Global Sources reports second quarter 2014 results

-- Reported second quarter revenue of $58.3 million --

-- Posted IFRS EPS of $0.20 and Non-IFRS EPS of $0.27 --

-- Provides guidance for second half of 2014 --

News provided by

Aug 14, 2014, 02:00 ET

NEW YORK, Aug. 14, 2014 /PRNewswire/ -- Global Sources Ltd. (NASDAQ: GSOL) reported financial results for the second quarter ended June 30, 2014.

Global Sources' executive chairman, Merle A. Hinrich, said: "In the second quarter, our export trade shows in Hong Kong performed very well and featured our largest-ever electronics series, including the inaugural Mobile Electronics show. Our fully integrated offering of online marketplaces and trade shows provides a broad multi-channel platform for cross border B2B trade. We are encouraged by the strength of our exhibition business as we continue to specialize and address the markets we believe offer the greatest opportunity for growth."

Financial highlights -- Second quarter: 2014 compared to 2013

Revenue was $58.3 million, as compared to $61.4 million.
- Online revenue was $20.8 million, as compared to $22.7 million.
- Exhibitions revenue was $32.4 million, as compared to $33.3 million.
- Print revenue was $3.0 million, as compared to $3.5 million.
IFRS net income was $7.0 million, or $0.20 per diluted share, as compared to second quarter 2013 IFRS net income of $16.8 million, or $0.46 per diluted share.
Non-IFRS net income was $9.4 million, or $0.27 per diluted share, as compared to $11.4 million, or $0.32 per diluted share, for the second quarter of 2013.
Adjusted EBITDA was $11.8 million, as compared to $13.2 million for the second quarter of 2013.
Total deferred income and customer prepayments were $99.0 million as at June 30, 2014, as compared to $100.1 million as at June 30, 2013.

Financial highlights -- Six Months Ended June 30: 2014 compared to 2013

Revenue was $92.8 million, as compared to $92.7 million.
IFRS net income was $7.1 million, or $0.20 per diluted share, as compared to $22.4 million, or $0.62 per diluted share.
Non-IFRS net income was $10.0 million, or $0.28 per diluted share, as compared to $13.2 million, or $0.37 per diluted share, for the six months ended June 30, 2013.
Adjusted EBITDA was $17.7 million, as compared to $16.3 million for the six months ended June 30, 2013.

Global Sources' CFO, Connie Lai, stated: "While our second quarter 2014 results reflect the strong performance of our electronics shows in Hong Kong, exhibition revenues were negatively impacted by the slower performance of our shows outside of Hong Kong. We also recorded a write down of approximately $1.7 million in consideration of impairment charges net of related taxes related to the China International Fashion Brand Fair -- Shenzhen (FashionSZshow). In addition, we successfully completed a cash tender offer that resulted in a cash outflow of $50.0 million. We continue to maintain a strong balance sheet with no short- or long-term debt."

Financial expectations for the second half of 2014 under IFRS

For the second half of 2014 ending Dec. 31, 2014:
- Revenue is expected to be in the range of $102.0 million to $104.0 million, as compared to $104.8 million for the second half of 2013.
- IFRS EPS is expected to be in the range of $0.13 to $0.17, as compared to $0.29 per diluted share in the second half of 2013. 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 second half of 2014.
- Non-IFRS EPS is expected to be in the range of $0.18 to $0.22, as compared to $0.47 per diluted share for the same period in 2013.
- Adjusted EBITDA is expected to be between $13.0 million and $14.2 million, as compared to $24.1 million in the second half of 2013.

"For the second half of 2014, we expect the revenue mix to range between 36% and 37% for online, 53% and 54% for exhibitions, 5% and 6% for print, and approximately 3% for miscellaneous. This compares to a second half 2013 revenue mix of approximately 42% for online, 49% for exhibitions, 6% for print and 3% for miscellaneous," Lai concluded.

Recent Corporate Highlights

The 14^th China International Fashion Brand Fair -- Shenzhen (FashionSZshow), the largest and most influential fashion exhibition in southern China, was held in Shenzhen in July.
Completed its cash tender offer on June 6, 2014, purchasing a total of 5 million shares at $10.00 per share.
Held China Sourcing Fairs April 12-15 and April 27-30 at AsiaWorld-Expo in Hong Kong featuring more than 6,800 booths. Total attendance exceeded 66,000 and included buyers from 163 countries and territories.
- Launched the inaugural Mobile Electronics show during the Electronics & Components series.
Private Sourcing Events were held from April through the end of July for 116 sourcing teams from very large buying organizations including AB InBev, Auchan, Coop Global Sourcing, Luxottica, Jockey, Kmart Australia, Monster Cable, Philips, etc. These events created more than 570 high-quality, one-on-one selling opportunities for Global Sources suppliers.

Conference call for Global Sources second quarter 2014 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. 14, 2014 (8:00 p.m. on Aug. 14, 2014 in Hong Kong) to review these results in more detail. Investors in the United States may participate in the call by dialing (888) 438-5525, and non-Hong Kong international participants may dial (1-719) 325-2469. Investors in Hong Kong may participate by dialing (852) 3008-0380. The conference ID is 7673309 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. 21, 2014. To listen to the telephone replay dial (888) 203-1112 or dial (1-719) 457-0820 outside the United States, and enter pass code 7673309. For those in the Hong Kong area, the replay dial-in number is (800) 901-108 and the pass code is 7673309.

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, sourcing research reports, 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.

