REG - Global Invacom Group - 3rd Quarter Results
Global Invacom Group Limited
("Global Invacom", the "Company" or the "Group")
Results for the nine months ended 30 September 2019
Singapore/London, 14 November 2019 - Global Invacom (SGX: QS9) (AIM: GINV), the global provider of satellite communications equipment and electronics, is pleased to announce its financial results for the nine months ended 30 September 2019 ("9M FY2019") and three months ended 30 September 2019 ("Q3 FY2019").
Key financial highlights:
· Revenue for Q3 FY2019 increased 6.4% to US$32.5m (Q3 FY2018: US$30.5m)
· Gross Profit for Q3 FY2019 increased by 3.3% to US$6.2m (Q3 FY2018: US$6.0m)
· Net profit for Q3 FY2019 increased 107.3% to US$0.2m (Q3 FY2018: US$0.1m)
· Cash and cash equivalents of US$10.8m (31 December 2018: US$8.4m)
Key operational highlights:
· Integration of recent acquisitions has enhanced the Group's ability to offer customers true end-to-end solutions across our product range, a genuine differentiator in the satellite communications industry
· Continued focus on driving both product development and diversification to support growth ambitions
· Established a new subsidiary in Jakarta, Indonesia to support sales and marketing activities across the APAC region, thereby significantly improving the Group's ability to directly address this core market
· Dissolution of two wholly-owned subsidiaries with no material impact for the Group - Radiance Electronics (Shenzhen) Co Ltd and Global Invacom Japan Kabushiki Kaisha - resulting in a more efficient business structure
Global Invacom addresses demand for connectivity through two key channels: delivering direct-to-home ("DTH") satellite connectivity, and data over satellite ("DOS") in which the Group's products - via its service providers - deliver high speed internet and data connectivity to end customers.
The Group has continued to deliver sales growth in Q3 FY2019, directly reflecting increasing consumer demand for data and connectivity, and the service providers' desire to deliver this connectivity to its global customer base. Our sales teams continue to see strong ongoing demand for the Group's DTH solutions, with rapidly increasing global demand for DOS products, reflecting the exponential rate of growth for data consumption globally.
DTH continues to play a fundamental role in delivering services direct to the consumer, despite the proliferation of over the top ("OTT") services. The Group believes that DTH will continue to generate good revenues going forward. In the first half of the year, the Group launched its next generation Slimline product which has been well-received by the customer.
Demand for DOS continues to grow exponentially globally. As mentioned previously, Global Invacom is now capable of offering integrated antenna and electronics solutions, including auto-pointing, medium earth orbit ("MEO") and low earth orbit ("LEO") satellite tracking features and waveguides, expanding its offering and building on its reputation as the 'go to' industry partner of choice for several global media operators, including a leading UK television and telecommunications company, a major broadcaster in the US and the world's largest provider of DOS services.
Revenue for the nine months ended 30 September 2019 increased 21.5% to US$104.4m from US$85.9m in the prior year ("9M FY2018"). Revenue for the quarter ended 30 September 2019 increased 6.4% to US$32.5m, from US$30.5m in Q3 FY2018, reflecting the overall buoyancy and growing demand in the global market, as well as the Group's introduction of new and improved products to key customers.
Geographically, Group revenue for 9M FY2019 increased in America, Europe and Rest of the World ("RoW") by US$14.8 million (+24.9%), US$2.6 million (+13.1%) and US$3.1 million (+157.1%), respectively, revenue in Asia fell by US$2.0 million (-45.3%). Revenue for Q3 FY2019 increased in Europe and RoW by US$1.2 million (+18.7%) and US$0.9 million (+141.6%) respectively, but declined in Asia by US$0.1 million (-6.7%) compared to the prior year. The America segment remained constant in the comparative Q3 period.
Gross profit has increased 19.7% to US$21.3 million in 9M FY2019, compared to US$17.8 million in 9M FY2018, driven by a combination of improved margins due to the launch of new Slimline products, improved product mix and the optimisation of manufacturing facilities.
Net profit increased by 107.3% to US$0.2 million (Q3 FY2018: US$0.1 million), representing net margins of 0.7% and 0.4%, respectively. Overall, the Group posted a net profit of US$1.8 million in 9M FY2019 as compared to US$0.6 million in 9M FY2018, representing net margins of 1.7% and 0.7%, respectively.
Administrative expenses for 9M FY2019 increased 9.8% to US$18.0 million compared to US$16.4 million in 9M FY2018, representing 17.2% and 19.1% of revenue respectively. This was primarily due to the inclusion of salaries and related costs from the acquisition of business from Skyware Technologies, which was absent in 9M FY2018. If these costs were excluded, administrative expenses would be US$16.3 million compared to US$16.4 million for 9M FY2018, a 0.6% decrease. Administrative expenses for Q3 FY2019 remained constant at US$5.8 million compared to the previous year, representing 17.9% and 19.0% of revenue respectively.
Earnings per share on a fully diluted basis increased to 0.08 US cent for Q3 FY2019 (Q3 FY2018: 0.04 US cent). Net asset value per share for the Group increased to 21.32 US cents at 30 September 2019 (31 December 2018: 20.84 US cents).
