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,
2015
| 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 2015 / 3rd Quarter Results of Operations
of GLOBAL SOURCES LTD. |
| Exhibit 2 | Unaudited Selected Consolidated Financial Information
of GLOBAL SOURCES LTD. at September 30, 2015. |
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: December 1, 2015
EXHIBIT 1
YEAR 2015 / 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 our trade shows. |
| · | 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 rateably over the period in which the advertisement is displayed.
Exhibitions –
trade shows and seminars — Our Global Sources trade shows, previously known as China Sourcing Fairs, offer international
buyers direct access to manufacturers in China and elsewhere in Asia. The first trade show was held in the fourth quarter of 2003.
Subsequently, we launched trade shows in Hong Kong, Dubai, Mumbai (which were moved to New Delhi in 2013), India, Johannesburg,
South Africa, Miami, USA, Sao Paulo, Brazil and Jakarta, Indonesia and held many events since 2004. These shows bring buyers from
around the world to meet face-to-face with suppliers. Our largest shows are our Global Sources trade shows which are held in Hong
Kong each spring and fall. We also host our FashionSZshow in Shenzhen, China in the third quarter of each year. In addition, in
March 2014, we held our first Shenzhen International Machinery Manufacturing Industry Exhibition and its related shows (“SIMM
machinery shows”) in Shenzhen, China. In 2015, we moved our SIMM machinery shows to second quarter of 2015 from first quarter
last year.
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. As our major trade shows in Hong
Kong are scheduled to be held in the second quarter and fourth quarter of each financial year, our 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, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| Revenue: | |
| | | |
| | | |
| | | |
| | |
| Online and other media services (Note 1) | |
$ | 17,217 | | |
$ | 20,311 | | |
$ | 52,947 | | |
$ | 62,692 | |
| Exhibitions | |
| 4,054 | | |
| 9,512 | | |
| 50,225 | | |
| 50,784 | |
| Miscellaneous | |
| 2,221 | | |
| 1,888 | | |
| 6,236 | | |
| 5,701 | |
| | |
| 23,492 | | |
| 31,711 | | |
| 109,408 | | |
| 119,177 | |
| Operating Expenses: | |
| | | |
| | | |
| | | |
| | |
| Sales | |
| 7,640 | | |
| 9,683 | | |
| 32,333 | | |
| 36,189 | |
| Event production | |
| 1,438 | | |
| 2,840 | | |
| 13,662 | | |
| 13,582 | |
| Community and content | |
| 4,453 | | |
| 5,179 | | |
| 14,656 | | |
| 15,514 | |
| General and administrative (Note 2) | |
| 11,320 | | |
| 10,397 | | |
| 32,072 | | |
| 36,401 | |
| Information and technology | |
| 3,401 | | |
| 3,039 | | |
| 9,853 | | |
| 9,051 | |
| Total Operating Expenses | |
| 28,252 | | |
| 31,138 | | |
| 102,576 | | |
| 110,737 | |
| Profit/(loss) from Operations | |
| (4,760 | ) | |
| 573 | | |
| 6,832 | | |
| 8,440 | |
| Interest income | |
| 123 | | |
| 272 | | |
| 689 | | |
| 979 | |
| Gain on sale of available-for-sale securities | |
| 13 | | |
| 1 | | |
| 149 | | |
| 11 | |
| Interest expenses | |
| (12 | ) | |
| (47 | ) | |
| (71 | ) | |
| (139 | ) |
| Profit/(loss) before Income Taxes | |
| (4,636 | ) | |
| 799 | | |
| 7,599 | | |
| 9,291 | |
| Income tax expense | |
| (234 | ) | |
| (282 | ) | |
| (2,422 | ) | |
| (1,112 | ) |
| Net Profit/(loss) from continuing operations | |
$ | (4,870 | ) | |
$ | 517 | | |
$ | 5,177 | | |
$ | 8,179 | |
| Net Profit from discontinued operations, net of income tax (Note 3) | |
| 223 | | |
| 2,721 | | |
| 5,629 | | |
| 2,022 | |
| Net profit/(loss) | |
$ | (4,647 | ) | |
$ | 3,238 | | |
$ | 10,806 | | |
$ | 10,201 | |
| Net profit/(loss) attributable to the Company’s shareholders from: | |
| | | |
| | | |
| | | |
| | |
| Continuing operations | |
$ | (4,847 | ) | |
$ | 808 | | |
$ | 3,978 | | |
$ | 8,228 | |
| Discontinued operations | |
| 223 | | |
| 1,109 | | |
| 5,893 | | |
| 821 | |
| Total | |
$ | (4,624 | ) | |
$ | 1,917 | | |
$ | 9,871 | | |
$ | 9,049 | |
| Diluted net profit/(loss) per share attributable to the Company’s shareholders from: | |
| | | |
| | | |
| | | |
| | |
| Continuing operations | |
$ | (0.18 | ) | |
$ | 0.02 | | |
$ | 0.13 | | |
$ | 0.24 | |
| Discontinued operations | |
| 0.01 | | |
| 0.04 | | |
| 0.20 | | |
