GLG CORP LTD — Annual Report 2017

Aug 28, 2017

GLG Corp Ltd

GLG Corp Ltd

ACN 116 632 958 PRELIMINARY FINAL REPORT

YEAR ENDED 30 JUNE 2017

1. Highlight of Results

1. Appendix 4E Financial Statements for the Year ended 30 June 2017

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GLG Corp Ltd

1. Results for announcement to market

Summary financial information for the consolidated entity for the 2016/17 financial year is set out below. Full financial details are attached to this announcement.

		Consolidated
Summary Information	30 –JUN-17 USD$’000	30 –JUN-16 USD$’000	Inc/(Dec) USD$’000	Inc/(Dec) %
Revenue from Ordinary Activities	156,041	171,435	(15,394)	(8.98)
Profit/(Loss) after Tax from Ordinary Activities	4,193	4,827	(634)	(13.13)
Net Profit/(Loss) after Tax Attributable to Members	4,193	4,827	(634)	(13.13)
Basic Earnings – US Cents Per Share	5.66	6.51	(0.85)	(13.06)
Dilute Earnings – US Cents Per Share	5.66	6.51	(0.85)	(13.06)
Net Tangible Assets – US Cents Per Share	61.05	58.41	2.64	4.52

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

Control gained

On 30 June 2017, the Group completed the acquisition of 100% interest in Ghim Li Fashion (M) Sdn Bhd. Hence, the income statement of this newly acquired company was not consolidated into the Group’s income statement for the year ended 30 June 2017. Only the balance sheet of this acquired company was consolidated into the Group as of 30 June 2017.

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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 BDO East Coast Partnership.

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.

For the current fiscal year in 2017, the Company has seen continued progress in its implementation of the strategic plan to become a vertical–integrated and textile manufacturing, supply chain business from its original state of being just a trading agent. To achieve this goal, in early 2015, the company built its maiden garment factory in Vietnam (which started production in March 2017), and in late 2016 completed the acquisition of a fabric mill in Malaysia. This has enhanced the capability of the Company in providing design, innovation services and producing all kinds of knitted fabric. In June 2017, GLG added its in-house manufacturing capacity by acquiring another garment factory, again in Malaysia.

Besides embarking on non-organic growth, to improve its competitiveness in the market, GLG has differentiated itself with its process innovation of securing self-inspection and lab approval for its endproduct with its key customers. Also, this fiscal year saw the incremental innovation in enhancing its existing product portfolio by selling directly to end-customers on Landed Duty Paid (LDP) basis. This new LDP business represents another step towards adding more value to our customers, using a total supplychain solutions approach by bringing the final product from door-to-door, i.e. from our fabric mill through to final production in garment factories, and ultimate delivery to the receiving dock of our customers.

This entire value chain ranging from product design, process innovation through knitted fabric manufacturing to last-mile delivery of knitted garments to our customers’ doorstep is now embedded into our current financial results ended 30 June 2017.

Comparison of Consolidated Statement of Profit or Loss and Comprehensive Income for the financial year ended 30 June 2017 with that of 30 June 2016.

GLG’s sales decreased by US$15,394 thousand, or 9% to US$156,041 thousand compared to sales of US$171,435 thousand in the previous year.

Sales from FOB segment decreased by US$25,509 thousand, or 14.9% to US$145,926 thousand compared to US$$171,435 thousand in the previous year. The decline in sales was mainly attributed to continued weakness in our end-customers’ retail apparel market. These end-customers have been facing intense competition and losing market share to on-line retails.

LDP business segment contributed US$10,115 thousand, or 6.5% to GLG’s sales with gross profit margin of 31%. When GLG increases its LDP business, the sales and gross profit margin will continue to improve. It is worthy to note that LDP revenues include logistics and customs duty cost which are then deducted below the gross profit level.

Gross profit margin for the Textile (Fabric) segment increased to 10.8% compared to 9.0% in the previous year. The increase was largely attributable to improved production efficiency and lower yarn cost.

