GLG CORP LTD — Annual Report 2019

Aug 27, 2019

GLG Corp Ltd

GLG Corp Ltd

ACN 116 632 958 PRELIMINARY FINAL REPORT

YEAR ENDED 30 June 2019

1. Highlight of Results

2. Appendix 4E Financial Statements for the Year ended 30 June 2019

1

GLG Corp Ltd

1. Results for announcement to market

Summary financial information for the consolidated entity for the 2018/19 financial year is set out below. Full financial details are attached to this announcement.

		Consolidated
Summary Information	30 –JUN-19 USD$’000	30 –JUN-18 USD$’000	Inc/(Dec) USD$’000	Inc/(Dec) %
Revenue from Ordinary Activities	175,709	180,606	(4,897)	(2.71)
Profit/(Loss) after Tax from Ordinary Activities	455	2,395	(1,940)	(81.00)
Net Profit/(Loss) after Tax Attributable to Members	455	2,395	(1,940)	(81.00)
Basic Earnings – US Cents Per Share	0.61	3.23	(2.62)	(81.11)
Diluted Earnings – US Cents Per Share	0.61	3.23	(2.62)	(81.11)
Net Tangible Assets – US Cents Per Share	62.73	65.42	(2.69)	(4.11)

Dividends (Distributions)	As per security – US Cents	Franked amount per security-US cents
Dividends Paid during Year	Nil	Nil
Proposed Final Dividend	Nil	Nil
Proposed payment date for final dividend	N/A	N/A

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GLG Corp Ltd

Summary commentary on results

Directors Comments:

GLG Corp Ltd (“GLG” or the “Company”) accounts are in the process of being audited by BDO East Coast Partnership.

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

Comparison of Consolidated Statement of Profit or Loss and Comprehensive Income for the financial year ended 30 June 2019 with that of 30 June 2018.

GLG’s sales slightly decreased by US$4,897 thousand, or 2.7% from US$180,606 thousand in the previous year to US$175,709 thousand in this financial year. The decline in sales was mainly attributed to continued weakness in our end-customers’ retail apparel market.

However gross margin slightly improved to 15.6% compared to 14% in the previous year due to better garment product mix.

Selling and distribution costs increased by 33% to US$8,315 thousand compared to US$6,252 thousand in the previous year, mainly due to the incurrence of airfreight cost and raw materials deliveries cost by garment factory in Cambodia and Maxim fabric mill to meet the tight delivery dates required from customers.

Administrative expenses increased by 19.4% to US$13,867 thousand compared to US$11,614 thousand in the previous year. This is attributable to an increase in admin headcount in HQ coupled with an increase in costs from consolidation of garment factory in Cambodia.

Finance costs increased by 53% from US$2,077 thousand to US$3,178 thousand in the current year compared to previous year, due to the increase in purchase of raw materials and new machineries investment in Cambodia.

Other expenses decreased by 36.7% from US$2,649 thousand to US$1,675 thousand due to reduction in legal fees and cost avoidance in commitment fees payable to outsourced manufacturers in previous year.

Net profit after tax for GLG was US$455 thousand, which represents a decrease of US$1,940 thousand or 81% compared to the financial year ended 30 June 2018 of US$2,395 thousand. Overall, the decrease mainly due to production losses incurred in Vietnam and Cambodia garment factories.

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GLG Corp Ltd

Summary commentary on results (cont’d)

Comparison of the Consolidated Statement of Financial Position as at 30 June 2019 with that of 30 June 2018.

Trade and other receivables decreased by 2.8% from US$89,455 thousand as at 30 June 2018 to US$86,917 thousand as at 30 June 2019. The decrease was primarily due to prompt settlement of payment from customers.

Property, plant and equipment reduced marginally by 8.1% to US$36,896 thousand as at 30 June 2019 compared to US$40,138 thousand as at 30 June 2018, due to account reclassification of the non-current assets of Vietnam subsidiary to “Assets Held For Sale” in compliance with AASB 5.

