GLG CORP LTD — Annual Report 2018

Sep 18, 2018

GLG Corp Ltd Statutory Accounts

GLG Corp Ltd

ACN 116 632 958 Statutory report for the financial year ended 30 June 2018

GLG Corp Ltd Statutory Accounts

Statutory Report for the financial year ended 30 June 2018

ear ended 30 June 2018
	Page
Corporate governance statement		3
Directors’ report		15
Auditor’s independence declaration		29
Independent audit report		30
Directors’ declaration		34
Consolidated Statement of profit or loss and other		35
comprehensive income
Consolidated Statement of financial position		36
Consolidated Statement of changes in equity		37
Consolidated Statement of cash flows		38
Notes to the financial report		39
Additional Australian securities exchange information		84

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GLG Corp Ltd Corporate Governance Statement

Corporate governance statement

GLG Corp (GLG) or (The Company’s) Directors and management are committed to conducting GLG’s business in an ethical manner and in accordance with the highest standards of corporate governance. The Company has adopted and substantially complies with the ASX Corporate Governance Principles and Recommendations (Third Edition) (Recommendations) to the extent appropriate to the size and nature of GLG’s operations. The Company has prepared this statement which sets out its corporate governance practices that were in operation for the financial year ended 30 June 2018, identifies any Recommendations that have not been followed, and provides reasons for not following such Recommendations. The Company’s corporate governance policies and charters and policies are all available on the Company’s Website (www.ghimli.com).

Principle	ASX Corporate Governance Council Recommendations– 3rd Edition	Comply?
1.	Lay solid foundations for management and oversight
1.1	A listed entity should disclose: (a) the respective roles and responsibilities of its board and management; and (b) those matters expressly reserved to the board and those delegated to management	Yes The Board has adopted a charter which establishes the role of the Board and its relationship with management. The primary role of the Board is the protection and enhancement of long term shareholder value. Its responsibility is the overall strategic direction of GLG. The functions and responsibilities of the Board and management are consistent with ASX Principle 1. A copy of the Board Charter is posted on the Website.
1.2	A listed entity should: (a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director	Yes The Board has a formal Nomination & Remuneration Committee. The Nomination and Remuneration Committee’s functions and powers are formalised in a Charter and is posted on the Website. It is the role of the Nomination & Remuneration Committee to identify suitable candidates to complement the existing Board, to undertake appropriate checks on the candidate; to seek confirmation from the candidate that he/she will have sufficient time to fulfil his or her responsibilities as a director; and subject to the results of such checks and confirmations, to make recommendations to the Board on their appointment. The Company provides information to shareholders about Directors seeking re-election at the annual general meeting to enable them to make an informed decision on whether or not to re-elect the Director, including their relevant qualifications and experience and the skills they bring to the Board; details of any other listed directorships held by the Director in the preceding 3 years; the term of office already served by the Director; whether the Director is considered to be independent; and a recommendation by the Board in respect of the re- election of the Director
1.3	A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.	Yes Each Director is given a letter upon appointment which outlines the Director’s duties, obligations, remuneration, expected time commitments and notification of the Company’s policies. Similarly

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GLG Corp Ltd Corporate Governance Statement

		senior executives including the CEO and CFO, have a formal job description and services agreement describing their term of office, duties, rights and responsibilities, and entitlements on termination. The Company will disclose the material terms of any employment, service or consultancy agreement it enters into with its CEO (or equivalent).
1.4	The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.	Yes The Company Secretary is responsible for co- ordination of all Board business, including agendas, board papers, minutes, communication with regulatory bodies, ASX and all statutory and other filings. The Company Secretary is accountable to the Board, and all Directors have access to the Company Secretary. The decision to appoint or remove the Company Secretary is be made and/or approved by the Board.
1.5	A listed entity should: (a) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them; (b) disclose that policy or a summary of it; and (c) disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them, and either: (1) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or (2) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act.	Yes The Company is committed to the principles of employing people with a broad range of experiences, skills and views. All executives, managers and employees are responsible for promoting workforce diversity. The Company has adopted a Diversity Policy which can be viewed on the Website. The Diversity Policy requires the commitment of the Directors and Senior Management to promote the specific objective of diversity and seeks to ensure, to the extent that is practicable and appropriate, that the Company’s director appointment and employee recruitment processes are undertaken with reference to the objectives of the Diversity Policy. The objectives of the Company’s Diversity policy are centred on a wide range of diversity criteria including gender, age, ethnicity and cultural background. The Company discloses the proportion of women on the Board, in Senior positions and in the company as a whole. Measurable objectives have been specified and the company has exceeded the objectives since the inception of the policy.
1.6	A listed entity should: (a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.	Yes The Directors undertake an annual process to review the performance and effectiveness of the Board, the Board Committees and individual directors. The CEO leads a discussion and provides feedback to individual Directors as necessary.

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GLG Corp Ltd Corporate Governance Statement

1.7	A listed entity should: (a) have and disclose a process for periodically evaluating the performance of its senior executives; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.	Yes The Company’s Chief Executive Officer evaluates the performance of GLG’s senior executives annually. The Nomination and Remuneration Committee reviews the Chief Executive Officer’s performance annually. The Committee also reviews and approves senior management bonuses. Evaluations were undertaken this year.
2.	Structure the board to add value
2.1	The board of a listed entity should: (a) have a nomination committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively	Yes The Board has a formal Nomination & Remuneration Committee comprising two independent directors and the CEO. Current members are Shane Hartwig (Independent Director and Chairman) Christopher Chong (Lead Independent Director), and Estina Ang (CEO). The Nomination & Remuneration Committee’s functions and powers are formalised in a Charter and is posted on GLG’s website. The number of times that the Nomination & Remuneration Committee met throughout the financial year and the individual attendances of the members at those meetings are disclosed in the Company’s Annual Report.
2.2	A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.	Yes The Company has a skills matrix which is disclosed in the Directors report.
2.3	A listed entity should disclose: (a) the names of the directors considered by the board to be independent directors; (b) if a director has an interest, position, association or relationship of the type described in item 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and (c) the length of service of each director	Yes Currently, the Board comprises four Directors, two independent and two Executives. Christopher Chong (Lead Independent Director), Shane Hartwig (Independent Director), Estina Ang (CEO) and Felicia Gan (Chief Marketing Officer). The Board has considered the circumstances of each Director and determined that all Non-Executive Directors were independent as described in item 2.3 of the Recommendations. The Corporations Act 2001, the Company’s Constitution and the Board meeting process requires Directors to advise the Board of any interest they have that has the potential to conflict with the interests of GLG, including any development that may impact their perceived or actual independence. If the Board determines that a Director’s status as an independent Director has changed, that determination will be disclosed and explained in a timely manner to the market. The length of service of each Director is set out in the Company’s Annual Report. Independent Directors

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GLG Corp Ltd Corporate Governance Statement

		formally advise the Board of their independent (or other) status each year.
2.4	A majority of the board of a listed entity should be independent directors.	No Currently, the Board comprises two independent Directors and two executive Directors. Christopher Chong (Lead Independent Director), Shane Hartwig (Independent Director), Estina Ang (CEO) and Felicia Gan (Chief Marketing Officer). The company believes this is an appropriate mix of skills and experience.
2.5	The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity.	No The Chairperson and CEO, Estina Ang Suan Hong, is integral in maintaining the business and important customer and banking relationships. This is commonplace in Asia and reflects ‘respect’ and economic imperative.
2.6	A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.	Yes The Company has procedures and policies in place to assist Directors in fulfilling their responsibilities. Each Director, at any time, is able to seek reasonable independent professional advice on any business-related matter at the expense of the Company. Directors also have access to adequate internal resources to seek any information from any officer or employee of the Company, or to require the attendance of management at meetings to enable them as Directors to fulfil their duties.
3	Act ethically and responsibly
3.1	A listed entity should: (a) have a code of conduct for its directors, senior executives and employees; and (b) disclose that code or a summary of it	Yes The Board has established a Code of Conduct which articulates acceptable practices for directors, senior executives and employees, to guide their behaviour and to demonstrate the commitment of the Company to ethical practices.
4.	Safeguard integrity in corporate reporting
4.1	The board of a listed entity should: (a) have an audit committee which: (1) has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and (2) is chaired by an independent director, who is not the chair of the board, and disclose: (3) the charter of the committee; (4) the relevant qualifications and experience of the members of the committee; and (5) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the	Partly The Board has a formal Audit Committee currently comprising two Independent Directors – Christopher Chong and Shane Hartwig. The role of the Audit Committee is to advise on financial information prepared for use by the Board or for inclusion in financial statements. The Chairman of the Audit Committee is the Lead Independent Director. The Audit Committee’s functions and powers are formalised in a Charter and is posted on GLG’s website. The number of times that the Audit Committee met throughout the financial year and the individual attendances of the members at those meetings, and the relevant qualifications and experience of the Audit Committee members are disclosed in the Company’s Annual Report and below under ‘Directors Meetings’.

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GLG Corp Ltd Corporate Governance Statement

	external auditor and the rotation of the audit engagement partner.
4.2	The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.	Yes The Directors are committed to the preparation of financial statements that present a balanced and clear assessment of the Company’s financial position and prospects. The Board reviews GLG’s half yearly and annual financial statements. The Board requires that the Chief Executive Officer and the Chief Financial Officer state in writing that GLG’s financial reports present a true and fair view, in all material respects, of the Company’s financial condition and operational results are in accordance with relevant accounting standards and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.
4.3	A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.	Yes Shareholders are encouraged to attend the Company’s Annual General Meeting, with the auditors available via conference call. Shareholders are given an opportunity to ask questions of the Company’s auditors regarding the conduct of the audit and preparation and content of the auditor’s report.
5.	Make timely and balanced disclosure
5.1	A listed entity should: (a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and (b) disclose that policy or a summary of it.	Yes The Company has a documented policy which has established procedures designed to ensure compliance with ASX Listing Rule continuous disclosure requirements and to ensure accountability at a senior management level for that compliance. The focus of these procedures is on continuous disclosure of any information concerning the Company that a reasonable person would expect to have a material effect on the price of the Company’s securities and improving access to information for all investors. The Chief Executive Officer and the Company Secretary are responsible for interpreting GLG’s policy and where necessary informing the Board. The purpose of the procedures for identifying information for disclosure is to ensure timely and accurate information is provided equally to all shareholders and market participants.
6.	Respect the rights of security holders
6.1	A listed entity should provide information about itself and its governance to investors via its website.	Yes The Board informs shareholders of all major developments affecting GLG’s state of affairs as follows: 1. Placing all relevant announcements made to the market, on the Website after they have been released to ASX; 2. Publishing all corporate governance policies and 3. Placing the full text of notices of meeting and explanatory material on the Website.
6.2	A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors.	Yes The Company communicates with its shareholders and investors by posting information via the ASX or website, and by encouraging attendance and

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GLG Corp Ltd Corporate Governance Statement

		participation of shareholders at general meetings. Management and/or Directors may meet with shareholders from time to time upon request and respond to any enquiries they may make. The Share Registry ‘Link Market Services’, also includes an investor relations program, which gives all investors access to information through the market registry
6.3	A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders.	Yes Shareholders are encouraged to attend the Company’s Annual General Meeting. The AGM is an opportunity for shareholders to hear the Directors provide updates on Company performance, ask questions of the Board and vote on the various resolutions affecting the business. Shareholders are given an opportunity to ask questions of the Company’s auditors regarding the conduct of the audit and preparation and content of the auditor’s report.
6.4	A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.	Yes Investors are able communicate with the Company electronically via the website. Investors are also able communicate with the Company’s registry electronically by emailing the registry or via the registry’s website.
7.	Recognise and manage risk
7.1	The board of a listed entity should: (a) have a committee or committees to oversee risk, each of which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework.	Partly The Board is responsible for the management of risk due to the current size of the Board. GLG is committed to embedding risk management practices to support the achievement of business objectives. The Board is responsible for reviewing and overseeing the risk management strategy and for ensuring GLG has an appropriate corporate governance structure. Within that overall strategy, management has designed and implemented a risk management and internal control system to manage material business risks. GLG has implemented a 5-step process to manage risk as follows: 1) Review the Risk context and Identification of specific key risks 2) Analysing and Prioritizing selected risks 3) Evaluation and Treatment of risks 4) Monitoring and Reporting; and 5) Controlling, Communication and Knowledge-Capturing GLG risk categories are: 1) Customer Risks (including their financial conditions, solvency, credit worthiness, etc.) 2) Competitor Risks 3) Investment Risks 4) Operational Risks 5) Outsourced Partner and Contract Manufacturing Risks 6) Legal, Regulatory and Compliance Risks 7) Resources Risks (including HR, IT, etc.) 8) Finance Risks (including liquidity, trade credit financing,forex,etc.)

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GLG Corp Ltd Corporate Governance Statement

		9) Reputation Risks 10) External Factors Risks The Management Risk Committee provides reports for Board meetings. The policy is available on the website www.ghimli.com
7.2	The board or a committee of the board should: (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and (b) disclose, in relation to each reporting period, whether such a review has taken place.	Yes The Board reviews the risk management framework and policies of the Company. The Board has delegated responsibilities to the Management Risk Committee who then provides reports to the Board. The Board is responsible for approving policies on risk assessment and management. The policy is available on the website.
7.3	A listed entity should disclose: (a) if it has an internal audit function, how the function is structured and what role it performs; or (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes.	Yes Management reviews the Company’s business units, organisational structure and accounting controls and processes on a regular basis and reports to the Audit Committee and in turn to the Board; the Board is satisfied that the processes in place to identify the Company’s material business risks are appropriate and that these risks are being effectively managed. GLG’s risk management processes continue to be monitored and reported against. A description of GLG’s risk management policy and internal compliance and control systems is available on the Website.
7.4	A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.	Yes The Company’s operations are not subject to any significant environmental regulations. The Directors believe that the Company has adequate systems in place for the management of its environmental requirements and are not aware of any breach of those environmental requirements.
8.	Remunerate fairly and responsibly
8.1	The board of a listed entity should: (a) have a remuneration committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive.	Yes The Board has a formal Nomination and Remuneration Committee comprising three members two of whom are independent and the CEO. Current members are Shane Hartwig (Independent Director and Chairman), Christopher Chong (Lead Independent Director) and Estina Ang (CEO). The role of the Nomination and Remuneration Committee is to review and make recommendations to the Board on remuneration packages and practices applicable to the Chief Executive Officer, Senior Executives and Directors themselves. This role also includes responsibility for share option schemes, incentive performance packages and retirement and termination entitlements. Remuneration levels are competitively set to attract the most qualified and experienced Directors and Senior Executives. The Nomination and Remuneration Committee may obtain independent advice on the appropriateness of remuneration packages. The Nomination and Remuneration Committee’s functions and powers

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GLG Corp Ltd Corporate Governance Statement

		are formalised in a Charter and is posted on GLG’s website. The number of times that the Nomination and Remuneration Committee met throughout the financial year and the individual attendances of the members at those meetings are disclosed in the Company’s Annual Report and below under Directors’ Meetings.
8.2	A listed entity should separately disclose its policies and practices regarding the remuneration of non- executive directors and the remuneration of executive directors and other senior executives.	Yes, details of the Directors and Key Senior Executives remuneration are set out in the Remuneration Report of the Annual Report. The structure of Non-Executive Directors’ remuneration is distinct from that of executives and is further detailed in the Remuneration Section of the Annual Report.
8.3	A listed entity which has an equity- based remuneration scheme should: (a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and (b) disclose that policy or a summary of it.	Yes Currently, the Company does not have an equity based remuneration scheme.

