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Global Sources reports fourth quarter and year-end 2013 results

March 13, 2014

- Reported fourth quarter revenue of $60.1 million -




NEW YORK, March 13, 2014 /PRNewswire/ — Global Sources Ltd. (NASDAQ: GSOL) reported financial results for the fourth quarter and year-ended Dec. 31, 2013.

http://photos.prnewswire.com/prnvar/20030303/LNM011LOGO-b

Global Sources’ executive chairman, Merle A. Hinrich, said: “Our fourth quarter 2013 operating results were in line with expectations given the business challenges we continue to experience. Our China Sourcing Fairs in Hong Kong performed well. We began to see our online business improve late in the fourth quarter and we are encouraged with its performance so far in 2014.

“We have a valuable market position serving the larger professional buyers and suppliers that account for the majority of trade. With a strong balance sheet, a solid cash position and no debt, we are well-positioned and have a strong foundation on which to build our competitive position.”

Financial highlights – Fourth quarter: 2013 compared to 2012

    --  Revenue was $60.1 million, as compared to $66.9 million.
        --  Online revenue was $21.7 million, as compared to $28.1 million.
        --  Exhibitions revenue was $33.2 million, as compared to $32.7 million.
        --  Print revenue was $3.3 million, as compared to $4.2 million.
    --  IFRS net income was $5.0 million, or $0.14 per diluted share, as
        compared to fourth quarter 2012 IFRS net income of $11.2 million, or
        $0.31 per diluted share. This includes a write-down net of related taxes
        of approximately $5.1 million related to the FashionSZshow.
    --  Non-IFRS net income was $10.9 million, or $0.30 per diluted share, as
        compared to $13.3 million, or $0.37 per diluted share, for the fourth
        quarter of 2012.
    --  Adjusted EBITDA was $13.1 million, as compared to $14.4 million for the
        fourth quarter of 2012.
    --  Total deferred income and customer prepayments were $90.4 million as at
        Dec. 31, 2013, as compared to $93.6 million as at Dec. 31, 2012.

Financial highlights – Full year 2013 ended Dec. 31: 2013 compared to 2012

    --  Revenue was $197.5 million, as compared to $231.7 million.
    --  IFRS net income was $32.7 million, or $0.91 per diluted share, as
        compared to $32.2 million, or $0.90 per diluted share.
    --  Non-IFRS net income was $30.2 million, or $0.84 per diluted share, as
        compared to $37.1 million, or $1.04 per diluted share, for 2012.
    --  Adjusted EBITDA was $40.4 million, as compared to $47.9 million for
        2012.

Global Sources’ CFO, Connie Lai, said: “We expect the revenue mix for the first half of 2014 to range between 44% and 45% for online, 44% and 45% for exhibitions, 5% and 6% for print, and approximately 4% for miscellaneous. This compares to a first half of 2013 revenue mix of approximately 51% for online, 38% for exhibitions, 7% for print, and 4% for miscellaneous.”

Financial expectations for the first half of 2014 under IFRS

“It is important to note our first half of 2014 guidance takes into consideration the purchase of our Singapore office property and the acquisition of an interest in the Shenzhen International Machinery Manufacturing Industry Exhibition and its related shows, known as SIMM,” Lai stated.

    --  For the first half of 2014 ending June 30, 2014:
        --  Revenue is expected to be in the range of $88.0 million to $90.0
            million, representing a decrease of 3% to 5%, as compared to $92.7
            million for the first half of 2013.
        --  IFRS EPS is expected to be in the range of $0.14 to $0.18, as
            compared to $0.62 per diluted share in the first half of 2013. SBC
            and the amortization of intangibles as it relates to certain equity
            compensation plans are estimated to be an expense of $0.04 per
            diluted share for the first half of 2014.
        --  Non-IFRS EPS is expected to be in the range of $0.18 to $0.22, as
            compared to $0.37 per diluted share for the same period in 2013.
        --  Adjusted EBITDA is expected to be between $12.6 million and $13.8
            million, as compared to $16.3 million in the first half of 2013.