Despite the higher gross profit margin generated from LDP and Textile segments, the group reported only a slight increase in gross profit margin from 13.3% in the previous year to 13.8% for the current year ended 30 June 2017. This was due to lower gross profit margin recorded for FOB business segment of 10.1% compared to 11.5% in the previous year.

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GLG Corp Ltd

Summary commentary on results (cont’d)

Selling and distribution cost increased by 28.8% to US$3,410 thousand compared to US$2,648 thousand in the previous year. The increase in expenses was mainly due to the customs duties and freight costs incurred on outbound shipments to LDP customer from door-to-door, compared with the mainstream FOB business, where our delivery obligation terminates at the Port of Departure.

Administration expense decreased by 6.2% to US$10,244 thousand compared to US$10,924 thousand in the previous year. This reduction in expenses was achieved through a streamlining of processes and internal restructuring.

Finance cost decreased by 8.4% to US$1,215 thousand compared to US$1,327 thousand in the previous year, as the company did not have to incur financing cost associated with a previous customer for export trade financing.

GLG’s profit after tax decreased by 13.1% to US$4,193 thousand, compared with US$4,827 thousand in the previous year. The reduction in profit after tax was mainly due to lower sales and pre-production costs incurred at the Vietnam garment factory.

Comparison of the Consolidated Statement of Financial Position as at 30 June 2017 with that of 30 June 2016.

Trade and other receivables increased by 13.9% to US$68,534 thousand as at 30 June 2017 compared to US$60,190 thousand as at 30 June 2016. The increase was primarily due to extended credit given to core customers in the current year.

Inventory increased by 6.8% to US12,515 thousand as at 30 June 2017 compared to US$11,715 thousand as at 30 June 2016, because of an increase in the Maxim’s fabric mill inventory for raw materials and workin-process.

Non-current other assets increased by 88% to US$2,615 thousand as at 30 June 2017 compared to US$1,391 thousand as at 30 June 2016, the increase was primarily due to the payment of infrastructure cost in Vietnam on an operating lease to an external party for the usage of land.

Property, plant and equipment increased by 29.3% to US$34,047 thousand as at 30 June 2017 compared to US$26,337 thousand as at 30 June 2016, the increase was due to the cost of investment in new machinery for the Vietnam garment factory and Maxim fabric mill. Correspondingly, this led to the current and longterm borrowings increased by 27.2%, to US$64,702 thousand as at 30 June 2017 compared to US$50,866 thousand as at 30 June 2016.

Comparison of the Consolidated Statement of Cash Flows for the financial year ended 30 June 2017 with that of 30 June 2016.

GLG’s cash from operating activities decreased by 57.4% to US$1,378 thousand as at 30 June 2017 compared to US$3,237 thousand as at 30 June 2016. The decrease was due to the decline in lower sales for the financial year.

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 profit or loss

Consolidated Statement of profit or loss and other comprehensive income for the financial year ended 30 June 2017

Revenue Cost of sales Gross profit 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: Items that will not be reclassified subsequently to profit or loss: Revaluation deficit, on land and building, net of tax Other comprehensive income, net of tax Total comprehensive income for the year Earnings per share: Basic (cents per share) Diluted (cents per share)	Note 4 4 11 11	Consolidated 2017 US$’000 2016 US$’000 156,041 171,435 (134,570) (148,577) 21,471 22,858 344 1,295 (3,410) (2,648) (10,244) (10,924) (1,215) (1,327) (2,469) (2,778) 4,477 6,476 (284) (1,649) 4,193 4,827 (381) (1,933) (381) (1,933) 3,812 2,894 5.66 6.51 5.66 6.51

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Notes to the financial statements are included on pages 9 to 25

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GLG Corp Ltd
Consolidated Statement of financial position

