2014 Investor Presentation 64 255 102 0 Calibri 1

2014 Investor Presentation

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Safe Harbor StatementSafe Harbor Statement

This presentation 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 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 trends and client mix; possibility of securing loans and other financing without fixed assets as collateral; 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 presentation 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.

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AgendaAgenda

Company Overview Competitive Advantages Industrial Overview & Emerging Growth Opportunities Evolving Business Model & Growth Strategies Financial Snapshots Management Team Appendix

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Company OverviewCompetitive AdvantagesIndustrial Overview & Growth OpportunitiesEvolving Business Model & Growth StrategiesFinancial SnapshotsManagement TeamAppendix

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Sgoco At a GlanceSgoco At a Glance

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As of October 31, 2013

Stock Ticker: SGOC

Stock Price: $3.40

Market cap: $58.5 M

Share outstanding: 17.2M

A Company in Transformation ….A Company in Transformation ….

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Capturing enormous opportunities from China’s urbanization

• Wide range from Smart displays and PCs, ASPs to LCD/LED monitors and TVs

• Develop and distribute products co-branded with top-tier brands • Own in-house product development capabilities

• A multi-brand strategy supported by wide distribution network • Target at China’s fast-growing 3rd and 4th tier cities

• Business model transformation in November, 2011• Sold manufacturing facilities and shifted focus to branding and distribution

• Listed in NASDAQ with an offering of 1.3M ordinary shares at $5.00 per share.

• Founded in China as a leading display products supplier and a OEM partner of choice.2005

2010

2011

2012


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An Integrated “Channel” Solution ModelAn Integrated “Channel” Solution Model

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ConsumersTRADITIONALLCD/ Monitor

RetailerDistributionOEM• Co-brand product

design• Procurement

Consumers

BRAND SOLUTION or

RetailerDistribution

DISPLAY SOLUTION

OEM

• Product design• Co-brand partnership• Procurement• R&D

• Find target corporate customers

Consumers

Corporate customers

RetailerDistributionOEM• Product design• Procurement• R&D

or

OEM

• Design solution based services and products• Co-brand partnership• Procurement

• Find target industry verticals

Industry Verticals

A Multiple Brand Strategy A Multiple Brand Strategy

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The company's flagship brand

China's leading TV brand

A leading brand in Tier 3 and Tier 4 markets

A leading brand in Tier 3 and Tier 4 markets

China's leading PC brand

Anhui

Zhejiang

GuangdongGuangxi

Hunan

HubeiSichuan

Henan

Shandong

Shaanxi

Heilongjiang

Inner - Mongolia

Jiangsu

Hebei

Fujian | Product center

Chongqing

Liaoning

Jiangxi

Beijing | Headquarter

Shenzhen | Sales office

An Extensive Channel Network in Tier 3 & 4 MarketsAn Extensive Channel Network in Tier 3 & 4 Markets

Self-managed province-level distributors covering 19 provinces in China

TRADITIONAL BUSINESS:LCD/LED Monitors, LCD/LED TVs

LED/LCD TVLED Monitor Touch-screen Monitor

LCD Monitor 3D TV

A Market Driven Product & Solution OfferingsA Market Driven Product & Solution Offerings

ADDITIONAL GROWTH BUSINESS:Smart Display Products

Tablet PC Part-in-ones (PIO)All-in-ones (AIO)

CCTV MonitorAdvertising LCD Touch ScreenE-board

FUTURE GROWTH FOCUS:Application: Specific products and services

target at industry verticals

A Distinctive SGOCO CompetenciesA Distinctive SGOCO Competencies

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Low AP risk : Direct control and billing to few distributors

First-hand market information : Localized sales and CRM teams in key sales points

Low AP risk : Direct control and billing to few distributors

First-hand market information : Localized sales and CRM teams in key sales points

Top tier licensing brands focus Continue to expand distribution networks High growth industries focus Continue to expand product and solution offerings

Top tier licensing brands focus Continue to expand distribution networks High growth industries focus Continue to expand product and solution offerings

Strong presence in rural display market Product development team owns market-know-how Cross-connected sales and product development team

sharing market knowledge

Strong presence in rural display market Product development team owns market-know-how Cross-connected sales and product development team

sharing market knowledge

Successful early development in high margin products Big opportunities ahead in commercial International expansion through distribution Optimize Cross-channel synergies

Successful early development in high margin products Big opportunities ahead in commercial International expansion through distribution Optimize Cross-channel synergies


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Expanding Addressable Display Market in China – Industry VerticalsExpanding Addressable Display Market in China – Industry Verticals

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Fast-growing demand for domestic travel.

Intensive infrastructure investments in China, encouraged domestic travel and the growth of budget hotels.

