Business and Trading Update
Global Invacom Group Limited
("Global Invacom", the "Company" or the "Group")
Business and Trading Update
Singapore/London, 15 January 2020, - Global Invacom (SGX: QS9) (AIM: GINV), the global provider of satellite communications equipment and electronics, today provides a business and trading update.
With Global Invacom now focused on addressing two distinct end markets, namely the Direct-To-Home ("DTH") and the Data Over Satellite ("DOS") segments, management has undertaken a comprehensive corporate review in order to best position the Company for growth going forward ("the Review").
The Review included detailed analysis of the Group's current operating environment, including a broad, Group wide production cost assessment, alongside an internal review of the Company's facilities in China.
The purpose of the Review is to ensure that the Company is ideally placed to exploit the market opportunity as global satellite service providers seek to deliver high speed internet and data connectivity to their end customers. The satellite communications market continues to see high levels of investment from governments as well as private companies, with required infrastructure for initiatives such as smart cars and cities, military operations and surveillance, and Low Earth Orbit ("LEO") satellites, transforming internet connectivity worldwide.
Following the findings of the Review, the Group intends to focus on the following strategic priorities in order to maximise both the revenue and profit potential of the Company:
· Driving continued product development and design across both the DTH and DOS markets
The DTH sector will continue to provide a solid foundation for the Group with revenues expected to remain stable going forward. The Group will seek to expand the range and reach of its DOS product set, in order to capitalise on the opportunity in emerging markets, where the Group sees significant opportunity to increase its market share.
· Relocation of Shanghai manufacturing operations to the Philippines
The Group will close its manufacturing operations in Shanghai during H1 2020, transferring its China-based manufacturing and assembly operations to a third-party vendor in the Philippines. The decision to undertake this move was driven by a combination of recent increases in production costs in China, along with the implementation of tariffs on Chinese products being exported to the United States ("U.S.").
· Accelerate product development and R&D through Global Invacom's U.S. subsidiary, Global Skyware
Following the closure of the Group's Shanghai production facility, Global Invacom's largest internal production facility will be its U.S. subsidiary, Global Skyware. The Group will accelerate ongoing productivity improvements at Global Skyware and invest more in R&D to widen its range of DTH and DOS products.
· Retention of key procurement and quality assurance personnel in China
The Group will retain an experienced core team in China post the closure of the production facility to ensure continuity of supply chain, quality assurance, and relations with key suppliers across Asia.
· Ongoing review of the Global Invacom portfolio
The Group will be undertaking a rolling review of the components of its portfolio and, where necessary, it will make adjustments to best position the Group for continued growth.
Trading for the year ended 31 December 2019 has been in line with management expectations, and the Group will remain operationally profitable in FY2019, with over 40% of revenues deriving from the Group's DOS division.
However, due to the upcoming closure of the Shanghai site, one-off write offs, impairments and other charges, Global Invacom expects to record a net loss in FY2019 compared to a net profit of US$1.5m in FY2018. Following the realignment of Asian manufacturing operations, the Group expects its operations and financial performance in 2020 to improve year-on-year compared to 2019.
The Group will announce full year results for the period ended 31 December 2019 on 27 January 2020.
Tony Taylor, Executive Chairman of Global Invacom, commented:
"With the market for satellite communications set to show continued strong growth momentum through 2020 and beyond, we are very confident that Global Invacom remains best placed to capitalise and further leverage its market leading position. We are uniquely placed to supply both antenna and electronics across our blue-chip customer base.
"We firmly believe the transition of our production facility to the Philippines will be highly beneficial and will enable us to continue bringing cutting edge, essential products to market and respond to the ever-increasing demand for data and connectivity globally."
For further information, please visit Global Invacom's website: www.globalinvacom.com
For further information, please contact:
Global Invacom Group Limited
Matthew Garner, Chief Financial Officer
Tel: +65 6431 0782
Tel: +44 203 053 3523
finnCap Ltd (Nominated Adviser and Joint Broker)
Christopher Raggett / Matthew Radley (Corporate Finance)
Tel: +44 207 220 0500
Mirabaud Securities LLP (Joint Broker)
Peter Krens (Equity Capital Markets)
Tel: +44 207 878 3362
WeR1 Consultants Pte Ltd (Singapore Investor Relations)
Jordan Teo / Ryan del Agua
Tel: +65 6737 4844
Vigo Communications (UK Media & Investor Relations)
Jeremy Garcia / Fiona Henson / Charlie Neish
Tel: +44 207 390 0233
About Global Invacom Group Limited
Global Invacom is a fully integrated satellite equipment provider with six manufacturing plants across China, Israel, Malaysia, UK and the US. Its customers include satellite broadcasters such as BSkyB 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 antennas, LNB receivers, transceivers, fibre distribution equipment, transmitters, switches and video distribution components and electronics manufacturing services in satellite communications as well as manufacturing services in military, medical, and consumer electronics industries. Following the acquisition in 2015 of Global Skyware, a leading US-based designer and supplier of satellite antennas products and services, the Company became 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
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