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Global Sources reports third quarter 2012 results

- Reported revenue of $59.1 million -

NEW YORK, Nov. 15, 2012 /PRNewswire/ -- Global Sources Ltd. (NASDAQ: GSOL) reported financial results for the third quarter ended September 30, 2012.

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

"Our third quarter results reflect the increasing contribution of our exhibitions business and especially several of our shows for the mainland China domestic market," said Global Sources' executive chairman, Merle A. Hinrichs. "SZIC was held in July and is one of the largest fashion shows in Asia. The China International Optoelectronic Expo was held in September and is one of the world's largest optoelectronics shows. Both shows performed very well and represent a substantial broadening of our footprint in the mainland China domestic market.

"With regards to our core international trade-related business, we expect the soft overseas consumer demand to continue impacting our results. However, at our just completed fall series of China Sourcing Fairs in Hong Kong, we were quite satisfied with the overall attendance and level of buying activity." 

Financial highlights -- Third quarter: 2012 compared to 2011

  • Revenue was $59.1 million, as compared to $47.0 million.
    • Online revenue was $30.0 million, as compared to $30.4 million.
    • Exhibitions revenue was $23.3 million, as compared to $9.0 million.
    • Print revenue was $4.1 million, as compared to $6.3 million.
  • IFRS net income was $8.2 million, or $0.23 per diluted share, as compared to third quarter 2011 IFRS net income of $4.0 million, or $0.11 per diluted share.
  • Non-IFRS net income was $9.1 million, or $0.25 per diluted share, as compared to $4.9 million, or $0.14 per diluted share, for the third quarter of 2011. 
  • Adjusted EBITDA was $15.3 million, as compared to $8.4 million for the third quarter of 2011.
  • Total deferred income and customer prepayments were $115.4 million as at September 30, 2012, as compared to $126.7 million as at September 30, 2011.

Financial highlights -- Nine Months Ended September 30: 2012 compared to 2011 -- in accordance with IFRS

  • Revenue was $164.8 million, as compared to $151.1 million.
  • IFRS net income was $21.0 million, or $0.59 per diluted share, as compared to $17.6 million, or $0.50 per diluted share. 
  • Non-IFRS net income was $23.7 million, or $0.66 per diluted share, as compared to $20.1 million, or $0.57 per diluted share, for the nine months ended September 30, 2011. 
  • Adjusted EBITDA was $33.5 million, as compared to $26.8 million for the nine months ended September 30, 2011. 

Global Sources' CFO, Connie Lai, said:  "Third quarter results were substantially enhanced by two new shows -- SZIC and the China Sourcing Fairs in Sao Paulo, Brazil. In addition, the Mumbai show moved from the fourth quarter last year to the third quarter this year. Our balance sheet remains strong. We closed the quarter with a cash and securities position of $110.8 million, as compared to $106.0 million at the end of June 2012, and we continue to have no debt."

"We are increasing our second half 2012 revenue and earnings guidance. For the second half of 2012, we expect the revenue mix to range between 46% and 47% for online, 44% and 45% for exhibitions, 6% and 7% for print, and approximately 3% for miscellaneous. In comparison, the revenue mix for the second half of 2011 was approximately 50% for online, 37% for exhibitions, 11% for print, and 2% for miscellaneous."

Financial expectations for the second half of 2012 under IFRS  

  • For the second half of 2012 ending December 31, 2012:
    • Revenue is expected to be in the range of $124.0 million to $125.0 million, as compared to $121.0 million for the second half of 2011.
    • IFRS EPS is expected to be in the range of $0.45 to $0.47, as compared to $0.45 per diluted share in the second half of 2011. SBC and the amortization of intangibles as it relates to certain equity compensation plans and impairment of goodwill and intangibles are estimated to be an expense of $0.07 per diluted share for the second half of 2012.
    • Non-IFRS EPS is expected to be in the range of $0.52 to $0.54, as compared to $0.52 per diluted share for the same period in 2011. 
    • Adjusted EBITDA is expected to be in the range of $27.1 million to $27.8 million, as compared to $23.5 million in the second half of 2011. 

