UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or 15d-16
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the nine months ended September 30,
2014
| Commission File Number |
000-30678 |
|
| GLOBAL
SOURCES LTD. |
| (Translation of Registrant's Name into English) |
| Canon’s Court |
| 22 Victoria Street |
| Hamilton, HM 12, Bermuda |
| (Address of Principal Executive Office) |
Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Note: Regulation S-T Rule 101(b)(1) only permits the
submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Note: Regulation S-T Rule 101(b)(7) only permits the
submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer
must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized
(the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities
are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed
to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission
or other Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing
the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934.
Yes ¨ No x
If "Yes" is marked, indicate below the file number
assigned to the registrant in connection with Rule 12g3-2(b): 82- ________
| Exhibit 1 | Year 2014 / 3rd Quarter Results of Operations
of GLOBAL SOURCES LTD. |
| Exhibit 2 | Unaudited Selected Consolidated Financial Information
of GLOBAL SOURCES LTD. at September 30, 2014. |
Signatures
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| |
GLOBAL SOURCES LTD. |
| |
(Registrant) |
| |
|
| |
|
| |
By: |
/s/ Connie Lai |
| |
|
Name: Connie Lai |
| |
|
Title: Chief Financial Officer |
Date: November 14, 2014
EXHIBIT 1
YEAR 2014 / 3rd
QUARTER
RESULTS OF OPERATIONS
OF GLOBAL SOURCES LTD.
The following
discussion of our financial condition and results of operations should be read in conjunction with the accompanying financial statements.
Overview
We are a
leading business-to-business (B2B) media company and a primary facilitator of two-way trade with Greater China. The core business
is facilitating trade from Greater China to the world, using a wide range of English-language media. The other key business segment
facilitates trade from the world to Greater China using Chinese-language media. We provide sourcing information to volume buyers
and integrated marketing services to suppliers. Our mission is to facilitate global trade between buyers and suppliers by providing
the right information, at the right time, in the right format. Although our range of media has grown, for more than 40 years we
have been in the same primary business of helping buyers worldwide find products and suppliers in Asia.
Our key
business objective is to be the preferred provider of content, services and integrated marketing solutions that enable our customers
to achieve a competitive advantage.
We believe
we offer the most extensive range of media and export marketing services in the industries we serve through our three primary channels
– online marketplaces, magazines and trade shows.
We were
originally incorporated under the laws of Hong Kong in 1970. In 1971, we launched Asian Sources, a trade magazine to serve
global buyers importing products in volume from Asia. Realizing the importance of the Internet, we became one of the first providers
of business-to-business online services by launching Asian Sources Online in 1995. In 1999, we changed the name of Asian
Sources Online to Global Sources Online.
In April
2000, we completed a share exchange with a publicly-traded company based in Bermuda, and our shareholders became the majority shareholders
of the Bermuda corporation. As a result of the share exchange, we became incorporated under the laws of Bermuda and changed our
name to Global Sources Ltd.
Business Strategy
Our primary target market is comprised
of professional small, medium and large-sized buyers and suppliers. Moreover, our focus is on verified suppliers and verified buyers.
Our business strategy is to serve our markets with online, print and trade show media that address our customers’ needs at
all stages of the buying process.
The Global Sources strategy is built around
the following four key foundations: to strengthen our position in the core, export-focused business; new product and market development;
expansion in China’s domestic B2B market; and acquisitions, joint ventures, and alliances.
| · | Strengthen position in core, export focused business. Our objective
is to leverage the combined strengths of GlobalSources.com and the China Sourcing Fairs. |
| · | New product and market development. Our plans include the launch
of new verticals and entries into new geographies. |
| · | Expansion in China’s domestic B2B market. We have more than
a dozen individual media properties serving this market and plans include further development of these businesses and expansion
into new verticals. |
| · | Acquisitions, joint ventures and/or alliances. We are focused on
complementary businesses, technologies and products that will help us maintain or achieve market leading positions in particular
niche markets. |
Revenue
We derive
revenue from two principal sources:
Online and
other media services; and Exhibitions, trade shows and seminars.
Online and
other media services consists of following two primary revenue streams:
Online
Services — Our primary service is creating and hosting marketing websites that present suppliers’ product and company
information in a consistent and easily searchable manner on Global Sources Online. We also offer banner advertising and
publish digital magazines.
Other Media Services
— We publish trade magazines, which consist primarily of product advertisements from suppliers and our independent editorial
reports and product surveys. Suppliers pay for advertising in our trade magazines to promote their products and companies. We also
derive revenue from buyers that subscribe to our trade publications.
We recognize revenue
from our Online and Other Media Services ratably over the period in which the advertisement is displayed.
Exhibitions –
trade shows and seminars — Our China Sourcing Fairs offer international buyers direct access to manufacturers in China
and elsewhere in Asia. The first China Sourcing Fair was held in the fourth quarter of 2003. Subsequently, we launched China Sourcing
Fairs events in Hong Kong, Dubai, Mumbai, India, Johannesburg, South Africa, Miami, USA, Sao Paulo, Brazil and held many China
Sourcing Fairs events since 2004. In August 2014, we launched China Sourcing Fairs events in Jakarta, Indonesia. We host domestic
trade shows in China under our Global Sourcing Fairs brand. We also host our International IC China Conferences and Exhibitions
in Shenzhen, China each year and host the China International Optoelectronic Expo as well as FashionSZshow in Shenzhen, China in
the third quarter of each year. In March 2014, we held our new Shenzhen International Machinery Manufacturing Industry Exhibition
and its related shows (“SIMM machinery shows”) in Shenzhen, China. We moved our International IC China Conferences
and Exhibitions in Shenzhen, China to third quarter of 2014 from first quarter last year and we did not host China Sourcing Fairs
events in Dubai in 2014. We are planning to launch an Electronics trade show in Shanghai, China in March 2015.
We derive revenue primarily
from rental of exhibit space, and also from advertising and sponsorship fees in show guides and other locations in and around our
event venues. We recognize exhibitor services revenue at the completion of the related events. Our major China Sourcing Fairs in
Hong Kong are scheduled to be held in the second quarter and fourth quarter of each financial year. As a result, second and fourth
quarter revenues are expected to be higher than the first and third quarter revenue.