The Group's cash and cash equivalents amounted to US$10.8 million as at 30 September 2019 (31 December 2018: US$8.4m).
The global satellite communications equipment market was valued at US$22.1 billion in 2018 and is expected to exceed US$53 billion by 2027, representing a CAGR of over 10% [1], the VSAT/DOS market is predicted to account for US$12.3 billion of this total in 2027[2].
Growth in the market is expected to be driven through increasing demand for uninterrupted connectivity and data across multiple markets where physical infrastructure, such as fibre, does not fit the purpose or is not an economically viable long-term solution. Furthermore, mobile data traffic continues to increase unabated, with a recent report from Ericsson stating that total mobile data traffic is expected to grow at 30% CAGR between 2018 and 2024, reaching 131 exabytes per month by the end of 2024, with 95% of that traffic generated from smartphones[3].
In Q3 FY2019, the Group continued to see strong revenue generated through its DTH division, with profits increasing compared to the last quarter, driven in part by the increased uptake of our second-generation Slimline low noise block downconverter ("LNB"). The Group now has both a Western-Arc and Eastern-Arc model, thereby servicing the whole of the US, and benefitted from being sole source supplier to a major customer for these products in the first half of 2019.
As supported by independent reports, the DOS market is being driven by the unprecedented growth of data consumption across all industry verticals. The Group boasts an enviable customer list and is increasingly seeing customers take advantage of its unique positioning and capability in delivering both antenna and electronics components.
The integration of the Apexsat acquisition - announced in June 2019 - continues to progress well, and has opened up multiple opportunities through the expansion of the Group's capabilities and product range. With its larger portfolio of products now available to clients, Global Invacom is well positioned to bid for large scale tenders in which it has historically been unable to participate.
The Group intends to continue enhancing its sales and marketing activities to further expand its customer base, as well as ensuring it is fully maximising opportunities within its existing customer base. As previously mentioned, the Company continues to de-risk its manufacturing exposure through reduction of activity at its largest site in China.
Notwithstanding the above, the Group is mindful of the difficult economic conditions in areas of the world in which we do business and, as much as possible, has plans and actions in place to react quickly and decisively to reduce any long-term impacts on the business.
Tony Taylor, Executive Chairman of Global Invacom, commented:
"We are delighted to report our eleventh successive quarter of profit growth, reflecting our unique ability to strike a balance to enhance our product offering while successfully serving our global customer base.
"As we continue to right size our business to support global demand, our ability to remain at the forefront of innovation underpins our growth aspirations and drives our strategic direction."
For further information, please contact:
Global Invacom Group Limited
Matthew Garner, Chief Financial Officer
Tel: +65 6431 0782
Tel: +44 203 053 3523
finnCap Ltd (Nominated Adviser and Joint Broker)
Christopher Raggett / Matthew Radley (Corporate Finance)
Tel: +44 207 220 0500
Mirabaud Securities LLP (Joint Broker)
Peter Krens (Equity Capital Markets)
Tel: +44 207 878 3362
WeR1 Consultants Pte Ltd (Singapore Investor Relations)
Jordan Teo / Ryan del Agua
Tel: +65 6737 4844
Vigo Communications (UK Media & Investor Relations)
Jeremy Garcia / Fiona Henson / Charlie Neish
Tel: +44 207 390 0238
About Global Invacom Group Limited
Global Invacom is a fully integrated satellite equipment provider with six manufacturing plants across China, Israel, Malaysia, UK and the US. Its customers include satellite broadcasters such as BSkyB of the UK and Dish Network of the USA and Data over Satellite providers including Hughes Network Systems, Viasat and Gilat Satellite Networks.
Global Invacom provides a full range of antennas, LNB receivers, transceivers, electronics, fibre distribution equipment, transmitters, switches and video distribution components as well as electronics manufacturing services in satellite communications. Following the acquisition in 2015 of Global Skyware, a leading US-based designer and supplier of satellite antennas products and services, the Company became the world's only full-service outdoor unit supplier.
Global Invacom is listed on the Mainboard of the Singapore Exchange Securities Trading Limited and its shares are admitted to trading on the AIM Market of the London Stock Exchange.
For more information, please refer to www.globalinvacom.com
FINANCIAL STATEMENT ANNOUNCEMENT FOR Q3 AND NINE MONTHS ENDED 30 SEPTEMBER 2019
PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS
1(a) A statement of comprehensive income (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year.
Consolidated Statement of Comprehensive Income for Q3 and nine months ended 30 September 2019. These figures have not been audited.
Group
Group
Q3
FY2019
Q3 FY2018
Increase/
(Decrease)
9 Months FY2019
9 Months FY2018
Increase/
(Decrease)
US$'000
US$'000
%
US$'000
US$'000
%
Revenue
32,496
30,530
6.4
104,441
85,926
21.5
Cost of sales
(26,282)
(24,516)
7.2
(83,148)
(68,141)
22.0
Gross profit
6,214
6,014
3.3
21,293
17,785
19.7
Other income
269
76
253.9
21
99
(78.8)
Distribution costs
(49)
(73)
(32.9)
(221)
(253)
(12.6)
Administrative expenses
(5,805)
(5,789)
0.3
(18,002)
(16,399)
9.8
Other operating expenses
-
-
-
(16)
(5)
220.0
Finance income
57
6
850.0
155
50
210.0
Finance costs
(392)
(130)
201.5
(802)
(377)
112.7
Profit before income tax(i)
294
104
182.7
2,428
900
169.8
Income tax (expense)/credit
(68)
5
N.M.
