REG - Global Invacom Group - Final Results
27/02/2023 07:00
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RNS Number : 0655R Global Invacom Group Limited 27 February 2023
Global Invacom Group Limited
("Global Invacom", the "Company" or the "Group")
Final Results for the year ended 31 December 2022
Singapore/London, 27 February 2023 - Global Invacom (SGX: QS9) (AIM: GINV),
the global provider of satellite communications equipment and electronics,
announces its unaudited financial results for the year ended 31 December 2022
("FY2022").
As previously announced, the Group continued to be impacted by well-publicised
global supply chain headwinds and inflationary pressures which, along with an
underperformance within our US subsidiary, has led to the Group recording a
net loss after tax for the year.
Key financial highlights:
· Revenue for FY2022 decreased 11.8% to US$72.8 million (FY2021:
US$82.5 million)
· Gross profit decreased to US$13.4 million (FY2021: US$16.6 million)
· Goodwill impairment charge of US$5.2 million and Deferred Tax Asset
write off of US$1.3 million, both relating to our US subsidiary
· Net loss of US$13.2 million (FY2021: net profit of US$0.6 million)
Key operational highlights:
· Well-documented macroeconomic challenges, including labour and raw
material inflationary pressures, continue to impact the Group's financial
performance.
· Initiated strategic and operational review of the broader business in
Q3 FY2022 aimed at strengthening the Group's operating platform, and further
developing the Group's research and development capabilities
· Launched additional Supervisory Control and Data Acquisition
("SCADA") products for hubs and remote locations in 1H FY2022, consolidating
the Company's position as a market-leading developer of satellite
communications ground equipment
· Partnership with Methera Global Communications Limited ("Methera")
progressing well, with the Group designing and developing Ka-band user
terminals, and currently on track to launch products to market in 2024
· Ability of Global Invacom to generate revenues impacted by legacy
impact of Covid-19 on the Group's Asia operations and global supply chains,
which continues to face a worldwide shortage of semiconductors
As a designer, manufacturer, and provider of high-tech products with an
international customer and employee base, 2022 continued to be a challenging
trading environment for the Group. The Group's net loss is substantially
attributed to its US operations, with impacting factors including the sale of
key products being postponed due to delays in customer demand. Considerable
macroeconomic headwinds impacted the Company's financial and operational
performance in the year ended 31 December 2022, and ongoing inflationary
pressures, along with reduced transportation costs leading to increased
competition from overseas suppliers, particularly into the US market, are also
expected to impact the performance of the business in the current financial
year. Global Invacom is focused on mitigating the effects of global supply
chain issues on its core business activities and ensuring the Group is
optimised as pressures subside.
Against a challenging economic backdrop, the team worked tirelessly throughout
the year to ensure the business continued to supply market-leading products
and continued to design, develop and launch state-of-the-art products, and the
Board would like to express its sincere thanks to our staff, partners,
suppliers, and customers for their continued support across 2022.
In Q3 FY2022, the Group commenced a comprehensive review of its operations,
focused on bolstering its operational platform and management capabilities
aimed at generating greater shareholder value. The review continues to assess
the Group's assets and cost base to streamline certain core functions, whilst
utilising its extensive research and development capabilities to seek and
secure new markets and customers. Global Invacom remains committed to
technological innovation and development, and, by working in collaboration
with key customers, the Group has ensured it is well positioned to maintain
its reputation of developing best-in-class solutions for the satellite
industry. The expansion of the Group's research capabilities has formed a
core element of the review, and will continue during 2023.
The Group's North America operation has committed to streamlining its core US
manufacturing functions to stabilise operations and enhance efficiencies.
Global Invacom expanded its product portfolio during 2022 with a range of
exciting new launches within the Very Small Aperture Terminal ("VSAT")
category aimed at targeting the growing market for data over satellite
capabilities. The Group announced new SCADA products for hubs and remote
locations in 1H FY2022, which have generated further cross-sell and upsell
opportunities and expanded the Company's market reach. Concurrently, Global
Invacom's subsidiary, OnePath Networks Limited, trading as Global Foxcom,
introduced its innovative Mini-Global Navigation Satellite System repeater
kit, diversifying its range of Satcom Repeater solutions and increasing its
presence in the aviation, commercial, and military markets. The Group
anticipates increased demand for its satellite dishes following the completion
of a long-term satellite project, which is expected to be in operation by 2H
FY2023.
As previously reported, delays in the completion of our XRJ product, coupled
with the recent decline in global demand for satellite television products,
has impacted the Group's financial performance. Global Invacom will continue
to monitor market trends to ensure our expert R&D, marketing and sales
teams are deployed strategically across expanding categories.
The Company continues to be recognised for its expertise and know-how in
satellite communications equipment design and innovation, and during 2022
secured mandates with key players in the industry to develop a range of modern
and affordable products for their customers. Announced in October 2021, the
Group's partnership with Methera and its subcontractors is progressing as
planned, and Global Invacom remains committed to helping meet the
ever-expanding demand for connectivity, including from remote communities, as
it targets the delivery of Ka-band user terminals to market in 2024.
With a blue-chip customer base and a highly experienced global team of
employees, management is focused on stabilising the business to ensure it
remains in a solid position to capitalise on the continued demand for
dependable VSAT products from a broad range of industries including energy and
defence. The Company strives to ensure its position at the forefront of
technological innovation and - where necessary - will explore additional
partnership opportunities in the medium to long term.
Now more than ever, individuals worldwide require reliable domestic
connectivity to support their daily activities, from business to leisure. The
Group's unique capabilities as a designer, manufacturer, and provider of
equipment for both electronics and antenna solutions means Global Invacom has
an integral role to play in delivering essential devices to customers across
the globe as the satellite communications industry continues to evolve.
