Global Sources reports third quarter 2015 results

-- Reported third quarter revenue of $23.5 million --

-- Updates guidance for second half of 2015 --

Nov 30, 2015, 01:00 ET from Global Sources

NEW YORK, Nov. 30, 2015 /PRNewswire/ -- Global Sources Ltd. (NASDAQ: GSOL) reported financial results for the third quarter ended Sept. 30, 2015.

Global Sources' executive chairman, Merle A. Hinrich, said: "The third quarter revenue reflects our decisions to focus on our core business of cross border B2B trade and on our Hong Kong trade shows. Supporting this effort, we completed the sale of our eMedia subsidiary in the second quarter and discontinued several overseas trade shows held in the prior year's third quarter. Our strategy is to focus on the markets and products that offer us the greatest opportunities for growth.

"In October, we held the world's largest electronics sourcing show, Global Sources Electronics, in Hong Kong. Held in two phases featuring more than 5,800 booths of the latest in electronics, we had solid overall growth in booth sales and attendance. China is the world's largest electronics manufacturing hub and we are excited about additional growth opportunities. Also for our overall business, we continue to develop unique, integrated show and online services for our respective buyer and supplier communities."

Financial highlights -- Third quarter: 2015 compared to 2014

  • Revenue from continuing operations was $23.5 million, as compared to $31.7 million.
    • Online revenue was $15.9 million, as compared to $18.7 million.
    • Exhibitions revenue was $4.1 million, as compared to $9.5 million.
    • Print revenue was $1.3 million, as compared to $1.6 million.
  • IFRS net loss was $4.6 million, or $0.17 per diluted share, as compared to IFRS net income of $1.9 million, or $0.06 per diluted share.
  • Non-IFRS net loss was $4.3 million, or $0.16 per diluted share, as compared to Non-IFRS net income of $2.6 million, or $0.08 per diluted share, for the third quarter of 2014. 
  • Adjusted EBITDA was negative $1.9 million, as compared to positive adjusted EBITDA of $7.4 million for the third quarter of 2014.
  • Total deferred income and customer prepayments were $102.5 million as at Sept. 30, 2015, as compared to $106.8 million as at Sept. 30, 2014.

Global Sources' CFO, Connie Lai, said: "In support of our focus on our Hong Kong shows, we did not hold any overseas export shows in the third quarter of 2015, which negatively impacted our revenue as compared to the prior year's quarter. We continue to maintain an efficient cost structure and our balance sheet remains strong with no short- or long-term debt."

Financial highlights -- Nine months ended Sept. 30: 2015 compared to 2014

  • Revenue from continuing operations was $109.4 million, as compared to $119.2 million.
  • IFRS net income was $9.9 million, or $0.33 per diluted share, as compared to $9.0 million, or $0.26 per diluted share.
  • Non-IFRS net income was $5.8 million, or $0.19 per diluted share, as compared to $12.6 million, or $0.37 per diluted share, for the nine months ended Sept. 30, 2014.
  • Adjusted EBITDA was $15.5 million, as compared to $25.2 million for the nine months ended Sept. 30, 2014.

Updated financial expectations for the second half of 2015 under IFRS

"While our trade shows have been strong, we are reducing guidance due to lower than expected performance from our online business," Lai stated.

  • For the second half of 2015 ending Dec. 31, 2015:
    • Revenue from continuing operations is expected to be in the range of $83.0 million to $84.0 million, as compared to $91.8 million for the second half of 2014.
    • IFRS EPS from continuing operations is expected to be in the range of $0.46 to $0.49, as compared to $0.32 per diluted share in the second half of 2014. SBC and the amortization of intangibles as it relates to certain equity compensation plans and gain on sale of investment property, net of transaction costs and related tax expenses, are estimated to be a credit of $0.25 per diluted share for the second half of 2015.
    • Non-IFRS EPS is expected to be in the range of $0.21 to $0.24, as compared to $0.36 per diluted share for the same period in 2014. 
    • Adjusted EBITDA from continuing operations is expected to be between $10.8 million and $11.4 million, as compared to $15.8 million in the second half of 2014.