(616)
(259)
137.8
Profit after income tax
226
109
107.3
1,812
641
182.7
Other comprehensive (loss)/income:
Items that may be reclassified subsequently to profit or loss
- Exchange differences on translation of foreign subsidiaries
(153)
(127)
20.5
(253)
66
N.M.
Other comprehensive (loss)/income for the period, net of tax
(153)
(127)
20.5
(253)
66
N.M.
Total comprehensive income/(loss)
73
(18)
N.M.
1,559
707
120.5
Profit for the year attributable to:
Owners of the Company
228
109
109.2
1,814
641
183.0
Non-controlling interests
(2)
-
N.M.
(2)
-
N.M.
226
109
107.3
1,812
641
182.7
Total comprehensive income/(loss) attributable to:
Owners of the Company
75
(18)
N.M.
1,561
707
120.8
Non-controlling interests
(2)
-
N.M.
(2)
-
N.M.
73
(18)
N.M.
1,559
707
120.5
N.M.: Not Meaningful
Note:
(i) Profit before income tax was determined after (charging)/crediting the following:
Group
Group
Q3
FY2019
Q3
FY2018
Increase/
(Decrease)
9 Months FY2019
9 Months FY2018
Increase/
(Decrease)
US$'000
US$'000
%
US$'000
US$'000
%
Interest income
57
6
850.0
155
50
210.0
Interest expense
(392)
(130)
201.5
(802)
(377)
112.7
Gain/(Loss) on foreign exchange
203
8
>100.0
(177)
28
N.M.
Write-back of payables
-
73
(100.0)
74
73
1.4
Gain/(Loss) on disposal of property, plant and equipment
30
8
275.0
17
(5)
N.M.
Depreciation of property, plant and equipment
(858)
(696)
23.3
(2,431)
(2,099)
15.8
Amortisation of intangible assets
(230)
(176)
30.7
(690)
(527)
30.9
Depreciation of right-of-use assets
(579)
-
N.M.
(1,731)
-
N.M.
Allowance/(Write-back) for inventory obsolescence, net
(149)
(140)
6.4
115
(294)
N.M.
Bad debts written off
-
-
-
(16)
-
N.M.
Research and development expense
(451)
(827)
(45.5)
(1,512)
(2,140)
(29.3)
1(b)(i) A statement of financial position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year.
Group
Company
30 Sep 2019
31 Dec 2018
30 Sep 2019
31 Dec 2018
US$'000
US$'000
US$'000
US$'000
ASSETS
Non-current Assets
Property, plant and equipment
12,901
12,606
183
85
Right-of-use assets
2,443
-
172
-
Investments in subsidiaries
-
-
41,388
44,892
Goodwill
9,352
9,352
-
-
Intangible assets
3,087
3,656
-
-
Other financial assets
2,409
1,519
2,130
1,511
Deferred tax assets
109
109
-
-
Other receivables and prepayments
55
55
9,974
9,608
30,356
27,297
53,847
56,096
Current Assets
Due from subsidiaries
-
-
4,458
939
Inventories
28,149
31,625
-
-
Trade receivables
21,820
24,874
-
-
Other receivables and prepayments
1,987
1,900
3,495
3,433
Tax receivables
1
15
-
-
Cash and cash equivalents
10,818
8,381
971
526
62,775
66,795
8,924
4,898
Total assets
93,131
94,092
62,771
60,994
EQUITY AND LIABILITIES
Equity
Share capital
60,423
60,423
74,240
74,240
Treasury shares
(1,656)
(1,656)
(1,656)
(1,656)
Reserves
(837)
(2,161)
(10,869)
(13,988)
Equity attributable to owners of the Company
57,930
56,606
61,715
58,596
Non-controlling interests
30
-
-
-
Total equity
57,960
56,606
61,715
58,596
Non-current Liabilities
Other payables
104
104
-
-
Lease liabilities
1,523
-
63
-
Deferred tax liabilities
406
406
-
-
2,033
510
63
-
Current Liabilities
Due to subsidiaries
-
-
553
2,109
Trade payables
12,255
19,381
-
-
Other payables
6,412
5,326
328
221
Borrowings
12,803
11,974
-
-
Lease liabilities
1,189
-
112
-
Provision for income tax
479
295
-
68
33,138
36,976
993
2,398
Total liabilities
35,171
37,486
1,056
2,398
Total equity and liabilities
93,131
94,092
62,771
60,994
1(b)(ii) Aggregate amount of group's borrowings and debt securities.
