GLG CORP LTD — Annual Report 2014

Aug 27, 2014

GLG Corp Ltd

GLG Corp Ltd

ACN 116 632 958 PRELIMINARY FINAL REPORT

PERIOD ENDED 30 JUNE 2014

1. Highlight of Results

2. Appendix 4E Financial Statements for the Year ended 30 June 2014

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1. Results for announcement to market

Summary financial information for the company for the 2013/14 financial year is set out below. Full financial details are attached to this announcement.

		Consolidated
Summary Information	30 –JUN-14 USD$’000	30 –JUN-13 USD$’000	Inc/(Dec) USD$’000	Inc/(Dec) %
Revenue from Ordinary Activities	225,893	229,413	(3,520)	(1.53)
Profit/(Loss) after Tax from Ordinary Activities	4,038	3,115	923	29.63
Net Profit/(Loss) after Tax Attributable to Members	4,038	3,115	923	29.63
Basic Earnings – US Cents Per Share	5.45	4.20	1.25	29.76
Dilute Earnings – US Cents Per Share	5.45	4.20	1.25	29.76
Net Tangible Assets – US Cents Per Share	70.79	65.35	5.44	8.32

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

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GLG Corp Ltd

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 Financial Report, as at the date of this report, the audit process has not been finalised and further changes may be forthcoming.

The discussion that follows compares the Consolidated Statement of Comprehensive Income for the financial year ended 30 June 2014 with that of 30 June 2013 .

GLG’s net profit increased 29.63% to US$4,038 thousand, against a net profit of US$3,115 thousand in the previous year. The increase was due to lower administrative costs relating to rental expenses and write-back of one-off reinstatement cost for the Changi South office.

The decrease in revenue and the weakening of gross margins resulted in gross profit decline to US$19,477 thousand from US$21,795 thousand. Gross margin decreased by 88 basis points from 9.50% to 8.62% compared to previous year. Both were due to a combination of factors including lower sales margin in support of a major long term customer who has been under market pressure and adjustments to agreements with suppliers which better reflects their raising costs.

Selling and distribution costs decreased by 23.26% to US$970 thousand compared to US$1,264 thousand in the previous year. The decrease in the expenses was mainly due to savings in freight costs.

Administration expenses decreased 20.18% to US$12,094 thousand compared to US$15,152 thousand in the previous year. The decrease was mainly due to the write-back of the over-provision of a one-off building reinstatement cost of US$373 thousand and saving in rental of US$1,401 thousand.

Other expenses decreased 22.71% to US$2,100 thousand compared to US$2,717 thousand in the previous year. This was mainly due to a decrease in legal and professional fees for the reporting period.

Comparison of the Consolidated Statement of Financial Position as at 30 June 2014 with that of 30 June 2013 .

The Group’s financial position was stable as at 30 June 2014.

Trade and other receivables increased 7.52% to US$78,476 thousand as at 30 June 2014 compared to US$72,988 thousand as at 30 June 2013. This increase was mainly due to revenue increases in the month of May and June 2014. Subsequent to 30 June 2014, the Group received US$16,379 thousand from receivables.

Other Non-Current Financial Assets decreased by US$9,491 thousand, or 79.28% to US$2,480 thousand as at 30 June 2014 compared to US$11,971 thousand as at 30 June 2013. The decrease was mainly due to the repayment of a term loan from related parties and GLIT receivables.

Total current payables and borrowings decreased by US$4,920 thousand, or 11.27%, to US$38,746 thousand as at 30 June 2014 compared to US$43,666 thousand as at 30 June 2013. The decrease was largely due to lower borrowings from bank for trust receipts.

Comparison of the Consolidated Statement of Cash Flows for the financial year ended 30 June 2014 with that of 30 June 2013.