Consolidated Statement of financial position as at 30 June 2017

Current assets Cash and cash equivalents Trade and other receivables Inventory Other assets Other financial assets Total current assets Non-current assets Other assets Other financial assets Investment property Investments accounted for using the equity method Intangible assets 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 Revaluation reserves Merger reserves Retained earnings Total equity	Note 5 6 7 6 7 17 15 17 13 8 9 9 10	Consolidated
		2017 US$’000 2016 US$’000
		6,881 7,908 68,534 60,190 12,515 11,715 1,725 445 344 344
		89,999 **80,602 **
		2,615 1,391 6,871 7,333 3,762 4,014 - - 1,853 - 34,047 26,337
		49,148 39,075
		139,147 119,677
		25,580 23,097 53,824 41,336 694 1,154
		80,098 **65,587 **
		10,878 9,530 1,077 1,278
		11,955 10,808
		92,053 76,395
		47,094 43,282
		10,322 10,322 3,599 3,980 (14,812) (14,812) 47,985 43,792
		47,094 43,282

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Notes to the financial statements are included on pages 9 to 25

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GLG Corp Ltd
Consolidated Statement of changes in equity

Consolidated Statement of changes in equity for the financial year ended 30 June 2017

Consolidated Balance at 1 July 2015 Profit after income tax expense Other comprehensive income for the year, net of tax Total comprehensive income Balance at 30 June 2016 Balance at 1 July 2016 Profit after income tax expense Other comprehensive income for the year, net of tax Total comprehensive income Balance at 30 June 2017	Issued Capital Asset Revaluation Reserve US$’000 US$’000	Merger Reserve Retained Earnings US$’000 US$’000	Total US$’000
	10,322 5,913 - - - (1,933)	(14,812) 38,965 - 4,827 - -	40,388 4,827 (1,933)
	- (1,933)	- 4,827	**2,894 **
	10,322 3,980	(14,812) 43,792	43,282
	10,322 3,980 - - - (381)	(14,812) 43,792 - 4,193 - -	43,282 4,193 (381)
	- (381)	- 4,193	3,812
	10,322 3,599	(14,812) 47,985	47,094

Notes to the financial statements are included on pages 9 to 25

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GLG Corp Ltd
Consolidated Statement of cash flows

Consolidated Statement of cash flows for the financial year ended

30 June 2017

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest income Interest and other costs of finance paid Income tax paid Net cash provided by operating activities 16 Cash flows from investing activities Proceeds from sales of property, plant and equipment Payment for property, plant and equipment Payment for software Net cash used in investing activities Cash flows from financing activities Net proceeds from/ (repayment of) borrowings (Advances to)/ received from related parties (Advances to)/ received from other parties Net cash provided by/(used in) financing activities Net 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
	2017 US$’000 2016 US$’000
	151,676 175,835 (148,457) (171,024) 15 15 (911) (1,045) (945) (544)
	1,378 **3,237 **
	2 114 (9,223) (6,557) (13) -
	(9,234) (6,443)
	13,734 (8,216) (488) 482 (6,417) 7,905
	6,829 171
	(1,027) (3,035) 7,908 10,943
	6,881 7,908

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Notes to the financial statements are included on pages 9 to 25

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2017

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 21 Jalan Mesin, 100 Miller St Singapore 368819 North Sydney NSW 2060 Australia

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

2. Significant accounting policies

Statement of compliance

The preliminary financial report has been prepared in accordance with Australian Accounting Standards and Interpretations as issued by the Australian Standards Board for the measurement and recognition criteria. The preliminary financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2016 and any public pronouncements made by the consolidated entity during the year in accordance with the continuous disclosure requirements of the Corporations Act 2001. Unless otherwise detailed in this note, accounting policies have been consistency applied by the entities in the group, and are consistent with those applied in the 30 June 2016 annual report.

Basis of preparation

The consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in United States dollars, unless otherwise noted.

The consolidated entity satisfies the requirements of ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 issued by the Australian Securities and Investments Commission in relation to rounding of amounts in the directors' report and the financial statements to the nearest thousand dollars. Amounts have been rounded off in the financial statements in accordance with that Legislative Instrument.

