Globe International : 21/02/17 - Appendix 4D – Half year accounts 31 Dec 2016

ABN 65 007 066 033

Lodged with the ASX under Listing Rule 4.2A

Results for announcement to the market 2

Directors' Report 3 - 4

Auditor's independence declaration 5

Consolidated income statement 6

Consolidated statement of comprehensive income 7

Consolidated balance sheet 8

Consolidated statement of changes in equity 9

Consolidated statement of cash flows 10

Notes to the accounts 11 - 13

Directors' declaration 14

Independent Auditor's review report to members 15 -16

ABN 65 007 066 033

10 March 2017

Record date for determining entitlements to the dividend

Explanation of Result

Please refer attached media release for a review and explanation of the financial results.

Your directors present their report on the consolidated entity of Globe International Limited ("the Company") and its controlled entities (collectively "the Group") as at the end of, or during, the half-year ended 31 December 2016.

DIRECTORS

The following persons were directors of the Company during the whole of the half-year and up to the date of this report: Paul Isherwood AO

Peter Hill

Stephen Hill

REVIEW OF OPERATIONS

The consolidated entity, compared to the prior corresponding period (pcp), reported a decline in revenues and profits but remained profitable and generated strong cash flows for the half year. The decline in revenues and profits was due mainly to the foreshadowed downturn in the skateboard hardgoods market in the Northern Hemisphere.

• Revenues of $70.7 million were 11% below the pcp (9% down in constant currency).

• Earnings before interest, tax, depreciation and amortization (EBITDA) of $3.2 million were $1.0 million below the pcp.

• Net profit after tax (NPAT) of $2.5 million for the half year was $0.4 million below the pcp.

• Cash-flows generated from operations during the period were $6.7 million, a turn-around compared to the $6.9 million used in operations in the pcp.

Financial Performance

Reported net sales of $70.5 million for the half year were $8.4 million below the same time last year. The negative impact of the sales decline was somewhat off-set by higher margins and lower costs, resulting in EBITDA of $3.2M, which was $1.0 million lower than the prior corresponding period.

The reduction in revenues came largely from a decline in skateboard hardgoods in the North American and European businesses. These divisions reported lower net sales than the prior corresponding period of 26% and 35% respectively. The bulk of the decline occurred in the first quarter of the year with the rate of decline slowing significantly in Q2.

In contrast the Australian business continued to be the stand-out performer, with reported revenue growth of 16% for the half year ended 31 December 2016. This growth came largely from the region's streetwear and workwear divisions.

During the period, the North American division continued a process of restructure which has resulted in improved margins, lower cost base and an adjustment to brand mix in that division. The restructuring has included the acquisition of an interest in the surf, fish, dive and sail apparel brand, Salty Crew effective 1 January, 2017. The brand, while in its infancy, provides a new growth engine for North America and enables that division to increase its sales in the apparel sector and to access more diverse distribution channels.

Financial Position

Cash flows from operations for the period were $6.7 million, compared to $6.9 million cash used in operations in the prior corresponding period. The positive cash flows were driven largely by the reduction in excess hardgoods inventory over the period, as well as an improvement in the ageing of accounts receivables compared to the same time last year.

MATTERS SUBSEQUENT TO THE END OF THE HALF YEAR

There are no matters to report subsequent to the end of the half year.

DIVIDENDS

During the half year, the Company paid a fully franked final dividend of 3 cents per share, in respect of the 2016 financial year. This dividend amounting to $1.244 million was paid to shareholders on 14 October 2016. The payment of this dividend took total dividends paid in respect of the 2016 financial year to 6 cents, amounting to $2.488 million paid to shareholders.

In respect of the half-year ended 31 December 2016, the Directors have determined that a fully franked interim dividend of 3 cents per share will be paid to shareholders on 24 March 2017 (2016 interim dividend: $1.244 million). This dividend will be paid out of the Company's profits earned in the current half-year.

AUDITOR'S INDEPENDENCE DECLARATION

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 5 and forms part of the Directors' Report for the half-year ended 31 December 2016

ROUNDING OF AMOUNTS

The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 and therefore the amounts contained in this report and in the financial report have been rounded to the nearest $1,000, or in certain cases, to the nearest dollar.

This report is made in accordance with a resolution of directors pursuant to section 306(3) of the Corporations Act 2001

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Paul Isherwood AO Chairman

Melbourne

21 February 2017