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GLG Corp Ltd Corporate Governance Statement

Composition of the Board

The composition of the Board is determined in accordance with the following principles and guidelines:

• the Board should comprise directors with an appropriate range of qualifications and expertise; and

• the Board shall meet regularly and follow guidelines set down to ensure all directors are made aware of, and have available, all necessary information to participate in an informed discussion of all agenda items.

The Directors in office at the date of this statement are as follows:

he Directors in office at the date of	this statement are as follows:
Name	Position
Estina AngSuan Hong	Executive Chairman and Chief Executive Officer
Christopher ChongMengTak	Lead Independent Director
Shane Hartwig	Independent Director
Felicia Gan Peiling	Director

The skills, experience and expertise relevant to the position of director as well as the period of office held by each director are set out in the Directors’ Report on pages 15 to 16.

Board Responsibilities

As the Board acts on behalf of the shareholders and is accountable to the shareholders, the Board seeks to identify the expectations of the shareholders as well as other regulatory and ethical expectations and obligations. In addition, the Board is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks. The Board, through the Audit Committee, receives reports from management on an on-going basis as to the material risks associated with the company’s operations and the recommended risk mitigation process that they undertake. The Board has established a Code of Conduct which in summary, requires that at all times Directors and employees act with the integrity, objectivity and in compliance with the letter and spirit of the law and company policies. GLG has established a written policy designed to ensure compliance with ASX listing rule disclosure and accountability as senior executive level for compliance.

Under the guidance of the ASX’s Corporate Governance Principles and Recommendations (3[rd] edition), the Board has established a Nomination and Remuneration Committee and an Audit Committee. The name of members of each committee and their attendance at meetings is contained on page 21 of the Annual Report.

The Nomination and Remuneration Committee has established a policy prohibiting transactions in associated products which limit the economic risk of participating in unvested entitlements under equity-based remuneration scheme.

A copy of the Company’s Code of Conduct, Audit Committee charter, Nomination and Remuneration Committee charter and the terms and conditions of the continuous disclosure and shareholder communication policy is made publically available on the Company’s website.

Diversity

The Company has implemented a Diversity Policy. This policy sets as a target 25% of all Board seats and management positions to be held by women. The Board is also considering other means to encourage diversity. The Company recognises the benefits of a diverse workforce and is committed to providing an environment that encourages diversity. The Board monitors the diversity profile of its workforce. As the Company already has gender diversity as evidenced by the proportion of women reported below, the Board has not set any measurable objectives.

At 30 June 2018, the proportion of women employed by GLG Corp Ltd was:

• Board of Directors 50%

• Senior Executives 48%

• Total Workforce 83%

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GLG Corp Ltd Corporate Governance Statement

Dealing in GLG Corporation’s Securities by Directors and employees

Directors, officers and employees of the Company are prohibited from trading in GLG securities apart from the period 15 days commencing the day after GLG announces its half-yearly, preliminary final reports and full year accounts. A full outline of the Company’s securities trading policy has been made available on the Company website.

Risk Management Policy

Risk is an inherent part of GLG Corp’s business, which operates in a highly competitive market sector. GLG Corp is committed to the management of risk as an integral part of its business, focusing on strategies to minimise risk which are regarded as threats to its achievement of objectives and goals.

The objectives of this policy are to:

• Outline the company’s approach to risk management;

• Improve decision-making, accountability and outcomes through the effective use of risk management;

• Integrate risk management into daily operations of the company and its outsourced business partners;

• Consider risk appetite in protecting staff and business assets and strategy execution

GLG Corp is committed to managing risk in order to benefit the company and manage the cost of risk. To meet this commitment, risk is every employee’s business. All employees are required to be responsible and accountable for managing risk in so far as reasonably practicable within their area of responsibility.

Sound risk management principles and practices must become part of the normal management strategy for all business units within GLC Corp including its outsourcing business partners.

The management of risk is to be integrated into GLG Corp’s existing planning and operational processes and fully recognised in GLG Corp’s reporting processes.

The following are the specific risk categories included in the risk register and reporting:

• Customer risks (including their financial conditions, solvency, credit worthiness);

• Competitor risks;

• Investment risks;

• Operational risks;

• Outsourced partner and contract manufacturing risks;

• Legal, regulatory and compliance risks (including product liability, legal compliance guideline set by customers);

• Resources risks (including HR, IT, etc.);

• Finance risks (including liquidity, trade credit financing, foreign exchange, etc.);

• Reputation risks; and

• • External factor risks

The Management Risk Committee is responsible for reviewing this policy document in conjunction with senior management and staff every year. The outcome of this review process is submitted to the Board for approval. The Management Risk Committee indicates, in its opinion and based on its activities, any significant residual business risks which remain at an unacceptably high level.

Full disclosure of the Company’s policies in relation to risk oversight and management of material business risk are made publicly available on the Company website.

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GLG Corp Ltd Directors’ Report

Audit Committee

The Audit Committee reviewed the statement of financial position of the consolidated financial statements of GLG for the financial year ended 30 June 2018, as well as the Independent Auditor’s Report thereon before submitting them to the Board for its approval. The Audit Committee discussed with Management the accounting principles that were applied and also considered the appropriateness of the critical accounting estimates and judgments made in preparing the financial statements.

The following significant matters impacting the financial statements were discussed with Management and the external auditor and were reviewed by the Audit Committee:

Key Matters		How the Audit Committee reviewed these matters and what decisions were made
GLG Corp Limited acquired Ghim Li Malaysia Sdn Bhd (GLM) on 30 June 2017, with purchase consideration that includes Goodwill, which represents the difference between the acquisition price and fair value of the net identifiable assets acquired. Under AASB136: Impairment of Assets, Goodwill is required to be tested for impairment, by comparing the carrying value of each asset to its recoverable amount.		The AC reviewed that: a) Management prepared an impairment analysis to identify any impairment indicators and none were noted. Management concluded there was no impairment required as at 30 June 2018. Key estimates included in the management analysis were: • The use of an appropriate discount rate which is reasonable for the risk profile of GLG • The assumption of a conservative business growth rate for FY2019 and subsequent years including the terminal growth rate. The conclusion of this impairment analysis showed that the resulting goodwill balance was well-supported, with no need for impairment for FY2018 b) The actual financial results of FY2018 against the budget for the year was reviewed and showed that actual performance exceeded the budget targets, giving the AC the assurance that management is capable of producing accurate budgets used in the impairment analysis. Also, allowances for capital expenditure by GLM and Gross Margin assumptions used in the impairment analysis were reasonable and in line with actual performance. After taking into account the above analyses, the AC concurred with management that no impairment charge is required for the GLM acquisition for FY2018.

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GLG Corp Ltd Directors’ Report

Audit Committee (cont’d)

Key Audit Matters

How the Audit Committee reviewed these matters and what decisions were made

Due to the material balance and potential for overstatement, recoverability of receivables is assessed as a risk.

The AC assessed and confirmed the following: a) Normal trade receivables in GLG Corp Ltd have been reviewed for recoverability, noting that the aging of the receivables do not show any customers having old-aged receivables and that the balances by key customers within the receivables are in line with current trends in business with no recoverability issues. b) The valuation of the GLIT Receivable continues to be an area of focus due to the commercial nature of GLG’s business. Management provided an extensive assessment of the GLIT receivable to support its recoverability. Although the receivable balance due from such outsourced manufacturing suppliers have risen, this was in line with the increase in sales of GLG Corp Ltd which resulted in an increase in working capital and fabric materials sent to them for garment manufacturing. With the accessibility of trust receipts available for offset and the amount of available collaterals in place, the receivable is evaluated to be recoverable at the reporting date. The turnover analysis, which showed the average turnover of the receivable is approximately 3-4 months with constant turning, appears to support its recoverability at period-end. c) Subsequent to the Balance Sheet date, the GLIT receivable in GLG Corp Ltd is expected to be reduced by US$8.5 million, upon completion of the purchase transaction, by way of set-off for the purchase consideration of the specific assets acquired from Ghim Li (Cambodia) Pte Ltd, based on a signed agreement on 28thJune, 2018.

Other Information

The Company’s corporate governance practices and policies in relation to the matters reserved to the board, matters delegated to senior executives and a copy of the board charter are publicly available at the Company’s registered office. The policies have also been posted on the Company’s website.

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GLG Corp Ltd Directors’ Report

Directors’ report

The Directors of GLG Corp Ltd (“GLG” or “the Company”) submit herewith the annual financial report of the consolidated entity for the financial year ended 30 June 2018. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:

Information about the Directors and senior management

The names and particulars of the Directors of the Company during and since the end of the financial year are:

Estina Ang Suan Hong

Founder and Executive Chairman of GLG Corp Ltd and parent company, Ghim Li Group Pte Ltd and a member of its Nomination and Remuneration committee. Estina Ang Suan Hong is a lady armed with over 35 years of experience in the textile and apparel industry who leads a 12,000 strong workforce spanning the Southeast Asia region. She grew the business from 6 sewing machines as a sub-contractor to a global supplier of quality apparel to major retailers in the USA and throughout Europe.

Ms Estina Ang graduated from Nanyang University in 1974 with a Bachelor of Arts degree and is a member of the Singapore Institute of Directors, Textile and Fashion Singapore. She obtained The Entrepreneur of the Year Awards in 2001 and listed in The 300 List in Singapore Tattler and also spearheaded the business expansion into USA, Mexico, Guatemala and Hong Kong.

Christopher Chong Meng Tak

Lead Independent Director, joined the Board on 12 October 2005. Mr Chong is the Chairman of the Audit Committee and member of the Nomination and Remuneration Committee.

Mr Chong is a partner of ACH Investments Pte Ltd, a specialist corporate advisory firm in Singapore. Prior to cofounding ACH Investments Pte Ltd, Mr Chong was a multi-award winning equity analyst and the Managing Director of HSBC James Capel Securities (Singapore) Pte Ltd, (now known as HSBC Securities (Singapore) Pte Ltd), a member of the Hong Kong Bank Group of companies. Mr Chong is an independent director of several public listed companies. Mr Chong is also a Director and/or advisor to many private companies and many Asian families and the judicial branch of the Singapore government.

Mr Chong has extensive Asia Pacific experience having previously also been an advisor to listed companies on the Exchange of Hong Kong, Jakarta (Indonesia), Kuala Lumpur (Malaysia), Makati (Philippines) and Bangkok (Thailand). Mr Chong is a fellow of the Australia Institute of Company Directors, a fellow of the Singapore Institute of Directors and a Master Stockbroker of the Securities and Derivatives Industry Association of Australia.

Mr Chong has received a B.Sc. (Economics) from the University College of Wales, an MBA from London Business School and is a member of the Institute of Chartered Accountants of Scotland.

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GLG Corp Ltd Director’s Report

Shane Hartwig

Mr Hartwig is a Certified Practicing Accountant and Chartered Company Secretary and holds a Bachelor of Business degree, majoring in Accounting and Taxation from Curtin University of Technology in Western Australia. He was appointed to the Board on 2 December 2014. Mr Hartwig is a member of the Audit Committee and the Chairman of the Nomination and Remuneration Committee.

Mr Hartwig is involved in the areas of initial public offerings, capital raisings, prospectus and information memorandum preparation and project management, company assessments and due diligence reviews, mergers and acquisitions and providing general corporate advice. Mr Hartwig has over 20 years’ experience in the finance industry both nationally and internationally with exposure to both the debt and equity capital markets.

Mr Hartwig was previously the Company Secretary of GLG Corp Ltd until July 2011.

Felicia Gan Peiling

Ms Gan joined the Board on 15 September 2015. Ms Gan joined the Company in 2006 as a legal officer responsible for the legal compliance office. Ms Gan is currently responsible for the overall management of Business Development, Sales & Marketing Teams including Outsourced Manufacturing and Product, Development and Design departments. Ms Gan builds, direct and drives the annual strategic sales and marketing plan and implements marketing strategies to identify and develop new customers and business opportunities on a global scale.

Ms Gan graduated with a Bachelor of Laws (Honours) from University of Nottingham in 2003 and was admitted to the Singapore Bar in May 2005. She is a member of the Singapore Academy of Law and a management committee member of the Textile Apparel Fashion Federation Singapore.