Board Composition
In December 2022, the Group announced that Tony Taylor, Executive Chairman,
had stepped down as a member of the Board and executive director. Mr Taylor
made a valuable contribution to the Group during his 16-year tenure, and the
Board and the wider executive team wish him every success in his future
endeavours.
Gordon Blaikie, Global Invacom's current Chief Operating Officer and an
executive director, has assumed the role of Interim Chief Executive Officer
whilst the Group identifies a permanent replacement. Mr Blaikie has 11 years'
experience at Global Invacom, overseeing the manufacturing entities and sales
functions of the Group and regularly worked closely with the Board and senior
management team to improve the Group's operating performance. In addition,
Wayne Porritt, an existing Independent Non-Executive Director of the Company,
became Independent Non-Executive Chairman.
Outlook
Due to the prevailing economic pressures on the business, the current
financial year is expected to be challenging for the Group. With supply chain
and inflationary pressures forecast to ease in FY2023, the Group is focused on
continuing to implement its operational restructuring and establishing the
underlying foundations for long-term growth.
Gordon Blaikie, Interim Chief Executive Officer of Global Invacom, commented:
"Despite facing considerable challenges during 2022, the Group made solid
progress across its sales and marketing divisions, as well as in product
development.
"We continue to attract significant partners, with our cutting-edge VSAT
products generating strong industry demand, and in Q3 FY2022 the Group
experienced encouraging signs of renewed customer activity, which is pleasing.
"The perseverance of our team throughout the year has not gone unnoticed, and
the Board and management would like to extend their profound gratitude to all
staff for their hard work and dedication.
"We look forward to progressing our restructuring and operational review to
help stabilise the business, the Group's key strategic priority, as well as
exploring additional commercial opportunities to further grow the company's
profile globally."
The information communicated in this announcement contains inside information
for the purposes of Article 7 of the Market Abuse Regulation (EU) No.
596/2014, as it forms part of UK domestic law.
For further information, please contact:
Global Invacom Group Limited www.globalinvacom.com (http://www.globalinvacom.com/)
Gordon Blaikie, Interim Chief Executive Officer via Vigo Consulting
Strand Hanson Limited (Nominated Adviser and Broker) www.strandhanson.co.uk (http://www.strandhanson.co.uk/)
James Harris / Richard Johnson / David Asquith Tel: +44 20 7409 3494
Vigo Consulting (UK Media & Investor Relations) www.vigoconsulting.com (http://www.vigoconsulting.com/)
Jeremy Garcia / Fiona Hetherington / Kendall Hill Tel: +44 20 7390 0238
ginv@vigoconsulting.com (mailto:ginv@vigoconsulting.com)
About Global Invacom Group Limited
Global Invacom is a fully integrated satellite equipment provider with sites
across Singapore, China, Indonesia, Philippines, Malaysia, Israel, UK and the
U.S. Its customers include satellite broadcasters such as Sky Group 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 satellite ground equipment including
antennas, LNB receivers, transceivers, fibre distribution equipment,
transmitters, switches, and video distribution components, as well as
manufacturing services for the defence and healthcare sectors. The Group is
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
(http://www.globalinvacom.com/)
UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
For the Six Months and Full Year Ended 31 December 2022
A. Condensed Interim Consolidated Statement of Comprehensive Income
Group Group
2H 2H FY2021 Increase/ FY2022 FY2021 Increase/
(Decrease)
FY2022 (Decrease)
US$'000 US$'000 % US$'000 US$'000 %
Revenue 35,349 42,102 (16.0) 72,769 82,541 (11.8)
Cost of sales (29,303) (34,338) (14.7) (59,354) (65,991) (10.1)
Gross profit 6,046 7,764 (22.1) 13,415 16,550 (18.9)
Other income 9 4,007 (99.8) 46 5,485 (99.2)
Distribution costs (98) (231) (57.6) (254) (368) (31.0)
Administrative expenses (7,379) (7,458) (1.1) (15,485) (15,918) (2.7)
Research and development expenses (1,741) (2,579) (32.5) (3,710) (4,996) (25.7)
Impairment of goodwill (5,199) - N.M. (5,199) - N.M.
Other operating expenses (311) (211) 47.4 (568) (263) 116.0
Finance income - - - - 1 (100.0)
Finance costs (307) (196) (56.6) (478) (519) (7.9)
(Loss)/Profit before income tax (8,980) 1,096 N.M. (12,233) (28) N.M.
Income tax (expense)/credit (917) 640 N.M. (956) 586 N.M.
(Loss)/Profit for the period/year (9,897) 1,736 N.M. (13,189) 558 N.M.
Other comprehensive loss:
Items that may be reclassified subsequently to profit or loss
- Exchange differences on translation of foreign subsidiaries (658) (445) 47.9 (677) (120) 464.2
(658) (445) 47.9 (677) (120) 464.2
Other comprehensive loss for the period/year, net of tax
(10,555) 1,291 (13,866) 438
Total comprehensive (loss)/income for the period/year N.M. N.M.
(Loss)/Profit for the period/year attributable to:
Equity holders of the Company (9,895) 1,738 N.M. (13,184) 561 N.M.
Non-controlling interests (2) (2) 0.0 (5) (3) 66.7
(9,897) 1,736 N.M. (13,189) 558 N.M.
Total comprehensive (loss)/income for the period/year attributable to:
Equity holders of the Company (10,553) 1,293 N.M. (13,861) 441 N.M.
Non-controlling interests (2) (2) 0.0 (5) (3) 66.7
(10,555) 1,291 N.M. (13,866) 438 N.M.
