HONG KONG, Dec. 19, 2014 /PRNewswire/ -- SGOCO Group, Ltd.
(Nasdaq: SGOC) ("SGOCO" or the "Company"), a company focused on
product design, distribution and brand development in display
products, today announced its unaudited operating results for the
six months ended June 30, 2014. The
Company also announced that it would report interim results on a
half-year basis in the future.
2014 Interim Results Overview
The interim results of SGOCO were adversely impacted by the
significant increase in competition and weak industrial growth in
the Chinese display industry.
- Interim revenues decreased 70.0% to $34.1 million in the first half of the year
("1H"), as compared to $113.8 million
year-over-year.
- Gross profit dropped 80.5% year-on-year to $1.7 million in the 1H 2014, from $8.9 million in the same period of 2013.
- Net loss decreased to $1.6
million in 1H 2014 as compared to $5.1 million of net income year-over-year.
- Basic and diluted loss per share was $0.09 in the 1H 2014, as compared to basic and
diluted earnings per share of $0.30
in the 1H 2013.
Revenue
SGOCO's revenue decreased year-over-year in the first half year
on weak industrial growth. SGOCO's main products are Flat panel
monitors. As a result of the slow demand of Personal Computers in
general and the increased demand for mobile devices, SGOCO's sales
in the display market dropped significantly. This change of users'
behavior has led to the contraction of the traditional display
market and increased price competition from the Company's peers
which resulted in significant decreases in the 1H 2014 gross
margins and revenues. The total revenues decreased by 70.0% to
$34.1 million when compared with the
1H 2013.
Gross margin
In 1H 2014, the gross profit of the Company decreased 80.5% to
$1.7 million from $8.9 million year-over-year. The overall gross
margin for the 1H 2014 was 5.1%, as compared with 7.9% during the
same period of 2013.
Operating loss and expenses
The Company recorded a $1.9
million operating loss in the 1H 2014, as compared to
$6.7 million operating income in the
1H 2013. Operating expenses in 1H 2014 increased 65.4% to
$3.7 million, compared to
$2.2 million in the first six months
of 2013. A significant part of the increase in operating expenses
is due to the issuance of ordinary shares to the independent
directors and certain employees. In January
2014, a total of 160,000 ordinary shares were issued to
SGOCO's independent directors and specific employees and vested
immediately. The fair value of each share was $3.36 on the grant day and as a result, the
Company recorded $537,600 in non-cash
compensation expenses. In addition, the general administration
expenses in SGOCO's Hong Kong
office increased due to the relocation and expansion of our
Hong Kong office since late 2013,
whereas no such expenses arose in 1H 2013.
Net loss and loss per share
The Company's net loss for 1H 2014 was $1.6 million, which changed 132.2% from a net
income position of $5.1 million
year-over-year. The net margin experienced a loss of 4.8% in the 1H
of 2014, as compared to 4.5% net profit margin during the same
period of 2013. Basic and diluted loss per share was $0.09 in the 1H of 2014 based on 17,397,082
weighted average number of common shares, as compared to basic and
diluted earnings per share of $0.30
based on 17,130,888 weighted average number of common shares for
the 1H 2013.
Cash and working capital
SGOCO held $1.1 million cash and
cash equivalents at June 30, 2014,
compared to $13.4 million as of
December 31, 2013. Working capital
decreased to $85.9 million from
$87.6 million at the end of
December 31, 2013. Increasing costs
of products and the Company's significant losses are the major
causes for the drop in cash flow.
SGOCO's Outlook
In the future, we expect SGOCO to face a continuing difficult
battle in the industry. In order to improve the revenue and profit,
SGOCO is working hard to turn the business focus and explore more
new products in the coming months. SGOCO management is also
considering further restructuring of its business model, including
the potential sale of the Company's trading arm in Fujian Province, China.
About SGOCO Group, Ltd.
SGOCO Group, Ltd. is focused on product design, brand
development and distribution in the Chinese display market,
including computer monitors, All-In-One ("AIO") and Parts-In-One
("PIO") computers and application specific products. SGOCO sells
its products and services in the China market and abroad. For more information
about SGOCO, please visit our investor relations website
http://www.sgocogroup.com.