Amount repayable in one year or less, or on demand
As at 30 Sep 2019
As at 31 Dec 2018
Secured
Unsecured
Secured
Unsecured
US$'000
US$'000
US$'000
US$'000
12,803
-
11,974
-
Amount repayable after one year
As at 30 Sep 2019
As at 31 Dec 2018
Secured
Unsecured
Secured
Unsecured
US$'000
US$'000
US$'000
US$'000
-
-
-
-
Details of any collateral
The revolving credit loans of US$12,803,000 were secured over the assets of the subsidiaries and corporate guarantees provided by the Company and the subsidiaries.
1(c) A statement of cash flows (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year.
Group
Group
Q3 FY2019
Q3 FY2018
9 Months FY2019
9 Months FY2018
US$'000
US$'000
US$'000
US$'000
Cash Flows from Operating Activities
Profit before income tax
294
104
2,428
900
Adjustments for:
Depreciation of property, plant and equipment
858
696
2,431
2,099
Amortisation of intangible assets
230
176
690
527
(Gain)/Loss on disposal of property, plant and equipment
(30)
(8)
(17)
5
Depreciation of right-of-use assets
579
-
1,731
-
Allowance/(Write-back) for inventory obsolescence, net
149
140
(115)
294
Bad debts written off
-
-
16
-
Unrealised exchange (gain)/loss
(137)
(55)
(232)
155
Interest income
(57)
(6)
(155)
(50)
Interest expense
392
130
802
377
Share-based payments
-
3
2
14
Write-back of payables
-
(73)
(74)
(73)
Operating cash flow before working capital changes
2,278
1,107
7,507
4,248
Changes in working capital:
Inventories
3,765
(393)
3,591
(57)
Trade receivables
287
(4,041)
3,033
(1,533)
Other receivables and prepayments
45
(250)
(97)
1,390
Trade and other payables
(1,070)
2,682
(6,373)
1,580
Cash generated from/(used in) operating activities
5,305
(895)
7,661
5,628
Interest paid
(205)
(52)
(440)
(171)
Income tax paid
(135)
(61)
(333)
(140)
Net cash generated from/(used in) operating activities
4,965
(1,008)
6,888
5,317
Cash Flows from Investing Activities
Interest received
6
4
36
48
Purchase of property, plant and equipment
(1,052)
(1,661)
(2,894)
(2,372)
Proceeds from disposal of property, plant and equipment
62
8
63
36
Acquisition of intangible assets
-
(2,250)
-
(2,250)
Payment for financial asset, at fair value through profit or loss
-
-
(779)
-
Net cash used in investing activities
(984)
(3,899)
(3,574)
(4,538)
Cash Flows from Financing Activities
Proceeds from borrowings
15,245
14,323
51,739
38,593
Repayment of borrowings
(16,090)
(13,023)
(50,908)
(36,723)
Repayment of lease liabilities
(179)
-
(1,638)
-
Capital contribution from non-controlling interests
32
-
32
-
Net cash (used in)/generated from financing activities
(992)
1,300
(775)
1,870
Net increase/(decrease) in cash and cash equivalents
2,989
(3,607)
2,539
2,649
Cash and cash equivalents at the beginning of the period
7,891
13,386
8,381
7,152
Effect of foreign exchange rate changes on the balance of cash held in foreign currencies
(62)
(7)
(102)
(29)
Cash and cash equivalents at the end of the period(i)
10,818
9,772
10,818
9,772
Note:
(i) For the purpose of presentation in the consolidated statement of cash flows, the consolidated cash and cash equivalents comprise the following:
Q3
FY2019
Q3
FY2018
9 Months FY2019
9 Months FY2018
US$'000
US$'000
US$'000
US$'000
Cash and bank balances
10,788
9,742
10,788
9,742
Fixed deposits
30
30
30
30
Cash and cash equivalents per the consolidated statement of cash flows
10,818
9,772
10,818
9,772
1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year.