N.M.: Not Meaningful
B. Condensed Interim Statements of Financial Position
Group Company
31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021
US$'000 US$'000 US$'000 US$'000
ASSETS
Non-current Assets
Property, plant and equipment 6,641 8,126 - 20
Right-of-use assets 3,095 4,396 41 39
Investments in subsidiaries - - 17,824 25,375
Goodwill 893 6,092 - -
Intangible assets 1,417 1,698 - -
Deferred tax assets 585 1,780 - -
Other receivables and prepayments 54 54 - 11,032
12,685 22,146 17,865 36,466
Current Assets
Due from subsidiaries - - 2,499 3,265
Inventories 22,869 25,764 - -
Trade receivables 10,011 13,772 - -
Other receivables and prepayments 1,274 5,302 13,786 2,588
Tax receivables 167 169 - -
Cash and cash equivalents 9,244 10,771 168 155
43,565 55,778 16,453 6,008
Total assets 56,250 77,924 34,318 42,474
EQUITY AND LIABILITIES
Equity
Share capital 60,423 60,423 74,240 74,240
Treasury shares (1,656) (1,656) (1,656) (1,656)
Reserves (25,160) (11,383) (38,472) (30,462)
Equity attributable to owners of the Company 33,607 47,384 34,112 42,122
Non-controlling interests (24) (19) - -
Total equity 33,583 47,365 34,112 42,122
Non-current Liabilities
Other payables 172 152 - -
Lease liabilities 1,599 3,088 - -
Deferred tax liabilities 684 646 - -
2,455 3,886 - -
Current Liabilities
Due to subsidiaries - - - 1
Trade payables 10,006 14,479 - -
Other payables 3,109 4,447 168 313
Borrowings 5,488 6,120 - -
Lease liabilities 1,607 1,627 38 38
Provision for income tax 2 - - -
20,212 26,673 206 352
Total liabilities 22,667 30,559 206 352
Total equity and liabilities 56,250 77,924 34,318 42,474
C. Condensed Interim Statements of Changes in Equity
Foreign currency translation reserve
Capital redemption reserves Share options reserve Attributable to equity holders of the Company
Share Treasury shares Merger reserves Capital reserve Retained profits Non-controlling interests Total
Group capital
US$'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 January 2022 60,423 (1,656) (10,150) 6 725 (5,109) (1,084) 4,229 47,384 (19) 47,365
Loss for the period - - - - - - - (3,289) (3,289) (3) (3,292)
Other comprehensive income:
Exchange differences on translating foreign operations
- - - - - - (19) - (19) - (19)
Total other comprehensive loss for the period
- - - - - - (19) (3,289) (3,308) (3) (3,311)
Balance as at 30 June 2022 60,423 (1,656) (10,150) 6 725 (5,109) (1,103) 940 44,076 (22) 44,054
Share-based payments - - - - 36 - (1) 49 84 - 84
Transfer to capital reserve in accordance with statutory requirements - - - - - (2,727) 2,343 384 - - -
Loss for the period - - - - - - (9,895) (9,895) (2) (9,897)
Other comprehensive loss:
Exchange differences on translating foreign operations
- - - - - - (658) - (658) - (658)
Total other comprehensive loss for the period
- - - - - - (658) (9,895) (10,553) (2) (10,555)
Balance as at 31 December 2022 60,423 (1,656) (10,150) 6 761 (7,836) 581 (8,522) 33,607 (24) 33,583
Balance as at 1 January 2021 60,423 (1,656) (10,150) 6 725 (5,109) (964) 3,668 46,943 (16) 46,927
Loss for the period - - - - - - - (1,177) (1,177) (1) (1,178)
Other comprehensive income:
Exchange differences on translating foreign operations
- - - - - - 325 - 325 - 325
Total other comprehensive income/(loss) for the period
- - - - - - 325 (1,177) (852) (1) (853)
Balance as at 30 June 2021 60,423 (1,656) (10,150) 6 725 (5,109) (639) 2,491 46,091 (17) 46,074
Profit/(Loss) for the period - - - - - - - 1,738 1,738 (2) 1,736
Other comprehensive loss:
Exchange differences on translating foreign operations
- - - - - - (445) - (445) - (445)
Total other comprehensive (loss)/income for the period
- - - - - - (445) 1,738 1,293 (2) 1,291
Balance as at 31 December 2021 60,423 (1,656) (10,150) 6 725 (5,109) (1,084) 4,229 47,384 (19) 47,365
C. Condensed Interim Statements of Changes in Equity (cont'd)
Foreign currency translation reserve
Share options reserve
Share Treasury shares Capital reserve Accumulated losses Total
Company capital
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance as at 1 January 2022 74,240 (1,656) 725 (4,481) (2,506) (24,200) 42,122
Loss for the period - - - - - (244) (244)
Other comprehensive loss:
Exchange differences on translating foreign operations - - - - - - -
Total other comprehensive loss for the period - - - - - (244) (244)
Balance as at 30 June 2022 74,240 (1,656) 725 (4,481) (2,506) (24,444) 41,878
Share-based payments - - (12) - - - (12)
Loss for the period - - - - - (7,754) (7,754)
Other comprehensive loss:
Exchange differences on translating foreign operations - - - - - - -
Total other comprehensive loss for the period - - - - - (7,754) (7,754)
Balance as at 31 December 2022 74,240 (1,656) 713 (4,481) (2,506) (32,198) 34,112
Balance as at 1 January 2021 74,240 (1,656) 725 (4,481) (2,506) (22,040) 44,282
Loss for the period - - - - - (139) (139)
Other comprehensive loss:
Exchange differences on translating foreign operations - - - - - - -
Total other comprehensive loss for the period - - - - - (139) (139)
Balance as at 30 June 2021 74,240 (1,656) 725 (4,481) (2,506) (22,179) 44,143
Loss for the period - - - - - (2,021) (2,021)
Other comprehensive loss:
Exchange differences on translating foreign operations - - - - - - -
Total other comprehensive loss for the period - - - - - (2,021) (2,021)
Balance as at 31 December 2021 74,240 (1,656) 725 (4,481) (2,506) (24,200) 42,122
D. Condensed Interim Consolidated Statement of Cash Flows
Group Group
2H FY2022 2H FY2021 FY2022 FY2021
US$'000 US$'000 US$'000 US$'000
Cash Flows from Operating Activities
(Loss)/Profit before income tax (8,980) 1,096 (12,233) (28)
Adjustments for:
Depreciation of property, plant and equipment 854 760 1,749 1,903
Amortisation of intangible assets 137 325 278 591
Depreciation of right-of-use assets 760 868 1,607 1,864
Loss/(Gain) on disposal of property, plant and equipment 278 - 273 (1,143)
Allowance/(Write-back) of inventory obsolescence, net 611 (736) 866 (738)