Consolidated Results
| | |
Three months ended September 30, | | |
Nine months ended September 30, | |
| | |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| Revenue: | |
| | | |
| | | |
| | | |
| | |
| Online and other media services (Note 1) | |
$ | 23,081 | | |
$ | 25,417 | | |
$ | 70,787 | | |
$ | 79,593 | |
| Exhibitions | |
| 17,562 | | |
| 17,624 | | |
| 58,834 | | |
| 52,399 | |
| Miscellaneous | |
| 1,895 | | |
| 1,726 | | |
| 5,724 | | |
| 5,466 | |
| | |
| 42,538 | | |
| 44,767 | | |
| 135,345 | | |
| 137,458 | |
| Operating Expenses: | |
| | | |
| | | |
| | | |
| | |
| Sales | |
| 11,766 | | |
| 11,153 | | |
| 40,056 | | |
| 41,418 | |
| Event production | |
| 4,533 | | |
| 4,431 | | |
| 15,352 | | |
| 15,081 | |
| Community and content | |
| 6,645 | | |
| 6,670 | | |
| 19,043 | | |
| 20,402 | |
| General and administrative (Note 2) | |
| 12,303 | | |
| 10,990 | | |
| 40,256 | | |
| 34,146 | |
| Information and technology | |
| 3,226 | | |
| 3,164 | | |
| 9,512 | | |
| 9,639 | |
| Total Operating Expenses | |
| 38,473 | | |
| 36,408 | | |
| 124,219 | | |
| 120,686 | |
| Profit on sale of property | |
| - | | |
| - | | |
| - | | |
| 15,410 | |
| Profit from Operations | |
| 4,065 | | |
| 8,359 | | |
| 11,126 | | |
| 32,182 | |
Net profit attributable to the Company’s
shareholders | |
$ | 1,917 | | |
$ | 5,356 | | |
$ | 9,049 | | |
$ | 27,751 | |
Diluted net profit per share attributable to
the Company’s shareholders | |
$ | 0.06 | | |
$ | 0.15 | | |
$ | 0.26 | | |
$ | 0.77 | |
Shares used in diluted net profit per share
calculations | |
| 31,487,766 | | |
| 36,186,254 | | |
| 34,166,224 | | |
| 36,045,545 | |
Note:
1. Online and other media services consists of:
| | |
Three months ended September 30, | | |
Nine months ended September 30, | |
| | |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| Online services | |
$ | 20,252 | | |
$ | 22,046 | | |
$ | 62,348 | | |
$ | 69,710 | |
| Print services | |
| 2,829 | | |
| 3,371 | | |
| 8,439 | | |
| 9,883 | |
| | |
$ | 23,081 | | |
$ | 25,417 | | |
$ | 70,787 | | |
$ | 79,593 | |
Note: 2. General and administrative expenses
consist of:
| | |
Three months ended September 30, | | |
Nine months ended September 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) | |
$ | 11,083 | | |
$ | 10,556 | | |
$ | 30,350 | | |
$ | 30,146 | |
| Amortization of intangible assets | |
| 1,376 | | |
| 627 | | |
| 6,347 | | |
| 2,097 | |
| Impairment charge on intangible assets | |
| - | | |
| - | | |
| 2,238 | | |
| 2,531 | |
| Foreign exchange losses (gains) | |
| (156 | ) | |
| (193 | ) | |
| 1,321 | | |
| (628 | ) |
| | |
$ | 12,303 | | |
$ | 10,990 | | |
$ | 40,256 | | |
$ | 34,146 | |
The following table represents our revenue by geographical areas:
| | |
Three months ended September 30, | | |
Nine months ended September 30, | |
| | |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| China | |
$ | 36,346 | | |
$ | 38,510 | | |
$ | 113,706 | | |
$ | 113,790 | |
| Rest of Asia | |
| 4,884 | | |
| 5,129 | | |
| 18,042 | | |
| 20,309 | |
| United States | |
| 1,160 | | |
| 1,051 | | |
| 3,285 | | |
| 3,013 | |
| Europe | |
| 134 | | |
| 63 | | |
| 264 | | |
| 241 | |
| Others | |
| 14 | | |
| 14 | | |
| 48 | | |
| 105 | |
| Total revenue | |
$ | 42,538 | | |
$ | 44,767 | | |
$ | 135,345 | | |
$ | 137,458 | |
Revenue
Our total revenue declined
by 5% to $42.5 million during the three months ended September 30, 2014 from $44.8 million during the three months ended September
30, 2013. The decline resulted mainly from a 9% decline in our online and other media services revenue. China accounted for 85%
of total revenue during the three months ended September 30, 2014 compared to 86% during the three months ended September 30, 2013.
Our Online and Other
Media Services revenue declined by 9% from $25.4 million during the three months ended September 30, 2013 to $23.1 million during
the three months ended September 30, 2014, resulting mainly from a 9% decline in our Online and Other Media Services revenue in
our China market. Our China market represented 79% of Online and Other Media Services revenue during
the third quarter of 2014 compared to 78% during the third quarter of 2013. The decline in our Online and Other Media Services
revenue resulted from a reduction of 8% in our revenue relating to hosting online websites for our customers and a 16% decline
in our revenue relating to our print advertising services. A continued weak growth in China export market resulting from the global
economic downturn coupled with various types of products and services launched by our competitors contributed to a reduced revenue
yield from our customers, which impacted our third quarter online services revenue negatively and in addition, magazine advertising
continues to be under pressure from the global shift by advertisers to alternative forms of advertising.
Our Exhibitions revenue
remained unchanged at $17.6 million during the three months ended September 30, 2014 compared to our Exhibitions revenue during
the three months ended September 30, 2013, resulting mainly from the new China Sourcing Fairs events in Jakarta, Indonesia that
we launched in the third quarter of 2014 and the rescheduling of our International IC China Conferences and Exhibitions in Shenzhen,
China to third quarter of 2014 from first quarter of 2013, off-set by a decline in revenue from our China Sourcing Fairs events
in Sao Paolo, Brazil due to a decline in number of booths sold. We reached an agreement with China tax authorities for VAT exemption
for our exhibition events held outside of China and received a VAT refund of $1.3 million in the third quarter of 2014.
Total revenue declined
by 2% to $135.3 million during the nine months ended September 30, 2014 from $137.5 million during the nine months ended September
30, 2013 resulting mainly from a 11% decline in our Online and Other Media Services revenue and a decline in booth sales in our
China Sourcing Fairs events in Sao Paulo, Brazil off-set partially by our new SIMM machinery shows that we held in March 2014.
Our Online and Other
Media Services revenue declined by 11% to $70.8 million for the nine months ended September 30, 2014, as compared with $79.6 million
for the nine months ended September 30, 2013, primarily due to a 11% decline in our China market. The decline in our Online and
Other Media Services revenue resulted from a 11% decline in our revenue from hosting online websites for our customers and a 15%
decline in our print advertising services revenue. A continued weak growth in China export market resulting from the global economic
downturn coupled with various types of products and services launched by our competitors contributed to a reduced revenue yield
from our customers, which impacted our online services revenue negatively and in addition, magazine advertising continues to be
under pressure from the global shift by advertisers to alternative forms of advertising. China
represented 79% of Online and Other Media Services revenue for the nine months ended September 30, 2014 and for the nine months
ended September 30, 2013.
