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Global Sources reports second half and year-end 2016 financial results

2017-03-16 16:07
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- Posted second half of 2016 revenue of $75.8 million - - Reported second half of 2016 IFRS EPS of $0.38 and Non-IFRS EPS of $0.51 - - Reported full year 2016 revenue of $157.7 million -- Posted full year 2016 IFRS EPS of $0.73 and Non-IFRS EPS of $0.96 -- Provides guidance for first half of 2017, expects revenue to be between $76.0 million and $78.0 million and IFRS EPS to range from $0.12 to $0.16 -NEW YORK, Mar. 16, 2017 /PRNewswire/ -- Global Sources Ltd. (NASDAQ: GSOL) reported financial results for the six-month period July 1, 2016 through Dec. 31, 2016 and year-end 2016.

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Merle A. Hinrich, Global Sources' executive chairman stated: "In the second half of 2016, we had a successful fall series of trade shows in Hong Kong with growth in both booth sales and attendance. With Global Sources Electronics, the world's largest electronics sourcing trade show showcasing consumer and mobile electronics, we are in a strong position to capture the continued growth of mainland China's electronics export industry. Our Startup Launchpad initiative is Asia's largest gathering of consumer electronics startups. Consisting of a conference track and pavilion within each phase of the show, it lets buyers see the latest innovations and be first to market with shelf-ready products. Also, we added a Smart Living website, magazine and trade show pavilion covering smart security, energy management, entertainment, appliances, and gadgets for the fast-growing smart home market. We continue to focus on enhancing value for customers through further integration of our online and trade show services in our core business of connecting buyers worldwide with suppliers in mainland China and Asia."

Financial highlights -- Second half: 2016 compared to 2015

  • Revenue from continuing operations was $75.8 million, as compared to $85.1 million.
    • Exhibitions revenue was $45.0 million, as compared to $45.7 million.
    • Online and other media services revenue was $27.6 million, as compared to $34.5 million.
  • IFRS net profit from continuing operations was $9.5 million, or $0.38 per diluted share, as compared to $15.2 million, or $0.58 per diluted share from continuing operations.
  • Non-IFRS net profit from continuing operations was $12.8 million, or $0.51 per diluted share, as compared to $8.7 million, or $0.33 per diluted share from continuing operations.
  • Adjusted EBITDA from continuing operations was $15.6 million, as compared to $13.1 million from continuing operations for the second half of 2015.
  • Total deferred income and customer prepayments were $81.5 million as at Dec. 31, 2016, as compared to $78.2 million as at Dec. 31, 2015.
  • Cash and cash equivalents at Dec. 31, 2016 was $110.2 million and the company remains debt free.

Global Sources' CFO, Connie Lai, said: "Our 2016 second half revenue reflects the success of our export trade shows in Hong Kong as well as the continued challenges in our online business. We fully impaired the carrying amount of $2.2 million, net of associated taxes, in relation to the China International Fashion Brand Fair - Shenzhen. Also, our bottom line benefitted from our cost control efforts combined with the recognition of deferred tax assets."

Financial highlights -- Full year ended Dec. 31: 2016 compared to 2015

  • Revenue from continuing operations was $157.7 million, as compared to $171.0 million.
  • IFRS net profit from continuing operations was $18.4 million, or $0.73 per diluted share, as compared to $24.0 million, or $0.83 per diluted share from continuing operations.
  • Non-IFRS net profit from continuing operations was $24.2 million, or $0.96 per diluted share, as compared to $19.0 million, or $0.66 per diluted share from continuing operations, for 2015.
  • Adjusted EBITDA from continuing operations was $32.0 million, as compared to $30.8 million from continuing operations for 2015.

Financial expectations for the first half of 2017 under IFRS

  • For the first half of 2017 ending June 30, 2017:
    • Revenue is expected to be in the range of $76.0 million to $78.0 million, as compared to $81.8 million for the first half of 2016.
    • IFRS EPS is expected to be in the range of $0.12 to $0.16, as compared to $0.35 per diluted share in the first half of 2016. 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 2017.
    • Non-IFRS EPS is expected to be in the range of $0.17 to $0.21, as compared to $0.45 per diluted share for the same period in 2016.
    • Adjusted EBITDA is expected to be between $11.1 million and $11.9 million, as compared to $16.3 million in the first half of 2016.

