Global Sources reports fourth quarter and year-end 2012 results

- Reported fourth quarter revenue of $66.9 million -

- Reported full year 2012 revenue of $231.7 million -

- Posted IFRS EPS of $0.31 and Non-IFRS EPS of $0.37 for the fourth quarter of 2012 -

- Posted full year 2012 IFRS EPS of $0.90 and Non-IFRS EPS of $1.04 -

- Provides guidance for first half of 2013, expects revenue of $87.0 million to $89.0 million and IFRS EPS to range from $0.49 to $0.53 -

News provided by

Global Sources

Mar 13, 2013, 03:00 ET

NEW YORK, March 13, 2013 /PRNewswire/ -- Global Sources Ltd. (NASDAQ: GSOL) reported financial results for the fourth quarter and year-ended Dec. 31, 2012.

(Logo: http://photos.prnewswire.com/prnh/20030303/LNM011LOGO-b )

Global Sources' executive chairman, Merle A. Hinrichs, said: "Our fourth quarter results were in line with our expectations and completed a solid year in a challenging market environment.

"Our focus remains on helping our buyer and supplier customers develop profitable and successful relationships. We help them find potential business partners through our various media and then meet them at our shows around the world. The attendees at our shows are a key business advantage, as we give all of our advertisers access to a highly qualified, influential and exclusive buyer community.

"Looking ahead, we expect market conditions to continue impacting our core business well into 2013. We are committed to maintaining profitability, and we have a very strong balance sheet with a solid cash position and no debt. With strong products and services, and a large and influential customer base, we are well-positioned to rebound as market conditions improve."

Financial highlights - Fourth quarter: 2012 compared to 2011

Revenue was $66.9 million, as compared to $74.0 million.
- Online revenue was $28.1 million, as compared to $30.5 million.
- Exhibitions revenue was $32.7 million, as compared to $35.5 million.
- Print revenue was $4.2 million, as compared to $6.4 million.
IFRS net income was $11.2 million, or $0.31 per diluted share, as compared to fourth quarter 2011 IFRS net income of $11.9 million, or $0.33 per diluted share.
Non-IFRS net income was $13.3 million, or $0.37 per diluted share, as compared to $13.6 million, or $0.38 per diluted share, for the fourth quarter of 2011.
Adjusted EBITDA was $14.4 million, as compared to $15.2 million for the fourth quarter of 2011.
Total deferred income and customer prepayments were $93.6 million as at Dec. 31, 2012, as compared to $110.1 million as at Dec. 31, 2011.

Financial highlights - Full year 2012 ended Dec. 31: 2012 compared to 2011

Revenue was $231.7 million, as compared to $225.1 million.
IFRS net income was $32.2 million, or $0.90 per diluted share, as compared to $29.5 million, or $0.83 per diluted share.
Non-IFRS net income was $37.1 million, or $1.04 per diluted share, as compared to $33.7 million, or $0.95 per diluted share, for 2011.
Adjusted EBITDA was $47.9 million, as compared to $42.0 million for 2011.

Global Sources' CFO, Connie Lai, said: "The Mumbai show moved to the third quarter of 2012 from the fourth quarter last year, which had a slight impact on this quarter's revenue. Our balance sheet remains strong as we closed the quarter with a cash and securities position of $116.3 million, as compared to $110.8 million at the end of September 2012. Our objective remains to balance cost controls with our investments in future growth.

"We expect the revenue mix for the first half to range between 50% and 51% for online, 36% and 37% for exhibitions, 7% and 8% for print, and approximately 4% for miscellaneous. This compares to a first half of 2012 revenue mix of approximately 58% for online, 31% for exhibitions, 8% for print, and 3% for miscellaneous."

Financial expectations for the first half of 2013 under IFRS

For the first half of 2013 ending June 30, 2013:
- Revenue is expected to be in the range of $87.0 million to $89.0 million, representing a decrease of 16% to 18%, as compared to $105.7 million for the first half of 2012.
- IFRS EPS is expected to be in the range of $0.49 to $0.53, as compared to $0.36 per diluted share in the first half of 2012. 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 $0.36 per diluted share for the first half of 2013.
- Non-IFRS EPS is expected to be in the range of $0.18 to $0.22, as compared to $0.41 per diluted share for the same period in 2012.
- Adjusted EBITDA is expected to be between $10.7 million and $12.9 million, as compared to $18.2 million in the first half of 2012.