(Write-back)/Impairment loss on trade receivables (35) - 140 -
Impairment loss on other financial assets - 8 - 8
Unrealised exchange (gain)/loss (884) 60 (951) 184
Interest income - - - (1)
Interest expense 307 196 478 519
Share-based payments 36 - 36 -
Bad debts written back - (113) - (96)
(Gain)/Loss on lease modifications (125) 144 (125) (63)
Write-back of payables - (880) - (880)
Impairment of goodwill 5,199 - 5,199 -
Operating cash flow before working capital changes (1,842) 1,728 (2,683) 2,120
Changes in working capital:
Inventories 1,692 686 2,029 1,790
Trade receivables 2,323 (2,978) 6,267 (5,680)
Other receivables and prepayments 1,694 (390) 1,354 3
Trade and other payables (3,446) 3,777 (5,462) 1,382
Cash generated from/(used in) operating activities 421 2,823 1,505 (385)
Interest paid (26) (34) (222) (150)
Income tax paid (4) - (126) (2)
Net cash generated from/(used in) operating activities 391 2,789 1,157 (537)
Cash Flows from Investing Activities
Interest received - 1 - 1
Purchase of property, plant and equipment (219) (384) (470) (1,063)
Proceeds from disposal of property, plant and equipment 3 203 8 784
Net cash used in investing activities (216) (180) (462) (278)
Cash Flows from Financing Activities
Proceeds from borrowings 18,624 17,738 35,801 34,764
Repayment of borrowings (18,850) (17,817) (36,433) (32,527)
Principal repayment of lease liabilities (704) (1,202) (1,581) (1,942)
Net cash (used in)/generated from financing activities (930) (1,281) (2,213) 295
Net (decrease)/increase in cash and cash equivalents (755) 1,328 (1,518) (520)
Cash and cash equivalents at the beginning of the period/year 10,000 9,435 10,771 11,273
Effect of foreign exchange rate changes on the balance of cash held in foreign (1) 8 (9) 18
currencies
Cash and cash equivalents at the end of the period/year 9,244 10,771 9,244 10,771
E. Notes to the Condensed Interim Consolidated Financial Statements
1. General Information
Global Invacom Group Limited (the "Company") is a public limited company
incorporated and domiciled in Singapore and is listed on the Mainboard of the
Singapore Exchange Securities Trading Limited ("SGX-ST"). The Company is also
listed on the AIM Market of the London Stock Exchange ("AIM") in the United
Kingdom (UK). These condensed interim consolidated financial statements as at
and for the six months and full year ended 31 December 2022 comprise the
Company and its subsidiaries (the "Group"). The principal activity of the
Company is that of an investment holding company.
The principal activities of the Group are design, manufacture and supply of a
full range of satellite ground equipment, including antennas, LNB receivers,
transceivers, fibre distribution equipment, transmitters, switches and video
distribution components.
2. Basis of Preparation
The condensed interim financial statements for the six months and full year
ended 31 December 2022 have been prepared in accordance with Singapore
Financial Reporting Standards (International) ("SFRS(I)") 1-34 Interim
Financial Reporting issued by the Accounting Standards Council Singapore. The
condensed interim financial statements do not include all the information
required for a complete set of financial statements. However, selected
explanatory notes are included to explain events and transactions that are
significant to an understanding of the changes in the Group's financial
position and performance of the Group since the last annual financial
statements for the year ended 31 December 2021.
The accounting policies adopted are consistent with those of the previous
financial year which were prepared in accordance with SFRS(I)s and
International Financial Reporting Standards ("IFRSs"), except for the adoption
of new and amended standards as set out in Note 2.1.
The condensed interim financial statements are presented in United States
dollar which is the Company's functional currency.
2.1 New and Amended Standards Adopted by the Group
There has been no change in the accounting policies and methods of computation
adopted by the Group for the current reporting period compared with the
audited financial statements for the year ended 31 December 2021, except for
the adoption of new or revised SFRS(I) and interpretations of SFRS(I) ("INT
SFRS(I)") that are mandatory for the financial year beginning on or after 1
January 2022. The adoption of these SFRS(I) and INT SFRS(I) has no significant
impact on the Group.
2.2 Use of Judgements and Estimates
In preparing the condensed interim financial statements, management has made
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
The significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those that applied to the consolidated financial statements as at and
for the year ended 31 December 2021.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimates are revised and in any future periods affected.
Information about critical judgements in applying accounting policies that
have the most significant effect on the amounts recognised in the financial
statements is included in the following notes:
· Note 9 - capitalised development costs
· Note 11 - impairment test on property, plant and equipment
E. Notes to the Condensed Interim Consolidated Financial Statements
(cont'd)
2. Basis of Preparation (cont'd)
2.2 Use of Judgements and Estimates (cont'd)
Information about assumptions and estimation uncertainties that have a
significant risk of resulting in a material adjustment to the carrying amounts
of assets and liabilities within the next interim period are included in the
following notes:
· Note 10 - impairment test of goodwill: key assumptions underlying
recoverable amounts
· Note 11 - useful lives of property, plant and equipment
3. Seasonal Operations
The Group's businesses are not affected significantly by seasonal or cyclical
factors during the six months and full year ended 31 December 2022.