Our Exhibitions revenue
grew by 12% from $52.4 million for the nine months ended September 30, 2013 to $58.8 million for the nine months ended September
30, 2014, mainly due to our new SIMM machinery shows that we held in March 2014 and growth in revenue from our China Sourcing Fairs
events in Hong Kong in the second quarter of 2014 and the new China Sourcing Fairs events in Jakarta, Indonesia that we launched
in the third quarter of 2014, off-set partially by the cancellation of our China Sourcing Fairs events in Dubai in 2014, which
we held in the second quarter of 2013 and a decline in booth sales in our China Sourcing Fairs events in Sao Paulo, Brazil. We
reached an agreement with China tax authorities for VAT exemption for our exhibition events held outside of China and received
a VAT refund of $1.3 million in the third quarter of 2014.
Operating expenses
Sales. We utilize
independent sales representatives employed by independent sales representative organizations in various countries and territories
to promote our products and services. Under these arrangements, the sales representative organizations are entitled to commissions
as well as marketing fees. These representative organizations sell online services, advertisements in our trade magazines and exhibitor
services and earn commission as a percentage of revenue generated. The commission expenses are expensed as incurred. For online
and other media services, the commission expense is incurred when the associated revenue is recognized or when the associated accounts
receivable are paid, whichever is earlier. For exhibitions, the commission expense is incurred when the associated revenue is recognized
upon conclusion of the event. Sales costs consist of operating costs for our sales departments and the commissions, marketing fees
and incentives provided to our independent sales representative organizations, as well as sales support fees for processing sales
contracts.
Sales costs increased
by 5% from $11.2 million during the three months ended September 30, 2013 to $11.8 million during the three months ended September
30, 2014. This was mainly due to an increase in marketing fees for the sales promotion activities carried out off-set partially
by a decline in sales commissions due to a decline in revenue during the same period.
Sales costs declined
by 3% from $41.4 million during the nine months ended September 30, 2013 to $40.1 million during the nine months ended September
30, 2014. The decline in sales costs was mainly due to the decline in sales commissions relating to our online and other media
services business due to a 11% decline in revenue off-set partially by an increase in marketing fees for the sales promotion activities
carried out. As our new SIMM machinery shows held in the first quarter of 2014 are China domestic tradeshows, their sales costs
are lower compared to the sales costs relating to our online and other media services business and our exhibitions held outside
China.
Event Production.
Event production costs consist of the costs incurred for hosting the exhibition or trade show and seminar events. The event
production costs include venue rental charges, booth construction costs, travel costs incurred for the event hosting and other
event organizing costs. The event production costs are deferred and recognized as an expense when the related event occurs.
Event production costs
increased marginally from $4.4 million for the three months ended September 30, 2013 to $4.5 million for the three months ended
September 30, 2014. The increase resulted mainly from the event costs for our new China Sourcing Fairs events in Jakarta, Indonesia
that we launched in the third quarter of 2014 and the rescheduled International IC China Conferences and Exhibitions in Shenzhen,
China that we held in the third quarter of 2014, off-set by a decline in event organizing costs for our China Sourcing Fairs events
in Sao Paolo, Brazil due to a decline in number of booths sold.
Event production costs
increased from $15.1 million for the nine months ended September 30, 2013 to $15.4 million for the nine months ended September
30, 2014. The increase was mainly due to increase in event production costs for our new SIMM machinery shows that we held in March
2014 and for our new China Sourcing Fairs events in Jakarta, Indonesia that we held in the third quarter of 2014. The increase
in event production costs was off-set partially by a decline in such costs due to the cancellation of our China Sourcing Fairs
events in Dubai in 2014, which we held in the second quarter of 2013 and a decline in event organizing costs for our China Sourcing
Fairs events in Sao Paolo, Brazil due to a decline in number of booths sold.
Community and Content.
Community and content costs consist of the costs incurred for servicing our buyer community, for marketing our products and
services to the global buyer community and our content management services costs for our print publications business and online
services business. Community and content costs also include costs relating to our trade magazine publishing business and marketing
inserts business, specifically printing, paper, bulk circulation and magazine subscription promotions, promotions for our on-line
services, customer services costs and the event specific promotions costs incurred for promoting the China Sourcing Fairs events
and the technical conferences, exhibitions and seminars to the buyer community. The event specific promotion costs incurred for
events are expensed as incurred.
Community and content
costs declined by 1% from $6.7 million during the three months ended September 30, 2013 to $6.6 million during the three months
ended September 30, 2014 due mainly to a reduction in our bulk circulation costs, and paper consumption for our publications business.
We also reduced our content management services costs.
Community and content
costs decreased by 7% from $20.4 million during the nine months ended September 30, 2013 to $19.0 million during the nine months
ended September 30, 2014 due mainly to the decline in bulk circulation costs, printing charges and paper consumption. We also reduced
our content management services costs.
General and Administrative.
General and administrative costs consist mainly of corporate staff compensation, marketing costs, office rental, depreciation,
communications and travel costs, foreign exchange gains/losses arising from the revaluation of monetary assets and monetary liabilities,
amortization of software and intangible assets as well as the impairment charge of intangible assets that may arise.
We have issued share
awards under an equity compensation plans (“ECP”), the Global Sources Retention Share Grant Plan and the Global Sources
Retention Share Grant Plan II (amended effective as of May 1, 2012) to former employees, consultants and employees of third party
service providers when they resign or retire from their respective employment or consultancy service. Under these plans, the share
grants vest over a five-year period on a graded vesting basis, with 20% of shares vesting each year. The grantee is subject to
the non-competition terms stipulated in the plan. There is no vesting condition other than the non-competition terms. Under the
above plans, if the grantee fails to comply with the non-competition terms, his or her unvested shares may be forfeited. We recognize
the intangible asset relating to the non-competition provisions of these awards at the fair value of the respective award. The
intangible assets are amortized over the non-competition period on a straight line basis. The amortization expense relating to
these intangible assets is included in the general and administrative costs.
In December 2009, our
subsidiary, eMedia Asia Limited, acquired a 70% interest in China International Optoelectronic Expo exhibition business. We recorded
the acquired intangible assets at fair value of $5.8 million and goodwill of $2.5 million in connection with this acquisition.
The amortization expense relating to these acquired intangible assets is included in the general and administrative costs.
On April 2, 2011, our
subsidiary, eMedia Asia Limited acquired a 100% interest in EDN China and EDN Asia publications business and recorded the acquired
intangible assets at fair value of $1.6 million and goodwill of $2.0 million in connection with this acquisition. The amortization
expense relating to these acquired intangible assets is included in the general and administrative costs.