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

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GLG Corp Ltd

Consolidated Statement of comprehensive income for the financial year ended 30 June 2014

Revenue Cost of sales Gross profit Other revenue Other income Distribution expenses Administration expenses Finance costs Other expenses Profit before income tax expense Income tax expense Profit for the year Other comprehensive income Total comprehensive income for the year Earnings per share: Basic (cents per share) Diluted (cents per share)	Note 3 3 3 9 9	Consolidated
		2014 US$’000 2013 US$’000
		225,893 229,413 (206,416) (207,618)
		19,477 21,795 424 401 486 985 (970) (1,264) (12,094) (15,152) (457) (541) (2,100) (2,717)
		4,681 3,592 (643) (477)
		4,038 3,115 - - 4,038 3,115
		5.45 4.20 5.45 4.20

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Notes to the financial statements are included on pages 8 to 16

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GLG Corp Ltd

Consolidated Statement of financial position as at 30 June 2014

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 13 6 7 7 8	Consolidated
		2014 US$’000 2013 US$’000
		8,221 5,379 78,476 72,988 260 245 170 285 344 344
		87,471 79,241
		2,480 11,971 - - 2,545 2,119
		5,025 14,090
		92,496 **93,331 **
		2,479 3,623 36,267 40,043 1,063 929
		39,809 44,595
		141 228 87 87
		228 315
		40,037 44,910
		52,459 48,421
		10,322 10,322 42,137 38,099
		52,459 48,421

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Notes to the financial statements are included on pages 8 to 16

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GLG Corp Ltd

Consolidated Statement of changes in equity for the financial year ended 30 June 2014

Note Consolidated Balance at 1 July 2012 Profit for the year Other comprehensive income Total comprehensive income Balance at 30 June 2013 Balance at 1 July 2013 Profit for the year Other comprehensive income Total comprehensive income Balance at 30 June 2014	Issued Capital US$’000	Retained Earnings Total US$’000 US$’000
	10,322 -	34,984 45,306 3,115 3,115
	-	- -
	-	3,115 3,115
	10,322	38,099 48,421
	10,322 -	38,099 48,421 4,038 4,038
	-	- -
	-	4,038 4,038
	10,322	42,137 52,459

Notes to the financial statements are included on pages 8 to 16

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GLG Corp Ltd

Consolidated Statement of cash flows for the financial year ended 30 June 2014

Note Cash flows from operating activities Receipts from customers Rental deposit paid Payments to suppliers and employees Interest and other costs of finance paid Income tax paid Net cash used in operating activities 14 Cash flows from investing activities Proceeds from sales of property, plant and equipment Payment for property, plant and equipment Proceeds from repayment of related party loans Net cash used in investing activities Cash flows from financing activities (Repayment of)/proceeds from borrowings Amounts advanced to related parties Received from other parties Net cash provided by 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
	2014 US$’000 2013 US$’000
	221,429 221,103 - (1,871) (222,457) (226,845) (268) (346) (509) (518)
	(1,805) (8,477)
	38 7 (788) (1,181) - (971)
	(750) (2,145)
	(3,617) 5,797 (266) (305) 9,280 907
	5,397 6,399
	2,842 (4,223) 5,379 9,602
	8,221 5,379

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Notes to the financial statements are included on pages 8 to 16

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GLG Corp Ltd Notes to the Appendix 4E for the Year Ended 30 June 2014

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 Level 40 North Point 100 Miller St North Sydney NSW 2060 Australia

Principal place of business 21 Jalan Mesin, Singapore 368819

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

Revenue from the sale of goods Revenue from the rendering of services Other income Interest Income Other Total other income	Consolidated
	2014 US$’000 2013 US$’000
	225,893 229,413
	424 486
	226,317 229,899
	246 414 155 571
	401 985
	401 985
	226,718 230,884

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GLG Corp Limited Notes to the Appendix 4E for the Year Ended 30 June 2014

4. Trade and other receivables

Trade receivables Third parties Other party- GLIT group Related Parties Other receivables Provision for Doubtful Debts Less: Payable to Related Parties Goods and services tax recoverable	Consolidated
	2014 US$’000 2013 US$’000
	29,168 37,814 8,192 5,725 28,951 37,775 7,781 1,148 (2,360) (2,613)
	78,539 73,042 (86) (113)
	78,453 72,929
	23 59
	78,476 72,988

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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, US$4.8 million (2013: US$9.7 million) is due from Macy’s the Group’s largest customer.

