GLG CORP LTD — Annual Report 2009

Aug 30, 2009

GLG Corp Ltd

GLG Corp Ltd

ACN 116 632 958 PRELIMINARY FINAL REPORT

PERIOD ENDED 30 JUNE 2009

1. Highlight of Results

2. Appendix 4E Financial Statements for the Year ended 30 June 2009

1

GLG Corp Ltd

1. Results for announcement to market

Summary financial information for the company for the 2008/09 financial year is set out below. Full financial details are attached to this announcement.

		Consolidated
Summary Information	30 –JUN-09 USD$’000	30 –JUN-08 USD$’000	Inc/(Dec) USD$’000	Inc/(Dec) %
Revenue from Ordinary Activities	196,021	209,125	(13,104)	(6.3%)
Profit/(Loss) after Tax from Ordinary Activities	2,134	6,329	(4,195)	(66.3%)
Profit/(Loss) after Tax from Discontinued Activities	-	(5)	(5)	(-)
Net Profit/(Loss) after Tax Attributable to Members	2,134	6,324	(4,190)	(66.3%)
Basic Earnings – US Cents Per Share	2.88	8.53	(5.65)	(67.0%)
Dilute Earnings – US Cents Per Share	2.88	8.53	(5.65)	(67.0%)
Net Tangible Assets – US Cents Per Share	36.72	33.94	2.78	8.2%

Dividends (Distributions)	As per security – US Cents	Franked amount per security-US cents
Dividends Paid during Year	Nil	Nil
Proposed Final Dividend	Nil	Nil
Proposed payment date for final dividend	N/A	N/A

2

GLG Corp Ltd

Summary commentary on results

Directors Comments:

The Company’s accounts are in the process of being audited by Deloitte Touche Tohmatsu, Chartered Accountants.

During the year, like many of its competitors, suppliers and customers, the company suffered from the severe adverse impact of the Global Financial Crisis which hit the US apparel market particularly hard. Amongst other challenges, one of the company’s major customers, Mervyns, entered into Chapter 11 bankruptcy proceedings early in the financial year. Despite trading difficulties, the company has emerged at the end of the year, battle hardened and positioned to benefit from an economic turnaround when it commences.

The Directors note that whilst they do not expect the final audited results to differ materially from those included in this Preliminary Financial Report, as at the date of this report, the audit process has not been finalised and further changes may be forthcoming.

The Directors believe that the final audited accounts will include an impairment of the GLIT (the company’s primary sourcing partner) receivable within a range of $1.5 million to $3.5 million. Accordingly, for the purposes of the Preliminary Financial Report an impairment charge of $2.5 million has been recognised.

The discussion that follows compares the Consolidated Income Statement for the year ended 30 June 2009 with that of 30 June 2008.

GLG’s net profit declined by 4,190 to 2,134 thousand, against a net profit of 6,324 thousand in the previous year. The decline was due to lower revenue and higher selling, and distribution expenses and other expenses and the inclusion of an impairment charge of 2,500 thousand.

GLG’s sales decreased by 13,104 thousand, or 6.27% to 196,021 thousand compared to sales of 209,125 thousand in the previous year. The decline in sales was affected mainly by lower orders from clients.

Other revenue decreased by 215 thousand to 642 thousand as compared to 857 thousand in previous year as a result of lower average commission rate received from suppliers.

Other income increased by 478 thousand to 852 thousand was largely due to a one off insurance compensation.

Cost of sales decreased by 11,125 thousand, or 5.91%, to 176,946 thousand compared to cost of sales of 188,071 thousand in the previous year, and was consistent with the decrease in sales.

GLG’s gross profit was 19,075 thousand compared to a gross profit of 21,054 thousand in the previous year as a result of lower sales. Gross margin declined by 0.33% to 9.73%, because of more aggressive pricing to gain or maintain market share.

Selling and distribution cost went up to 2,060 thousand compared to 1,672 thousand in the previous year. The increase in expenses was due mainly to a one off commission expenses paid during the financial year to enhance future sales.

Administrative expenses decreased marginally by 344 thousand, or 3.23% to 10,303 thousand compared to 10,647 thousand in the previous year. This is the result of cost cutting measures implemented during the year.

Finance cost was reduced to 542 thousand compared to 1,498 thousand in the previous year. The decrease was due to lower volume of letters of credit processed and assuming of interest expense from suppliers.

3

GLG Corp Ltd

Tax expense increased by 415 thousand to 1,230 thousand compared to 815 thousand in the previous year. This was the direct result of additional tax assessments for prior years.

The discussion that follows compares the Consolidated Balance Sheet as at 30 June 2009 with that of 30 June 2008.

Cash as at 30 June 2009 increased by 2,826 thousand, or 73.81%, to 6,655 thousand compared to 3,829 thousand as at 30 June 2008. The increase in cash was mainly due to draw down of borrowings prior to year-end.

Trade and other receivables decreased by 324 thousand, or 1.56%, to 20,402 thousand as at 30 June 2009 compared to 20,726 thousand as at 30 June 2008 The decrease was a result of the higher volume of delivery prior to year end offset by an allowance for doubtful debts of 2,500 thousand.

Inventory was 41 thousand compared to nil for previous year. This was for the cost of finished garment stocks under a private label wholesales trading unit which commenced operation during the year.

Other current assets increased by 95 thousand, or 51.07%, to 281 thousand as at 30 June 2009 compared to 186 thousand as at 30 June 2008. The increase was attributable mainly to prepayments for insurance and billing on behalf of suppliers.

Total payables and borrowings increased by 2,095 thousand, or 40.65%, to 7,249 thousand as at 30 June 2009 compared to 5,154 thousand as at 30 June 2008 after accounting for off-settable trust receipts and increased bank borrowings.

Equity increased to 27,211 thousand as at 30 June 2009, from 25,148 thousand as at 30 June 2008, mainly from retained profits as at 30 June 2009.

The discussion that follows compares the Consolidated Statement of Cash flow as at 30 June 2008 with that of 30 June 2008.