Global Sources' other businesses provide 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 5 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, profits or losses on acquisitions and 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 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 and investments 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,
	2014		2013
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	87,026	$	137,359
Term deposits with banks		4,100		106
Financial assets, available-for-sale		1,377		6,367
Accounts receivables, net		2,781		3,122
Receivables from sales representatives		8,579		10,630
Inventories		293		266
Prepaid expenses and other current assets		18,271		18,544
		122,427		176,394
Non-current assets
Property and equipment		63,882		49,701
Investment properties		86,639		89,615
Intangible assets		38,546		21,423
Long term investment		100		100
Deferred income tax assets		38		98
Other non-current assets		1,592		1,766
		190,797		162,703
Total assets	$	313,224	$	339,097

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	9,937	$	8,779
Deferred income and customer prepayments		93,540		84,704
Accrued liabilities		19,467		19,166
Income tax liabilities		4,221		2,635
		127,165		115,284
Non-current liabilities
Accounts payable		864		-
Deferred income and customer prepayments		5,467		5,660
Deferred income tax liabilities		6,389		4,591
		12,720		10,251
Total liabilities		139,885		125,535

Equity attributable to Company's shareholders
Common shares		528		525
Treasury shares		(200,089)		(150,089)
Other reserves		160,521		161,950
Retained earnings		198,726		191,594
Total Company shareholders' equity		159,686		203,980
Non-controlling interests		13,653		9,582
Total equity	$	173,339	$	213,562
Total liabilities and equity	$	313,224	$	339,097

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,
	2014		2013		2014		2013
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Revenue:
Online and other media services (Note 1)	$	23,864	$	26,217	$	47,706	$	54,176
Exhibitions		32,412		33,274		41,272		34,775
Miscellaneous		2,061		1,948		3,829		3,740
		58,337		61,439		92,807		92,691
Operating Expenses:
Sales (Note 2)		19,244		19,272		28,290		30,265
Event production		9,015		10,254		10,819		10,650
Community and content (Note 2)		6,955		7,547		12,398		13,732
General and administrative (Note 2 & 3)		13,825		13,364		27,953		23,156
Information and technology (Note 2)		3,095		3,161		6,286		6,475
Total Operating Expenses		52,134		53,598		85,746		84,278
Profit on sale of property		-		10,953		-		15,410
Profit from Operations		6,203		18,794		7,061		23,823
Interest income		333		347		750		621
Gain on sale of available-for-sale securities		-		-		10		-
Interest expenses		(45)		-		(92)		-
Profit before Income Taxes		6,491		19,141		7,729		24,444
Income tax expense		(411)		(2,643)		(766)		(2,669)
Net Profit	$	6,080	$	16,498	$	6,963	$	21,775
Net (profit) / loss attributable to non-controlling interests		907		276		169		620
Net profit attributable to the Company's shareholders	$	6,987	$	16,774	$	7,132	$	22,395
Diluted net profit per share attributable to the Company's shareholders	$	0.20	$	0.46	$	0.20	$	0.62
Shares used in diluted net profit per share calculations		35,183,171		36,200,567		35,672,551		36,048,346

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

	Three months ended June 30,				Six months ended June 30,
	2014		2013		2014		2013
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Online services	$	20,844	$	22,689	$	42,096	$	47,664
Print services		3,020		3,528		5,610		6,512
	$	23,864	$	26,217	$	47,706	$	54,176

Note: 2. 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,
	2014		2013		2014		2013
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Sales	$	139	$	159	$	146	$	227
Community and content		27		25		(32)		(16)
General and administrative		347		374		530		603
Information and technology		50		54		120		139
	$	563	$	612	$	764	$	953

Note: 3. General and administrative expenses consist of:

	Three months ended June 30,				Six months ended June 30,
	2014		2013		2014		2013
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)

General and administrative expenses before amortization of intangible assets, impairment charge on intangible assets and foreign exchange losses (gains)	$	10,241	$	10,818	$	19,267	$	19,590
Amortization of intangible assets		1,510		694		4,971		1,470
Impairment charge on intangible assets		2,238		2,531		2,238		2,531
Foreign exchange losses (gains)		(164)		(679)		1,477		(435)
	$	13,825	$	13,364	$	27,953	$	23,156

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,
	2014		2013		2014		2013

IFRS EPS	$	0.20	$	0.46	$	0.20	$	0.62

IFRS Net Profit	$	6,987	$	16,774	$	7,132	$	22,395

Non-cash stock based compensation expense (Note 1)		563		612		764		953

Amortization of intangibles (Note 2)		151		172		404		426

Impairment of goodwill and intangibles (Note 3)		1,678		2,531		1,678		2,531

Profit on sale of property, net of transaction costs & related tax expenses		-		(8,667)		-		(13,124)

Non-IFRS Net Profit	$	9,379	$	11,422	$	9,978	$	13,181

Non-IFRS diluted net profit per share	$	0.27	$	0.32	$	0.28	$	0.37


Total shares used in non-IFRS diluted net profit per share calculations		35,183,171		36,200,567		35,672,551		36,048,346

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,
	2014		2013		2014		2013

IFRS profit from operations	$	6,203	$	18,794	$	7,061	$	23,823

Depreciation and amortization		2,819		2,179		7,665		4,449

EBITDA		9,022		20,973		14,726		28,272

Non-cash stock based compensation expense		563		612		764		953

Impairment of goodwill and intangibles		2,238		2,531		2,238		2,531

Profit on sale of property, net of transaction costs		-		(10,953)		-		(15,410)

Adjusted EBITDA	$	11,823	$	13,163	$	17,728	$	16,346

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,
	2014			2013

Revenue	$102.0	to	$104.0	$104.8

IFRS EPS	$0.13	to	$0.17	$0.29

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 of goodwill and intangibles	-		-	$0.14

Non-IFRS diluted net income per share	$0.18	to	$0.22	$0.47

Total shares used in non-IFRS diluted net income per share calculations	31,600,000		31,600,000	36,181,032


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/20140814/8521404554-a

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]