Group
Share
capital
Treasury shares
Merger reserves
Capital redemption reserves
Share options reserve
Capital reserve
Foreign currency translation reserve
Retained profits
Attributable to equity holders of the Company
Non-controlling interests
Total
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
Balance as at 1 Jan 2019
60,423
(1,656)
(10,150)
6
723
(3,560)
(1,289)
12,109
56,606
-
56,606
Effect of adoption of SFRS(I) 16
-
-
-
-
-
-
-
(239)
(239)
-
(239)
Share-based payments
-
-
-
-
2
-
-
-
2
-
2
Profit for the period
-
-
-
-
-
-
-
741
741
-
741
Other comprehensive income:
Exchange differences on translating foreign operations
-
-
-
-
-
-
53
-
53
-
53
Total other comprehensive income for the period
-
-
-
-
-
-
53
741
794
-
794
Balance as at 31 Mar 2019
60,423
(1,656)
(10,150)
6
725
(3,560)
(1,236)
12,611
57,163
-
57,163
Profit for the period
-
-
-
-
-
-
-
845
845
-
845
Other comprehensive loss:
Exchange differences on translating foreign operations
-
-
-
-
-
-
(153)
-
(153)
-
(153)
Total other comprehensive income for the period
-
-
-
-
-
-
(153)
845
692
-
692
Balance as at 30 Jun 2019
60,423
(1,656)
(10,150)
6
725
(3,560)
(1,389)
13,456
57,855
-
57,855
Capital subscribed by non-controlling interests
-
-
-
-
-
-
-
-
-
32
32
Transfer to capital reserve in accordance with statutory requirements
-
-
-
-
-
(1,549)
-
1,549
-
-
-
Profit for the period
-
-
-
-
-
-
-
228
228
(2)
226
Other comprehensive loss:
Exchange differences on translating foreign operations
-
-
-
-
-
-
(153)
-
(153)
-
(153)
Total other comprehensive income for the period
-
-
-
-
-
-
(153)
228
75
(2)
73
Balance as at 30 Sep 2019
60,423
(1,656)
(10,150)
6
725
(5,109)
(1,542)
15,233
57,930
30
57,960
Group
Share
capital
Treasury shares
Merger reserves
Capital redemption reserves
Share options reserve
Capital reserve
Foreign currency translation reserve
Retained profits
Attributable to equity holders of the Company
Non-controlling interests
Total
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
Balance as at 1 Jan 2018
60,423
(1,656)
(10,150)
6
706
(3,695)
(872)
10,708
55,470
-
55,470
Share-based payments
-
-
-
-
8
-
-
-
8
-
8
Profit for the period
-
-
-
-
-
-
-
326
326
-
326
Other comprehensive income:
Exchange differences on translating foreign operations
-
-
-
-
-
-
124
-
124
-
124
Total other comprehensive income for the period
-
-
-
-
-
-
124
326
450
-
450
Balance as at 31 Mar 2018
60,423
(1,656)
(10,150)
6
714
(3,695)
(748)
11,034
55,928
-
55,928
Share-based payments
-
-
-
-
3
-
-
-
3
-
3
Profit for the period
-
-
-
-
-
-
-
206
206
-
206
Other comprehensive income:
Exchange differences on translating foreign operations
-
-
-
-
-
-
69
-
69
-
69
Total other comprehensive income for the period
-
-
-
-
-
-
69
206
275
-
275
Balance as at 30 Jun 2018
60,423
(1,656)
(10,150)
6
717
(3,695)
(679)
11,240
56,206
-
56,206
Share-based payments
-
-
-
-
3
-
-
-
3
-
3
Profit for the period
-
-
-
-
-
-
-
109
109
-
109
Other comprehensive loss:
Exchange differences on translating foreign operations
-
-
-
-
-
-
(127)
-
(127)
-
(127)
Total other comprehensive loss for the period
-
-
-
-
-
-
(127)
109
(18)
-
(18)
Balance as at 30 Sep 2018
60,423
(1,656)
(10,150)
6
720
(3,695)
(806)
11,349
56,191
-
56,191
Company
Share
capital
Treasury shares
Share options reserve
Capital reserve
Foreign currency translation reserve
Accumulated losses
Total
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
Balance as at 1 Jan 2019
74,240
(1,656)
723
(4,481)
(1,927)
(8,303)
58,596
Effect of adoption of SFRS(I) 16
-
-
-
-
-
(5)
(5)
Share-based payments
-
-
2
-
-
-
2
Loss for the period
-
-
-
-
-
(485)
(485)
Other comprehensive loss:
Exchange differences on translating foreign operations
-
-
-
-
-
-
-
Total other comprehensive loss for the period
-
-
-
-
-
(485)
(485)
Balance as at 31 Mar 2019
74,240
(1,656)
725
(4,481)
(1,927)
(8,793)
58,108
Profit for the period
-
-
-
-
-
2,297
2,297
Other comprehensive income:
Exchange differences on translating foreign operations
-
-
-
-
-
-
-
Total other comprehensive income for the period
-
-
-
-
-
2,297
2,297
Balance as at 30 Jun 2019
74,240
(1,656)
725
(4,481)
(1,927)
(6,496)
60,405
Profit for the period
-
-
-
-
-
1,889
1,889
Other comprehensive loss:
Exchange differences on translating foreign operations
-
-
-
-
(579)
-
(579)
Total other comprehensive income for the period
-
-
-
-
(579)
1,889
1,310
Balance as at 30 Sep 2019
74,240
(1,656)
725
(4,481)
(2,506)
(4,607)
61,715
Balance as at 1 Jan 2018
74,240
(1,656)
706
(4,481)
(1,927)
(7,618)
59,264
Share-based payments
-
-
7
-
-
-
7
Loss for the period
-
-
-
-
-
(234)
(234)
Other comprehensive loss:
Exchange differences on translating foreign operations
-
-
-
-
-
-
-
Total other comprehensive loss for the period
-
-
-
-
-
(234)
(234)
Balance as at 31 Mar 2018
74,240
(1,656)
713
(4,481)
(1,927)
(7,852)
59,037
Share-based payments
-
-
4
-
-
-
4
Loss for the period
-
-
-
-
-
(240)
(240)
Other comprehensive loss:
Exchange differences on translating foreign operations
-
-
-
-
-
-
-
Total other comprehensive loss for the period
-
-
-
-
-
(240)
(240)
Balance as at 30 Jun 2018
74,240
(1,656)
717
(4,481)
(1,927)
(8,092)
58,801
Share-based payments
-
-
3
-
-
-
3
Loss for the period
-
-
-
-
-
(205)
(205)
Other comprehensive loss:
Exchange differences on translating foreign operations
-
-
-
-
-
-
-
Total other comprehensive loss for the period
-
-
-
-
-
(205)
(205)
Balance as at 30 Sep 2018
74,240
(1,656)
720
(4,481)
(1,927)
(8,297)
58,599
1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on.