Recent Corporate Highlights   

  • Renewed contracts with AsiaWorld-Expo Management to host China Sourcing Fairs at Hong Kong's AsiaWorld-Expo for 2015 and 2016. The contracts represent a total value of US$21.4 million.
  • Organized its series of fall shows with more than 7,100 booths in October at Hong Kong's AsiaWorld-Expo. Total attendance exceeded 61,200, and included buyers from 153 countries and territories.
  • The fifth annual China Sourcing Fairs were held in Mumbai, India in September featuring 400 booths. The Fairs are managed by Pico Event Management under license from Global Sources.
  • Held the China International Optoelectronic Expo (CIOE) in September featuring nearly 3,000 exhibitors.
  • The inaugural China Sourcing Fairs in Sao Paulo, Brazil were launched in August. The Fairs were the largest expositions of mainland China-made products in Brazil, featuring 500 booths. Total attendance exceeded 5,400 and included buyers from 23 countries. The Fairs are managed by Milton Exhibits under license from Global Sources.
  • Held the SZIC fashion show in Shenzhen in July featuring more than 3,500 booths. The Fair is one of the largest fashion shows in Asia.
  • Held the second China Sourcing Fairs in Miami in July for buyers in the U.S.A. and Latin America, featuring over 650 booths. Total attendance exceeded 6,000 and included buyers from 60 countries and territories.
  • Private Sourcing Events were held from July through October for more than 110 sourcing teams from very large buying organizations including Amazon.com, Auchan, Future Group, Grainger, Home Depot, IKEA, Intercoop, Liverpool, Meijer, Okaidi, OSRAM, William E. Connor and Woolworths. These events created over 600 high quality, one-on-one selling opportunities for Global Sources suppliers.

Conference call for Global Sources third 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 November 15, 2012 (9:00 p.m. on November 15, 2012 in Hong Kong) to review these results in more detail. Investors in the United States may participate in the call by dialing (877) 941-2068, and non-Hong Kong international participants may dial (1-480) 629-9712. Investors in Hong Kong may participate by dialing (852) 3009-5027. The conference ID is 4570106 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 November 23, 2012. To listen to the telephone replay dial (800) 406-7325 or dial (1-303) 590-3030 outside the United States, and enter pass code 4570106. For those in the Hong Kong area, the replay dial-in number is (852) 3056-2777, and the pass code is 4570106.

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.

Over 1.18 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 over 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, 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 September 30,


As at December 31,



2012


2011



(Unaudited)



ASSETS





Current assets





Cash and cash equivalents


$

100,134


$

81,903

Term deposits with banks



2,988



2,764

Financial assets, available-for-sale



7,651



13,250

Accounts receivables



4,197



4,711

Receivables from sales representatives



11,814



6,523

Inventories



297



230

Prepaid expenses and other current assets



25,573



20,895




152,654



130,276

Non-current assets







Property and equipment



54,064



55,761

Investment properties



74,321



75,370

Intangible assets



34,919



11,946

Long term investment



100



100

Deferred income tax assets



311



325

Other non-current assets



3,363



2,552




167,078



146,054

Total assets


$

319,732


$

276,330








LIABILITIES AND SHAREHOLDERS' EQUITY







Current liabilities







Accounts payable


$

10,801


$

7,698

Deferred income and customer prepayments



103,589



101,841

Accrued liabilities



18,852



17,723

Income tax liabilities



2,559



714




135,801



127,976

Non-current liabilities







Deferred income and customer prepayments



11,819



8,290

Deferred income tax liabilities



6,232



1,510




18,051



9,800

Total liabilities



153,852



137,776








Equity attributable to Company's shareholders







Common shares



520



518

Treasury shares



(150,089)



(150,089)

Other reserves



155,061



152,591

Retained earnings



147,682



126,653

Total Company shareholders' equity



153,174



129,673

Non-controlling interests



12,706



8,881

Total equity


$

165,880


$

138,554

Total liabilities and equity


$

319,732


$

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 September 30,


Nine months ended September 30,



2012


2011


2012


2011



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)

Revenue:









    Online and other media services (Note 1)