Board Skills Matrix

Skills	Description	Number of Directors
Strategic and	The ability to define strategic objectives,
commercial acumen	constructively question business plans	4
	and implement strategy using
	commercial judgment.
Financial acumen	Financial knowledge, accounting or	3
	related financial management
	qualifications and experience
Risk and compliance	An understanding of compliance matters	4
	and risk management, including
	environmental, technological and
	governance risk
Executive leadership	Experience in senior leadership roles,	1
	including on the boards of other listed
	companies.
Diversity	The ability to contribute to inclusion and	4
	diversity.
International/global	Senior leadership experience across a	4
	range of international businesses and
	exposure to a range of political, cultural,
	regulatory and business environments

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GLG Corp Ltd Director’s Report

Directorships of other listed companies

Directorships of other listed companies held by directors in the 3 years immediately before the end of the financial year are as follows:

Name Christopher Chong Meng Tak

Company Period of directorship ASL Marine Holdings Ltd Since 03 January 2006 Forise International Ltd Since 19 August 2015 Emerging Towns & Cities Singapore Ltd (formerly known as Cedar Strategic Ceased 26 Apr 2018 Holdings Ltd) Singapore O&G Ltd Ceased 26 December 2017 Koon Holdings Ltd Ceased 31 December 2015 Yingli International Real Estate Ltd Ceased 28 April 2017

Former partners of the audit firm

No officer of the Company has been a partner in an audit firm, or a director of an audit company that is an auditor of the Company during the period or was such a partner or director at a time when the audit firm or the audit company undertook an audit of the Company.

Directors’ shareholdings

The following table sets out each director’s relevant interest in shares or options in shares or debentures of the Company or a related body corporate as at the date of this report.

Directors	Fully Paid Ordinary Shares Number	Share options Number
Estina Ang Suan Hong Felicia Gan Peiling Christopher Chong Meng Tak Shane Hartwig	50,116,000 2,222,000 110,001 0	- - - -

Remuneration of directors and senior management

Information about the remuneration of directors and senior management is set out in the remuneration report of this directors’ report, on pages 21 to 28.

Share options granted to directors and senior management

During and since the end of the financial year no share options (2017: nil) were granted to the directors as part of their remuneration.

Company Secretary

Mr Alistair Chong was appointed as Company Secretary on the 12[th] December 2016. Mr Chong holds a B.Comm and MBA through the University of Tasmania, and a GIA (Cert) with the Governance Institute of Australia. Mr Chong has extensive knowledge in the areas of change management, company HR practices, and organisational change, as he is a current tutor in these subject areas at the University of Tasmania, and has been tutoring there for five years.

Principal Activities

The consolidated entity’s principal activities in the course of the financial year were being a global supplier of knitwear/apparel and supply chain management operations.

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GLG Corp Ltd Director’s Report

Review of Operations

In the current fiscal year ending June 2018, the Company has enhanced its manufacturing capacity in its fabric mill in Malaysia, with an all-time record of revenue of US$52,267 thousand to support the increased demand of knitted fabric from its customers. This is a new milestone for the fabric mill which was acquired by the Company in late 2016, as part of its vertical-integration and textile manufacturing strategic roadmap. FY2018 also witnessed the Company’s decision to invest in garment manufacturing capacity, for the first time, in Cambodia to supplement its current production in Vietnam and Malaysia. Although the garment factory in Cambodia is still in its infancy stage, this is another step forward to enhance its manufacturing and supply chain business from its original state of being just a trading agent. Finally, the Company was successful to expand its innovative offering of Landed Duty Paid (LDP) services to its customers, with its incremental revenue in FY2018 by shipping the final products from door-to-door to its LDP customers.

Comparison of Consolidated Statement of Profit or Loss and Comprehensive Income for the financial year ended 30 June 2018 with that of 30 June 2017.

GLG’s sales increased by US$24,565 thousand, or 16% to US$180,606 thousand compared to sales of US$156,041 thousand in the previous year. This is due to business wins achieved in new programs with existing customers, in addition to increase in business volume for repeat orders. LDP (Landed Duty Paid) business which represents direct outbound shipments delivered to customers door-to-door, also contributed to revenue increment from US$10,115 thousand to US$16,299 thousand in this financial year with the higher gross profit margin.

Gross margin slightly improved to 14% compared to 13.76% in the previous year due to increased fabric margin and garment product mix (where the freight costs and customs duty costs of LDP business are categorised under Selling & Distribution costs, as opposed to Cost of Sales).

Other income increased by 225% to US$1,118 thousand compared to US$344 thousand in the previous year mainly attributed to the following

• 1) fair value gain in investment property of US$378 thousand from Malaysia

• 2) payable written back of US$289 thousand

Selling and distribution costs increased by 83.3% to US$6,252 thousand compared to US$3,410 thousand in the previous year, mainly due to (a) increase of US$1,049 thousand in LDP shipments which resulted in higher customs duties payable to U.S. Customs, for door-to-door outbound shipments, and (b) increase of US$1,801 thousand in freight costs incurred on FOB outbound shipments resulting from increased sales.

Administrative expenses increased by 13.4% to US$11,614 thousand compared to US$10,244 thousand in the previous year, mainly attributable to such costs from the acquired garment manufacturing operations in Malaysia and newly-formed subsidiary in Cambodia.

Finance costs increased by 71% from US$1,215 thousand to US$2,077 thousand in the current year compared to previous year, due to the increase in purchase of raw materials to support higher sales and new machineries investment.

Other expenses increased by 7.3% from US$2,469 thousand to US$2,649 thousand due to legal fees incurred during the year in relation to action taken to recover past due receivables.

Net profit after tax for GLG was US$2,395 thousand, which represents a decrease of US$1,798 thousand or 42.9% compared to the financial year ended 30 June 2017 of US$4,193 thousand. Overall, the reduction in net profit after tax was mainly due to pre-production costs incurred by newly-formed Cambodia garment factory.

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GLG Corp Ltd Director’s Report

Review of Operations (cont’d)

Comparison of the Consolidated Statement of Financial Position as at 30 June 2018 with that of 30 June 2017.

Trade and other receivables increased by 30.5% to US$89,455 thousand as at 30 June 2018 compared to US$68,534 thousand as at 30 June 2017. The increase was primarily due to extended credit given to core customers in the current period and raw material purchase on behalf of outsourced manufacturing suppliers for early production.

Inventory increased by 56% to US$19,480 thousand as at 30 June 2018 compared to US$12,515 thousand as at 30 June 2017, due to increase in the inventory of raw materials and work-in-process within the fabric mill to support customer orders and early production to meet the short-lead time in customer order placement.

Investment property increased in value from US$3,762 thousand as of 30 June 2017to US$5,323 thousand as a result of two reasons: (a) increase in value driven by appreciation of the Malaysia Ringgit over US dollar as the asset is originally denominated in the Malaysia Ringgit, and (b) the reclassification from freehold land and building to Investment Property as the premises was fully rented out in entire FY2018 compared to previous year, FY2017 when a portion was still utilised internally i.e. not rented out. The investment property was subsequently reclassified to property, plant and equipment as the property was rented out to a company within the consolidated group.

Trade and other payables increased by 46% to US$37,249 thousand as at 30 June 2018 compared to US$25,580 thousand as at 30 June 2017, resulting from increase in purchases of raw materials in advance for future production.

Current and non-current borrowings increased by 24% to US$80,276 thousand as at 30 June 2018 compared to US$64,702 thousand as at 30 June 2017, as a result of increase in trade financing from financial institutions to support the business growth.

Comparison of the Consolidated Statement of Cash Flows for the financial year ended 30 June 2018 with that of 30 June 2017.

GLG’s cash from operating activities increased by 394% to US$6,809 thousand as at 30 June 2018 compared to US$1,378 thousand as at 30 June 2017. This increase resulted from increase in sales for the financial year.

Net cash used in investing was decreased by US$4,664 thousand or 51% to US$4,570 thousand as at 30 June 2018 compared to US$9,234 thousand as at 30 June 2017. This was mainly attributable to additions of new plant & machinery and renovation in the Vietnam factory to meet the needs of higher production levels in the previous financial year, FY2017.

Net cash used in financing was increased to US$937 thousand as at 30 June 2018 compared to cash provided of US$6,829 thousand as at 30 June 2018. The increase stemmed from financing the working capital incurred in the factories for fabric and garment production and the long extended payment terms accorded to GLG’s customers which increases the level of cash utilised in trade financing.

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 Director’s Report

Changes in state of affairs

In August 2017, Ghim Li International (S) Pte Ltd (GLIS), a fully owned subsidiary of GLG Corp Ltd, with the assistance of Ghim Li Group Pte Ltd, set up a legal entity in Cambodia, called GG Fashion Cambodia Co. Ltd (GGFC), which was incorporated under the laws of Cambodia. The rationale of establishing GGFC is part of GLG’s strategy of vertical-integration and expansion of supply chain garment manufacturing, by expanding its presence in Cambodia to offer higher value-add services and advantage to its customers. GGFC also serves as the legal vehicle, in future, to own the specific assets to be acquired from by GLG to enhance its manufacturing capacity. The financial performance and assets/liabilities of GGFC, since incorporation, are accounted for as part of GLG’s results for FY2018, in accordance with the requirements of AASB 10 – Consolidated Financial Statements.

There were no other significant changes in the state of affairs of the consolidated entity during the financial year.

Dividends

In respect of the financial year ended 30 June 2018, the Directors do not recommend the payment of a final dividend and no interim dividend was paid. In respect of the financial year ended 30 June 2017, no dividend was declared.

Subsequent events

On 28 June 2018, Ghim Li International (S) Pte Ltd, a fully-owned subsidiary of GLG Corp Ltd, has entered into an agreement with Ghim Li (Cambodia) Pte Ltd and its parent company, GLIT Holdings Pte Ltd to acquire some specific assets in the latter’s garment manufacturing factory in Cambodia. The assets to be acquired consist of machinery and equipment, some other fixed assets and intangible assets such as trade name and customer network, employee database and records.

Ghim Li International (S) Pte Ltd plans to establish a garment manufacturing factory in Cambodia with a new legal entity in Cambodia, which will then be assigned to own and manage these assets acquired from the sellers. The rationale of this acquisition is to allow Ghim Li International (S) Pte Ltd to set up its own garment manufacturing factory in Cambodia to supplement its current garment manufacturing investment in Vietnam and Malaysia.

The completion of this acquisition is subject to the fulfilment of certain conditions, namely (a) the securing of Board approvals for GLIS, GLIT Holdings and Ghim Li Cambodia respectively, (b) obtaining regulatory and statutory approvals in Singapore and Cambodia and (c) the establishment of the legal entity by GLIS in Cambodia. Management expects all of these conditions to be met after 30 June 2018, hence this acquisition transaction is mentioned here as a subsequent balance sheet event. GLIT Holdings Pte Ltd and its subsidiaries provide outsourced manufacturing services to GLG Corp Ltd and the receivables owed by GLIT to GLG Corp will be reduced by the same amount of the purchase consideration for the specific assets upon completion of this transaction, by way of set-off.

Future Developments

The consolidated entity is expanding fabric suppliers to include fashion novelty and also to increase the amount of work with outsourced factories. The performance depends on many economic and industry factors. In the opinion of the Directors, it is not possible or appropriate to make a prediction on the future course of markets, performance of the Consolidated Entity’s or the forecast of the likely result of the Consoldiated Entity’s activities.

Environmental Regulation

The consolidated Entity is not subject to any particular or significant environmental regulation.

Shares under option or issued on exercise of options

There are no shares under option or issues on exercise of options during the year (2017: Nil).

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GLG Corp Ltd Director’s Report

Proceedings on Behalf of the Company

No person has applied for leave of court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings.

The company was not a party to any such proceedings during the year.

Indemnification of officers and auditors

During the financial year, the Company paid a premium in respect of a contract insuring the directors of the company (as named above), the company secretary, and all executive officers of the company and of any related body corporate against a liability incurred as such a director, secretary or exectuvie officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

The company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the company or of any related body corporate against a liability incurred as such an officer or auditor.

Directors’ meetings

The following table sets out the number of directors’ meetings (including meetings of committees of directors) held during the financial year and the number of meetings attended by each director (while they were a director or committee member). During the financial year 3 Board meetings, 3 Nomination and Remuneration Committee meeting and 3 Audit Committee meetings were held:

	Board of directors	Board of directors	Nomination & remuneration committee	Nomination & remuneration committee	Audit committee	Audit committee
Directors	Held	Attended	Held	Attended	Held	Attended
Estina Ang Suan Hong 3 3 3 3 3 3 Christopher Chong Meng Tak 3 3 3 3 3 3 Shane Hartwig 3 3 3 3 3 3 Felicia Gan Peiling 3 3 3 3 3 3

Non-audit services

Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 33 of the financial report.

The Directors are satisfied that the provision of non-audit services, during the year, by the auditor (or by another person or firm on the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The Directors are of the opinion that the services as disclosed in Note 33 to the full financial statements do not compromise the external auditors’ independence, based on advice received from the Audit Committee, for the following reasons:

• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor, and

• none of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.

Auditor’s independence declaration

The auditor’s independence declaration is included on page 29 of this report.

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GLG Corp Ltd Director’s Report

Rounding off of amounts

The company is a company of the kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191 and in accordance with that Corporations Instrument amounts in the directors’ report and the financial statements are rounded off to the nearest thousand dollars, unless otherwise indicated.

Remuneration Report (audited)

This Remuneration report, which forms part of the Directors’ report, sets out information about the remuneration of GLG’s directors and its senior management for the financial year ended 30 June 2018. The prescribed details for each person covered by this report are detailed below under the following headings:

• director and senior management details

• remuneration policy

• relationship between the remuneration policy and company performance

• remuneration of directors and senior management.

• key terms of employment contracts

Director and senior management details

The following persons acted as directors of the Company during or since the end of the financial year:

• Estina Ang Suan Hong as Executive Chairman and Chief Executive Officer

• Christopher Chong Meng Tak as Lead Independent Director

• Shane Hartwig as Independent Director

• Felicia Gan Peiling as Chief Marketing Officer

The term ‘senior management’ is used in this remuneration report to refer to the following persons. Except as noted, the named persons held their current position for the whole of the financial year and since the end of the financial year:

• Susan Yong as Executive Vice President - Operations

• Cheah Eng Kean as EVP, Marketing & Contract Manufacturing (resigned on 19 September 2016)

• Shawn Fung as Chief Financial Officer and Head of IT & Human Resources

Remuneration policy

The remuneration for Key Management Personnel is determined as follows:

• For the Executive Chairman, Chief Executive Officer, by the Nominations and Remuneration Committee and by the Board and with a view to attract, retain and develop appropriately skilled people. Remuneration is reviewed on an annual basis having regard to personal and corporate performance and relevant comparative information.