GLG’s cash from operating activities decreased to an inflow of 578 thousand as at 30 June 2009 compared to an inflow of 6,913 thousand as at 30 June 2008. The reduction in the cash flow from operating activities is mainly due to higher level of uncollected receivables from year end shipments and higher payment to suppliers.

We believe our cash flow from operations of GLG remains sufficient to meet our working capital requirements, capital expenditures, debts servicing and other funding requirements for the foreseeable future.

4

GLG Corp Ltd

Index to the financial report

Index to the financial report	Index to the financial report
Contents		Page
Income	statement	6
Balance sheet		7
Statement of changes in equity		8
Cash flow statement		9
Note to	the financial statements
1	General information	10
2	Significant accounting policies	10
3	Critical accounting judgments and key sources of estimation uncertainty	20
4	Segment information	20
5	Revenue	21
6	Trade and other receivables	22
7	Other financial assets	24
8	Investments accounted for using the equity method	25
9	Trade and other payables	26
10	Borrowings	26
11	Issued capital	27
12	Earnings per share	28
13	Dividends	29
14	Commitments for expenditure	29
15	Contingent liabilities	29
16	Leases	30
17	Share-based payments	31
18	Subsidiaries	32
19	Economic Dependency	32

5

GLG Corp Ltd

Income statement for the financial year ended 30 June 2009

Continuing Operations Revenue Cost of sales Gross profit Other revenue Other income Distribution expenses Administration expenses Finance costs Impairment Expense Other expenses Share of losses of jointly controlled entities accounted for using the equity method Profit before income tax expense Income tax expense Profit for the year from continuing operations Discontinued operations Loss for the year from discontinued operations Profit for the year Earnings per share: From continuing and discontinued operations: Basic (cents per share) Diluted (cents per share) From continuing operations: Basic (cents per share) Diluted (cents per share)	Note 5 5 5 12 12 12 12	Consolidated
		2009 US$’000 2008 US$’000
		196,021 209,125 (176,946) (188,071)
		19,075 21,054 642 852 857 374 (2,060) (1,672) (10,303) (10,647) (542) (1,498) (2,500) - (1,546) (1,235) (254) (89)
		3,364 7,144 (1,230) (815)
		2,134 6,329 - (5)
		2,134 6,324
		2.88 8.53 2.88 8.53 2.88 8.54 2.88 8.54

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Notes to the financial statements are included on pages 10 to 32

6

GLG Corp Limited Cash flow statement

Balance sheet as at 30 June 2009

Current assets Cash and cash equivalents Trade and other receivables Inventory Other assets Other financial assets Total current assets Non-current assets Other financial assets Investments accounted for using the equity method Property, plant and equipment Total non-current assets Total assets Current liabilities Trade and other payables Borrowings Current tax liabilities Total current liabilities Non-current liabilities Borrowings Deferred tax liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Retained earnings Total equity	Note 6 7 7 8 9 10 10 11	Consolidated
		2009 US$’000 2008 US$’000
		6,655 3,829 20,402 20,726 41 - 281 186 2,517 -
		29,896 24,741
		4,630 5,085 39 - 1,035 1,467
		5,704 6,552
		35,600 31,293
		2,968 3,425 1,558 833 1,050 925
		5,576 5,183
		2,723 896 90 66
		2,813 962
		8,389 6,145
		27,211 25,148
		10,322 10,252 3 144 16,886 14,752
		27,211 25,148

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Notes to the financial statements are included on pages 10 to 32

7

GLG Corp Ltd

Statement of changes in equity for the financial year ended 30 June 2009

Note Consolidated Balance at 1 July 2007 Net income recognised directly in equity Profit for the year Total recognised income and expense Recognition of financial guarantee fees 17 Recognition of share-based payments 17 Transfer to issued share capital Payment of dividends 13 Balance at 30 June 2008 Balance at 1 July 2008 Net income recognised directly in equity Profit for the year Total recognised income and expense Recognition of financial guarantee fees 17 Recognition of share-based payments 17 Transfer to issued share capital Payment of dividends 13 Balance at 30 June 2009	Issued Capital US$’000	Share based payment Reserves Financial Guarantee Reserves US$’000 US$’000	Retained Profits Total US$’000 US$’000
	10,193	160 163	13,022 23,538
	(89)	- -	- (89)
	-	- -	6,324 6,324
	(89)	- -	6,324 6,235
	- - 148	- (82) 51 - (148) -	- (82) - 51 - -
	-	- -	(4,594) (4,594)
	10,252	63 81	14,752 25,148
	10,252 - -	63 81 7 - - -	14,752 25,148 - 7 2,134 2,134
	-	7 -	2,134 2,141
	- 70 - -	- (78) (70) - - - - -	- (78) - - - - - -
	10,322	- 3	16,886 27,211

Notes to the financial statements are included on pages 10 to 32

8

GLG Corp Ltd

Cash flow statement for the financial year ended 30 June 2009

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest and other costs of finance paid Interest received Income tax paid Net cash provided by/(used in) operating activities Cash flows from investing activities Proceeds from sales of property, plant and equipment Payment for property, plant and equipment Proceeds on sales of investment Dividends received Interests acquired in joint venture Proceeds from repayment of related party loans Net cash provided by/(used in) investing activities Cash flows from financing activities Dividends paid Drawdown of borrowings Repayment of borrowings Amounts advanced to related parties Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year	Consolidated
	2009 US$’000 2008 US$’000
	197,974 207,320 (195,932) (198,614) (542) (936) 162 153 (1,084) (1,010)
	578 6,913
	110 86 (121) (386) - - - - (293) (89) - -
	(304) (389)
	- (4,594) 3,368 (619) (816) - - -
	2,552 (5,213)
	2,826 1,311 3,829 2,518
	6,655 3,829

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Notes to the financial statements are included on pages 10 to 32

9

GLG Corp Limited

Notesto the Financial Statements for the Year Ended 30 June 2009

Notes to the Financial Statements for the Year Ended 30 June 2009

1. General information

GLG Corp Ltd (the Company) is a public company listed on the Australian Stock Exchange (trading under the symbol ‘GLE’), incorporated in Australia and operating in Asia.

