REG - Global Invacom Group - Final Results <Origin Href="QuoteRef">GLOB.SI</Origin> - Part 2
23/02/2017 07:06
- Part 2: For the preceding part double click ID:nRSW6088Xa
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.
FY2016 No. of shares US$'000
Balance as at 1 Jan 2016 and 31 Dec 2016 271,662,227 72,584
FY2015 No. of shares US$'000
Balance as at 1 Jan 2015 269,059,299 70,819
Purchase of treasury shares (11,610,000) (3,424)
Balance as at 31 Mar 2015 257,449,299 67,395
Purchase of treasury shares (15,004,900) (3,749)
Sale of treasury shares 12,000,000 2,777
Balance as at 30 Jun 2015 254,444,399 66,423
Purchase of treasury shares (10,740,000) (1,656)
Issuance of treasury shares pursuant to the acquisition of the entireequity interest in Satellite Acquisition Corporation 27,957,828 7,817
Balance as at 30 Sep 2015 and 31 Dec 2015 271,662,227 72,584
There were 10,740,072 treasury shares held by the Company as at 31 December
2016 and 31 December 2015.
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.
31 Dec 2016 31 Dec 2015
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.
FY2016 No. of shares US$'000
Balance as at 1 Jan 2016 and 31 Dec 2016 10,740,072 1,656
2. Whether the figures have been audited or reviewed and in
accordance with which auditing standard or practice.
These figures have not been audited or reviewed.
3. Where the figures have been audited or reviewed, the auditors'
report (including any qualifications or emphasis of a matter).
Not applicable.
4. Whether the same accounting policies and methods of computation
as in the issuer's most recently audited annual financial statements have been
applied.
The accounting policies and methods of computation have been applied
consistently for the current financial year ended 31 December 2016 as those
used in the audited financial statements for the year ended 31 December 2015,
except for the adoption of the new or revised International Financial
Reporting Standards ("IFRS") applicable for the financial period beginning 1
January 2016.
5. If there are any changes in the accounting policies and methods
of computation, including any required by an accounting standard, what has
changed, as well as the reasons for, and the effect of, the change.
The Group has adopted all of the new or revised IFRS that are effective for
the financial period beginning 1 January 2016 and are relevant to its
operations. The adoption of these IFRS does not have financial impact on the
Group's financial position or results.
6. Earnings per ordinary share of the group for the current
financial period reported on and the corresponding period of the immediately
preceding financial year, after deducting any provision for preference
dividends.
Earnings per ordinary share of the Group, after deducting any provision for preference dividends Group Group
Q4FY2016US$ Q4FY2015US$ FY2016US$ FY2015US$
(a) Based on weighted average number of ordinary shares on issue; and (1.09) cents 1.68 cents (1.00) cent (0.43) cent
(b) On a fully diluted basis (1.09) cents 1.68 cents (1.00) cent (0.43) cent
Weighted average number of ordinary shares used in computation of basic earnings per share 271,482,055 262,586,638 271,482,055 262,586,638
Weighted average number of ordinary shares used in computation of diluted earnings per share 272,078,632 262,586,638 271,724,745 263,148,798
263,148,798
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
31 Dec 2016US$ 31 Dec 2015US$ 31 Dec 2016US$ 31 Dec 2015US$
Net asset value ("NAV") per ordinary share based on issued share capital 19.26 cents 20.05 cents 21.96 cents 22.59 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 was US$31.0 million in Q4 FY2016, US$11.9 million lower
than US$42.9 million in Q4 FY2015. This includes reductions in revenue to a
key customer of US$9.1 million and in its Contract Manufacturing segment of
US$2.6 million. The Group's revenue for the full year ended 31 December 2016
decreased 1.4% to US$127.3 million from US$129.1 million a year ago and
included a full year of revenue contribution from Satellite Acquisition
Corporation (trading as "Global Skyware") of US$42.4 million against one
quarter in FY2015 at US$17.5 million.
By geography, revenue for Q4 FY2016 from all regions declined, with America,
Europe, Asia and Rest of the World ("RoW") regions decreasing by US$7.5
million (-27.4%), US$2.1 million (-23.0%), US$1.2 million (-30.0%) and US$1.1
million (-53.6%), respectively, against that in Q4 FY2015. On a full year
basis, decline in revenue for FY2016 was mainly attributable to the regions in
Europe, Asia and RoW by US$3.0 million (-8.8%), US$5.7 million (-41.2%) and
US$1.5 million (-28.4%), respectively, offset by an increase in revenue from
America by US$8.4 million (+11.1%).