The accounting policies and methods of computation adopted in the preparation of the preliminary financial report are consistent with those adopted and disclosed in the company’s 2016 annual financial report for the financial year ended 30 June 2016, except for the impact of the new and revised Standards and Interpretations described below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

Comparative figures

Comparative figures have been adjusted to conform to changes in presentation for the current financial year.

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2017

2. Significant accounting policies (cont’d)

Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

Fair value hierarchy

The following details the consolidated entity's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Unobservable inputs for the asset or liability

Assets and liabilities measured at fair value include:

• Freehold and leasehold land and buildings - Level 3

• Investment properties - Level 3

• Contingent consideration - Level 3

There were no transfers between levels during the period.

Valuations of land and buildings and investment properties

Freehold and leasehold land and building, along with investment properties have been valued based on similar assets, location and market conditions at fair value on an annual basis.

Contingent consideration was valued in accordance with methods stated in Note 18.

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GLG Corp Ltd

Notesto the Appendix 4E for the Year Ended 30 June 2017

2. Significant accounting policies (cont’d)

Common Control Business Combination

A business combination involving entities under common control is accounted for under the pooling of interest method since the combining businesses are ultimately controlled by the same party, both before and after the business combination. The assets and liabilities of the combining entities are reflected at their carrying amounts and no adjustments are made to reflect fair values at the date of combination. Goodwill is not recognised as a result of the combination. The income statement reflects the results of the combining entities for the full year, irrespective of when the combination took place. Comparatives are also restated as there has been effectively no change in control. Any difference between the consideration paid and the equity acquired is reflected within equity.

When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not re-measured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is re-measured in each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at the acquisition date.

Business Combinations

Business combinations occur where an acquirer obtains control over one or more businesses.

A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or business under common control. The business combination will be accounted for from the date that control is obtained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognized (subject to certain limited exemptions).

All transaction costs incurred in relation to business combinations, other than those associated with the issue of a financial instrument, are recognised as expenses in profit or loss when incurred. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.

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GLG Corp Ltd

Notesto the Appendix 4E for the Year Ended 30 June 2017

2. Significant accounting policies (cont’d)

Business combination (cont’d)

Goodwill

All business combinations are accounted for by applying the acquisition method. Goodwill represent the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash generating units and is tested annually for impairment. Negative goodwill arising on an acquisition is recognized directly in the statement of profit or loss and other comprehensive income.

New accounting standards and interpretations

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 their operations and effective for the current year.

Any new, revised, or amending accounting standards or interpretations that are not yet mandatory have not been early adopted.

3. Segment information

Identification of reportable operating segments

The consolidated entity is organised into two operating segments: fabric and garments. These operating segments are based on the internal reports that are reviewed and used by the Board of Directors in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments.

The directors’ review EBIT (earnings before interest and tax). The accounting policies adopted for internal reporting to the directors are consistent with those adopted in the financial statements.

The information reported to the directors is on at least a monthly basis.

Types of products and services

The principal products and services of each of these operating segments are as follows:

Fabric manufacturing the manufacture and wholesaling of fabric Garment the manufacturing and wholesaling of garments

Intersegment transactions

Intersegment transactions were made at market rates. The garment retailing operating segment purchases fabric from the fabric manufacturing operating segment. Intersegment transactions are eliminated on consolidation.

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GLG Corp Ltd

Notesto the Appendix 4E for the Year Ended 30 June 2017

3. Segment information (cont'd)

Consolidated – 30 June 2017 Revenue Sales to external customers Intersegment sales Total revenue Interest revenue Depreciation EBIT Finance costs Profit before income tax expense Income tax expense Profit after income tax expenses	Fabric Manufacturing Garment Intersegment US$'000 US$'000 eliminations 420 155,621 - 36,768 - (36,768)	Total US$'000 156,041 -
	37,188 155,621 (36,768)	156,041
	9 6 -	15
	1,929 303 -	2,233
	3,008 2,684 -	5,692
		(1,215)
		4,477 (284)
		4,193