Safe Harbor and Informational Statement
This announcement contains "forward-looking" statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These
statements are made under the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. All statements,
other than statements of historical fact, including, without
limitation, those with respect to the objectives, plans and
strategies of the Company set forth herein and those preceded by or
that include the words "believe," "expect," "anticipate," "future,"
"will," "intend," "plan," "estimate" or similar expressions, are
"forward-looking statements". Forward-looking statements in this
release include, without limitation, the effectiveness of the
Company's multiple-brand, multiple channel strategy and the
transitioning of its product development and sales focus and to a
"light-asset" model, Although the Company's management believes
that such forward-looking statements are reasonable, it cannot
guarantee that such expectations are, or will be, correct. These
forward-looking statements involve a number of risks and
uncertainties, which could cause the Company's future results to
differ materially from those anticipated. These forward-looking
statements can change as a result of many possible events or
factors not all of which are known to the Company, which may
include, without limitation, requirements or changes adversely
affecting the LCD and LED market in China; fluctuations in customer demand for LCD
and LED products generally; our success in promoting our brand of
LCD and LED products in China and
elsewhere; our ability to have effective internal control over
financial reporting; our success in designing and distributing
products under brands licensed from others; management of sales
trend and client mix; possibility of securing loans and other
financing without efficient fixed assets as collaterals; changes in
government policy in China; the
fluctuations and competition in sales and sale prices of LCD and
LED products in China;
China's overall economic
conditions and local market economic conditions; our ability to
expand through strategic acquisitions and establishment of new
locations; compliance with government regulations; legislation or
regulatory environments; geopolitical events, and other events
and/or risks outlined in SGOCO's filings with the U.S. Securities
and Exchange Commission, including its annual report on Form 20-F
and other filings. All information provided in this press release
and in the attachments is as of the date of the issuance, and SGOCO
does not undertake any obligation to update any forward-looking
statement, except as required under applicable law.
For investor and media inquiries, please contact:
SGOCO Group, Ltd.
Kathy Ko
Investor Relations Officer
Tel: +852 25010128
Email: ir@sgoco.com
SGOCO GROUP, LTD.
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
FOR THE SIX MONTHS
ENDED JUNE 30, 2014 AND 2013
(Unaudited)
|
(In
thousands of U.S. dollars except share and per share
data)
|
|
|
|
|
2014
|
|
2013
|
REVENUES:
|
|
|
|
|
Revenues
|
|
34,141
|
|
113,785
|
|
|
|
|
|
COST OF GOODS
SOLD:
|
|
|
|
|
Cost of goods
sold
|
|
32,396
|
|
104,840
|
|
|
|
|
|
GROSS
PROFIT
|
|
1,745
|
|
8,945
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
Selling
expenses
|
|
240
|
|
556
|
General and administrative expenses
|
|
3,441
|
|
1,670
|
Total operating
expenses
|
|
3,681
|
|
2,226
|
|
|
|
|
|
(LOSS) INCOME FROM
OPERATIONS
|
|
(1,936)
|
|
6,719
|
|
|
|
|
|
OTHER INCOME
(EXPENSES):
|
|
|
|
|
Interest
income
|
|
338
|
|
5
|
Interest
expense
|
|
(171)
|
|
(93)
|
Other income
(expense), net
|
|
(8)
|
|
(61)
|
Change in fair value
of warrant derivative liability
|
|
15
|
|
(27)
|
Total other income
(expenses), net
|
|
174
|
|
(176)
|
|
|
|
|
|
(LOSS) INCOME BEFORE
PROVISION FOR INCOME TAXES
|
|
(1,762)
|
|
6,543
|
|
|
|
|
|
PROVISION FOR INCOME
TAXES
|
|
(113)
|
|
1,429
|
NET (LOSS)
INCOME
|
|
(1,649)
|
|
5,114
|
|
|
|
|
|
OTHER COMPREHENSIVE
(LOSS) INCOME:
|
|
|
|
|
Foreign currency
translation adjustment
|
|
(592)
|
|
106
|
|
|
|
|
|
COMPREHENSIVE (LOSS)
INCOME
|
|
(2,241)
|
|
5,220
|
|
|
|
|
|
(LOSS) EARNINGS PER
SHARE:
|
|
|
|
|
Basic
|
|
(0.09)
|
|
0.30
|
Diluted
|
|
(0.09)
|
|
0.30
|
|
|
|
|
|
WEIGHTED AVERAGE
NUMBER OF COMMON SHARES
OUTSTANDING:
|
|
|
|
|
Basic
|
|
17,397,082
|
|
17,130,888
|
Diluted
|
|
17,397,082
|
|
17,130,888
|
SGOCO GROUP, LTD.
