Global Sources reports second quarter 2015 results

- Reported second quarter revenue of $68.5 million -

- Posted IFRS EPS of $0.52 and Non-IFRS EPS of $0.35 -

- Provides guidance for second half of 2015 -

Aug 05, 2015, 02:00 ET from Global Sources

NEW YORK, Aug. 5, 2015 /PRNewswire/ -- Global Sources Ltd. (NASDAQ: GSOL) reported financial results for the second quarter ended June 30, 2015.

Global Sources' executive chairman, Merle A. Hinrich, said: "In the second quarter, total revenue was $68.5 million, with our exhibition business revenue growing 42 percent year-over-year, driven primarily by the performance of our large electronics international trade shows held in Hong Kong in April and the move of our SIMM machinery shows from the first quarter of 2014 to the second quarter of 2015. We were especially pleased with the revenue and attendance growth for the Global Sources Electronics and Mobile Electronics shows.

"Recently, we completed three important actions to return value to our shareholders and to focus on our core business. First, we completed a cash tender offer to return up to approximately $50 million to shareholders, which commenced on June 26, 2015 and expired at 12:00 midnight, New York City time, on July 27, 2015. Second, we completed the sale of our eMedia subsidiary. And third, following the end of the second quarter, we entered into an agreement to sell an investment property in Shenzhen."

Financial highlights - Second quarter: 2015 compared to 2014

As a result of completing the sale of its eMedia subsidiary during the quarter, the eMedia business has been reclassified as a discontinued operation.

  • Revenue from continuing operations was $66.0 million, as compared to $55.5 million.
    • Online revenue was $16.4 million, as compared to $19.3 million.
    • Exhibitions revenue was $46.1 million, as compared to $32.4 million.
    • Print revenue was $1.3 million, as compared to $1.7 million.
  • Revenue from discontinued operations was $2.5 million, as compared to $2.9 million.
  • IFRS net income from continuing operations was $16.7 million, or $0.52 per diluted share, as compared to $7.1 million, or $0.20 per diluted share.
  • IFRS net loss from discontinued operations was $0.04 million, as compared to $0.1 million.
  • Non-IFRS net income was $11.2 million, or $0.35 per diluted share, as compared to $9.4 million, or $0.27 per diluted share, for the second quarter of 2014.
  • Adjusted EBITDA was $17.4 million, as compared to $11.8 million for the second quarter of 2014.
  • Total deferred income and customer prepayments were $86.2 million as at June 30, 2015, as compared to $99.0 million as at June 30, 2014.

Financial highlights - Six months ended June 30: 2015 compared to 2014

  • Revenue from continuing operations was $85.9 million, as compared to $87.5 million.
  • Revenue from discontinued operations was $4.8 million, as compared to $5.3 million.
  • IFRS net income from continuing operations was $14.6 million, or $0.46 per diluted share, as compared to $7.4 million, or $0.21 per diluted share.
  • IFRS net loss from discontinuing operations was $0.1 million, as compared to $0.3 million.
  • Non-IFRS net income was $9.7 million, or $0.31 per diluted share, as compared to $10.0 million, or $0.28 per diluted share, for the six months ended June 30, 2014.
  • Adjusted EBITDA was $17.4 million, as compared to $17.7 million for the six months ended June 30, 2014.

Global Sources' CFO, Connie Lai, stated: "Our second quarter 2015 results reflect growth of the electronics trade shows held in April, the SIMM machinery shows moving from the first quarter last year to the second quarter of 2015 and the capital gain of $6.2 million recorded from the sale of our eMedia subsidiary. We continue to maintain an efficient cost structure, while maintaining a strong balance sheet with no short- or long-term debt."

Financial expectations for the second half of 2015 under IFRS

"It is important to note that our second half 2015 guidance takes into consideration the impact on revenue resulting from the sale of our eMedia subsidiary, as well as capital gains from the expected sale of our Shenzhen investment property," Lai stated.

  • For the second half of 2015 ending Dec. 31, 2015:
    • Revenue from continuing operations is expected to be in the range of $86.0 million to $88.0 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 $0.50 to $0.55, 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 $0.24 per diluted share for the second half of 2015.
    • Non-IFRS EPS is expected to be in the range of $0.26 to $0.31, as compared to $0.36 per diluted share for the same period in 2014.
    • Adjusted EBITDA from continuing operations is expected to be between $12.0 million and $13.2 million, as compared to $15.8 million in the second half of 2014.

"For the second half of 2015, we expect the revenue mix to range between 52% and 54% for exhibitions, 41% and 42% for online and print, and approximately 6% for miscellaneous. This compares to a second half 2014 revenue mix of approximately 52% for exhibitions, 44% for online and print and 4% for miscellaneous," Lai concluded.