| 0.02 | |
| Total | |
$ | (0.17 | ) | |
$ | 0.06 | | |
$ | 0.33 | | |
$ | 0.26 | |
| Shares used in diluted net profit/(loss) per share calculations | |
| 27,359,011 | | |
| 31,487,766 | | |
| 30,088,869 | | |
| 34,166,224 | |
| Note: 1. | Online and other media services consists of: |
| | |
Three months ended September 30, | | |
Nine months ended September 30, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| Online services | |
$ | 15,924 | | |
$ | 18,712 | | |
$ | 49,125 | | |
$ | 57,912 | |
| Print services | |
| 1,293 | | |
| 1,599 | | |
| 3,822 | | |
| 4,780 | |
| | |
$ | 17,217 | | |
$ | 20,311 | | |
$ | 52,947 | | |
$ | 62,692 | |
| Note: 2. | General and administrative expenses consist of: |
| | |
Three months ended September 30, | | |
Nine months ended September 30, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| General and administrative expenses before amortization of intangible assets, impairment charge on intangible assets and foreign exchange losses (gains) | |
$ | 9,095 | | |
$ | 9,306 | | |
$ | 27,400 | | |
$ | 26,998 | |
| Amortization of intangible assets | |
| 957 | | |
| 1,220 | | |
| 3,064 | | |
| 5,879 | |
| Impairment charge on intangible assets | |
| - | | |
| - | | |
| - | | |
| 2,238 | |
| Foreign exchange losses (gains) | |
| 1,268 | | |
| (129 | ) | |
| 1,608 | | |
| 1,286 | |
| | |
$ | 11,320 | | |
$ | 10,397 | | |
$ | 32,072 | | |
$ | 36,401 | |
| Note: 3. | Net Profit from discontinued operations, net of income
tax consists of: |
| | |
Three months ended September 30, | | |
Nine months ended September 30, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| Profit on sale of subsidiary | |
$ | 223 | | |
$ | - | | |
$ | 6,382 | | |
$ | - | |
| Income tax expense | |
| - | | |
| - | | |
| (361 | ) | |
| - | |
| Profit on sale of subsidiary, net of income tax | |
| 223 | | |
| - | | |
| 6,021 | | |
| - | |
| Profit /(loss) from discontinued operations, net of income tax | |
| - | | |
| 2,721 | | |
| (392 | ) | |
| 2,022 | |
| | |
$ | 223 | | |
$ | 2,721 | | |
$ | 5,629 | | |
$ | 2,022 | |
The following table represents our revenue by geographical areas:
| | |
Three months ended September 30, | | |
Nine months ended September 30, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| China | |
$ | 20,709 | | |
$ | 27,904 | | |
$ | 96,822 | | |
$ | 103,629 | |
| Rest of Asia | |
| 2,713 | | |
| 3,732 | | |
| 12,402 | | |
| 15,270 | |
| United States | |
| 62 | | |
| 65 | | |
| 142 | | |
| 233 | |
| Europe | |
| - | | |
| (3 | ) | |
| - | | |
| - | |
| Others | |
| 8 | | |
| 13 | | |
| 42 | | |
| 45 | |
| Total revenue | |
$ | 23,492 | | |
$ | 31,711 | | |
$ | 109,408 | | |
$ | 119,177 | |
Revenue from continuing operations
Total revenue declined
by 26% from $31.7 million during the three months ended September 30, 2014 to $23.5 million during the three months ended September
30, 2015 resulting mainly from cancellation in 2015 of our exhibition events in Sao Paolo, Brazil, Jakarta, Indonesia and Shenzhen,
China that were held in the third quarter of last year and a 15% decline in our Online and Other Media Services revenue.
Our Online and Other
Media Services revenue declined by 15% from $20.3 million during the three months ended September 30, 2014 to $17.2 million during
the three months ended September 30, 2015, resulting mainly from a 14% decline in our Online and Other Media Services revenue in
our China market. Our China market represented 87% of Online and Other Media Services revenue during
the third quarter of 2015 compared to 86% during the third quarter of 2014. The decline in our Online and Other Media Services
revenue resulted from a reduction of 15% in our revenue relating to hosting online websites for our customers and a 19% decline
in our revenue relating to our print advertising services. A continued weak growth in China export market resulting from the global
economic downturn and commoditization of the Online services as well as 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
declined by 57% to $4.1 million during the three months ended September 30, 2015 from $9.5 million during the three months ended
September 30, 2014, resulting mainly from cancellation in 2015 of our exhibition events in Sao Paolo, Brazil, Jakarta, Indonesia
and Shenzhen, China that were held in the third quarter of last year.