State also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year.
9 Months FY2019
No. of shares
US$'000
Balance as at 1 Jan 2019 and 30 Sep 2019
271,662,227
72,584
9 Months FY2018
No. of shares
US$'000
Balance as at 1 Jan 2018 and 30 Sep 2018
271,662,227
72,584
There were 10,740,072 treasury shares held by the Company as at 30 September 2019 and 30 September 2018 and there was no subsidiary holdings.
1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year.
30 Sep 2019
31 Dec 2018
Total number of issued shares excluding treasury shares
271,662,227
271,662,227
1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on.
9 Months FY2019
No. of shares
US$'000
Balance as at 1 Jan 2019 and 30 Sep 2019
10,740,072
1,656
1(d)(v) A statement showing all sales, transfers, cancellation and/or use of subsidiary holdings as at the end of the current financial period reported on.
9 Months FY2019
No. of shares
US$'000
Balance as at 1 Jan 2019 and 30 Sep 2019
-
-
2. Whether the figures have been audited or reviewed and in accordance with which auditing standard or practice.
These figures have not been audited or reviewed.
3. Where the figures have been audited or reviewed, the auditors' report (including any qualifications or emphasis of a matter).
Not applicable.
4. Whether the same accounting policies and methods of computation as in the issuer's most recently audited annual financial statements have been applied.
Except as disclosed in Note 5 below, the Group has applied the same accounting policies and methods of computation consistent with those used in the most recent audited financial statements for the year ended 31 December 2018.
5. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change.
The Group has adopted various new and revised SFRS(I)s and IFRSs that are relevant to its operations and effective for the period beginning 1 January 2019. Except as disclosed below, the adoption of the new and revised SFRS(I)s and IFRSs has no material financial impact on the Group's financial statements.
SFRS(I) 16 and IFRS 16, Leases sets out a revised framework for the recognition, measurement, presentation and disclosure of leases, and replaces existing lease accounting guidance. SFRS(I) 16 and IFRS 16 requires lessees to recognise right-of-use assets and lease liabilities for all leases with a term of more than 12 months, except where the underlying asset is of low value. The right-of-use asset is depreciated and interest expense is recognised on the lease liability. The accounting requirements for lessors have not been changed substantially and continue to be based on classification as operating and finance leases. Disclosure requirements have been enhanced for both lessors and lessees.
The Group adopted SFRS(I) 16 and IFRS 16 on 1 January 2019 based on a permitted transition approach that does not restate comparative information, but recognised the cumulative effect of initially applying SFRS(I) 16 and IFRS 16 as an adjustment to the opening balance of retained earnings on 1 January 2019. The Group also adopted an expedient offered by SFRS(I) 16 and IFRS 16, exempting the Group from having to reassess whether pre-existing contracts contain a lease.
The Group and the Company have entered into several leasing arrangements with lessors for factory buildings and office premises. Prior to the adoption of SFRS(I) 16 and IFRS 16, the Group and the Company recognised these arrangement as operating leases and payments made under operating leases are recognised in the income statement on a straight-line basis over the period of the lease. Upon adoption of SFRS(I) 16 and IFRS 16, the Group and the Company recognised the right-of-use assets and lease liabilities. The nature of expenses related to those leases will change as SFRS(I) 16 and IFRS 16 replaces the straight-line operating lease expense with depreciation charge for right-of-use assets and interest expenses on lease liabilities. The Group does not restate the comparative information for the effect of adopting SFRS(I) 16 and IFRS 16 due to the exemption in SFRS(I) 16 and IFRS 16 but has instead recognised the effect in retained earnings and other reserves as at 1 January 2019.
6. Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends.
Earnings per ordinary share of the Group, after deducting any provision for preference dividends
Group
Group
Q3
FY2019
US$
Q3
FY2018
US$
9 Months FY2019
US$
9 Months FY2018
US$
(a) Based on weighted average number of ordinary shares on issue; and
0.08 cent
0.04 cent
0.67 cent
0.24 cent
(b) On a fully diluted basis
0.08 cent*
0.04 cent*
0.67 cent*
0.24 cent*
Weighted average number of ordinary shares used in computation of basic earnings per share
271,662,227
271,662,227
271,662,227
271,662,227
Weighted average number of ordinary shares used in computation of diluted earnings per share
271,662,227
271,662,227
271,662,227
271,662,227
* Diluted earnings per share for Q3 FY2019 and 9 Months FY2019 are the same as the basic earnings per share because the potential ordinary shares to be converted are anti-dilutive as the effect of the share conversion would be to increase the earnings per share.
7. Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the:
(a) current financial period reported on; and
(b) immediately preceding financial year.