Gross Profit
Gross profit decreased by US$1.7 million or 22.3% to US$5.8 million in Q4
FY2016 from US$7.5 million in Q4 FY2015 driven by the reduction in revenue
volume. However, the gross profit margin ("GPM") improved to 18.8% in Q4
FY2016 from 17.4% in Q4 FY2015 as a result of favourable product mix variation
and on-going Group-wide factory cost control. On a full-year basis, gross
profit for FY2016 improved 4.5% to US$26.0 million from US$24.9 million in
FY2015 with GPM improving to 20.4% from 19.3% for the same comparative
periods.
Administrative Expenses
Administrative expenses increased significantly to US$7.9 million in Q4 FY2016
from US$6.7 million in Q4 FY2015, representing 25.4% and 15.5% of revenue,
respectively. As announced on 22 December 2016, the Group is consolidating its
activities in the People's Republic of China ("PRC") under its wholly-owned
subsidiary, Global Invacom Manufacturing (Shanghai) Co. Ltd ("Shanghai
Subsidiary") from Radiance Electronics (Shenzhen) Co. Ltd ("Shenzhen
Subsidiary"), to optimise manufacturing operations and cost efficiencies. With
this move, the Group has made a compensation payment of approximately US$2.3
million to the employees in its Shenzhen Subsidiary based on the Labour Law in
PRC. Excluding this compensation, the administrative expenses would have
reduced to US$5.6 million, representing 17.9% of revenue in Q4 FY2016 and a
reduction of 16.8% against Q4 FY2015.
On a full-year basis, administrative expenses for FY2016 decreased by 9.0% to
US$26.4 million from US$29.0 million in FY2015 or by 17.0% to US$24.1 million
by exclusion of the compensation at the Shenzhen Subsidiary.
Profit Before Tax & Net Profit
The Group recorded a loss before tax of US$2.4 million in Q4 FY2016 compared
to a profit before tax of US$3.8 million in Q4 FY2015, representing a negative
margin of 7.7% compared to a positive margin of 8.9%, respectively. On a
full-year basis, the Group posted a loss before tax of US$1.5 million in
FY2016, a 19.6% increase from net loss of US$1.3 million in FY2015. Excluding
the write-back of the contingent consideration payable of US$5.0 million in Q4
FY2015 related to the acquisition of Global Skyware and the Shenzhen
Subsidiary's compensation of US$2.3 million in Q4 FY2016 will result in
comparatives of a loss before tax of US$0.1 million in Q4 FY2016 against a
loss before tax of US$1.2 million in Q4 FY2015, and a profit before tax of
US$0.8 million in FY2016 against a loss before tax of US$6.3 million in
FY2015.
Overall, the Group posted a net loss of US$3.0 million in Q4 FY2016 compared
to a net profit of US$4.4 million in Q4 FY2015, representing a negative margin
of 9.6% compared to a positive margin of 10.3%, respectively and a net loss of
US$2.7 million in FY2016 compared to a net loss of US$1.1 million in FY2015,
representing a negative margin of 2.1% compared to a negative margin of 0.9%.
During FY2016, the Group incurred one-off costs in Q4 of US$2.5 million for
restructuring and impairment of the Shenzhen Subsidiary and a further US$0.8
million in respect of restructuring and legal charges. These adjustments would
give a net loss in Q4 FY2016 of US$0.5 million and a net profit in FY2016 of
US$0.5 million.
Review of Financial Position
Non-current assets decreased, primarily due to the depreciation of property,
plant and equipment and the amortisation of intangible assets.
Net current assets decreased by US$0.4 million to US$28.5 million as at 31
December 2016 compared to US$28.9 million as at 31 December 2015. Inventories
increased by US$1.0 million in preparation for orders for the next few months,
and prompt collections has resulted in trade and other receivables decreased
by US$5.2 million. The repayment of the shareholders' loan as well as trade
suppliers has also resulted in the decrease of trade and other payables by
US$5.0 million. On the other hand, borrowings increased by US$0.8 million to
US$6.1 million and cash and cash equivalents decreased by US$0.9 million to
US$7.9 million as at 31 December 2016. Net tax receivables increased by US$0.5
million to US$0.6 million as at 31 December 2016.
The Group's net asset value stood at US$52.3 million as at 31 December 2016,
compared to US$54.5 million as at 31 December 2015.
Review of Cash Flows
Net cash used in operating activities in Q4 FY2016 was US$1.5 million,
comprising cash outflow from operating activities before working capital
changes of US$1.0 million, net working capital outflow of US$0.1 million and
payment of interest and income tax expense of US$0.4 million.
On a full year basis, net cash generated from operating activities in FY2016
was US$3.2 million, comprising cash inflow from operating activities before
working capital changes of US$3.1 million, net working capital inflow of
US$1.6 million and payment of interest and income tax expense of US$1.5
million.