GLG Corp Ltd’s registered office and principal place of business are as follows:

Registered office Principal place of business Level 5, 56 Pitt Street 41, Changi South Ave 2, Sydney, NSW 2000Australia Singapore 486153

The entity’s principal activities are the global supplier of knitwear/apparel and supply chain management operation.

2. Significant accounting policies

Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and complies with other requirements of the law. The financial report includes the separate financial statements of the Company and the consolidated financial statements of the Group.

Accounting Standards include Australian equivalents to International Financial Reporting Standards (‘A-IFRS’). Compliance with the A-IFRS ensures that the financial statements and notes of the Company and the Group comply with International Financial Reporting Standards (‘IFRS’).

The Preliminary Financial Report was authorised for issue by the Directors on 31[st] August 2009.

Basis of preparation

The financial report has been prepared on the basis of historical cost, except for financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in US dollars, unless otherwise noted.

The Company is a company of the kind referred to in ASIC Class Order 98/100, dated 10 July 1998, and in accordance with that Class Order amounts in the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

Going concern

The directors have prepared the Preliminary Financial Report on a going concern basis, which assumes continuity of normal business activities and the realization of assets and the settlement of liabilities in the ordinary course of business. As such the financial statements do not include any adjustments as to the recoverability and classification of assets and amounts and classification of liabilities that might be necessary should the Group not continue as a going concern. The Directors acknowledge that the Group faces significant uncertainties during this global financial crisis as it is dependent on continued financing facilities from banks as disclosed in Note 10 to enable it to continue as a going concern. The majority of the existing facilities of the Company are due within 12 months as detailed in note 10. Unused facilities are available to the Company, but these facilities also do not extend past 12 months.

The Directors are of the opinion that the Group should be able to continue as a going concern providing it receives the continued financial support from its current bankers or is able to source replacement facilities from other banks. However, if the continued financial support of its bankers or alternative funding is not available, significant uncertainty would exist as to whether the Group will continue as a going concern and, therefore, whether it will realize its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial statements.

For the reasons set out above, the Directors currently believe that the Group should be able to continue as a going concern and is a going concern.

10

GLG Corp Limited

Notesto the Financial Statements for the Period Ended 30[th] June 2009

2. Significant accounting policies (cont’d)

Adoption of new and revised Accounting Standards

In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. Details of the impact of the adoption of these new accounting standards are set out in the individual accounting policy notes set out below.

Standards and Interpretations issued not yet effective

At the date of authorisation of the financial report, a number of Standards and Interpretations were in issue but not yet effective. Initial application of the following Standards will not affect any of the amounts recognised in the financial report, but will change the disclosures presently made in relation to the Company’s financial report:

		Effective for annual	Expected to be
		reporting periods	initially applied in
		beginning on or after	the financial year
Standard			ending
•	AASB 101 ‘Presentation of Financial Statements’ (revised September	1 January 2009	30 June 2010
	2007), AASB 2007-8 ‘Amendments to Australian Accounting Standards
	arising from AASB 101’, AASB 2007-10 ‘Further Amendments to
	Australian Accounting Standards arising from AASB 101’
•	AASB 8 ‘Operating Segments’, AASB 2007-3 ‘Amendments to	1 January 2009	30 June 2010
	Australian Accounting Standards arising from AASB 8’
•	AASB 2009-2 ‘Amendments to Australian Accounting Standards – Improving Disclosures about Financial Instruments’	1 January 2009 (and that ends on or after 30 April	30 June 2010
		2009)

Initial application of the following Standards/Interpretations is not expected to have any material impact on the financial report of the Company:

		Effective for annual	Expected to be initially
		reporting periods	applied in the financial
Standard/Interpretation		beginning on or after	year ending
•	AASB 123 ‘Borrowing Costs’ (revised), AASB 2007-6	1 January 2009	30 June 2010
	‘Amendments to Australian Accounting Standards arising from
	AASB 123’
•	AASB 3 ‘Business Combinations’ (revised), AASB 127	Business combinations	30 June 2010
	‘Consolidated and Separate Financial Statements’ (revised) and	occurring after the beginning
	AASB 2008-3 ‘Amendments to Australian Accounting	of annual reporting periods
	Standards arising from AASB 3 and AASB 127’	beginning 1 July 2009
•	AASB 2008-5 ‘Amendments to Australian Accounting	1 January 2009	30 June 2010
	Standards arising from the Annual Improvements Project’
•	AASB 2008-6 ‘Further Amendments to Australian	1 July 2009	30 June 2010
	Accounting Standards arising from the Annual
	Improvements Project’
•	AASB 2008-7 ‘Amendments to Australian Accounting	1 January 2009	30 June 2010
	Standards – Cost of an Investment in a Subsidiary, Jointly
	Controlled Entity or Associate
•	AASB 2008-8 ‘Amendments to Australian Accounting	1 July 2009	30 June 2010
	Standards – Eligible Hedged Items’
•	AASB 2009-4 ‘Amendments to Australian Accounting Standards arising from the Annual Improvements Process’	1 July 2009	30 June 2010
•	AASB 2009-5 ‘Further Amendments to Australian
	Accounting Standards arising from the Annual	1 January 2010	30 June 2011
	Improvements Process’
•	AASB 2009-6 “Amendments to Australian Accounting Standards”	1 January 2009	30 June 2010
•	AASB 2009-7 “Amendments to Australian Accounting
	Standards”	1 July 2009	30 June 2010

11

GLG Corp Limited Notes to the Financial Statements for the Period Ended 30[th] June 2009

2. Significant accounting policies (cont’d)

The following significant accounting policies have been adopted in the preparation and presentation of the financial report:

• (a) Basis of consolidation

The consolidated financial statements are prepared by combining the financial statements of all the entities that comprise the consolidated entity, being the Company (the parent entity) and its subsidiaries as defined in Accounting Standard AASB 127 ‘Consolidated and Separate Financial Statements’. Consistent accounting policies are employed in the preparation and presentation of the consolidated financial statements.

