% of Global Edge Technology, a technology company focused on
providing inter-operator short messaging services to mobile telecom operators in
Hong Kong. GINSMS's stated business objective to become a leading short
messaging service ("SMS") and data hubbing service provider to mobile network
operators in Hong Kong and China and to establish an international SMS and value
added services business.
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