Recent Corporate Highlights   

  • Organized its series of fall shows with more than 8,000 booths in October at Hong Kong's AsiaWorld-Expo. Sourcing teams attending from very large buying organizations included Amazon, Best Buy, Burberry, Samsung and Sears. Total attendance exceeded 84,600 and included buyers from more than 150 countries and territories.
    • Held Global Sources Electronics, the world's largest electronics sourcing show in two phases; Mobile Electronics was the second phase.
  • Launched three new industry specialized websites: Drones & Robotics, Machinery & Parts and Auto Parts & Accessories.
  • Completed its cash tender offer on July 31, 2015, purchasing a total of 6,666,666 shares at $7.50 per share.
  • Entered into a letter of intent on July 6, 2015, and subsequently entered into formal sale and purchase agreements, to sell its investment property on the 50th floor of the Shenzhen International Chamber of Commerce Tower in Shenzhen, China for approximately $21.7 million. The transaction is anticipated to close by the end of 2015.
  • The 15th China International Fashion Brand Fair -- Shenzhen (FashionSZshow) was held in Shenzhen in July.

Conference call for Global Sources third quarter 2015 earnings

Executive chairman Merle A. Hinrich and CFO Connie Lai are scheduled to conduct a conference call at 8:00 a.m. ET on Nov. 30, 2015 (9:00 p.m. on Nov. 30, 2015 in Hong Kong) to review these results in more detail. Investors in the United States may participate in the call by dialing (888) 277-7112, and non-Hong Kong international participants may dial (1-913) 312-1442. Investors in Hong Kong may participate by dialing (852) 3008-0382. The conference ID is 9894503 and participants are encouraged to dial 10 minutes prior to the call to prevent a delay in joining. A live webcast of the conference call is scheduled to be available on Global Sources' corporate site at http://www.investor.globalsources.com.

For those who cannot listen to the live broadcast, a webcast replay of the call is scheduled to be available on the company's corporate site for 30 days. A telephone replay of the call is also scheduled to be available through Dec. 7, 2015. To listen to the telephone replay dial (888) 203-1112 or dial (1-719) 457-0820 outside the United States, and enter pass code 9894503. For those in the Hong Kong area, the replay dial-in number is (800) 901-108, and the pass code is 9894503.

About Global Sources

Global Sources is a leading business-to-business media company and a primary facilitator of trade with Greater China.

The core business facilitates trade between Asia and the world using English-language media such as online marketplaces (GlobalSources.com), magazines, apps, private sourcing events, and trade shows.

More than 1 million international buyers, including 95 of the world's top 100 retailers, use these services to obtain product and company information to help them source more profitably from overseas supply markets. These services also provide suppliers with integrated marketing solutions to build corporate image, generate sales leads and win orders from buyers in more than 240 countries and territories.

Now in its fifth decade, Global Sources has been publicly listed on the NASDAQ since 2000.

Global Sources' non-IFRS metrics

Management believes non-IFRS metrics are useful measures of operations and provides IFRS to non-IFRS reconciliation tables at the end of this press release. Global Sources defines non-IFRS net income as net income excluding non-cash, SBC expense or credit, amortization of intangibles as it relates to certain equity compensation plans, profits or losses on acquisitions, investments and disposal net of transaction costs and related tax expenses, and/or impairment charges net of related taxes, for all historical and future references to non-IFRS metrics. Non-IFRS EPS is defined as non-IFRS net income divided by the weighted average of diluted common shares outstanding. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, impairment of goodwill and intangible assets, and profits or losses on acquisitions, investments and disposal net of transaction costs and related tax expenses.

Safe Harbor Statement

This news release contains forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933, as amended and Section 21-E of the Securities Exchange Act of 1934, as amended. The company's actual results could differ materially from those set forth in the forward-looking statements as a result of the risks associated with the company's business, changes in general economic conditions, and changes in the assumptions used in making such forward-looking statements.

-- Tables Follow --

GLOBAL SOURCES LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)

As at September 30,

As at December 31,

2015

2014

(Unaudited)

ASSETS

Current assets

Cash and cash equivalents

$

53,800

$

90,223

Term deposits with banks

7,634

4,285

Financial assets, available-for-sale

4,092

3,952

Accounts receivables, net

939

2,269

Receivables from sales representatives

9,667

7,900

Inventories

149

154

Prepaid expenses and other current assets

24,414

17,027

Assets classified as held for sale

10,821

-

111,516

125,810

Non-current assets

Property and equipment

59,996

63,519

Investment properties

71,402

85,546

Intangible assets

28,729

37,732

Long term investment

100

100

Deferred income tax assets

289

196

Other non-current assets

2,511

1,108

163,027

188,201

Total assets

$

274,543

$

314,011

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Accounts payable

$

11,161

$

9,418

Deferred income and customer prepayments

95,843

84,869

Accrued liabilities

15,393

19,100

Income tax liabilities

3,377

3,848

125,774

117,235

Non-current liabilities

Accounts payable

291

889

Deferred income and customer prepayments

6,629

3,971

Deferred income tax liabilities

5,069

6,842

11,989

11,702

Total liabilities

137,763

128,937

Equity attributable to Company's shareholders

Common shares

533

529

Treasury shares

(250,089)