Consolidated – 30 June 2016 Revenue Sales to external customers Intersegment sales Total revenue Interest revenue Depreciation EBIT Finance costs Profit before income tax expense Income tax expense Profit after income tax expenses	Fabric Manufacturing Garment Intersegment US$'000 US$'000 eliminations 638 170,797 - 34,996 - (34,996)	Total US$'000 171,435 -
	35,634 170,797 (34,996)	171,435
	6 9 -	15
	1,882 232 -	2,114
	3,403 4,400 -	7,803
		(1,327)
		6,476 (1,649)
		4,827

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2017

4. Revenue

Revenue from the sale of goods Other income Rental income Sample income Profit on sale of assets Interest income Grant Payable written back Productivity and Innovation Credit cash payout Fair value adjustment on investment property Other Total other income	Consolidated
	2017 US$’000 2016 US$’000
	156,041 171,435
	232 254 28 43 - 62 15 15 14 47 - 99 - 180 - 564 55 31
	344 **1,295 **
	156,385 172,730

5. 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 Payable to Other Parties – GLIT group Goods and services tax recoverable	Consolidated
	2017 US$’000 2016 US$’000
	24,610 41,309 1,325 1,234 20,160 42,976 1,324 878 (613) (2,610)
	67,865 62,728 - - (7) (2,705)
	67,858 60,023
	676 167
	68,534 60,190

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. 99% 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.

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2017

5. Trade and other receivables(cont’d)

Included in the Group’s trade receivable balance are debtors with a carrying amount of US$325 thousand (2016: $435 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

	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 Charge / (credit) to profit or loss Allowance written off during the year Balance at the end of the year*	Consolidated
		2017 US$’000 2016 US$’000
		88 78 237 45 - 312
		325 435
		2,610 2,351 277 300 (2,274) (41)
		613 2,610

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*Includes the provision for doubtful debts for Trade Receivables, both current and non-current. The Group has made a full provision of US$613 thousand for one of the customer which filed for Chapter 11 bankruptcy in the United States.

The provision made to one of the buyers who owed an amount for more than 5 years has been written off in this financial year.

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. Credit risk is concentrated with a few significant counterparties.

6. Other assets

Current Prepayments Non-current Prepayment	Consolidated
	2017 US$’000 2016 US$’000
	1,725 445
	2,615 1,391

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2017

7. Other financial assets

Current Trade receivables – Third parties (i) Provision for Bad Debts Total Current other financial assets Non-current Other receivables – GLIT group Loans and receivables – related parties (ii)(a)(b) Disclosed in the financial statements as : Total Non-current other financial assets	Consolidated
	2017 US$’000 2016 US$’000
	368 368 (24) (24)
	344 344
	5,000 5,000 1,871 2,333
	6,871 7,333
	6,871 7,333

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(i) The current trade receivable owed by third party has a provision for non-recovery in FY2017 of US$24 thousand (FY2016: 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 (2016: US$1,871 thousand).

(b) Terms loan repayable over 10 years at fixed interest rate of 2% p.a. commencing January 2016 was fully settled in FY2017 (2016: US$462 thousand).

8. Trade and other payables

Trade payables (i) Other payables Parent company Accruals – employee compensation Accruals – construction fees Accruals – deferred rent Accruals – audit fee Accruals – others	Consolidated
	2017 US$’000 2016 US$’000
	3,236 1,309 4,238 2,115 15,757 16,708 867 663 - 795 536 417 84 161 862 929
	25,580 23,097

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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 Ltd

Notesto the Appendix 4E for the Year Ended 30 June 2017

9. Borrowings

Secured– at amortised cost Current Trust receipts (Gross) (i) Bills payable (Gross) Finance lease liabilities Term loan Total Non-current Finance lease liabilities Term loan Disclosed in the financial statements as: Current borrowings Non-current borrowings	Consolidated
	2017 US$’000 2016 US$’000
	46,768 37,350 2,768 136 1,679 61 4,152 2,246
	53,824 41,336 38 74 10,840 9,456
	10,878 9,530
	53,824 41,336 10,878 9,530
	64,702 50,866

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.

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 and long term financing facilities.