Total revenue declined
to $109.4 million during the nine months ended September 30, 2015 from $119.2 million during the nine months ended September 30,
2014 resulting mainly from a 16% decline in our Online and Other Media Services revenue.
Our Online and Other
Media Services revenue declined by 16% to $52.9 million for the nine months ended September 30, 2015, as compared with $62.7 million
for the nine months ended September 30, 2014, primarily due to a 14% decline in our China market. The decline in our Online and
Other Media Services revenue resulted from a 15% decline in our revenue from hosting online websites for our customers and a 20%
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 87% of Online and Other Media Services revenue for the nine months ended September 30, 2015 compared to 85% for the
nine months ended September 30, 2014.
Our Exhibitions revenue
declined by 1% from $50.8 million for the nine months ended September 30, 2014 to $50.2 million for the nine months ended September
30, 2015, resulting mainly from the cancellation of our exhibitions in Miami, USA, Sao Paolo, Brazil, Jakarta, Indonesia and Shenzhen,
China in 2015, which we held in the first nine months of 2014, off-set partially by a growth in revenue from our exhibition events
in Hong Kong in the second quarter of 2015, and growth in our SIMM machinery shows .
Operating expenses from continuing operations
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 declined
by 21% from $9.7 million during the three months ended September 30, 2014 to $7.6 million during the three months ended September
30, 2015. This was mainly due to reduction in sales commissions due to decline in our revenue.
Sales costs declined
by 11% from $36.2 million during the nine months ended September 30, 2014 to $32.3 million during the nine months ended September
30, 2015. The decline in sales costs was mainly due to the decline in sales commissions due to a decline in revenue and decline
in marketing fees.
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
decreased from $2.8 million for the three months ended September 30, 2014 to $1.4 million for the three months ended September
30, 2015. The decrease resulted mainly from the cancellation of our Sao Paolo, Brazil, Jakarta, Indonesia and Shenzhen, China exhibition
events.
Event production costs
increased marginally from $13.6 million for the nine months ended September 30, 2014 to $13.7 million for the nine months ended
September 30, 2015. The increase was mainly due to increase in event production costs for our exhibition events in Hong Kong due
to an increase in number of booths sold, off-set partially by the cancellation of our Miami, USA Sao Paolo, Brazil, Jakarta, Indonesia
and Shenzhen, China exhibition events.
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 trade shows 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 14% from $5.2 million during the three months ended September 30, 2014 to $4.5 million during the three months
ended September 30, 2015 due mainly to declines in buyer promotion costs for our exhibitions business, payroll costs and in our
content management services costs.
Community and content
costs decreased by 6% from $15.5 million during the nine months ended September 30, 2014 to $14.7 million during the nine months
ended September 30, 2015 due mainly to the decline in buyer promotions costs for our exhibition events off-set partially by increases
in buyer promotion costs for our online business.
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.
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. Based on the subsequent impairment reviews performed
by the management, the goodwill was fully impaired in 2013 and we recorded impairment charges to the acquired intangible assets
of $3.5 million in 2013 and $2.2 million in the second quarter of 2014. In October 2013, we also reviewed the useful lives of intangible
assets relating to this acquisition and revised the useful lives of the intangible assets to seven years from the original seventeen
years. The amortization expense relating to these acquired intangible assets is included in the general and administrative costs.
We completed the acquisition
of a majority interest in the SIMM machinery shows business on January 1, 2014. We recorded the acquired intangible assets at fair
value of $16.5 million and the related deferred tax liabilities of $4.1 million and goodwill of $9.0 million in connection with
this acquisition. The trade mark intangible assets have useful lives of 10 years and the contractual backlog has a useful life
of 3 months. The amortization expense relating to the acquired intangible assets is included in the general and administrative
costs. This transaction is discussed under liquidity and capital resources section of this document.
General and administrative
costs increased by 9% from $10.4 million during the three months ended September 30, 2014 to $11.3 million during the three months
ended September 30, 2015. The increase resulted mainly due to the 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, off-set partially
by decline in amortization expenses of intangible assets relating to acquired businesses and declines in marketing costs.
General and administrative
costs declined by 12% from $36.4 million during the nine months ended September 30, 2014 to $32.1 million during the nine months
ended September 30, 2015, due mainly to reductions in impairment charges to intangible assets relating to our acquired FashionSZshow
business, amortization of intangible assets relating to our acquired SIMM machinery shows business off-set partially by 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.
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 increased from $3.0 million for the three months ended September 30, 2014 to $3.4
million during the three months ended September 30, 2015 due to increase in payroll costs, fees paid to consultants and depreciation
costs.
