GLG CORP LTD — Annual Report 2011

Aug 30, 2011

31 August 2011

GLG CORP LTD Level 40, 100 Miller Street North Sydney NSW 2060 Australia Tel: (61) 2 8415 8956 Fax: (61) 2 8415 8986 www.glgcorpltd.com.au

Australian Securities Exchange Limited

Exchange Centre

20 Bridge Street SYDNEY NSW 2000

GLG Corporation Ltd (ASX: GLE) Appendix 4E

Following is the GLE Appendix 4E for the period ended June 2011.

Regards,

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Jo Bourke

Company Secretary

GLG Corp Ltd

GLG Corp Ltd

ACN 116 632 958 PRELIMINARY FINAL REPORT

PERIOD ENDED 30 JUNE 2011

1. Highlight of Results

2. Appendix 4E Financial Statements for the Year ended 30 June 2011

1

1. Results for announcement to market

Summary financial information for the company for the 2010/11 financial year is set out below. Full financial details are attached to this announcement.

		Consolidated
Summary Information	30 –JUN-11 USD$’000	30 –JUN-10 USD$’000	Inc/(Dec) USD$’000	Inc/(Dec) %
Revenue from Ordinary Activities	237,885	195,495	42,390	21.68
Profit/(Loss) after Tax from Ordinary Activities	2,705	7,920	(5,215)	(65.84)
Net Profit/(Loss) after Tax Attributable to Members	2,705	7,920	(5,215)	(65.84)
Basic Earnings – US Cents Per Share	3.65	10.69	(7.04)	(65.85)
Dilute Earnings – US Cents Per Share	3.65	10.69	(7.04)	(65.85)
Net Tangible Assets – US Cents Per Share	50.99	47.34	3.65	7.71

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

Summary commentary on results

Directors Comments:

GLG Corp Ltd (“GLG” or the Company) accounts are in the process of being audited by Deloitte Touche Tohmatsu, Chartered Accountants.

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

Due to the fall in demand for clothing in the United States in 2010-2011 and the volatility of the cotton prices, it has been a very challenging year for the Company. The difficult marketplace has affected not only US retailers but also brand owners and wholesalers who sell into the USA such as Sprockets, a specialist children’s clothing store and a client of the Company’s. The difficult market conditions have resulted in many US retailers seeking to share the risk and reward across the entire supply chain. For the Company this means having to work with the outsourced factories in consultation with buyers to take positions with respect to volatile cotton prices. The Company has taken a conservative position of getting the outsourced factories to purchase the cotton yarn required upfront prior to tender or upon receipt of an order. This has ensured that the Company has not suffered from unexpected surges in the cotton price. However, it has meant higher working capital requirement and higher borrowings to support the outsourced factories. Having said this, the Company believes that cotton and yarn prices are now expected to consolidate and stabilize thereby offering relief from volatility and high working capital financing.

The sharp drop in net profit from last year was largely due to the absence of a write-back (in FY2010 there was a $2.5 million write back) and a $2 million provision with respect to the receivables of Sprockets. This accounts for $4.5 million of the $5.2 million decline in net profits. The directors have made the provision as they believe that the final audited accounts should include an impairment of the Sprockets (the company sourcing agency) receivables. However, the Company notes that Sprockets has a new investor who will issue LCs for all new orders and who has agreed that the Company will be repaid by way of a percentage of Sprocket sales.

The discussion that follows compares the Consolidated Statement of comprehensive income for the financial year ended 30 June 2011 with that of 30 June 2010 .

GLG’s net profit decreased 66% to $2,705 thousand, against a net profit of $7,920 thousand in the previous year. The decline was due to lower gross margin, higher distribution expenses, administration expenses and the inclusion of an impairment charge of $2,000 thousand. In the previous financial year, there was a write back of impairment charge of $2,500 thousand as compared to a charge of $2,000 thousand in this financial year. This contributed to a drop in net profit by $4,500 thousand.

GLG’s sales increased 22% to $237,885 thousand compared to $195,495 thousand in the previous year. The increase in sales was mainly attributed to higher Freight On Board (“FOB”) unit prices resulted from higher cotton prices and increase in sales of yarn.