Intangible assets increased by 151.8% to US$4,776 thousand as at 30 June 2019 compared to US$1,897 thousand as at 30 June 2018, due to acquisition of specific assts (trade name, customer network and employee database) from outsourced manufacturing supplier, Ghim Li Cambodia Pte Ltd.

Trade and other payables increased by 32.4% to US$49,335 thousand as at 30 June 2019 compared to US$37,249 thousand as at 30 June 2018, resulting from increase in short term financing extended by company director and majority shareholder, Ghim Li Group Pte Ltd.

Current and non-current borrowings decreased by 12.1% from US$80,276 thousand as at 30 June 2018 to US$70,580 thousand as at 30 June 2019, as a result of decrease in export invoice factoring from financial institutions and repayment of bank loans which correspondingly reduced the cash balance of 37.5% from US$8,183 thousand as at 30 June 2018 to US$5,113 thousand as at 30 June 2019.

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GLG Corp Ltd

Summary commentary on results (cont’d)

Comparison of the Consolidated Statement of Cash Flows for the financial year ended 30 June 2019 with that of 30 June 2018.

GLG’s cash from operating activities increased by 97.1% to US$13,418 thousand as at 30 June 2019 compared to US$6,809 thousand as at 30 June 2018. This increase resulted mainly due to prompt settlement from customers, supported by close monitoring of trade receivables.

Net cash used in investing was increased by US$6,237 thousand or 136% to US$10,807 thousand as at 30 June 2019 compared to US$4,570 thousand as at 30 June 2018. This was mainly attributable to additions of new plant & machinery, renovation and intangible assets in Cambodia factory to meet the needs of higher production levels.

Net cash used in financing was increased to US$5,940 thousand as at 30 June 2019 compared to US$937 thousand as at 30 June 2018. The increase stemmed from financing the working capital incurred in the factories for fabric and garment production.

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

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GLG Corp Ltd
Consolidated Statement of profit or loss

Consolidated Statement of profit or loss and other comprehensive income for the financial year ended 30 June 2019

Revenue Cost of sales Gross profit Other income Distribution expenses Administration expenses Finance costs Other expenses Profit before income tax expense Income tax expense Profit for the year Other comprehensive income: Items that will not be reclassified subsequently to profit or loss: Revaluation surplus, on land and building, net of tax Fair value adjustment of reclassification of PPE to investment property Other comprehensive income, net of tax Total comprehensive income for the year Earnings per share: Basic (cents per share) Diluted (cents per share)	Note 4 4 11 11		Consolidated
			2019 US$’000 2018 US$’000
			175,709 180,606 (148,267) (155,326)
			27,442 25,280 1,031 1,118 (8,315) (6,252) (13,867) (11,614) (3,178) (2,077) (1,675) (2,649)
			1,438 3,806 (983) (1,411)
			455 2,395 431 834 - 52
			431 886
			886 3,281
			0.61 3.23 0.61 3.23

Notes to the financial statements are included on pages 10 to 30

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GLG Corp Ltd
Consolidated Statement of financial position

Consolidated Statement of financial position as at 30 June 2019

Current assets Cash and cash equivalents Trade and other receivables Inventory Other assets Other financial assets Assets held for sale Total current assets Non-current assets Other assets Other financial assets Investments accounted for using the equity method Intangible assets Property, plant and equipment Total non-current assets Total assets Current liabilities Trade and other payables Borrowings Current tax liabilities Total current liabilities Non-current liabilities Borrowings Deferred tax liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital Revaluation reserves Merger reserves Retained earnings Total equity	Note 5 18 6 7 19 6 7 15 17 13 8 9 9 10	Consolidated
		2019 US$’000 2018 US$’000
		5,304 8,183 86,917 89,455 20,755 19,480 843 1,330 344 344 10,704 -
		124,867 **118,792 **
		- 2,555 6,871 6,871 - - 4,776 1,897 36,896 40,138
		48,543 **51,461 **
		173,410 170,253
		49,335 37,249 63,972 71,722 427 791
		113,734 **109,762 **
		6,608 8,554 1,807 1,562
		8,415 10,116
		122,149 119,878
		51,261 50,375
		10,322 10,322 4,916 4,485 (14,812) (14,812) 50,835 50,380
		51,261 50,375