$

34,115


$

36,669


$

103,748


$

104,612

    Exhibitions



23,342



9,006



56,066



42,498

    Miscellaneous



1,646



1,305



4,984



3,948



$

59,103


$

46,980


$

164,798


$

151,058

Operating Expenses:













    Sales (Note 2)



18,686



17,249



57,252



55,058

    Event production



6,548



2,616



16,534



13,364

    Community and content (Note 2)



8,172



7,859



24,068



24,648

    General and administrative (Note 2)



10,647



10,315



32,225



28,939

    Information and technology (Note 2)



3,326



3,294



9,965



9,537

Total Operating Expenses


$

47,379


$

41,333


$

140,044


$

131,546

Profit from Operations


$

11,724


$

5,647


$

24,754


$

19,512

    Interest income



300



83



732



199

    Share of loss of associate



-



-



(24)



-

    Impairment loss on investment in associate



-



-



(302)



-

Profit before Income Taxes


$

12,024


$

5,730


$

25,160


$

19,711

Income tax expense



(1,514)



(633)



(2,050)



(1,157)

Net Profit


$

10,510


$

5,097


$

23,110


$

18,554

Net profit attributable to non-controlling interests



(2,305)



(1,134)



(2,081)



(967)

Net profit attributable to the Company's 
  shareholders


$

8,205


 

$

3,963


 

$

21,029


 

$

17,587

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


$

0.23


 

$

0.11


 

$

0.59


 

$

0.50

Shares used in diluted net profit per share
   calculations



35,862,759



35,482,592



35,718,965



35,387,418











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





















Three months ended September 30,


Nine months ended September 30,



2012


2011


2012


2011



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)

Online services


$

29,975


$

30,378


$

90,897


$

87,480

Print services



4,140



6,291



12,851



17,132



$

34,115


$

36,669


$

103,748


$

104,612











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 September 30,


Nine months ended September 30,



2012


2011


2012


2011



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)

 Sales


$

175


$

186


$

412


$

530

 Community and content



23



56



39



173

 General and administrative



424



434



1,159



1,053

 Information and technology



61



64



197



207



$

683


$

740


$

1,807


$

1,963










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 September 30,


Nine months ended September 30,



2012


2011


2012


2011










IFRS EPS


$

0.23


$

0.11


$

0.59


$

0.50










IFRS Net Profit


$

8,205


$

3,963


$

21,029


$

17,587










Non-cash stock based compensation expense (Note 1)


683


740


1,807


1,963










Amortization of intangibles (Note 2)


221


191


604


572










Impairment loss on investment in associate                          


-


-


302


-










Non-IFRS Net Profit


$

9,109


$

4,894


$

23,742


$

20,122










Non-IFRS diluted net profit per share         


$

0.25


$

0.14


$

0.66


$

0.57



















Total shares used in non-IFRS diluted net profit           
 per share calculations                                        


35,862,759


35,482,592


35,718,965


35,387,418










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 September 30,


Nine months ended September 30,




2012


2011


2012


2011











IFRS profit from operations


$

11,724


$

5,647


$

24,754


$

19,512











Depreciation and amortization                                     


2,875


1,984


6,928


5,321











EBITDA


14,599


7,631


31,682


24,833











Non-cash stock based compensation expense


683


740


1,807


1,963











Adjusted EBITDA


$

15,282


$

8,371


$

33,489


$

26,796





















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,



2012


2011








Revenue


$124.0

to

$125.0


$121.0








IFRS EPS                                                                              


$0.45

to

$0.47


$0.45








Non-cash stock based compensation expense (Note 1) 


$0.04


$0.04


$0.04








Amortization of intangibles (Note 2)


$0.01


$0.01


$0.01








Impairment of goodwill and intangibles 


$0.02


$0.02


$0.02








Non-IFRS diluted net income per share                      


$0.52

to

$0.54


$0.52








Total shares used in non-IFRS diluted net income
 per share calculations


35,875,000


35,875,000


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.

For Financial Matrix, please visit: http://www.prnasia.com/sa/attachment/2012/11/20121115112827746547.pdf

Press Contact in Asia

Investor Contact in Asia

Camellia So 

Suzanne Wang

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]

SOURCE Global Sources

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