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SGOCO Group, Ltd. Announces Solid Growth in Revenues and Earnings for First Quarter 2013



 SGOCO Group, Ltd. Announces Solid Growth in Revenues and Earnings for First
                                 Quarter 2013

PR Newswire

BEIJING, June 10, 2013

BEIJING, June 10, 2013 /PRNewswire/ -- SGOCO Group, Ltd. (Nasdaq: SGOC)
("SGOCO" or the "Company"), a company focused on product design, distribution
and brand development in flat-panel display products, today announced its
unaudited operating results for the three months ended March 31, 2013.

2013 First Quarter Overview

SGOCO started the year 2013 with a solid year-over-year growth of both its
revenues and profits. Compared with the first quarter of 2012, SGOCO achieved
top line increase of 58.0% and bottom line increase of 87.5% for the first
quarter of 2013.

The solid operational results demonstrated that the light-asset business model
provided SGOCO with greater scalability in growing its sales.

Financial Highlights First Quarter 2013 vs. First Quarter 2012

  o Quarterly revenues increased 58.0% to $54.5 million, as compared to $34.5
    million year-over-year
  o Gross profit increased by 39.6% to $3.7 million, as compared to $2.7
    million year-over-year
  o Net income increased 87.5% to $1.7 million, as compared to $0.9 million
    year-over-year
  o Basic and diluted earnings per share were $0.10, as compared to $0.05.

Revenue

In the first quarter of 2013, SGOCO's total revenues were $54.5 million, which
increased by 58.0% from $34.5 million from the first quarter of 2012. The
year-over-year revenue increase was mainly due to the sign-ups with a few
large local distributor clients and increased sales of other application
products as well as larger-sized monitors with higher prices, offset by a
decrease in sales of smaller-sized monitors in the quarter.

Of the total revenues in the quarter, $36.6 million or 67.1% of total revenues
were from SGOCO's own brands; $6.5 million or 12.0% of total revenues were
from OEM customers; and $11.4 million or 20.9% of total revenues were from
sales of other application products. Starting in the fourth quarter of 2012,
the Company started to source orders for higher margin application products in
order to diversify its revenue streams.

Gross Margin

Gross profit for the first quarter of 2013 increased 39.6% to $3.7 million
from $2.7 million for the first quarter of 2012.

The overall gross margin for the first quarter of 2013 was 6.9%, as compared
with 7.8% for the first quarter of 2012. Gross margin continued to be
negatively impacted by the increased fees charged by Chinese authorities for
recycling imported monitors and price decreases in monitors. During the first
quarter of 2013, SGOCO brand sales had a gross margin of 6.6%, which decreased
from 9.8% in the first quarter of 2012. During the first quarters of 2013 and
2012, OEM businesses had a gross margin of 6.9% and 5.5%, respectively. Sales
of other application products in the first quarter of 2013 recorded a gross
margin of 7.8%.

Operating Income and Expenses

Operating income totaled $2.7 million for the first quarter of 2013, or 4.9%
of total revenues, as compared to $1.7 million, or 4.8% of total revenues for
the first quarter of 2012.

SG&A expenses for the first quarter of 2013 were $1.1 million, roughly the
same level as the first quarter of 2012 of $1.0 million. The year-over-year
increase of $0.1 million was attributed to increase in both transportation
cost and staff salaries and welfare, offset by a decrease in share-based
compensation expenses.

Net Income and EPS

Net income for the first quarter of 2013 was $1.7 million, which grew 87.5%
from $0.9 million for the first quarter of 2012. The net income margins were
3.2% and 2.7% for the three months ended March 31, 2013 and 2012,
respectively.

Basic and diluted earnings per share were reported at $0.10 for the first
quarter of 2013, compared to $0.05 in the first quarter of 2012. Basic and
diluted EPS for the first quarter of 2013 was calculated based on 17,086,826
weighted average number of common shares as compared to 17,053,036 weighted
average number of common shares for the first quarter of 2012.

Cash and Working Capital

As of March 31, 2013, the Company held $5.7 million in cash and cash
equivalents compared to $11.5 million as of December 31, 2012. Working capital
increased to $79.9 million from $78.1 million at the end of 2012. The current
ratio was 3.01 on March 31, 2013, compared to 3.86 on December 31, 2012.

The decrease in the cash position was largely due to the Company's significant
inventory build-up and advances made to suppliers as of March 31, 2013 in
order to meet customers' delivery schedules in the following quarter.

Annual General Meeting
The Company is scheduled to hold its Annual General Meeting on June 24, 2013
with Proxy Statement filed with the SEC.

Conference Call
SGOCO's management will host a conference call at 9 a.m. Eastern Time/9 p.m.
Beijing Time on Monday, June 17, 2013.

Interested parties may access the call by dialing 1-877-941-1427 (US
Toll-free) or 1-480-629-9664 (International) or 400-120-0612 (China
Toll-free). The Conference call identification number is 4620997#.

A webcast will also be available via
http://public.viavid.com/index.php?id=104868

A recording of the conference call will be accessible within 48 hours via
SGOCO's website at:
http://www.sgocogroup.com/us/SGOC/irwebsite/index.php?mod=recent&id=14

About  SGOCO Group, Ltd.