Recent Corporate Highlights

    --  Announced intentions to commence an issuer tender offer before the end
        of April 2014, with an expected completion before the end of May 2014,
        for approximately 5 million shares, or approximately 14.4% of its
        outstanding common shares as of Feb. 28, 2014, at a purchase price of
        $10.00 per share in cash.
    --  Purchased one floor of office space property in Singapore for Global
        Sources' continued operational use.
    --  China Sourcing Fairs were held in New Delhi in December 2013.
    --  China Sourcing Fairs were held in Johannesburg in November 2013.
    --  China Sourcing Fairs were held in October 2013 at Hong Kong's
        AsiaWorld-Expo. The series of fall shows had more than 6,800 booths.
        Total attendance exceeded 63,000 and included buyers from more than 150
        countries and territories.
    --  Received the Gold award in the December 2013 issue of The Asset's
        Corporate Awards for excellence in management and corporate governance.
        The company received The Asset's Gold award in 2011 and 2012 and its
        Titanium corporate award in 2009 and 2010.
    --  Private Sourcing Events were held from October 2013 through January 2014
        for more than 100 sourcing teams from very large buying organizations
        including Bossini, Carrefour, Casino, El Corte Ingles, Falabella, Future
        Group, Home Retail Group, Intelbras, Kmart Australia, the METRO GROUP
        and others. These events created more than 500 high-quality, one-on-one
        selling opportunities for Global Sources suppliers.

Conference call for Global Sources fourth quarter 2013 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 13, 2014 (8:00 p.m. on March 13, 2014 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 4666662 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 20, 2014. To listen to the telephone replay dial (800) 406-7325 or dial (1-303) 590-3030 outside the United States, and enter pass code 4666662. For those in the Hong Kong area, the replay dial-in number is (852) 3056-2777, and the pass code is 4666662.

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 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, 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 December 31,           As at December 31,
                                                                                                            ------------------           ------------------

                                                                                                                          2013               2012
                                                                                                                          ----               ----

                                                                                                                (Unaudited)

    ASSETS

    Current assets

    Cash and cash equivalents                                                                                                  $137,359                    $104,631

    Term deposits with banks                                                                                                        106                       4,184

    Financial assets, available-for-sale                                                                                          6,367                       7,472

    Accounts receivables                                                                                                          3,122                       4,242

    Receivables from sales representatives                                                                                       10,630                       7,773

    Inventories                                                                                                                     266                         410

    Prepaid expenses and other current assets                                                                                    18,544                      18,396
                                                                                                                                 ------                      ------

                                                                                                                                176,394                     147,108
                                                                                                                                -------                     -------

    Non-current assets

    Property and equipment                                                                                                       49,701                      30,442

    Investment properties                                                                                                        89,615                      97,377

    Intangible assets                                                                                                            21,423                      33,136

    Long term investment                                                                                                            100                         100

    Deferred income tax assets                                                                                                       98                         244

    Other non-current assets                                                                                                      1,766                       2,762
                                                                                                                                  -----                       -----

                                                                                                                                162,703                     164,061
                                                                                                                                -------                     -------

    Total assets                                                                                                               $339,097                    $311,169
                                                                                                                               --------                    --------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities

    Accounts payable                                                                                                             $8,779                     $12,531

    Deferred income and customer prepayments                                                                                     84,704                      84,540

    Accrued liabilities                                                                                                          19,166                      20,409

    Income tax liabilities                                                                                                        2,635                       1,225
                                                                                                                                  -----                       -----

                                                                                                                                115,284                     118,705
                                                                                                                                -------                     -------

    Non-current liabilities

    Deferred income and customer prepayments                                                                                      5,660                       9,062

    Deferred income tax liabilities                                                                                               4,591                       6,090
                                                                                                                                  -----                       -----

                                                                                                                                 10,251                      15,152
                                                                                                                                 ------                      ------

    Total liabilities                                                                                                           125,535                     133,857
                                                                                                                                -------                     -------

    Equity attributable to Company's shareholders

    Common shares                                                                                                                   525                         521

    Treasury shares                                                                                                            (150,089)                   (150,089)

    Other reserves                                                                                                              161,950                     156,629

    Retained earnings                                                                                                           191,594                     158,859
                                                                                                                                -------                     -------

    Total Company shareholders' equity                                                                                          203,980                     165,920

    Non-controlling interests                                                                                                     9,582                      11,392
                                                                                                                                  -----                      ------

    Total equity                                                                                                               $213,562                    $177,312
                                                                                                                               --------                    --------

    Total liabilities and equity                                                                                               $339,097                    $311,169
                                                                                                                               --------                    --------


