Global Sources reports fourth quarter and year-end 2015 results

- Reported fourth quarter revenue of $61.6 million -

- Reported full year 2015 revenue of $171.0 million -

- Posted IFRS EPS of $0.79 and Non-IFRS EPS of $0.52 for the fourth quarter of 2015 -

- Posted full year 2015 IFRS EPS of $1.03 and Non-IFRS EPS of $0.65 -

- Provides guidance for first half of 2016, expects revenue of $78.0 million to $80.0 million and IFRS EPS to range from $0.13 to $0.17 -

News provided by

Global Sources

Mar 17, 2016, 02:00 ET

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NEW YORK, March 17, 2016 /PRNewswire/ -- Global Sources Ltd. (NASDAQ: GSOL) reported financial results for the fourth quarter and year-ended Dec. 31, 2015.

"The highlight of the fourth quarter of 2015 was our very successful series of trade shows in Hong Kong, which included Global Sources Electronics - the world's largest electronics sourcing trade show," stated Merle A. Hinrich, Global Sources' executive chairman. "During the year, we advanced the integration of our online and trade show services and increased our focus on helping buyers identify new, important and innovative products from among the millions of products online. Key initiatives include our Analyst's Choice product sections and Startup Launchpad, a pavilion and conference within our electronics trade shows. Looking ahead, we remain focused on growing our core business by leveraging our differentiated offering that integrates the best of online with the best of trade shows."

Financial highlights - Fourth quarter: 2015 compared to 2014

Revenue from continuing operations was $61.6 million, as compared to $60.1 million.
- Exhibitions revenue was $41.6 million, as compared to $38.2 million.
- Online revenue was $15.3 million, as compared to $18.0 million.
- Print revenue was $2.0 million, as compared to $1.8 million.
IFRS net profit was $20.0 million, or $0.79 per diluted share, as compared to $9.3 million, or $0.29 per diluted share.
Non-IFRS net profit was $13.0 million, or $0.52 per diluted share, as compared to $9.9 million, or $0.31 per diluted share, for the fourth quarter of 2014.
Adjusted EBITDA was $15.0 million, as compared to $12.2 million for the fourth quarter of 2014.
Total deferred income and customer prepayments were $78.2 million as at Dec. 31, 2015, as compared to $88.8 million as at Dec. 31, 2014.

Global Sources' CFO, Connie Lai, said: "During the fourth quarter of 2015, we completed the sale of our Shenzhen investment property, recording a net profit of $7.6 million, net of transaction costs and related tax expenses. We continue to drive efficiencies throughout the organization, while remaining committed to creating shareholder value, maintaining a strong balance sheet, a solid cash position and no debt."

"As announced on March 15, CEO Spenser Au will retire at the end of 2016 following 39 years of service to Global Sources," continued Mr. Hinrich. "In his role as CEO for the past five years, Spenser was essential to the development of our fully integrated offering of online marketplaces and trade shows. Our strong and experienced management team will continue to build on his contributions as we transition to a successor."

Financial highlights - Full year ended Dec. 31: 2015 compared to 2014

Revenue from continuing operations was $171.0 million, as compared to $179.3 million.
IFRS net profit was $29.9 million, or $1.03 per diluted share, as compared to $18.3 million, or $0.55 per diluted share.
Non-IFRS net profit was $18.8 million, or $0.65 per diluted share, as compared to $22.5 million, or $0.67 per diluted share, for 2014.
Adjusted EBITDA was $30.5 million, as compared to $37.3 million for 2014.

Financial expectations for the first half of 2016 under IFRS

For the first half of 2016 ending June 30, 2016:
- Revenue from continuing operations is expected to be in the range of $78.0 million to $80.0 million, as compared to $85.9 million from continuing operations for the first half of 2015.
- IFRS EPS from continuing operations is expected to be in the range of $0.13 to $0.17, as compared to $0.28 per diluted share from continuing operations in the first half of 2015. SBC and the amortization of intangibles as it relates to certain equity compensation plans are estimated to be an expense of $0.05 per diluted share for the first half of 2016.
- Non-IFRS EPS from continuing operations is expected to be in the range of $0.18 to $0.22, as compared to $0.32 per diluted share from continuing operations for the same period in 2015.
- Adjusted EBITDA from continuing operations is expected to be between $12.5 million and $13.4 million, as compared to $18.1 million from continuing operations in the first half of 2015.