By the end of 2013, 37% of classrooms in China will have an interactive display. Source: Futuresource.

• Travel & Leisure• Transportation & Infrastructure • Education

RMB

Source: China National Tourism Administration

Domestic Tourism Expenditure per Capita Growth in China

National Enrolment Breakdown 2012Approx. 509.6 million students

Source: Ministry of Education of China

Emergence of Solutions Driven Demand from Retail and CommercialEmergence of Solutions Driven Demand from Retail and Commercial

Interactive panel displays are gaining popularity:

For 1H 2013, sales of interactive whiteboards & interactive flat panel displays in the education and corporate sectors up 20% Source: Futuresource

China retained its position as the largest world country market, with 40% of the global market and 77% of the Asia region's sales.

• Household ASP• Commercial ASP• Younger generation’s need on sophisticated electronic devices

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Source: KDB Daewoo Securities Research

Touchscreen Penetration in Desktop PCs

The “Screenager” Era: Touch panels are in increasingly widespread use in a variety of applications, including

mobile phones, tablets, notebook PCs, and in-car technology... (Nomura)

Exponential Growth in Lower Tier CitiesExponential Growth in Lower Tier Cities

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In China:

PC shipment to have double-digit growth until 2016. Lower tier cities are growth drivers. (1)

Disposable income per capita of urban households up 9.6% to nearly RMB 25K. (2)

Urbanization rate at 42.2% in 2012 (3). 390 million people will move to urban areas by 2030.

Internet population to reach ≈ 800 mil by 2015. Mobile internet users up 18.1% yoy to 420 mil in 2012. (4)

210 mil fixed-line broadband subscribers by 2013, 270 mil by 2015 end, 400 mil by 2020 end

(1) IDC, June 2012(2) National Bureau of Statistics of China(3) Chinese Academy of Social Sciences, CASS

• TV• PC• Mobile/ Handheld

4. Chinese Ministry of Industry and Information Technology, MIIT5. China’s Sate Council – 2013-2020 Broadband Development Plans

Disposable Income of Urban Households 2008 ~ 2012 (2)

By end of 2013

By end of 2015

By end of 2020

Urban areas 55% 65%

Rural areas 20% 30%

Overall 40% 50% 70%

25% 32.5% 85%

China Target Broadband Internet-access Penetration Rates

Network type

Fixed-line networks

3G and LTE

Source: China State Council, compiled by Digitimes, August 2013


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Transformative Business Model Moves Up the Value StackTransformative Business Model Moves Up the Value Stack

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Channel Play = Combining products and display solution

V A L U

E C H

A I N

P R

O D

U C

T S

Multi-brands:- Sgoco- TCL- Founder- Povizon- No. 10

Channels SGOCO Brand

Channels

e-commerce

Sector Driven : Education

Market Driven : Media Display

Display Solution

Others ….

Transformation in 4-Pronged Strategies Transformation in 4-Pronged Strategies

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Leverage on strong distribution network to sign up top tier brands

Increase overall brand awareness for SGOCO and clients to capture additional market share

Leverage on strong distribution network to sign up top tier brands

Increase overall brand awareness for SGOCO and clients to capture additional market share

Continue to expand in the traditional distribution network

Look into emerging channels such as e-commerce to capture the shift of consumer behaviors in the market

Continue to expand in the traditional distribution network

Look into emerging channels such as e-commerce to capture the shift of consumer behaviors in the market

Identified high growth industries, such as budget hotel chains - provide them with tailored display products for their boutique size

Identified high growth industries, such as budget hotel chains - provide them with tailored display products for their boutique size

Self-develop and partner with brand clients to develop niche products

o All-in-one PCso Parts-in-one PCs

Self-develop and partner with brand clients to develop niche products

o All-in-one PCso Parts-in-one PCs

Product Driven Short-Term Growth Catalysts Product Driven Short-Term Growth Catalysts

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All-in-One / Part-in-One PCs

Features: Touch-screen, Built-in to a flat screen monitor, Multi-functional, Slim design. PIO also provides flexibility for users to configure and build their own PC system

Target markets: Retail and Commercial use e.g. Budget hotels

Features: Touch-screen, Built-in to a flat screen monitor, Multi-functional, Slim design. PIO also provides flexibility for users to configure and build their own PC system

Target markets: Retail and Commercial use e.g. Budget hotels

Design and Price is King!

Worldwide All-in-one Desktop PC Forecast

CAGR: 13%

DisplaySearch

Solution & Channel Driven Mid to Long-Term Growth Catalysts Solution & Channel Driven Mid to Long-Term Growth Catalysts

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Target markets: High growth industries in China

Education Infrastructure Travel and Leisure

Target markets: High growth industries in China

Education Infrastructure Travel and Leisure

Flexibility and Diversification is King!


