GLG CORP LTD — Interim / Quarterly Report 2016

Feb 28, 2016

GLG Corp Ltd

ACN 116 632 958 Results for Announcement to the Market Appendix 4D – Half Year Report Given to ASX under Listing Rule 4, 2A

Current Reporting Period - Half Year Ended 31[st] December 2015 Previous Reporting Period - Half Year Ended 31[st] December 2014

1. Highlight of Results

1. Appendix 4D Financial Statements for the Half Year ended 31 December 2015

1. Results for announcement to market

Summary financial information for the company for the six months ended 31[st] December 2015. Full financial details are attached to this announcement.

		Consolidated
Summary Information	31 –DEC-15 USD$’000	31 –DEC-14 USD$’000	Inc/(Dec) USD$’000	Inc/(Dec) %
Revenue from Ordinary Activities	89,901	102,200	(12,299)	(12.0%)
Profit/(Loss) after Tax from Ordinary Activities	2,285	2,154	131	6.1%
Net Profit/(Loss) after Tax Attributable to Members	2,285	2,154	131	6.1%
Basic Earnings – US Cents Per Share	3.08	2.91	0.17	5.8%
Diluted Earnings – US Cents Per Share	3.08	2.91	0.17	5.8%
Net Tangible Assets – US Cents Per Share	78.13	73.70	4.43	6.0%

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

Summary commentary on results

Directors Comments:

Net profit after tax for GLG Corp Ltd “(GLG)” for the half year ended 31 December 2015 was US$2,285 thousand, an increase of US$131 thousand or 6.1% compared to the corresponding period for 2014 of US$2,154 thousand. The increase in net profit was mainly attributed to higher gross margin, which improved to 11.4% for half year ended 31 December 2015 as compared to 9.4% for corresponding period, derived from changes in product mix.

GLG’s sales decreased by US$12,299 thousand, or 12.0% to US$89,901 thousand compared to sales of US$102,200 thousand in the corresponding period. The decline in sales was mainly attributed to continued weakness observed from a major customer and GLG’s decision to decrease the orders with this particular customer which has continued to close a number of their stores in 2015 amid their own restructuring. The decline of orders from this customer accounted for a drop of US$16,863 thousand in sales. GLG managed to increase orders from some of the existing customers for making up some of the shortfall.

Selling and distribution expenses increased from US$422 thousand to US$1,234 thousand in 2015 due to higher freight costs incurred in order to achieve timely delivery to customers.

Administrative expenses decreased by US$564 thousand or 9.8% from US$5,739 thousand to US$5,175 thousand in 2015. This reduction in expenses was achieved through continued streamlining of processes and saving in manpower costs.

Finance costs increased from US$183 thousand to US$467 thousand in 2015 due to higher financing costs charged by one of the agents for a key customer.

The discussion that follows compares the Consolidated Statement of Cash flows for the six months to 31 December 2015 with that of 31 December 2014

GLG’s cash from operating activities decreased to US$5,060 thousand for the half year ended 31 December 2015 compared to US$12,660 thousand for the corresponding period ended 31 December 2014. The decrease in the cash flow from operating activities was due to the decrease in business volume and the decrease in revenue.

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

GLG Corp Ltd

ACN 116 632 958 Financial report for the half-year ended 31 December 2015

GLG Corp Limited

Financial report for the halfyear ended 31 December 2015

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		Page
Directors’ report		3
Auditor’s independence declaration		5
Independent review report		6
Directors’ declaration		8
Condensed consolidated statement of profit or loss and		9
other comprehensive income
Condensed consolidated statement of financial position		10
Condensed consolidated statement of changes	in equity	11
Condensed consolidated statement of cash flows		12
Notes to the condensed consolidated	financial	13
statements

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GLG Corp Limited Directors’ Report

Directors’ report

The Directors of GLG Corp Ltd (“GLG”) submit herewith the financial report of GLG Corp Ltd and its subsidiaries for the half-year ended 31 December 2015. In order to comply with the provisions of the Corporations Act 2001 , the Directors report as follows:

The names of the directors of the company during or since the end of the half-year are:

Estina Ang Suan Hong Executive Chairman and Chief Executive Officer Christopher Chong Meng Tak Independent Director Shane Hartwig Non Executive Director Felicia Gan Peiling Director (appointed 15 September 2015) Por Khay Ti Director (resigned 3 August 2015)

Review of operations

Net profit after tax for GLG Corp Ltd “(GLG)” for the half year ended 31 December 2015 was US$2,285 thousand, an increase of US$131 thousand or 6.1% compared to the corresponding period for 2014 of US$2,154 thousand. The increase in net profit was mainly attributed to higher gross margin, which improved to 11.4% for half year ended 31 December 2015 as compared to 9.4% for corresponding period, derived from changes in product mix.

GLG’s sales decreased by US$12,299 thousand, or 12.0% to US$89,901 thousand compared to sales of US$102,200 thousand in the corresponding period. The decline in sales was mainly attributed to continued weakness observed from a major customer and GLG’s decision to decrease the orders with this particular customer which has continued to close a number of their stores in 2015 amid their own restructuring. The decline of orders from this customer accounted for a drop of US$16,863 thousand in sales. GLG managed to increase orders from some of the existing customers for making up some of the shortfall.