                                                                                                                                   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,
                                                                                                                  -------------------------------                                         -----------------------

                                                                                                                                             2013                                            2012                                         2013                       2012
                                                                                                                                             ----                                            ----                                         ----                       ----

                                                                                                                            (Unaudited)                                                   (Unaudited)                                        (Unaudited)

    Revenue:

        Online and other media services (Note 1)                                                                                                                                 $25,036                                         $32,353                   $104,629         $136,101

        Exhibitions                                                                                                                                                               33,237                                          32,716                     85,636           88,782

        Miscellaneous                                                                                                                                                              1,791                                           1,873                      7,257            6,857
                                                                                                                                                                                   -----                                           -----                      -----            -----

                                                                                                                                                                                 $60,064                                         $66,942                   $197,522         $231,740
                                                                                                                                                                                 -------                                         -------                   --------         --------

    Operating Expenses:

        Sales (Note 2)                                                                                                                                                            20,540                                          23,102                     61,958           80,354

        Event production                                                                                                                                                           9,322                                           9,716                     24,403           26,250

        Community and content (Note 2)                                                                                                                                             7,079                                           8,628                     27,481           32,696

        General and administrative (Note 2)                                                                                                                                       16,126                                          12,056                     50,272           44,281

        Information and technology (Note 2)                                                                                                                                        3,090                                           3,223                     12,729           13,188
                                                                                                                                                                                   -----                                           -----                     ------           ------

    Total Operating Expenses                                                                                                                                                     $56,157                                         $56,725                   $176,843         $196,769
                                                                                                                                                                                 -------                                         -------                   --------         --------

        Profit on sale of property                                                                                                                                                     -                                               -                     15,410                -
                                                                                                                                                                                     ---                                             ---                     ------              ---

    Profit from Operations                                                                                                                                                        $3,907                                         $10,217                    $36,089          $34,971
                                                                                                                                                                                  ------                                         -------                    -------          -------

        Interest income                                                                                                                                                              384                                             312                      1,472            1,044

        Gain on sale of available-for-sale securities                                                                                                                                 64                                               -                         64                -

        Share of loss of associate                                                                                                                                                     -                                               -                          -              (24)

        Impairment loss on investment in associate                                                                                                                                     -                                               -                          -             (302)
                                                                                                                                                                                     ---                                             ---                        ---             ----

    Profit before Income Taxes                                                                                                                                                    $4,355                                         $10,529                    $37,625          $35,689

    Income tax expense                                                                                                                                                              (427)                                           (694)                    (4,753)          (2,744)
                                                                                                                                                                                    ----                                            ----                     ------           ------

    Net Profit                                                                                                                                                                    $3,928                                          $9,835                    $32,872          $32,945
                                                                                                                                                                                  ------                                          ------                    -------          -------

    Net profit attributable to non-controlling interests                                                                                                                           1,056                                           1,342                       (137)            (739)
                                                                                                                                                                                   -----                                           -----                       ----             ----

    Net profit attributable to the Company's                                                                                                                                      $4,984                                         $11,177                    $32,735          $32,206

       shareholders

    Diluted net profit per share attributable to the                                                                                                                               $0.14                                           $0.31                      $0.91            $0.90

       Company's shareholders

    Shares used in diluted net profit per share                                                                                                                               36,196,122                                      35,870,511                 36,068,326       35,742,495

       calculations

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

                                                                                                                  Three months ended December 31,                                         Year ended December 31,
                                                                                                                  -------------------------------                                         -----------------------

                                                                                                                                             2013                                            2012                                         2013                       2012
                                                                                                                                             ----                                            ----                                         ----                       ----

                                                                                                                            (Unaudited)                                                   (Unaudited)                                        (Unaudited)

    Online services                                                                                                                                                              $21,712                                         $28,114                    $91,422         $119,011

    Print services                                                                                                                                                                 3,324                                           4,239                     13,207           17,090
                                                                                                                                                                                   -----                                           -----                     ------           ------

                                                                                                                                                                                 $25,036                                         $32,353                   $104,629         $136,101
                                                                                                                                                                                 -------                                         -------                   --------         --------

    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 December 31,                                         Year ended December 31,
                                                                                                                  -------------------------------                                         -----------------------

                                                                                                                                             2013                                            2012                                         2013                       2012
                                                                                                                                             ----                                            ----                                         ----                       ----

