TIDMGINV
RNS Number : 1263J
Global Invacom Group Limited
25 April 2022
GLOBAL INVACOM GROUP LIMITED
(Incorporated in the Republic of Singapore)
(Company Registration No. 200202428H)
RESPONSE TO QUESTIONS RAISED BY THE SECURITIES INVESTORS
ASSOCIATION (SINGAPORE) ("SIAS") IN RESPECT OF THE COMPANY'S ANNUAL
REPORT FOR THE FINANCIAL YEARED 31 DECEMBER 2021 ("FY2021")
The Board of Directors (the "Board") of GLOBAL INVACOM GROUP
LIMITED ("Global Invacom", the "Company", together with its
subsidiaries, the "Group") would like to respond to the following
questions raised by SIAS in respect of its annual report for FY2021
as follows:
Question 1:
In the Data Over Satellite ("DOS") segment, the group serves
service providers that includes Hughes Network Systems, Viasat and
Gilat Satellite Networks. The group has boosted its capabilities in
the DOS segment with the acquisitions of Skyware Global, Skyware
Technologies and Apexsat. The business' core focus is now on the
higher-growth and much-publicised DOS market.
(i) Can management help shareholders quantify the addressable
market/size of the opportunities in the DOS segment given the
group's capabilities and position?
Company's Response:
The global satellite data services market was valued at US$6.09
billion in 2020, and is projected to reach US$45.85 billion by
2030, registering a CAGR of 22.5% from 2021 to 2030 (source: Allied
Market Research
https://www.alliedmarketresearch.com/satellite-data-services-market-A06428).
(ii) What are the realised benefits from the group's acquisition
of Skyware Global, Skyware Technologies and Apexsat? Have the
acquisitions created long-term shareholder value?
Company's Response:
These acquisitions, which are now quite historical, created a
number of strategic benefits for the Group, namely; expanded the
Company's product set; increased our geographical sales footprint;
and expand our customer reach.
(iii) Given the competition in the marketplace, what is the
competitive advantage of the group in DOS? How successful is the
group at converting these opportunities into firm orders/contracts
that generated profits for shareholders?
Company's Response:
The Group has a diverse range of products geared to
transmitting, receiving and the distribution of DOS signals. It is
this product set, customer reach and market expertise which
management believes the Company is ideally placed to
capitalise.
We would also add that the Company has over 40 years of design
and build capabilities, alongside a significant operational
footprint - which includes a strong global presence.
Lastly, the Group has stock availability across Asia, America
and Europe, and has the capacity to offer a one stop shop for
customers, enabling the Group to 'bundle' deals to meet exacting
customer requirements.
(iv) What is the progress made in the development of a low-cost
Ka-band user terminal and a larger enterprise solution for use with
DOS that was awarded European Space Agency funding?
Company's Response:
Steady progress has been made in fulfilling this contract and
the Company remains on-track to deliver terminals to market in 2024
to meet the surge in demand for connectivity to non-geostationary
satellite orbit ("NGSO") constellations. Significantly, Global
Invacom is responsible for designing and manufacturing the fully
integrated user terminal which aims to give remote and
under-connected communities across the globe access to affordable
satellite broadband by offering service providers and operators
constellations.
Question 2:
In FY2014, the company listed on the London AIM market, raising
gross proceeds of US$15 million. The dual listing was said to
strengthen the group's leading position as an international
research and development-led manufacturer of Satellite
Communications equipment and peripheral applications provider to
the global satellite industry.
As at 31 December 2014, equity attributable to owners of the
company amounted to US$60.1 million while the group had a
net-debt-to-equity ratio of 7.2%. Net debt was US$4.3 million.
As at 31 December 2021, equity attributable to owners of the
company has decreased to US$47.4 million while the
net-debt-to-equity ratio has increased to 40.4%. Net debt amounts
to US$19.1 million.
The company has not paid a dividend since it declared a final
cash dividend of 0.525 Singapore cent per share for FY2014.