• The remuneration of non-executive directors may not exceed in aggregate in any financial period the amount fixed by the Company at the general meeting. The amount has not changed since the Company listed in 2005.

• For executives, the Nomination and Remuneration Committee reviews remuneration policies and practices and makes recommendations to the Board regarding their approval. Remuneration is reviewed on an annual basis having regard to personal and corporate performance and relevant comparative information.

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GLG Corp Ltd Director’s Report

Relationship between the remuneration policy and company performance

The tables below set out summary information about the consolidated entity’s earnings and movements in shareholder wealth for the five years to June 2018:

	30 June 2018	30 June 2017	30 June 2016	30 June 2015	30 June 2014
	US$’000	US$’000	US$’000	US$’000	US$’000
Revenue from all
sources	180,606	156,041	171,435	180,343	226,718
Net profit before
tax	3,806	4,477	6,476	3,865	4,681
Net profit after
tax	2,395	4,193	4,827	3,148	4,038
Share price at
start of year	$0.19	$0.15	$0.18	$0.24	$0.28
Share price at end
of year	$0.10	$0.19	$0.15	$0.18	$0.24
Final Dividend
(unfranked)	-	-	-	-	-
Basic earnings per
share	3.23 cps	5.66 cps	6.51 cps	4.25 cps	5.45 cps
Diluted earnings
per share	3.23 cps	5.66 cps	6.51 cps	4.25 cps	5.45 cps

GLG Corp Ltd employees may be entitled to receive a discretionary bonus, as set and agreed by senior management and / or the Nomination and Remuneration Committee. These bonuses are accrued prior to year-end based on the expected bonuses to be paid, however the amounts may not be finalized or paid until a future date that is not necessarily within 12 months of balance sheet date. As a result, there is a difference in timing of the accrual of the bonus and the timing of the payment of the bonus.

Each executive director of the Company has entered into an Executive Service Agreement with Ghim Li Global Pte Ltd, a major subsidiary of GLG. They are not remunerated separately for being a director or executive of the Company or other operating entities. Under their respective terms of engagement, all executives:

• commenced their terms as an executive of Ghim Li Global Pte Ltd for a 3-year term, and thereafter their engagement automatically continues from year to year, unless their Executive Service Agreement is terminated;

• are covenanted to not compete against GLG’s operations for a period of 12 months after cessation of employment with GLG;

• agree that either party may terminate their Executive Service Agreement by giving 3 months written notice. In addition, Ghim Li Global Pte Ltd may without prior notice terminate their Service Agreements under certain conditions, for example, if the executive commits a serious breach of his or her obligations, or is guilty of grave misconduct in the discharge of his or her duties, or becomes bankrupt.

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GLG Corp Ltd Director’s Report

Remuneration of directors and senior management (cont’d)

The service agreements contain otherwise standard terms, including with regard to each executive’s duties, GLG owns any intellectual property created by its executives, confidentiality, entitlements to minor benefits in addition to their remuneration, and devoting substantially the whole of their time and attention during business hours to the discharge of their duties.

Each executive director receives a salary per month. They may also be entitled to an annual bonus determined by the Nomination and Remuneration Committee, in its absolute discretion.

Each of the key managers have entered into a service agreement with Ghim Li Global Pte Ltd, the general terms of which are not materially different to those of the executive directors described above.

Each key manager receives a salary per month, reviewed by the Chief Executive Officer annually with reference to the progress of GLG. Each may also be entitled to an annual bonus determined by the Chief Executive Officer, reviewed by the Nomination and Remuneration Committee, and approved by the Board taking into account overall management performance and the Company’s profit for the year.

Elements of Key Management Personnel remuneration

Remuneration packages contain the following key elements:

• (a) Short-term employment benefits – salaries/fees, bonuses; and

• (b) Post-employment benefits

2018	Short term employment benefits Post- employment benefits super - annuation Other long-term employee benefits Share based payments, options &rights Total
	Salary & fees US$ Bonus US$ Non- monetary US$ Other US$ US$ US$ US$ US$
Directors
Estina Ang Suan Hong1	541,063 45,781 - - 6,889 - - 593,733
Christopher Chong Meng Tak	42,685 - - - - - - 42,685
Shane Hartwig	27,939 - - - - - - 27,939
Felicia Gan Peiling1	165,026 56,187 - - 11,758 - - 232,971
	776,713 101,968 - - 18,647 - - 897,328
Executives
Shawn Fung	184,714 15,642 - - 7,454 - - 207,810
Susan Yong	148,316 12,208 - - 8,757 - - 169,281
	333,030 27,850 - - 16,211 - - 377,091
Total	1,109,743 129,818 - - 34,858 - - 1,274,419

1. Estina Ang Suan Hong and Felicia Gan Peiling are both Directors and Executives of GLG Corp Ltd. Estina Ang Suan Hong acts as the Chief Executive Officer; Felicia Gan Peiling is Chief Marketing Officer.

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GLG Corp Ltd Director’s Report

Remuneration of directors and senior management (cont’d)

2017	Short term employment benefits Post- employment benefits super - annuation Other long term employee benefits Share based payments, options &rights Total
	Salary & fees US$ Bonus US$ Non- monetary US$ Other US$ US$ US$ US$ US$
Directors
Estina Ang Suan Hong1	572,759 82,999 - - 6,534 - - 662,292
Christopher Chong Meng Tak	38,566 - - - - - - 38,566
Shane Hartwig	27,091 - - - - - - 27,091
Felicia Gan Peiling1	121,401 19,090 - - 12,059 - - 152,550
	759,817 102,089 - - 18,593 - - 880,499
Executives
Shawn Fung	145,209 11,758 - - 8,268 - - 165,235
Cheah Eng Kean2	31,463 - - - 1,511 - - 32,974
Susan Yong	140,410 12,450 - - 8,358 - - 161,218
	317,082 24,208 - - 18,137 - - 359,427
Total	1,076,899 126,297 - - 36,730 - - 1,239,926

1. Estina Ang Suan Hong and Felicia Gan Peiling (appointed as an Executive 15 September 2015) are both Directors and Executives of GLG Corp Ltd. Estina Ang Suan Hong acts as the Chief Executive Officer; Felicia Gan Peiling is Chief Marketing Officer.

2. Cheah Eng Kean appointed as EVP, Marketing & Contract Manufacturing resigned on 19 September 2016.

The relative proportions of those elements of remuneration of key management personnel that are linked to performance:

	Fixed remuneration	Fixed remuneration	Remuneration linked to performance	Remuneration linked to performance
Directors Estina Ang Suan Hong Christopher Chong Meng Tak Shane Hartwig Felicia Gan Peiling Executives Shawn Fung Cheah Eng Kean Susan Yong	2018 92.3% 100% 100% 75.9% 92.5% - 92.8%	2017 87.5% 100% 100% 87.5% 92.9% 100% 92.3%	2018 7.7% - - 24.1% 7.5% - 7.2%	2017 12.5% - - 12.5% 7.1% - 7.7%

Note: Fixed remuneration consists of base pay plus other fixed allowances paid to the individual on a regular basis, whilst Performancelinked remuneration refers to variable bonus paid to the individual, dependent on company financial results and individual’s performance.

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GLG Corp Ltd Director’s Report

Bonuses payment as compensation for the current financial year

Cash Bonuses

Madam Estina Ang Suan Hong was granted a cash bonus on 9 February 2018 of US$45,781 (FY2017: US$82,999) during the financial year ended 30 June 2018. The cash bonus was given for her stewardship as Chief Executive Officer on the company’s overall performance. The full amount of the bonus was paid on 11 February 2018.

Ms Felicia Gan Peiling was granted a cash bonus on 9 February 2018 of US$56,187 (FY2017: US$19,090) during the financial year ended 30 June 2018. The cash bonus was given for her contribution as Chief Marketing Officer including business development for the business. The full amount of the bonus was paid on 11 February 2018.

Mr Shawn Fung was granted a cash bonus on 9 February 2018 of US$15,642 (FY2017: US$11,758) during the financial year ended 30 June 2018. The cash bonus was given for his contribution as Chief Financial Officer & Head of HR and IT for the business. The full amount of the bonus was paid on 11 February 2018.

Ms Susan Yong was granted a cash bonus on 9 February 2018 of US$12,208 (FY2017: US$12,450) during the financial year ended 30 June 2018. The cash bonus was given for her contribution as Executive Vice President, Sales Operations and Global Sourcing for the business. The full amount of the bonus was paid on 11 February 2018.

Loans to Key Management Personnel

GLG has not provided any loans to key management personnel.

Other transactions with Key Management Personnel in GLG

There have been no other transactions between GLG and key management personnel.

Key Management Personnel equity holdings

Fully paid ordinary shares of GLG Corp Ltd

		Balance at 1 July No.	Granted as compensation No.	Net other change No.	Balance at resignation date No.	Balance at 30 June No.
2018 Estina Ang Suan Hong (indirect holding through Ghim Li Group) Felicia Gan Peiling Christopher Chong Meng Tak		50,116,000 2,222,000 110,001	- - -	- - -	- - -	50,116,000 2,222,000 110,001
2017 Estina Ang Suan Hong (indirect holding through Ghim Li Group) Felicia Gan Peiling Christopher Chong Meng Tak		54,560,000 - 160,007	- - -	(4,444,000) 2,222,000 (50,006)	- - -	50,116,000 2,222,000 110,001

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GLG Corp Ltd Director’s Report

Key terms of employment contract

A summary of the key term of employment are set out below:

Position	Keyterm of service agreements	Keyterm of service agreements
Chief Executive Officer	•	Base salary: US$536,592 (SG$726,000) excluding
		superannuation. The contract for remuneration is in Singapore
		Dollars.
	•	Term: no fixed term
	•	Base remuneration: Reviewed annually by the Nomination
		and Remuneration Committee.
	•	Bonus entitlements: Determined annually by the Nomination
		and Remuneration Committee.
	•	Termination notice period: 6 months’ notice or without notice
		in the event of serious misconduct.
	•	Termination payment: in lieu of notice
	•	Restraint and confidentiality provisions.
Executive Director	•	Base salary: US$163,057 (SG$219,000) excluding
		superannuation. The contract for remuneration is in Singapore
		Dollars.
	•	Term: no fixed term
	•	Base remuneration: Reviewed annually by the Nomination
		and Remuneration Committee.
	•	Bonus entitlements: Determined annually by the Nomination
		and Remuneration Committee.
	•	Termination notice period: 3 months’ notice or without notice
		in the event of serious misconduct.
	•	Termination payment: in lieu of notice
	•	Restraint and confidentiality provisions.
Senior Management	•	Base salary: refer to remuneration of directors and senior
		management for individual’s salary
	•	Term: no fixed term
	•	Base remuneration: Reviewed annually by the Nomination
		and Remuneration Committee.
	•	Bonus entitlements: Determined annually by the Nomination
		and Remuneration Committee.
	•	Termination notice period: one month’ notice or without
		notice in the event of serious misconduct.
	•	Termination payment: in lieu of notice
	•	Restraint and confidentiality provisions.

This concludes the Remuneration Report, which has been audited.

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GLG Corp Ltd Director’s Report

The Directors’ report is signed in accordance with a resolution of the Directors made pursuant to s.298 (2) of the Corporations Act 2001.

==> picture [163 x 123] intentionally omitted <==

Singapore, 19 September 2018

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GLG Corp Ltd Auditor’s Independence Declaration

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GLG Corp Ltd Independent Auditor’s Report

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GLG Corp Ltd Independent Auditor’s Report

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GLG Corp Ltd Independent Auditor’s Report

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GLG Corp Ltd Independent Auditor’s Report

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GLG Corp Ltd Directors’ Declaration

Directors’ declaration

The Directors declare that:

• (a) in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable;

• (b) in the Directors’ opinion, the attached financial statements are in compliance with International Financial Reporting Standards, as stated in note 2 to the financial statements;

• (c) in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with Australian Accounting Standards and giving a true and fair view of the financial position and performance of the consolidated entity; and

• (d) the Directors have been given the declarations required by s.295A of the Corporations Act 2001.

Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations Act 2001.

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Singapore, 19 September 2018

34

GLG Corp Ltd Consolidated statement of profit or loss and other comprehensive income

Consolidated Statement of profit or loss and other comprehensive income for the financial year ended 30 June 2018

Note Revenue 5 Cost of sales Gross profit Other income 5 Distribution expenses Administration expenses 6 Finance costs 7 Other expenses 8 Profit before income tax expense Income tax expense 10 Profit for the year Other comprehensive income: Items that will not be reclassified subsequently to profit or loss: Revaluation surplus/ (deficit), on land and building, net of tax Fair value adjustment of reclass PPE to investment property Other comprehensive income, net of tax Total comprehensive income for the year Earnings per share: From continuing operations: Basic (cents per share) 23 Diluted (cents per share) 23	Consolidated
	2018 US$’000 2017 US$’000
	180,606 156,041 (155,326) (134,570)
	25,280 21,471 1,118 344 (6,252) (3,410) (11,614) (10,244) (2,077) (1,215) (2,649) (2,469)
	3,806 4,477 (1,411) (284)
	2,395 4,193 834 (381) 52 -
	886 (381)
	3,281 3,812
	3.23 5.66 3.23 5.66

Notes to the financial statements are included on page 39 to 83

35

GLG Corp Ltd Consolidated statement of financial position

Consolidated Statement of financial position as at 30 June 2018

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 Investments accounted for using the equity method Investment property 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 28(a) 11 13 16 12 16 12 14 17 18 15 19 20 10(b) 20 10(c) 21 29 29 22	Consolidated
		2018 US$’000 2017 US$’000
		8,183 6,881 89,455 68,534 19,480 12,515 1,330 1,725 344 344
		118,792 89,999
		2,555 2,615 6,871 6,871 - - - 3,762 1,897 1,853 40,138 34,047
		51,461 49,148
		170,253 139,147
		37,249 25,580 71,722 53,824 791 694
		109,762 80,098
		8,554 10,878 1,562 1,077
		10,116 11,955
		119,878 92,053
		50,375 47,094
		10,322 10,322 4,485 3,599 (14,812) (14,812) 50,380 47,985
		50,375 47,094