Selling and distribution expenses increased from US$422 thousand to US$1,234 thousand in 2015 due to higher freight costs incurred in order to achieve timely delivery to customers.

Administrative expenses decreased by US$564 thousand or 9.8% from US$5,739 thousand to US$5,175 thousand in 2015. This reduction in expenses was achieved through continued streamlining of processes and saving in manpower costs.

Finance costs increased from US$183 thousand to US$467 thousand in 2015 due to higher financing costs charged by one of the agents for a key customer.

The discussion that follows compares the Consolidated Statement of Cash flows for the six months to 31 December 2015 with that of 31 December 2014

GLG’s cash from operating activities decreased to US$5,060 thousand for the half year ended 31 December 2015 compared to US$12,660 thousand for the corresponding period ended 31 December 2014. The decrease in the cash flow from operating activities was due to the decrease in business volume and the decrease in revenue.

We believe the cash flow 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 Limited Directors’ Report

Auditor’s independence declaration

The auditor’s independence declaration is included on page 5 of the half-year report.

Rounding off of amounts

The company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the directors’ report and the half-year financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

Signed in accordance with a resolution of directors made pursuant to s.306 (3) of the Companies Act 2001 .

On behalf of the Directors

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GLG Corp Limited Auditor’s Independence Declaration

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5

GLG Corp Limited Independent Review Report

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GLG Corp Limited Independent Review Report

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GLG Corp Limited 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; and

• (b) in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001 , including compliance with accounting standards and giving a true and fair view of the financial position and performance of the consolidated entity.

Signed in accordance with a resolution of the directors made pursuant to s.303(5) of the Corporations Act 2001 .

On behalf of the Directors

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GLG Corp Limited Condensed consolidated statement of profit or loss and other comphensive income

Condensed consolidated statement of profit or loss and other comprehensive income for the half-year ended 31 December 2015

Continuing Operations Revenue Cost of sales Gross profit Other income Selling and distribution expenses Administration expenses Finance costs Other expenses Profit before income tax expense Income tax expense Profit for the period Other comprehensive income Total comprehensive income for the period Earnings per share: From continuing operations: Basic (cents per share) Diluted (cents per share)	Consolidated
	Half-year ended
	31 Dec 2015 US$’000 31 Dec 2014 US$’000
	89,901 102,200 (79,639) (92,597)
	10,262 9,603 147 138 (1,234) (422) (5,175) (5,739) (467) (183) (911) (858)
	2,622 2,539 (337) (385)
	2,285 2,154
	- -
	2,285 2,154
	3.08 2.91 3.08 2.91

Notes to the financial statements are included on pages 13 to 16

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GLG Corp Limited Condensed consolidated statement of financial position

Condensed consolidated statement of financial position as at 31 December 2015

Note Current assets Cash and cash equivalents Trade and other receivables 3(a) Inventory Other assets Other financial assets Total current assets Non-current assets Other financial assets Property, plant and equipment Total non-current assets Total assets Current liabilities Trade and other payables Borrowings 3(b) Current tax liabilities Total current liabilities Non-current liabilities Borrowings 3(b) Deferred tax liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital Retained earnings Total equity	Consolidated
	31 Dec 2015 US$’000 30 Jun 2015 US$’000
	10,452 10,831 77,897 85,408 105 114 232 180 344 344
	89,030 96,877
	7,333 2,333 2,263 2,393
	9,596 4,726
	98,626 101,603
	2,377 2,913 37,126 41,813 934 949
	40,437 45,675
	40 64 257 257
	297 321
	40,734 45,996
	57,892 55,607
	10,322 10,322 47,570 45,285
	57,892 55,607

Notes to the financial statements are included on pages 13 to 16

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GLG Corp Limited Condensed consolidated statement of changes in equity

Condensed consolidated statement of changes in equity for the half-year ended 31 December 2015

Consolidated Balance at 1 July 2014 Profit for the period Balance at 31 December 2014 Balance at 1 July 2015 Profit for the period Balance at 31 December 2015	Issued Capital Retained Profits US$’000 US$’000	Total US$’000
	10,322 42,137 - 2,154	52,459 2,154
	10,322 44,291	54,613
	10,322 45,285 - 2,285	55,607 2,285
	10,322 47,570	57,892

Notes to the financial statements are included on pages 13 to 16

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GLG Corp Limited Condensed cosolidated statement of cash flows

Condensed consolidated statement of cash flows for the half-year ended 31 December 2015

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest and other costs of finance paid Income tax paid Net cash provided by operating activities Cash flows from investing activities Payment for property, plant and equipment Grant received from government Proceeds from disposal of property, plant and equipment Net cash used in investing activities Cash flows from financing activities Repayment of borrowings Amounts advanced to other parties Amount advanced to related parties Net cash used in financing activities Net (decrease)/ increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial period Cash and cash equivalents at the end of the financial period	Consolidated
	Half-year ended
	31 Dec 2015 US$’000 31 Dec 2014 US$’000
	93,266 111,766 (87,490) (98,765) (365) (94) (351) (247)
	5,060 12,660
	(123) (53) 101 - 3 8
	(19) (45)
	(4,713) (2,115) (701) (4,304) (6) (136)
	(5,420) (6,555)
	(379) 6,060 10,831 8,221
	10,452 14,281