Information and technology
costs increased from $9.1 million for the nine months ended September 30, 2014 to $9.9 million for the nine months ended September
30, 2015, due mainly to increase in payroll costs, fees paid to consultants and 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 the three months ended September 30, 2015 and the three months ended September 30,
2014 were $0.5 million and $0.6 million, respectively.
The non-cash compensation
expenses for the nine months ended September 30, 2015 and the nine months ended September 30, 2014 were $1.7 million and $1.3 million,
respectively.
The corresponding amounts
for the non-cash compensation expenses were credited to shareholders’ equity.
Profit/loss from
Operations. The total loss from operations during the three months ended September 30, 2015 was $4.8 million as compared to
a profit of $0.6 million during the three months ended September 30, 2014. The decline in profit from operations resulted mainly
from the decline in revenue, increases in general and administrative costs and information and technology costs, off-set partially
by reductions in sales costs, event production costs and community and content costs.
The total profit from
operations during the nine months ended September 30, 2015 was $6.8 million as compared to $8.4 million during the nine months
ended September 30, 2014. The decline in total profit from operations resulted mainly from decline revenue and increase in information
and technology costs, off-set partially by declines in sales costs, content and community cotss and general and administrative
costs.
Interest Income
and gain on sale of available-for-sale securities. We recorded interest income of $0.1 million and $0.3 million arising mainly
from term deposits placed with banks during the three months ended September 30, 2015 and the three months ended September 30,
2014, respectively.
We recorded interest
income of $0.7 million arising mainly from term deposits placed with banks during the nine months ended September 30, 2015 compared
to an interest income of $1.0 million during the nine months ended September 30, 2014. We also recorded $0.1 million gain on sale
of available-for-sale securities for the nine months ended September 30, 2015 compared to $0.01 million during 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 expense
of $0.2 million during the three months ended September 30, 2015 compared to a tax expense of $0.3 million during the three months
ended September 30, 2014.
We reported a tax provision
of $2.4 million for the nine months ended September 30, 2015 and of $1.1 million for the nine months ended September 30, 2014.
The increase is mainly due to the an increase in tax provision in the first half of 2015 for our Hong Kong exhibition events and
our SIMM exhibition events and reduction in realization of deferred tax liabilities relating to our subsidiaries during the nine
months ended September 30, 2015 compared to September 30, 2014.
Net
Profit/loss Attributable to the Company from continuing operations. Net loss attributable to the Company from continuing
operations was $4.8 million during the three months ended September 30, 2015 compared to a net profit from continuing operations
of to $0.8 million during the three months ended September 30, 2014. The decline in net profit
attributable to the Company from continuing operations resulted mainly from the reduction in revenue, and increases in general
and administrative costs and information and technology costs, off-set partially by declines in sales costs, event production costs
and community and content costs.
Net
profit attributable to the Company from continuing operations declined from $8.2 million during the nine months ended September
30, 2014 to $4.0 million during the nine months ended September 30, 2015. The reduction in net profit
attributable to the Company from continuing operations resulted mainly from decline in revenue and increases in information and
technology costs and income tax expense, off-set partially by declines in sales costs, community and content costs and general
and administrative costs.
Profit on sale of
subsidiary. During the second quarter of 2015, we sold our 60.1 percent interest in our subsidiary eMedia Asia Limited to the
minority shareholder of the subsidiary, for $11.8 million in cash which is subject to final adjustment and provisionally recorded
a profit of $6.2 million and a tax provision of $0.4 million during the three months ended June 30, 2015. In the third quarter
of 2015, the final adjustment has been completed and the final consideration for this transaction was $12.0 million. In the three
months ended September 30, 2015, we recorded an additional profit of $0.2 million in connection with this transaction, which increases
the total pre-tax profit on sale of subsidiary to $6.4 million and the after tax profit to $6.0 million. This transaction is discussed
in detail under liquidity and capital resources section of this document.
Net profit Attributable
to the Company from discontinued operations. Net profit attributable to the Company from discontinued operations was
$0.2 million during the three months ended September 30, 2015 resulting from the additional profit on sale of subsidiary compared
to a net profit from discontinued operations of $1.1 million during the three months ended September 30, 2014.
Net profit attributable
to the Company from discontinued operations was $5.9 million during the nine months ended September 30, 2015 compared to profit
attributable to the Company from discontinued operations of $0.8 million during the nine months ended September 30, 2014. The net
profit attributable to the Company from discontinued operations during the nine months ended September 30, 2015 included $6.0 million
profit on sale of subsidiary.
Diluted Net Profit/loss
per Share from continuing operations. The diluted net loss per share attributable to the Company’s shareholders from
continuing operations was $0.18 for the three months ended September 30, 2015 compared to a diluted net profit per share attributable
to the Company’s shareholders from continuing operations of $0.02 for the three months ended September 30, 2014. The number
of shares used for the computation of net profit per share declined from 31.5 million to 27.4 million resulting from the 6.7 million
shares repurchased by the company during the third quarter of 2015.