Cost of sales increased 24% to $217,373 thousand compared to cost of sales of $175,367 thousand in the previous year, consistent with the increase in sales.

GLG’s gross profit was $20,512 thousand compared to a gross profit of $20,128 thousand in the previous year. Gross margin declined by 1.7% to 8.6% compared to 10.3% in the previous year. This is because of surging cotton prices could not be fully passed on to the retailers as consumers’ confidence remained low.

Selling and distribution costs increased 52% to $1,597 thousand compared to $1,048 thousand in the previous year. The increase in expenses was mainly due to higher design fees paid for filling Wal-mart and Target FOB sales orders which increased by 44%.

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Administration expense increased 16% to $12,535 thousand compared to $10,823 in the previous year. The increase was mainly due to the reinstatement of staff salaries and wages to pre-global crisis levels in order to avoid high staff turnover as business trading conditions improved.

Comparison of the Consolidated Statement of financial position as at 30 June 2011 with that of 30 June 2010 .

The Group financial position remained stable at 30 June 2011.

Trade and other receivables increased by 37% to $31,313 thousand as at 30 June 2011 compared to $22,819 thousand as at 30 June 2010 mainly due to higher sales.

Total current payables and borrowings increased by $13,361 thousand, or 215%, to $19,302 thousand as at 30 June 2011 compared to $6,121 thousand as at 30 June 2010 due to increase in purchases of cotton yarn. As noted above the Company has taken a conservative position of getting the factories to purchase the required cotton yarn upfront prior to tender or upon receipt of an order.

Comparison of the Consolidated Statement of cash flows for the financial year ended 30 June 2011 with that of 30 June 2010.

Cash flows from operations increased to $25,668 thousand for the year ended 30 June 2011 compared to $12,149 thousand in the prior year. The increase in the cash flow from operating activities was mainly due to higher revenue, and improvement in cash management and collection efficiency.

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

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Consolidated Statement of comprehensive income for the financial year ended 30 June 2011

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 Other comprehensive income Total comprehensive income 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 3 3 3 9 9 9 9	Consolidated
		2011 US$’000 2010 US$’000
		237,885 195,495 (217,373) (175,367)
		20,512 20,128 997 1,087 971 66 (1,597) (1,048) (12,535) (10,823) (1,408) (1,404) (2,000) 2,500 (1,450) (1,336) - (39)
		3,606 9,015 (901) (1,095)
		2,705 7,920 - -
		2,705 7,920 - - 2,705 7,920
		3.65 10.69 3.65 10.69 3.65 10.69 3.65 10.69

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Notes to the financial statements are included on pages 9 to 17

5

Consolidated Statement of financial position as at 30 June 2011

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 Retained earnings Total equity	Note 4 5 5 6 7 7 8	Consolidated
		2011 US$’000 2010 US$’000
		10,439 2,031 31,313 22,819 19 5 235 226 - -
		42,006 **25,081 **
		16,557 18,200 - - 1,274 1,050
		17,831 19,250
		59,837 **44,331 **
		3,313 5,032 16,169 1,081 1,026 1,049
		20,508 **7,162 **
		1,460 2,005 87 87
		1,547 **2,092 **
		22,055 **9,254 **
		37,782 35,077
		10,322 10,322 27,460 24,755
		37,782 35,077

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Notes to the financial statements are included on pages 9 to 17

6

Consolidated Statement of changes in equity for the financial year ended 30 June 2011

Note Consolidated Balance at 1 July 2009 Profit for the year Other comprehensive income Total comprehensive income Recognition of financial guarantee fees Balance at 30 June 2010 Balance at 1 July 2010 Profit for the year Other comprehensive income Total comprehensive income Balance at 30 June 2011	Issued Capital US$’000	Share based payment Reserves Financial Guarantee Reserves US$’000 US$’000	Retained Profits Total US$’000 US$’000
	10,322	- 3	16,835 27,160
	-	- -	7,920 7,920
	-	- -	- -
	-	- -	7,920 7,920
	-	- (3)	- (3)
	10,322	- -	24,755 35,077
	10,322 -	- - - -	24,755 35,077 2,705 2,705
	-	- -	- -
	-	- -	2,705 2,705
	10,322	- -	27,460 37,782