Recent Corporate Highlights   

  • Completed its cash tender offer, which commenced on June 26, 2015 and expired at 12:00 midnight, New York City time, on July 27, 2015, purchasing a total of 6,666,666 shares at $7.50 per share.
  • Entered into a Letter of Intent on July 6, 2015 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. Completion of the transaction is conditional upon, and subject to, the further signing of a formal sale and purchase agreement by the parties on or before Sept. 1, 2015, and the buyer's full payment of the sale price on or before Nov. 10, 2015.
  • The 15th China International Fashion Brand Fair - Shenzhen (FashionSZshow) was held in Shenzhen in July.
  • Sold its interest in eMedia Asia Limited.
  • Launched five new vertically specialized websites: Fashion Accessories & Footwear; Fashion Apparel & Fabrics; Gifts & Premiums; Hardware; and Home Products.
  • China Sourcing Fairs were held in April 2015 at Hong Kong's AsiaWorld-Expo. The spring shows had more than 7,600 booths. Total attendance exceeded 77,300 and included buyers from more than 150 countries and territories.
  • The Shenzhen International Machinery Manufacturing Industry Exhibition and its related shows, known as the SIMM machinery shows, were held on March 30-April 2, 2015.
  • Launched an enhanced version of Mobile Electronics plus three new vertically specialized websites for Consumer Electronics, Security Products and Electronic Components.
  • Private Sourcing Events were held from April 2015 through June 2015 for more than 55 sourcing teams from very large buying organizations including BIC Graphic, Casino, Coop, Future Group, Hermes-OTTO International, Jula AB, Kingfisher, Panasonic, Philips, Sodimac, The Home Depot, The Source and others.

Conference call for Global Sources second 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 Aug. 5, 2015 (8:00 p.m. on Aug. 5, 2015 in Hong Kong) to review these results in more detail. Investors in the United States may participate in the call by dialing (888) 737-3616, and non-Hong Kong international participants may dial (1-913) 312-1391. Investors in Hong Kong may participate by dialing (852) 3008-0382. The conference ID is 3671969 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 Aug. 12, 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 3671969. For those in the Hong Kong area, the replay dial-in number is (800) 901-108, and the pass code is 3671969.

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), print and digital magazines, 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 June 30,   

As at December 31,

2015

2014

(Unaudited)

ASSETS

Current assets

Cash and cash equivalents

$

86,614

$

90,223

Term deposits with banks

8,387

4,285

Financial assets, available-for-sale

-

3,952

Accounts receivables, net

879

2,269

Receivables from sales representatives

11,145

7,900

Inventories

151

154

Prepaid expenses and other current assets

29,155

17,027

136,331

125,810

Non-current assets

Property and equipment

61,799

63,519

Investment properties

84,453

85,546

Intangible assets

29,484

37,732

Long term investment

100

100

Deferred income tax assets

323

196

Other non-current assets

1,920

1,108

178,079

188,201

Total assets

$

314,410

$

314,011

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Accounts payable

$

7,459

$

9,418

Deferred income and customer prepayments

81,501

84,869

Accrued liabilities

17,277

19,100

Income tax liabilities

3,223

3,848

109,460

117,235

Non-current liabilities

Accounts payable

294

889

Deferred income and customer prepayments

4,712

3,971

Deferred income tax liabilities

5,407

6,842

10,413

11,702

Total liabilities

119,873

128,937

Equity attributable to Company's shareholders

Common shares

532

529

Treasury shares

(200,089)

(200,089)

Other reserves

162,225

161,242

Retained earnings

224,419

209,924

Total Company shareholders' equity

187,087

171,606

Non-controlling interests

7,450

13,468

Total equity

$

194,537

$

185,074

Total liabilities and equity

$

314,410

$

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 June 30,

Six months ended June 30,

2015

2014

2015

2014

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenue:

   Online and other media services (Note 2)

$

17,721

$

21,022

$

35,730

$

42,381

   Exhibitions

46,096

32,412

46,171

41,272

   Miscellaneous

2,137

2,051

4,015

3,813

65,954

55,485

85,916

87,466

Operating Expenses:

   Sales (Note 3)

18,798

18,270

24,693

26,506

   Event production

12,197

8,991

12,224

10,742

   Community and content (Note 3)

6,677

5,919

10,203

10,335

   General and administrative (Note 3 & 4)

10,635

12,819

20,752

26,004

   Information and technology (Note 3)

3,245

2,939

6,452

6,012

Total Operating Expenses

51,552

48,938

74,324

79,599

   Profit on sale of subsidiary

6,159

-

6,159

-

Profit from Operations

20,561

6,547

17,751

7,867

   Interest income

273

311

566

707

   Gain on sale of available-for-sale securities

90

-

136

10

   Interest expenses

(13)

(45)

(59)

(92)

Profit before Income Taxes

20,911

6,813

18,394

8,492

Income tax expense

(2,684)

(440)

(2,549)

(830)