4. Segment and Revenue Information
The Group is organised into the following main business segments:
· Satellite Communications ("Sat Comms"); and
· Contract Manufacturing ("CM")
These operating segments are reported in a manner consistent with internal
reporting provided to the executive directors who are responsible for
allocating resources and assessing performance of the operating segments.
4.1 Reportable Segments
Sat
Comms CM Group
US$'000 US$'000 US$'000
FY2022
Revenue 72,769 - 72,769
Operating loss (11,755) - (11,755)
Finance costs (478)
Income tax expense (956)
Loss for the year (13,189)
Amortisation of intangible assets 278 - 278
Depreciation of property, plant and equipment 1,749 - 1,749
Depreciation of right-of-use assets 1,607 - 1,607
Addition to property, plant and equipment 470 - 470
Impairment of goodwill 5,199 - 5,199
Impairment loss on trade receivables 140 - 140
Gain on lease modifications (125) - (125)
Allowance for inventory obsolescence, net 866 - 866
E. Notes to the Condensed Interim Consolidated Financial Statements
(cont'd)
4. Segment and Revenue Information (cont'd)
4.1 Reportable Segments (cont'd)
Sat
Comms CM Group
US$'000 US$'000 US$'000
Assets and liabilities
Segment assets 55,095 - 55,095
Unallocated assets
- Other receivables 85
- Deferred tax assets 585
- Cash and cash equivalents 168
- Tax receivables 167
- Right-of-use assets 150
Total assets 56,250
Segment liabilities 16,247 - 16,247
Unallocated liabilities
- Other payables 208
- Provision for income tax 2
- Deferred tax liabilities 684
- Borrowings 5,488
- Lease liabilities 38
Total liabilities 22,667
FY2021
Revenue 82,541 - 82,541
Operating profit/(loss) 507 (17) 490
Finance income 1
Finance costs (519)
Income tax credit 586
Profit for the year 558
Amortisation of intangible assets 591 - 591
Depreciation of property, plant and equipment 1,903 - 1,903
Depreciation of right-of-use assets 1,864 - 1,864
Addition to property, plant and equipment 1,063 - 1,063
Impairment loss on other financial assets 8 - 8
Bad debts written (back)/off (113) 17 (96)
Gain on lease modifications (63) - (63)
Write-back of inventory obsolescence, net (738) - (738)
Assets and liabilities
Segment assets 74,109 1,573 75,682
Unallocated assets
- Non-current assets 20
- Other receivables 79
- Deferred tax assets 1,780
- Cash and cash equivalents 155
- Tax receivables 169
- Right-of-use assets 39
Total assets 77,924
Segment liabilities 23,393 - 23,393
Unallocated liabilities
- Other payables 362
- Deferred tax liabilities 646
- Borrowings 6,120
- Lease liabilities 38
Total liabilities 30,559
E. Notes to the Condensed Interim Consolidated Financial Statements
(cont'd)
4. Segment and Revenue Information (cont'd)
4.2 Disaggregation of Revenue
The Group's revenue is disaggregated by principal geographical areas, major
product lines and timing of revenue recognition.
Group Group
2H 2H FY2022 FY2021
FY2022
FY2021
US$'000 US$'000 US$'000 US$'000
Principal geographical market
America
- Sale of goods 22,861 23,295 40,256 46,460
Europe
- Sale of goods 7,949 13,364 19,437 24,361
Asia
- Sale of goods 1,155 3,483 2,374 4,692
Rest of the World
- Sale of goods 3,384 1,960 10,702 7,028
Total 35,349 42,102 72,769 82,541
Major product lines
Sale of goods 35,349 42,102 72,769 82,541
The Group recognises revenue from sale of goods at a point in time, when the
Group satisfies a performance obligation and the customers obtain control of
the goods.
E. Notes to the Condensed Interim Consolidated Financial Statements
(cont'd)
5. Financial Assets and Financial Liabilities
5.1 Significant Items
Group Group
2H 2H FY2022 FY2021
FY2022
FY2021
US$'000 US$'000 US$'000 US$'000
Interest income - - - 1
Interest expense (307) (196) (478) (519)
Write-back of payables - 880 - 880
Impairment of goodwill (5,199) - (5,199) -
(Loss)/Gain on disposal of property, plant and equipment (302) - (273) 1,143
Gain/(Loss) on lease modifications 125 (144) 125 63
(Write-back)/Impairment loss on trade receivables (35) - 140 -
Impairment loss on other financial assets - (8) - (8)
Gain/(Loss) on foreign exchange 177 (159) (88) (193)
Bad debts written back - 113 - 96
(Allowance)/Write-back of inventory obsolescence (611) 736 (866) 738
Depreciation of property, plant and equipment (854) (760) (1,749) (1,903)
Depreciation of right-of-use assets (760) (868) (1,607) (1,864)
Amortisation of intangible assets (137) (325) (278) (591)
Operating lease expense (12) (19) (22) (19)
5.2 Related Party Transactions
There are no material related party transactions apart from those disclosed
elsewhere in the condensed interim financial statements.
6. Taxation
The Group calculates the period income tax expense using the tax rate that
would be applicable to the expected total annual earnings.
7. (Loss)/Earnings Per Share
(Loss)/Earnings per ordinary share of the Group, after deducting any provision Group Group
for preference dividends
2H 2H FY2022 FY2021
FY2022 FY2021 US$ US$
US$ US$
(a) Based on weighted average number of ordinary shares on issue; and (3.64) cents 0.64 cent (4.85) cents 0.21 cent
(b) On a fully diluted basis (3.64) cents* 0.64 cent* (4.85) cents* 0.21 cent*
Weighted average number of ordinary shares used in computation of basic 271,662,227 271,662,227 271,662,227 271,662,227
earnings per share
Weighted average number of ordinary shares used in computation of diluted 271,662,227 271,662,227 271,662,227 271,662,227
earnings per share
* Diluted earnings per share 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.
