TIDMGINV
RNS Number : 0275S
Global Invacom Group Limited
12 March 2021
Global Invacom Group Limited
("Global Invacom", the "Company" or the "Group")
Response to Queries from SGX-ST
Regarding 2020 Full Year Results
The Board of Directors (the "Board") of the Global Invacom would
like to offer its response to the following queries raised by the
Singapore Exchange Securities Trading Limited (the "SGX-ST") on 10
March 2021 and would like to provide additional information in
relation to the Company's full year results for the financial year
ended 31 December 2020 ("FY2020").
SGX-ST's Query 1:
It is stated that inventory written off for the FY2020 is
US$2,663,000 (FY2019: US$1,256,000). It is also stated that a
write-back for inventory obsolescence of US$3,210,000 was recorded,
vis-à-vis an allowance for inventory obsolescence of US$2,816,000
in FY2019.
(i) Why is there a significant inventory write-off?
Company's response to Query 1(i):
In the Company's corporate and business update and profit
guidance announced on 15 January 2020, the Company announced the
relocation of its Shanghai manufacturing operations of Global
Invacom Manufacturing (Shanghai) Co., Ltd ("GISH") to the
Philippines.
It was also announced in the financial results dated 28 February
2020 and 1 March 2021, that following the relocation of these
operations to the Philippines, the Company recorded certain
impairment costs and these costs included the allowance for
inventory obsolescence.
The Company has ceased its GISH manufacturing operations in July
2020 as announced in the financial results dated 13 August 2020 and
1 March 2021, following which the Group has written off the
inventories which were impaired in 2019 and recorded the write-back
for inventory obsolescence in 2020 accordingly.
(ii) Please disclose the amount of inventory write-off
identified as a result of discrepancies between stock counts and
inventory record (i.e. missing/lost inventory).
Company's response to Query 1(ii):
Please refer to response to Query 1(i).
(iii) Please disclose the amount of inventory write-off due to
slow-moving inventory or obsolescence.
Company's response to Query 1(iii):
Please refer to response to Query 1(i).
(iv) Please disclose the breakdown of the Company's inventory write-off by aging.
Company's response to Query 1(iv):
Please refer to response to Query 1(i).
(v) What is the general shelf/product life of the Company's inventory?
Company's response to Query 1(v):
The general shelf/product life of the Company's inventory ranges
from one to five years and depends largely on the type of
components, materials and products.
(vi) Please opine on the reasonableness of methodologies used to
determine provision/impairment.
Company's response to Query 1(vi):
The Group inventories are stated at the lower of cost and net
realisable value. Reviews are made periodically by the management
for excess inventories, obsolescence and decline in net realisable
value below cost. The assessment requires the exercise of judgement
as the allowances are made based on historical obsolescence and
slow-moving history. Key factors considered include the nature of
the inventory, its ageing, shelf life and turnover rate. The Group
is of the opinion that the allowance for inventory obsolescence is
reasonable as at 31 December 2020.
SGX-ST's Query 2:
Please explain why interest income amounted to only US$22,000
(FY2019: US$230,000) during the financial period ended 31 December
2020 when the Company has significant cash and bank balance
amounting to US$11,273,000 (FY2019: US$8,912,000).
Company's response to Query 2:
The majority of the Group's cash and cash balances are in the
United Kingdom bearing either zero or very low interest.
SGX-ST's Query 3:
Please provide information on the Group's inventory turnover
days for FY2020 and FY2019.
Company's response to Query 3:
FY2020 FY2019
Inventory turnover 124 days 95 days
days
--------- --------
SGX-ST's Query 4:
Please disclose a breakdown of trade payables amounting to
US$12,509,000 as at 31 December 2020. For other payables amounting
to US$5,589,000, please disclose the aging and nature of these
other payables and whether the counterparties are related
parties.
Company's response to Query 4:
Breakdown of trade payables:
FY2020
US$'000
Third party payables 12,509
Related party payables -
--------
12,509
--------
Nature and aging of other payables:
Past due Past due
Current 1 to 6 months > 6 months FY2020
US$'000 US$'000 US$'000 US$'000
Accrued operating
expenses 2,231 - - 2,231
Provision for warranty 265 - - 265
Provision for restructuring
costs 15 - - 15
Customers advances
received 2,029 - - 2,029
GST/VAT payables 79 - - 79
Directors fees 64 - - 64
Other creditors 844 62 - 906
----------------- ------------------ ----------------- ----------------
5,527 62 - 5,589
----------------- ------------------ ----------------- ----------------
Save as disclosed above, no counterparties are related
parties.
SGX-ST's Query 5:
Please provide the reason(s) for the borrowings of US$3,883,000
by the Group when the Group recorded a cash and cash equivalent of
US$11,273,000 as at 31, December 2020.
Company's response to Query 5:
These borrowings are for working capital purposes as the timing
of the cash receipts from customers are variable during the year.
These borrowings have reduced from US$8,929,000 as at 31 December
2019 to US$3,883,000 as at 31 December 2020 as the Group continues
to repay its borrowings. A minimum level of borrowings is also
required to maintain the credit facility with the banks and the
Group continuously monitors its level of borrowings. Further, the
Group collected US$2.9 million from a major customer in the last
two weeks of December 2020, resulting in a significant increase in
cash and cash equivalents as at 31 December 2020.
SGX-ST's Query 6:
Please provide the reason(s) for the significant trade payables
of US$12,509,000, taking into account the fall in Cost of Sales
from US$110,443,000 in FY2019 to US$77,353,000 and the Group
recording a cash and cash equivalent of US$11,273,000 as at 31,
December 2020.
Company's response to Query 6:
With the current COVID-19 pandemic, the management has taken
precautionary steps to conserve cash resources of the Group to
sustain its business operations to ensure the viability of the
Group and its working requirements are met, resulting in a higher
trade payables. Further, as mentioned in response to Query 2, the
Group collected US$2.9 million from a major customer in the last
two weeks of December 2020, resulting in a significant increase in
cash and cash equivalents as at 31 December 2020.
BY ORDER OF THE BOARD
Anthony Brian Taylor
Executive Chairman
12 March 2021
For further information, please contact:
Global Invacom Group Limited www.globalinvacom.com
Tony Taylor, Executive Chairman via Vigo Communications
Strand Hanson Limited (Nominated Adviser www.strandhanson.co.uk
and Broker)
James Harris / Jack Botros Tel: +44 20 7409 3494
Vigo Communications (Media & Investor www.vigocomms.com
Relations)
Jeremy Garcia / Charlie Neish Tel: +44 20 7390 0238
ginv@vigocomms.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 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
.
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END
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