                                                                                                                            (Unaudited)                                                   (Unaudited)                                        (Unaudited)

    Sales                                                                                                                                                                           $153                                            $153                       $539             $565

    Community and content                                                                                                                                                             31                                              31                         43               70

    General and administrative                                                                                                                                                       369                                             365                      1,340            1,524

    Information and technology                                                                                                                                                        55                                              53                        248              250
                                                                                                                                                                                     ---                                             ---                        ---              ---

                                                                                                                                                                                    $608                                            $602                     $2,170           $2,409
                                                                                                                                                                                    ----                                            ----                     ------           ------


                                                                                                       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                 Year ended December
                                                                                                                                         December 31,                     31,

                                                                                                                                                    2013                 2012                         2013             2012
                                                                                                                                                    ----                 ----                         ----             ----

    IFRS EPS                                                                                                                                                       $0.14                        $0.31           $0.91            $0.90
                                                                                                                                                                   =====                        =====           =====            =====

    IFRS Net Profit                                                                                                                                               $4,984                      $11,177         $32,735          $32,206

    Non-cash stock based compensation expense (Note 1)                                                                                                               608                          602           2,170            2,409

    Amortization of intangibles (Note 2)                                                                                                                             154                          148             748              751

    Impairment loss on investment in associate                                                                                                                         -                            -               -              302

    Impairment of goodwill and intangibles (Note 3)                                                                                                                5,109                        1,389           7,640            1,389

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

    Non-IFRS Net Profit                                                                                                                                          $10,855                      $13,316         $30,169          $37,057
                                                                                                                                                                 =======                      =======         =======          =======

    Non-IFRS diluted net profit per share                                                                                                                          $0.30                        $0.37           $0.84            $1.04
                                                                                                                                                                   =====                        =====           =====            =====

    Total shares used in non-IFRS diluted net profit                                                                                                          36,196,122                   35,870,511      36,068,326       35,742,495

     per share calculations

    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 December 31,                                 Year ended December 31,

                                                                                    2013                                     2012                        2013          2012
                                                                                    ----                                     ----                        ----          ----

    IFRS profit from operations                                                                                   $3,907                         $10,217      $36,089       $34,971

    Depreciation and amortization                                                                                  2,542                           2,184        9,029         9,112
                                                                                                                   -----                           -----        -----         -----

    EBITDA                                                                                                         6,449                          12,401       45,118        44,083

    Non-cash stock based compensation expense                                                                        608                             602        2,170         2,409

    Impairment of goodwill and intangibles                                                                         5,994                           1,389        8,525         1,389

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

    Adjusted EBITDA                                                                                              $13,051                         $14,392      $40,403       $47,881
                                                                                                                 =======                         =======      =======       =======


                                                                                                       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
    ended
                                                                                                                                                             June 30,
    Six months
    ended June 30,
                                                                                                                                                          ----------------     -------------------------

                                                                                                                                                                       2014                       2013
                                                                                                                                                                       ----                       ----

    Revenue                                                                                                                                                           $88.0 to                   $90.0         $92.7

    IFRS EPS                                                                                                                                                          $0.14 to                   $0.18         $0.62

    Non-cash stock based compensation expense (Note 1)                                                                                                                $0.03                      $0.03         $0.03

    Amortization of intangibles (Note 2)                                                                                                                              $0.01                      $0.01         $0.01

    Impairment of goodwill and intangibles                                                                                                                                -                          -         $0.07

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

    Non-IFRS diluted net income per share                                                                                                                             $0.18 to                   $0.22         $0.37
                                                                                                                                                                      =====                      =====         =====

    Total shares used in non-IFRS diluted net income                                                                                                             36,400,000                 36,400,000    36,048,346

     per share calculations

    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/20140313/8521401421


    Press Contact in Asia               Investor Contact in Asia

    Camellia So                         Connie Lai

    Tel: (852) 2555-5021                Tel: (852) 2555-4747

    e-mail: cso@globalsources.com       e-mail: investor@globalsources.com

    Press Contact in U.S.               Investor Contact in U.S.

    Brendon Ouimette                    Cathy Mattison

    Tel: (1-480) 664-8309               LHA

    e-mail: bouimette@globalsources.com Tel: (1-415) 433-3777

                                        e-mail: cmattison@lhai.com

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SOURCE Global Sources


Source: PR Newswire



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