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Notes to the financial statements are included on pages 10 to 30

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GLG Corp Ltd
Consolidated Statement of changes in equity

Consolidated Statement of changes in equity for the financial year ended 30 June 2019

Consolidated Balance at 1 July 2017 Profit after income tax expense Other comprehensive income for the year, net of tax Total comprehensive income Balance at 30 June 2018 Balance at 1 July 2018 Profit after income tax expense Other comprehensive income for the year, net of tax Total comprehensive income Balance at 30 June 2019	Issued Capital Asset Revaluation Reserve Merger Reserve US$’000 US$’000 US$’000	Retained Earnings Total US$’000 US$’000
	10,322 3,599 (14,812) - - - - 886 -	47,985 47,094 2,395 2,395 - 886
	- 886 -	2,395 **3,281 **
	10,322 4,485 (14,812)	50,380 50,375
	10,322 4,485 (14,812) - - - - 431 -	50,380 50,375 455 455 - 431
	- 431 -	455 886
	10,322 4,916 (14,812)	50,835 51,261

Notes to the financial statements are included on pages 10 to 30

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GLG Corp Ltd
Consolidated Statement of cash flows

Consolidated Statement of cash flows for the financial year ended

30 June 2019

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest income Interest and other costs of finance paid Income tax paid Net cash provided by operating activities 16 Cash flows from investing activities Proceeds from sales of property, plant and equipment Payment for property, plant and equipment Payment for intangible assets Net cash used in investing activities Cash flows from financing activities Net (payment)/ proceeds from borrowings Advance from/ (Payment to) Ghim Li Group Advance from director Payment to outsourced manufacturing suppliers Net cash used in financing activities Net (decrease)/ increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year	Consolidated
	2019 US$’000 2018 US$’000
	186,103 175,001 (168,848) (165,662) 7 10 (2,743) (1,711) (1,101) (829)
	13,418 6,809
	- 29 (7,880) (4,535) (2,927) (64)
	(10,807) (4,570)
	(9,696) 15,574 7,381 (2,296) 3,658 - (6,833) (14,215)
	(5,490) (937)
	(2,879) 1,302 8,183 6,881
	5,304 8,183

Notes to the financial statements are included on pages 10 to 30

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2019

Notes to the Appendix 4E

1. General information

GLG Corp Ltd (the Company) is a public company listed on the Australian Securities Exchange (ASX: ‘GLE’), incorporated in Australia and operating in Asia.

GLG Corp Ltd’s registered office and principal place of business are as follows:

Registered office Principal place of business Level 40 North Point 21 Jalan Mesin, 100 Miller St Singapore 368819 North Sydney NSW 2060 Australia

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

2. Significant accounting policies

Statement of compliance

The preliminary financial report has been prepared in accordance with Australian Accounting Standards and Interpretations as issued by the Australian Standards Board for the measurement and recognition criteria. The preliminary financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2018 and any public pronouncements made by the consolidated entity during the year in accordance with the continuous disclosure requirements of the Corporations Act 2001. Unless otherwise detailed in this note, accounting policies have been consistency applied by the entities in the group, and are consistent with those applied in the 30 June 2018 annual report.

Basis of preparation

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

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

The accounting policies and methods of computation adopted in the preparation of the preliminary financial report are consistent with those adopted and disclosed in the company’s 2018 annual financial report for the financial year ended 30 June 2018, except for the impact of the new and revised Standards and Interpretations described below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

Comparative figures

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

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GLG Corp Ltd

Notesto the Appendix 4E for the Year Ended 30 June 2019

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 13 for further details

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2019

2. Significant accounting policies (cont’d)

Common Control Business Combination

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

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

Business Combinations

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

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

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

Goodwill

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

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

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GLG Corp Ltd

Notesto the Appendix 4E for the Year Ended 30 June 2019

2. Significant accounting policies (cont’d)

Non-current assets or disposal groups classified as held for sale

Non-current assets and assets of disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continued use. They are measured at the lower of their carrying amount and fair value less costs of disposal. For non-current assets or assets of disposal groups to be classified as held for sale, they must be available for immediate sale in their present condition and their sale must be highly probable.

