Globe International : 22/08/17 - Appendix 4E – Full Year Accounts FY2017

GLOBE INTERNATIONAL LIMITED

APPENDIX 4E

Preliminary Final Report

Lodged with the ASX under Listing Rule 4.3A

Results for Announcement to the Market

2017 $'000	2016 $'000	Change $'000 %
Revenue from ordinary activities	140,484	150,822	(10,338)	(6.9)
Net Sales from ordinary activities	140,006	150,299	(10,293)	(6.8)
Earnings before Interest, Tax, Depreciation & Amortisation (EBITDA )	6,113	6,751	(638)	(9.4)
Net Profit after tax attributable to members (NPAT)	5,081	4,740	341	7.2

Consolidated Entity

2017 $'000	2016 $'000	Change $'000 %
Net profit after tax attributable to members (NPAT)	5,434	6,279	(845)	(13.5)

Parent Entity

Dividends	Amount per security	Franked amount per security
Final dividend	5 cents	5 cents
Interim dividend	3 cents	3 cents

6 September 2017

Record date for determining entitlements to the dividend

26 October 2017

Date of Company's 2017 AGM

NTA Backing	Current Period	Previous Corresponding Period
Net tangible asset backing per ordinary security	$0.81	$0.80

GLOBE INTERNATIONAL LIMITED Full Financial Report Year ended 30 June 2017

Contents Directors' report	Page 3 - 9
Auditor's independence declaration	10
Financial report	11 - 54
Directors' declaration	55
Independent auditor's report	56 - 61

Your directors present their report on Globe International Limited ("the Company") and its controlled entities (collectively "Globe" or the "consolidated entity") for the year ended 30 June 2017.

DIRECTORS

The name and position of each director of the Company in office during the financial year and up to the date of this report:

Name, position and qualifications Experience Directors' interests in Ordinary Shares of GLB

Paul Isherwood AO FCA

Independent Non-Executive Chairman

Paul Isherwood was appointed to the Board of Directors in March 2001 and elected Chairman in March 2003. Paul is an experienced company director with a strong finance and accounting background and extensive corporate governance experience across different industry sectors, mostly with listed companies. He has proven leadership skills from a career with Coopers & Lybrand that spanned 38 years. He held the position of National Chairman and Managing Partner of Coopers & Lybrand (Australia) from 1985 to 1994 and served on the International Board and Executive Committee of the firm from 1985 to 1994. Paul was also a Director of the Australand Property Group from December 2005 to November 2014.

1,000,000

Stephen Hill Executive Director

Stephen Hill co-founded Globe in 1985, remains a major shareholder in the business and has expertise in the development of growth initiatives, brand development and market positioning strategies for the Company. Stephen is a former skateboarding champion and remains an active skateboarder, snowboarder and surfer.

12,525,606

Peter Hill Executive Director

Peter Hill co-founded Globe in 1985 and remains a major shareholder in the business. He is a major contributor to the strategic market direction and brand development of the business with a particular emphasis on Asian sourcing and distribution where he is based. Peter is a former skateboarding champion and maintains an extensive interest in extreme action sports and motorsports.

12,436,009

COMPANY SECRETARY Name and qualifications Experience

Gerhard M. Correa CPA, CA

Gerhard Correa was appointed as the Company Secretary in November 2004. Gerhard joined the Company in November 2000 as Financial Controller.

PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity during the financial year were the specialized production and distribution of purpose-built apparel, footwear and hardgoods for the board sports, street fashion and workwear markets globally.

CHANGES IN STATE OF AFFAIRS

There have been no significant changes in the state of affairs of the consolidated entity during the financial year.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

There are no reportable matters that have occurred subsequent to the end of the financial year.

REVIEW OF OPERATIONS

The consolidated entity reported that profits were approximately flat on the previous corresponding period (pcp) and operating cash flows were significantly ahead of the same time last year, despite a downturn in revenues.

• Revenues for the financial year of $140.5 million were 7% or $10.3 million below the pcp (5% down in constant currency).

• Earnings before interest, tax, depreciation and amortization (EBITDA) of $6.1 million for the financial year were $0.6 million below the pcp.

• Net profit after tax (NPAT) of $5.1 million for the financial year was $0.3 million above the pcp.

• Cash-flows generated from operations during the period were $10.6 million, representing a $14.0 million improvement on the $3.4 million used in operations in the pcp.

  Financial Performance

  The decline in net sales was largely due to the downturn in the Northern Hemisphere skateboard hardgoods market, particularly in the first half of the year. In the second half, constant currency sales were flat compared to the prior corresponding period, with growth in apparel brands and the bottoming out of the hardgoods decline.

  Despite the decline in net sales, NPAT of $5.1 million was 7% above last year due to higher gross margins, lower costs and a lower effective tax rate. A brief overview of performance by region is included below:

• The Australian division continued to be the stand out performer. Net sales, mainly in streetwear and workwear, were 14% higher than the prior period.

• Restructuring of the North American division continued during the year leading to a change in brand and category mix, improved margins and a lower cost base. Of note was the introduction of Salty Crew from 1 January 2017, which contributed to second half sales being 2% higher than the prior corresponding period.

• The European business was most affected by the hardgoods downturn, with a 36% decline in net sales over the full year. Despite the substantial decline in net sales, the division remained profitable with sales stabilizing by the end of the year.

  Financial Position

  During the current financial year, a number of initiatives were undertaken to successfully reduce the working capital needs of the business, including a targeted reduction in months' stock on hand for key at-once businesses. The net effect was a substantial improvement in operating cash flows, with $10.6 million generated in the current financial year compared to the $3.4 million cash used in operations in the 2016 financial year.

  DIVIDENDS

  During the year the Company paid the following dividends:

• a fully franked final dividend of 3 cents per share, relating to the 2016 financial year. This dividend amounting to $1.244 million was paid to shareholders on 14 October 2016.

• A fully franked interim dividend of 3 cents per share, relating to the 2017 financial year. This dividend amounting to $1.244 million was paid to shareholders on 24 March 2017.

Since the end of the financial year the directors have determined that a fully franked final dividend of 5 cents per share will be payable, relating to the 2017 financial year. This dividend, amounting to $2.073 million, will be paid to shareholders on 22 September 2017.

In total, dividends of 8 cents per share will be paid to shareholders in respect of the financial year ended 30 June 2017, compared to 6 cents paid in relation to the year ended 30 June 2016.