On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. If, after reassessment, the fair values of the identifiable net assets acquired exceeds the cost of acquisition, the deficiency is credited to profit and loss in the period of acquisition.

The interest of minority shareholders is stated at the minority’s proportion of the fair values of the assets and liabilities recognised.

The consolidated financial statements include the information and results of each subsidiary from the date on which the Company obtains control and until such time as the Company ceases to control such entity. The consolidated financial statements have been accounted for as reverse acquisition of companies under common control and the consolidated financial statements have been prepared using the reverse acquisition accounting method.

In preparing the consolidated financial statements, all intercompany balances and transactions, and unrealised profits arising within the consolidated entity are eliminated in full.

(b) Joint venture arrangements Jointly controlled entities

Interest in jointly controlled entities in which the Group is a venturer (and so has joint control) are accounted for under the equity method in the consolidated financial statements and the cost method in the Company financial statements.

Investments in jointly controlled entities where the Group is an investor but does not have joint control over that entity are accounted for as an available-for-sale financial asset or, if the Group has significant influence, by using the equity method.

(c) Foreign currency

The individual financial statements of each group entity are presented in its functional currency being the currency of the primary economic environment in which the entity operates. For the purpose of the consolidated financial statement, the results and financial position of each entity are expressed in United States dollars, which is the functional currency of GLG Corp Ltd and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transaction in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

12

GLG Corp Limited Notes to the Financial Statements for the Period Ended 30[th] June 2009

2. Significant accounting policies (cont’d)

• (c) Foreign currency (cont’d)

• Exchange differences are recognised in profit or loss in the period in which they arise except that:

• (i) exchange differences which relate to assets under construction for future productive use, which are included in the cost of those assets where they are regarded as an adjustment to interest costs on foreign currency borrowings (refer note 2 (k));

• (ii) exchange differences on transactions entered into in order to hedge certain foreign currency risks; and

• (iii) exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned or likely to occur, which form part of the net investment in a foreign operation, and which are recognised in the foreign currency translation reserve and recognised in profit or loss on disposal of the net investment.

On consolidation, the assets and liabilities of the Group’s foreign operations are translated in United States dollars at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the groups foreign currency translation reserve. Such exchange differences are recognised in profit or loss in the period in which the foreign operation is disposed.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity on or after the date of transition to A-IFRS are treated as assets and liabilities of the foreign entity and translated at exchange rates prevailing at the reporting date. Goodwill arising on acquisitions before the date of transition to A-IFRS is treated as an Australian dollar denominated asset.

• (d) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:

• (i) where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or

• (ii) for receivables and payables which are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.

Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified within operating cash flows.

13

GLG Corp Limited Notes to the Financial Statements for the Period Ended 30[th] June 2009

2. Significant accounting policies (cont’d)

(e) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, stock rotation, price protection, rebates and other similar allowances.

Sale of goods

Revenue from the sale of goods is recognised when the goods are delivered to buyers’ forwarders which is taken to be the point in time when the buyers have accepted the goods and the related risks and rewards of ownership.

Rendering of services

Rendering of services is commission income recognised upon completion of services rendered to fabric suppliers and garments manufacturers.

Dividend and interest revenue

Dividend revenue is recognised on a receivable basis. Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.

(f) Income tax

Current tax

Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).

Deferred tax

Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items. In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, branches, associates and joint ventures except where the consolidated entity is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with these investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the consolidated entity expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

14

GLG Corp Limited

Notesto the Financial Statements for the Period Ended 30[th] June 2009

2. Significant accounting policies (cont’d)

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company/consolidated entity intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the period

Current and deferred tax is recognised as an expense or income in the income statement, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess.

(g) Cash and cash equivalents

Cash comprise cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash, which are subject to an insignificant risk of changes in value and have a maturity of three months or less at the date of acquisition.

Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

(h) Financial assets

Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs except for those financial assets classified as at fair value through profit or loss which are initially measured at fair value.

Subsequent to initial recognition, investments in subsidiaries are measured at cost in the Company’s financial statements. Subsequent to initial recognition, investments in associates are accounted for under the equity method in the consolidated financial statements and the cost method in the Company financial statements.

Other financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’, ‘held-to-maturity’ investments, ‘available-for-sale’ financial assets, and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premium or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period.

Interest income is recognised on an effective interest rate basis for debt instruments other than those financial assets ‘at fair value through profit or loss’.

Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less impairment.

Interest income is recognised by applying the effective interest rate.

Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial asset the estimated future cash flows of the investment have been impacted.

15

GLG Corp Limited Notes to the Financial Statements for the Period Ended 30[th] June 2009

2. Significant accounting policies (cont’d)

For financial assets carried at amortised costs, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of financial assets including uncollectible trade receivables is reduced by the impairment loss through the use of an allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognised the financial assets and also recognises a collateralised borrowings for the proceeds received.

• (i) Inventories

Inventories are valued at the lower of cost and net realisable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventory on hand by the method most appropriate to each particular class of inventory, valued on a first in first out basis. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

• (j) Property, plant and equipment

Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are carried in the balance sheet at fair value, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Fair value is determined on the basis of an independent valuation prepared by external valuation experts, based on discounted cash flows or capitalisation of net income, as appropriate. Revaluations are performed with sufficient regularity such that the carrying amounts do not differ materially from those that would be determined using fair values at the balance sheet date.

Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation is calculated on a straight line basis so as to write off the net cost or other revalued amount of each asset over its expected useful life to its estimated residual value. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period. The following estimated useful lives are used in the calculation of depreciation

Leasehold improvements	5-10 years
Plant and equipment	5- 10 years
Furniture, fittings and office equipment	3-5 years
Motor vehicles	5-10 years

(k) Borrowing costs

Borrowings are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition, borrowings are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the borrowing using the effective interest rate method.

16

GLG Corp Limited

Notesto the Financial Statements for the Period Ended 30[th] June 2009

2. Significant accounting policies (cont’d)

• (l) Leased assets

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Group as lessee

Assets held under finance leases are initially recognised at their fair value or, if lower, at amounts equal to the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.