Recent Corporate Highlights

Announced CEO Spenser Au plans to retire after 39 years of service to the company. He will remain engaged until the end of 2016 to assist in the transition to a successor.
Closed the sale of investment property on the 50^th floor of the Shenzhen International Chamber of Commerce Tower in Shenzhen, China for a total consideration of approximately $21.1 million.
Global Sources Exhibitions were held in Johannesburg in November 2015.
Global Sources series of fall trade shows were held in October 2015 at Hong Kong's AsiaWorld-Expo, including Global Sources Electronics, the world's largest electronics sourcing trade show.
- In total, the fall trade shows had more than 8,000 booths.
- Total attendance exceeded 84,600 and included buyers from more than 150 countries and territories.
Launched three new industry specialized websites: Drones & Robotics, Machinery & Parts and Auto Parts & Accessories.
Received the Gold corporate award for excellence in corporate governance and investor relations in The Asset's December 2015 issue. The company received The Asset's Gold and Titanium corporate award for the previous six years.

Conference call for Global Sources fourth 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 March 17, 2016 (8:00 p.m. on March 17, 2016 in Hong Kong) to review these results in more detail. Investors in the United States may participate in the call by dialing (877) 502-9276, and non-Hong Kong international participants may dial (1-913) 312-6693. Investors in Hong Kong may participate by dialing (852) 3008-0382. The conference ID is 9464808 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 25, 2016. To listen to the telephone replay dial (888) 203-1112 or dial (1-719) 457-0820 outside the United States, and enter pass code 9464808. For those in the Hong Kong area, the replay dial-in number is (800) 901-108, and the pass code is 9464808.

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), trade shows, magazines and apps.

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 profit as IFRS net profit excluding non-cash stock based compensation expense or credit, amortization of intangibles assets as it relates to certain equity compensation plans, profits or losses on acquisitions and disposals of investments, 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 diluted net profit per share is defined as non-IFRS net profit divided by the weighted average of diluted common shares outstanding. Adjusted EBITDA is defined as profit before interest, taxes, depreciation, amortization, non-cash stock based compensation expense or credit, profits or losses on acquisitions and disposals of investments, net of transaction costs 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,
		2015		2014
		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	70,356	$	90,223
Term deposits with banks		9,097		4,285
Financial assets, available-for-sale		-		3,952
Accounts receivables, net		849		2,269
Receivables from sales representatives		8,802		7,900
Inventories		176		154
Prepaid expenses and other current assets		16,268		17,027
		105,548		125,810
Non-current assets
Property and equipment		59,064		63,519
Investment properties		69,726		85,546
Intangible assets		26,309		37,732
Long term investment		100		100
Deferred income tax assets		389		196
Other non-current assets		951		1,108
		156,539		188,201
Total assets	$	262,087	$	314,011

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	7,383	$	9,418
Deferred income and customer prepayments		75,265		84,869
Accrued liabilities		15,183		19,100
Income tax liabilities		2,990		3,848
		100,821		117,235
Non-current liabilities
Accounts payable		289		889
Deferred income and customer prepayments		2,917		3,971
Deferred income tax liabilities		4,493		6,842
		7,699		11,702
Total liabilities		108,520		128,937

Equity attributable to Company's shareholders
Common shares		533		529
Treasury shares		(250,089)		(200,089)
Other reserves		157,562		161,242
Retained earnings		239,812		209,924
Total Company shareholders' equity		147,818		171,606
Non-controlling interests		5,749		13,468
Total equity	$	153,567	$	185,074
Total liabilities and equity	$	262,087	$	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 December 31,				Year ended December 31,
		2015		2014		2015		2014
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Revenue:
Exhibitions	$	41,629	$	38,157	$	91,854	$	88,941
Online and other media services (Note 2)		17,295		19,738		70,242		82,430
Miscellaneous		2,693		2,210		8,929		7,911
		61,617		60,105		171,025		179,282
Operating Expenses:
Sales (Note 3)		17,898		19,906		50,231		56,095
Event production		10,871		9,751		24,533		23,333
Community and content (Note 3)		5,879		6,753		20,535		22,267
General and administrative (Note 3 & 4)		11,625		11,603		43,697		48,004
Information and technology (Note 3)		3,495		3,075		13,348		12,126
Total Operating Expenses		49,768		51,088		152,344		161,825
Profit on sale of property		9,791		-		9,791		-
Profit from Operations		21,640		9,017		28,472		17,457
Interest income		103		244		792		1,223
Gain on sale of available-for-sale securities		39		-		188		11
Interest expenses		(12)		(47)		(83)		(186)
Profit before Income Taxes		21,770		9,214		29,369		18,505
Income tax expense		(2,187)		(534)		(4,609)		(1,646)
Net Profit from continuing operations	$	19,583	$	8,680	$	24,760	$	16,859
Net Profit / (loss) from discontinued operations, net of income tax (Note 5)		-		(40)		5,629		1,982
Net profit	$	19,583	$	8,640	$	30,389	$	18,841
Net (profit)/loss attributable to non-controlling interests from:
Continuing operations		434		499		(765)		548
Discontinued operations		-		142		264		(1,059)
Total		434		641		(501)		(511)
Net profit attributable to the Company's shareholders from:
Continuing operations	$	20,017	$	9,179	$	23,995	$	17,407
Discontinued operations		-		102		5,893		923
Total	$	20,017	$	9,281	$	29,888	$	18,330
Diluted net profit per share attributable to the Company's shareholders from:
Continuing operations	$	0.79	$	0.29	$	0.83	$	0.52
Discontinued operations		-		*		0.20		0.03
Total	$	0.79	$	0.29	$	1.03	$	0.55
Shares used in diluted net profit per share calculations		25,185,321		31,516,581		28,820,976		33,482,371

