GLG CORP LTD — Annual Report 2015

Aug 30, 2015

GLG Corp Ltd

GLG Corp Ltd

ACN 116 632 958 PRELIMINARY FINAL REPORT

YEAR ENDED 30 JUNE 2015

1. Highlight of Results

2. Appendix 4E Financial Statements for the Year ended 30 June 2015

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1. Results for announcement to market

Summary financial information for the company for the 2014/15 financial year is set out below. Full financial details are attached to this announcement.

		Consolidated
Summary Information	30 –JUN-15 USD$’000	30 –JUN-14 USD$’000	Inc/(Dec) USD$’000	Inc/(Dec) %
Revenue from Ordinary Activities	180,126	225,893	(45,767)	(20.26)
Profit/(Loss) after Tax from Ordinary Activities	3,148	4,038	(890)	(22.04)
Net Profit/(Loss) after Tax Attributable to Members	3,148	4,038	(890)	(22.04)
Basic Earnings – US Cents Per Share	4.25	5.45	(1.20)	(22.02)
Dilute Earnings – US Cents Per Share	4.25	5.45	(1.20)	(22.02)
Net Tangible Assets – US Cents Per Share	75.04	70.79	4.25	6.00

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 2015 with that of 30 June 2014 .

GLG’s net profit decreased 22.04% to US$3,148 thousand, against a net profit of US$4,038 thousand in the previous year. The reduction in net profit was mainly due to lower revenue and a decrease in other income. However the gross profit margin increased to 10.42% compared to 8.62% in the previous year.

GLG’s sales decreased by US$45,767 thousand, or 20.26% to US$180,126 thousand compared to US$225,893 thousand in the previous year. The decline in sales was mainly due to continued weakness in the consumer market and decreased orders from a major customer which closed a significant number of their stores in 2014. The decline from this customer alone accounted for a drop of US$16,325 thousand in GLG’s revenue.

Selling and distribution costs increased by 7.73% to US$1,045 thousand compared to US$970 thousand in the previous year. The increased in the expenses was mainly due to the higher number of samples required for presentation and frequent travel for developing new and existing customers.

Administration expenses decreased 7.65% to US$11,169 thousand compared to US$12,094 thousand in the previous year. This reduction in expenses was achieved through a streamlining of processes, saving in net employee costs and management fees due to the termination of service contracts.

Other expenses increased 19.71% to US$2,514 thousand compared to US$2,100 thousand in the previous year. This was mainly due to an increased in the commitment fees paid to the manufacturer during the reporting period.

Comparison of the Consolidated Statement of Financial Position as at 30 June 2015 with that of 30 June 2014 .

The Group’s financial position was stable as at 30 June 2015.

Trade and other receivables increased 8.83% to US$85,408 thousand as at 30 June 2015 compared to US$78,476 thousand as at 30 June 2014. The increase was primarily due to an increase in the GLIT receivable. This increase was caused by timing differences due to production delays at the cut-off date.

Total current payables and borrowings increased by US$5,980 thousand, or 15.43%, to US$44,726 thousand as at 30 June 2015 compared to US$38,746 thousand as at 30 June 2014. The increase was largely due to new bank borrowings and bills payable.

Comparison of the Consolidated Statement of Cash Flows for the financial year ended 30 June 2015 with that of 30 June 2014.

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 2015

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
		2015 US$’000 2014 US$’000
		180,126 225,893 (161,358) (206,416)
		18,768 19,477 142 75 424 401 (1,045) (970) (11,169) (12,094) (392) (457) (2,514) (2,100)
		3,865 4,681 (717) (643)
		3,148 4,038 - - 3,148 4,038
		4.25 5.45 4.25 5.45

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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 2015

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 12 6 7 7 8	Consolidated
		2015 US$’000 2014 US$’000
		10,831 8,221 85,408 78,476 114 260 180 170 344 344
		96,877 87,471
		2,333 2,480 - - 2,393 2,545
		4,726 5,025
		101,603 92,496
		2,913 2,479 41,813 36,267 949 1,063
		45,675 39,809
		64 141 257 87
		321 228
		45,996 **40,037 **
		55,607 52,459
		10,322 10,322 45,285 42,137
		55,607 52,459

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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 2015

Note Consolidated Balance at 1 July 2013 Profit for the year Other comprehensive income Total comprehensive income Balance at 30 June 2014 Balance at 1 July 2014 Profit for the year Other comprehensive income Total comprehensive income Balance at 30 June 2015	Issued Capital US$’000	Retained Earnings Total US$’000 US$’000
	10,322 -	38,099 48,421 4,038 4,038
	-	- -
	-	4,038 4,038
	10,322	42,137 52,459
	10,322 -	42,137 52,459 3,148 3,148
	-	- -
	-	3,148 3,148
	10,322	45,285 55,607

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 2015

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 13 Cash flows from investing activities Proceeds from sales of property, plant and equipment Payment for property, plant and equipment Net cash used in investing activities Cash flows from financing activities (Repayment of)/proceeds from borrowings Repayment from (amounts advanced) to related parties (Advances to)/ received from other parties Net cash (used in)/ provided by financing activities Net increase 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
	2015 US$’000 2014 US$’000
	188,515 221,429 (175,419) (222,457) (206) (268) (662) (509)
	12,228 (1,805)
	13 38 (144) (788)
	(131) (750)
	5,470 (3,617) 169 (266) (15,126) 9,280
	(9,487) **5,397 **
	2,610 2,842 8,221 5,379
	10,831 8,221

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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 2015

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 Rental income Interest Income Wage Credit Scheme PIC cash payout Other Total other income	Consolidated
	2015 US$’000 2014 US$’000
	180,126 225,893
	142 424
	180,268 226,317
	9 13 12 246 33 29 - 58 21 55
	75 401
	75 401
	180,343 226,718