Finance leased assets are amortised on a straight line basis over the estimated useful life of the asset.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

• (l) Leased assets (cont’d)

Lease incentives

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefits of incentives are recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

• (m) Intangible assets

Patents, trademarks and licences

Patents, trademarks and licences are recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight line basis over their estimated useful lives of 5 years. The estimated useful life and amortisation method is reviewed at the end of each annual reporting period.

- - Internally generated intangible assets research and development costs

Expenditure on research activities is recognised as an expense in the period in which it is incurred. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period as incurred.

An intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following are demonstrated

• the technical feasibility of completing the intangible asset so that it will be available for use or sale;

• the intention to complete the intangible asset and use or sell it;

• the ability to use or sell the intangible asset;

• how the intangible asset will generate probable future economic benefits;

• the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

• the ability to measure reliably the expenditure attributable to the intangible asset during its development

• Internally generated intangible assets

Internally-generated intangible assets are stated at cost less accumulated amortisation and impairment, and are amortised on a straight-line basis over their useful lives as follows:

• capitalised development costs 5 years

17

GLG Corp Limited Notes to the Financial Statements for the Period Ended 30[th] June 2009

2. Significant accounting policies (cont’d)

• (n) Employee benefits

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.

Provisions made in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the consolidated entity in respect of services provided by employees up to reporting date.

Defined contribution plans

Contributions to defined contribution superannuation plans are expensed when employees have rendered service entitling them to the contributions.

• (o) Provisions

Provisions are recognised when the consolidated entity has a present obligation (legal or constructive) as a result of a past event, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be measured reliably.

Warranties

Provisions for warranty costs are recognised at the date of sale of the relevant products, at the Directors’ best estimate of the expenditure required to settle the consolidated entity’s liability.

• (p) Financial instruments issued by the Company

Debt and equity instruments

Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual arrangement. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

Compound instruments

The component parts of compound instruments are classified separately as liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar nonconvertible debt. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or upon the instruments reaching maturity. The equity component initially brought to account is determined by deducting the amount of the liability component from the amount of the compound instrument as a whole. This is recognised and included in equity, net of income tax effects and is not subsequently remeasured.

18

GLG Corp Limited Notes to the Financial Statements for the Period Ended 30[th] June 2009

2. Significant accounting policies (cont’d)

• (p) Financial instruments issued by the Company (cont’d)

Transaction costs on the issue of equity instruments

Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the proceeds of the equity instruments to which the costs relate. Transaction costs are the costs that are incurred directly in connection with the issue of those equity instruments and which would not have been incurred had those instruments not been issued.

Interest and dividends

Interest and dividends are classified as expenses or as distributions of profit consistent with the balance sheet classification of the related debt or equity instruments or component parts of compound instruments.

Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial liabilities.

Financial liabilities at fair value through profit or loss

Financial liabilities are classified as at fair value through profit or loss where the financial liability is either held for trading or it is designated as at fair value through profit or loss.

A financial liability is held for trading if:

it has been incurred principally for the purpose of repurchasing in the near future; or

it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

it is a derivative that is not designated and effective as a hedging instrument.

• A financial liability other than a financial liability held for trading is designated as at fair value through profit or loss upon initial recognition if:

such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; orit forms part of a contract containing one or more embedded derivatives, and AASB 139 ‘Financial Instruments: Recognition and Measurement’ permits the entire combined contract (asset or liability) to be designated as at fair value through profit or loss.

Financial liabilities at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability. Fair value is determined in the manner described in note 28.

Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

19

GLG Corp Limited Notes to the Financial Statements for the Period Ended 30[th] June 2009

2. Significant accounting policies (cont’d)

(q) Share-based payments

Equity-settled share-based payments with employees and others providing similar services are measured at the fair value of the equity instrument at the grant date. Fair value is measured by use of a binomial model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. Further details on how the fair value of equity-settled share-based transactions has been determined can be found in note 29.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest.

At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss over the remaining vesting period, with corresponding adjustment to the equity-settled employee benefits reserve.

No amount has been recognised in the financial statements in respect of the other equity-settled sharedbased payments.

3. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group’s accounting policies, which are described in note 2, management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates.

Management refer to the current carrying value of the GLIT receivable (the Company’s primary sourcing partner), and the outstanding receivable owed by Mervyn’s (a previous customer, that sought bankruptcy protection and ultimately has been placed into bankruptcy). The carrying value of these receivables (including current impairment charges) have been based on management’s judgment and based on various underlying assumptions and estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

4. Segment information

GLG operates predominantly in one industry and geographical segment which is the sale of knit wear apparel to the United States market.

20

GLG Corp Limited

Notesto the Financial Statements for the Period Ended 30[th] June 2009

5. Revenue

An analysis of the Group’s revenue for the year, from both continuing and discontinued operations, is as follows:

Continuing operations Revenue from the sale of goods Revenue from the rendering of services Other income Interest revenue: Bank deposits Other Dividends: Subsidiary Other Total other income Discontinued operations Other income	Consolidated 2009 US$’000 2008 US$’000
	196,021 209,125 642 857
	196,663 209,982
	5 43 157 182
	162 225 - - 690 149
	690 149
	852 374
	197,515 210,356
	- 2

21

GLG Corp Limited Notes to the Financial Statements for the Period Ended 30[th] June 2009

6. Trade and other receivables

Trade receivables Third parties (i) Other party- GLIT group (ii) Related Parties (ii) Other receivables Impairment Charge Less: Payable to Other Party- GLIT group (ii) Payable to Related Parties Bills Payable (i) Trust Receipts related to Other party- GLIT group (ii) Trust Receipts related to Related Parties (ii) Goods and services tax recoverable	Consolidated
	2009 US$’000 2008 US$’000
	18,985 42,685 8,419 1,975 20,757 37,109 7,146 1,147 (2,577) (77)
	69,487 66,082 (9,954) (6,307) - - (9,162) (6,682) (24,100) (27,385) (5,904) (5,016)
	(20,367) (20,692)
	35 34
	20,402 20,726

==> picture [111 x 313] intentionally omitted <==

• (i) Third parties offset: When GLG receives an order from a customer, it either receives a letter of credit or an open account for the customer. Upon completion of the order, GLG converts this letter of credit or open account into a bill payable with a bank. GLG will then use the cash to pay its creditors. When the letter of credit matures or the customer pays off the open account, the bank will offset funds from the third party trade receivable against bills payable.

