GINV.L Regulatory News (GINV)

Global Invacom Group Limited

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

Results for the six months ended 30 June 2021

Singapore/London, 13 August 2021 - Global Invacom (SGX: QS9) (AIM: GINV), the global provider of satellite communications equipment and electronics, is pleased to announce its financial results for the six months ended 30 June 2021 ("1H FY2021").

Key financial highlights:

· Revenue for 1H FY2021 of US$40.4m (1H FY2020: US$52.8m)

· Gross Profit for 1H FY2021 of US$8.8m (1H FY2020: US$12.4m)

· Net loss for 1H FY2021 of US$1.2m (1H FY2020: US$0.3m net profit)

· Cash and cash equivalents as at 30 June 2021 of US$9.4m (31 December 2020: US$11.3m)

Key operational highlights:

· Continued demand for Direct to Home ("DTH") products through the Company's key customer in the United States, providing an ongoing revenue base albeit at lower levels than previous years

· Demand for Data Over Satellite ("DOS") products continues to grow, driven by ongoing demand for connectivity and data delivery through the COVID-19 pandemic

· Global supply chains continue to be impacted by COVID-19 pandemic

· The Group has undertaken cost reduction measures

The financial performance of the Group in the first half of 2021 reflects broader ongoing COVID-19 challenges. The much-publicised disruption to supply chains and problems with the availability of key products, including semi-conductors and capacitors, continues to be a challenge for the Company. Furthermore, the Company has also been impacted by supply chain and global transportation network issues as a result of government restrictions, the introduction of quarantine and additional checks and measures, coupled with a shortage of personnel at key sites such as ports. This has ultimately led to a delay in the transport of products from the manufacturing facility to customer sites.

The Group delivered sales of US$40.4 million in the first half of the year. Geographically, we saw ongoing sales pressure in America, Europe and Asia, with an increase in demand across the Rest of the World. The United States, which remains a significant market for the Group, continues to be impacted by the ongoing pandemic, which has translated to a fall in anticipated orders.

As reported in the FY2020 full year results statement, in 2020 the Group restructured its development, sales and marketing teams to focus on the DOS products, a growth market, leaving just a core team focused on the DTH markets. The Group has also undertaken, and is continuing, a restructuring across the Group to reduce its cost base, removing excess headcount in non-core functions, and a reduction in administrative costs.

DOS continues to underpin 4G/5G and high-speed broadband access, service providers are adopting satellite solutions to meet the significant growth in demand where traditional fibre and cable solutions are not viable. We continue to work to position ourselves to take advantage of this potential growth in demand.

The Group's DTH products continue to generate good sales, albeit at lower levels than in previous years. As such, we continue to invest in the development of bespoke new products for our key customer in the United States but have reduced the size of the team focused on this segment.

The Group continues to monitor the pandemic situation closely, carrying out rigorous risk assessments and implementing stringent hygiene procedures across our sites. This has enabled us to allow our employees to return to work safely should they wish to do so. As a global business, the Group continues to monitor the situation closely and to adhere to all relevant Government guidelines for the regions in which it is present.

The challenges faced by the Group in the first half will likely continue to impact the Group's business throughout FY2021. Notwithstanding that, the Group believes Global Invacom's products have a key role to play in the provision of this connectivity as restrictions ease across territories, supply chains recover, and demand starts to normalise.

Tony Taylor, Executive Chairman of Global Invacom, commented:

"The first half of 2021 has been challenging as we faced down a number of operational and macroeconomic headwinds. Despite this, our business has delivered a solid performance, supported by a highly skilled and talented workforce.

"As global restrictions ease, and supply chains move more freely, I firmly believe our business is ideally placed to deliver a sustainable recovery in the medium term."

For further information, please contact:

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 US. 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.

GLOBAL INVACOM GROUP LIMITED

(Incorporated in Singapore)

(Company Registration Number 200202428H)

UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended 30 June 2021

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

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 2021 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 2021 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 2020.

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 2020, 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 2021. 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 2020.

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

· Note 12 - impairment test on investments in subsidiaries

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 2021.

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

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.

5. Financial Assets and Financial Liabilities

Set out below is an overview of the financial assets and financial liabilities of the Group as at 30 June 2021 and 31 December 2020:

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.

8. Net Asset Value

9. Fair Value Measurement

The Group and the Company categories fair value measurement using a fair value hierarchy that is dependent on the valuation inputs used as follows:

(i) quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date (Level 1);

(ii) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and

(iii) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

The following table presents the financial assets and financial liabilities measurement at fair value as at the statement of financial position date by level of the fair value hierarchy:

9.1 Fair value of the Group's and the Company's financial assets and liabilities that are measured at fair value on a recurring basis

The Group and Company's financial asset, at fair value through profit or loss as at the statement of financial position date is considered not significant.

9.2 Fair value of the Group's and the Company's financial assets and liabilities that are not measured at fair value on a recurring basis (but fair value disclosure is required)

(i) The carrying amounts of financial assets and liabilities with a maturity of less than 1 year, which include cash and cash equivalents, borrowings, receivables and payables are assumed to approximate their fair values due to their short-term maturities.

(ii) The carrying amount of non-current portion of loans to subsidiaries, non-current portion of other payables and non-current lease liabilities to the financial statements are reasonable approximation of their fair value.

9.3 Valuation Policies and Procedures

The Group and the Company has established a control framework with respect to the measurement of fair values. This framework includes the finance team that reports directly to the Chief Executive Officer and has overall responsibility for all significant fair value measurements, including Level 3 fair values.  

The finance team regularly reviews significant unobservable inputs and valuation adjustments. If third party information is used to measure fair value, then the finance team assesses and documents the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of SFRS(I), including the level in the fair value hierarchy the resulting fair value estimate should be classified.

Significant valuation issues are reported to the Company's Audit and Risk Committee.

10. Intangible Assets

11. Goodwill

11.1 Allocation of goodwill

Goodwill has been allocated to the Group's cash generating unit ("CGU") identified according to the business segment as follows:

12. Property, Plant and Equipment

The proceeds from disposal of property, plant and equipment of US$581,000 and gain on disposal of property, plant and equipment of US$1,143,000 pertains to machinery and equipment that was fully written off in the prior financial year ended 31 December 2020.

13. Investment in Subsidiaries

Allowance for impairment loss 

(i) Global Invacom Manufacturing Pte Ltd ("GIMPL")

As at 30 June 2021 and 31 December 2020, 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 is considered to be Level 3 in the fair value hierarchy.

(ii) Global Invacom Holdings Limited and its subsidiaries ("GIHL Group")

As at 30 June 2021 and 31 December 2020, an allowance for impairment loss of US$5,639,000 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.

14. Borrowings

Aggregate amount of group's borrowings and debt securities.

Amount repayable in one year or less, or on demand

Amount repayable after one year

The revolving credit loans of US$6,199,000 were secured over the assets of the subsidiaries and corporate guarantees provided by the Company and the subsidiaries.

15. Share Capital