Notes to the financial statements are included on pages 9 to 17

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Consolidated Statement of cash flows for the financial year ended 30 June 2011

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest and other costs of finance paid 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 Proceeds from repayment of related party loans Net cash provided by/(used in) investing activities Cash flows from financing activities Additional / (Repayment) of borrowings Amounts advanced to other parties 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
	2011 US$’000 2010 US$’000
	264,039 198,379 (236,913) (185,138) (533) (387) (925) (705)
	25,668 12,149
	5 483 (613) (472) - 1,950 (869) (95)
	(1,477) 1,866
	8,346 (92) (19,533) (14,895) (4,596) (3,759)
	(15,783) (18,746)
	8,408 (4,731) 2,031 6,762
	10,439 2,031

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Notes to the financial statements are included on pages 9 to 17

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2011

Notes to the Appendix 4E

1. General information

GLG Corp Ltd (the Company) is a public company listed on the Australian Securities Exchange (ASX: 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 40 North Point 41, Changi South Ave 2, 100 Miller St Singapore 486153 North Sydney NSW 2060 Australia

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

2. Segment information

GLG Corp Ltd operates in apparel industry and reports only one reportable segment under AASB8 “Operating Segments”.

3. 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 Income Other Total other income	Consolidated 2011 US$’000 2010 US$’000
	237,885 195,495
	997 971
	238,882 196,466
	847 - 240 66
	1,087 66
	1,087 66
	239,969 196,532

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GLG Corp Ltd
Notesto Appendix 4E for the Year Ended 30[th] June 2011

4. Trade and other receivables

Trade and other receivables
	Consolidated
Trade receivables Third parties (i) Other party- GLIT group (ii) Related Parties (ii) Other receivables Provision for Bad Debts Less: Payable to Other Party- GLIT group (ii) Bills Payable (i) Trust Receipts related to Other party- GLIT group (ii) Trust Receipts related to Related Parties (ii) Goods and services tax recoverable	2011 US$’000 2010 US$’000 19,843 36,364 15,360 1,422 39,208 28,088 16,223 1,945 (2,125) (149)
	70,864 85,315 (4,401) (21,073) (759) (7,129) (33,018) (30,662) (1,420) (3,669)
	31,266 22,782
	47 37
	31,313 22,819

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• (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 2011 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 the letter of credit it has issued into a Trust Receipt and place under Third Parties and only upon maturity of the Trust Receipt it would then be chargeable to Other Party – GLIT group (ii).

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, $12.5 million (2010: $9.1 million) is due from Macy the Group’s largest customer.

10

GLG Corp Ltd
Notesto Appendix 4E for the Year Ended 30[th] June 2011

4. Trade and other receivables(con’t)

Included in the Group’s trade receivable balance are debtors with a carrying amount of $2.4million (2010: $1.5 million) which are past due at the reporting date for which the Group has provided a $2 million impairment of the Sprockets receivable as there has been a significant change in credit quality and not all amounts are considered recoverable. The Group does not hold any collateral over these balances.

Ageing of Trade Receivables (excluding GLIT and Related Party amounts) past due but not impaired

	Ageing of Trade Receivables (excluding GLIT and Re due but not impaired	lated Party amounts) past
	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
		2011 US$’000 2010 US$’000
		13 1,152 53 13 2,286 339
		2,352 1,504
		328 2,947 1,797 (2,619)
		2,125 328

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*Includes the provision for doubtful debts for Trade Receivables, both current and non-current.

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.