At 30 June 2017 GLG Corp Ltd had short term financing facilities available of US$133,603 thousand, longterm financing facilities available of US$23,252 thousand and foreign exchange available of US$19,102 thousand. (Short term: US$58,166 thousand was used and US$75,437 thousand was unused. Long-term: US$14,492 thousand was used and US$8,760 thousand was unused. Foreign exchange of US$19,102 thousand was unused). Compared with US$126,943 thousand of short term financing facilities, long-term financing facilities of US$26,880 thousand and forward contract available of US$8,908 thousand at 30 June 2016 (Short term: US$48,517 thousand was used and US$78,426 thousand was unused. Long-term: US$11,703 thousand was used and US$15,177 thousand was unused. Foreign exchange of US$8,908 thousand was unused). GLG believe that it will continue 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:
	2017	2016
Bank loans	2.57% p.a.	-
Term loan	3.88%	4.57%
Trust receipts / Bill payable	2.37%	1.82%
Finance lease liabilities	2.16% p.a.	3.70% p.a.

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2017

10. Issued capital

Issued capital
74,100,000 (2016: 74,100,000) fully paid ordinary shares	Consolidated
	2017 US$’000 2016 US$’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.

Vote Right

The voting rights attached to each class of equity security are as follows:

Ordinary shares:

• Each ordinary share is entitled to one vote when a poll is called; otherwise each member present at a meeting or by proxy has one vote on a show of hands.

Redeemable and convertible preference shares:

• These shares have no voting rights

Fully paid ordinary shares Balance at beginning of financial year Balance at end of financial year	Consolidated No. ’000 2017 US$’000 74,100 10,322 74,100 10,322	Consolidated
		No. ’000 2016 US$’000
		74,100 10,322
		74,100 10,322

11. Earnings per share

Earnings per share
Basic earnings per share: Total basic earnings per share Diluted earnings per share: Total diluted earnings per share	Consolidated
	2017 Cents per share 2016 Cents per share
	5.66 6.51
	5.66 6.51

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 Weighted average number of ordinary shares for the purposes of basic earnings per share	2017 US$’000 2016 US$’000
	4,193 4,827
	4,193 4,827
	2017 No.’000 2016 No.’000
	74,100 74,100

18

GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2017

11. 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 diluted EPS	Consolidated
	2017 US$’000 2016 US$’000
	4,193 4,827
	4,193 4,827
	Consolidated
	2017 No.’000 2016 No.’000
	74,100 74,100

12. Contingent liabilities

Contingent liabilities
Contingent liabilities Guarantees arising from Letters of credit in force (i) Total	Consolidated
	2017 US$’000 2016 US$’000
	8,130 9,488
	8,130 9,488

==> picture [88 x 99] intentionally omitted <==

(i) A number of contingent liabilities have arisen as a result of the Group’s letter of credit issued by banks for purchase of goods.

19

GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2017

13. Property, plant and equipment (cont'd)

					Consolidated
		At Valuation				At Cost
Cost	Freehold land and buildings	Leasehold land and buildings	Sub-total	Construction in Progress	Plant and machinery	Renovation	Other assets	Motor vehicles	Total
	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000
Balance as at 1 July 2015	2,546	11,505	14,051	-	9,209	2,770	4,392	567	30,989
Additions	-	35	35	2,960	2,866	194	346	78	6,479
Disposals	-	-	-	-	(48)	(9)	(381)	(255)	(693)
Revaluation deficit	(1,339)	(1,930)	(3,269)	-	-	-	-	-	(3,269)
Balance as at 30 June 2016	1,207	9,610	10,817	2,960	12,027	2,955	4,357	390	33,506
Additions	-	24	24	1,626	3,534	3,593	446	-	9,223
Additions through acquisition	-	-	-	-	1,017	11	50	25	1,103
Reclassification	-	-	-	(2,960)	-	2,960	-	-	-
Disposals	-	-	-	-	-	(1)	(13)	-	(14)
Revaluation deficit	(76)	(591)	(667)	-	-	-	-	-	(667)
Balance as at 30 June 2017	1,131	9,043	10,174	1,626	16,578	9,518	4,840	415	43,151