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US$ Millions

Revenue Growth Traction ReturnedRevenue Growth Traction Returned

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3Q 2012:•SGOCO was experiencing the transition to a “light-asset” business model. Therefore, the revenues were negatively impacted.

Total Revenue

Profitability FocusedProfitability Focused

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Income from Operations & Operating Margin

US$ Millions US$ Millions

Stabilized Cash Position to Fuel GrowthStabilized Cash Position to Fuel Growth

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Working Capital & Current Ratio

US$ Millions

US$ Millions

Cash and Cash Equivalents

US$ Millions

Inventories

Shareholders’ Return FocusedShareholders’ Return Focused

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Return on Invested Capital Return on Equity

Per QuarterPer Quarter


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A Dynamic Management TeamA Dynamic Management Team

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Chief Financial Officer •CPA in Hong Kong and Australia•Started with Deloitte in Hong Kong and Beijing from 1997, Mr. Lau has over 17 years of experience in the accounting profession•Previous worked in various public companies in the US and England as Director of Finance and CFO for nine years•Bachelor degree in commerce from Monash University, Australia

Mr. Johnson Lau

Mr. David Xu

Chief Executive Officer•Appointed as SGOCO’s CEO in January 2014•Served as SGOCO’s COO from July 2013 to January 2014•Served as SGOCO’s CFO from May 2011 to July 2013•Nearly 20 years of finance and accounting experience in both Asia and North America•Previous employers include General Electric and Yum! Brands•MBA from the University of Illinois at Chicago, and a BA in English and American Literature from Beijing Normal University

Mr. Tin Man Or

Chairman of the Board•Appointed as SGOCO’s Chairman of the Board in January 2014 •Previously served as a director of the Board from 2010 to 2013•35+ years of experience in the investment and marketing of the display and trading industries throughout Greater China. •Owns Sun Zone Investments Limited, which is the major shareholder of SGOCO Group. •Served as General Manager of Honesty Group from 2005 to 2011, before SGOCO's sale of Honesty Group and transformation into a light-asset business model


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$ in thousands except shares and per share data

Three Months EndedSeptember 30, 2013

Nine Months EndedSeptember 30, 2013

2013 2012 2013 2012

Revenues 42,969 26,047 156,754 103,272

Cost of Goods Sold 39,501 25,105 144,341 95,692

Gross Profit 3,468 942 12,413 7,580

Selling expenses 259 212 815 460

General and administrative expenses 765 1,482 2,435 4,166

Total operating expenses 1,024 1,694 3,250 4,626

Income (Loss) from Operations 2,444 (752) 9,163 2,954

Income before Provision for Income Taxes 2,667 (759) 9,210 2,946

Provision for Income Taxes 513 331 1,942 1,887

Net income (loss) 2,154 (1,090) 7,268 1,059

Comprehensive Income 2,180 (1,093) 7,400 974

Earnings (Loss) per Share – basic & diluted 0.12 (0.06) 0.42 0.06

Weighted Average Number of Common Shares – basic & diluted

17,254,860 17,059,860 17,172,720 17,059,860

P&L – Selected ItemsP&L – Selected Items

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$ in thousands except shares and per share data

As ofSeptember 30, 2013

As ofDecember 31, 2012

Cash 13,681 11,548

Accounts receivable 54,393 59,355

Inventories 25,709 5,725

Advances to suppliers 20,502 28,511

Total Current Assets 120,204 105,386

Total Assets 120,445 105,647

Short-term loan 11,451 6,230

Accounts payable 8,342 12,038

Customer deposits 6,098 1,155

Taxes payable 7,915 7,147

Total Current Liabilities 34,477 27,314

Total Liabilities 34,505 27,332

Retained earnings 60,312 53,044

Total Shareholders’ Equity 85,940 78,315

Total Liabilities and Shareholders’ Equity 120,445 105,647

Balance Sheet – Selected ItemsBalance Sheet – Selected Items

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$ in thousands of U.S. dollars Nine Months EndedSeptember 30, 2013

Nine Months EndedSeptember 30, 2012

Net cash provided by (used in) operating activities

(2,921) (12,138)

Net cash (used in) provided by investing activities

(29) 18,629

Net cash provided by (used in) financing activities

5,012 (254)

Increase in cash 2,133 6,213

CASH, beginning of period 11,548 535

CASH, end of period 13,681 6,748

Cash Flow Statements – Selected ItemsCash Flow Statements – Selected Items

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Investor Relations ContactInvestor Relations Contact

Serena WuSGOCO Group, Ltd.Direct Line: +86-10-8587-0173Email: [email protected]

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2014 Investor Presentation 64 255 102 0 Calibri 1