Candy Club Holdings Limited
ACN 629 598 778
Annual Report - 31 December 2021
Candy Club Holdings Limited
Corporate directory
31 December 2021
Directors
Mr Keith Cohn (Executive Director)
Mr Andrew Clark (Non Executive Director)
Mr James Baillieu (Non Executive Chairman)
Mr Chi Kan Tang (Non-Executive Director)
Company secretary
Ms Nova Taylor
Registered office
Principal place of business
Share register
Auditor
Solicitors
C/- Automic Registry Services
Level 5, 126 Phillip Street,
SYDNEY, NSW, AUSTRALIA, 2000
5855 Green Valley Circle
Suite 101
Culver City, CA 90230
Automic Group
Level 5, 126 Phillip Street
Sydney NSW 2000, Australia
HLB Mann Judd (Vic) Partnership
Level 9, 575 Bourke Street,
Melbourne VIC 3000, Australia
Moray & Agnew Lawyers
Level 6, 505 Little Collins Street,
Melbourne VIC 3000, Australia
Stock exchange listing
Candy Club Holdings Limited shares are listed on the Australian Securities Exchange
(ASX code: CLB)
Candy Club Holdings Limited options are listed on the Australian Securities Exchange
(ASX code: CLBO)
Website
https://www.candyclub.com
Corporate Governance Statement
Refer to https://www.candyclub.com
1
Candy Club Holdings Limited
Directors' report
31 December 2021
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'consolidated entity') consisting of Candy Club Holdings Limited (referred to hereafter as the 'company' or 'parent entity')
and the entities it controlled at the end of, or during, the year ended 31 December 2021.
Directors
The following persons were directors of Candy Club Holdings Limited during the whole of the financial year and up to the
date of this report, unless otherwise stated:
Keith Cohn
Chi Kan Tang
James Baillieu
Andrew Clark
Principal activities
During the financial year the principal continuing activities of the consolidated entity consisted of:
●
business to business and online candy distribution in the United States.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The loss for the consolidated entity after providing for income tax amounted to $US7,921,955 (31 December 2020:
$US4,535,042).
Candy Club saw the B2B segment continue to scale as revenue from this business line grew 118% from $US6,645,435 in
2020 to $US14,470,550 in 2021. Total revenue for 2021 was $US16,540,956.
Candy Club’s B2B segment saw the total number of retail doors shipped in FY2021 nearly double as it grew from 14,000
doors in 2020 to 27,000 doors in 2021. Candy Club experienced significant growth in both the number of retail doors carrying
its product resulting from signing partnerships with large US national retailers as well as growth in its B2B eCommerce
platform customers.
It should be noted that the growth the Company experienced in 2021 occurred despite the significant headwinds from the
COVID-19 pandemic which dramatically curtailed brick and mortar retail activity in the US, especially in the first half of 2021.
Candy Club continues to see good growth in the number of new national retailers it has secured in Q1 2022 for shipments in
Q2 – Q4 2022 as brick and mortar retailers begin to resume more normalized operations.
Candy Club’s outstanding performance in 2021 was driven by a combination of strong new customer acquisition and a 90%+
reorder rate every quarter by its top customers.
Candy Club’s B2C subscription business continues to be managed for an optimum ROI. This segment’s largest variable
expense is its cost per acquisition (“CPA”), which increased to US$24 in 2021 vs. $US17, but still well below our target CPA.
The B2C segment remains a key part of the Company’s overall strategy and supports the B2B business by helping with
product and manufacturing efficiencies. Candy Club believes that this can be accomplished through efficient new customer
acquisition channels in conjunction with repeat business from existing customers, new product development, consumer
facing advertising, expanded partnerships with existing & new business partners, leveraging big-data customer insights to
continually improve the company’s products & programs.
In Q1 2022 the Company signed new deals with its existing 3rd party logistics partner and lead transportation
provider. Combined with a previously announced price increase that went into effect on January 1, 2022, the Company is on
track to expand its gross margins in 2022 despite all of the headwinds impacting worldwide supply chains.