• (ii) Other party- GLIT and Related Parties offsets: Presently and reflected in the Balance Sheet at 30 June 2009 when Other Party-GLIT buys fabric from textile mills GLG issues a letter of credit on their behalf. In order to maximize the discounts available, GLG converts for Other Party- GLIT the letter of credit it has issued into a Trust Receipt.

The bank will immediately pay the textile mill. After completion of the apparel order, Other Party- GLIT invoices GLG and a trade payable is recorded. GLG immediately has a legally enforceable right to offset the amount owed by Other Party- GLIT and settle the balance, if any, with Other Party- GLIT on a net basis.

The offset takes place between 90 days to 120 days depending on the date of maturity of the Trust Receipt. A similar offset arrangement has been made with Related Parties transactions.

The average credit period on sales of goods and rendering of services is 60 days. No interest is charged on the trade receivables outstanding balance.

Before accepting any new customers, the Group uses an external scoring system to assess the potential customer’s credit quality and defines credit limits by customers. Limits and scoring attributed to customers are reviewed twice a year. 80% of the trade receivables that are neither past due nor impaired have the best credit scoring attributable under the external credit scoring system used by the Group. Of the trade receivables balance at the end of the year, $2.5 million (2008: $4.8 million) is due from Macy the Group’s largest customer.

22

GLG Corp Limited

Notesto the Financial Statements for the Period Ended 30[th] June 2009

6. Trade and other receivables (cont’d)

Included in the Group’s trade receivable balance are debtors with a carrying amount of $1.6 million (2008: $3.5 million) which are past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral over these balances. Ageing of Trade Receivables (excluding GLIT and Related Party amounts) past

==> picture [111 x 163] intentionally omitted <==

due but not impaired

due but not impaired
60 – 90 days 90 – 120 days More than 120 days Total Movement in the allowance for doubtful debts Balance at the beginning of the year Allowance made during the year Balance at the end of the year	Consolidated
	2009 US$’000 2008 US$’000
	436 1,388 343 96 789 2,031
	1,568 3,515
	77 77 2,500 -
	2,577 77

In determining the recoverability of trade receivables, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated.

23

GLG Corp Limited

Notesto the Financial Statements for the Period Ended 30[th] June 2009

7. Other financial assets

Other financial assets
Non-current Investments in subsidiaries (note 26) Loans carried at amortised cost (i): Current Trade receivables – Other Party GLIT group (i)(a)(b) Non-current Trade receivables – Other Party GLIT group (i)(a) Trade receivables – Third parties (ii) Disclosed in the financial statements as : Non-current other financial assets	Consolidated 2009 US$’000 2008 US$’000
	- - - 2,517 - 2,568 5,085 2,062 - 4,630 5,085 7,147 5,085 7,147 5,085

(i) The loans owed by Other Party – GLIT consists of two amounts:

(a) US$3,368 thousand (FY 2008: Nil ) which is the equivalent of a S$5,000 thousand denominated receivable repayable over a period of 48 months at a fixed interest rate of 5.00% p.a. commencing June 2009.

(b) US$1,717 thousand (FY2008: US$5,085 thousand) which is repayable in a lump sum not later than 30 June 2010 together with the accrued interest. Other Party- GLIT is charged commercial rates of interest on the amount owed, based on a margin above Singapore Inter-Bank Offer Rate (SIBOR). Other Party-GLIT may repay the monies early without penalty.

Ghim Li Holdings Co. Pte Ltd the ultimate holding company of GLG Corp has guaranteed the repayment of both amounts in the event of a default by Other Party –GLIT. The guarantee from Ghim Li Holdings Co Pte Ltd is in the form of two undertakings. The first commits Ghim Li Holdings to return the proceeds from any sale of the Group shares by Ghim Li Holdings to the Group for the outstanding receivables owed by Other PartyGLIT. The second requires Ghim Li Holdings to return the proceeds from any sale of Other Party-GLIT share to the Group against the outstanding receivables owed by Other-Party-GLIT to the Group. These undertakings are secured via debentures undertaken by Ghim Li Holdings. In the event these guarantees are not sufficient to meet the full value of the long term trade receivables, the full amount of the asset may not be recovered.

(ii) The long term trade receivable owed by Third party of US$2,062 thousand (FY2008: Nil) arises from the following:

• (a) US$1,883 thousand which is the carrying value of an administrative claim of US$3,714 thousand against the estate of Mervyns which is presently in liquidation under Chapter 11 of the US Bankruptcy Code. Based on legal advice, the administrative claim of US$3,714 thousand is fully recoverable if two pending litigations by the estate of Mervyns are successful. The directors consider that the current excess amount of the administrative claims over its carrying value is sufficient to account for delays or discounts to be given on eventual settlement of the administrative claims.

• (b) US$179 thousand which is refund of commissions from the agent of Mervyns pending distribution of administrative claims to them.

24

GLG Corp Limited Notes to the Financial Statements for the Period Ended 30[th] June 2009

8. Investments accounted for using the equity method

Investments in jointly controlled entities Reconciliation of movement in investments accounted for using the equity method Balance at 1 July 2008 Share of losses for the year Additions Balance at 30 June 2009	Consolidated
	2009 US$’000 2008 US$’000
	- -
	- - (254) (89)
	(254) (89) 293 89
	39 -

Name of entity	Country of incorporation	Principal activity	Ownership interest	Ownership interest
			2009 %	2008 %
Jointly controlled entities JES Apparel LLC Delaware Importer of knitwear products			51 -

25

GLG Corp Limited

Notesto the Financial Statements for the Period Ended 30[th] June 2009

9. Trade and other payables

Trade payables (i) Other payables Related parties Accruals	Consolidated
	2009 US$’000 2008 US$’000
	796 1,281 71 - 91 23 2,010 2,121
	2,968 3,425

==> picture [90 x 119] intentionally omitted <==

(i) The average credit period on purchases of certain goods is 4 months. No interest is charged on the outstanding balance of trade payables. The Group has financial risk management policies in place to ensure that all payables are paid within the credit time frame.