Notes to the financial statements are included on pages 39 to 83

36

GLG Corp Ltd Consolidated statement of changes in equity

Consolidated Statement of changes in equity for the financial year ended 30 June 2018

Consolidated Balance at 1 July 2016 Profit for the year Other comprehensive income for the year Total comprehensive income for the year Balance at 30 June 2017 Balance at 1 July 2017 Profit for the year Other comprehensive income for the year Total comprehensive income for the year Balance at 30 June 2018	Issued Capital Asset Revaluation Reserve US$’000 US$’000	Merger Reserve Retained Earnings Total US$’000 US$’000 US$’000
	10,322 3,980 - - - (381)	(14,812) 43,792 43,282 - 4,193 4,193 - - (381)
	- (381)	- 4,193 3,812
	10,322 3,599	(14,812) 47,985 47,094
	10,322 3,599 - - - 886	(14,812) 47,985 47,094 - 2,395 2,395 - - 886
	- 886	- 2,395 **3,281 **
	10,322 4,485	(14,812) 50,380 50,375

Notes to the financial statements are included on pages 39 to 83

37

GLG Corp Ltd Consolidated statement of cash flows

Consolidated Statement of cash flows

for the financial year ended 30 June 2018

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 Cash flows from investing activities Proceeds from sale 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 borrowings Payments to Ghim Li Group Payments to outsourced manufacturing suppliers Net cash (used in)/ 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	Note 28(c) 28(d) 28(a)	Consolidated
		2018 US$’000 2017 US$’000
		175,001 151,676 (165,662) (148,457) 10 15 (1,711) (911) (829) (945)
		6,80 9 1,37 8
		29 2 (4,535) (9,223) (64) (13)
		(4,570) (9,234)
		15,574 13,734 (2,296) (488) (14,215) (6,417)
		(937) 6,829
		1,302 (1,027) 6,881 7,908
		8,183 6,881

Notes to the financial statements are included on pages 39 to 83

38

GLG Corp Ltd Notes to the financial report

Notes to the financial report

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 L40 100 Miller St 21 Jalan Mesin, North Sydney NSW 2060 Singapore 368819 Australia

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

2. Significant accounting policies

Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and complies with other requirements of the law. The financial report comprises the consolidated financial statements of GLG. For the purposes of preparing the consolidated financial statement, the company is a for-profit entity.

Accounting Standards include Australian Accounting Standards. Compliance with the Australian Accounting Standards ensures that the financial statements and notes of GLG comply with International Financial Reporting Standards (‘IFRS’).

The financial statements were authorised for issue by the Directors on 19[th] September 2018.

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.

39

GLG Corp Ltd Notes to the financial report

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 – refer to Note 15 for further details

• Investment properties - Level 3 – refer to Note 17 for further details

40

GLG Corp Ltd Notes to the financial report

2. Significant accounting policies (cont’d)

Adoption of new and revised Accounting Standards

In the current year, the Company has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period.

Standards and Interpretations issued not yet effective

At the date of authorisation of the financial report, a number of Standards and Interpretations were in issue but not yet effective.

t yet effective.
Standard/Interpretation	Effective for annual reporting periods beginning on or after	Expected to be initially applied in the financial year ending
AASB 9 Financial Instruments, and the relevant	1 January 2018	30 June 2019
amending standards
AASB 15 ‘Revenue from Contracts with	1 January 2018	30 June 2019
Customers’, AASB 2014-5 ‘Amendments to
Australian Accounting Standards arising from AASB
15, AASB 2016-8 ‘Amendments to Australian
Accounting Standards – Effective date of AASB 15’
AASB 16 Leases	1 January 2019	30 June 2020

As at the date of the report management are quantifying the impact, if any, on the adoption of the above accounting standards. However, management do note that AASB 16 is expected to impact GLG as the operating leases entered into by the company will be brought onto the statement of financial position as a right to use asset and liability.

For AASB 9, GLG has evaluated the recoverability of receivables and determine collection and recoverability to be highly probable based on past interaction with the same GLGs and no changes to relationships with these GLGs is expected going forward. However, GLG are still in the process of evaluating the effects of the change with this standard.

With respect to the revenue disclosures for AASB15, GLG has adopted this standard from 1 July 2018. GLG has applied the principles of this standard to its business and concludes that the consolidated entity correctly recognises revenue at the time that the transfer of control of the custom-made goods to its customers. GLG has considered the effects of variable consideration such as settlement discounts and concluded that the impact of such discounts that reduce the revenue to be immaterial based on historical transactions. At the end of each reporting period, the impact will be assessed as such variable consideration may fluctuate. Revenue is recognized by GLG as and when control is passed at a certain point in time, rather than over-time. Control of the custom-made goods is defined for GLG as the ability of its customers to direct the use of and obtain the benefits from the goods delivered. GLG historically has experienced minimal returns from customers, hence no impact on accounting for returns within revenue is expected.

41

GLG Corp Ltd Notes to the financial report

2. Significant accounting policies (cont’d)

(a) Basis of consolidation

The consolidated financial statements include the information and results of each subsidiary from the date on which the Company obtains control and until such time as the Company ceases to control such entity. Control is achieved when the company:

• has power over the investee;

• is exposed, or has the rights, to variable returns from its involvement with the investee; and

• has the ability to use its power to affect its returns.

Total comprehensive income of subsidiaries is attributed to the owners of the Company.

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

A list of subsidiaries appears in note 27 to the financial statements. Consistent accounting policies are employed in the preparation and presentation of the consolidated financial statements.

(b) Foreign currency

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

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of each reporting period.

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

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

• (ii) exchange differences on transactions entered into in order to hedge certain foreign currency risks, there are no hedging activities undertaken in the current year; and

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

42

GLG Corp Ltd Notes to the financial report

2. Significant accounting policies (cont’d)

(c) Goods and services tax

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

(i) where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or (ii) for receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.

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

• (d) Financial assets

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

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

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

Effective interest method

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

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

Loans and receivables

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

43

GLG Corp Ltd Notes to the financial report

2. Significant accounting policies (cont’d)

(d) Financial assets (cont’d)

Impairment of financial assets

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

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

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

Derecognition of financial assets

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

• (e) Impairment of tangible and intangible assets

At the end of each reporting period, GLG reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, GLG estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cashgenerating units, or otherwise they are allocated to the smallest GLG of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

44

GLG Corp Ltd Notes to the financial report

2. Significant accounting policies (cont’d)

(f) Employee benefits

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

Provisions made in respect of short term employee benefits are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Provisions made in respect of long term employee benefits are measured as the present value of the estimated future cash outflows to be made by the consolidated entity in respect of services provided by employees up to reporting date.

Defined contribution plans

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

(g) Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, and it is probable that the Company will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.

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

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

(h) Financial instruments issued by the Company

Other financial liabilities

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

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

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

3. Critical accounting judgements and key sources of estimation uncertainty

In the application of GLG’s accounting policies, which are described in note 2, management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates. Impairment of receivables and impairment of goodwill are two key areas of estimates and judgements. Refer to Notes 11 and 18 for further details. Additionally, the estimates related to the revaluation of property plant and equipment and investment property are also key areas of estimates and judgements. Refer to Notes 15 and 17 for further details.

45

GLG Corp Ltd Notes to the financial report

4. 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 and management do not review information by geographic segment nor do they review segment assets or liabilities

Revenues of US$57,375 thousand (2017: US$48,146 thousand), US$49,513 thousand (2017: US$48,736 thousand) and US$34,151 thousand (2017: US$31,151) are derived from three single customers of the Company. Each of these separate revenues amount to more than 10% of the Company’s revenues from external customers.

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 the manufacture and wholesaling of fabric Garments 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.

Operating segment information

Consolidated – 30 June 2018 Revenue Sales to external customers Intersegment sales Total revenue Interest received Depreciation EBIT Finance costs Profit before income tax expense Income tax expense Profit after income tax expense	Fabric US$'000 867 51,400	Garments US$'000 179,739 - 179,739 299 850 1,357	Intersegment eliminations US$'000 - (51,400)	Total US$'000 180,606 -
	52,267		(51,400)	180,606
	9		(298)	10
	2,148		-	2,998
	4,526		-	5,883 (2,077)
				3,806 (1,411)
				2,395

46

GLG Corp Ltd Notes to the financial report

4. 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 expense	Fabric US$'000 420 36,768 37,188 9 1,929 3,008	Garments US$'000 155,621 - 155,621 6 304 2,684	Intersegment eliminations US$'000 - (36,768)	Total US$'000 156,041 -
			(36,768)	156,041
			-	15
			-	2,233
			-	5,692 (1,215)
				4,477 (284)
				4,193

Revenue attributable to external customers is disclosed below, based on the location of the external customer:

Cambodia India Madagascar Malaysia Myanmar Singapore Sri Lanka	Fabric
	2018 US$’000 2017 US$’000
	447 - 89 - 25 - 241 137 65 - - 252 - 31
	867 420

Canada China Europe Japan Singapore USA Vietnam	Garments 2018 US$’000 2017 US$’000 34,151 31,171 179 - 11,837 10,161 134 98 1 196 133,395 113,995 42 -
	179,739 155,621

47

GLG Corp Ltd Notes to the financial report

5. Revenue

Revenue recognition

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

Sale of goods

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

Interest income

Interest income is recognised on a time proportionate basis that takes into account by applying the effective interest rate.

Rental income

Rental income from operating leases is recognised on a straight-line basis over the lease term.

Revenue from the sale of goods Other income Rental income (i) Sample income Profit on sale of assets Interest income Grant Payable written back Fair value adjustment on investment property Other Total other income	Consolidated
	2018 US$’000 2017 US$’000
	180,606 156,041
	- 232 46 28 32 - 10 15 - 14 289 - 378 - 363 55
	1,118 344
	181,724 156,385

(i) Rental income represents the market-value rental of the property at Lot 7962, Batu 22, Jalan Air Hitam, 81000 Kulai, Johor for the twelve months ending 30 June 2018. This rental income is eliminated upon consolidation as the tenant (Ghim Li Fashion (M) Sdn Bhd) and landlord (Maxim Textile Technology Sdn Bhd) are both subsidiaries of GLG.

6. Administrative expenses

dministrative expenses
Employee compensation Rental and equipment expenses on operating leases Management fees Insurance Courier Others	Consolidated
	2018 US$’000 2017 US$’000
	8,281 5,689 1,326 1,349 127 1,691 198 201 429 321 1,252 993
	11,614 10,244

48

GLG Corp Ltd Notes to the financial report

7. Finance costs

Finance costs
Interest on loans Interest on obligations under finance leases Bank charges Total interest and bank charges Line of credit charges	Consolidated
	2018 US$’000 2017 US$’000
	587 522 7 6 263 241
	857 769 1,220 446
	2,077 1,215

8. Other expenses

Bad and doubtful debts Commitment fee Legal fee Others	Consolidated
	2018 US$’000 2017 US$’000
	- 296 868 1,081 291 - 1,490 1,092
	2,649 2,469

9. Profit For The Year Before Income Tax Expense

Profit for the year has been arrived at after (crediting)/charging the following gains and losses:

Loss on written of property, plant and equipment Gain on sales of property, plant and equipment Bad and doubtful debts Net foreign exchange loss Fair value adjustment on investment properties Depreciation of non-current assets Amortisation of non-current assets Operating lease rental expenses: Minimum lease payments Employee benefit expense: Salaries, wages, and bonuses Post-employment benefits: Defined contribution plans Total employee benefit expenses	Consolidated
	2018 US$’000 2017 US$’000
	73 4 (33) - - 296 730 86 (378) 252 2,998 2,232 20 1 1,626 1,423
	18,430 7,902 1,041 594
	19,471 8,496

49

GLG Corp Ltd Notes to the financial report

10. Income Taxes

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

Deferred tax is recognised on temporary differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items. In principle, deferred tax liabilities are recognised for all taxable temporary differences. However, deferred tax liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, branches and interest in joint ventures except where the consolidated entity is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

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

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

There were no franking credits for 2017 nor 2018.

Current and deferred tax for the period

Current and deferred tax is recognised as an expense or income in the Consolidated Statement of profit or loss and other comprehensive income, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, in which case the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where the current or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

50

GLG Corp Ltd Notes to the financial report

10. Income taxes (cont'd)

(a) Income tax recognised in profit or loss

Tax expense comprises: Current tax expense in respect of the current year Deferred tax expense in respect of the current year Under provision of deferred tax in prior financial year Adjustments recognized in the current year in relation to prior years Total tax expense The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in the financial statements as follows: Profit from operations Income tax expense calculated at 30% Effect of expenses that are not deductible in determining taxable profit Effect of income not assessble for tax purposes Effect of tax allowance Effect of tax losses not recognised Effects of different tax rates of subsidiaries operating in other jurisdictions_(i)_ Utilisation of deferred tax assets not recognised previously Under provision of deferred tax in prior financial year Other Adjustments recognised in the current year in relation to the current tax of prior years Income tax expense recognised in profit	Consolidated
	2018 US$’000 2017 US$’000
	868 685 458 625 27 (825) 58 (201)
	1,411 284
	3,806 4,477 1,142 1,343 551 590 - (65) (545) (119) 613 14 (305) (483) (139) - 27 (825)
	1,344 455 9 30
	1,353 485 58 (201)
	1,411 284

• (i) The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under Australian tax law. There has been no change in the corporate tax rate when compared with the previous reporting period. However, for the purposes of tax reconciliation, certain subsidiaries were operating in Singapore, Malaysia and Hong Kong, in which these entities are taxed at the respective local tax rates.

Unrecognised deferred tax assets in relation to tax losses at year end amounted to approximately $918,000.