The diluted net profit
per share attributable to the Company’s shareholders from continuing operations declined from $0.24 for the nine months ended
September 30, 2014 to $0.13 for the nine months ended September 30, 2015. The number of shares used for the computation of net
profit per share declined from 34.2 million to 30.1 million resulting from the shares repurchased by the company during the third
quarter of 2015.
Diluted Net profit
per Share from discontinued operations. The diluted net profit per share attributable to the Company’s shareholders from
discontinued operations was $0.01 for the three months ended September 30, 2015 compared $0.04 for the three months ended September
30, 2014.
The diluted net profit
per share attributable to the Company’s shareholders from discontinued operations was $0.20 for the nine months ended September
30, 2015 and $0.02 for the nine months ended September 30, 2014.
Liquidity and Capital Resources
We financed our activities
for the nine months ended September 30, 2015 using cash generated from our operations and we had no bank debt as at September 30,
2015.
Net cash generated
from operating activities was $21.8 million for the nine months ended September 30, 2015, compared to $27.3 million for the nine
months ended September 30, 2014. 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 $7.9 million as at December 31, 2014 to $9.7 million as at September 30, 2015 as the
sales representatives are in the process of remitting the collections to our bank accounts. 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.
Currently we own 15,364.50
square meters of office space in commercial buildings in Shenzhen China, approximately 6,668 square meters of office space in a
commercial building in Shanghai, China and approximately 50,265 square feet of office space together with three car parking spaces
in commercial buildings in Hong Kong. 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. In addition, we also own approximately 22,496.50 square feet of office space, together with appurtenant roof top accessory
lots in a commercial building situated on freehold land in Singapore. 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.
With an intent to rebalance
our real estate property holding position, we decided to dispose of one of our investment properties. Accordingly, on July 6, 2015,
we entered into a Letter of Intent and on September 1, 2015 signed the sale and purchase agreement for the sale of approximately
2,118 square meters of office space on the 50th floor of the Shenzhen International Chamber of Commerce Tower in Shenzhen, China
for a total cash consideration of approximately $21.2 million and received a non-refundable deposit of approximately $3.1 million
from the buyer. This transaction is expected to be completed in the fourth quarter of 2015. We expect to derive a net gain on sale
of property of approximately $7.0 million from this transaction. The net book value of this property has been reclassified from
investment properties and presented under “Assets classified as held for sale” in our balance sheet as at September
30, 2015.
The net book value
of the portion of the properties classified as Investment Properties as at September 30, 2015 and as at December 31, 2014 was $71.4
million and $85.5 million respectively. The total net book value of these office properties including the portion classified as
Investment Properties, the portion classified as Assets Classified as Held for Sale and the portion classified under Property and
Equipment as at September 30, 2015 and as at December 31, 2014 was $136.9 million and $142.2 million respectively. The total market
value of the office properties held as at December 31, 2014 was $242.5 million based on independent valuation reports prepared
by Savills Valuation and Professional Services Limited, Hong Kong for properties situated in Hong Kong SAR and China and by Savills
Valuation and Professional Services (S) Pte Ltd, Singapore for the property situated in Singapore. Based on our management‘s
assessment the total market value of the office properties as at September 30, 2015, was not less than their total market value
as at December 31, 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, 2015 were nil, $32.5 million
and $4.1 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, 2014 of $nil, $61.3 million and $4.0 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, 2015, 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, 2015, such guarantee amounted to $0.003 million.
We did not recognize
deferred income tax assets of $9.8 million in respect of losses as at September 30, 2015 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.
In
2012, 2014, in April 2015 and again in August 2015, we entered into venue license agreements for future exhibition events from
2015 to 2018 for a total amount of $46.9 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, 2015, we have paid approximately $14.4 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, 2015, we have not bought back any of our shares under this program.
In 2014, we acquired
a controlling interest in Shenzhen International Machinery Manufacturing Industry Exhibition and its related shows (“SIMM
machinery shows”). These events are held annually in Shenzhen, China. The completion date of this transaction was January
1, 2014. The total consideration for this acquisition was approximately $16.3 million. We paid a total of $13.0 million in 2013
and 2014 towards the purchase consideration and paid $2.6 million in 2015. The balance of cash consideration of $0.7 million is
payable in two instalments over next two years upon certain conditions being fulfilled. 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 contingent consideration
is measured at fair value on the date of acquisition and held as a financial liability on the balance sheet. We recorded this acquisition
as a business combination.