* Diluted net profit 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 year ended December 31, 2015 and 2014 was as follows:

	Three months ended December 31,				Year ended December 31,
		2015		2014		2015		2014
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Continuing operations	$	61,617	$	60,105	$	171,025	$	179,282
Discontinued operations		-		2,762		4,776		18,930
	$	61,617	$	62,867	$	175,801	$	198,212

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

	Three months ended December 31,				Year ended December 31,
		2015		2014		2015		2014
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Online services	$	15,296	$	17,983	$	64,421	$	75,895
Print services		1,999		1,755		5,821		6,535
	$	17,295	$	19,738	$	70,242	$	82,430

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 December 31,				Year ended December 31,
		2015		2014		2015		2014
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Sales	$	116	$	123	$	418	$	409
Community and content		23		21		88		16
General and administrative		316		319		1,418		1,215
Information and technology		44		45		225		217
	$	499	$	508	$	2,149	$	1,857

Note: 4. General and administrative expenses consist of:

	Three months ended December 31,				Year ended December 31,
		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	$	9,890	$	9,345	$	37,290	$	36,343
Amortization of intangible assets		1,250		994		4,314		6,873
Impairment charge on intangible assets		-		4		-		2,242
Foreign exchange losses		485		1,260		2,093		2,546
	$	11,625	$	11,603	$	43,697	$	48,004

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

	Three months ended December 31,				Year ended December 31,
		2015		2014		2015		2014
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Profit on sale of subsidiary	$	-	$	-	$	6,382	$	-
Income tax expense		-		-		(361)		-
Profit on sale of subsidiary, net of income tax		-		-		6,021		-
Profit /(loss) from discontinued operations, net of income tax		-		(40)		(392)		1,982
	$	-	$	(40)	$	5,629	$	1,982

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,
	2015		2014		2015		2014

IFRS diluted net profit per share	$	0.79	$	0.29	$	1.03	$	0.55

IFRS Net Profit	$	20,017	$	9,281	$	29,888	$	18,330

Non-cash stock based compensation expense (Note 1)		499		508		2,149		1,857

Amortization of intangibles (Note 2)		34		86		381		594

Impairment of goodwill and intangibles (Note 3)		-		4		-		1,682

Profit on sale of subsidiary (Note 4)		-		-		(6,021)		-

Profit on sale of property, net of transaction costs & related tax expenses		(7,550)		-		(7,550)		-

Non-IFRS Net Profit	$	13,000	$	9,879	$	18,847	$	22,463

Non-IFRS diluted net profit per share	$	0.52	$	0.31	$	0.65	$	0.67


Total shares used in non-IFRS diluted net profit
per share calculations		25,185,321		31,516,581		28,820,976		33,482,371


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 December 31,				Year ended December 31,
		2015		2014		2015		2014

IFRS profit from operations including discontinued operations	$	21,640	$	9,044	$	27,804	$	20,170

Depreciation and amortization including discontinued operations		2,623		2,614		10,326		13,061

EBITDA		24,263		11,658		38,130		33,231

Non-cash stock based compensation expense		499		508		2,149		1,857

Impairment of goodwill and intangibles		-		4		-		2,242

Profit on sale of property, net of transaction costs		(9,791)		-		(9,791)		-

Adjusted EBITDA including discontinued operations	$	14,971	$	12,170	$	30,488	$	37,330

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,
	2016			2015

Revenue from continuing operations	$78.0	to	$80.0	$85.9

IFRS EPS from continuing operations	$0.13	to	$0.17	$0.28

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


Non-IFRS diluted net income per share from continuing operations	$0.18	to	$0.22	$0.32

Total shares used in non-IFRS diluted net income
per share calculations	25,400,000		25,400,000	31,534,448


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/20160317/8521601731

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

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