E. Notes to the Condensed Interim Consolidated Financial Statements
(cont'd)
8. Net Asset Value
Group Company
31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021
US$ US$ US$ US$
Net asset value per ordinary share based on issued share capital 12.37 cents 17.44 cents 12.56 cents 15.51 cents
Total number of issued shares 271,662,227 271,662,227 271,662,227 271,662,227
9. Intangible Assets
Trading name Intellectual property rights Capitalised development Total
costs
US$'000 US$'000 US$'000 US$'000
Group
2022
Cost
Balance at 1 January and 31 December 16 2,674 4,834 7,524
Amortisation and impairment
Balance at 1 January 16 1,043 4,767 5,826
Amortisation charge - 211 67 278
Currency realignment - 3 - 3
Balance at 31 December 16 1,257 4,834 6,107
Net book value
Balance at 31 December - 1,417 - 1,417
2021
Cost
Balance at 1 January and 31 December 16 2,674 4,834 7,524
Amortisation and impairment
Balance at 1 January 16 757 4,460 5,233
Amortisation charge - 284 307 591
Currency realignment - 2 - 2
Balance at 31 December 16 1,043 4,767 5,826
Net book value
Balance at 31 December - 1,631 67 1,698
10. Goodwill
Group
31 December 2022 31 December 2021
US$'000 US$'000
Cost
Balance at the beginning and end of the year 6,092 9,352
Allowance for impairment loss
Balance at the beginning and end of the year 5,199 3,260
Net carrying amount 893 6,092
E. Notes to the Condensed Interim Consolidated Financial Statements
(cont'd)
10. Goodwill (cont'd)
10.1 Allocation of Goodwill
Goodwill has been allocated to the Group's cash generating unit ("CGU")
identified according to the business segment as follows:
Group
31 December 2022 31 December 2021
US$'000 US$'000
Satellite Communications
- OnePath Networks Limited ("OPN") - Israel 893 893
- Satellite Acquisition Corporation ("SAC") - United States of America - 5,199
893 6,092
11. Property, Plant and Equipment
Freehold Machinery & Motor Furniture, fittings &
property equipment vehicles equipment Renovations Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Group
2022
Cost
Balance at 1 January 2,871 17,907 40 7,813 1,438 30,069
Currency realignment - 96 - (3) 8 101
Additions - 429 - 19 22 470
Write-off - (183) - (2) - (185)
Disposals - (281) - (1) (11) (293)
Balance at 31 December 2,871 17,968 40 7,826 1,457 30,162
Accumulated
depreciation
Balance at 1 January 960 12,523 40 7,244 1,176 21,943
Currency realignment (6) 15 - 8 9 26
Depreciation charge 16 1,438 - 136 159 1,749
Write-off - (183) - (2) - (185)
Disposals - - - (1) (11) (12)
Balance at 31 December 970 13,793 40 7,385 1,333 23,521
Net book value
Balance at 31 December 1,901 4,175 - 441 124 6,641
2021
Cost
Balance at 1 January 2,883 17,639 40 7,649 1,458 29,669
Currency realignment - (19) - 12 (1) (8)
Additions - 814 - 152 97 1,063
Disposals (12) (527) - - (116) (655)
Balance at 31 December 2,871 17,907 40 7,813 1,438 30,069
Accumulated
depreciation
Balance at 1 January 928 11,187 40 6,969 1,135 20,259
Currency realignment 44 322 - - 70 436
Depreciation charge - 1,541 - 275 87 1,903
Disposals (12) (527) - - (116) (655)
Balance at 31 December 960 12,523 40 7,244 1,176 21,943
Net book value
Balance at 31 December 1,911 5,384 - 569 262 8,126
E. Notes to the Condensed Interim Consolidated Financial Statements
(cont'd)
11. Property, Plant and Equipment (cont'd)
Furniture,
fittings &
equipment Renovations Total
US$'000 US$'000 US$'000
Company
2022
Cost
Balance at 1 January and 31 December 211 80 291
Accumulated depreciation
Balance at 1 January 192 79 271
Depreciation charge 19 1 20
Balance at 31 December 211 80 291
Net book value
Balance at 31 December - - -
2021
Cost
Balance at 1 January and 31 December 211 80 291
Accumulated depreciation
Balance at 1 January 137 72 209
Depreciation charge 55 7 62
Balance at 31 December 192 79 271
Net book value
Balance at 31 December 19 1 20
12. Investment in Subsidiaries
Company
31 Dec 2022 31 Dec 2021
US$'000 US$'000
Unquoted equity shares, at cost 40,533 40,533
Accounting for employee share options 713 725
Currency realignment 130 131
Less: Allowance for impairment loss (23,552) (16,014)
17,824 25,375
Movement in the allowance for impairment loss are as follows:
At the beginning of the year 16,014 14,287
Impairment loss recognised during the year 7,538 1,727
At the end of the year 23,552 16,014
E. Notes to the Condensed Interim Consolidated Financial Statements
(cont'd)
12. Investment in Subsidiaries (cont'd)
Allowance for impairment loss
(i) Global Invacom Manufacturing Pte Ltd ("GIMPL")
As at 31 December 2022 and 31 December 2021, an allowance for impairment loss
of US$8,648,000 was made on the cost of investment in GIMPL, as the allocated
CGU, to which the investment relates to, was incurring losses from operations
due to the restructuring costs incurred. The recoverable amount was based on
management's estimate of the fair value less costs to sell, with reference to
the fair value of the net assets of GIMPL, which was considered to be Level 3
in the fair value hierarchy.