On June 5, 2015 we
entered into a sale and purchase agreement to sell our 60.1 percent interest in our subsidiary eMedia Asia Limited to the minority
shareholder of the subsidiary, for $11.8 million in cash consideration which is subject to final adjustment. The subsidiary’s
business includes the China International Optoelectronic Expo exhibition and print and online publications serving Asia's electronics
engineering community. The transaction was completed on June 30, 2015. We provisionally recorded a profit of $6.2 million and a
tax provision of $0.4 million during the three months ended June 30, 2015 in connection with this transaction. In the third quarter
of 2015, the final adjustment has been completed and we recorded an additional profit of $0.2 million in connection with this transaction.
The final consideration for this transaction was $12.0 million, the total pre-tax profit on sale of subsidiary was $6.4 million
and we recorded a tax provision of $0.4 million in connection with this transaction, resulting in an after tax profit of $6.0 million
for this transaction.
On June 9, 2015,
our Board of Directors authorized the repurchase of up to 6,666,666 of our issued and outstanding common shares, representing approximately
22.05% of the total number of our common shares issued and outstanding as at April 30, 2015, by tender offer at a purchase price
of $7.50 per share. The total purchase consideration for this tender offer was $50.0 million. The offer commenced on June 26, 2015.
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. 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 tendered all of their shares and did not properly withdraw them before the expiration date;
and second, from all other shareholders who properly tendered shares, on a pro-rata basis. The Company accepted approximately 51.305852%
of the shares properly tendered and not properly withdrawn by each shareholder, in addition to the tendered shares with odd lot
priority. The Company paid $7.50 per share totaling to $50.0 million for all the shares purchased. 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 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:
IFRS 9, ‘Financial
instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. The
complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement
of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories
for financial assets: amortised cost, fair value through OCI and fair value through P&L. The basis of classification depends
on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity
instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present
changes in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment
model used in IAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition
of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. IFRS
9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic
relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management
actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared
under IAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted.
We are currently assessing the impact of the adoption of IFRS 9 on our financial statements.
IFRS 15, ‘Revenue
from contracts with customers’ deals with revenue recognition and establishes principles for reporting useful information
to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s
contracts with customers. Revenue is recognized when a customer obtains control of a goods or service and thus has the ability
to direct the use and obtain the benefits from the goods or service. The standard replaces IAS 18 ‘Revenue’ and IAS
11 ‘Construction contracts’ and related interpretations. The standard is effective for annual periods beginning on
or after 1 January 2017 and earlier application is permitted. We are currently assessing the impact of the adoption of IFRS 15
on our financial statements.
Qualitative and Quantitative Disclosures
about Market Risk
During the nine months
ended September 30, 2015 and the nine months ended September 30, 2014, we have not engaged in foreign currency hedging activities.
In the nine months
ended September 30, 2015 and the nine months ended September 30, 2014, 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, | |
| | |
2015 | | |
2014 | |
| | |
(Unaudited) | | |
| |
| ASSETS | |
| | | |
| | |
| Current assets | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 53,800 | | |