On March 9, 2012, we
acquired an 80% interest in FashionSZshow (formerly known as China (Shenzhen) International Brand Clothing & Accessories Fair)
in mainland China. We recorded the acquired intangible assets at a fair value of $20.4 million, goodwill of $5.0 million and related
deferred tax liabilities of $5.1 million in connection with this acquisition. The amortization expense relating to these acquired
intangible assets is included in the general and administrative costs.
On October 1, 2013,
in view of the downward trend in fashion industry sector in China, management reviewed the useful lives of the trademarks intangible
assets of the FashionSZshow business and revised the useful lives of the trademark intangible assets to seven years from the original
seventeen years. The effect of this change in the accounting estimate was recognized prospectively from October 1, 2013. Amortization
expense for the three months ended September 30, 2014 is higher by $0.2 million compared to the amortization expense for the three
months ended September 30, 2013 due to this change in accounting estimate.
Due to continuing decline
in the economic climate in China especially in the high fashion industry sector and other factors, management noted a decline in
booth sales for the 2014 event compared to the earlier projections. Accordingly, management performed an impairment review in the
second quarter of 2014 which revealed a shortfall in the future cash flows to support the recoverability of the carrying value
of the FashionSZshow business. These calculations use cash flow projections by management covering a five-year period. Cash flows
beyond the five-year period are extrapolated using estimated growth rates. Based on the review, management determined that there
was impairment to the intangible assets and recorded a further impairment charge of $2.2 million on trademark intangible assets
in the general and administrative costs in the second quarter of 2014. The net book values of the intangible assets and goodwill
relating to the FashionSZshow business as at September 30, 2014 were $9.5 million and $nil respectively.
We entered into an
agreement in April 2013 to acquire a majority interest in the SIMM machinery shows business and paid an initial deposit of $2.1
million in the third quarter of 2013. The completion date of this transaction was January 1, 2014 and the results of the SIMM machinery
shows business have been consolidated into our financial statements with effect from January 1, 2014. The amortization expense
relating to the acquired intangible assets is included in the general and administrative costs. This transaction is discussed in
detail under liquidity and capital resources section of this document.
General and administrative
costs increased by 12% from $11.0 million during the three months ended September 30, 2013 to $12.3 million during the three months
ended September 30, 2014, due mainly to the increases in amortization of intangible assets relating to our acquired FashionSZshow
business and the SIMM machinery shows business discussed above, increase in marketing costs as well as administrative costs relating
to SIMM machinery shows business. These increases were partially off-set by a decline in marketing costs.
General and administrative
costs increased by 18% from $34.1 million during the nine months ended September 30, 2013 to $40.3 million during the nine months
ended September 30, 2014, due mainly to increase in amortization of intangible assets relating to our acquired FashionSZshow business
and SIMM machinery shows business, and foreign exchange losses recorded by us on the revaluation of the foreign currency denominated
monetary assets and liabilities into our reporting currency, the U.S. Dollar, due to the devaluation of the Renminbi during the
first half of 2014 and administrative costs relating to SIMM machinery shows business, off-set partially by reductions in marketing
costs.
Information and
Technology. Information and technology costs consist mainly of payroll, office rental and depreciation costs and fees paid
to third parties relating to our information and technology support services and the updating and maintenance of Global Sources
Online. Information and technology costs remained at $3.2 million for the three months ended September 30, 2013 and for the
three months ended September 30, 2014.
Information and technology
costs declined by 1% from $9.6 million during the nine months ended September 30, 2013 to $9.5 million during the nine months ended
September 30, 2014 due mainly to reductions in depreciation costs.
Non-Cash Compensation
Expense. We have issued share awards under several equity compensation plans (“ECP”) to both employees and non-employees.
The Company’s share awards to non-employees are share grants to consultants and to employees of third party service providers.
We also recognize non-cash compensation expenses relating to the share awards granted to our directors under The Global Sources
Directors Share Grant Award Plan.
The
share grants to employees and non-employees vest over a six-year period on a graded vesting basis, with a percentage of shares
vesting each year. The share grants have a service condition that the awardees who received the share grants must continue to provide
the services during the vesting period. The awardees will receive the shares on the respective vesting dates if they continue to
render services to the Company. If an awardee ceases to provide services, any shares that
have not vested are forfeited.
Persons eligible to
receive grants under the Global Sources Directors Share Grant Award Plan are the directors of the Company. Share grants to directors
will be vested at the end of four years or in accordance with such other vesting schedule as may be determined by the Plan Committee.
The Company accelerates
the vesting of share grants in the event of death of an awardee or if the Company is in liquidation or in certain cases, if there
is a takeover or a change of control of the Company.
The total non-cash
compensation expenses, resulting from ECP and The Global Sources Directors Share Grant Award Plan recorded by us and included under
the respective categories of expenses during both the three months ended September 30, 2014 and the three months ended September
30, 2013 were $0.6 million. The non-cash compensation expenses for the nine months ended September 30, 2014 and the nine months
ended September 30, 2013 were $1.3 million and $1.6 million, respectively.
The corresponding amounts
for the non-cash compensation expenses were credited to shareholders’ equity.
Profit from Sale
of Property. In the first quarter of 2013 we sold 9,431 square feet of office space on the 26th floor of Southmark building
in Hong Kong, China, and three car parking spaces, for a total cash consideration of approximately $9.0 million and recorded a
profit on sale of property of $4.5 million resulting from this transaction. In the second quarter of 2013, we sold 1,939.38 square
meters of office space on the 46th floor of a building in Shenzhen, China known as Excellence Times Square, for a total cash consideration
of approximately $19.6 million and recorded a profit on sale of property of approximately $11.0 million and related taxes of $2.3
million resulting from this transaction. There were no such property sale transactions during the three months and nine months
ended September 30, 2014.
Profit from Operations.
The total profit from operations during the three months ended September 30, 2014 was $4.1 million as compared to $8.4 million
during the three months ended September 30, 2013. Total profit from operations declined mainly due to decline in revenue and increases
in sales costs, event production costs and general and administrative costs, off-set partially by a decline in community and content
costs.
The total profit from
operations during the nine months ended September 30, 2014 was $11.1 million as compared to $32.2 million during the nine months
ended September 30, 2013. The decline in total profit from operations resulted mainly as there is no profit on sale of property
during the nine months ended September 30, 2014 and due to decline in revenue, increases in event production costs and general
and administrative costs, off-set partially by declines in sales costs, community and content costs and information and technology
costs.
Interest Income
and gain on sale of available-for-sale securities. We recorded interest income of $0.3 million arising mainly from U.S. Treasury
securities and term deposits placed with banks during the three months ended September 30, 2014 compared to an interest income
of $0.5 million during the three months ended September 30, 2013. The reduction was mainly due to reduction in our term deposits
placed with banks in 2014 as we paid $50.0 million for our tender offer and $10.8 million for the second instalment of the purchase
consideration for the SIMM machinery shows business acquisition during the second quarter of 2014.