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
AS OF JUNE 30,
2014 AND DECEMBER 31, 2013
|
(In thousands
of U.S. dollars except share and per share data)
|
|
|
|
June 30,
2014
|
|
|
|
December 31,
2013
|
ASSETS
|
|
(Unaudited)
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
|
|
1,108
|
|
|
|
13,497
|
Accounts
receivable, net of provision for doubtful accounts of
$1,437 and $98, respectively
|
|
50,439
|
|
|
|
48,063
|
Deferred
tax assets
|
|
352
|
|
|
|
-
|
Notes
receivable
|
|
-
|
|
|
|
1,316
|
Other
receivables and prepayments
|
|
353
|
|
|
|
744
|
Inventories
|
|
6,028
|
|
|
|
7,017
|
Advances
to suppliers
|
|
46,266
|
|
|
|
33,824
|
Other current
assets
|
|
106
|
|
|
|
51
|
Total current
assets
|
|
104,652
|
|
|
|
104,512
|
|
|
|
|
|
|
|
PLANT AND EQUIPMENT,
NET
|
|
178
|
|
|
|
223
|
|
|
|
|
|
|
|
Total
assets
|
|
104,830
|
|
|
|
104,735
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
Short-term loans
|
|
4,063
|
|
|
|
6,734
|
Accounts
payable, trade
|
|
6,479
|
|
|
|
2,052
|
Accrued liabilities
|
|
440
|
|
|
|
301
|
Short-term loan - shareholder
|
|
100
|
|
|
|
-
|
Other
payables
|
|
386
|
|
|
|
394
|
Customer
deposits
|
|
638
|
|
|
|
999
|
Taxes
payable
|
|
6,317
|
|
|
|
6,126
|
Deferred tax
liabilities
|
|
316
|
|
|
|
319
|
Total current
liabilities
|
|
18,739
|
|
|
|
16,925
|
|
|
|
|
|
|
|
OTHER
LIABILITIES
|
|
|
|
|
|
|
Warrant derivative
liability
|
|
6
|
|
|
|
21
|
Total
liabilities
|
|
18,745
|
|
|
|
16,946
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
Preferred stock,
$0.001 par value, 1,000,000 shares
authorized,
nil issued and outstanding as of June 30, 2014
and December
31, 2013, respectively
|
|
-
|
|
|
|
-
|
Common stock, $0.001
par value, 50,000,000 shares
authorized,
17,414,861 and 17,660,356 issued and
outstanding as
of June 30, 2014 and December 31, 2013,
respectively
|
|
18
|
|
|
|
18
|
Paid-in-capital
|
|
25,589
|
|
|
|
25,052
|
Statutory reserves
|
|
809
|
|
|
|
809
|
Retained
earnings
|
|
59,431
|
|
|
|
61,080
|
Accumulated other
comprehensive income
|
|
238
|
|
|
|
830
|
Total shareholders'
equity
|
|
86,085
|
|
|
|
87,789
|
Total liabilities and
shareholder's equity
|
|
104,830
|
|
|
|
104,735
|
SGOCO GROUP, LTD.
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
FOR THE SIX MONTHS
ENDED JUNE 30, 2014 AND 2013 (Unaudited)
|
(In thousands of U.S.
dollars)
|
|
|
|
|
|
|
|
June
30,
|
|
|
|
|
|
|
2014
|
|
2013
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net (loss)
income
|
|
(1,649)
|
|
5,114
|
|
Adjustments to
reconcile net (loss) income to cash
(used in) provided by
operating activities:
|
|
|
|
Depreciation and
amortization
|
|
41
|
|
37
|
|
|
|
Bad debt
provision
|
|
1,339
|
|
105
|
|
|
|
Change in fair value
of warrant derivative liability
|
|
(15)
|
|
27
|
|
|
|
Share-based
compensation expenses
|
|
538
|
|
224
|
|
Change in operating
assets – (increase) decrease
|
|
|
|
|
|
|
|
Accounts receivable,
trade
|
|
(3,969)
|
|
(17,469)
|
|
|
|
Deferred tax
assets
|
|
(353)
|
|
-
|
|
|
|
Other
receivables
|
|
385
|
|
(2,467)
|
|
|
|
Notes
Receivable
|
|
1,316
|
|
-
|
|
|
|
Inventories
|
|
928
|
|
(10,475)
|
|
|
|
Advances to
suppliers
|
|
(12,782)
|
|
1,592
|
|
|
|
Other current
assets
|
|
(53)
|
|
(35)
|
|
Change in operating
liabilities – increase (decrease)
|
|
|
|
|
|
|
|
Accounts payables,
trade
|
|
4,457
|
|
22,956
|
|
|
|
Other payables and
accrued liabilities
|
|
138
|
|
111
|
|
|
|
Customer
deposits
|
|
(354)
|
|
1,476
|
|
|
|
Taxes
payable
|
|
247
|
|
415
|
|
|
|
|
Net cash (used in) provided by
operating activities
|
(9,785)
|
|
1,611
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
Purchase of
equipment
|
|
-
|
|
(15)
|
|
|
|
|
Net cash used in
investing activities
|
|
-
|
|
(15)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
Proceeds from
short-term loan
|
|
-
|
|
804
|
|
Payments on
short-term loan
|
|
(2,617)
|
|
-
|
|
Proceeds from
shareholder loan
|
|
100
|
|
-
|
|
|
|
|
Net cash (used in) provided by
financing activities
|
(2,517)
|
|
804
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE ON CASH
|
|
(87)
|
|
208
|
|
|
|
|
|
|
|
|
|
(DECREASE) INCREASE
IN CASH
|
|
(12,389)
|
|
2,608
|
|
|
|
|
|
|
|
|
|
CASH, beginning of
period
|
|
13,497
|
|
11,548
|
|
|
|
|
|
|
|
|
|
CASH, end of period
|
|
1,108
|
|
14,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
Cash paid for
interest
|
|
171
|
|
93
|
|
Cash paid for income
taxes
|
|
43
|
|
900
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/sgoco-group-ltd-announces-2014-interim-financial-results-300012544.html
|
SOURCE SGOCO Group, Ltd.