Significant changes in the state of affairs
During the year company issued the following shares :-
2
Candy Club Holdings Limited
Directors' report
31 December 2021
●
●
●
●
2,614 fully paid ordinary shares raising US$8 on the conversion of options;
7,102,088 fully paid ordinary shares valued at US$685,972 on the conversion of short term debt
60,866,326 fully paid ordinary shares raising US$9,252,732 before costs; and
8,942,168 fully paid ordinary shares with a value of US$1,142,862 to settle debt issuance fee on the consolidated
entity's debts in the United States
In addition, the company issued 16,432,000 options over ordinary shares during the current year to key management
personnel or under the ESOP.
There were no other significant changes in the state of affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the financial year
On 12 January 2022, a total of 74,124 options over ordinary shares lapsed unexercised.
Also on 12 January 2022, the company issued 105,000 unlisted options under the employee incentive scheme. The options
have an exercise price of AU$13.5 cents and expire on 9 June 2025.
On 9 March 2022, 2,000,000 performance rights held by Keith Cohn and another former director were converted into ordinary
shares following satisfaction of performance conditions. In addition, on the same date 2,000,000 performance rights lapsed
due to conditions not being satisfied.
Since 31 December 2021, the consolidated entity has engaged a leading mid-market US based investment bank that
specialises in food and beverage to help it explore strategic opportunities in the US.
No other matter or circumstance has arisen since 31 December 2021 that has significantly affected, or may significantly
affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future
financial years.
Likely developments and expected results of operations
Information on likely developments in the operations of the consolidated entity and the expected results of operations have
not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the
consolidated entity.
Business risks
Below is a summary of the key business risk relating to the consolidated entity.
3
Candy Club Holdings Limited
Directors' report
31 December 2021
Item
Summary
Sufficiency of funding
Consumer demand
Customer acquisition costs
Food safety and hygiene
Supply of confectionery
Privacy and Data
Intellectual Property
Reliance on Key Personnel
The consolidated entity's objectives when managing capital is to safeguard its ability to
continue as a going concern, so that it can provide returns for shareholders and benefits for
other stakeholders and to maintain an optimum capital structure to reduce the cost of
capital.
If consumers do not perceive the Candy Club-branded confectionery to be of sufficient
quality, value or novelty, the consolidated entity may be unable to acquire new customers or
retain existing customers, adversely affecting the consolidated entity’s business operations
and profitability.
Customer demand for subscription plans of the Candy Boxes is currently generated, in part,
from paid online media sources such as Facebook and Google. Customer acquisition costs,
in particular from online media sources may rise in the future and in such circumstances the
consolidated entity could find it difficult to acquire customers at a price sufficient to make a
profit.
Selling food for human consumption carries inherent risks related to food safety. The
business carried on by the consolidated entity may be adversely affected to the extent there
are any food safety incidents involving the Candy Club branded confectionery (such as
tampering or contamination).
While the consolidated entity is not dependent on any one supplier of confectionery, its
business operations may be affected by the failure of a supplier to meet its contractual
obligations to the consolidated entity or to supply products that meet the consolidated
entity’s production standards. Any such failure by a supplier may have adverse implications
on the consolidated entity’s business.
The consolidated entity is reliant on third party suppliers for data processing and payment
services, and the consolidated entity and such suppliers collect, store and transmit
significant amounts of customer information. Any security breach or interruption in service
may adversely affect the consolidated entity’s reputation and substantially interrupt the
consolidated entity’s business operations.
The success of Candy Club’s business operations is reliant on its intellectual property, such
as customer data, trademarks, domain names, copyrights and know-how. If competitors
utilise or infringe the consolidated entity’s intellectual property, the consolidated may be
adversely affected.
The consolidated entity is heavily reliant on key personnel, including the consolidated
entity’s Executive Director, Mr Keith Cohn and Non-Executive Director Andrew Clark. Candy
Club’s continued success depends on the continuing efforts and retention of its
management team and staff, and if it is not able to attract highly skilled staff to support its
planned growth, its business operations may be impacted.
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State
law.