An impairment loss is recognised for any initial or subsequent write down of the non-current assets and assets of disposal groups to fair value less costs of disposal. A gain is recognised for any subsequent increases in fair value less costs of disposal of a non-current assets and assets of disposal groups, but not in excess of any cumulative impairment loss previously recognised.

Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of assets held for sale continue to be recognised.

Non-current assets classified as held for sale and the assets of disposal groups classified as held for sale are presented separately on the face of the statement of financial position, in current assets. The liabilities of disposal groups classified as held for sale are presented separately on the face of the statement of financial position, in current liabilities.

New accounting standards and interpretations

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current year.

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

3. Segment information

Identification of reportable operating segments

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

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

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

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

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

Intersegment transactions

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

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2019

3. Segment information (cont'd)

Consolidated – 30 June 2019 Revenue Sales to external customers Intersegment sales Total revenue Interest revenue Depreciation EBIT Finance costs Profit before income tax expense Income tax expense Profit after income tax expenses	Fabric Manufacturing Garment US$'000 US$'000 727 174,982 62,553 -	Intersegment Eliminations US$’000 - (62,553)	Total US$’000 175,709 -
	63,280 174,982	(62,553)	175,709
	6 292	(291)	7
	2,116 1,192	-	3,308
	3,948 668	-	4,616
			(3,178)
			1,438 (983)
			455

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

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2019

3. Segment information (cont'd)

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

Cambodia India Madagascar Malaysia Myanmar	Fabric
	2019 US$’000 2018 US$’000
	336 447 216 89 - 25 175 241 - 65
	727 867

Canada China Europe Japan Singapore USA Cambodia Vietnam Others	Garments 2019 US$’000 2018 US$’000 32,993 34,151 77 179 824 11,837 333 134 177 1 140,239 133,395 195 - 39 42 105 -
	174,982 179,739

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2019

4. Revenue

Revenue from the sale of goods Other income Sample income Profit on sale of assets Interest income Insurance compensation Payable written back Fair value adjustment on investment property Other Total other income	Consolidated
	2019 US$’000 2018 US$’000
	175,709 180,606
	68 46 - 32 7 10 500 - 334 289 - 378 122 363
	1,031 1,118
	176,740 181,724

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5. 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	Consolidated
	2019 US$’000 2018 US$’000
	19,457 29,059 25,949 25,858 36,926 30,102 1,325 1,325 - -
	83,657 86,344 1,941 2,081 - (480)
	1,941 1,601 (121) (39) - -
	85,477 87,906
	1,440 1,549
	86,917 89,455

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.

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2019

5. Trade and other receivables(cont’d)

Before accepting any new customers, the Group uses an external scoring system to assess the potential customer’s credit quality and defines credit limits by customers. Limits and scoring attributed to customers are reviewed twice a year. 95% of the trade receivables that are neither past due nor impaired have the best credit scoring attributable under the external credit scoring system used by the Group.

Included in the Group’s trade receivable balance are debtors with a carrying amount of US$1,101 thousand (2018: $1,235 thousand) which are past due at the reporting date. There has been no significant change in credit quality and all amounts are considered recoverable. The Group does not hold any collateral over these balances.

[Ageing of Trade Receivables (trade customers) ][-][ 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 / (credit) to profit or loss Allowance written off during the year Balance at the end of the year* Movement in the allowance for non-trade doubtful debts Balance at the beginning of the year Charge / (credit) to profit or loss Allowance written off during the year Balance at the end of the year	Consolidated
		2019 US$’000 2018 US$’000
		930 515 143 552 22 1 6 167
		1,101 1,235
		- 613 - - - (613)
		- -
		480 480 - - (480) -
		- 480

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In determining the recoverability of trade receivables, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. Credit risk is concentrated with a few significant counterparties.