(ii) Global Invacom Holdings Limited and its subsidiaries ("GIHL
Group")
As at 31 December 2022 and 31 December 2021, an allowance for impairment loss
of US$14,904,000 and US$7,366,000, respectively, was made on the cost of
investment in GIHL Group, as the allocated CGU, to which the investment
relates to, was incurring losses from operations. The recoverable amount was
based on management's estimate of the fair value less costs to sell, with
reference to the fair value of the net assets of GIHL Group, which is
considered to be Level 3 in the fair value hierarchy.
13. Borrowings
Aggregate amount of group's borrowings and debt securities.
Amount repayable in one year or less, or on demand
As at 31 Dec 2022 As at 31 Dec 2021
Secured Unsecured Secured Unsecured
US$'000 US$'000 US$'000 US$'000
5,488 - 6,120 -
Amount repayable after one year
As at 31 Dec 2022 As at 31 Dec 2021
Secured Unsecured Secured Unsecured
US$'000 US$'000 US$'000 US$'000
- - - -
The revolving credit loans of US$5,488,000 were secured over the assets of the
subsidiaries and corporate guarantees provided by the Company and the
subsidiaries.
14. Share Capital
FY2022 No. of shares US$'000
Balance as at 1 Jan 2022 and 31 Dec 2022 271,662,227 72,584
No. of shares US$'000
FY2021
Balance as at 1 Jan 2021 and 31 Dec 2021 271,662,227 72,584
There were 10,740,072 treasury shares held by the Company as at 31 December
2022 and 31 December 2021 and there were no subsidiary holdings.
E. Notes to the Condensed Interim Consolidated Financial Statements
(cont'd)
14. Share Capital (cont'd)
Total number of issued shares excluding treasury shares as at the end of the
current financial period and as at the end of the immediately preceding year:
31 Dec 2022 31 Dec 2021
Total number of issued shares excluding treasury shares 271,662,227 271,662,227
Total number of treasury shares as at the end of the current financial period
reported on:
FY2022 No. of shares US$'000
Balance as at 1 Jan 2022 and 31 Dec 2022 10,740,072 1,656
15. Subsequent Events
There are no known subsequent events which have led to adjustments to this set
of interim financial statements.
F. Other Information Required by Listing Rule Appendix 7.2
1. Review
The condensed interim consolidated statement of financial position of Global
Invacom Group Limited and its subsidiaries as at 31 December 2022 and the
related condensed interim consolidated statement of comprehensive income,
condensed interim consolidated statement of changes in equity and condensed
interim consolidated statement of cash flows for the six-month period and full
year then ended and certain explanatory notes have not been audited or
reviewed by the auditors.
2. Review of Performance of the Group
2.1 Review of Financial Performance
Revenue
The Group's revenue for the year ended 31 December 2022 ("FY2022") decreased
by 11.8% to US$72.8 million from US$82.5 million in the prior year ("FY2021").
Revenue for the second half year ended 31 December 2022 ("2H FY2022") was
US$35.3 million against US$42.1 million in the prior year ("2H FY2021").
Pressure on the Group's revenue during FY2022 has been sustained. The legacy
recovery of global supply chains, combined with increased raw material prices,
has impacted our ability to fulfill demand. In addition, the market
requirement for our products has been impacted by the ongoing delays to the
launch of satellites, delaying demand for some of our legacy products, and
delays in bringing new products to market.
Geographically, Group revenue for FY2022 decreased in America, Europe and Asia
by US$6.2 million (-13.4%), US$4.9 million (-20.2%) and US$2.3 million
(-49.4%), respectively and increased in Rest of the World ("RoW") by US$3.7
million (+52.3%). Revenue for 2H FY2022 decreased in the same segments,
America, Europe and Asia by US$0.4 million (-1.9%), US$5.4 million (-40.5%)
and US$2.3 million (-66.8%), respectively, compensated by an increase in RoW
by US$1.4 million (+72.7%), compared to the prior year.
Gross Profit
The decrease in revenue resulted in a 18.9% decrease in gross profit from
US$16.6 million in FY2021 to US$13.4 million in FY2022. Gross profit margin
has decreased marginally by 1.7 percentage points from 20.1% to 18.4%, where
the Group, particularly our US subsidiary, has come under sustained selling
price, labour shortage and material costs pressures. As demand and supply
chains the Group operates within open up, the Group has experienced a net
increase in pressure on our margins.
Similarly, gross profit decreased from US$7.8 million in 2H FY2021 to US$6.0
million in 2H FY2022. Gross profit margin has decreased by 1.3 percentage
points from 18.4% to 17.1%.
Other Income
Other income in 2H FY2021 and FY2021 relates primarily to a grant from the US
Government of US$2.7 million, gain on disposal of equipment of US$1.1 million,
write-back of payables of US$0.9 million and subsidy support received from
various government bodies across the Group due to the COVID-19 pandemic.
Administrative and Research and Development Expenses
Administrative expenses, together with research and development expenses, for
FY2022 decreased 8.2% to US$19.2 million compared to US$20.9 million in
FY2021, representing 26.4% and 25.3% of revenue, respectively as a result of
the ongoing cost savings measures to streamline certain core functions across
the Group. For 2H FY2022, administrative and research and development
expenses, decreased 9.1% to US$9.1 million compared to US$10.0 million in the
previous year, representing 25.8% and 23.8% of revenue, respectively.
Impairment of Goodwill
The impairment charge in 2H FY2022 and FY2022 was attributed to a goodwill
impairment of US$5.2 million, which is non-cash in nature, related to the
performance of the Group's US subsidiary. The requirement to recognise this
charge has arisen due to the sustained loss making position of the Group's US
subsidiary.