11

GLG Corp Ltd
Notesto Appendix 4E for the Year Ended 30[th] June 2011

5. Other financial assets

Loans carried at amortised cost (i): Current Trade receivables – Other Party GLIT group (i)(a) Non-current Trade receivables – Other Party GLIT group (i)(a)(b) Trade receivables – Third parties Provision for Bad Debts Disclosed in the financial statements as : Non-current other financial assets	Consolidated
	2011 US$’000 2010 US$’000
	- - 16,236 18,200 368 179
	16,604 18,379 (47) (179)
	16,557 18,200
	16,557 18,200

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

(a) US$1,802 thousand (FY2010: US$1,802) which is the equivalent of a SG$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$16,236 thousand (FY2010:US$18,200) is payable over a period of 48 (FY2010:48) months at a fixed interest rate of 5% p.a. commencing 1 July 2010.

Ghim Li Group Pte Ltd has guaranteed the repayment of both amounts in the current and non-current receivables owing by Other Party – GLIT to GLG Corp in the event of a default by Other Party – GLIT. This guarantee is in the form of three undertakings. The first, committed Ghim Li Group Pte Ltd to return the proceeds from any sale of GLG Corp Ltd shares by Ghim Li Group Pte Ltd to GLG Corp Ltd for the outstanding receivables owed by Other Party – GLIT. The second requires GLIT Holdings to pledge the proceeds of the sale of the Brunei Factory (and its associated assets) of GLIT Holdings to GLG Corp Ltd. The third requires Estina Ang Suan Hong, the Executive Chairman/CEO of GLG Corp to commit to a personal pledge of US$10 million.

6. Trade and other payables

Trade payables (i) Other payables Related parties Accruals	Consolidated
	2011 US$’000 2010 US$’000
	267 1,119 101 - - 43 2,945 3,870
	3,313 5,032

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(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.

12

GLG Corp Ltd
Notesto Appendix 4E for the Year Ended 30[th] June 2011

7. 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
	2011 US$’000 2010 US$’000
	142 9 1,040 982 49,273 34,331 759 152 7,129 90
	51,366 42,541 (34,438) (34,331) (759) (7,129)
	16,169 1,081 1,000 1,802 460 203
	1,460 2,005
	1,334 1,081 1,460 2,005
	17,629 3,086

Summary of borrowing arrangements:

• (i) Secured by corporate guarantee from 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$2,040 thousand (2010: US$2,784 thousand) which is repayable by a reducing balance method of 48 monthly average installments of US$115 thousand (30 June 2010: US$115 thousand). The average effective interest rate charge is 5% per annum.

• (iii) Trust Receipts offsettable US$34,438 thousand (30 June 2010: US$34,331 thousand).

• (iv) Bills payable offsettable US$759 thousand (30 June 2010: US$7,129 thousand).

• (v) Banking relationship: the Group 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. At 30 June 2011 GLG Corp Ltd had financing facilities available of US$111.5 million (US$70.9 million was used and US$40.6 million is unused). This is compared with US$105.5 million at 30 June 2010 (US$58.1 million was used and US$47.2 million was unused). GLG continued to have the strong support of its core banking relationship 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:

heet date were as follows:
	2011	2010
Bank overdrafts	US prime rate	US prime rate
Bank loans	5.02%p.a.	6.82%p.a.
Trust receipts	1- 5mths US SIBOR + (1.50% -	1- 5mths US SIBOR + (1.50%
	2.25%)	-2.25%)
Finance lease liabilities	4.94%p.a.	5.20%p.a.
Bills payable	US SIBOR/LIBOR + 1.35% -	US SIBOR/LIBOR + 1.35% -
	3.75%	3.75%

13

GLG Corp Ltd
Notesto Appendix 4E for the Year Ended 30[th] June 2011

8. Issued capital

74,100,000 (2010: 74,100,000) fully paid ordinary shares	Consolidated 2011 US$’000 2010 US$’000 10,322 10,322

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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 Balance at end of financial year	Consolidated No. ’000 2011 US$’000 74,100 10,322 74,100 10,322	Consolidated
		No. ’000 2010 US$’000
		74,100 10,322
		74,100 10,322

9. Earnings per share

Earnings per share
Basic earnings per share: From continuing operations Total basic earnings per share Diluted earnings per share: From continuing operations Total diluted earnings per share	Consolidated
	2011 Cents per share 2010 Cents per share
	3.65 10.69
	3.65 10.69
	3.65 10.69
	3.65 10.69

