GINV.L Regulatory News (GINV)

Global Invacom Group Limited

9 Months and Q3 2017 Results

Singapore and U.K. AIM-listed Global Invacom Group Reports Eight-Fold Rise in 9M FY2017 Net Profit To US$2.2 Million, Driven By Improved Efficiencies After Restructuring China Operations

· Administrative expenses for 9M FY2017 fell by 16.1% to US$15.5 million following last year's consolidation of two Chinese facilities into one

· Net profit of US$2.2 million for 9M FY2017 (9M FY2016: US$0.3 million)

· Achieves third consecutive quarter of profit in Q3 FY2017

Singapore, 9 November 2017 - Global Invacom Group Limited ("Global Invacom" or "the Group"), a satellite communications ("Sat Comms") equipment provider listed on the Singapore Exchange and the U.K. AIM Market, today announced an eight-fold increase in net profit to US$2.2 million for the nine months ended 30 September 2017 ("9M FY2017") propelled by efficiencies following a restructuring of its China manufacturing operations.

The Group, which continued the development of strong quality controls and strengthened its cost management, also benefited from the consolidation of operations in the People's Republic of China that took place at the end of 2016, as it sharpened focus on its core business of making satellite-related products. The improved efficiencies helped lower administrative expenses for 9M FY2017 by 16.1% to US$15.5 million from US$18.5 million a year ago.

Group revenue for 9M FY2017 declined 10.8% to US$85.9 million, reflecting the reduction in revenue from contract manufacturing activities previously carried out in Shenzhen. On a geographical basis, the reduced revenue was due to lower contributions from America (-6.6%) and Europe (-28.4%), which was partially offset by higher contributions from Asia (+0.8%) and the Rest of the World (+18.0%).

9M FY2017 gross profit dropped 11.3% to US$17.9 million from US$20.2 million a year ago on lower revenue. Nonetheless, gross profit margins remained relatively level at 20.9% against 21.0% in 9M FY2016.

The Group achieved a US$0.7 million net profit for the three months ended 30 September 2017 ("Q3 FY2017") - its third consecutive profitable quarter - unchanged from a year ago despite lower revenues (Q3 FY2017: US$28.5 million compared to Q3 FY2016: US$32.1 million).

Q3 FY2017 gross profit decreased to US$6.1 million from US$7.2 million in Q3 FY2016. Gross profit margin decreased to 21.4% in Q3 FY2017 from 22.6% in Q3 FY2016, which had included a number of high-margin product sales that were not present in Q3 FY2017.

Earnings per share ("EPS") on a fully diluted basis came to 0.80 U.S. cent for 9M FY2017 (9M FY2016: 0.10 U.S. cent) and 0.25 U.S. cent for Q3 FY2017 (Q3 FY2016: 0.26 U.S. cent). Net asset value per share rose to 20.14 U.S. cents as at 30 September 2017 from 19.26 cents as at 31 December 2016.

Cash and cash equivalents as at 30 September 2017 amounted to US$8.9 million, a net increase of US$0.9 million in 9M FY2017.

During the period, the Group also began supplying a triple-feed Low Noise Block ("LNB") utilising Digital Channel Stacking Switch ("DCSS") technology that allows up to 32 continuous video streams. The LNBs are being sold to one of the Group's major customers, a U.S. broadcaster. The Group continues to leverage its position as a leader in the global satellite communication sector, combining its unique abilities in strong electrical and antenna R&D with established customer relationships and a global manufacturing footprint. It sees good opportunities amidst more launches of satellites to support data services and anticipates higher demand for VSAT products and services.

In the U.K., it successfully live-tested breakthrough technology for live HD large-scale event video streaming over WiFi.

Mr Tony Taylor, Executive Chairman of Global Invacom, said, "Our plan to restructure our supply chain and strengthen our manufacturing capabilities has generated significant cost savings, improved efficiencies across our global footprint and strengthened our foundations in manufacturing and supply chain."

"While helping our key satellite broadcasting customers transition to new technology, we will also strive to offer new satellite communication products while further improving operational efficiencies," he added.

The Group expects to continue deploying DCSS-generation technology across more LNBs, including those in design and pending approval, for other customers and territories.

**End of Press Release**

For media queries, please contact

Matthew Garner

Chief Financial Officer

Global Invacom Group Limited 

On behalf of Global Invacom Group Limited:

finnCap Ltd (Nominated Adviser and Joint Broker)

Christopher Raggett/Simon Hicks (Corporate Finance)

Rhys Williams (Corporate Broking and Sales)

+44 207 220 0500

Mirabaud Securities LLP (Joint Broker)

Peter Krens (Equity Capital Markets)

+44 207 878 3362

WeR1 Consultants Pte Ltd (Singapore Investor Relations)

Ian Lau, ianlau@wer1.net

Roshan Singh, roshansingh@wer1.net 

+65 6737 4844

About Global Invacom Group Limited

Global Invacom Group Limited ("Global Invacom") is listed on the Singapore Exchange Securities Trading Limited Mainboard ("SGX-ST") and its shares are admitted to trading on the AIM Market of the London Stock Exchange in the U.K.