We recorded interest
income of $1.0 million arising mainly from U.S. Treasury securities and term deposits placed with banks during the nine months
ended September 30, 2014 compared to an interest income of $1.1 million during the nine months ended September 30, 2013. The decline
in interest income was mainly due to the reduction in our term deposits placed with banks in 2014 as we paid $50.0 million for
our tender offer and $10.8 million for the second instalment of the purchase consideration for the SIMM machinery shows business
acquisition during the second quarter of 2014, off-set partially by the higher yield on the term deposits with the banks for the
nine months ended September 30, 2014. We also recorded $0.01 million gain on sale of available-for-sale securities for the nine
months ended September 30, 2014.
Interest expenses.
Interest expense represents the unwinding of the discount on the contingent consideration payable for the acquisition of the SIMM
machinery shows business.
Income Taxes. Certain
subsidiaries of the group operate in the Cayman Islands and other jurisdictions where there are no taxes imposed on companies.
Some of our subsidiaries operate in Hong Kong SAR, Singapore, China and certain other jurisdictions and are subject to income taxes
in their respective jurisdictions.
We reported a tax provision
of $1.1 million during the three months ended September 30, 2014 and of $1.7 million during the three months ended September 30,
2013. The decline was mainly due to the recognition of deferred tax assets relating to our subsidiary.
We reported a tax provision
of $1.8 million for the nine months ended September 30, 2014 and of $4.3 million for the nine months ended September 30, 2013.
The decline is mainly due to the $2.3 million tax expenses relating to the sale of property in Shenzhen, China recorded in the
first half of 2013 and recognition of deferred tax assets and realization of deferred tax liabilities relating to our subsidiaries,
off-set partially by tax provision on the profits for the SIMM machinery shows business recorded during the first half of 2014.
Net
Profit Attributable to the Company. Net profit attributable to the Company declined from $5.4 million during the three months
ended September 30, 2013 to $1.9 million during the three months ended September 30, 2014. The decline in net profit
attributable to the Company resulted mainly from decline in revenue, reduction in interest income and increases in sales costs,
event production costs and general and administrative costs, off-set partially by reductions in community and content costs and
income tax expense.
Net
profit attributable to the Company declined from $27.8 million during the nine months ended September 30, 2013 to $9.0 million
during the nine months ended September 30, 2014. The decline in net profit attributable to
the Company resulted mainly from reduction in profit on sale of property, decline in revenue, increases in event production costs
and general and administrative costs off-set partially by declines in sales costs, community and content costs, information and
technology costs and income tax expense.
Diluted Net Profit
per Share. The diluted net profit per share attributable to the Company’s shareholders declined from $0.15 for the three
months ended September 30, 2013 to $0.06 for the three months ended September 30, 2014. The number of shares used for the computation
of net profit per share declined from 36.2 million to 31.5 million resulting from the share repurchase discussed in the liquidity
and capital section of this document.
The diluted net profit
per share attributable to the Company’s shareholders declined from $0.77 for the nine months ended September 30, 2013 to
$0.26 for the nine months ended September 30, 2014. The number of shares used for the computation of net profit per share declined
from 36.0 million to 34.2 million resulting from the share repurchase discussed in the liquidity and capital section of this document.
Liquidity and Capital Resources
We financed our activities
for the nine months period ended September 30, 2014 using cash generated from our operations and we had no bank debt as at September
30, 2014.
Net cash generated
from operating activities was $27.3 million for the nine months ended September 30, 2014, compared to $31.8 million for the nine
months ended September 30, 2013. The primary source of cash from operating activities was collections from our customers received
through our independent sales representative organizations. The majority of our customers in mainland China pay us in advance for
our Online and Other Media Services business. The majority of our Exhibitions business collections are advance payments.
Receivables from sales
representative organizations increased from $10.6 million as at December 31, 2013 to $13.5 million as at September 30, 2014 as
the sales representatives collected money for our fourth quarter 2014 exhibition events. These collections will be transferred
to our bank accounts in the coming months. The receivables from sales representatives represent cash receipts from our customers,
net of commissions and fees payable, and which are collected by the independent sales representatives on our behalf. These cash
receipts are banked into designated bank accounts owned by the independent sales representatives in China. For credit risk management
purposes, our employees are the only authorized signatories for the withdrawal of cash from these bank accounts. We have long standing
relationships with a majority of these independent sales representatives, for whom there is no recent history of default in transferring
the funds to us. In the long term, if our China business and our exhibition business grow as the economic climate improves, the
receivables from sales representative organizations may increase.
In 2004, 2007 and 2008
we purchased office space of 9,000 square meters, 1,939.38 square meters and 6,364.50 square meters, respectively, in commercial
buildings in Shenzhen China. In 2008 we also purchased office space of 22,874 square feet together with six car parking spaces
in a commercial building in Hong Kong SAR. In the third quarter of 2011, we purchased office space of approximately 6,668 square
meters in a commercial building in Shanghai, China at a purchase price of approximately $52.0 million, to support our continued
business expansion in China. In order to reduce our exposure to potential rental cost increases, in March 2013 we purchased office
space of 36,822 square feet in a commercial building in Hong Kong SAR, which we were leasing for operational use. The payments
for these acquisitions were funded from our internal cash resources. These buildings are situated on leasehold lands with lease
periods ranging between 50 and 75 years. We record the depreciation on these assets on a straight-line basis over the remaining
lease term or 50 years, whichever is shorter.
On March 28, 2013,
we sold office space on the 26th floor of Southmark building in Hong Kong SAR, which was recorded under property and equipment,
comprising a total area of 9,431 square feet, and three car parking spaces, for a total cash consideration of approximately $9.0
million.
In May 2013, we completed
the sale of 1,939.38 square meters of office space on the 46th floor of a building in Shenzhen, China known as Excellence Times
Square, for a total cash consideration of approximately $19.6 million.
In order to reduce
our exposure to potential rental cost increases, and to secure office space for our continued and uninterrupted operational use,
we signed a sale and purchase agreement on January 20, 2014 for the purchase of commercial property on the eighth floor of No.
1 Sims Lane, Singapore, situated on freehold land, with a total gross floor area of approximately 22,496.50 square feet, together
with appurtenant roof top accessory lots above the eighth floor which we were leasing for operational use for a total consideration
of approximately $13.1 million. The transaction has been completed on February 10, 2014 and the total purchase consideration has
been paid by us. The total cost of the purchase including the transaction costs of $13.8 million was recorded under property and
equipment. We record the depreciation on the building portion of this asset on a straight-line basis over 50 years.