(200,089)

Other reserves

160,090

161,242

Retained earnings

219,795

209,924

Total Company shareholders' equity

130,329

171,606

Non-controlling interests

6,451

13,468

Total equity

$

136,780

$

185,074

Total liabilities and equity

$

274,543

$

314,011

 

GLOBAL SOURCES LTD. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)

Three months ended September 30,

Nine months ended September 30,

2015

2014

2015

2014

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenue:

    Online and other media services (Note 2)

$

17,217

$

20,311

$

52,947

$

62,692

    Exhibitions

4,054

9,512

50,225

50,784

    Miscellaneous

2,221

1,888

6,236

5,701

23,492

31,711

109,408

119,177

Operating Expenses:

    Sales (Note 3)

7,640

9,683

32,333

36,189

    Event production

1,438

2,840

13,662

13,582

    Community and content (Note 3)

4,453

5,179

14,656

15,514

    General and administrative (Note 3 & 4)

11,320

10,397

32,072

36,401

    Information and technology (Note 3)

3,401

3,039

9,853

9,051

Total Operating Expenses

28,252

31,138

102,576

110,737

Profit/(loss) from Operations

(4,760)

573

6,832

8,440

    Interest income

123

272

689

979

    Gain on sale of available-for-sale securities

13

1

149

11

    Interest expenses

(12)

(47)

(71)

(139)

Profit/(loss) before Income Taxes

(4,636)

799

7,599

9,291

Income tax expense

(234)

(282)

(2,422)

(1,112)

Net Profit/(loss) from continuing operations

$

(4,870)

$

517

$

5,177

$

8,179

Net Profit/(loss) from discontinued operations, net of

  income tax (Note 5)

223

2,721

5,629

2,022

Net profit/(loss)

$

(4,647)

$

3,238

$

10,806

$

10,201

Net (profit)/loss attributable to non-controlling interests from:

  Continuing operations                                   

23

291

(1,199)

49

   Discontinued operations

-

(1,612)

264

(1,201)

   Total

23

(1,321)

(935)

(1,152)

Net profit/(loss) attributable to the Company's    shareholders from:

   Continuing operations

$

(4,847)

$

808

$

3,978

$

8,228

   Discontinued operations

223

1,109

5,893

821

   Total

$

(4,624)

$

1,917

$

9,871

$

9,049

Diluted net profit/(loss) per share attributable to the  Company's shareholders from:

   Continuing operations

$

(0.18)

$

0.02

$

0.13

$

0.24

   Discontinued operations

0.01

0.04

0.20

0.02

   Total

$

(0.17)

$

0.06

$

0.33

$

0.26

Shares used in diluted net profit/(loss) per share    calculations

27,359,011

31,487,766

30,088,869

34,166,224

Note: 1. Total revenue from both the continuing operations and discontinued operations during the three months and nine months ended September 30, 2015 and 2014 was as follows:

Three months ended September 30,

Nine months ended September 30,

2015

2014

2015

2014

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Continuing operations

$

23,492

$

31,711

$

109,408

$

119,177

Discontinued operations

-

10,827

4,776

16,168

$

23,492

$

42,538

$

114,184

$

135,345

Note: 2. Online and other media services consists of:

Three months ended September 30,

Nine months ended September 30,

2015

2014

2015

2014

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Online services

$

15,924

$

18,712

$

49,125

$

57,912

Print service

1,293

1,599

3,822

4,780

$

17,217

$

20,311

$

52,947

$

62,692

Note: 3. Non-cash compensation expenses associated with the several equity compensation plans and Global Sources Directors Share Grant Award Plan included under various categories of expenses are as follows:

Three months ended September 30,

Nine months ended September 30,

2015

2014

2015

2014

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

  Sales

$

124

$

140

$

302

$

286

  Community and content

24

27

65

(5)

  General and administrative

334

366

1,102

896

  Information and technology

48

52

181

172

$

530

$

585

$

1,650

$

1,349

Note: 4. General and administrative expenses consist of:

Three months ended September 30,

Nine months ended September 30,

2015

2014

2015

2014

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

   General and administrative expenses before      amortization of intangible assets, impairment     charge on intangible assets and foreign     exchange losses (gains)