51

GLG Corp Ltd Notes to the financial report

10. Income taxes (cont’d)

(b) Current tax liabilities

Current tax liabilities Income tax payable attributable to entities in the consolidated GLG

	Consolidated	Consolidated
	2018	2017
	US$’000	US$’000
	791	694
	791	694

(c) Deferred tax balances

Deferred tax liabilities arise from the following:

	Consolidated
	Opening balance	Charged to income	Charged to Equity	Acquisitions/ disposals	Exchange differences	Changes in tax rate		Closing balance
2018	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000		US$’000
Temporary differences Property, plant and equipment Unused tax loses and other credits: Nil	1,077 485 - -				- -		1,562
	1,077 485 - -				- -		1,562
	- - - -				- -		-
	- - - -				- -		-
	1,077 485 - -				- -		1,562

Presented in the statement of financial position as follows: Deferred tax liability

1,562

2017	Consolidated	Consolidated	Consolidated	Consolidated
	Opening balance	Charged to income	Charged to Equity	Acquisitions/ disposals	Exchange differences	Changes in tax rate	Closing balance
	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000
Temporary differences Property, plant and equipment Unused tax loses and other credits: Nil	1,278 (201) - -				- -
							1,077
	1,278 (201) - -				- -		1,077
	- - - -				- -
							-
	- - - -				- -		-
	1,278 (201) - -				- -		1,077

Presented in the statement of financial position as follows: Deferred tax liability

1,077

52

GLG Corp Ltd Notes to the financial report

11. Trade and other receivables

Trade receivables Trade customers GLIT Holdings Outsourced manufacturing suppliers Joint-venture entity Provision for Doubtful Debts Trade receivables Other receivables Other receivables Provision for Doubtful Debts Other receivables Less: Payable to outsourced manufacturing suppliers Payable to GLIT Holdings Goods and services tax recoverable	2018 US$’000 2017 US$’000
	29,059 24,610 25,858 33,395 30,102 7,914 1,325 1,325 - (613)
	86,344 66,631 2,081 1,714 (480) (480)
	1,601 1,234 (39) - - (7)
	87,906 67,858
	1,549 676
	89,455 68,534

The average credit period on sales of goods and rendering of services is 75 days. No interest is charged on the trade receivables outstanding balance.

Before accepting any new customers, GLG 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. 96% 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 GLG.

Included in GLG’s trade receivable balance are debtors with a carrying amount of US$1,235 thousand (2017: US$325 thousand) which are past due at the reporting date. There has been no significant change in credit quality and all amounts are considered recoverable. GLG does not hold any collateral over these balances.

Age of receivables past due, but not impaired

Age of receivables past due, but not impaired 30 – 60days 60 – 90 days 90 – 120 days More than 120 days Total Movement in the allowance for trade doubtful debts Balance at the beginning of the year Charge to profit or loss Allowance written off during the year Balance at the end of the year*	Consolidated
	2018 US$’000 2017 US$’000
	515 - 552 88 1 237 167 -
	1,235 325
	613 2,610 - 277 (613) (2,274)
	- 613

53

GLG Corp Ltd Notes to the financial report

11. Trade and other receivables (cont’d)

*Includes the provision for doubtful debts for Trade Receivables.

The provision made for one of the customer which filed for Chapter 11 bankruptcy in the United States has been written off in this financial year.

Movement in the allowance for non-trade doubtful debts Balance at the beginning of the year Charge to profit or loss Allowance written off during the year Balance at the end of the year	Consolidated
	2018 US$’000 2017 US$’000
	480 480 - - - -
	480 480

In determining the recoverability of trade receivables, GLG 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.

Provision for impairment of receivables – estimates and judgements

GLG assesses impairment at the end of each reporting period by evaluating the conditions and events specific to GLG that may be indicative of impairment triggers.

GLIT Holdings Pte Ltd (GLIT) and its operating subsidiaries provide outsourced manufacturing services to GLG Corp. GLG Corp provides working capital and fabric to GLIT as part of the arrangement. When fabric is acquired by GLIT, GLG Corp issues a letter of credit on their behalf. In order to maximize the discounts available, GLG Corp converts for GLIT the letter of credit it has issued into a Trust Receipt. The Bank will immediately pay the fabric supplier. Once GLIT invoices GLG Corp, a trade payable is recorded. GLG Corp has a legally enforceable right to offset the amount owed by GLIT and settle the balance, if any, with 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.

GLIT Holdings Pte Ltd and its subsidiaries that provide subcontracted manufacturing operations were disposed of by the Ghim Li Group in 2005 as part of a management buy out. GLIT continue to operate as GLG’s outsourced manufacturing partner.

The GLIT Receivables (collectively the receivables from GLIT Holdings and receivables from outsourced manufacturing suppliers) carrying value is estimated to be recoverable on the basis that GLIT continues to operate as our outsourced manufacturing partner dedicated to serve the day-to-day needs of GLG Corp. It is assumed that GLIT has sufficient resources, financial and otherwise to support the order fulfilment processes in the factories, with guidance and loadings from GLG Corp. The valuation of GLIT receivable is evaluated to be recoverable based on the assumption specifically on the accessibility of trust receipts available for offset and the amount of available collateral in place.

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

54

GLG Corp Ltd Notes to the financial report

12. Other financial assets

. Other financial assets
Current Other receivables – External party (i) Provision for Bad Debts Total Current other financial assets Non-current Security deposit Office rental deposit (ii) Disclosed in the financial statements as : Total Non-current other financial assets	Consolidated
	2018 US$’000 2017 US$’000 368 368 (24) (24) 344 344 5,000 5,000 1,871 1,871 6,871 6,871 6,871 6,871

(i) The current trade receivable owed by third party has a provision for non-recovery in FY2018 of US$24 thousand (FY2017: US$24 thousand).

(ii)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).

13. Inventory

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

Raw materials Work in progress Goods in transit Consumables Stock lot Finished goods Total	Consolidated
	2018 US$’000 2017 US$’000
	5,801 3,393 7,743 2,987 1,743 2,769 5 7 667 189 3,521 3,170
	19,480 12,515

55

GLG Corp Ltd Notes to the financial report

14. Investments accounted for using the equity method

Name of entity	Country of incorporation		Ownership interest	Ownership interest
		Principal activity	2018	2017 %
			%
Jointly controlled entities JES Apparel LLC USA Importer of knitwear products			51 51

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

Financial position: Current assets Current liabilities Net assets GLG’s share of jointly controlled entity’s net assets Financial performance: Income Expenses Total loss for investment in joint venture GLG’s share of jointly controlled entity’s losses	Consolidated
	2018 US$’000 2017 US$’000
	393 393 (1,879) (1,879)
	(1,486) (1,486)
	(757) (757)
	- - - -
	- -
	- -

The entity ceased business since 2012 and consolidated entity’s share of losses for 2018 and 2017 was nil. The entity’s cumulative unrecognised share of retained losses is US$757 thousand (2017: US$757 thousand).

56

GLG Corp Ltd Notes to the financial report

15. Property, plant and equipment

Property, plant and equipment held for use in the production or supply of goods or services, or for administrative purposes, are carried in the Statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Assets are pledged as security – refer further to Note 20.

Land and buildings are initially recognized at cost. Freehold land is subsequently carried at the revalued amount less accumulated impairment losses. Buildings and leasehold land are subsequently carried at the revalued amounts less accumulated depreciation and accumulated impairment losses.

Depreciation is provided on property, plant and equipment, including freehold buildings. Depreciation is calculated on a straight line basis so as to write off the net cost or other revalued amount of each asset over its expected useful life to its estimated residual value. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight line method. The lease period is for 60years, ending 2050. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period. The following estimated useful lives are used in the calculation of depreciation

Building on freehold land 50 years Leasehold properties Over term of lease Plant and machinery 10 years Furniture, fittings and office equipment 3-10 years Motor vehicles 5-10 years

Assets and liabilities measured at fair value include:

• Freehold and leasehold land and buildings - Level 3

• Freehold and leasehold land and buildings of the Company were revalued on 30 June 2018 by One Asia Property Consultants (KL) Sdn. Bhd, an external, independent and registered valuer. The comparison method was adopted in arriving at the market value of the freehold and leasehold land and buildings. In estimating the fair value of the properties, the highest and best use of the properties is their current use. There has been no change to the valuation technique as compared with previous financial year and revaluations are done on an annual basis.

Freehold and leasehold land and buildings at valuation are categorised as Level 3 fair value, which has been generally derived using the sales comparison approach. Sales price of comparable properties in close proximity are adjusted for differences in key attributes such as property size. The most significant input to this valuation approach is price per square foot of comparable properties.

Description	Valuation Approach	Unobservable inputs	Range of inputs	Weighted average	Relationship of unobservable inputs to fair value
Property	Sales comparison	Price per square foot	RM30-44 per square foot for land RM30-100 per square foot for building RM = Malaysian Ringgit currency	RM24 per square foot for land RM75 per square foot for building	The higher the price per square foot the higher the fair value

57

GLG Corp Ltd Notes to the financial report

15. Property, plant and equipment (cont’d)

Valuation of land and buildings – estimates and judgements

GLG has determined that the revaluation model is more appropriate for reflecting the value of their land and buildings.

Land and Buildings Freehold Land at independent valuation Building at independent valuation Total land and building Carrying amount of all freehold land had it been carried under the cost model Leasehold Leasehold improvement At cost Accumulated depreciation Land at independent valuation Building at independent valuation Reclassification from investment properties Total land and building Carrying amount of all leasehold had it been carried under the cost model Plant and Equipment Plant and equipment: At cost Accumulated depreciation Plant and equipment with net carrying amount were acquired under finance leases: At cost Accumulated depreciation Plant and equipment with net carrying amount were acquired under bank borrowings At cost Accumulated depreciation Total plant and equipment Total property, plant and equipment	Consolidated GLG 2018 2017 US$'000 US$'000 789 789 342 342
	1,131 1,131
	757 776
	378 187 (216) (48)
	162 139
	1,911 1,783 7,498 7,073
	4,192 -
	13,763 8,995
	10,038 6,220
	19,977 16,892 (8,636) (7,164)
	11,341 9,728
	371 143 (81) (77)
	290 66
	16,426 15,942 (2,813) (1,815)
	13,613 14,127
	25,244 23,921 40,138 34,047

58

GLG Corp Ltd Notes to the financial report

15. 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
Balance as at 1 July 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
Additions		-	44	44	41	3,680	417	745	243	5,170
Reclassification		-	4,192	4,192	-	-	-	-	-	4,192
Disposals		-	-	-	(635)	(672)	-	(22)	-	(1,329)
Transfer		-	-	-	(836)	795	41	-	-	-
Revaluation surplus		-	700	700	-	-	-	-	-	700
Balance as at 30 June 2018		1,131	13,979	15,110	196	20,381	9,976	5,563	658	51,884

59

GLG Corp Ltd Notes to the financial report

15. 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 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
Depreciation expense		-	302	302	-	1,857	500	297	42	2,998
Depreciation on disposals		-	-	-	-	(208)	-	(14)	-	(222)
Revaluation deficit		-	(134)	(134)	-	-	-	-	-	(134)
Balance as at 30 June 2018		-	216	216	-	5,916	2,747	2,501	366	11,746
Net book value
As at 30 June 2017		1,131	8,995	10,126	1,626	12,311	7,271	2,622	91	34,047
As at 30 June 2018		1,131	13,763	14,894	196	14,465	7,229	3,062	292	40,138

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

60

GLG Corp Ltd Notes to the financial report

16. Other assets

Current Prepayments Non-current Prepayments	Consolidated 2018 US$’000 2017 US$’000 1,330 1,725 2,555 2,615

17. Investment property

The investment property is located at Lot 7962, Batu 22, Jalan Air Hitam, 81000 Kulai, Johor in Malaysia. It was revalued by One Asia Property Consultants (KL) Sdn. Bhd, an external, independent and registered valuer using the sales comparison method on 30 June 2018, and has been categorised as Level 3 fair value. Revaluations are done on an annual basis. Sales price of comparable properties in close proximity are adjusted for differences in key attributes such as property size. The most significant input to this valuation approach is price per square foot of comparable properties.

The investment property has include those portions of factory and office buildings that are held for longterm rental yields and/or for capital appreciation which are initially recognised at cost and subsequently carried at fair value.

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.

The following table sets out the valuation techniques used to measure fair value within Level 3, including details of the significant unobservable inputs used and the relationship between unobservable inputs and fair value. Changes in fair values are recognised in profit or loss.

Description	Valuation Approach	Unobservable inputs	Range of inputs	Weighted average	Relationship of unobservable inputs to fair value
Investment property	Sales comparison	Price per square foot	RM40 to 63 per square foot for land RM40 to 100 per square foot for building RM = Malaysian Ringgit currency	RM47 per square foot for land RM73 per square foot for building	The higher the price per square foot, the higher the fair value

61

GLG Corp Ltd Notes to the financial report

17. Investment property (cont’d)

Beginning of financial year Fair value gain/ (loss) recognised in profit or loss Fair value gain recognised in revaluation reserve Reclassification to property, plant and equipment since intercompany rental in 2018 End of financial year	Consolidated
	2018 US$’000 2017 US$’000
	3,762 4,014 378 (252) 52 - (4,192) -
	- 3,762

The following are recognised in profit or loss in respect of investment property.

Rental income (i) Direct operating expenses arising from: Investment property that generated rental income	Consolidated
	2018 US$’000 2017 US$’000
	0 227 (28) (8)
	(28) 219

(i) Rental income represents the market-value rental of the property at Lot 7962, Batu 22, Jalan Air Hitam, 81000 Kulai, Johor for the twelve months ending 30 June 2018. This rental income is eliminated upon consolidation as the tenant (Ghim Li Fashion (M) Sdn Bhd) and landlord (Maxim Textile Technology Sdn Bhd) are both subsidiaries of GLG.

Valuation of investment properties – estimates and judgements

GLG has determined that the fair value model is more appropriate for reflecting the value of their investment properties.

62

GLG Corp Ltd Notes to the financial report

18. Intangible assets

Cost As at 1 July 2017 Additions As at 30 June 2018 Accumulated Depreciation As at 1 July 2017 Additions As at 30 June 2018 Net book Value As at 1 July As at 30 June Goodwill Total intangible assets As at 1 July As at 30 June	Consolidated
	2018 US$’000 2017 US$’000
	13 - 64 13
	77 13
	1 - 20 1
	21 1 12 - 56 12 1,841 1,841 1,853 - 1,897 1,853

Software

Computer software is stated as intangible assets in the statement of financial position and amortised on the straight line method over 3 years.

Goodwill – recognition and measurement

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 and has an indefinite useful life. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is assessed as part of the Ghim Li Fashion (M) Sdn Bhd CGU. Goodwill is not amortised but is subject to impairment testing on an annual basis or whenever there is an indication of impairment.