Recent Corporate Highlights

Signed agreements for the sale of two real estate properties:
- Signed a letter of intent to sell the 46^th floor of the Excellence Times Square building in Shenzhen, China, for approximately $19.3 million. The transaction is expected to close on or before May 7, 2013.
- Signed a provisional sale and purchase agreement to sell 10 units on the 26^th floor and three car parking spaces on the first floor of the Southmark building in Hong Kong, China, for approximately $9.0 million. The transaction is expected to close on or before March 28, 2013.
Signed a provisional sale and purchase agreement to acquire the 21^st, 22^nd and 23^rd floors of the Vita Tower building in Hong Kong, China, for approximately $23.6 million. The transaction is expected to close on or before March 28, 2013.
Private Sourcing Events were held from October 2012 through January 2013 for more than 100 sourcing teams from very large buying organizations including Amazon.com, Auchan, EI Corte Ingles, Embraco, Forever 21, Future Group, Home Retail Group, Kmart, LPP, Meijer, Monster, OfficeMax, OSRAM, Panasonic, Quiksilver, Targus, The Source, TJX, William E. Connor and Woolworths. These events created more than 600 high-quality, one-on-one selling opportunities for Global Sources suppliers.
Held 14 Sourcing Fairs with more than 7,100 booths in October 2012 at Hong Kong's AsiaWorld-Expo. Total attendance exceeded 61,200, and included buyers from 153 countries and territories.
Held its third annual China Sourcing Fairs in Johannesburg in November 2012, with 815 exhibitor booths.
Held Global Sourcing Fairs in Shanghai in December 2012 with more than 600 booths. Show categories included Gifts & Home Products and Fashion Accessories.
Received the Gold award in the December 2012 issue of The Asset's Corporate Awards for excellence in investor relations and social responsibility. The company received The Asset's Gold award in 2011 and the Titanium corporate award in 2009 and 2010.

Conference call for Global Sources fourth quarter 2012 earnings

Executive Chairman Merle A. Hinrichs and CFO Connie Lai are scheduled to conduct a conference call at 8:00 a.m. ET on March 13, 2013 (8:00 p.m. on March 13, 2013 in Hong Kong) to review these results in more detail. Investors in the United States may participate in the call by dialing (877) 941-1427, and non-Hong Kong international participants may dial (1-480) 629-9664. Investors in Hong Kong may participate by dialing (852) 3009-5027. The conference ID is 4593683 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 March 21, 2013. To listen to the telephone replay dial (800) 406-7325 or dial (1-303) 590-3030 outside the United States, and enter pass code 4593683. For those in the Hong Kong area, the replay dial-in number is (852) 3056-2777, and the pass code is 4593683.

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 (http://www.globalsources.com), print and digital magazines, sourcing research reports, private sourcing events, trade shows, and online sourcing fairs.

More than 1 million international buyers, including 90 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.

Global Sources' other businesses provides Chinese-language media to companies selling to and within Greater China. These services include online web sites, print and digital magazines, seminars and trade shows. In mainland China, Global Sources has a network of more than 30 office locations and a community of more than 4 million registered online users and magazine readers of its Chinese-language media.

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, gains or losses on acquisitions and investments net of transaction costs and related tax expenses, and/or impairment charges, 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 and impairment of goodwill and intangible assets.

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 December 31,		As at December 31,
	2012		2011
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	104,631	$	81,903
Term deposits with banks		4,184		2,764
Financial assets, available-for-sale		7,472		13,250
Accounts receivables, net		4,242		4,711
Receivables from sales representatives		7,773		6,523
Inventories		410		230
Prepaid expenses and other current assets		18,396		20,895
		147,108		130,276
Non-current assets
Property and equipment		30,442		55,761
Investment properties		97,377		75,370
Intangible assets		33,136		11,946
Long term investment		100		100
Deferred income tax assets		244		325
Other non-current assets		2,762		2,552
		164,061		146,054
Total assets	$	311,169	$	276,330

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	12,531	$	7,698
Deferred income and customer prepayments		84,540		101,841
Accrued liabilities		20,409		17,723
Income tax liabilities		1,225		714
		118,705		127,976
Non-current liabilities
Deferred income and customer prepayments		9,062		8,290
Deferred income tax liabilities		6,090		1,510
		15,152		9,800
Total liabilities		133,857		137,776

Equity attributable to Company's shareholders
Common shares		521		518
Treasury shares		(150,089)		(150,089)
Other reserves		156,629		152,591
Retained earnings		158,859		126,653
Total Company shareholders' equity		165,920		129,673
Non-controlling interests		11,392		8,881
Total equity	$	177,312	$	138,554
Total liabilities and equity	$	311,169	$	276,330

GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)