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GLG Corp Limited Notes to the Appendix 4E for the Year Ended 30 June 2014

4. Trade and other receivables(con’t)

Included in the Group’s trade receivable balance are debtors with a carrying amount of US$47 thousand (2013: $227 thousand) which are past due at the reporting date. There has been no significant change in credit quality and 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

	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 written off during the year Balance at the end of the year*	Consolidated
		2014 US$’000 2013 US$’000
		1 13 4 166 42 48
		47 227
		2,613 2,624 (253) (11)
		2,360 2,613

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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.

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GLG Corp Ltd Notes to the Appendix 4E for the Year Ended 30 June 2014

5. Other financial assets

Current Trade receivables – Third parties (ii) Provision for Bad Debts Total Current other financial assets Non-current Trade receivables – Other Party GLIT group (i)(a) Loans and receivables – related parties (iii)(a)(b) Disclosed in the financial statements as : Total Non-current other financial assets	Consolidated
	2014 US$’000 2013 US$’000
	368 368 (24) (24)
	344 344
	- 9,319 2,480 2,652
	2,480 11,971
	2,480 11,971

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(i) The loans owed by Other Party – GLIT Group consist of:

(a) US$9,319 thousand (FY2013: US$9,319 thousand) has been fully settled during the financial year.

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.

(ii) The current trade receivable owed by third party has for a provision for non-recovery in FY2014 of US$24 thousand (FY2013: US$24 thousand).

(iii) The loan owed by related party consist of:

(a) US$1,871 thousand of rental deposit paid for the 10 years lease rental from Ghim Li Group Pte Ltd (2013: US$1,871 thousand).

(b) US$609 thousand of terms loan repayable over 10 years at fixed interest rate of 2% p.a. commencing January 2013 (2013: US$781 thousand).

6. Trade and other payables

Trade payables (i) Other payables Accruals	Consolidated
	2014 US$’000 2013 US$’000
	520 493 176 91 1,783 3,039
	2,479 3,623

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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.

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GLG Corp Limited Notes to the Appendix 4E for the Year Ended 30 June 2014

7. Borrowings

Secured– at amortised cost Current Bank overdraft Trust receipts (i) (ii) (Gross) Bills payable (Gross) Finance lease liabilities Total Non-current Finance lease liabilities Disclosed in the financial statements as: Current borrowings Non-current borrowings	Consolidated
	2014 US$’000 2013 US$’000
	- 328 36,180 38,932 - 87 692 91
	36,267 40,043 141 228
	141 228
	36,267 40,043 141 228
	36,408 40,271

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) 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 2014 GLG Corp Ltd had financing facilities available of US$112.3 million (US$59.1 million was used and US$53.2 million is unused). This is compared with US$108.1 million at 30 June 2013 (US$61 million was used and US$47.1 million was unused). GLG believe it continues to have the strong support from main bankers for its working capital and capital expenditure requirements.

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

sheet date were as follows:
	2014	2013
Bank overdrafts	US prime rate	US prime rate
Bank loans	5.00%p.a.	5.00%p.a.
Trust receipts / Bill payable	0.92% -1.62%	0.92% -1.75%
Finance lease liabilities	3.94%p.a.	4.21%p.a.