20

GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2017

13. Property, plant and equipment (cont'd)

					Consolidated	Consolidated
			At Valuation				At Cost
Cost		Freehold land and buildings	Leasehold land and buildings	Sub-total	Construction in Progress	Plant and machinery	Renovation	Other assets	Motor vehicles	Total
		US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000
Accumulated depreciation
Balance as at 1 July 2015		172	821	993	-	1,930	1,390	2,176	502	6,991
Depreciation expense		34	340	374	-	1,050	448	192	50	2,114
Depreciation on disposals		-	-	-	-	(17)	(9)	(321)	(253)	(600)
Revaluation deficit		(206)	(1,130)	(1,336)	-	-	-	-	-	(1,336)
Balance as at 30 June 2016		-	31	31	-	2,963	1,829	2,047	299	7,169
Depreciation expense		8	295	303	-	1,304	418	182	25	2,232
Depreciation on disposals		-	-	-	-	-	-	(11)	-	(11)
Revaluation deficit		(8)	(278)	(286)	-	-	-	-	-	(286)
Balance as at 30 June 2017		-	48	48	-	4,267	2,247	2,218	324	9,104
Net book value
As at 30 June 2016		1,207	9,579	10,786	2,960	9,064	1,126	2,310	91	26,337
As at 30 June 2017		1,131	8,995	10,126	1,626	12,311	7,271	2,622	91	34,047

Other assets comprise of computers, furniture and fittings, hostel and office equipment.

21

GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2017

14. Subsidiaries

Name of subsidiary	Country of incorporation	Ownership interest	Ownership interest
		2017 %	2016 %
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
G&G International Pte Ltd (ii)	Singapore	100	100
Escala (USA) Inc	USA	100	100
G&G Fashion (Vietnam) Co., Ltd.	Vietnam	100	100
Maxim Textile Technology Sdn Bhd (ii)	Malaysia	100	100
Maxim Textile Technology Pte Ltd (ii)	Singapore	100	100
Ghim Li Global International (GuangZhou) Ltd	China	100	100
Ghim Li Fashion(M)Sdn Bhd(i)	Malaysia	100	-

i) This company was acquired on 30 June 2017. ii) These companies were acquired on 12 December 2016 through common control acquisition.

15. Investments accounted for using the equity method

Name of entity	Country of incorporation	Principal activity	Ownership interest	Ownership interest
			2017 %	2016 %
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
	2017 US$’000 2016 US$’000
	393 393 (1,879) (1,879) (1,486) (1,486) (757) (757) - - - - - - - -

The entity ceased business in 2012 and the consolidated entity’s share of losses for 2017 and 2016 was nil. The entity’s cumulative unrecognised share of retained losses is US$757 thousand (2016: US$757 thousand).

22

GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2017

16. Notes to the cash flow statement

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

Profit for the year Depreciation and amortisation of non-current assets Bad debts write-off Fair value adjustment on investment property (Note 17) Changes in net assets and liabilities, net of effects from acquisition and disposal of businesses: (Increase)/decrease in assets: Inventories Trade and other receivables Other assets Increase/(decrease) in liabilities: Trade and other payables Current tax Deferred tax Net cash provided by operating activities	Consolidated
	2017 US$’000 2016 US$’000
	4,193 4,827 2,233 2,114 296 2,533 252 (564) (539) (7,176) (4,695) 3,182 (2,071) 211 2,370 (2,995) (460) 85 (201) 1,020
	1,378 3,237

17. Investment property

Investment properties include those portions of factory and office buildings that are held for long-term rental yields and/or for capital appreciation which are initially recognised at cost and subsequently carried at fair value, determined annually by independent professional valuers on the highest-and-best-use basis. Changes in fair values are recognised in profit or loss.

The cost of major renovations and improvements is capitalised and the carrying amounts of the replaced components are recognised in profit or loss. The cost of maintenance, repairs and minor improvements is recognised in profit or loss when incurred.