Net cash used in investing activities was US$0.3 million in Q4 FY2016 and
US$1.6 million in FY2016. This was mainly attributable to the purchase of
machinery and equipment and partially offset by a decrease in restricted cash
during the year.
Net cash used in financing activities was US$1.4 million in Q4 FY2016 and
US$2.1 million in FY2016, arising mainly from the repayment of borrowings and
shareholders' loan.
Overall, the Group recorded a net decrease in cash and cash equivalents of
US$3.2 million in Q4 FY2016 and US$0.5 million in FY2016, bringing cash and
cash equivalents per the consolidated statement of cash flows to US$6.7
million as at 31 December 2016.
9. Where a forecast, or a prospect statement, has been previously
disclosed to shareholders, any variance between it and the actual results.
In line with the earlier performance guidance made by the Company on 22
December 2016 that due to the Group's consolidation of its manufacturing
operations in the PRC, the Group expects to report a net loss for FY2016, the
Group's FY2016 results have shown a net loss of US$2.7 million.
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.
FY2016 marks the first full year of revenue contributions from the Group's
United States ("US") subsidiary, Satellite Acquisition Corporation (formerly
trading as "Skyware Global"), a leading manufacturer of antennas and other
satellite communications ("Sat Comms") equipment. Since its acquisition on 24
August 2015, the subsidiary has been rebranded as "Global Skyware" to align
the business with the Group's main brand. The Group has since introduced new
manufacturing processes and technologies to boost productivity and streamline
operating efficiencies which it believes will show benefits in the future.
Despite concerns surrounding Britain's exit from the European Union ("EU"),
the Group remains upbeat about its Sat Comms business. The weakening of the
British Pound against major currencies during the year provided short-term
foreign exchange benefits for the Group as a sizeable portion of its
operations are located in the United Kingdom ("UK"). The Group may also
consider establishing a logistics hub in an EU country to continue tariff-free
transactions via potential UK-EU Free Trade Agreements.
The Group's Sat Comms revenue and raw materials spend are largely transacted
in US dollars, a currency that has strengthened since the election of US
President Donald Trump. Recent political changes around the world may have an
impact on international trade and the Group is monitoring these developments
and investigating ways to mitigate any impact on its activities.
Following its announcement on 22 December 2016, the Group is also
consolidating activities in PRC under its wholly-owned Shanghai Subsidiary, to
optimise manufacturing operations and cost efficiencies. Critical equipment
and customer inventory have been shifted from the Shenzhen Subsidiary to the
Shanghai Subsidiary. The move will integrate the Shenzhen Subsidiary's
products within the Shanghai Subsidiary's facilities and strategic location.
The Group remains mindful of the significant technological change that has
swept the global satellite ground equipment industry with the introduction of
new Digital Channel Stacking Switch ("DCSS") technology, which allows up to 32
continuous video streams from a single Low Noise Block ("LNB"). Having secured
qualification from a key customer and commenced the supply of new DCSS LNBs in
Q4 FY2016, the Group is poised to convert its prior year's expenditures in the
research and development of this latest Sat Comms technology into potential
revenue streams. It will continue to invest in innovation and automation to
design and manufacture smarter LNBs and other satellite ground equipment.
Worldwide, the global satellite manufacturing and launch market is expected to
grow at a compounded annual growth rate of 4.95% between 2016 and 2020*. The
Group expects the December 2016 launch of communication satellite, EchoStar
19/Jupiter 2, to lift demand for its VSAT products, which provide low-cost
connectivity for mobile/Internet usage, banking and telecommunications
especially in rural areas.
While the consolidation of the Group's PRC operations has affected the bottom
line for FY2016, the Board is confident that the roll out of the new DCSS
products along with the expected growth of other new products and the Group's
own restructuring and cost improvement measures will enable the Group to
improve margins and sustain profitability in the long term.
*Source: Global Satellite Manufacturing and Launch Market 2016-2020 -
TechNavio
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.
No dividend has been declared or recommended for the year ended 31 December
2016.
PART II - ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT
(This part is not applicable to Q1, Q2, Q3 or Half Year Results)
13. Segmented revenue and results for business or geographical
segments (of the group) in the form presented in the issuer's most recently
audited annual financial statements, with comparative information for the
immediately preceding year.
13(a) Reportable Operating Segments
The business of the Group is organised into the following product segments:
· Satellite Communications ("Sat Comms")
· Contract Manufacturing ("CM")
For management purposes, the Group is organised into business segments based
on their products as the Group's risks and rates of return are affected
predominantly by differences in the products produced. Each product segment
represents a strategic business unit and management monitors the operating
results of its business units separately for the purpose of making decisions
about resource allocation and performance assessment.