17

GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2019

6. Other assets

Current Prepayments Non-current Prepayment	Consolidated
	2019 US$’000 2018 US$’000
	843 1,330
	- 2,555

7. Other financial assets

Other financial assets
Current Trade receivables – External party (i) Provision for Bad Debts Total Current other financial assets Non-current Security deposit Office rental deposit Disclosed in the financial statements as : Total Non-current other financial assets	Consolidated
	2019 US$’000 2018 US$’000
	368 368 (24) (24)
	344 344
	5,000 5,000 1,871 1,871
	6,871 6,871
	6,871 6,871

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(i) The current trade receivable owed by third party has a provision for non-recovery in FY2019 of US$24 thousand (FY2018: US$24 thousand).

8. Trade and other payables

Trade and other payables
Trade payables (i) Other payables Ghim Li Group Due to director Accruals – employee compensation Accruals – deferred rent Accruals – audit fee Accruals – TR interest Accruals – others	Consolidated
	2019 US$’000 2018 US$’000
	15,570 16,028 5,494 4,215 20,843 13,462 3,658 - 2,024 1,649 417 536 117 105 257 216 955 1,038
	49,335 37,249

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

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2019

9. Borrowings

Secured– at amortised cost Current Trust receipts (Gross) (i) Bills payable (Gross) Finance lease liabilities Bank loan Term loan Total Non-current Finance lease liabilities Term loan Disclosed in the financial statements as: Current borrowings Non-current borrowings	Consolidated
	2019 US$’000 2018 US$’000
	49,652 50,802 6,575 38 15,369 39 4,100 1,100 3,607 4,412
	63,972 71,722 117 151 6,491 8,403
	6,608 8,554
	63,972 71,722 6,608 8,554
	70,580 80,276

Summary of borrowing arrangements:

(i) Secured by corporate guarantee from Ghim Li Group Pte Ltd and negative pledge over all assets of Ghim Li Global Pte Ltd.

Banking relationship: the Group uses bank facilities to support the working capital requirement of its operations. Presently, the bank facilities provided to the Group are uncommitted short term trade financing facilities which are renewable annually by the banks and long term financing facilities.

At 30 June 2019 GLG Corp Ltd had short term financing facilities available of US$133,294 thousand, long-term financing facilities available of US$18,967 thousand and foreign exchange available of US$12,556 thousand. (Short term: US$59,046 thousand was used and US$74,248 thousand was unused. Long-term: US$10,098 thousand was used and US$8,869 thousand was unused. Foreign exchange of US$12,556 thousand was unused). Compared with US$127,652 thousand of short term financing facilities, long-term financing facilities of US$23,538 thousand and forward contract available of US$17,855 thousand at 30 June 2018 (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). GLG believe that it will continue to have the strong support from main bankers for its working capital and capital expenditure requirements.

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

the balance sheet date were as follows:
	2019	2018
Bank loans	4.24% p.a.	3.94% p.a.
Term loan	4.83%	4.02%
Trust receipts / Bill payable	3.84%	2.66%
Finance lease liabilities	5.55% p.a.	5.31% p.a.

19

GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2019

10. Issued capital

Issued capital
74,100,000 (2018: 74,100,000) fully paid ordinary shares	Consolidated
	2019 US$’000 2018 US$’000
	10,322 10,322

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Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998. Therefore, the Company does not have a limited amount of authorised capital and issued shares do not have a par value.

