HONG KONG, May 15, 2015 /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 audited financial results for the
year ended December 31, 2014 and the
unaudited second half financial results of 2014.
2014 Annual Results Overview
The annual results of SGOCO were adversely impacted by the weak
industrial growth and increase in competition and in the
traditional display industry in China.
- Annual revenues decreased 78.5% to $43.2
million in the year ended December
31, 2014, as compared to $201.0
million year-over-year.
- Gross profit dropped 87.3% year-on-year drop to $2.0 million in the year ended December 31, 2014, from $15.9 million in the same period of 2013.
- Net loss became $2.3 million in
the year ended December 31, 2014 as
compared to $8.4 million of net
income year-over-year.
- Basic and diluted loss per share was $0.13 in the year ended December 31, 2014, as compared to basic and
diluted earnings per share of $0.49
in the same period of 2013.
Mr. Shi-bin Xie, President and
Chief Executive Officer of SGOCO, commented on the results. "SGOCO
has faced a challenged market condition throughout 2014 resulting
from the drop of the traditional flat panel display market."
"As a result, the Company decided to further restructure its
business by disposing SGOCO (Fujian) Electronic Co., Ltd., a subsidiary
engaged in sales and distribution of LED and LCD products in
Southern China ("SGOCO
(Fujian) "), in December 2014. After that, the Company will
decrease the sales of traditional flat panel LCD and LED monitors,
but increase the sales of All-In-One ("AIO") and Parts-In-One
("PIO") computers."
Mr. Xie concluded, "In 2015, SGOCO will focus on new investments
and exploring new products, including but not limited to acquiring
equities of potential target companies related to electronic and
internet-related businesses and enriching the our product
range."
FULL FISCAL 2014 AND SECOND HALF OF 2014 FINANCIAL
RESULTS
Revenue
Due to the increasing popularity of mobile devices, the
contraction of personal computer market demand continued and it
adversely impacted the market demand of our major product, flat
panel LCD and LED monitors. The drop in market demand also led to
intense competition with our peers which has further affected our
revenue and gross margins. SGOCO's revenue decreased by 78.5% to
$43.2 million in the year ended
December 31, 2014 compared with
$201.0 million in the year ended
December 31, 2013.
Total revenue for the second half of 2014 decreased 89.6% to
$9.1 million from $87.2 million in the second half of 2013. The
year-over-year revenue decrease was mainly due to the significant
contraction of market demand in the second half of 2014 when
comparing with the same period in 2013.
Gross Profit and Gross Margin
In the year ended December 31,
2014, the gross profit of the Company decreased 87.3% to
$2.0 million from $15.9 million year-over-year. The overall gross
margin for the year ended December 31,
2014 was 4.7%, as compared with 7.9% during the fiscal
2013.
Gross profit for the second half of 2014 decreased 96.1%
year-over-year to $0.3 million from
$7.0 million in 2013. The gross
margin for the second half of 2014 was 3.0%, as compared with 8.0%
for the second half of 2013.
Operating Expenses
Selling, General and Administrative expenses for the fiscal year
of 2014 decreased 31.0% year-over-year to $3.4 million from $4.9
million. Selling expenses decreased 72.3% year-over-year to
$0.3 million as compared to
$1.1 million in the 2013. The
decrease in selling expenses was primarily due to the decrease in
sales volume and reduction of sales personnel during the year.
General and Administrative expenses for the fiscal year of 2014
decreased 19.3% year-over-year to $3.1
million from $3.8 million. The
decrease in General and Administrative expenses was mainly due to
tightened expenses control.
Selling, General and Administrative expenses for the second half
of 2014 decreased 61.3% to 1.0 million from $2.6 million for the second half of 2013, after
the consideration of $1.3 million of
recovery of bad debt expenses recorded in the first half of 2014.
Selling expenses for the second half of 2014 decreased 89.0%
year-over-year to $0.1 million,
representing 0.6% of total revenues, compared with $0.5 million or 0.6% of total revenues in the
second half of 2013. General and Administrative expenses decreased
54.6% year-over-year to $0.9 million
from $2.1 million for the second half
of 2013.
Operating loss
The Company recorded $1.3 million
operating loss in the year ended December
31, 2014, as compared to $11.1
million operating income during the same period of 2013.