Basic earnings per share

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 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	2011 US$’000 2010 US$’000
	2,705 7,920
	2,705 7,920
	2,705 7,920
	2011 No.’000 2010 No.’000
	74,100 74,100

14

GLG Corp Ltd

Notesto Appendix 4E for the Year Ended 30[th] June 2011

9. Earnings per share (con’t)

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 Earnings used in the calculation of diluted EPS from continuing operations Weighted average number of ordinary shares used in the calculation of basic EPS Weighted average number of ordinary shares used in the calculation of diluted EPS	Consolidated
	2011 US$’000 2010 US$’000
	2,705 7,920
	2,705 7,920
	2,705 7,920
	Consolidated
	2011 No.’000 2010 No.’000
	74,100 74,100
	74,100 74,100

10. Dividends

Recognised amounts Fully paid ordinary shares Proposed final fully unfranked ordinary dividend	2011 Cents per share Total US$’000 - -	2010
		Cents per share Total US$’000
		- -

Unrecognised amounts

In respect of the financial year ended 30 June 2011, the Directors do not recommend the payment of dividend.

11. Contingent liabilities

Contingent liabilities Guarantees in lieu of commercial and statutory cash deposits Guarantees arising from Letters of credit in force Repayment of income tax concessions received (i) Total	Consolidated
	2011 US$’000 2010 US$’000
	2,962 2,578 19,558 12,819 1,570 -
	24,090 15,397

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• (i) GLG Corp Ltd currently receive tax concessions based on its ability to fulfill requirements as set out by the International Enterprise Singapore (IES) under the Global Trader Programme (GTP). If theses requirements are not met, GLG Corp Ltd may be required to pay additional taxes in lieu of previous tax concessions received.

15

GLG Corp Ltd
Notesto Appendix 4E for the Year Ended 30[th] June 2011

12. Subsidiaries

		Ownership interest
		2011 % 2010 % 100 100
Name of subsidiary	Country of incorporation
Ghim Li Global Pte Ltd Singapore
Ghim Li Global International Ltd Hong Kong		100 100
Escala Fashion Pte. Ltd. Singapore		100 100
Ghim Li International (S) Pte Ltd Singapore		100 100

13. 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 2010 Share of losses for the year Additions Balance at 30 June 2011	Consolidated
	2011 US$’000 2010 US$’000
	- -
	- 39 - (39)
	- - - -
	- -

		Principal activity	Ownership interest	Ownership interest
	Country of		2011 %	2010 %
Name of entity
			51 51

16

GLG Corp Ltd
Notesto Appendix 4E for the Year Ended 30[th] June 2011

14. Disposal of Subsidiary

On 21 December 2009, GLG Corp Ltd disposed of Escala Guatemala S.A. The proceeds on disposal of US$1,950,000 were received in cash.

The profit/(loss) for the period from the discontinued operation is analysed as follows:

Revenue Operating expenses Profit before income tax Income tax expense/(credit) Profit after tax Net assets disposed of Gain on disposal Total consideration Satisfied by cash, and net cash inflow arising on disposal	Consolidated
	2011 US$’000 2010 US$’000
	- - - -
	- - - -
	-
	1,950 - 1,950
	- - - 1,950 - 1,950
	- -

No gain was recognised on the disposal of Escala Guatemala S.A. No tax charge or credit arose on the transaction.

15. 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.

16. Reclassification of financial information

The Company has reassessed its presentation of discounts and rebates received from suppliers to ensure items are classified within the Comprehensive Income Statement consistent with the company’s accounting policy on inventories. Based on this reassessment, it was determined that certain amounts in the Comprehensive Income Statement recognised within the lines other revenue and other income should be classified and recognised within cost of sales. Overall this reclassification has nil impact on the net profit after tax disclosed in the Comprehensive Income Statement but the other revenue/other income and cost of sales line items both reduce by US$964 thousand. Due to this reassessment a reclassification was also completed within the statement of cash flows with receipts from customers decreasing US$964 thousand and payments to suppliers decreasing by the same amount. This has nil impact on net cash flow from operating activities and the net cash increase for the year.

17