Vote Right

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

Ordinary shares:

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

Fully paid ordinary shares Balance at beginning of financial year Balance at end of financial year	Consolidated No. ’000 2019 US$’000 74,100 10,322 74,100 10,322	Consolidated No. ’000 2018 US$’000 74,100 10,322 74,100 10,322

11. Earnings per share

Earnings per share
Basic earnings per share: Total basic earnings per share Diluted earnings per share: Total diluted earnings per share	Consolidated
	2019 Cents per share 2018 Cents per share
	0.61 3.23
	0.61 3.23

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	2019 US$’000 2018 US$’000
	455 2,395
	455 2,395
	2019 No.’000 2018 No.’000
	74,100 74,100

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2019

11. Earnings per share (con’t)

Diluted earnings per share

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

Net profit Earnings used in the calculation of diluted EPS Weighted average number of ordinary shares used in the calculation of diluted EPS	Consolidated
	2019 US$’000 2018 US$’000
	455 2,395
	455 2,395
	Consolidated
	2019 No.’000 2018 No.’000
	74,100 74,100

12. Contingent liabilities

Contingent liabilities
Contingent liabilities Guarantees arising from Letters of credit in force (i) Total	Consolidated
	2019 US$’000 2018 US$’000
	4,313 9,382
	4,313 9,382

==> picture [73 x 100] intentionally omitted <==

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

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GLG Corp Ltd
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13. 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 9.

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 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 2019 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
Leasehold Property	Sales comparison	Price per square foot	RM27-56 per square foot for land RM30-100 per square foot for building RM = Malaysian Ringgit currency	RM28 per square foot for land RM75 per square foot for building	The higher the price per square foot the higher the fair value

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

• Freehold and leasehold land and buildings - Level 3 (cont’d)

Description	Valuation Approach	Unobservable inputs	Range of inputs	Weighted average	Relationship of unobservable inputs to fair value
Freehold property	Sales comparison	Price per square foot	RM37 to 51 per square foot for land RM40 to 100 per square foot for building RM = Malaysian Ringgit currency	RM50 per square foot for land RM73 per square foot for building	The higher the price per square foot, the higher the fair value

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2019

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

					Consolidated
		At Valuation				At Cost
Cost	Freehold land and buildings	Leasehold land and buildings	Sub-total	Construction in Progress	Plant and machinery	Renovation	Other assets	Motor vehicles	Total
	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000
Balance as at 1 July 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
Additions	-	-	-	-	6,754	652	466	14	7,886
Reclassification	4,192	(4,424)	(232)	-	232	128	(128)	-	-
Disposals	-	-	-	-	(38)	(89)	(26)	-	(153)
Transfer	-	-	-	(130)	130	-	-	-	-
Classified as held for sale	-	-	-	(66)	(2,235)	(6,592)	(136)	-	(9,029)
Revaluation surplus	3	129	132	-	-	-	-	-	132
Balance as at 30 June 2019	5,326	9,684	15,010	-	25,224	4,075	5,739	672	50,720

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2019

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

					Consolidated	Consolidated
			At Valuation				At 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 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
Depreciation expense		-	152	152	-	2,187	562	307	74	3,282
Depreciation on disposals		-	-	-	-	(17)	(30)	(26)	-	(73)
Classified as held for sale		-	-	-	-	(398)	(369)	(66)	-	(833)
Reclassification		-	(70)	(70)	-	70	-	-	-	-
Revaluation surplus		-	(298)	(298)	-	-	-	-	-	(298)
Balance as at 30 June 2019		-	-	-	-	7,758	2,910	2,716	440	13,824
Net book value
As at 30 June 2018		1,131	13,763	14,894	196	14,465	7,229	3,062	292	40,138
As at 30 June 2019		5,326	9,684	15,010	-	17,466	1,165	3,023	232	36,896

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

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2019

14. Subsidiaries

Name of subsidiary	Country of incorporation	Ownership interest	Ownership interest
		2019 %	2018 %
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	Singapore	100	100
AES (USA) Inc	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 Ghim Li Fashion (M) Sdn Bhd	Singapore Malaysia	100 100	100 100
GGFashion(Cambodia) Co.,Ltd	Cambodia	100	100

15. Investments accounted for using the equity method

Name of entity	Country of incorporation	Principal activity	Ownership interest	Ownership interest
			2019 %	2018 %
Jointly controlled entities JES Apparel LLC USA Importer of knitwear products			51 51

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

Financial position: Current assets Current liabilities Net assets Group’s share of jointly controlled entity’s net assets Financial performance: Income Expenses Total loss for investment in joint venture Group’s share of jointly controlled entity’s losses	Consolidated
	2019 US$’000 2018 US$’000
	393 393 (1,879) (1,879) (1,486) (1,486) (757) (757) - - - - - - - -

The entity ceased business in 2012 and the consolidated entity’s share of losses for 2019 and 2018 was nil. The entity’s cumulative unrecognised share of retained losses is US$757 thousand (2018: US$757 thousand).