Based on the Company’s
intention, the portion of the properties that is designated to generate rental income in the short to medium term has been classified
as Investment Properties. The net book value of the portion of these properties classified as Investment Properties as at September
30, 2014 and as at December 31, 2013 was $86.9 million and $89.6 million respectively. The total net book value of these office
properties including the portion classified as Investment Properties and the portion classified under Property and Equipment as
at September 30, 2014 and as at December 31, 2013 was $144.4 million and $134.5 million respectively. The total market value of
the office properties held as at December 31, 2013 was $229.4 million based on independent valuation reports prepared by Savills
Valuation and Professional Services Limited, Hong Kong. Based on our management‘s assessment the total market value of the
office properties as at September 30, 2014, was not less than their total carrying value as at September 30, 2014. We did not
record the market valuation gains as we record our Property and Equipment and Investment Properties at cost less the accumulated
depreciation.
We continuously monitor
collections from our customers and maintain an adequate provision for impairment of receivables. While credit losses have historically
been within our expectations and the allowances established, if bad debts significantly exceed our provisions, additional provisions
may be required in future.
We invest our excess
cash in term deposits with commercial banks, U.S. Treasury securities and available-for-sale securities to generate income from
interest received as well as capital gains, while the funds are held to support our business.
Generally, we hold
securities with specified maturity dates such as Treasury Bills until their maturity. We invest excess cash on hand in U.S. Treasury
Bills, in term deposits with major banks and available-for-sale securities to generate interest income. The market values of U.S.
Treasury Bills, term deposits with banks and other available-for-sale securities as at September 30, 2014 were nil, $52.9 million
and $4.0 million respectively, compared to the market values of U.S. Treasury Bills, term deposits with banks and other available-for-sale
securities as at December 31, 2013 of $13.2 million, $98.1 million and $6.4 million respectively. We do not engage in buying and
selling of securities with the objective of generating profits on short-term differences in price or for other speculative purposes.
Our objective is to invest to support our capital preservation strategy.
We hold a Documentary
Credit facility with the Hongkong and Shanghai Banking Corporation Limited, for providing documentary credits to our suppliers.
This facility has a maximum limit of approximately $0.6 million. As at September 30, 2014, the unutilized amount under this facility
was approximately $0.6 million. Hongkong and Shanghai Banking Corporation Limited has also provided a guarantee on our behalf
to our suppliers. As at September 30, 2014, such guarantee amounted to $0.003 million.
We did not recognize
deferred income tax assets of $8.9 million in respect of losses as at September 30, 2014 that can be carried forward against future
taxable income as the losses arose from dormant and/or loss-making subsidiaries whereby the realization of the related tax benefit
through future taxable profits is not probable.
During the first quarter
of 2007, we entered into a number of venue license agreements for our exhibition events amounting to $44.4 million in payments
over five and a half years. In 2010, we entered into a number of venue license agreements for our exhibition events amounting
to a gross value of approximately $20.0 million in payments over four to five years. Subsequently, we signed supplemental agreements
for additional space, increasing the total amount to $20.9 million. In 2012 we signed additional agreements for a total amount
of $21.4 million. Subsequently, we signed supplemental agreements for additional space, increasing the total amount to $21.8 million.
The above agreements are cancelable under force majeure or other specified conditions, or upon notice and payment of cancellation
charges to the other party. The amounts paid will be expensed when the related events are held. As at September 30, 2014, we have
paid approximately $60.6 million in aggregate under these agreements.
On February 4, 2008,
our Board of Directors authorized a program to buy back up to $50.0 million of common shares. We may, from time to time, as business
conditions warrant, purchase shares in the open market or through private transactions. The buyback program does not obligate us
to buy back any specific number of shares and may be suspended or terminated at any time at management’s discretion. The
timing and amount of any buyback of shares will be determined by management based on its evaluation of market conditions and other
factors. As at September 30, 2014, we have not bought back any of our shares under this program.
The Shenzhen International
Machinery Manufacturing Industry Exhibition and its related shows (“SIMM machinery shows”) currently consist of two
groups of co-located trade shows: (a) the Shenzhen International Machining Automation Exhibition and the Shenzhen International
Metal Forming Machine Tool & Mould Exhibition (collectively, the “Group A SIMM Events”); and (b) the Shenzhen International
Metal Cutting Machine Tool Exhibition (the “Group B SIMM Events”). Topranch Limited (a company incorporated in the
British Virgin Islands) through its subsidiaries owns a 70% interest in Group A SIMM Events and a 56% interest in Group B SIMM
Events.
In April 2013, we entered
into an agreement to acquire 100% interest in Topranch Limited, subject to closing conditions. These events are held annually in
Shenzhen, China. The Group’s ownership interest in these events will further assist the Group to establish a strong presence
in a fast-growing market in mainland China and will enable the Group to take advantage of the market opportunities.
The total consideration
for this acquisition is approximately $16.3 million. We paid an initial deposit of $2.1 million in the third quarter of 2013 and
paid the second instalment of $10.8 million in April 2014. The balance of cash consideration of $3.4 million is payable in several
instalments over next three years upon certain conditions being fulfilled.
We expensed $0.2 million
legal and other costs relating to this acquisition in 2013. In addition, there is a potential obligation to pay not more than approximately
$1.2 million for transaction cost, which will be expensed upon payment.
The completion date
of the transaction was January 1, 2014 and the results of the acquired entities have been consolidated into our financial statements
in the first quarter 2014. The contingent consideration is measured at fair value on the date of acquisition and held as a financial
liability on the balance sheet. Details of the fair value of assets acquired and liabilities assumed, the amount of goodwill to
be recorded and the effect on the cash flows for the Group are not disclosed, as the accounting for this acquisition is still in
progress. Management has provisionally recorded the acquired intangible assets at an estimated fair value of $16.5 million, related
deferred tax liabilities of $4.1 million, goodwill of $9.0 million and non-controlling interests of $4.7 million based on their
proportionate share of the identifiable net assets of the acquiree in connection with this acquisition using a partial goodwill
method. The amortization expense relating to these acquired intangible assets of $0.6 million and $3.5 million was included in
the general and administrative costs in the consolidated income statement for the three months and nine months ended September
30, 2014, respectively. We recorded $0.1 million and $0.9 million credit to income tax expense, in relation to the deferred tax
liabilities arising from these intangible assets in the consolidated income statement for the three months and nine months ended
September 30, 2014.