$

9,095

$

9,306

$

27,400

$

26,998

Amortization of intangible assets

957

1,220

3,064

5,879

Impairment charge on intangible assets

-

-

-

2,238

Foreign exchange losses (gains)

1,268

(129)

1,608

1,286

$

11,320

$

10,397

$

32,072

$

36,401

Note: 5. Net Profit from discontinued operations, net of income tax consist of:

Three months ended September 30,

Nine months ended September 30,

2015

2014

2015

2014

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

  Profit on sale of subsidiary

$

223

$

-

$

6,382

$

-

  Income tax expense

-

-

(361)

-

  Profit on sale of subsidiary, net of income tax

223

-

6,021

-

  Profit /(loss) from discontinued operations, net of income tax

-

2,721

(392)

2,022

$

223

$

2,721

$

5,629

$

2,022

 

 

GLOBAL SOURCES LTD. AND SUBSIDIARIES

ACTUAL IFRS to NON-IFRS RECONCILIATION

(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)

Three months ended September 30,

Nine months ended September 30,

2015

2014

2015

2014

IFRS diluted net profit/(loss) per share

$

(0.17)

$

0.06

$

0.33

$

0.26

IFRS Net Profit/(Loss)

$

(4,624)

$

1,917

$

9,871

$

9,049

Non-cash stock based compensation expense (Note 1)

530

585

1,650

1,349

Amortization of intangibles (Note 2)

54

104

347

508

Impairment of goodwill and intangibles (Note 3)

-

-

-

1,678

Profit on sale of subsidiary (Note 4)

(223)

-

(6,021)

-

Non-IFRS Net Profit/(Loss)

$

(4,263)

$

2,606

$

5,847

$

12,584

Non-IFRS diluted net profit/(loss) per share

$

(0.16)

$

0.08

$

0.19

$

0.37

Total shares used in non-IFRS diluted net profit/(loss)

 per share calculations

27,359,011

31,487,766

30,088,869

34,166,224

Notes:

(1) Actual SBC is calculated based on actual share price on date of the awards.

(2) Amortization of intangible assets relating to certain non-compete agreements.

(3) Impairment of intangibles are net of related taxes.

(4) Profit on sale of subsidiary is net of related tax.

GLOBAL SOURCES LTD. AND SUBSIDIARIES

ADJUSTED EBITDA RECONCILIATION

(In U.S. Dollars Thousands)

Three months ended September 30,

Nine months ended September 30,

2015

2014

2015

2014

IFRS profit/(loss) from operations including discontinued operations

$

(4,760)

$

4,065

$

6,164

$

11,126

Depreciation and amortization including discontinued operations

2,338

2,782

7,703

10,447

EBITDA

(2,422)

6,847

13,867

21,573

Non-cash stock based compensation expense

530

585

1,650

1,349

Impairment of goodwill and intangibles

-

-

-

2,238

Adjusted EBITDA including discontinued operations

$

(1,892)

$

7,432

$

15,517

$

25,160

 

GLOBAL SOURCES LTD. AND SUBSIDIARIES

GUIDANCE IFRS to NON-IFRS RECONCILIATION 

(In U.S. Dollars Million, Except Number of Shares and Per Share Data)

GUIDANCE

ACTUAL

Six months

Six months

ended December 31,

ended December 31,

2015

2014

Revenue

$83.0

to

$84.0

$91.8

IFRS EPS

$0.46

to

$0.49

$0.32

Non-cash stock based compensation expense (Note 1)

$0.04

$0.04

$0.03

Amortization of intangibles (Note 2)

$0.01

$0.01

$0.01

Gain on sale of investment property, net of transaction costs & related tax expenses

(0.30)

(0.30)

-

Non-IFRS diluted net income per share

$0.21

to

$0.24

$0.36

Total shares used in non-IFRS diluted net income

per share calculations

26,283,705

26,283,705

31,490,737

Notes:

(1) Actual SBC is calculated based on actual share price on date of the awards.

(2) Amortization of intangible assets relating to certain non-compete agreements.

For financial matrix, please visit: http://photos.prnasia.com/prnk/20151130/8521508133 

Press Contact

Investor Contact in Asia

Camellia So

Connie Lai

Tel: (852) 2555-5021

Tel: (852) 2555-4747       

e-mail: GSpress@globalsources.com 

e-mail: investor@globalsources.com

Investor Contact in U.S.

Cathy Mattison

LHA

Tel: (1-415) 433-3777

e-mail: cmattison@lhai.com

 

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SOURCE Global Sources



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