Operating expenses in the year ended December 31, 2014 decreased 31.0% to $3.4 million, which recorded for $4.9 million in the same period of 2013.
Operating income for the second half of 2014 was $0.6 million, decreased from $4.3 million in the second half of 2013.
Net loss and loss per share
The Company's net loss for the year ended December 31, 2014 was $2.3
million, which changed from the net income position of
$8.4 million year-over-year. The net
margin experienced a loss of 5.3% in the year ended December 31, 2014, as compared to 4.2% net profit
margin during the same period of 2013. Basic and diluted loss per
share was $0.13 in the year ended
December 31, 2014 based on 17,406,069
weighted average number of common shares, as compared to basic and
diluted earnings per share of $0.49
based on 17,193,189 weighted average number of common shares for
the same period of 2013.
Cash and working capital
SGOCO held $0.1 million cash and
cash equivalents as of December 31,
2014, compared to $13.5
million as of December 31,
2013. Working capital decreased to $85.2 million from $87.8 million at
the end of December 31, 2013.
Increasing cost in the products and suffering of operating loss are
the major causes for the drop of cash flow.
Sale of SGOCO (Fujian)
On December 31, 2014, the Company
announced the entering of a Sale and Purchase Agreement ("SPA") to
sell its 100% equity ownership interest in SGOCO (Fujian) to Apex Flourish Group Limited
("Apex"), which is an independent third party with interests in
real estate and forestry products.
The sales price for all the equity of SGOCO (Fujian) is equivalent to the net asset value
of SGOCO (Fujian) on December 31, 2014 calculated on the basis of
Chinese Accounting Standards. The final amount is $11.0 million (the "Sale Price"). Apex also
agreed to assume responsibility to settle the entire balance of
accounts payable and other payables (the "Payables") due by SGOCO
(Fujian) to SGOCO and its
affiliates, which amounts to $80.4
million, by installments prior to June 30, 2015. The transfer of the Sale Equity
was effective on December 31,
2014. As of April 30, 2015,
Apex has paid the aggregated amount of $75.9
million to the Company as installment payments of the Sale
Price and settlement of the Payables.
About SGOCO Group, Ltd.
SGOCO Group, Ltd. is focused on product design, brand
development and distribution in the Chinese display market,
including computer monitors, AIO and 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.
Johnson Lau
Chief Financial Officer
Tel: +852 25010128
Email: ir@sgoco.com
SGOCO GROUP, LTD.
AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
FOR THE YEARS
ENDED DECEMBER 31, 2014, 2013 AND 2012
|
|
(In thousands of U.S.
dollars except share and per share data)
|
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
|
43,230
|
|
|
|
200,974
|
|
|
|
166,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF GOODS
SOLD
|
|
|
41,213
|
|
|
|
185,045
|
|
|
|
154,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
|
|
2,017
|
|
|
|
15,929
|
|
|
|
12,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
297
|
|
|
|
1,073
|
|
|
|
670
|
|
General and administrative expenses
|
|
|
3,069
|
|
|
|
3,802
|
|
|
|
5,322
|
|
Total operating
expenses
|
|
|
3,366
|
|
|
|
4,875
|
|
|
|
5,992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) INCOME FROM OPERATIONS
|
|
|
(1,349)
|
|
|
|
11,054
|
|
|
|
6,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
338
|
|
|
|
12
|
|
|
|
8
|
|
Interest
expense
|
|
|
(304)
|
|
|
|
(260)
|
|
|
|
(61)
|
|
Other income
(expense), net
|
|
|
319
|
|
|
|
192
|
|
|
|
(130)
|
|
Change in fair value
of warrant derivative liability
|
|
|
19
|
|
|
|
(3)
|
|
|
|
75
|
|
Total other income
(expenses), net
|
|
|
372
|
|
|
|
(59)
|
|
|
|
(108)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) INCOME BEFORE
PROVISION FOR INCOME TAXES
|
|
|
(977)
|
|
|
|
10,995
|
|
|
|
6,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME
TAXES
|
|
|
1,311
|
|
|
|
2,551
|
|
|
|
2,167
|
|
NET (LOSS)
INCOME
|
|
|
(2,288)
|
|
|
|
8,444
|
|
|
|
4,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
(36)
|
|
|
|
805
|
|
|
|
(59)
|
|
Realization of
foreign currency translation gain relating to disposal of
subsidiaries
|
|
|
(805)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE (LOSS)
INCOME
|
|
|
(3,129)
|
|
|
|
9,249
|
|
|
|
4,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) INCOME PER
SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
(0.13)
|
|
|
|
0.49
|
|
|
|
0.25
|
|
Diluted
|
|
|
(0.13)
|
|
|
|
0.49
|
|
|
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
17,406,069
|
|
|
|
17,193,189
|
|
|
|
17,059,575
|
|
Diluted
|
|
|
17,406,069
|
|
|
|
17,193,189
|
|
|
|
17,059,575
|
|
SGOCO GROUP, LTD.