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16. Notes to the cash flow statement

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

Profit for the year Depreciation and amortisation of non-current assets Amortisation of intangible assets Written off on non-current assets 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
	2019 US$’000 2018 US$’000
	455 2,395 3,282 2,998 26 20 62 - - (378) - (33) 18 73 (1,275) (6,965) 9,371 (6,302) 551 455 1,047 13,964 (364) 97 245 485
	13,418 6,809

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GLG Corp Ltd
Notesto the Appendix 4E for the Year Ended 30 June 2019

17. Intangible Assets

		Consolidated	Consolidated
Cost	Software	Goodwill	Trademark & customers network	Others	Total
	US$’000	US$’000	US$’000	US$’000	US$’000
Balance as at 1 July 2017	13	1,841	-	-	1,854
Additions	64	-	-	-	64
Balance as at 30 June 2018	77	1,841	-	-	1,918
Additions	2	-	2,518	407	2,927
Classified as held for sale	(61)	-	-	-	(61)
Balance as at 30 June 2019	18	1,841	2,518	407	4,784
Accumulated Depreciation
Balance as at 1 July 2017	1	-	-	-	1
Additions	20	-	-	-	20
Balance as at 30 June 2018	21	-	-	-	21
Additions	26	-	-	-	26
Classified as held for sale	(39)	-	-	-	(39)
Balance as at 30 June 2019	8	-	-	-	8
Net book value
As at 30 June 2018	56	1,841	-	-	1,897
As at 30 June 2019	10	1,841	2,518	407	4,776

Software

Computer software is stated as intangible assets in the statement of financial position and amortised on the straigh ~~t -~~ 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 as the goodwill originated from this acquisition in FY17. Goodwill is not amortized but is subject to impairment testing on an annual basis or whenever there is an indication of impairment.

Trademark and customers network

Trademark and customers network are stated as intangible assets in the statement of financial position and amortised on the straight-line method over 10 years.

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18. 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
	2019 US$’000 2018 US$’000
	9,516 5,801 5,463 7,743 1,450 1,743 10 5 1,218 667 3,098 3,521
	20,755 19,480

19. Assets and liabilities classified as held for sale

In July 2019, GLG Corp Ltd (“Group”) announced the signing of a definitive agreement under which its Singapore subsidiary, Ghim Li Global Pte Ltd will sell its Vietnam subsidiary, G&G Fashion (Vietnam) Co. Ltd (“Vietnam”) to Dragon Crowd Garment Inc (“Buyer”). The Buyer will acquire all outstanding shares of Vietnam, excluding certain specified assets and liabilities of the entity, using a combination of US$1.32 million in cash and loan facilities, of short and long-term nature, to settle liabilities of Vietnam.

After the completion of the sale, Vietnam will remain as a supplier to the Group under an outsourcing agreement. There are planned customer orders for Vietnam up until October 2019. Despite this change in ownership, the management and factory operations team will remain the same and the Group will continue to partner with the Buyer and Vietnam through outsourcing agreement as part of our global network of factories.

The assets and liabilities related to Vietnam, were classified as a disposal group held for sale on the consolidated statement of financial position.

Assets and liabilities held for sale

The following major classes of assets and liabilities relating to these operations have been classified as held for sale in the consolidated statement of financial position on 30 June 2019:

	G&G Fashion (Vietnam)
	2019
	US$’000
Plant & Equipment	8,191
Intangible assets

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20. Subsequent events

There has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of the consolidated entity in future financial year.

30