10. Borrowings

Secured– at amortised cost Current Bank overdraft Bank loans (i) (ii) Trust receipts (i), (iii)(Gross) Bills payable (Gross) (iv) Finance lease liabilities Less Trust receipt – offsettable Less Bill payable-offsettable Total Non-current Bank loans (i) (ii) Finance lease liabilities Disclosed in the financial statements as: Current borrowings Non-current borrowings	Consolidated
	2009 US$’000 2008 US$’000
	105 - 1,418 775 30,004 32,401 9,162 35 6,682 58
	40,724 39,916 (30,004) (32,401) (9,162) (6,682)
	1,558 833 2,678 770 45 126
	2,723 896
	1,558 833 2,723 896
	4,281 1,729

Summary of borrowing arrangements:

(i) Secured by corporate guarantee from GLG Corp Ltd and Ghim Li Group Pte Ltd and negative pledge over all assets of Ghim Li Global Pte Ltd .

(ii) The non current borrowings consist of (a) Term loan of US$3,368 thousand (2008: Nil) which is repayable by a reducing balance method of 48 monthly average installments of US$115,146 (30 June 2008: NIL). The average effective interest rate charge is 5% per annum. (b) Term loan of US$657 thousand (2008: US$ 1,729 thousand) which is repayable by a reducing balance method of 60 monthly average installments of US$63,750 (30 June 2008: 63,750). The average effective interest rate charge is 7.9172% per annum.

26

GLG Corp Limited Notes to the Financial Statements for the Period Ended 30[th] June 2009

10. Borrowings (cont’d)

Summary of borrowing arrangements contd:

• (iii) Trust Receipts not offsettable US$ nil thousand (30 June 2008: nil thousand); Trust Receipts offsettable US$30,003 thousand (30 June 2008: US$32,401 thousand). See note 9.

• (iv) Bills payable not offsettable US$ nil (30 June 2008: US$nil); Bills payable offsettable US$16,853 thousand (30 June 2008: US$6,682 thousand). See note 9.

• (v) Banking relationship: GLG is dependent on bank facilities to support the working capital requirement of its operations. Presently, the bank facilities provided to the Group are uncommitted short term trade financing facilities which are renewable annually by the banks. The repayment details of existing facilities are disclosed note (ii), the majority of which are due within 12 months. GLG continued to have the strong support of its core banking relationships for its working capital requirements. GLG has largely completed the sourcing of additional bank facilities from Singapore based banks if there is a need to replace facilities from banks who because of capital and credit risk constraints, may limit or suspend their corporate lending business.

The weighted average effective interest rates for bank overdrafts, bills payable and trust receipts at the balance sheet date were as follows:

	2009	2008
Bank overdrafts	US prime rate	US prime rate
Bank loans	6.52%p.a.	7.92%p.a.
Trust receipts	1- 5mths US SIBOR + (1% -	1- 5mths US SIBOR + (1% -
	2.25%)	1.75%)
Finance lease liabilities	5.75%p.a.	4.60%p.a.
Bills payable	2.89%%	6.67%

11. Issued capital

74,100,000 (2008: 74,100,000) fully paid ordinary shares	Consolidated
	2009 US$’000 2008 US$’000
	10,322 10,252

==> picture [95 x 81] intentionally omitted <==

Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998. Therefore, the Company does not have a limited amount of authorised capital and issued shares do not have a par value.

Fully paid ordinary shares Balance at beginning of financial year Legal costs relating to IPO expenses Transfer from share based payment reserve Balance at end of financial year	Consolidated No. ’000 2009 US$’000 74,100 10,252 - - - 70 74,100 10,322	Consolidated
		No. ’000 2008 US$’000
		74,100 10,193 - (89) - 148
		74,100 10,252

27

GLG Corp Limited

Notesto the Financial Statements for the Period Ended 30[th] June 2009

12. Earnings per share

Basic earnings per share: From continuing operations From discontinued operations Total basic earnings per share Diluted earnings per share: From continuing operations From discontinued operations Total diluted earnings per share Basic earnings per share	Consolidated
	2009 Cents per share 2008 Cents per share
	2.88 8.54 - (0.01)
	2.88 8.53
	2.88 8.54 - (0.01)
	2.88 8.53

The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

Net profit Earnings used in the calculation of basic EPS Adjustments to exclude loss for the period from discontinued operations Earnings used in the calculation of basic EPS from continuing operations Weighted average number of ordinary shares for the purposes of basic earnings per share	2009 US$’000 2008 US$’000
	2,134 6,324
	2,134 6,324 - 5
	2,134 6,329
	2009 No.’000 2008 No.’000 74,100 74,100

Diluted earnings per share

The earnings used in the calculation of diluted earnings per share is as follows:

Net profit Earnings used in the calculation of diluted EPS Adjustments to exclude loss for the period from discontinued operations Earnings used in the calculation of diluted EPS from continuing operations Weighted average number of ordinary shares used in the calculation of basic EPS Shares deemed to be issued for no consideration in respect of: Employee options Weighted average number of ordinary shares used in the calculation of diluted EPS	Consolidated
	2009 US$’000 2008 US$’000
	2,134 6,324
	2,134 6,324 - 5
	2,134 6,329
	Consolidated
	2009 No.’000 2008 No.’000
	74,100 74,100 - -
	74,100 74,100

28

GLG Corp Limited

Notesto the Financial Statements for the Period Ended 30[th] June 2009

13. Dividends

Dividends
Recognised amounts Fully paid ordinary shares Proposed final fully unfranked ordinary dividend	2009 Cents per share Total US$’000 - -	2008
		Cents per share Total US$’000
		6.2 4,594

Unrecognised amounts

In respect of the financial year ended 30 June 2009, the Directors do not recommend the payment of dividend.