Global Invacom is a fully integrated satellite equipment provider with six manufacturing plants across China, Israel, Malaysia, U.K. and the U.S. Its customers include satellite broadcasters such as BSkyB of the U.K. and Dish Network of the U.S.A.

On 24 August 2015, Global Invacom completed the acquisition of Global Skyware, a leading U.S.-based designer and supplier of satellite antennas products and services for C-band, Ku-band and Ka-band frequency platforms, positioning itself as the world's only full-service outdoor unit supplier.

Global Invacom provides a full range of dish antennas, LNB receivers, transmitters, switches and video distribution components and electronics manufacturing services in satellite communications as well as manufacturing services in TV peripherals, computer peripherals, medical, and consumer electronics industries.

For more information, please refer to www.globalinvacom.com

FINANCIAL STATEMENT ANNOUNCEMENT FOR Q3 AND NINE MONTHS ENDED 30 SEPTEMBER 2017

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 2017. These figures have not been audited.

N.M.: Not Meaningful

Note:

(i) Profit before income tax was determined after (charging)/crediting the following:

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.

1(b)(ii) Aggregate amount of group's borrowings and debt securities.

Amount repayable in one year or less, or on demand

Amount repayable after one year

Details of any collateral

The revolving credit loans of US$8,722,000 were secured over the corporate guarantees provided by the Company.

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.

Note:

(i) For the purpose of presentation in the consolidated statement of cash flows, the consolidated cash and cash equivalents comprise the following:

* Restricted cash in Q3 FY2016 included cash collateral of US$1,000,000 and fixed deposits of US$400,000 pledged with the banks for facilities and loans granted to the Group. As at 30 September 2017, the Group had utilised US$8,722,000 of the facilities and loans granted.

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.

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.

There were 10,740,072 treasury shares held by the Company as at 30 September 2017 and 30 September 2016 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.

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.

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.

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 period ended 30 September 2017 as those used in the audited financial statements for the year ended 31 December 2016, except for the adoption of the new or revised International Financial Reporting Standards ("IFRS") applicable for the financial period beginning 1 January 2017.

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 2017 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.

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.

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

Following the Group's decision to consolidate its subsidiaries in the People's Republic of China ("PRC") at the end of 2016 and concentrate on its core satellite business, the Group's revenue for the nine months FY2017 ("9M FY2017") decreased US$10.4 million (-10.8%) to US$85.9 million from US$96.3 million a year ago, led by the reduction of US$9.1 million from the Contract Manufacturing segment. Its revenue in Q3 FY2017 was US$28.5 million, US$3.6 million lower than US$32.1 million in Q3 FY2016. Although retaining key customers in the consolidation, the Contract Manufacturing segment showed a US$3.2 million reduction in sales for this period.

By geography, reflecting the consolidation in PRC, revenue for the 9M FY2017 declined from America and Europe by US$4.3 million (-6.6%) and US$6.7 million (-28.4%), respectively, offset by an increase in revenue from Asia and Rest of the World ("RoW") by US$0.1 million (+0.8%) and US$0.5 million (+18.0%), respectively. Decline in revenue for Q3 FY2017 against Q3 FY2016 was mainly attributable to the regions in America, Europe and RoW by US$2.3 million (-10.5%), US$1.5 million (-17.9%) and US$0.1 million (-15.5%), respectively. This was partially offset by an increase in revenue from Asia by US$0.3 million (+24.7%). Again, this is driven by reduced revenue from the discontinued Contract Manufacturing segment.

Gross Profit

For 9M FY2017, gross profit was US$17.9 million, down US$2.3 million from US$20.2 million in nine months FY2016 ("9M FY2016") with gross profit margin ("GPM") decreasing slightly to 20.9% from 21.0%.

In Q3 FY2017 gross profit was US$6.1 million, down US$1.1 million from US$7.2 million in Q3 FY2016, largely driven by the lower revenue figure. GPM dropped to 21.4% in Q3 FY2017 from 22.6% in Q3 FY2016 which had included some high-margin product sales.

Other Income

Other income in Q3 FY2017 pertained primarily to foreign exchange gains.

Administrative Expenses

Administrative expenses for 9M FY2017 decreased by 16.1% to US$15.5 million from US$18.5 million a year ago, representing 18.1% and 19.2% of revenue, respectively. This is attributed to ongoing cost-saving exercises initiated during FY2016 including the consolidation of the Group's PRC operations. Administrative expenses decreased 9.0% to US$5.2 million in Q3 FY2017 from US$5.7 million in Q3 FY2016, representing 18.3% and 17.9% of revenue, respectively.