	Three months ended December 31,				Year ended December 31,
	2012		2011		2012		2011
	(Unaudited)		(Unaudited)		(Unaudited)
Revenue:
Online and other media services (Note 1)	$	32,353	$	36,863	$	136,101	$	141,475
Exhibitions		32,716		35,475		88,782		77,973
Miscellaneous		1,873		1,669		6,857		5,617
	$	66,942	$	74,007	$	231,740	$	225,065
Operating Expenses:
Sales (Note 2)		23,102		26,305		80,354		81,363
Event production		9,716		11,273		26,250		24,637
Community and content (Note 2)		8,628		9,430		32,696		34,078
General and administrative (Note 2)		12,056		11,721		44,281		40,660
Information and technology (Note 2)		3,223		3,070		13,188		12,607
Total Operating Expenses	$	56,725	$	61,799	$	196,769	$	193,345
Profit from Operations	$	10,217	$	12,208	$	34,971	$	31,720
Interest income		312		161		1,044		360
Share of loss of associate		-		-		(24)		-
Impairment loss on investment in associate		-		-		(302)		-
Profit before Income Taxes	$	10,529	$	12,369	$	35,689	$	32,080
Income tax expense		(694)		(456)		(2,744)		(1,613)
Net Profit	$	9,835	$	11,913	$	32,945	$	30,467
Net profit attributable to non-controlling interests		1,342		(24)		(739)		(991)
Net profit attributable to the Company's shareholders	$	11,177	$	11,889	$	32,206	$	29,476
Diluted net profit per share attributable to the Company's shareholders	$	0.31	$	0.33	$	0.90	$	0.83
Shares used in diluted net profit per share calculations		35,870,511		35,501,296		35,742,495		35,385,218

Note: 1.		Online and other media services consists of:

			Three months ended December 31,				Year ended December 31,
			2012		2011		2012		2011
			(Unaudited)		(Unaudited)		(Unaudited)
Online services			$	28,114	$	30,466	$	119,011	$	117,946
Print services				4,239		6,397		17,090		23,529
			$	32,353	$	36,863	$	136,101	$	141,475

Note: 2.	Non-cash compensation expenses associated with the several employee equity compensation plans and Global Sources Directors Share Grant Award Plan included under various categories of expenses are as follows:

			Three months ended December 31,				Year ended December 31,
			2012		2011		2012		2011
			(Unaudited)		(Unaudited)		(Unaudited)
Sales			$	153	$	207	$	565	$	737
Community and content				31		61		70		234
General and administrative				365		475		1,524		1,528
Information and technology				53		71		250		278
			$	602	$	814	$	2,409	$	2,777


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 December 31,					Year ended December 31,
		2012		2011		2012		2011

IFRS EPS		$	0.31	$	0.33	$	0.90	$	0.83

IFRS Net Profit		$	11,177	$	11,889	$	32,206	$	29,476

Non-cash stock based compensation expense (Note 1)			602		814		2,409		2,777

Amortization of intangibles (Note 2)			148		191		751		763

Impairment loss on investment in associate			-		-		302		-

Impairment of goodwill and intangibles			1,390		670		1,390		670

Non-IFRS Net Profit		$	13,317	$	13,564	$	37,058	$	33,686

Non-IFRS diluted net profit per share		$	0.37	$	0.38	$	1.04	$	0.95


Total shares used in non-IFRS diluted net profit per share calculations			35,870,511		35,501,296		35,742,495		35,385,218

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.

GLOBAL SOURCES LTD. AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION
(In U.S. Dollars Thousands)



	Three months ended December 31,				Year ended December 31,
	2012		2011		2012		2011

IFRS profit from operations	$	10,217	$	12,208	$	34,971	$	31,720

Depreciation and amortization		2,184		1,464		9,112		6,785

EBITDA		12,401		13,672		44,083		38,505

Non-cash stock based compensation expense		602		814		2,409		2,777

Impairment of goodwill and intangibles		1,390		670		1,390		670

Adjusted EBITDA	$	14,393	$	15,156	$	47,882	$	41,952

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 June 30,			ended June 30,
	2013			2012

Revenue	$87.0	to	$89.0	$105.7

IFRS EPS	$0.49	to	$0.53	$0.36

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

Impairment loss on investment in associate	-		-	$0.01

Gain on sale of investment property, net of transaction costs & related tax expenses	($0.36)		($0.36)	-

Non-IFRS diluted net income per share	$0.18	to	$0.22	$0.41

Total shares used in non-IFRS diluted net income
per share calculations	36,130,000		36,130,000	35,716,189


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://www.prnasia.com/sa/attachment/2013/03/20130313095937293701.pdf

Press Contact in Asia	Investor Contact in Asia
Camellia So	Connie Lai
Tel: (852) 2555-5021	Tel: (852) 2555-4747
e-mail: [email protected]	e-mail: [email protected]

Press Contact in U.S.	Investor Contact in U.S.
Brendon Ouimette	Cathy Mattison
Tel: (1-480) 664-8309	LHA
e-mail: [email protected]	Tel: (1-415) 433-3777
	e-mail: [email protected]