Segment results represent the profit earned by each segment without allocation
of finance income/costs and taxation. Segment assets and liabilities include
items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprised mainly corporate
assets and liabilities, borrowings and income taxes. Segment revenue includes
transfers between operating segments. Such transfers are accounted for at
competitive market prices charged to unaffiliated customers for similar goods.
The transfers are eliminated on consolidation. No operating segments have been
aggregated to form the following reportable operating segments.
FY2016 Sat Comms CM Group
US$'000 US$'000 US$'000
Revenue 109,869 17,439 127,308
Operating profit 1,318 (2,310) (992)
Finance income 17
Finance costs (572)
Income tax expense (1,156)
Loss for the year (2,703)
Amortisation of intangible assets 314 - 314
Depreciation of property, plant and equipment 2,297 181 2,478
Addition to property, plant and equipment 1,856 32 1,888
Impairment of property, plant and equipment - 139 139
Allowance/(Write-back) for inventory obsolescence 794 (339) 455
Write-back of allowance of trade receivables (20) (335) (355)
Write-off of trade receivables 28 335 363
Provision of liabilities 241 - 241
Assets and liabilities
Segment assets 74,671 7,120 81,791
Unallocated assets
- Non-current assets 4
- Other receivables 201
- Tax receivables 1,002
- Deferred tax assets 355
- Cash and cash equivalents 251
Total assets 83,604
FY2016 Sat Comms CM Group
US$'000 US$'000 US$'000
Segment liabilities 21,170 2,781 23,951
Unallocated liabilities
- Other payables 196
- Borrowings 6,108
- Provision for income tax 354
- Deferred tax liabilities 681
Total liabilities 31,290
FY2015
Revenue 101,969 27,138 129,107
Operating (loss)/profit (2,141) 1,087 (1,054)
Finance income 17
Finance costs (256)
Income tax credit 165
Loss for the year (1,128)
Amortisation of intangible assets 431 - 431
Depreciation of property, plant and equipment 1,632 287 1,919
Addition to property, plant and equipment 690 47 737
Addition to intangible assets 280 - 280
Allowance for inventory obsolescence 196 253 449
Impairment of trade receivables 20 339 359
Impairment of intangible assets 1,121 - 1,121
Write-back of contingent consideration payable (5,000) - (5,000)
Assets and liabilities
Segment assets 75,243 12,383 87,626
Unallocated assets
- Non-current assets 5
- Other receivables 117
- Deferred tax assets 723
- Cash and cash equivalents 637
- Tax receivables 431
Total assets 89,539
Segment liabilities 20,844 5,626 26,470
Unallocated liabilities
- Other payables 2,779
- Provision for income tax 309
- Deferred tax liabilities 171
- Borrowings 5,348
Total liabilities 35,077
13(b) Geographical Information
Revenue and non-current assets information based on the geographical location
of customers and assets respectively are as follows:
FY2016 AmericaUS$'000 EuropeUS$'000 AsiaUS$'000 Rest of the WorldUS$'000 GroupUS$'000
Revenue 84,505 30,745 8,119 3,939 127,308
Non-current assets 5,500 12,949 6,854 109 25,412
FY2015 AmericaUS$'000 EuropeUS$'000 AsiaUS$'000 Rest of the WorldUS$'000 GroupUS$'000
Revenue 76,096 33,706 13,801 5,504 129,107
Non-current assets 5,298 13,623 7,332 120 26,373
14. In the review of performance, the factors leading to any
material changes in contributions to turnover and earnings by the business or
geographical segments.
Please refer to Note 8.
15. A breakdown of sales.
FY2016US$'000 FY2015US$'000 % increase/(decrease)
(a) Sales reported for first half year 64,275 53,970 19.1
(b) Operating loss after income tax before deducting minority interests reported for first half year (429) (2,840) (84.9)
(c) Sales reported for second half year 63,033 75,137 (16.1)
(d) Operating profit after income tax before deducting minority interests reported for second half year (2,274) 1,712 N.M.
16. A breakdown of the total annual dividend (in dollar value) for
the issuer's latest full year and its previous full year.
FY2016US$'000 FY2015US$'000
Ordinary - 1,078
Preference - -
Total Annual Dividend - 1,078
17. 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 and there were no
IPTs for the year ended 31 December 2016.
18. 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.
19. Disclosure of person occupying a managerial position in the
issuer or any of its principal subsidiaries who is a relative of a director or
chief executive officer or substantial shareholder of the issuer pursuant to
Rule 704(13) in the format below. If there are no such persons, the issuer
must make an appropriate negative statement.
Neither Global Invacom Group Limited nor any of its principal subsidiaries
have any person occupying a managerial position who is related to a director,
chief executive officer or substantial shareholder.
BY ORDER OF THE BOARD
Anthony Brian Taylor
Executive Chairman
23 February 2017
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
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