Recent Corporate Highlights

  • Announced plans to partner with Shenzhen Globex e-Services Inc., an integrated e-commerce service provider, to co-develop a fully integrated electronic solution to facilitate more efficient cross-border trade between mainland China-based exporters and overseas buyers.
  • Announced retirement of board member James Watkins effective Jan. 1, 2017.
  • Appointed Craig Pepples as Global Sources' CEO effective Jan. 1, 2017.
  • Received the Gold corporate award for excellence in corporate governance and investor relations in The Asset's December 2016 issue.
  • Held Global Sources series of fall trade shows in October 2016 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 8,500 booths.
    • Total attendance exceeded 79,000 and included buyers from 153 countries and territories.
  • Appointed Fumbi Chima and Michael Scown as new members to Global Sources' Board of Directors effective Sept.12, 2016.

Conference call for Global Sources second half and year-end 2016 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 16, 2017 (8:00 p.m. on March 16, 2017 in Hong Kong) to review these results in more detail. Investors in the United States may participate in the call by dialing (888) 256-1014, and non-Hong Kong international participants may dial (1-913) 312-1296. Investors in Hong Kong may participate by dialing (852) 3008-0382. The conference ID is 3765441 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 23, 2017. To listen to the telephone replay dial (888) 203-1112 or dial (1-719) 457-0820 outside the United States, and enter pass code 3765441. For those in the Hong Kong area, the replay dial-in number is (800) 901-108, and the pass code is 3765441.

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 1.7 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,



2016


2015



(Unaudited)



ASSETS





Current assets





Cash and cash equivalents

$

88,749

$

70,356

Term deposits with banks


9,919


9,097

Financial assets, available-for-sale


11,234


-

Accounts receivables, net


838


849

Receivables from sales representatives


4,962


8,802

Inventories


111


176

Prepaid expenses and other current assets


14,129


16,268



129,942


105,548

Non-current assets





Property and equipment


71,604


59,064

Investment properties


47,955


69,726

Intangible assets


16,907


26,309

Financial assets, available-for-sale


257


-

Long term investment


-


100

Deferred income tax assets


2,669


389

Other non-current assets


2,118


951



141,510


156,539

Total assets

$

271,452

$

262,087






LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities





Accounts payable

$

5,681

$

7,383

Deferred income and customer prepayments


77,450


75,265

Accrued liabilities


14,917


15,183

Income tax liabilities


934


2,990



98,982


100,821

Non-current liabilities





Accounts payable


-


289

Deferred income and customer prepayments


4,040


2,917

Deferred income tax liabilities


2,453


4,493



6,493


7,699

Total liabilities

$

105,475

$

108,520






Equity attributable to Company's shareholders





Common shares


536


533

Treasury shares


(250,089)


(250,089)

Other reserves


153,181


157,562

Retained earnings


258,293


239,812

Total Company shareholders' equity


161,921


147,818

Non-controlling interests


4,056


5,749

Total equity

$

165,977

$

153,567

Total liabilities and equity

$

271,452

$

262,087

GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS

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




Six months ended December 31,


Year ended December 31,



2016


2015


2016


2015



(Unaudited)


(Unaudited)


(Unaudited)



Revenue:









Exhibitions

$

44,968

$

45,683

$

92,381

$

91,854

Online and other media services (Note 1)


27,646


34,512


58,340


70,242

Miscellaneous


3,235


4,914


6,946


8,929



75,849


85,109


157,667


171,025

Operating Expenses:









Sales (Note 2)


21,858


25,538


44,767


50,231

Event production


12,018


12,309


25,084


24,533

Community and content (Note 2)


8,152


10,332


17,163


20,535

General and administrative (Note 2 & 3)


20,685


22,945


43,019


43,697

Information and technology (Note 2)


5,541


6,896


11,315


13,348

Total Operating Expenses


68,254


78,020


141,348


152,344

Profit on sale of property


-


9,791


-


9,791

Profit from Operations


7,595


16,880


16,319


28,472

Interest income


265


226


558


792

Gain on sale of available-for-sale securities


26


52


93


188

Profit on sale of long term investment


-


-


43


-

Interest expenses


(7)


(24)


(23)


(83)

Profit before Income Taxes


7,879


17,134


16,990


29,369

Income tax credit / (expense)


752


(2,421)


1,328


(4,609)

Net Profit from continuing operations

$

8,631

$

14,713

$

18,318

$

24,760

Net Profit from discontinued operations, net of

income tax (Note 4)


-


223


-


5,629

Net profit

$

8,631

$

14,936

$

18,318

$

30,389

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









Continuing operations


913


457


51


(765)

Discontinued operations


-


-


-


264

Total


913


457


51


(501)

Net profit attributable to the Company's shareholders from:









Continuing operations

$

9,544

$

15,170

$

18,369

$

23,995

Discontinued operations


-


223


-


5,893

Total

$

9,544

$

15,393

$

18,369

$

29,888

Diluted net profit per share attributable to the Company's
shareholders from:









Continuing operations

$

0.38

$

0.58

$

0.73

$

0.83

Discontinued operations


-


0.01


-


0.20

Total

$

0.38

$

0.59

$

0.73

$

1.03

Shares used in diluted net profit per share calculations


25,397,702


26,249,657


25,305,261


28,820,976






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




Six months ended December 31,


Year ended December 31,



2016


2015


2016


2015



(Unaudited)


(Unaudited)


(Unaudited)



Online services

$

25,064

$

31,220

$

52,750

$

64,421

Print services


2,582


3,292


5,590


5,821


$

27,646

$

34,512

$

58,340

$

70,242


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:




Six months ended December 31,


Year ended December 31,



2016


2015


2016


2015



(Unaudited)


(Unaudited)


(Unaudited)



Sales

$

206

$

240

$

279

$

418

Community and content


44


47


62


88

General and administrative


624


650


1,360


1,418

Information and technology


85


92


204


225


$

959

$

1,029

$

1,905

$

2,149






Note: 3. General and administrative expenses consist of:




Six months ended December 31,


Year ended December 31,



2016


2015


2016


2015



(Unaudited)


(Unaudited)


(Unaudited)



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

$

15,331

$

18,984

$

33,310

$

37,289

Amortization of intangible assets


1,639


2,207


3,681


4,314

Impairment charge on intangible assets


2,889


-


4,791


-

Foreign exchange losses


826


1,754


1,237


2,094


$

20,685

$

22,945

$

43,019

$

43,697






Note: 4. Net Profit from discontinued operations, net of income tax consist of:




Six months ended December 31,


Year ended December 31,



2016


2015


2016


2015



(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

Loss from discontinued operations, net of income tax


-


-


-


(392)


$

-

$

223

$

-

$

5,629

GLOBAL SOURCES LTD. AND SUBSIDIARIES

ACTUAL IFRS to NON-IFRS RECONCILIATION

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

































Six months ended December 31,



Year ended December 31,





2016



2015



2016



2015















IFRS diluted net profit per share from continuing operations


$

0.38


$

0.58


$

0.73


$

0.83















IFRS Net Profit from continuing operations


$

9,544


$

15,170


$

18,369


$

23,995















Non-cash stock based compensation expense (Note 1)



959



1,029



1,905



2,149















Amortization of intangibles (Note 2)



179



88



363



381















Profit on sale of long term investment



-



-



(43)



-















Impairment of goodwill and intangibles (Note 3)



2,167



-



3,593



-















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



-



(7,550)



-



(7,550)















Non-IFRS Net Profit continuing operations


$

12,849


$

8,737


$

24,187


$

18,975















Non-IFRS diluted net profit per share from continuing operations


$

0.51


$

0.33


$

0.96


$

0.66





























Total shares used in non-IFRS diluted net profit













per share calculations



25,397,702



26,249,657



25,305,261



28,820,976





























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)


















Six months ended December 31,


Year ended December 31,




2016


2015


2016


2015















IFRS profit from continuing operations


$

7,595


$

16,880


$

16,319


$

28,472















Depreciation and amortization from continuing operations



4,179



4,961



8,946



9,999















EBITDA



11,774



21,841



25,265



38,471















Non-cash stock based compensation expense



959



1,029



1,905



2,149















Impairment of goodwill and intangibles



2,889



-



4,791



-















Profit on sale of property, net of transaction costs



-



(9,791)



-



(9,791)















Adjusted EBITDA from continuing operations


$

15,622


$

13,079


$

31,961


$

30,829

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,



2017


2016








Revenue


$76.0

to

$78.0


$81.8








IFRS EPS


$0.12

to

$0.16


$0.35








Non-cash stock based compensation expense (Note 1)


$0.04


$0.04


$0.04








Amortization of intangibles (Note 2)


$0.01


$0.01


$0.00








Impairment of goodwill and intangibles (Note 3)


$0.00


$0.00


$0.06








Non-IFRS diluted net income per share


$0.17

to

$0.21


$0.45








Total shares used in non-IFRS diluted net income







per share calculations


25,600,000


25,600,000


25,358,358















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.







For financial matrix, please visit: http://photos.prnasia.com/prnk/20170316/8521701700

Press Contact

Camellia So

Tel: (852) 2555-5021

e-mail: GSpress@globalsources.com

Investor Contact in Asia

Connie Lai

Tel: (852) 2555-4747

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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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/global-sources-reports-second-half-and-year-end-2016-financial-results-300424697.html

Source: Global Sources

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