Goodwill – estimates and judgements

GLG assesses impairment at the end of each reporting period by evaluating the conditions and events specific to GLG that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions within the CGU. The value in use is based on the cash flow projections for a period of two years. The cash flow projections are based on the FY2019 budget that has been approved by the board with estimated growth rates of 5% for FY2020 with a terminal growth rate of 2.5%. As part of the annual impairment test for goodwill, management assesses the reasonableness of growth rate assumptions by reviewing historical cash flow projections and future growth objectives.

The pre tax discount rate applied to these cash flow projections is 8.2%. The discount rate has been determined using the weighted average cost of capital which incorporates both the cost of debt and the cost of capital. The tax rate applied in the valuation model is based on the corporate tax rate in Malaysia of 24%.

There has been no impairment loss recognised in relation to goodwill.

Management believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of the cash generating unit to materially exceed its recoverable amount.

63

GLG Corp Ltd Notes to the financial report

19. Trade and other payables

Trade payables (i) Other payables Ghim Li Group (ii) Accruals – employee remuneration Accruals – deferred rent Accruals – audit fee Accruals – TR interest Accruals – others	Consolidated
	2018 US$’000 2017 US$,000
	16,028 3,236 4,215 4,238 13,462 15,757 1,649 867 536 536 105 84 216 130 1,038 732
	37,249 25,580

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

(ii) This payable due to Ghim Li Group (majority shareholder of GLG) is the outstanding amount owed by GLG for the purchase consideration payable for the acquisition of Maxim entities in December 2016.

20. Borrowings

Secured–at amortised cost Current Trust receipts (Gross) (i) (1) Bills payable (Gross) (3) Finance lease liabilities (Note 26) Bank Loan Term Loan (2) Total current borrowings Non-current Finance lease liabilities (Note 26) Term Loan (2) Total non-current borrowings Disclosed in the financial statements as: Current borrowings Non-current borrowings	Consolidated
	2018 US$’000 2017 US$’000
	50,802 46,768 15,369 39 2,768 136 1,100 500 4,412 3,652
	71,722 53,824
	151 38 8,403 10,840
	8,554 10,878
	71,722 53,824 8,554 10,878
	80,276 64,702

64

GLG Corp Ltd Notes to the financial report

20. Borrowings (cont’d)

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: GLG uses bank facilities to support the working capital requirement of its operations. Presently, the bank facilities provided to GLG are uncommitted short term trade financing facilities which are renewable annually by the banks and long term financing facilities. At 30 June 2018 GLG Corp Ltd had short term financing facilities available of US$127,652 thousand, long-term financing facilities available of US$23,538 thousand and foreign exchange available of US$17,855 thousand. (Short term: US$81,068 thousand was used and US$46,584 thousand was unused. Long-term: US$12,815 thousand was used and US$10,723 thousand was unused. Foreign exchange of US$17,855 thousand was unused). Compared with US$133,603 thousand of short term financing facilities, long-term financing facilities of US$23,252 thousand and forward contract available of US$19,102 thousand at 30 June 2017 (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). GLG believe that it will continue to have the strong support from main bankers for its working capital and capital expenditure requirements.

The facilities used are inclusive of the contingent liabilities as disclosed in note 25.

Borrowing costs

All borrowing costs are recognised in profit or loss in the period in which they are incurred.

Terms & Conditions of Borrowing Balances:

---

• 1) Trust Receipts are denominated in USD, bear weighted average effective interest rate of 2.66% (2017: 2.37%) per annum for a tenure of 4 months and are secured by corporate guarantee from major shareholder, Ghim Li Group. Trust receipts are a discount form of supplier credit. In commercial terms, they are accounts payable.

• 2) Term Loan relates to purchase of property, plant and machinery of the Company’s subsidiaries and are secured by a negative pledge of the assets of the Company and corporate guarantee from the majority shareholder, Ghim Li Group. The loan repayment period varies from 8 to 10 years for property and 5 to 6 years for plant and machinery. The weighted average effective interest rate for such loans is 4.02% per annum (2017: 3.58% per annum).

• 3) Bills Payable are amounts received from banks for discounting sales invoices billed to customers. Such liabilities are secured by corporate guarantee from major shareholder, Ghim Li Group with weighted average effective interest rate of 2.66% (2017: 2.37%) per annum.

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

lance date were as follows:
	2018	2017
Bank loans	3.94% p.a.	2.68% p.a.
Term loan	4.02%	3.58%
Trust receipts / Bill payable	2.66%	2.37%
Finance lease liabilities	5.31% p.a.	4.70% p.a.

65

GLG Corp Ltd Notes to the financial report

21. Issued capital

Issued capital
74,100,000 (2017: 74,100,000) fully paid ordinary shares	Consolidated
	2018 US$’000 2017 US$’000
	10,322 10,322

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.

• Ordinary shares are classified as equity and entitle the holder to participate in dividends and the proceeds on the winding up of GLG in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and GLG does not have a limited amount of authorised capital.

Fully paid ordinary shares Balance at beginning of financial year Balance at end of financial year	Consolidated	Consolidated
	No. ’000 2018 US$’000	No. ’000 2017 US$’000
	74,100 10,322	74,100 10,322
	74,100 10,322	74,100 10,322

22. Retained earnings

Balance at beginning of financial year Net profit attributable to members of the parent entity Balance at end of financial year	Consolidated 2018 US$’000 2017 US$’000 47,985 43,792 2,395 4,193 50,380 47,985

66

GLG Corp Ltd Notes to the financial report

23. 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
	2018 Cents per share 2017 Cents per share
	3.23 5.66
	3.23 5.66

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	Consolidated
	2018 US$’000 2017 US$’000
	2,395 4,193
	2,395 4,193
	Consolidated
	2018 No.’000 2017 No.’000
	74,100 74,100

Diluted earnings per share

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

Net profit Earnings used in the calculation of diluted EPS Weighted average number of ordinary shares used in the calculation of basic EPS	Consolidated
	2018 US$’000 2017 US$’000
	2,395 4,193
	2,395 4,193
	Consolidated
	2018 No.’000 2017 No.’000
	74,100 74,100

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

67

GLG Corp Ltd Notes to the financial report

24. Commitments for expenditure

a) Capital expenditures

Capital expenditures contracted for at the balance sheet date but not recognised in the financial statements are as follows:

Property, plant and equipment Construction of factory Infrastructure usage fee	Consolidated
	2018 US$’000 2017 US$’000
	268 810 - - - -
	268 810

b) Operating lease commitment – where the consolidated entity is a lessee

GLG leases property under operating leases expiring from one to 44 years. Leases generally provide GLG with a right of renewal, at which time all terms are renegotiated.

The future minimum lease payables under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities, are as follows:

Not later than one year Longer than 1 year and not longer than 5 years Between one and five years	Consolidated
	2018 US$’000 2017 US$’000
	2,462 1,425 7,932 5,576 927 1,632
	11,321 8,633

25. Contingent liabilities

Continent liabilities
g Guarantees arising from Letters of Credit in force (i) Total	Consolidated
	2018 US$’000 2017 US$’000
	9,382 8,130
	9,382 8,130

• (i) A number of contingent liabilities has arisen as a result of GLG’s letter of credit issued by banks for purchase of goods.

68

GLG Corp Ltd Notes to the financial report

26. Leases

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

GLG as lessee

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

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

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

Finance lease liabilities

Leasing arrangement

GLG leases motor vehicles and office equipment under finance leases expiring from one to five years. All the leases involve lease payments of a fixed base amount. No contingent rentals were paid during the year (2017: nil)

No later than 1 year Later than 1 year and not later than 5 years More than 5 years Minimum future lease payments Less future finance charges Present value of minimum lease payments* Included in the financial statements as (note 20) Current borrowings Non-current borrowings	Minimum future lease payments Consolidated 2018 US$’000 2017 US$’000	Present value of minimum future lease payments Consolidated 2018 US$’000 2017 US$’000
	44 140 138 41 40 -	39 136 113 38 39 -
	222 181 (32) (7)	190 174 - -
	190 174	190 174
		39 136 151 38
		190 174

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

69

GLG Corp Ltd Notes to the financial report

27. Subsidiaries

Name of subsidiary	Country of incorporation	Ownership interest	Ownership interest
		2018 %	2017 %
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
AES (USA) Inc (iii)	USA	100	100
G&G Fashion (Vietnam) Co., Ltd.	Vietnam	100	100
Maxim Textile Technology Sdn Bhd	Malaysia	100	100
Maxim Textile Technology Pte Ltd	Singapore	100	100
Ghim Li Global International (GuangZhou) Ltd (i)	China	-	100
Ghim Li Fashion (M) Sdn Bhd	Malaysia	100	100
GG Fashion(Cambodia)Co.,Ltd(ii)	Cambodia	100	-

i) This company was inactive and liquidated on 10 August 2017. ii) This company was newly set up on 9 Aug 2017.

70

GLG Corp Ltd Notes to the financial report

28. Notes to the cash flow statement

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

Bank overdrafts are shown within borrowings in current liabilities in the Statement of financial position.

(a) Reconciliation of cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial year as shown in the cash flow statement is reconciled to the related items in the Statement of financial position as follows:

Cash and cash equivalents (b) Financing facilities Secured bank loan facilities with various maturity dates and which may be extended by mutual agreement: • amount used • amount unused	Consolidated
	2018 US$’000 2017 US$’000
	8,183 6,881
	8,183 6,881
	93,883 72,658 75,162 103,299
	169,045 175,957

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

Profit for the year Depreciation and amortisation of non-current assets Amortisation of intangible assets Bad debts write-off Fair value adjustment on investment property (Note 17) Gain on sales of non-current assets Loss on written off non-current assets 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
	2018 US$’000 2017 US$’000
	2,395 4,193 2,998 2,232 20 1 - 296 (378) 252 (33) - 73 4 (6,965) (539) (6,302) (4,695) 455 (2,071) 13,964 2,366 97 (460) 485 (201)
	6,809 1,378

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GLG Corp Ltd Notes to the financial report

28. Notes to the cash flow statement (cont’d)

(d) Changes in liabilities arising from financing activities

Proceeds from borrowings Amounts advanced to other parties Repayment related entity borrowings Total	1 July 2017 Cashflows Transfer of PPE 30 June 2018 64,702 15,574 - 80,276 (41,302) (14,215) (404) (55,921) 14,433 (2,296) - 12,137
	37,833 (937) (404) 36,492

29. Reserves

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(a) Revaluation reserves Beginning of financial year Fair value adjustment from property, plant and equipment to investment properties Revaluation gain/ (deficit) arising from property, plant and equipment End of financial year	2018 US$’000 2017 US$’000 3,599 3,980 52 - 834 (381)
	4,485 3,599

The revaluation reserve represents the decrease in the fair value of the freehold and leasehold land and buildings, net of tax.

(b) Merger reserves

The merger reserve of US$14,812 thousand is a result of the common control acquisition.

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GLG Corp Ltd Notes to the financial report

30. Financial instruments

(a) Capital risk management

GLG manages its capital to ensure that entities in GLG will be able to continue as a going concern while maximizing the return to stakeholders through the optimisation of the debt and equity balance. GLG’s overall strategy remains unchanged from 2017.

The capital structure of GLG consists of debt, which includes the borrowings disclosed in note 20 and equity attributable to equity holders of the parent, comprising issued capital and retained earnings as disclosed in notes 21 and 22 respectively.

Operating cash flows are used to maintain and expand GLG’s assets, as well as to make the routine outflows of tax and repayment of maturing debt. GLG’s policy is to borrow centrally, using a variety of capital market issues and borrowing facilities, to meet anticipated funding requirements.

Gearing ratio

An integral function of GLG’s Board is risk management. The Board reviews the capital structure on a semi-annual basis.

The gearing ratio at year end was as follows:

Debt (i) Cash and cash equivalents Net Debt Equity (ii) Net debt to equity ratio	Consolidated
	2018 US$’000 2017 US$’000
	80,276 64,702 (8,183) (6,881)
	72,093 57,821 50,375 47,094 143% 123%

(i) Debt is defined as long-term and short-term borrowings, as detailed in note 20.

(ii) Equity includes all capital, retained earnings and reserves

(b) Categories of financial instruments

Categories of financial instruments
Financial assets Loans and receivables Cash and cash equivalents Financial liabilities Amortised cost	Consolidated
	2018 US$’000 2017 US$’000
	96,670 75,749 8,183 6,881 117,525 90,282

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GLG Corp Ltd Notes to the financial report

30. Financial instruments (cont’d)

(c) Financial risk management objectives

GLG has not executed any derivatives in the current year, hence the policy listed below are for background information purpose only. If and when such derivatives are used in the future, the objectives is to use them in accordance with a board approved policy. The policy requires GLG co-ordinates access to domestic and international financial markets, and manages the financial risks relating to the operations of the consolidated entity.

GLG does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The use of financial derivatives is governed by the consolidated entity’s policies approved by the board of directors, which provide written principles on the use of financial derivatives.

GLG’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. GLG minimises its financial risk of changes in foreign currency exchange rate through the natural hedge of matching its revenues and purchases in US dollars and matching of its assets and liabilities in US dollars.

(d) Foreign currency risk management

GLG undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise

The carrying amount of GLG’s foreign currency denominated monetary assets and monetary liabilities at the reporting date is as follows:

Singapore dollars Hong Kong dollars Vietnamese Dong Malaysia Ringgit Australia Dollar	Liabilities 2018 US$’000 2017 US$’000 181 645 - - 105 703 993 3,221 20 77 1,299 4,646	Assets
		2018 US$’000 2017 US$’000
		4 2,091 - 10 11 119 598 1,168 16 154
		629 3,542

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GLG Corp Ltd Notes to the financial report

30. Financial Instruments (cont’d)

(e) Foreign currency sensitivity analysis

GLG is mainly exposed to movements in the value of Singapore dollars and Malaysia ringgits compared to the US dollar.

The following table details GLG’s sensitivity to a 10% increase and decrease in the United States dollar against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within GLG where the denomination of the loan is in a currency other than the currency of the lender or the borrower. A positive number indicates an increase in profit or loss where the United States dollars strengthens against the respective currency. For a weakening of the United States dollars against the respective currency there would be an equal and opposite impact on the profit, and the balances below would be negative.