F. Other Information Required by Listing Rule Appendix 7.2 (cont'd)
2. Review of Performance of the Group (cont'd)
2.1 Review of Financial Performance (cont'd)
Profit Before Tax & Net Profit
The Group posted a loss before tax of US$12.2 million in FY2022, compared to a
loss before tax of US$28,000 the prior year, representing a negative margin of
16.8% and 0.03%, respectively. For 2H FY2022, the Group recorded a loss before
tax of US$9.0 million compared to a profit before tax of US$1.1 million in the
prior year, representing a negative margin of 25.4% compared to a margin of
2.6%.
The Group received research and development tax credits from the UK Government
and has written-off deferred tax assets of US$1.3 million related to the US
subsidiary.
Overall, the Group recorded a net loss of US$13.2 million in FY2022, compared
to a net profit of US$0.6 million the prior year, representing a negative
margin of 18.1% compared to a margin of 0.7%, respectively. For 2H FY2022, the
Group recorded a net loss of US$9.9 million compared to a net profit of US$1.7
million in the prior year, representing a negative margin of 28.0% compared to
a margin of 4.1%.
2.2 Review of Financial Position
Non-current assets decreased by US$9.5 million to US$12.7 million as at 31
December 2022, due to the impairment of goodwill and deferred tax assets.
Net current assets decreased by US$5.8 million to US$23.3 million as at 31
December 2022 compared to US$29.1 million as at 31 December 2021. Inventories,
trade and other receivables and trade and other payables decreased by US$2.9
million, US$7.8 million and US$5.8 million, respectively, with decrease in
demand and controlled purchases. In 2H FY2022, the Group's US subsidiary has
also received US$2.7 million in proceeds from the US government related a
grant support which was accounted for within other receivables. Tax
receivables remained at US$0.2 million as at 31 December 2022.
Cash and cash equivalents decreased by US$1.5 million to US$9.2 million as at
31 December 2022 from US$10.7 million at 31 December 2021, and borrowings
decreased by US$0.6 million to US$5.5 million as at 31 December 2022 from
US$6.1 million as at 31 December 2021. The current portion of the lease
liabilities remained at US$1.6 million as at 31 December 2022.
With the repayment of leases, the non-current portion of the lease liabilities
decreased by US$1.5 million to US$1.6 million as at 31 December 2022.
The Group's net asset value stood at US$33.6 million as at 31 December 2022,
compared to US$47.4 million as at 31 December 2021.
2.3 Review of Cash Flows
In 2H FY2022, net cash generated from operating activities was US$0.4 million,
comprising US$1.9 million cash outflow from operating activities (before
working capital changes) and US$2.3 million net working capital inflow.
In FY2022, net cash generated from operating activities was US$1.2 million,
comprising US$$2.7 million cash outflow from operating activities (before
working capital changes), US$4.2 million net working capital inflow and US$0.3
million payment of interest and income tax.
Net cash used in investing activities in 2H FY2022 and FY2022 amounted to
US$0.2 million and US$0.5 million, respectively, relating predominately to the
purchase of machinery and equipment, offset against proceeds from the disposal
of property, plant and equipment.
Net cash used in financing activities in 2H FY2022 and FY2022 was US$0.9
million and US$2.2 million, respectively, attributable to the net proceeds of
borrowings and repayment of lease liabilities.
The Group recorded a net decrease in cash and cash equivalents amounting to
US$0.7 million and US$1.5 million in 2H FY2022 and FY2022, respectively,
bringing cash and cash equivalents per the consolidated statement of cash
flows to US$9.2 million as at 31 December 2022.
F. Other Information Required by Listing Rule Appendix 7.2 (cont'd)
3. 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.
4. 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.
As a designer, manufacturer, and provider of high-tech products with an
international customer and employee base, 2022 continued to be a challenging
trading environment for the Group. The Group's net loss is substantially
attributed to its US operations, with impacting factors including the sale of
key products being postponed due to delays in customer demand.
Considerable macroeconomic headwinds impacted the Company's financial and
operational performance in the year ended 31 December 2022, and ongoing
inflationary pressures, along with reduced transportation costs leading to
increased competition from overseas suppliers, particularly into the US
market, are also expected to impact the performance of the business in the
current financial year. Global Invacom is focused on mitigating the effects of
global supply chain issues on its core business activities and ensuring the
Group is optimised as pressures subside.
In Q3 FY2022, the Group commenced a comprehensive review of its operations,
focused on bolstering its operational platform and management capabilities
aimed at generating greater shareholder value. The review continues to assess
the Group's assets and cost base to streamline certain core functions, whilst
utilising its extensive research and development capabilities to seek and
secure new markets and customers.
The current financial year is expected to be challenging for the Group due to
the prevailing economic pressures on the business. The supply chain and
inflationary pressures experienced in 2022 are forecast to ease during FY2023.
In order to establish long-term growth, and as part of its operational
restructuring, Global Invacom remains committed to technological innovation
and development. By working in collaboration with key customers, the Group is
well positioned to maintain its reputation of developing best-in-class
solutions for the satellite industry.
F. Other Information Required by Listing Rule Appendix 7.2 (cont'd)
5. 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.
6. If no dividend has been declared/recommended, a statement to that
effect and the reason(s) for the decision.
Due to the operating conditions faced by the Group, no dividend has been
declared or recommended for the year ended 31 December 2022.
7. 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 for the year ended
31 December 2022.
8. Confirmation 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 year ended 31 December 2022 to be false or misleading in any
material aspect.
9. Confirmation Pursuant to Rule 720(1) of the Listing Manual
Global Invacom Group Limited confirms that undertakings under Rule 720(1) have
been obtained from all its directors and executive officers in the format set
out in Appendix 7.7.
10. 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.
On behalf of the Board
Wayne Robert
Porritt
Gordon Blaikie
Independent Non-Executive
Chairman
Executive Director
BY ORDER OF THE
BOARD
Wayne Robert Porritt
Independent Non-Executive Chairman
27 February 2023
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