(i) Can the board help shareholders understand if it has been
effective at providing entrepreneurial leadership and setting the
strategic objectives for the group? The company has lost US$(13)
million in the past 7 years and it has taken on more debt as at 31
December 2021.
Company's Response:
The Company has delivered steady progress since first listing on
AIM but the last two years have been challenging for businesses in
general and not just Global Invacom.
Whilst overall demand and customer traction remains good, the
current financial year remains challenging. Although the impact of
the COVID-19 pandemic is easing, management remains vigilant as to
the financial impact of any potential future lockdowns. Elsewhere,
supply shortages within the semiconductor sector, and ongoing
inflationary pressure across international shipping, wages
(particularly in the US) and raw materials (including steel), will
likely impact the performance of the business in the current
financial year.
(ii) What were the key performance indicators used to measure
the performance of management? Is the board satisfied with the
performance of management and with the level of value creation?
Company's Response:
As disclosed in our annual report for FY2021, the Group has in
place a remuneration policy for Executive Directors and key
management personnel which comprises of a fixed and a variable
component. The fixed component is in the form of a base salary. The
variable component is in the form of a cash bonus scheme that is
results-based with a trigger set around three key targets, two of
which were financial based on revenue and profit before tax and one
was a soft target based on new product introduction.
Given the current trading macroeconomics and aftermath of the
COVID-19 pandemic, the Board remains satisfied with the performance
of management.
(iii) Would the independent directors be carrying out a
strategic review to assess the company's grow-by-acquisition
strategy?
In July 2021, the company appointed Gordon Blaikie as an
executive director and Derek Arthur Henry Grice as the group's new
chief technology officer. Anthony Brian Taylor remains as the
executive chairman of the board.
Company's Response:
The Company is not wholly reliant on acquisition to grow the
business. However, the Board is embarking on a strategic
review.
(iv) Can management (re)state its priorities for 2022? How is
management going to improve the financial and operational
performance to deliver long term value to shareholders?
Company's Response:
-- Seek to further mitigate supply shortages within the
semiconductor sector, and ongoing inflationary pressure across
international shipping, wages (particularly in the United States)
and raw materials (including steel).
-- Further evaluate the Group's manufacturing footprint to best
service the Group's blue chip customer base.
-- Enhance, develop and leverage the Group's blue chip customer base.
Question 3:
The group's internal audit function in FY2021 was outsourced to
Nexia TS Risk Advisory Pte. Ltd. The internal auditor (IA) reports
directly to the chairman of the audit and risk committee (ARC) on
audit matters and the CEO on administrative matters.
The ARC approves the hiring, removal, evaluation and
compensation of the internal audit function. The IA has unfettered
access to all the Company's documents, records, properties and
personnel, including access to the ARC. The ARC is satisfied that
the internal audit function is adequately resourced and has
appropriate standing within the company. The internal audit
function is also adequately staffed with persons with the relevant
qualifications and experience.
(i) What was the scope of the internal audit in 2021?
Company's Response:
The scope of internal audit for FY2021 covers two entities,
Global Invacom Limited ("GIL") and The Waveguide Solution Ltd
("TWS"). The processes in scope for GIL and TWS are as follows:
GIL
- Production management;
- Cash management;
- Fixed assets management;
- Human resource and payroll; and
- Follow up on previous internal audit reports.
TWS
- Revenue, receivables and collection;
- Procurement, payables and payment;
- Production management;
- Inventory management; and
- Follow up on previous internal audit reports.
(ii) Can the ARC confirm that the operating subsidiaries in
other countries were included in the internal audit?
Company's Response:
Yes, key operating subsidiaries in other countries are included
as part of a 4-year internal audit plan.
(iii) Given the closure of national borders, was the scope and
the effectiveness of the IA affected?
Company's Response:
No, the scope and effectiveness of IA was not affected by the
closure of national borders.
(iv) What were the key findings and the recommendations by the internal auditor?
Company's Response:
There were no major findings arising from the internal
audit.
BY ORDER OF THE BOARD
Anthony Brian Taylor
Executive Chairman
23 April 2022
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END
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