On March 11, 2014,
our Board of Directors authorized the repurchase of up to 5,000,000 of our issued and outstanding common shares, representing approximately
14.4% of the total number of our common shares issued and outstanding as at February 28, 2014, by tender offer at a purchase price
of $10.00 per share. As more than 5,000,000 shares were properly tendered and not properly withdrawn, as per terms of the tender
offer the shares were purchased, first, from all holders of “odd lots” of fewer than 100 shares who properly tender
all of their shares and did not properly withdraw them before the expiration date; and second, from all other shareholders who
properly tender shares, on a pro-rata basis. The total purchase consideration for this tender offer was $50.0 million. The offer
commenced on April 30, 2014. As per the final count, the number of shares properly tendered and not properly withdrawn was greater
than the number of shares that the company offered to purchase. Therefore, it was necessary to apply the odd lot priority and prorating
provisions described in our offer to purchase. The Company accepted approximately 15.17% of the shares properly tendered and not
properly withdrawn by each shareholder, in addition to the tendered shares with odd lot priority. The Company issued payment of
$10.00 per share for all the shares purchased. The repurchase was completed by June 6, 2014 and we paid total $50.0 million in
purchase consideration to the tendering shareholders. We funded this share repurchase from our cash balance on hand. We are holding
the repurchased shares as treasury shares.
We anticipate that
our cash and securities on hand and expected positive cash-flows from our operations will be adequate to satisfy our working capital
needs, capital expenditure requirements and cash commitments for the next 12 months. However, looking to the long term, we may
raise additional share capital, or sell debt securities, or obtain credit facilities as and when required to further enhance our
liquidity position, and an issue of additional shares could result in dilution to our shareholders.
Recent Accounting Pronouncements
The following recent accounting pronouncements
are applicable for accounting periods beginning on January 1, 2014:
| i. | | Amendment to IAS 36, ‘Impairment of assets’ |
The following recent
accounting pronouncement is applicable for accounting periods beginning after the final standard is announced and comes into effect:
| i. | | IFRS 9, “Financial instruments” |
| ii. | | IFRS 15, “Revenue from contracts with customers” |
The above accounting
pronouncements are discussed in detail in the following paragraphs:
Amendment to IAS 36,
‘Impairment of assets’ on recoverable amount disclosures. This amendment addresses the disclosure of information about
the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. We adopted Amendment to
IAS 36 for the accounting period beginning on January 1, 2014 and the adoption of this standard is not expected to have a significant
impact on our financial statements.
IFRS 9, ‘Financial
instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. IASB
has published the complete version of IFRS 9 which replaces the guidance in IAS 39. The final version includes requirements on
the classification and measurement of financial assets and liabilities; it also includes an expected credit losses model that replaces
the incurred loss impairment model used today. The final hedging part of IFRS 9 was issued in November 2013. IFRS 9 is effective
for annual periods beginning on or after 1 January 2018. IFRS 9 is to be applied retrospectively but comparatives are not required
to be restated. Accordingly, we will adopt IFRS 9 when it becomes applicable.
IFRS 15, “Revenue
from contracts with customers” will be effective for IFRS reporters for the first interim period within annual reporting
periods beginning on or after 1 January 2017. The standard moves away from a revenue recognition model based on an ‘earnings
process’ to an ‘asset-liability’ approach based on transfer of control. Entities that sell multiple goods or
services in a single arrangement must allocate the consideration to each of those goods or services. Entities that license their
IP to customers will need to determine whether the license transfers to the customer over time or at a point in time. An entity
should adjust the transaction price for the time value of money if the contract includes a significant financing component. Contract
costs that meet certain criteria are capitalized as an assets and are amortized as revenue is recognized. Accordingly, we will
adopt IFRS 15 when it becomes applicable.
Qualitative and Quantitative Disclosures
about Market Risk
During the nine months
period ended September 30, 2014 and the nine months period ended September 30, 2013, we have not engaged in foreign currency hedging
activities.
In the nine months
period ended September 30, 2014 and the nine months period ended September 30, 2013, we derived more than 90% of our revenue from
customers in the Asia-Pacific region. We expect that a majority of our future revenue will continue to be generated from customers
in this region. Future political or economic instability in the Asia-Pacific region could negatively impact our business.
Forward-looking Statements
Except for any historical
information contained herein, the matters discussed in this report contain certain “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations
and business. These statements relate to analyses and other information which are based on forecasts of future results and estimates
of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies. These
forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,”
“could,” “estimate,” “expect,” “intend,” “may,” “project,”
“plan,” “predict,” “strategy,” “forecast,” “will” and similar terms
and phrases, including references to assumptions.
These forward-looking
statements include current trend information, projections for deliveries, business growth strategies and plans, projected capital
expenditure, expansion plans and liquidity. These forward looking statements involve risks and uncertainties that may cause our
actual future activities and results of operations to be materially different from those suggested or described in this report
on Form 6-K. These risks include but are not limited to: product demand; customer satisfaction and quality issues; labor disputes;
competition, changes in technology and the marketplace; our ability to achieve and execute internal business plans; the success
of our business partnerships and alliances; worldwide political instability and economic growth; changes in regulatory and tax
legislation in the countries in which we operate; and the impact of any weakness in the currencies in Asia in which we operate.
In addition to the
foregoing factors, certain other risks and uncertainties, which could cause actual results to differ materially from those expected,
estimated or projected can be found in the section “Risk Factors” in our Annual Report on Form 20-F filed with the
United States Securities and Exchange Commission.
If
one or more of these risks or uncertainties materializes, or if underlying assumptions prove incorrect, our actual results may
vary materially from those expected, estimated or projected. Given these uncertainties, users of the information included in this
report on Form 6-K, including investors and prospective investors, are cautioned not to place undue reliance on such forward-looking
statements. We do not intend to update the forward-looking statements included in this report.
