REG - Global Invacom Group - Q3 FY2016 Results <Origin Href="QuoteRef">GLOB.SI</Origin> - Part 2

Global InvacomAnnouncement

11/11/2016 07:05

- Part 2: For the preceding part double click  ID:nRSK9214Oa 

increased by US$0.9 million or 15.4% to US$7.2 million in Q3
FY2016 from US$6.3 million in Q3 FY2015. Gross profit margin improved to 22.6%
in Q3 FY2016 from 19.5% in Q3 FY2015. Excluding Global Skyware, gross profit
margin would have risen by 4.8% against Q3 FY2015 to 29.0% in Q3 FY2016. The
favourable product mix variation, efficiency improvement and Group-wide
factory cost control have resulted in the increased gross profit margin. 
 
Administrative Expenses 
 
Administrative expenses decreased significantly to US$5.7 million in Q3 FY2016
from US$8.7 million in Q3 FY2015, representing 17.9% and 27.1% of revenue,
respectively. This was primarily due to the absence of professional fees in
relation to the acquisition of Global Skyware and the reduction in legal costs
on a dispute with a supplier that was incurred in Q3 FY2015, cost savings
incurred from streamlining programmes, as well as a restructuring and
rationalisation exercise in FY2016. 
 
Finance Costs 
 
The increase in finance costs was mainly attributable to the increase in
borrowings in Q3 FY2016 relating to Global Skyware. 
 
Profit before Tax & Net Profit 
 
The Group recorded a profit before tax of US$1.2 million in Q3 FY2016 compared
to a loss before tax of US$2.5 million in Q3 FY2015, with a positive margin of
3.7% compared to a negative margin of 7.8%, respectively. On an organic basis,
excluding the loss from Global Skyware, the Group would have posted a profit
before tax in the quarter of US$1.6 million. 
 
Overall, the Group posted a net profit of US$0.7 million in Q3 FY2016 compared
to a net loss of US$2.7 million in Q3 FY2015, with a positive margin of 2.2%
compared to a negative margin of 8.4%, respectively. On an organic basis,
excluding Global Skyware, the Group would have posted a net profit of US$1.1
million. 
 
Review of Financial Position 
 
Non-current assets decreased primarily with the depreciation of property,
plant and equipment. 
 
Net current assets increased by US$0.8 million to US$29.7 million as at 30
September 2016 compared to US$28.9 million as at 31 December 2015. Inventories
increased by US$1.3 million in preparation of anticipated and confirmed orders
for the next few months and improved collections has resulted in trade and
other receivables decreased by US$3.9 million. The repayment of the
shareholders' loan has also resulted in the decrease of other payables by
US$2.8 million. On the other hand, borrowings increased by US$2.0 million to
US$7.4 million and cash and cash equivalents improved by US$2.6 million to
US$11.5 million as at 30 September 2016. 
 
Non-current liabilities decreased by US$0.4 million due to the release of a
provision for litigation that the Group settled with a former supplier. 
 
The Group's net asset value stood at US$55.2 million as at 30 September 2016,
compared to US$54.5 million as at 31 December 2015. 
 
Review of Cash Flows 
 
Net cash generated from operating activities was US$0.3 million, comprising
cash inflow from operating cash activities before working capital changes of
US$2.0 million, net working capital outflow of US$1.2 million and payment of
interest and income tax expense of US$0.5 million. 
 
Net cash used in investing activities was US$0.3 million, mainly comprising
the purchase of machinery and equipment. 
 
Net cash used in financing activities was US$1.0 million, arising from the
repayment of shareholders' loan, offset by the receipt of bank loans. 
 
Overall, the Group recorded a net decrease in cash and cash equivalents of
US$1.0 million in Q3 FY2016, bringing cash and cash equivalents per the
consolidated statement of cash flows to US$10.0 million as at 30 September
2016. 
 
9.             Where a forecast, or a prospect statement, has been previously
disclosed to shareholders, any variance between it and the actual results. 
 
No forecast or prospect statement was made by the Company in the previous
announcement made on 4 August 2016. 
 
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 Q3 FY2016 results mark the Group's second consecutive quarter of
profitability. The Group intends to build on this turnaround in the coming
quarters as it continues to reap the benefits of its restructuring and cost
improvement initiatives. 
 
The integration of the Group's US subsidiary, Raven Antenna Systems -
previously trading as Skyware Global - has progressed significantly although
there are still further improvements and research and development projects to
complete. Since completing the acquisition on 24 August 2015, the subsidiary
has been rebranded as Global Skyware to bring the business in line with the
Group's wider brand and to fully consolidate its US supply chain. The Group
will recognise Global Skyware's first full-year revenue contributions in
FY2016. 
 
Further to the announcement of 8 November 2016, the Group is exploring the
potential consolidation of its activities in China under its wholly-owned
subsidiary, Global Invacom Manufacturing (Shanghai) Co., Ltd ("Shanghai
subsidiary"), to optimise manufacturing cost efficiencies. Critical equipment
and customer inventory from the Group's Shenzhen subsidiary, Radiance
Electronics (Shenzhen) Co., Ltd, may be transferred to the Shanghai
subsidiary. The Group will announce any material developments relating to this
matter as and when appropriate. 
 
The Group believes the expected launch of two new communication satellites in
the coming months by a leading US broadcaster will underpin demand for its
next-generation Satellite Communications ("Sat Comms") products. Worldwide,
the global satellite manufacturing and launch market is expected to grow at a
CAGR of 5.14% between 2014 and 2019.* Developing markets in Latin America, the
Middle East and Southeast Asia continue to offer potential for the adoption of
new Sat Comms services. 
 
Despite global concerns about Britain's economic prospects following its
decision in June to leave the European Union ("Brexit"), the Group remains
upbeat about its Sat Comms business. The weakening of the British Pound
against major currencies has provided, and is expected to continue to provide,
short-term foreign exchange benefits for the Group's UK-based operating costs.
Pending the outcome of a UK parliamentary vote on Brexit - as announced by a
UK High Court recently - the Group will consider establishing a logistics hub
in an EU country to continue tariff-free transactions via a possible UK-EU
Free Trade Agreement that may need to be negotiated. Revenue from the Group's
Sat Comms sales is predominantly transacted in US Dollars, as well as the bulk
of its raw material spend. 
 
The Group remains mindful of the significant technology change that recently
swept the satellite ground equipment industry with the introduction of digital
channel stacking switch ("DCSS") technology, which allows up to 32 continuous
video streams from a single Low Noise Block ("LNB"). This impacted the Group's
FY2015 performance as major customers had to destock, and is likely to persist
for the remainder of 2H FY2016. 
 
The Group has completed research on next-generation LNBs that support DCSS,
and has secured approval to supply LNBs from a main customer. It is one of
only two main suppliers for this project. This approval marks a significant
achievement for the Group, which has invested in the new generation of LNBs
since 2014. The Group expects to deploy the DCSS technology across its LNBs
for all customers and territories. Delivery of the new products will commence
in Q4 FY2016, following which the Group will supply similar LNBs to other
customers. 
 
*Source: The Satellite Industry Association's 2015 State of the Satellite
Industry Report 
 
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 nine months period ended
30 September 2016. 
 
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 and there were no
IPTs for the nine months period ended 30 September 2016. 
 
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 period ended 30 September 2016 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 
 
Chairman 
 
11 November 2016 
 
The information communicated in this announcement contains inside information
for the purpose of Article 7 of the Market Abuse Regulation (EU) No.
596/2014. 
 
This information is provided by RNS
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