On disposal of an investment property, the difference between the disposal proceeds and the carrying amount is recognised in profit or loss.

Beginning of financial year Fair value (loss)/gain recognised in profit or loss End of financial year	Consolidated
	2017 US$’000 2016 US$’000
	4,014 3,450 (252) 564
	3,762 4,014

23

GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2017

18. Common control acquisition

On 12 December 2016, Ghim Li International (S) Pte Ltd, a subsidiary of GLG Corp Ltd, acquired 100% of the ordinary shares of Maxim Textile Technology Pte Ltd, a company incorporated in Singapore and Maxim Textile Technology Sdn Bhd, a fabric mill in Malaysia for total consideration of US$20 million, which includes contingent consideration of US$7,600 thousand. Contingent consideration is based a multiple of excess profit over the next four years and management estimate these targets are achievable. Maxim operates in the fabric division of the consolidated entity.

As both GLG and Maxim entities are under common control of Ghim Li Group Pte Ltd, the pooling of interest method is used.

By executing this acquisition strategy, the Group will have a vertically-integrated textile manufacturing and supply chain business, offering the flexibility to plan for shorter production lead times resulting in speed-to-market advantage to its customers by controlling each step in the value chain.

The acquired business contributed revenues of US$37,188 thousand and profit after tax of US$2,339 thousand to the consolidated entity for the financial year ended 30 June 2017. As the business was acquired under common control, the prior comparatives were restated to reflect the acquisition from the earliest reported period. As such the acquired business contributed revenues of US$35,634 thousand with profit after tax of US$1,907 thousand to the consolidated entity for the year ended 30 June 2016.

19. Business combination

On 30 June 2017, Ghim Li International (S) Pte Ltd, a subsidiary of GLG Corp Ltd, acquired 100% of the ordinary share of Ghim Li Fashion (M) Sdn Bhd, a company incorporated in Malaysia. This is a business which engages in the manufacturing of garments. With this acquisition, GLG will enhance its manufacturing and supply chain business with additional capacity and gives the Group the ability to offer more control and speed-to market solutions to the Groups end customers. The acquired entity did not contribute to any profit from ordinary activities or revenue for the Group’s consolidated results for the year ended 30 June 2017 as the acquisition was on the last day of the year.

The consideration of US$5 million of the acquisition of Ghim Li Fashion (M) Sdn Bhd from GLIT Holdings Pte Ltd was offset against the receivables due to the Group on 30 June 2017.

Had Ghim Li Fashion (M) Sdn Bhd been acquired by the Group as of 1 July 2016, i.e. a year ago, the acquired entity would have contributed Revenue of US$6,268 thousand and Profit after tax of US$261 thousand to the consolidated group for the year ended 30 June 2017.

Transaction costs of US$18 thousand were recognised in respect to this acquisition, hence included in the consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2017.

As the acquisition was completed on 30 June 2017, the Group has provisionally accounted for the acquisition in the balance sheet as of 30 June 2017. The final position of the fair value of the assets and liabilities acquired will be accounted for within 12 months in accordance with AASB 3 – Business Combinations.

24

GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2017

19. Business combination (cont’d)

Details of the acquisition are as follows:

Details of the acquisition are as follows:
	Fair value
	$’000
Consideration
- Offset against GLIT receivable	5,000
Total consideration	5,000
Net identifiable assets acquired
- Cash	144
- Trade and other receivables	2,383
- Inventories	260
- Other current assets	433
- Property, plant and equipment	1,103
- Trade and other payables	(1,062)
- Finance lease payable	(102)
Net identifiable assets acquired	3,159
Goodwill on acquisition	1,841

Intangible assets

ntangible assets
Software - Cost Accumulated depreciation Net book value Goodwill	Consolidated
	2017 US$’000 2016 US$’000
	13 - (1)
	12 1,841 -
	1,853 -

20. Subsequent event

There has been no subsequent events after the year ended 30 June 2017 to the date of this report.

25