4
Candy Club Holdings Limited
Directors' report
31 December 2021
Information on directors
Name:
Title:
Experience and expertise:
Keith Cohn
Executive Director
Keith founded the Candy Club Business in 2014 and currently serves as the Chief
Executive Officer of the Company. Keith has over 20 years of consumer industry
experience and has held various executive marketing roles in the industry. Keith began
his career as a Product Manager for Parkers Brothers, a division of Hasbro, Inc in
managing the product lines of toys. He then proceeded to work as a Senior Product
manager for Mattel, Inc. Keith subsequently worked at Equity Marketing, Inc, where he
served as Vice President of the consumer division and was responsible for negotiating
master licensing agreements with Universal Studios, Warner Bros. Entertainment Inc.
and Lyrick Studios and launched product lines on a worldwide basis. In 2000, Mr. Cohn
founded Vendare Media, a leading venture-backed online performance marketing
company. Cohn led this high-growth, digital marketing enterprise from pre-revenue to
US $150,000,000 in annual sales in five years. The Company pioneered email, lead
generation and network advertising platforms in the early days of online marketing. He
subsequently founded Bardon Advisors, a successful Search-based digital marketing
company focused on high-value SEM marketing which he later sold in 2010.
Other current directorships:
Nil
Former directorships (last 3 years): Nil
Interests in shares:
Interests in options:
Interests in rights:
9,497,811 fully paid ordinary shares
20,950,000 options over ordinary shares
Nil
Experience and expertise:
Name:
Title:
Qualifications:
Chi Kan Tang
Non Executive Director
Kan is a qualified Chartered Professional Accountant (CPA) and qualified Chartered
Financial Analyst (CFA) and holds a Bachelor of Commerce from the University of
Alberta.
Kan is the founding partner of Asia Summit Capital, a private equity firm established in
2014, focused on consumer growth and the technology sector in Indonesia and
Southeast Asia. Prior to this, Kan developed considerable experience in the online and
landbase gaming industry with particular expertise in markets within the Asia-Pacific
region. In 2003, Kan co-founded AsianLogic Limited, a Hong Kong based gaming
company. During his time at Asianlogic, he took on numerous senior roles and
responsibilities from CFO in the early stages of the company growth, to Business
Development Director and was promoted to Chief Officer of Asianlogic from 2009 to
2014. Kan has also launched a series of SMEs including multiple F&B, leisure and 7-
Eleven franchises in Hong Kong and the Philippines.
Other current directorships:
Nil
Former directorships (last 3 years): Nil
Interests in shares:
Interests in options:
Interests in rights:
Contractual rights to shares:
52,372,566 fully paid ordinary shares
11,214,718 options over ordinary shares
Nil
Convertible note with a face value of $US 250,000.
5
Candy Club Holdings Limited
Directors' report
31 December 2021
Name:
Title:
Qualifications:
Experience and expertise:
Mr James Baillieu
Non Executive Director
James holds an LLB (First Class Honours) and Bachelor of Arts from the University of
Melbourne
James previously served as Senior Vice President of Business Development at Aconex
Limited (ASX:ACX) and was an early investor in and consultant to Aconex Limited. He
also served as a non-executive director of Bidenergy Ltd (ASX: BID). James spent
more than seven years as a consultant with McKinsey & Co, assisting businesses in
Australia and internationally with strategy and operational improvement. James was
previously a lawyer who practised in commercial law with Mallesons Stephen Jacques
in the 1990s.
Nil
Other current directorships:
Former directorships (last 3 years): Bidenergy Ltd (ASX: BID) - resigned 22 February 2019
Interests in shares:
Interests in options:
Interests in rights:
Contractual rights to shares:
95,597,309 fully paid ordinary shares
25,161,509 options over ordinary shares
Nil
Convertible note with a face value of $US 400,000.
Name:
Title:
Experience and expertise:
Andrew Clark
Non-Executive Director
Andrew Clark has a wealth of knowledge gained in executive and senior leadership
positions whilst working for more than 20 years in the Consumer Goods sector.