AND SUBSIDIARIES
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
AS OF DECEMBER 31,
2014 AND 2013
|
|
(In thousands
of U.S. dollars except share and per share data)
|
|
|
|
|
|
2014
|
|
|
2013
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
Cash
|
|
|
92
|
|
|
|
13,497
|
|
Accounts receivable, net of provision for doubtful accounts of
nil and $98, respectively
|
|
|
910
|
|
|
|
48,063
|
|
Notes
receivable
|
|
|
-
|
|
|
|
1,316
|
|
Other
receivables and prepayments
|
|
|
51
|
|
|
|
744
|
|
Receivable from
sale of a subsidiary
|
|
|
91,379
|
|
|
|
-
|
|
Inventories
|
|
|
1
|
|
|
|
7,017
|
|
Advances to
suppliers
|
|
|
33
|
|
|
|
33,824
|
|
Prepaid income
taxes
|
|
|
17
|
|
|
|
33,824
|
|
Other current
assets
|
|
|
56
|
|
|
|
51
|
|
Total current
assets
|
|
|
92,539
|
|
|
|
104,512
|
|
|
|
|
|
|
|
|
|
|
PLANT AND EQUIPMENT,
NET
|
|
|
14
|
|
|
|
223
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
92,553
|
|
|
|
104,735
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Short-term
loans
|
|
|
-
|
|
|
|
6,734
|
|
Accounts payable,
trade
|
|
|
606
|
|
|
|
2,052
|
|
Loan from a
shareholder
|
|
|
100
|
|
|
|
-
|
|
Other payables and
accrued liabilities
|
|
|
209
|
|
|
|
695
|
|
Customer
deposits
|
|
|
198
|
|
|
|
999
|
|
Taxes
payable
|
|
|
6,241
|
|
|
|
6,126
|
|
Warrant derivative
liability
|
|
|
2
|
|
|
|
21
|
|
Deferred tax
liabilities
|
|
|
-
|
|
|
|
319
|
|
Total
liabilities
|
|
|
7,356
|
|
|
|
16,946
|
|
|
|
|
|
|
|
|
|
|
Commitment and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Preferred stock,
$0.001 par value, 1,000,000 shares authorized, nil issued and
outstanding as of December 31, 2014 and 2013
|
|
|
-
|
|
|
|
-
|
|
Common stock, $0.001
par value, 50,000,000 shares authorized, 17,414,861 and 17,660,356
shares issued and outstanding as of December 31, 2014 and 2013,
respectively
|
|
|
18
|
|
|
|
18
|
|
Paid-in-capital
|
|
|
25,589
|
|
|
|
25,052
|
|
Statutory
reserves
|
|
|
-
|
|
|
|
809
|
|
Retained
earnings
|
|
|
59,601
|
|
|
|
61,080
|
|
Accumulated other
comprehensive (loss) income
|
|
|
(11)
|
|
|
|
830
|
|
Total shareholders'
equity
|
|
|
85,197
|
|
|
|
87,789
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
|
|
92,553
|
|
|
|
104,735
|
|
SGOCO GROUP, LTD.
AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
FOR THE YEARS
ENDED DECEMBER 31, 2014, 2013 AND 2012
|
|
(In thousands of U.S.
dollars)
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
|
(2,288)
|
|
|
|
8,444
|
|
|
|
4,213
|
|
Adjustments to reconcile net income to cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
19
|
|
|
|
76
|
|
|
|
69
|
|
Bad debt
provision
|
|
|
-
|
|
|
|
98
|
|
|
|
-
|
|
Change in fair value
of warrant derivative liability
|
|
|
(19)
|
|
|
|
3
|
|
|
|
(75)
|
|
Share-based
compensation expenses
|
|
|
538
|
|
|
|
225
|
|
|
|
273
|
|
Deferred income
taxes
|
|
|
-
|
|
|
|
314
|
|
|
|
-
|
|
Change in operating
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable,
trade
|
|
|
14,275
|
|
|
|
10,953
|
|
|
|
(39,496)
|
|
Notes
receivable
|
|
|
1,316
|
|
|
|
(1,294)
|
|
|
|
-
|
|
Other receivables and
prepayments
|
|
|
521
|
|
|
|
(561)
|
|
|
|
587
|
|
Inventories
|
|
|
2,009
|
|
|
|
(1,093)
|
|
|
|
34,557
|
|
Prepaid income
tax
|
|
|
(17)
|
|
|
|
-
|
|
|
|
-
|
|
Advances to
suppliers
|
|
|
(42,814)
|
|
|
|
(4,344)
|
|
|
|
(23,797)
|
|
Other current
assets
|
|
|
53
|
|
|
|
31
|
|
|
|
(16)
|
|
Change in operating
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable,
trade
|
|
|
13,495
|
|
|
|
(10,195)
|
|
|
|
7,390
|
|
Other payables and
accrued liabilities
|
|
|
1,943
|
|
|
|
141
|
|
|
|
(164)
|
|
Customer
deposits
|
|
|
(200)
|
|
|
|
(189)
|
|
|
|
997
|
|
Taxes
payable
|
|
|
385
|
|
|
|
(1,225)
|
|
|
|
1,575
|
|
Net cash (used in)
provided by operating activities
|
|
|
(10,784)
|
|
|
|
1,384
|
|
|
|
(13,887)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from disposal of subsidiaries, net of cash disposed of $25
|
|
|
(25)
|
|
|
|
-
|
|
|
|
18,734
|
|
Purchase of equipment
and construction-in-progress
|
|
|
-
|
|
|
|
(32)
|
|
|
|
(106)
|
|
Net cash (used in)
provided by investing activities
|
|
|
(25)
|
|
|
|
(32)
|
|
|
|
18,628
|
|
SGOCO GROUP, LTD.
AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
FOR THE YEARS
ENDED DECEMBER 31, 2014, 2013 AND 2012 - Continued
|
|
(In thousands
of U.S. dollars)
|
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from
short-term loan
|
|
|
-
|
|
|
|
6,668
|
|
|
|
6,230
|
|
Payments on short-term
loan
|
|
|
(2,599)
|
|
|
|
(6,230)
|
|
|
|
-
|
|
Proceeds from loan
from a shareholder
|
|
|
600
|
|
|
|
-
|
|
|
|
-
|
|
Payments on loan from
a shareholder
|
|
|
(500)
|
|
|
|
(209)
|
|
|
|
-
|
|
Net cash (used in)
provided by financing activities
|
|
|
(2,499)
|
|
|
|
229
|
|
|
|
6,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE
ON CASH
|
|
|
(97)
|
|
|
|
368
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN
CASH
|
|
|
(13,405)
|
|
|
|
1,949
|
|
|
|
11,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH, beginning of
year
|
|
|
13,497
|
|
|
|
11,548
|
|
|
|
535
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH, end of
year
|
|
|
92
|
|
|
|
13,497
|
|
|
|
11,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for
interest
|
|
|
304
|
|
|
|
260
|
|
|
|
61
|
|
Cash paid for income
taxes
|
|
|
963
|
|
|
|
3,205
|
|
|
|
575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE
OF NON-CASH INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable from the
sale of a subsidiary
|
|
|
91,379
|
|
|
|
-
|
|
|
|
-
|
|
Settlement of
consideration receivable – received in finished goods
|
|
|
-
|
|
|
|
-
|
|
|
|
38,397
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/sgoco-group-ltd-announces-2014-annual-financial-results-and-unaudited-second-half-financial-results-300084219.html
SOURCE SGOCO Group, Ltd.