Group
Company
30 Sep 2019
US$
31 Dec 2018
US$
30 Sep 2019
US$
31 Dec 2018
US$
Net asset value per ordinary share based on issued share capital
21.32 cents
20.84 cents
22.72 cents
21.57 cents
Total number of issued shares
271,662,227
271,662,227
271,662,227
271,662,227
8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group's business. It must include a discussion of the following:
(a) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and
(b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on.
Review of Financial Performance
Revenue
The Group's revenue for the nine months ended 30 September 2019 ("9M FY2019") increased by US$18.5 million to US$104.4 million from US$85.9 million in the prior year ("9M FY2018"). Revenue for the quarter ended ("Q3 FY2019") amounted to US$32.5 million against US$30.5 million in the prior year quarter ("Q3 FY2018"), reflecting the overall buoyancy and demand in the market globally, as well as its introduction of new and improved products to key customers.
Geographically, Group revenue for 9M FY2019 increased in America, Europe and Rest of the World ("RoW") by US$14.8 million (+24.9%), US$2.6 million (+13.1%) and US$3.1 million (+157.1%), respectively, offset by reductions in Asia by US$2.0 million (-45.3%). Revenue for Q3 FY2019 increased in Europe and RoW by US$1.2 million (+18.7%) and US$0.9 million (+141.6%), respectively but declined in Asia by US$0.1 million (-6.7%) compared to the prior year. The America segment remained constant in the comparative Q3 period.
Gross Profit
The increase in revenue has resulted in a 19.7% increase in gross profit from US$17.8 million in 9M FY2018 to US$21.3 million in 9M FY2019, due to the launch of new slimline products, improved product mix and the optimisation of manufacturing facilities. Gross profit margin decreased slightly by 0.3 percentage points from 20.7% to 20.4%. Similarly, for Q3 FY2019, gross profit margin decreased by 0.6 percentage points from 19.7% to 19.1%, due to product mix, with gross profit at US$6.2 million against US$6.0 million for Q3 FY2018.
Other Income
Other income in Q3 FY2019 relates primarily to foreign exchange gains and gain on disposal of equipment.
Administrative Expenses
Administrative expenses for 9M FY2019 increased 9.8% to US$18.0 million compared to US$16.4 million in 9M FY2018, representing 17.2% and 19.1% of revenue respectively, primarily due to the inclusion of salaries and related costs from the acquisition of business from Skyware Technologies and professional fees incurred for the proposed reverse takeover, which were both absent in 9M FY2018. If these costs were excluded, administrative expenses would be US$16.3 million compared to US$16.4 million for 9M FY2018, a 0.6% decrease.
Administrative expenses for Q3 FY2019 remained constant at US$5.8 million compared to the previous year, representing 17.9% and 19.0% of revenue respectively.
Profit Before Tax & Net Profit
The Group posted a profit before tax of US$2.4 million in 9M FY2019, compared to US$0.9 million the prior year, representing margins of 2.3% and 1.0%, respectively. For Q3 FY2019, the Group recorded US$0.3 million profit before tax compared to US$0.1 million in the prior year quarter, representing margins of 0.9% and 0.3%, respectively.
Overall, the Group posted a net profit of US$1.8 million in 9M FY2019, compared to US$0.6 million in 9M FY2018, representing net margins of 1.7% and 0.7%, respectively. The Group recorded a net profit of US$0.2 million in Q3 FY2019 compared to US$0.1 million the prior year quarter, representing net margins of 0.7% and 0.4%, respectively.
Review of Financial Position
Non-current assets increased by US$3.1 million to US$30.4 million as at 30 September 2019, primarily due to the adoption of SFRS(I) 16 on leases, addition of property, plant and equipment as well as the interest accrued on the convertible loans subscribed in Tactilis Sdn. Bhd.
Net current assets decreased by US$0.2 million to US$29.6 million as at 30 September 2019 compared to US$29.8 million as at 31 December 2018. Inventories, trade and other receivables and trade and other payables decreased by US$3.4 million, US$3.0 million and US$6.0 million respectively, with better procurement control, faster collection and continuing payment to suppliers. Borrowings increased by US$0.8 million to US$12.8 million with cash and cash equivalents increased by US$2.4 million to US$10.8 million as at 30 September 2019 compared to US$8.4 million as at 31 December 2018. Provision for income tax increased by US$0.2 million, in line with the increase in profits. The adoption of SFRS(I) 16 on leases increased the current portion of lease liabilities by US$1.2 million.
Similarly, the non-current portion of the lease liabilities increased to US$1.5 million.
The Group's net asset value stood at US$58.0 million as at 30 September 2019, compared to US$56.6 million as at 31 December 2018.
Review of Cash Flows
In Q3 FY2019, net cash generated from operating activities amounted to US$5.0 million, comprising US$2.3 million cash inflow from operating activities (before working capital changes), US$3.0 million net working capital inflow and US$0.3 million payment of interest and income tax.
In 9M FY2019, net cash generated from operating activities amounted to US$6.9 million, comprising US$7.5 million cash inflow from operating activities (before working capital changes), US$0.2 million net working capital inflow and US$0.8 million payment of interest and income tax.