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GLG Corp Limited Notes to the Appendix 4E for the Year Ended 30 June 2015

4. Trade and other receivables

Trade receivables Third parties Other party- GLIT group Related Parties Other receivables Other receivables – GLIT group Provision for Doubtful Debts Less: Payable to Related Parties Payable to Other Parties – GLIT group Goods and services tax recoverable	Consolidated
	2015 US$’000 2014 US$’000
	20,707 53,267 8,096 984 29,168 37,814 8,263 654 5,000 5,000 (2,351) (2,360)
	85,703 78,539 - (86) (328) -
	85,375 78,453
	33 23
	85,408 78,476

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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$3,577 thousand (2014: US$4,843 thousand) 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 2015

4. Trade and other receivables(con’t)

Included in the Group’s trade receivable balance are debtors with a carrying amount of US$327 thousand (2014: $47 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 Credit to profit or loss Allowance written off during the year Balance at the end of the year*	Consolidated
		2015 US$’000 2014 US$’000
		327 1 - 4 - 42
		327 47
		2,360 2,613 (9) (46) - (207)
		2,351 2,360

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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 2015

5. Other financial assets

Other financial assets
Current Trade receivables – Third parties (i) Provision for Bad Debts Total Current other financial assets Non-current Loans and receivables – related parties (ii)(a)(b) Disclosed in the financial statements as : Total Non-current other financial assets	Consolidated
	2015 US$’000 2014 US$’000
	368 368 (24) (24)
	344 344
	2,333 2,480
	2,333 2,480
	2,333 2,480

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(i) The current trade receivable owed by third party has a provision for non-recovery in FY2015 of US$24 thousand (FY2014: US$24 thousand).

(ii) The loan owed by related parties consist of:

(a) US$1,871 thousand of rental deposit paid for the 10 years lease rental from Ghim Li Group Pte Ltd (2014: US$1,871 thousand).

(b) US$462 thousand of terms loan repayable over 10 years at fixed interest rate of 2% p.a. commencing January 2014 (2014: US$609 thousand).

6. Trade and other payables

Trade and other payables
Trade payables (i) Other payables Accruals	Consolidated
	2015 US$’000 2014 US$’000
	281 520 537 176 2,095 1,783
	2,913 2,479

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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 2015

7. Borrowings

Secured– at amortised cost Current Trust receipts (i) (ii) (Gross) Bills payable (Gross) Finance lease liabilities Bank loan Total Non-current Finance lease liabilities Disclosed in the financial statements as: Current borrowings Non-current borrowings	Consolidated
	2015 US$’000 2014 US$’000
	36,307 36,180 3,434 72 - 87 2,000 -
	41,813 36,267 64 141
	64 141
	41,813 36,267 64 141
	41,877 36,408

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 2015 GLG Corp Ltd had financing facilities available of US$119.4 million (US$54.6 million was used and US$64.8 million is unused). This is compared with US$112.3 million at 30 June 2014 (US$59.1 million was used and US$53.2 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:
	2015	2014
Bank overdrafts	US prime rate	US prime rate
Bank loans	5.00%p.a.	5.00%p.a.
Trust receipts / Bill payable	1.50%-1.89%	0.92% -1.62%
Finance lease liabilities	3.87%p.a.	3.94%p.a.

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GLG Corp Ltd

Notesto the Appendix 4E for the Year Ended 30 June 2015

8. Issued capital

74,100,000 (2011: 74,100,000) fully paid ordinary shares	Consolidated 2015 US$’000 2014 US$’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 2015 US$’000 74,100 10,322 74,100 10,322	Consolidated
		No. ’000 2014 US$’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
	2015 Cents per share 2014 Cents per share
	4.25 5.45
	4.25 5.45

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	2015 US$’000 2014 US$’000
	3,148 4,038
	3,148 4,038
	2015 No.’000 2014 No.’000
	74,100 74,100

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GLG Corp Limited

Notesto the Appendix 4E for the Year Ended 30 June 2015

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
	2015 US$’000 2014 US$’000
	3,148 4,038
	3,148 4,038
	Consolidated
	2015 No.’000 2014 No.’000
	74,100 74,100
	74,100 74,100

10. Contingent liabilities

Contingent liabilities Guarantees in lieu of commercial and statutory cash deposits Guarantees arising from Letters of credit in force Total	Consolidated
	2015 US$’000 2014 US$’000
	- 803 13,713 22,934
	13,713 23,737

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GLG Corp Ltd Notes to the Appendix 4E for the Year Ended 30 June 2015

11. Subsidiaries

Name of subsidiary	Country of incorporation	Ownership interest	Ownership interest
		2015 %	2014 %
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

12. Investments accounted for using the equity method

Name of entity	Country of incorporation	Principal activity	Ownership interest	Ownership interest
			2015 %	2014 %
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
	2015 US$’000 2014 US$’000
	393 393 (1,879) (1,879) (1,486) (1,486) (757) (757) - - - - - - - -

The entity ceased business in 2014 and the consolidated entity’s share of losses for 2015 and 2014 was nil. The entity’s cumulative unrecognised share of retained losses is US$694 thousand (2014: US$694 thousand).

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GLG Corp Limited Notes to the Appendix 4E for the Year Ended 30 June 2015

13. 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/(Loss) 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 provided by/(used in) operating activities	Consolidated
	2015 US$’000 2014 US$’000
	3,148 4,038 20 (20) - (20) 263 365 (11) (246) 55 134 146 (15) - - 8,183 (5,012) (10) 115 434 (1,144)
	12,228 (1,805)

14. 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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