Malaysia Ringgit Impact Consolidated 2018 2017 US$’000 US$’000 (396) (411)	Vietnamese Dong Impact Consolidated 2018 2017 US$’000 US$’000 (95) (115)	Other Foreign Currency Impact
		Consolidated
		2018 2017 US$’000 US$’000
		1 17

(f) Interest rate risk management

GLG is exposed to interest rate risk as entities in GLG borrow funds at both fixed and floating interest rates. The risk is managed by GLG by maintaining an appropriate mix between fixed and floating rate borrowings. As no hedging activities undertaken in the current year and if such activities are to be considered in the future, they will be evaluated to align with interest rate views and define risk appetite; ensuring optimal hedging strategies are applied, by either positioning the Statement of financial position or protecting interest expense through different interest rate cycles.

GLG’s exposure to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.

Interest rate sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the possible change in interest rates.

At reporting date, if interest rates had been 50 basis points higher or lower and all other variables were held constant, GLG’s:

Net profit would increase by US$106thousand and decrease by US$96 thousand (2017: increase by US$77 thousand and decrease by US$70 thousand). This is mainly attributable to GLG’s exposure to interest rates on its variable rate borrowings

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GLG Corp Ltd Notes to the financial report

30. Financial instruments (cont’d)

(g) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to GLG. The Company deals with creditworthy counterparties by reviewing the exposure and credit-ratings of its counterparties to mitigate the risk of financial loss from defaults. Credit exposure is continuously monitored by the payment behaviors of counterparties in relation to the financial strength.

Trade accounts receivable consist of a number of retail customers located in the United States of America. Ongoing credit evaluation is performed on the financial condition of accounts and, where appropriate, trading within the credit limits or discounting of receivables on non-recourse basis with credit acceptance or insurance in place.

The consolidated entity does not have any significant credit risk exposure to any single counterparty or any GLG of counterparties having similar characteristics except to the GLIT receivable as disclosed in Note 11. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. There were no derivatives in the current year.

The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the consolidated entity’s maximum exposure to credit risk without taking account of the value of any collateral obtained.

The consolidated entity also faces risks of orders cancellation. This is related to fabric, accessories and manufacturing cost incurred on orders cancelled prior to shipment. The consolidated entity is now exploring credit insurance to cover this risk as well.

(h) Liquidity risk management

The consolidated entity manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Included in note 28(b) is a listing of additional undrawn facilities that GLG has at its disposal to further reduce liquidity risk.

As business competition dictates, GLG has by choice given extended payment terms to certain core customers with high-volume impact during the current year. Although such practice increases the liquidity risk and cash flow requirement, it is also considered to be an essential element of market penetration and customer retention. The resulting cash flow impact is evaluated with the support of undrawn banking facilities that GLG has arranged to support such business growth.

76

GLG Corp Ltd Notes to the financial report

30. Financial instruments (cont’d)

(h) Liquidity risk management (cont’d)

Liquidity and interest risk tables

The following table details that GLG’s remaining contractual maturity for its non-derivative financial liabilities and expected maturity for its non-derivative financial assets. The tables have been drawn up based on the undiscounted cash flows of financial assets and liabilities based on the earliest date on which GLG can be required to receive/pay. The table includes both interest and principal cash flows.

Consolidated

	Weighte d average effective interest rate	Within 1 year	2-5 year	5+ years	Total
2018 Financial Assets Non-interest bearing - 97,982 5,000 1,871 104,853 Financial Liabilities Non-interest bearing - 37.249 - - 37,249 Variable interest rate instruments 2.66 66,709 - - 66,709 Term loan 4.02 4,639 8,326 1,343 14,308 Bank loan 3.94 1,107 - - 1,107 Finance lease liability 5.31 45 138 39 222 2017 Financial Assets Non-interest bearing - 75,759 5,000 1,871 82,630 Financial Liabilities Non-interest bearing - 25,580 - - 25,580 Variable interest rate instruments 2.37 49,927 - - 49,927 Term loan 3.58 4,246 9,076 2,618 15,940 Bank loan 2.68 501 - - 501 Finance lease liability 4.70 139 42 - 181

The variable interest rates were as follows:

			2018	2017
Term loan			4.02% p.a.	3.58% p.a.
Bank loan			3.94%	2.68%
Trust receipts	/	Bill
payables			2.66%	2.37%
Finance lease liabilities			5.31% p.a.	4.70% p.a.

77

GLG Corp Ltd Notes to the financial report

30. Financial instruments (cont’d)

(i) Fair value of financial instruments

The Directors consider that the carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their fair values.

The fair values of financial assets and financial liabilities are determined as follows: the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices.

31. Key management personnel compensation

The aggregate compensation made to directors and other members of the key management personnel of the Company and GLG is set out below:

Short-term employee benefits Post-employment benefits		Consolidated
		2018 US$ 2017 US$ 1,239,561 1,203,196 34,858 36,730
		1,274,419 1,239,926

Short-term employee benefits

These amounts include fees and benefits paid to the non-executive Chair and non-executive directors as well as all salary, paid leave benefits, fringe benefits and cash bonuses awarded to executive directors and other KMP.

Post-employment benefits

These amounts are the current-year’s estimated costs of providing for GLG’s defined benefits scheme post-retirement, superannuation contributions made during the year and post-employment life insurance benefits.

The compensation of each member of the key management personnel of GLG is set out in the remuneration report:

(a) Key management personnel compensation policy

Details of key management personnel

The Directors of GLG Corp Ltd during the year were:

• Estina Ang Suan Hong as Executive Chairman and Chief Executive Officer

• Christopher Chong Meng Tak as Independent Director

• Shane Hartwig as Independent Director

• Felicia Gan Peiling as Director on 15 September 2015 and Chief Marketing Officer

Other key management personnel of GLG Corp Ltd during the year were:

• Shawn Fung as Chief Financial Officer and Head of IT & Human Resources

• Susan Yong as Executive Vice President – Operations

No director or senior management person appointed during the period received a payment as part of his or her consideration for agreeing to hold the position.

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GLG Corp Ltd Notes to the financial report

32. Related party transactions

(a) Equity interests in subsidiaries

Details of the percentage of ordinary shares held in subsidiaries are disclosed in note 27 to the financial statements

(b) Transactions with key management personnel

(i) Key management personnel remuneration

Details of key management personnel remuneration are disclosed in note 31 to the financial statements and the remuneration report.

(c) Transactions with other related parties

During the year, GLG entities entered into the following expenditure transactions with related parties that are not members of GLG:

Rental Loan Interest Utilities Financial Guarantee fee	Transaction with Ghim Li Group Pte Ltd (majority shareholder)
	2018 2017 US$’000 US$’000 1,329 1,201 - 5 46 - 54 107
	1,429 1,313

No amounts were provided for doubtful debts relating to debts due from related parties at reporting date.

Amounts receivable from and payable to these related parties are disclosed in note 19 to the financial statements. Loan balances were settled at the end of the year.

• (d) Majority shareholder

The majority shareholder of GLG Corp Ltd is Ghim Li Group Pte Ltd. Ghim Li Group Pte Ltd is incorporated in Singapore.

The majority shareholder Ghim Li Group Pte Ltd has entered into a letter of undertaking dated 27 June 2013 to guarantee the repayment of GLIT and other receivables up to a cap of US$25 million, however based on the share price at the year end this is valued at US$5,200 thousand.

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GLG Corp Ltd Notes to the financial report

33. Remuneration of auditors

Auditor of the parent entity Audit and review of the financial report Tax services Related Practice of the parent entity auditor Audit or review of the subsidiaries Tax services	Consolidated
	2018 US$ 2017 US$
	56,541 3,082 55,740 -
	59,623 55,740
	97,699 98,500 9,405 10,030
	107,104 108,530

The auditor of GLG Corp Ltd is BDO East Coast Partnership.

The related practices are BDO Singapore, BDO Vietnam and BDO HK. Cheng & Co was also used in both 2018 and 2017. (FY2018: Audit US$17,864 and Tax Service US$8,844. FY2017: Audit US$15,523 and Tax Service US$2,330).

34. Parent entity disclosures

Financial position

Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Equity Issued capital Accumulated Losses Total equity	2018 US$’000 2017 US$’000
	80 154 30,000 30,000
	30,080 30,154
	3,471 3,392 212 184
	3,683 3,576
	53,552 53,552 (27,155) (26,974)
	26,397 26,578

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GLG Corp Ltd Notes to the financial report

34. Parent entity disclosures (cont’d)

Financial performance

Loss for the year Other comprehensive income Total comprehensive income	2018 US$’000 2017 US$’000
	(181) (1,050) - - (181) (1,050)

Contingent liabilities

As at 30 June 2018, the parent entity had no contingent liabilities (2017: nil).

Significant accounting policies

The accounting policies of the parent entity are consistent with those of GLG, except for the following: ▪ Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. ▪ Investments in associates are accounted for at cost, less any impairment, in the parent entity.

Contractual commitments

The parent did not have any contractual commitments at the end of the financial year

The above information is presented for the legal parent entity.

35. 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 GLG the ability to offer more control and speed-to market solutions to GLG’s end customers. The acquired entity did not contribute to any profit from ordinary activities or revenue for GLG’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 GLG on 30 June 2017.

Transaction costs of US$18 thousand were recognised in respect to this acquisition and included in the consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2018.

As the acquisition was completed on 30 June 2017, GLG provisionally accounted for the acquisition in the balance sheet as of 30 June 2017.

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GLG Corp Ltd Notes to the financial report

35. Business combination (cont’d)

In accordance with AASB 3-Business Combinations, GLG reassessed the previously accounted for acquisition amounts on 30 June 2018 and have determined that the initially recorded amounts accurately represented the fair value of the assets and liabilities at their acquisition date.

Details of the acquisition are as follows:

Details of the acquisition are as follows:
	Fair value
	$’000
Consideration
- Offset against GLIT receivable in Note 11		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

Business Combinations Recognition and Measurement

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). The excess of consideration over the fair value of net assets acquired is represented by goodwill.

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 Additional Australia Securities Exchange Information

36. Subsequent events

On 28 June 2018, Ghim Li International (S) Pte Ltd, a fully-owned subsidiary of GLG Corp Ltd, has entered into an agreement with Ghim Li (Cambodia) Pte Ltd and its parent company, GLIT Holdings Pte Ltd to acquire some specific assets in the latter’s garment manufacturing factory in Cambodia. The assets to be acquired consist of machinery and equipment, some other fixed assets and intangible assets such as trade name and customer network, employee database and records.

Ghim Li International (S) Pte Ltd plans to establish a garment manufacturing factory in Cambodia with a new legal entity in Cambodia, which will then be assigned to own and manage these assets acquired from the sellers. The rationale of this acquisition is to allow Ghim Li International (S) Pte Ltd to set up its own garment manufacturing factory in Cambodia to supplement its current garment manufacturing investment in Vietnam and Malaysia.

The completion of this acquisition is subject to the fulfilment of certain conditions, namely (a) the securing of Board approvals for GLIS, GLIT Holdings and Ghim Li Cambodia respectively, (b) obtaining regulatory and statutory approvals in Singapore and Cambodia and (c) the establishment of the legal entity by GLIS in Cambodia. Management expects all of these conditions to be met after 30 June 2018, hence this acquisition transaction is mentioned here as a subsequent balance sheet event. The receivables owed by GLIT to GLG Corp will be reduced by the same amount of the purchase consideration for the specific assets upon completion of this transaction, by way of set-off.

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GLG Corp Ltd Additional Australia Securities Exchange Information

Additional Australian Securities Exchange information as at 28 August 2018

Holding distribution

Range	Securities	%	No. of holders	%
100,001 andOver	71,957,701	97.11	19	4.88
10,001 to 100,000	1,259,468	1.70	32	8.23
5,001 to 10,000	202,377	0.27	22	5.66
1,001 to5,000	678,800	0.91	307	78.92
1 to 1,000	3,654	0.00	9	2.31
Total	74,100,000	100.00	389	100.00
Unmarketable Parcels	580,954	0.78	296	76.09

Voting Rights

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.

Substantial shareholders

The names of the substantial shareholders listed in GLG Corp Ltd register as at 15 September 2017 were:

Ordinary shareholders	Fully paid ordinary shares	Fully paid ordinary shares
	Number	Percentage
Ghim Li Group Pte Ltd	50,116,000 67.63
	50,116,000 67.63

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GLG Corp Ltd Additional Australia Securities Exchange Information

Twenty largest holders of quoted equity securities

Top 20 holders – 28 August 2018

Rank	Name	Shares	%
1	Ghim LiGroupPte Ltd	50,116,000	67.63
2	Mr Yin Min Yong	3,504,751	4.73
3	HSBC CustodyNominees(Australia)Limited	3,310,419	4.47
4	Mr TiongAng	2,222,000	3.00
4	Ms Peiling Gan	2,222,000	3.00
5	Ms Bee Phong Gan	2,183,297	2.95
6	Mr Yoke Min Pang	2,000,000	2.70
7	Mr Ah Yian Au	1,322,957	1.79
8	BNP Paribas Noms PtyLtd	1,133,600	1.53
9	Ms MengHuiSurinaGan	1,000,000	1.35
10	GowingBros Limited	830,903	1.12
11	MrGerald Francis Pauley &Mr MichaelJames Pauley	749,763	1.01
12	Dixson Trust PtyLimited	330,000	0.45
13	Markess Trustee Limited	250,000	0.34
14	Kam HingPiece Works Ltd	206,010	0.28
15	AngLeongAik	200,000	0.27
16	Chean Moy Seng	150,000	0.20
17	Eu Mun Leong	116,000	0.16
18	MrChristopherChong &Mrs HeatherChong	110,001	0.15
19	LimChai Har	100,000	0.13
19	SeowTengPeng	100,000	0.13
20	ParomayLtd	99,999	0.13
	Top 20	72,257,700	97.51
	Total	74,100,000	100.00

Company secretary

Mr Alistair Chong

Registered office L40 100 Miller St North Sydney NSW 2060 Australia

Principal administration office 21 Jalan Mesin Singapore 368819

Share registry

Link Market Services Limited Level 1, 333 Collins Street Melbourne VIC 3000 Australia

85