Net cash used in investing activities in Q3 FY2019 and 9M FY2019 amounted to US$1.0 million and US$3.6 million, respectively, relating predominately to purchase of machinery and equipment and payment for Apexsat Pte Ltd.
Net cash used in financing activities in Q3 FY2019 and 9M FY2019 amounted to US$1.0 million and US$0.8 million, respectively, attributable to the net proceeds of borrowings and repayment of lease liabilities.
Overall, the Group recorded a net increase in cash and cash equivalents amounting to US$3.0 million and US$2.5 million in Q3 FY2019 and 9M FY2019, respectively, bringing cash and cash equivalents per the consolidated statement of cash flows to US$10.8 million as at 30 September 2019.
9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results.
No prospect statement was made.
10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months.
The Group continues to see strong market traction for its products in both the DTH and DOS markets, with the continued investment in R&D being reflected by the positive market reception of newly introduced and improved products such as the Slimline LNB for the United States ("U.S.") DTH customer base. Similarly, by bolstering the Group's capabilities through recent acquisitions, Global Invacom is now uniquely placed in the industry to offer integrated, fixed and tracking, antenna and electronics solutions for customers serving both the DTH and DOS markets.
The global satellite communications equipment market was valued at US$22.1 billion in 2018 and is expected to exceed US$53 billion by 2027, representing a CAGR of over 10% during the forecast period[4], with the VSAT/DOS market accounting for US$12.3 billion of this total in 2027[5].
In the DTH market, the Group continues to see a strong revenue stream. The extent of customers ending their traditional cable and satellite TV subscriptions - known as cord cutting - has been smaller than expected. Similarly, while there has been a proliferation of OTT services which were expected to threaten the DTH subscriber numbers, the anticipated drop off hasn't occurred. As such, DTH continues to play a central role in the provision of connectivity and satellite TV, particularly in developed economies such as the UK and Canada, and it is anticipated DTH will co-exist alongside OTT services going forward.
In the DOS vertical, the Group is seeing significant opportunities driven by the exponential growth in data consumption and demand for uninterrupted connectivity. Ericsson recently released a report stating that total mobile data traffic is expected to grow at 30% CAGR between 2018 and 2024, reaching 131 exabytes per month by the end of 2024, with 95% of that traffic generated from smartphones[6].
In many territories, satellite presents the only viable solution to deliver connectivity, where alternatives such as fibre infrastructure are not viable due to cost or the sheer scale it is required to cover. The Group continues to drive its R&D investment in DOS and DTH to capitalise on our reputation of delivering reliable, cutting edge and market leading products to customers. Furthermore, the acquisition of Skyware Technologies in Q3 FY2018 has significantly improved the Group's positioning, with the capability to now deliver integrated antenna and electronics solutions to its customer base for the DOS segment as well as DTH. The Group continues to secure new business in this division across a number of global customers, with a strong pipeline of opportunities it will seek to convert in Q4 and beyond.
The integration of the Apexsat acquisition - announced in June 2019 - continues to progress well, and, as expected, has opened up multiple opportunities through the expansion of the Group's capabilities and product range. With its larger portfolio of products available to clients, Global Invacom is now well-positioned to bid for large scale tenders which it has historically been unable to participate in.
Notwithstanding the above, the Group is mindful of the difficult economic conditions in areas of the world in which we do business and, as much as possible, has plans and actions in place to react quickly and decisively to reduce any long-term impacts on the business.
11. Dividend
(a) Current Financial Period Reported On
Any dividend declared for the current financial period reported on?
None.
(b) Corresponding Period of the Immediately Preceding Financial Year
Any dividend declared for the corresponding period of the immediately preceding financial year?
None.
(c) Date payable
Not applicable.
(d) Books closure date
Not applicable.
12. If no dividend has been declared/recommended, a statement to that effect.
Due to the operating conditions faced by the Group, no dividend has been declared or recommended for the nine months ended 30 September 2019.
13. If the Group has obtained a general mandate from shareholders for Interested Person Transactions ("IPTs"), the aggregate value of such transactions as required under Rule 920(1)(a)(ii). If no IPTs mandate has been obtained, a statement to that effect.
The Company does not have a shareholders' mandate for IPTs.
14. Confirmation that the Company has procured undertaking from all its directors and executive officers pursuant to Rule 720(1).
The Company confirms that it has procured undertakings from all its directors and executive officers under Rule 720(1) of the Listing Manual of the Singapore Exchange Securities Trading Limited.
CONFIRMATION BY THE BOARD OF DIRECTORS (THE "BOARD") PURSUANT TO RULE 705(5) OF THE LISTING MANUAL
We do hereby confirm, for and on behalf of the Board of Global Invacom Group Limited (the "Company"), that to the best of our knowledge, nothing has come to the attention of the Board of the Company which may render the financial results for the nine months ended 30 September 2019 to be false or misleading in any material aspect.
On behalf of the Board
Anthony Brian Taylor Matthew Jonathan Garner
Director Director
BY ORDER OF THE BOARD
Anthony Brian Taylor
Executive Chairman
14 November 2019
The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDQRTEAKFLFEENFEF
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