Profit Before Tax & Net Profit

The Group posted a profit before tax of US$2.7 million in 9M FY2017 compared to US$0.8 million in 9M FY2016, an increase of 220.7%, representing a margin of 3.2% and 0.9% respectively. The Group recorded a profit before tax of US$0.8 million in Q3 FY2017 compared to US$1.2 million in Q3 FY2016, a decrease of 30.7%, representing a margin of 2.9% and 3.7%, respectively.

Overall, the Group posted a net profit of US$2.2 million in the 9M FY2017 compared to US$0.3 million in 9M FY2016, representing a net margin of 2.5% and 0.3% respectively. The Group posted a net profit of US$0.7 million in Q3 FY2017 compared to US$0.7 million in Q3 FY2016, representing a net margin of 2.4% and 2.2%, respectively.

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 increased by US$3.4 million to US$31.8 million as at 30 September 2017 compared to US$28.4 million as at 31 December 2016. Inventories increased by US$2.2 million in preparation for orders for the next few months and trade and other receivables increased by US$1.0 million from late quarter revenues. Trade and other payables decreased by US$2.8 million following the ongoing rectification of trade supplier payments particularly by the Group's operations in the United States. This was achieved by restructuring our loan facilities and taking on new borrowings which have increased by US$2.6 million to US$8.7 million, resulting in an increase of US$0.9 million in cash and cash equivalents to US$8.9 million as at 30 September 2017. Net tax receivables decreased by US$0.9 million to net tax payables of US$0.3 million as at 30 September 2017.

The Group's net asset value stood at US$54.7 million as at 30 September 2017, compared to US$52.3 million as at 31 December 2016.

Review of Cash Flows

Net cash used in operating activities in Q3 FY2017 was US$1.0 million, comprising cash inflow from operating activities before working capital changes of US$1.8 million and net working capital outflow of US$2.8 million.

Net cash used in operating activities in the 9M FY2017 was US$0.5 million, comprising cash inflow from operating activities before working capital changes of US$4.8 million, net working capital outflow of US$5.0 million and payment of interest and income tax expense of US$0.3 million.

Net cash used in investing activities was US$0.3 million in Q3 FY2017 and US$0.1 million in the 9M FY2017. This was mainly attributable to the purchase of machinery and equipment and offset by a decrease in restricted cash in Q3 FY2017.

Net cash generated from financing activities was US$0.2 million in Q3 FY2017 and US$2.6 million in the 9M FY2017, arising mainly from the additional proceeds from borrowings.

Overall, the Group recorded a net decrease in cash and cash equivalents of US$1.1 million in Q3 FY2017 against an increase of US$2.1 million in the 9M FY2017, bringing cash and cash equivalents per the consolidated statement of cash flows to US$8.9 million as at 30 September 2017.

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.

According to the Satellite Industry Association*, yearly growth in the global satellite industry was steady at 2% in 2016, with the satellite services section supported by demand in emerging markets for both Satellite TV and Satellite Broadband. As more satellites are launched to support data services, particularly in developing markets, the Group anticipates increased demand for VSAT products and services. The Group will leverage on its value proposition as a global leader in this sector, taking into account its strong research and development capabilities, established ties with major customers and global manufacturing footprint.

The Group will continue to monitor developments in the global economic and political landscape that may affect international trade, but overall remains confident in the outlook for the satellite communications sector.

Global broadcasters are continuing to transition clients to the new Digital Channel Stacking Switch-related ("DCSS") technology, which allows up to 32 streams from a single Low Noise Block ("LNB"), with the Group's growing suite of DCSS products offering a combined competitive edge. The Group commenced supply of a new triple-feed DCSS LNB to the western U.S. region in September 2017 following approval from its customer, a major U.S. broadcaster. It is one of two exclusive suppliers of this product for this key client, underscoring its position as a leading supplier of cutting-edge satellite communications equipment. The Group expects to deploy more DCSS-generation technology across its LNBs, including those in design and pending approval, for other customers and territories.

The Group's extensive restructuring efforts in the last two years have streamlined its supply chain through strengthening quality and cost controls. The U.S. site in particular has shown improved operational efficiencies bringing its first profitable quarters in over ten years. Further, the Group's decision to consolidate its subsidiaries in the People's Republic of China ("PRC") at the end of FY2016, has helped to protect its margins for the financial year to date. With the cessation of its contract manufacturing activities in the PRC, the Group will focus on its core segment of manufacturing satellite-related products, utilising its strong research and development expertise in both fields of electronics and antenna design, to provide new and existing customers with solutions and cost-effective alternatives to enhance margin for the Group.

The Group will continue to deploy innovative new products, work on ground-breaking technologies and tap promising opportunities worldwide. In the quarter under review, it successfully live-tested breakthrough technology permitting live HD large-scale event video streaming over WiFi.

*Source: The Satellite Industry Association's 2017 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 ended 30 September 2017.

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 ended 30 September 2017.

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 2017 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

9 November 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.