Net Profit from continuing operations

$

18,227

$

6,373

$

15,845

$

7,662

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

 

(187)

(293)

 

(392)

 

(699)

Net profit

$

18,040

$

6,080

$

15,453

$

6,963

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

   Continuing operations

(1,562)

712

(1,222)

(242)

   Discontinued operations

144

195

264

411

   Total

(1,418)

907

(958)

169

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

  Continuing operations

$

16,665

$

7,085

$

14,623

$

7,420

  Discontinued operations

(43)

(98)

(128)

(288)

  Total

$

16,622

$

6,987

$

14,495

$

7,132

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

  Continuing operations

$

0.52

$

0.20

$

0.46

$

0.21

  Discontinued operations

*

*

*

(0.01)

  Total

$

0.52

$

0.20

$

0.46

$

0.20

Shares used in diluted net profit per share calculations

 

31,743,270

 

35,183,171

 

31,534,448

 

35,672,551

    * Diluted net loss per share attributable to the Company's shareholders from discontinued operations is less than $0.01

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

Three months ended June 30,

Six months ended June 30,

2015

2014

2015

2014

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

   Continuing operations

$

65,954

$

55,485

$

85,916

$

87,466

   Discontinued operations

2,535

2,852

4,776

5,341

$

68,489

$

58,337

$

90,692

$

92,807

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

Three months ended June 30,

Six months ended June 30,

2015

2014

2015

2014

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

   Online services

$

16,440

$

19,293

$

33,201

$

39,200

   Print services

1,281

1,729

2,529

3,181

$

17,721

$

21,022

$

35,730

$

42,381

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 June 30,

Six months ended June 30,

2015

2014

2015

2014

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

 Sales

$

141

$

139

$

178

$

146

 Community and content

31

27

41

(32)

 General and administrative

404

347

768

530

 Information and technology

56

50

133

120

$

632

$

563

$

1,120

$

764

Note: 4. General and administrative expenses consist of:

Three months ended June 30,

Six months ended June 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)

$

9,627

$

9,395

$

18,305

$

17,692

   Amortization of intangible assets

989

1,354

2,107

4,659

   Impairment charge on intangible assets

-

2,238

-

2,238

   Foreign exchange losses (gains)

19

(168)

340

1,415

$

10,635

$

12,819

$

20,752

$

26,004

 

 

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 June 30,

Six months ended June 30,

2015

2014

2015

2014

IFRS diluted net profit per share                               

$

0.52

$

0.20

$

0.46

$

0.20

IFRS Net Profit

$

16,622

$

6,987

$

14,495

$

7,132

Non-cash stock based compensation expense (Note 1)

632

563

1,120

764

Amortization of intangibles (Note 2)

82

151

293

404

Impairment of goodwill and intangibles (Note 3)

-

1,678

-

1,678

Profit on sale of subsidiary

(6,159)

-

(6,159)

-

Non-IFRS Net Profit

$

11,177

$

9,379

$

9,749

$

9,978

Non-IFRS diluted net profit per share

$

0.35

$

0.27

$

0.31

$

0.28

Total shares used in non-IFRS diluted net profit

 per share calculations

31,743,270

35,183,171

31,534,448

35,672,551

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.

 

 

GLOBAL SOURCES LTD. AND SUBSIDIARIES

ADJUSTED EBITDA RECONCILIATION

(In U.S. Dollars Thousands) 

Three months ended June 30,

Six months ended June 30,

2015

2014

2015

2014

IFRS profit from operations

$

20,295

$

6,203

$

17,083

$

7,061

Depreciation and amortization

2,620

2,819

5,365

7,665

EBITDA

22,915

9,022

22,448

14,726

Non-cash stock based compensation expense

632

563

1,120

764

Impairment of goodwill and intangibles

-

2,238

-

2,238

Profit on sale of subsidiary

(6,159)

-

(6,159)

-

Adjusted EBITDA

$

17,388

$

11,823

$

17,409

$

17,728

 

 

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

$86.0

to

$88.0

$91.8

IFRS EPS

$0.50

to

$0.55

$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

(0.29)

(0.29)

-

Non-IFRS diluted net income per share

$0.26

to

$0.31

$0.36

Total shares used in non-IFRS diluted net income

   per share calculations

26,331,586

26,331,586

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/20150805/8521505087

Press Contact in Asia

Investor Contact in Asia

Camellia So

Connie Lai

Tel: (852) 2555-5021

Tel: (852) 2555-4747    

e-mail: cso@globalsources.com 

e-mail: investor@globalsources.com

Press Contact in U.S.

Investor Contact in U.S.

Brendon Ouimette

Cathy Mattison

Tel: (1-480) 664-8309

LHA

e-mail: bouimette@globalsources.com

Tel: (1-415) 433-3777

e-mail: cmattison@lhai.com

 

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SOURCE Global Sources