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GLG Corp Ltd

Notesto the Appendix 4E for the Year Ended 30 June 2014

8. Issued capital

74,100,000 (2011: 74,100,000) fully paid ordinary shares	Consolidated 2014 US$’000 2013 US$’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 2014 US$’000 74,100 10,322 74,100 10,322	Consolidated
		No. ’000 2013 US$’000
		74,100 10,322
		74,100 10,322

9. Earnings per share

Earnings per share
Basic earnings per share: Total basic earnings per share Diluted earnings per share: Total diluted earnings per share Basic earnings per share	Consolidated
	2014 Cents per share 2013 Cents per share
	5.45 4.20
	5.45 4.20

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 Weighted average number of ordinary shares for the purposes of basic earnings per share	2014 US$’000 2013 US$’000
	4,038 3,115
	4,038 3,115
	2014 No.’000 2013 No.’000
	74,100 74,100

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GLG Corp Limited

Notesto the Appendix 4E for the Year Ended 30 June 2014

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 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
	2014 US$’000 2013 US$’000
	4,038 3,115
	4,038 3,115
	Consolidated
	2014 No.’000 2013 No.’000
	74,100 74,100
	74,100 74,100

10. Dividends

Recognised amounts Fully paid ordinary shares Proposed final fully unfranked ordinary dividend	2014 Cents per share Total US$’000 - -	2013
		Cents per share Total US$’000
		- -

Unrecognised amounts

In respect of the financial year ended 30 June 2014, the Directors do not recommend the payment of dividend (2013: nil).

11. Contingent liabilities

Contingent liabilities Guarantees in lieu of commercial and statutory cash deposits Guarantees arising from Letters of credit in force Total	Consolidated
	2014 US$’000 2013 US$’000
	803 885 22,934 22,079
	23,737 22,964

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GLG Corp Ltd Notes to the Appendix 4E for the Year Ended 30 June 2014

12. Subsidiaries

Name of subsidiary	Country of incorporation	Ownership interest	Ownership interest
		2014 %	2013 %
Ghim Li Global Pte Ltd Singapore		100 100
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
Escala (USA) Inc USA		100 100
Ghim Li Global International (GuangZhou) Ltd China		100 100

13. Investments accounted for using the equity method

Name of entity	Country of incorporation	Principal activity	Ownership interest	Ownership interest
			2014 %	2013 %
Jointly controlled entities JES Apparel LLC USA Importer of knitwear products			51 51

Summarised financial information in respect of the Group’s jointly controlled entity is set out below:

Financial position: Current assets Current liabilities Net assets Group’s share of jointly controlled entity’s net assets Financial performance: Income Expenses Total loss for investment in joint venture Group’s share of jointly controlled entity’s losses	Consolidated
	2014 US$’000 2013 US$’000
	393 393 (1,879) (1,879) (1,486) (1,486) (757) (757) - - - - - - - -

The entity ceased business in 2013 and the consolidated entity’s share of losses for 2014 and 2013 was nil. The entity’s cumulative unrecognised share of retained losses is US$694 thousand (2013: US$694 thousand).

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GLG Corp Limited Notes to the Appendix 4E for the Year Ended 30 June 2014

14. Notes to the cash flow statement

Reconciliation of profit for the year to net cash flows from operating activities

econciliation of profit for the year to net cash flows from operating activities
Profit for the year Gain on sale or disposal of non-current assets Reversal/ (Impairment) expenses Depreciation and amortisation of non-current assets Interest Income Increase/(decrease) in income tax Changes in net assets and liabilities, net of effects from acquisition and disposal of businesses: (Increase)/decrease in assets: Inventories Prepaid assets Trade and other receivables Other assets Increase/(decrease) in liabilities: Trade and other payables Net cash used in operating activities	Consolidated
	2014 US$’000 2013 US$’000
	4,038 3,115 (20) (4) (20) 114 365 444 (246) (414) 134 (42) (15) (159) - (1,871) (5,012) (9,367) 115 (5) (1,144) (288)
	(1,805) (8,477)

15. Economic dependency

The consolidated entity is sourcing its apparel manufacturing requirements significantly from the GLIT entities. In return, the consolidated entity has an obligation to fulfill 80% of the production capacity of GLIT entities.

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