14. Commitments for expenditure

Lease commitments

Finance lease liabilities and non-cancelable operating lease commitments are disclosed in note 16 to the financial statements.

15. Contingent liabilities

Contingent liabilities Guarantees in lieu of commercial and statutory cash deposits Guarantees arising from Letters of credit in force Total	Consolidated
	2009 US$’000 2008 US$’000
	2,274 3,188 6,219 9,142
	8,493 12,330

==> picture [95 x 133] intentionally omitted <==

29

GLG Corp Limited Notes to the Financial Statements for the Period Ended 30[th] June 2009

16. Leases

Finance lease liabilities

Leasing arrangement

The Group leases motor vehicles and office equipment under finance leases expiring from one to five years. All the leases involve lease payments of a fixed base amount. No contingent rentals were paid during the year (2007: Nil)

	Minimum future lease payments	Minimum future lease payments	Minimum future lease payments	Minimum future lease payments	Present value of minimum future lease payments	Present value of minimum future lease payments	Present value of minimum future lease payments	Present value of minimum future lease payments
	Consolidated		Company		Consolidated		Company
	2009 US$’000	2008 US$’000	2009 US$’000	2008 US$’000	2009 US$’000	2008 US$’000	2009 US$’000	2008 US$’000
No later than 1 year Later than 1 year and not later than 5 years Later than 5 years Minimum future lease payments Less future finance charges Present value of minimum lease payments* Included in the financial state Current borrowings Non-current borrowings	35 66 - - 45 129 - - - 5 - -				32 58 42 121 - 5		- - - - - -
	80 200 - - (6) (16) - -				74 184 - -		- - - -
	74 184 - -				74 184		- -
	ments as (note 16)				32 102 42 126		- - - -
					74 184		- -

• Minimum future lease payments includes the aggregate of all lease payments and any guaranteed residual.

Operating leases

Leasing arrangement

The Group leases property under operating leases expiring from one to five years. Leases generally provide the Group with a right of renewal, at which time all terms are renegotiated. Operating leases for rental of office and warehouse will increase every 3 years at the rate of 9%. No contingent rentals were paid during the year (2007: nil). Note 7 shows the expense recognised in the income statement in respect of operating leases. Renewals are at the option of the specific entity that holds the lease.

Non-cancellable operating lease payments

Not longer than 1 year Longer than 1 year and not longer than 5 years Longer than 5 years	Consolidated
	2009 US$’000 2008 US$’000
	1,213 1,213 4,140 5,350 - 360
	5,353 6,923

The operating leases for rental of office and warehouse will increase every 3 years at the rate of 9%.

30

GLG Corp Limited

Notesto the Financial Statements for the Period Ended 30[th] June 2009

17. Share-based payments Share option plan

In respect of each independent director, upon listing of the Company, Ghim Li Group Pte Ltd (ultimate parent entity of GLG Corp Ltd) agreed to assign 300,000 shares to an escrow agent on or before 11 October 2006. Each Independent Director is entitled to receive up to 100,000 of these GLG Corp Ltd shares for nil consideration, receivable as follows:

Upon the first anniversary of their appointment 33,333 shares for 1 year’s continuous service as a Director

Upon the second anniversary of their 33,333 shares for 2 year’s continuous service as a appointment Director Upon the third anniversary of their appointment 33,333 shares for 3 year’s continuous service as a Director

The purpose of the share options are to:

• Provide long term incentive to each independent director to remain with the group

• Improve the long term performance of the Company

There is an arrangement between GLG Corp Ltd and Ghim Li Group Pte Ltd whereby GLG Corp Ltd compensates Ghim Li Group Pte Ltd for the fair value of the share options, as determined at grant date when the shares are transferred to the independent directors of GLG Corp Ltd

The following share based payment arrangements were in existence during the current and comparative period:

Option Series	Number	Grant date	Expiry date	Exercise price	Fair value at grant date
(1)Issued 11 October 2006	100,000	14/12/05	11/10/06	-	0.74
(2)Issued 11 October 2007	100,000	14/12/05	11/10/07	-	0.74
(3)Issued 11 October 2008	100,000	14/12/ 05	11/10/08	-	0.74

31

GLG Corp Limited

Notesto the Financial Statements for the Period Ended 30[th] June 2009

17. Share-based payments (cont’d)

The following reconciles the outstanding share options granted under the share option plan at the beginning and end of the financial year:

Balance at beginning of financial year Granted during the financial year Forfeited during the financial year Exercised during the financial year Balance at end of the financial year Exercisable at end of the financial year	2009 Number of Options Weighted average exercise price 166,667 - - - - 166,667 - - - - -	2008
		Number of Options Weighted average exercise price
		233,333 - - - - 66,666 - 166,667 -
		66,666 -

(i) Exercised during the financial year

2009 Option Series	Number exercised	Exercise date	Share price at exercise date $
(1) Issued 11 October 2008	99,999 19/6/09 66,666
2008 Option Series	Number exercised	Exercise date	Share price at exercise date $
(1) Issued 11 October 2007	66,666 29/8/08 - 66,666

(ii) Balance at end of the financial year

There a nil share options outstanding as at 30 June 2009. The share options outstanding as at 30 June 2008 had a weighted average remaining contractual life of 3.40 months.

18. Subsidiaries

Name of subsidiary	Country of incorporation	Ownership interest	Ownership interest
		2009 %	2008 %
Escala Guatemala S.A. Republic of Guatemala		100 100
Ghim Li Global Pte Ltd Singapore		100 100
Ghim Li Global International Ltd Hong Kong		100 100
GG Textiles Co. Pte Ltd Singapore		100 100
Ghim Li International (S) Pte Ltd Singapore		100 100

19. Economic dependency

The consolidated entity is sourcing its apparel manufacturing requirements mainly from the GLIT entities. The economic dependency of this arrangement is protected by the long term contracts between the GLIT entities and the consolidated entity which has first right of refusal for the production capacity of the GLIT entities.

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