$ | 90,223 | |
| Term deposits with banks | |
| 7,634 | | |
| 4,285 | |
| Financial assets, available-for-sale | |
| 4,092 | | |
| 3,952 | |
| Accounts receivables, net | |
| 939 | | |
| 2,269 | |
| Receivables from sales representatives | |
| 9,667 | | |
| 7,900 | |
| Inventories | |
| 149 | | |
| 154 | |
| Prepaid expenses and other current assets | |
| 24,414 | | |
| 17,027 | |
| Assets classified as held for sale | |
| 10,821 | | |
| - | |
| | |
| 111,516 | | |
| 125,810 | |
| Non-current assets | |
| | | |
| | |
| Property and equipment | |
| 59,996 | | |
| 63,519 | |
| Investment properties | |
| 71,402 | | |
| 85,546 | |
| Intangible assets | |
| 28,729 | | |
| 37,732 | |
| Long term investment | |
| 100 | | |
| 100 | |
| Deferred income tax assets | |
| 289 | | |
| 196 | |
| Other non-current assets | |
| 2,511 | | |
| 1,108 | |
| | |
| 163,027 | | |
| 188,201 | |
| Total assets | |
$ | 274,543 | | |
$ | 314,011 | |
| | |
| | | |
| | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Accounts payable | |
$ | 11,161 | | |
$ | 9,418 | |
| Deferred income and customer prepayments | |
| 95,843 | | |
| 84,869 | |
| Accrued liabilities | |
| 15,393 | | |
| 19,100 | |
| Income tax liabilities | |
| 3,377 | | |
| 3,848 | |
| | |
| 125,774 | | |
| 117,235 | |
| Non-current liabilities | |
| | | |
| | |
| Accounts payable | |
| 291 | | |
| 889 | |
| Deferred income and customer prepayments | |
| 6,629 | | |
| 3,971 | |
| Deferred income tax liabilities | |
| 5,069 | | |
| 6,842 | |
| | |
| 11,989 | | |
| 11,702 | |
| Total liabilities | |
| 137,763 | | |
| 128,937 | |
| | |
| | | |
| | |
| Equity attributable to Company’s shareholders | |
| | | |
| | |
| Common shares | |
| 533 | | |
| 529 | |
| Treasury shares | |
| (250,089 | ) | |
| (200,089 | ) |
| Other reserves | |
| 160,090 | | |
| 161,242 | |
| Retained earnings | |
| 219,795 | | |
| 209,924 | |
| Total Company shareholders’ equity | |
| 130,329 | | |
| 171,606 | |
| Non-controlling interests | |
| 6,451 | | |
| 13,468 | |
| Total equity | |
$ | 136,780 | | |
$ | 185,074 | |
| Total liabilities and equity | |
$ | 274,543 | | |
$ | 314,011 | |
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, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| Revenue: | |
| | | |
| | | |
| | | |
| | |
| Online and other media services (Note 2) | |
$ | 17,217 | | |
$ | 20,311 | | |
$ | 52,947 | | |
$ | 62,692 | |
| Exhibitions | |
| 4,054 | | |
| 9,512 | | |
| 50,225 | | |
| 50,784 | |
| Miscellaneous | |
| 2,221 | | |
| 1,888 | | |
| 6,236 | | |
| 5,701 | |
| | |
| 23,492 | | |
| 31,711 | | |
| 109,408 | | |
| 119,177 | |
| Operating Expenses: | |
| | | |
| | | |
| | | |
| | |
| Sales (Note 3) | |
| 7,640 | | |
| 9,683 | | |
| 32,333 | | |
| 36,189 | |
| Event production | |
| 1,438 | | |
| 2,840 | | |
| 13,662 | | |
| 13,582 | |
| Community and content (Note 3) | |
| 4,453 | | |
| 5,179 | | |
| 14,656 | | |
| 15,514 | |
| General and administrative (Note 3 & 4) | |
| 11,320 | | |
| 10,397 | | |
| 32,072 | | |
| 36,401 | |
| Information and technology (Note 3) | |
| 3,401 | | |
| 3,039 | | |
| 9,853 | | |
| 9,051 | |
| Total Operating Expenses | |
| 28,252 | | |
| 31,138 | | |
| 102,576 | | |
| 110,737 | |
| Profit/(loss) from Operations | |
| (4,760 | ) | |
| 573 | | |
| 6,832 | | |
| 8,440 | |
| Interest income | |
| 123 | | |
| 272 | | |
| 689 | | |
| 979 | |
| Gain on sale of available-for-sale securities | |
| 13 | | |
| 1 | | |
| 149 | | |
| 11 | |
| Interest expenses | |
| (12 | ) | |
| (47 | ) | |
| (71 | ) | |
| (139 | ) |
| Profit/(loss) before Income Taxes | |
| (4,636 | ) | |
| 799 | | |
| 7,599 | | |
| 9,291 | |
| Income tax expense | |
| (234 | ) | |
| (282 | ) | |
| (2,422 | ) | |
| (1,112 | ) |
| Net Profit/(loss) from continuing operations | |
$ | (4,870 | ) | |
$ | 517 | | |
$ | 5,177 | | |
$ | 8,179 | |
| Net Profit from discontinued operations, net of income tax (Note 5) | |
| 223 | | |
| 2,721 | | |
| 5,629 | | |
| 2,022 | |
| Net profit/(loss) | |
$ | (4,647 | ) | |
$ | 3,238 | | |
$ | 10,806 | | |
$ | 10,201 | |
| Net (profit)/loss attributable to non-controlling interests from: | |
| | | |
| | | |
| | | |
| | |
| Continuing operations | |
| 23 | | |
| 291 | | |
| (1,199 | ) | |
| 49 | |
| Discontinued operations | |
| - | | |
| (1,612 | ) | |
| 264 | | |
| (1,201 | ) |
| Total | |
| 23 | | |
| (1,321 | ) | |
| (935 | ) | |
| (1,152 | ) |