Notes to the financial statements are included on pages 13 to 16

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GLG Corp Limited Notes to the condensed consolidated financial statements

Notes to the condensed consolidated financial statements

1. Significant accounting policies

Statement of compliance

The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 Interim Financial Reporting . Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting . The halfyear report does not include notes of the type normally included in an annual financial report and shall be read in conjunction with the most recent annual financial report.

Basis of preparation

The condensed 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 company is a company of the kind referred to in ASIC Class Order 80/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the directors’ report and the half-year financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the company’s 2015 annual financial report for the financial year ended 30 June 2015, 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.

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 their operations and effective for the current half-year.

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 half-year.

New and revised Standards and amendments thereof and Interpretations effective for the current half-year that are relevant to the Group include:

• AASB 2015-3 ‘Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality’

Impact of the application of AASB 2015-3 ‘Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality’

• Completes the withdrawal of references to AASB 1031 in all Australian Accounting Standards and Interpretations.

The adoption of amending Standards does not have any impact on the disclosures or the amounts recognised in the Group’s consolidated financial statements.

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GLG Corp Limited Notes to the condensed consolidated financial statements

2. Segment information

AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance.

GLG operates in the apparel industry and reports only one reportable segment under AASB 8 “Operating Segments”.

3. Disclosure of additional information

(a) Trade receivables

Trade receivables are net trade receivables. The reconciliation between gross and net receivables is set out below:

As at	31 December 2015	30 June 2015
	US$’000	US$’000
Trade receivables
Thirdparties	17,622	20,707
Otherparty– GLITgroup	53,741	53,267
Relatedparties	8,105	8,096
Other receivables	813	984
Other receivables – GLITgroup	-	5,000
Allowance for doubtful debts	(2,310)	(2,351)
Subtotal	77,971	85,703
Less:
Payable to Related Parties	(100)	(328)
Subtotal	77,871	85,375
Goods and services tax recoverable	26	33
Total Trade and other receivables	77,897	85,408

(b) Borrowings

As at 31 December 2015

US$	within 1 year US$’000	within 1 to 5 years US$’000	After 5 years US$’000
Trust receipts(i)	36,794	-	-
Billspayable	275	-	-
Loans from:
Bank loan	-	-	-
Finance lease liabilities	57	40	-
Total borrowings	37,126	40	-

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GLG Corp Limited Notes to the condensed consolidated financial statements

3. (b) Borrowings (cont’d)

As at 30 June 2015

US$	within 1 year US$’000	within 1 to 5 years US$’000	After 5 years US$’000
Trust receipts(i)	36,307	-	-
Billspayable	3,434	-	-
Loans from:
Bank loan	2,000	-	-
Finance lease liabilities	72	64	-
Total borrowings	41,813	**64 **	-

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

• (ii) Banking relationship: the Group is dependent on bank facilities to support the working capital requirement of its operations. Presently, the bank facilities provided to the Group are uncommitted short term trade financing facilities which are reviewable annually by the banks.

At 31 December 2015 GLG Corp Ltd had financing facilities available of US$115,912 thousand (US$44,516 thousand was used and US$71,396 thousand was unused). This is compared with US$119,432 thousand at 30 June 2015 (US$54,696 thousand was used and US$64,736 thousand was unused). Used financing facilities comprises of Trust Receipts and Bank Loans, which at 31 December 2015 was US$36,794 thousand (30 June 2015 US$36,307 thousand) and guarantees arising form letters of credit in force, which was US$5,722 thousand at 31 December 2015 (30 June 2015 US$13,827 thousand). GLG believe it continues to have the strong support from main bankers for its working capital and capital expenditure requirements.

• (iii) For the period ended 31 December 2015, the group has breached loan covenants, which relates to submission of audited financial statement on a timely basis, for the borrowings amounting to US$10,307 thousand. The breaches have not been rectified post period end. The group has not had any restriction on utilising the facilities subsequent to the period ended 31 December 2015.

The Directors are confident the breach will have no impact on reclassification, repayment obligation or the ability of the Group to refinance facilities when they fall due.

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GLG Corp Limited Notes to the condensed consolidated financial statements

4. Contingent Liabilities

ngent Liabilities
Guarantees arising from letters of credit in force Total	31 December 2015 30 June 2015 US$’000 US$’000 5,722 13,827
	5,722 13,827

5. Subsequent Event

There have been no subsequent events after the half year ended 31 December 2015.

6. Investments accounted for using the equity method

Name of entity	Country of incorporation	Principal activity	Ownershipinterest	Ownershipinterest
			2015 %	2014 %
Jointly controlled entities JES Apparel LLC	USA	Importer of knitwear products	51%	51%

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