GINV.L Regulatory News (GINV)

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Global Invacom Group Limited

("Global Invacom", the "Company" or the "Group")

Half year results for the six months ended 30 June 2023

Singapore/London, 11 August 2023 - Global Invacom (SGX: QS9) (AIM: GINV), the global provider of satellite communications equipment and electronics, announces its financial results for the six months ended 30 June 2023 ("1H FY2023").

The Group continues to see some lag in demand for certain legacy products as a result of delays to launch schedules which are being seen across the industry. This, alongside continued supply chain issues, has resulted in the Group recording a net loss after tax for the year. However due to increased business focus on product mix, gross profit improved.

Key financial highlights:

· Revenue for 1H FY2023 decreased 16.3% to US$31.3 million (1H FY2022: US$37.4 million)

· Gross profit increased 12.7% to US$8.3 million (1H FY2022: US$7.4 million)

· Gross profit margin increased to 26.5% (1H FY2022: 19.7%)

· Net loss after tax of US$2.1 million (1H FY2022: US$3.3 million)

· Cash and cash equivalents of US$5.5 million at 30 June 2023 (30 December 2022: US$9.2 million)

Key operational highlights:

· Sustained focus on development and launch of market-leading products to respond to client and sector demands

· Management is pleased to report that we have started to ship our new XRJ Ka Band transceiver product to customers. Whilst the completion of the manufacturing process has taken longer than initially planned, which has impacted 1H sales levels, we continue to see encouraging levels of market interest for the product

· Development of two new non-geostationary gateway antenna ("NGSO") products in the period:

o  Titan, the Group's latest multi-constellation and multi-band gateway antenna platform for permanent or temporary deployment

o  Obliquiti, a new Low Earth Orbit ("LEO") and Medium Earth Orbit ("MEO") platform for broadband and narrowband use, equipped with AI-based software for satellite acquisition, tracking and switching

· Delays to launches across the satellite industry have resulted in customers postponing orders for certain legacy products, which has had an impact on trading in the first half of the year

· Whilst pressures on global supply chains have started to ease, there remains pressure on the semiconductors supply chain, which has impacted on the Company's revenue generation capabilities

· We are starting to see the benefits of the strategic review, which was announced in Q3 FY2022, with progress made in stabilising our operations and streamlining core functions

· The Board strategic review remains ongoing, as it continues to assess the Group's existing corporate and operational structure, the Company's cost base, and to streamline certain core functions in order to maximise stakeholder returns in the medium term

There has been continued supply chain disruption experienced in the satellite communications sector. As a designer, manufacturer, and provider of technologically advanced satellite communication products to an international customer base, this disruption has inevitably resulted in sustained challenging trading conditions for the Group. Despite customers continuing to delay the purchase of some products and with postponements to launch schedules, the Group moved quickly to optimise efficiencies at our US manufacturing facilities, which has resulted in an improvement in our net loss compared to 1H FY2022. We envisage these challenging macro-economic dynamics will be present for some time to come, and remain focused on mitigating these pressures while ensuring the Group is well poised to respond to customer demands and requirements for new products.

Despite the continued headwinds, the Group has made progress in 1H FY2023 with gross profit increasing 12.7% to US$8.3 million, and delivering a 6.8 percentage points improvement in gross profit margin to 26.5%, driven by increased business focus on product mix.

Our research and development ("R&D") team continue to bring new products to market in response to customer demands and on the assessment of the broader marketplace. The Group's latest multi-constellation and multi-band gateway antenna, Titan, was developed in the first half of the year. Titan is a NGSO which uses an ultra-robust lightweight carbon fibre composite and provides operators with deployment flexibility and uncompromised performance. During the period the Group also continued to develop the Obliquiti NGSO, a novel platform for broadband and narrowband use. Obliquiti is suitable for fixed, nomadic and mobile applications, and is equipped with SatSenz, the Group's AI-based software for satellite acquisition, tracking and switching.

We continue to see increasing demand for satellite communication systems, driven by growth in the demand for data and connectivity globally. A recent report shows that the number of global Internet of Things ("IoT") connections grew by 18% in 2022 to 14.3 billion active IoT endpoints, with a further 16% growth expected in 2023[1]. Furthermore, there is increasing awareness of the need for mission critical communications systems which are able to maintain communications when land-based infrastructure is disrupted or unable to cope with challenging geographical terrain.

The Company remains focused on enhancing its R&D team to ensure the Group is well-placed to deliver cutting-edge, market-leading products, and thereby maintaining its position as a technological pioneer, supporting the ever-growing satellite industry. We are building the right team to continue to deliver best-in-class solutions, and to work alongside customers to respond to specific demands and requirements, cementing our role as an integral equipment provider and partner in the satellite communications ecosystem.

Outlook

Due to the continued pressures in the broader trading environment, the current financial year is expected to continue to be challenging for the Group.

The Board strategic review remains ongoing, as it continues to assess the Group's existing corporate and operational structure, and to streamline certain core functions, whilst seeking to secure new markets and customers and maximise stakeholder returns in the medium term.

Gordon Blaikie, Interim Chief Executive Officer of Global Invacom, commented:

"We continue to make steady progress, as we have focused our attentions on situations under our control, which - alongside our ongoing strategic review - has resulted in delivering an improved gross profit for the first half of the year.

"We are cognisant of market demands, and the need to develop and launch new products and have seen our R&D team develop exciting new NGSO products for the market.

"Whilst the market continues to experience delays to satellite launches, we are now seeing signs of renewed customer activity and an acceleration of timetables. We remain committed to our technology and working with our partners to ensure we are an integral part of the supply chain process.

"The Board and management would like to thank the entire team at Global Invacom for their continued efforts and dedication to the business, without whom we would not be able to deliver the quality of products required for such a demanding environment."

For further information, please contact:

About Global Invacom Group Limited

Global Invacom Group comprises a number of companies specialising in innovative technology, products and solutions for the satellite ground equipment sector. Uniquely, the Group provides fully integrated manufacturing for most of its product lines providing additional quality and supply chain assurance to a global blue-chip customer base in the satellite communications, satellite TV and satellite navigation markets.

The Group has an established global presence with sales offices, research and development centres and manufacturing facilities across the world, including Singapore, China, Indonesia, the Philippines, Malaysia, Israel, the UK, and the USA.

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

UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS

For The Six Months Ended 30 June 2023

A. Condensed Interim Consolidated Statement of Comprehensive Income

N.M.: Not Meaningful

B. Condensed Interim Statements of Financial Position

C. Condensed Interim Statements of Changes in Equity

C. Condensed Interim Statements of Changes in Equity (cont'd)

D. Condensed Interim Consolidated Statement of Cash Flows

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 ended 30 June 2023 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 ended 30 June 2023 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 2022.

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 2022, 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 2023. 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 2022.

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 ended 30 June 2023.

4. Segment and Revenue Information

Prior to FY2023, the business of the Group was organised into Satellite Communications and Contract Manufacturing segments.

With the completion of the deregistration of its wholly-owned subsidiary, Global Invacom Manufacturing (Shanghai) Co Ltd, the Group is re-organised into the following main business segments:

· Very Small Aperture Terminal ("VSAT"); and

· Non-VSAT

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

E. Notes to the Condensed Interim Consolidated Financial Statements (cont'd)

4. Segment and Revenue Information (cont'd)

4.1 Reportable segments (cont'd)

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.

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 (cont'd)

5.1 Significant items

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. 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

9. Intangible Assets

10. Goodwill

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:

11. Property, Plant and Equipment