| Net profit/(loss) attributable to the Company’s shareholders from: | |
| | | |
| | | |
| | | |
| | |
| Continuing operations | |
$ | (4,847 | ) | |
$ | 808 | | |
$ | 3,978 | | |
$ | 8,228 | |
| Discontinued operations | |
| 223 | | |
| 1,109 | | |
| 5,893 | | |
| 821 | |
| Total | |
$ | (4,624 | ) | |
$ | 1,917 | | |
$ | 9,871 | | |
$ | 9,049 | |
| Basic net profit/(loss) per share attributable to the Company’s shareholders from: | |
| | | |
| | | |
| | | |
| | |
| Continuing operations | |
$ | (0.19 | ) | |
$ | 0.02 | | |
$ | 0.14 | | |
$ | 0.25 | |
| Discontinued operations | |
| 0.01 | | |
| 0.04 | | |
| 0.20 | | |
| 0.03 | |
| Total | |
$ | (0.18 | ) | |
$ | 0.06 | | |
$ | 0.34 | | |
$ | 0.28 | |
| Shares used in basic net profit/(loss) per share calculations | |
| 25,767,421 | | |
| 29,870,922 | | |
| 28,682,394 | | |
| 32,643,064 | |
| Diluted net profit/(loss) per share attributable to the Company’s shareholders from: | |
| | | |
| | | |
| | | |
| | |
| Continuing operations | |
$ | (0.18 | ) | |
$ | 0.02 | | |
$ | 0.13 | | |
$ | 0.24 | |
| Discontinued operations | |
| 0.01 | | |
| 0.04 | | |
| 0.20 | | |
| 0.02 | |
| Total | |
$ | (0.17 | ) | |
$ | 0.06 | | |
$ | 0.33 | | |
$ | 0.26 | |
| Shares used in diluted net profit/(loss) per share calculations | |
| 27,359,011 | | |
| 31,487,766 | | |
| 30,088,869 | | |
| 34,166,224 | |
GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(In U.S. Dollars Thousands, Except Number
of Shares and Per Share Data)
| Note: 1. | Total revenue from both the continuing operations and
discontinued operations during the three months and nine months ended September 30, 2015 and 2014 was as follows: |
| | |
Three months ended September 30, | | |
Nine months ended September 30, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| Continuing operations | |
$ | 23,492 | | |
$ | 31,711 | | |
$ | 109,408 | | |
$ | 119,177 | |
| Discontinued operations | |
| - | | |
| 10,827 | | |
| 4,776 | | |
| 16,168 | |
| | |
$ | 23,492 | | |
$ | 42,538 | | |
$ | 114,184 | | |
$ | 135,345 | |
| Note: 2. | Online and other media services consists of: |
| | |
Three months ended September 30, | | |
Nine months ended September 30, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| Online services | |
$ | 15,924 | | |
$ | 18,712 | | |
$ | 49,125 | | |
$ | 57,912 | |
| Print services | |
| 1,293 | | |
| 1,599 | | |
| 3,822 | | |
| 4,780 | |
| | |
$ | 17,217 | | |
$ | 20,311 | | |
$ | 52,947 | | |
$ | 62,692 | |
| Note: 3. | 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, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| Sales | |
$ | 124 | | |
$ | 140 | | |
$ | 302 | | |
$ | 286 | |
| Community and content | |
| 24 | | |
| 27 | | |
| 65 | | |
| (5 | ) |
| General and administrative | |
| 334 | | |
| 366 | | |
| 1,102 | | |
| 896 | |
| Information and technology | |
| 48 | | |
| 52 | | |
| 181 | | |
| 172 | |
| | |
$ | 530 | | |
$ | 585 | | |
$ | 1,650 | | |
$ | 1,349 | |
| Note: 4. | General and administrative expenses consist of: |
| | |
Three months ended September 30, | | |
Nine months ended September 30, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| General and administrative expenses before amortization of intangible assets, impairment charge on intangible assets and foreign exchange losses (gains) | |
$ | 9,095 | | |
$ | 9,306 | | |
$ | 27,400 | | |
$ | 26,998 | |
| Amortization of intangible assets | |
| 957 | | |
| 1,220 | | |
| 3,064 | | |
| 5,879 | |
| Impairment charge on intangible assets | |
| - | | |
| - | | |
| - | | |
| 2,238 | |
| Foreign exchange losses (gains) | |
| 1,268 | | |
| (129 | ) | |
| 1,608 | | |
| 1,286 | |
| | |
$ | 11,320 | | |
$ | 10,397 | | |
$ | 32,072 | | |
$ | 36,401 | |
| Note: 5. | Net Profit from discontinued operations, net of income
tax consist of: |
| | |
Three months ended September 30, | | |
Nine months ended September 30, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| Profit on sale of subsidiary | |
$ | 223 | | |
$ | - | | |
$ | 6,382 | | |
$ | - | |
| Income tax expense | |
| - | | |
| - | | |
| (361 | ) | |
| - | |
| Profit on sale of subsidiary, net of income tax | |
| 223 | | |
| - | | |
| 6,021 | | |
| - | |
| Profit /(loss) from discontinued operations, net of income tax | |
| - | | |
| 2,721 | | |
| (392 | ) | |
| 2,022 | |
| | |
$ | 223 | | |
$ | 2,721 | | |
$ | 5,629 | | |
$ | 2,022 | |
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