SGOCO Group, Ltd. is focused on product design, brand development and
distribution of flat panel display products, including computer monitors, TVs,
computers and application specific products. SGOCO sells its products and
services in the Chinese market and abroad. For more information about SGOCO,
please visit our investor relations website http://www.sgocogroup.com.

For investor and media inquiries, please contact:

SGOCO Group, Ltd.

Serena Wu
Investor Relations Manager
Tel: +86 (10) - 85870173 (China)
US: +1(646) - 5831616 (Voice mail)
Email:ir@sgoco.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;
changing principles of generally accepted accounting principles; 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.

SGOCO GROUP, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012
(Unaudited)
(In thousands of U.S.dollars except share and per share data)
                                                2013          2012
REVENUES:
Revenues                                         54,544        34,522
COST OF GOODS SOLD:
Cost of goods sold                               50,801        31,840
GROSS PROFIT                                     3,743         2,682
OPERATING EXPENSES:
Selling expenses                                 244           118
General and administrative expenses              832           912
Total operating expenses                         1,076         1,030
INCOME FROM OPERATIONS                           2,667         1,652
OTHER INCOME (EXPENSES):
Interest income                                  1             -
Interest expense                                 (35)          (15)
Other income (expense), net                      (74)          (14)
Change in fair value of warrant derivative       5             1
liability
Total other expenses, net                        (103)         (28)
INCOME BEFORE PROVISION FOR INCOME TAXES         2,564         1,624
PROVISION FOR INCOME TAXES                       843           706
NET INCOME                                       1,721         918
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustment          14            (72)
COMPREHENSIVE INCOME                             1,735         846
EARNINGS PER SHARE:
Basic                                            0.10          0.05
Diluted                                          0.10          0.05
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING:
Basic                                            17,086,826    17,053,036
Diluted                                          17,086,826    17,053,036

SGOCO GROUP, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2013 AND DECEMBER 31, 2012
(In thousands of U.S.dollars except share and per share data)
                                               March 31, 2013    December 31,
                                                                 2012 
ASSETS                                         (Unaudited) 
CURRENT ASSETS
 Cash                                          5,663             11,548
 Accounts receivable, net                      64,966            59,355
 Other receivables and prepayments             1,440             169
 Inventories                                   12,288            5,725
Advances to suppliers                          35,313            28,511
 Other current assets                          27                78
Total current assets                           119,697           105,386
PLANT AND EQUIPMENT, NET                       257               261
Total assets                                   119,954           105,647
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term loan                                11,800            6,230
Accounts payable, trade                        17,197            12,038
Accrued liabilities                            104               156
Short-term loan – shareholder                  209               209
Other payables                                 325               379
Customer deposits                              2,563             1,155
Taxes payable                                  7,594             7,147
Total current liabilities                      39,792            27,314
OTHER LIABILITIES
Warrant derivative liability                   13                18
Total liabilities                              39,805            27,332
Commitment and contingencies
SHAREHOLDERS' EQUITY
Preferred stock, $0.001 par value, 1,000,000
shares authorized, nil issued and              -                 -
outstanding as of
March 31, 2013 and December 31, 2012
Common stock, $0.001 par value, 50,000,000
shares authorized, 17,545,356 and 17,465,356
shares                                         18                17
issued and outstanding as of March 31, 2013
and December 31, 2012, respectively
Paid-in-capital                                24,926            24,828
Statutory reserves                             401               401
Retained earnings                              54,765            53,044
Accumulated other comprehensive income         39                25
Total shareholders' equity                     80,149            78,315
 Total liabilities and shareholder's equity    119,954           105,647

SGOCO GROUP, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012
(Unaudited)
(In thousands of U.S.dollars)
                                                            2013      2012
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                              1,721     918
    Adjustments to reconcile net income to net cash used
    in operating activities:
                        Depreciation and amortization       18        15
                        Change in fair value of warrant     (5)       (1)
                        derivative liability
                        Share-based compensation expenses   98        273
    Change in operating assets and liabilities
                        Accounts receivable, trade          (5,657)   (9,511)
                        Other receivables and prepayments   (1,268)   392
                        Inventories                         (6,538)   11,373
                        Advances to suppliers               (6,716)   (8,313)
                        Other current assets                54        42
                        Accounts payables, trade            5,119     270
                        Accrued liabilities                 (52)      (18)
                        Other payables                      (81)      788
                        Customer deposits                   1,403     (40)
                        Taxes payable                       427       517
                           Net cash used in operating       (11,477)  (3,295)
                           activities
CASH FLOWS FROM INVESTING ACTIVITIES:
    Settlement of consideration received from disposal of   -         9,703
    subsidiaries
    Purchase of equipment                                   (14)      (67)
                           Net cash (used in) provided by   (14)      9,636
                           investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
    Increase in restricted cash                             -         (65)
    Notes payable                                           -         65
    Proceeds from short-term loan                           5,570     -
                           Net cash provided by financing   5,570     -
                           activities
EFFECT OF EXCHANGE RATE ON CASH                             36        (93)
(DECREASE) INCREASE IN CASH                                 (5,885)   6,248
CASH, beginning of period                                   11,548    535
CASH, end of period                                         5,663     6,783
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
    Interest expenses paid (net of amount capitalized)      35        15
    Income taxes paid                                       399       189
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES
    Settlement of consideration receivable –                -         13,901
    received in finished goods

SOURCE SGOCO Group, Ltd.

Website: http://www.sgocogroup.com
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