EXHIBIT 2
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, | |
| | |
2014 | | |
2013 | |
| | |
(Unaudited) | | |
| |
| ASSETS | |
| | | |
| | |
| Current assets | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 87,757 | | |
$ | 137,359 | |
| Term deposits with banks | |
| 3,954 | | |
| 106 | |
| Financial assets, available-for-sale | |
| 3,954 | | |
| 6,367 | |
| Accounts receivables, net | |
| 2,714 | | |
| 3,122 | |
| Receivables from sales representatives | |
| 13,505 | | |
| 10,630 | |
| Inventories | |
| 214 | | |
| 266 | |
| Prepaid expenses and other current assets | |
| 24,108 | | |
| 18,544 | |
| | |
| 136,206 | | |
| 176,394 | |
| Non-current assets | |
| | | |
| | |
| Property and equipment | |
| 64,516 | | |
| 49,701 | |
| Investment properties | |
| 86,924 | | |
| 89,615 | |
| Intangible assets | |
| 38,396 | | |
| 21,423 | |
| Long term investment | |
| 100 | | |
| 100 | |
| Deferred income tax assets | |
| 246 | | |
| 98 | |
| Other non-current assets | |
| 2,109 | | |
| 1,766 | |
| | |
| 192,291 | | |
| 162,703 | |
| Total assets | |
$ | 328,497 | | |
$ | 339,097 | |
| | |
| | | |
| | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Accounts payable | |
$ | 10,408 | | |
$ | 8,779 | |
| Deferred income and customer prepayments | |
| 99,060 | | |
| 84,704 | |
| Accrued liabilities | |
| 21,150 | | |
| 19,166 | |
| Income tax liabilities | |
| 4,473 | | |
| 2,635 | |
| | |
| 135,091 | | |
| 115,284 | |
| Non-current liabilities | |
| | | |
| | |
| Accounts payable | |
| 886 | | |
| - | |
| Deferred income and customer prepayments | |
| 7,709 | | |
| 5,660 | |
| Deferred income tax liabilities | |
| 6,942 | | |
| 4,591 | |
| | |
| 15,537 | | |
| 10,251 | |
| Total liabilities | |
| 150,628 | | |
| 125,535 | |
| | |
| | | |
| | |
| Equity attributable to Company’s shareholders | |
| | | |
| | |
| Common shares | |
| 529 | | |
| 525 | |
| Treasury shares | |
| (200,089 | ) | |
| (150,089 | ) |
| Other reserves | |
| 162,050 | | |
| 161,950 | |
| Retained earnings | |
| 200,643 | | |
| 191,594 | |
| Total Company shareholders’ equity | |
| 163,133 | | |
| 203,980 | |
| Non-controlling interests | |
| 14,736 | | |
| 9,582 | |
| Total equity | |
$ | 177,869 | | |
$ | 213,562 | |
| Total liabilities and equity | |
$ | 328,497 | | |
$ | 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 September 30, | | |
Nine months ended September 30, | |
| | |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| Revenue: | |
| | | |
| | | |
| | | |
| | |
| Online and other media services (Note 1) | |
$ | 23,081 | | |
$ | 25,417 | | |
$ | 70,787 | | |
$ | 79,593 | |
| Exhibitions | |
| 17,562 | | |
| 17,624 | | |
| 58,834 | | |
| 52,399 | |
| Miscellaneous | |
| 1,895 | | |
| 1,726 | | |
| 5,724 | | |
| 5,466 | |
| | |
| 42,538 | | |
| 44,767 | | |
| 135,345 | | |
| 137,458 | |
| Operating Expenses: | |
| | | |
| | | |
| | | |
| | |
| Sales (Note 2) | |
| 11,766 | | |
| 11,153 | | |
| 40,056 | | |
| 41,418 | |
| Event production | |
| 4,533 | | |
| 4,431 | | |
| 15,352 | | |
| 15,081 | |
| Community and content (Note 2) | |
| 6,645 | | |
| 6,670 | | |
| 19,043 | | |
| 20,402 | |
| General and administrative (Note 2 & 3) | |
| 12,303 | | |
| 10,990 | | |
| 40,256 | | |
| 34,146 | |
| Information and technology (Note 2) | |
| 3,226 | | |
| 3,164 | | |
| 9,512 | | |
| 9,639 | |
| Total Operating Expenses | |
| 38,473 | | |
| 36,408 | | |
| 124,219 | | |
| 120,686 | |
| Profit on sale of property | |
| - | | |
| - | | |
| - | | |
| 15,410 | |
| Profit from Operations | |
| 4,065 | | |
| 8,359 | | |
| 11,126 | | |
| 32,182 | |
| Interest income | |
| 296 | | |
| 467 | | |
| 1,046 | | |
| 1,088 | |
| Gain on sale of available-for-sale securities | |
| 1 | | |
| - | | |
| 11 | | |
| - | |
| Interest expenses | |
| (47 | ) | |
| - | | |
| (139 | ) | |
| - | |
| Profit before Income Taxes | |
| 4,315 | | |
| 8,826 | | |
| 12,044 | | |
| 33,270 | |
| Income tax expense | |
| (1,077 | ) | |
| (1,657 | ) | |
| (1,843 | ) | |
| (4,326 | ) |
| Net Profit | |
$ | 3,238 | | |
$ | 7,169 | | |
$ | 10,201 | | |
$ | 28,944 | |
| Net (profit)/loss attributable to non-controlling interests | |
| (1,321 | ) | |
| (1,813 | ) | |
| (1,152 | ) | |
| (1,193 | ) |
| Net profit attributable to the Company’s shareholders | |
$ | 1,917 | | |
$ | 5,356 | | |
$ | 9,049 | | |
$ | 27,751 | |
| Basic net profit per share attributable to the Company’s shareholders | |
$ | 0.06 | | |
$ | 0.16 | | |
$ | 0.28 | | |
$ | 0.81 | |
| Shares used in basic net profit per share calculations | |
| 29,870,922 | | |
| 34,454,494 | | |
| 32,643,064 | | |
| 34,408,075 | |
| Diluted net profit per share attributable to the Company’s shareholders | |
$ | 0.06 | | |
$ | 0.15 | | |
$ | 0.26 | | |
$ | 0.77 | |
| Shares used in diluted net profit per share calculations | |
| 31,487,766 | | |
| 36,186,254 | | |
| 34,166,224 | | |
| 36,045,545 | |
| Note: 1. | Online and other media services consists of: |
| | |
Three months ended September 30, | | |
Nine months ended September 30, | |
| | |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| Online services | |
$ | 20,252 | | |
$ | 22,046 | | |
$ | 62,348 | | |
$ | 69,710 | |
| Print services | |
| 2,829 | | |
| 3,371 | | |
| 8,439 | | |
| 9,883 | |
| | |
$ | 23,081 | | |
$ | 25,417 | | |
$ | 70,787 | | |
$ | 79,593 | |
| 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, | |
| | |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| Sales | |
$ | 140 | | |
$ | 159 | | |
$ | 286 | | |
$ | 386 | |
| Community and content | |
| 27 | | |
| 28 | | |
| (5 | ) | |
| 12 | |
| General and administrative | |
| 366 | | |
| 368 | | |
| 896 | | |
| 971 | |
| Information and technology | |
| 52 | | |
| 54 | | |
| 172 | | |
| 193 | |
| | |
$ | 585 | | |
$ | 609 | | |
$ | 1,349 | | |
$ | 1,562 | |
| Note: 3. | General and administrative expenses consist of: |
| | |
Three months ended September 30, | | |
Nine months ended September 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) | |
$ | 11,083 | | |
$ | 10,556 | | |
$ | 30,350 | | |
$ | 30,146 | |
| Amortization of intangible assets | |
| 1,376 | | |
| 627 | | |
| 6,347 | | |
| 2,097 | |
| Impairment charge on intangible assets | |
| - | | |
| - | | |
| 2,238 | | |
| 2,531 | |
| Foreign exchange losses (gains) | |
| (156 | ) | |
| (193 | ) | |
| 1,321 | | |
| (628 | ) |
| | |
$ | 12,303 | | |
$ | 10,990 | | |
$ | 40,256 | | |
$ | 34,146 | |
Global Sources Ltd. (NASDAQ:GSOL)
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Global Sources Ltd. (NASDAQ:GSOL)
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