Andrew's experiences have included domestic and global roles held in large multi-
national and national public businesses and smaller private equity businesses covering
manufacturer/supplier, wholesaler/retailer and technology/platform operations in the
Australian, UK and US markets. Andrew has held various roles at Cadbury Schweppes,
Reckitt Benckiser (including Global Sales Development Director and USA Vice
President Trade Marketing); Nestle (Head of Sales and Category); Metcash (General
Manager Merchandise: Food and Non-Food) and irexchange (CEO - FMCG).
Nil
Other current directorships:
Former directorships (last 3 years): Nil
Interests in shares:
Interests in options:
3,138,130 fully paid ordinary shares
7,025,000 options over ordinary shares
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Company secretaries
Justyn Stedwell is a professional Company Secretary consultant with over eleven years’ experience as a Company Secretary
of ASX listed companies in a wide range of industries. His qualifications include a Bachelor of Commerce (Management and
Economics) from Monash University, a Graduate Diploma of Accounting from Deakin University and a Graduate Diploma in
Applied Corporate Governance at the Governance Institute of Australia. He is currently the Company Secretary of several
ASX listed companies.
On 25 January 2021, Nova Taylor was appointed as joint company secretary. She has 4 years working in company secretary
and assistant company secretary roles for listed entities. She previously worked for Computershare Investor Services Pty
Ltd in various roles for 10 years and has a Bachelor of Law from Deakin University.
On 3 February 2022, Justyn Stedwell resigned as company secretary and the role is held solely by Nova Taylor.
6
Candy Club Holdings Limited
Directors' report
31 December 2021
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') held during the year ended 31 December 2021,
and the number of meetings attended by each director were:
Keith Cohn
Chi Kan Tang
Andrew Clark
James Baillieu
Full Board
Attended
Held
9
9
9
9
9
9
9
9
Held: represents the number of meetings held during the time the director held office.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having the authority and responsibility for planning, directing and controlling
the activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The company observed the following factors in setting remuneration:
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency.
The board is responsible for determining and reviewing remuneration arrangements for its directors and executives. The
performance of the consolidated entity depends on the quality of its directors and executives. The remuneration philosophy
is to attract, motivate and retain high performance and high quality personnel.
The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it
should seek to enhance shareholders' interests by:
●
●
having economic performance as a core component of plan design
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering
constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value
attracting and retaining high calibre executives
●
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
7
Candy Club Holdings Limited
Directors' report
31 December 2021
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors'
fees and payments are reviewed annually by the board. The board may, from time to time, receive advice from independent
remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line with the market.
The chairman's fees are determined independently to the fees of other non-executive directors based on comparative roles
in the external market. The chairman is not present at any discussions relating to the determination of his own remuneration.
Non-executive directors do not receive share options or other incentives.
ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general
meeting. The annual level of non-executive remuneration was set a maximum of $AU250,000 at the company's 2019 annual
general meeting.
Executive remuneration
The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of
remuneration which has both fixed and variable components.
The executive remuneration and reward framework has three components:
●
●
●
●
base pay and non-monetary benefits
short term performance incentives
share based payments
other amounts such as superannuation and leave
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the
board based on individual and business unit performance, the overall performance of the consolidated entity and comparable
market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the consolidated entity and provides additional value to the
executive.
The short-term incentives ('STI') program is designed to align the targets of the business units with the performance hurdles
of executives. STI payments are granted to executives based on specific annual targets and key performance indicators
('KPI's') being achieved. KPI's include customer satisfaction, leadership contribution and product management.
The long-term incentives ('LTI') include long service leave and share-based payments. The Board reviewed the long-term
equity-linked performance incentives.
Consolidated entity performance and link to remuneration
Remuneration for certain individuals is directly linked to the performance of the consolidated entity. A portion of cash bonus
and incentive payments are dependent on targets being met. Refer to the section 'Additional information' below for details of
the earnings and total shareholders return for the last four years.
Use of remuneration consultants
The consolidated entity has not made use of remuneration consultants.
Voting and comments made at the company's 30 July 2021 Annual General Meeting ('AGM')
At the 30 July 2021 AGM, 83.3% of the votes received supported the adoption of the remuneration report for the year ended
31 December 2020. The company did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
8
Candy Club Holdings Limited
Directors' report
31 December 2021
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based payments
Cash salary
Consulting
Bonus
Super-
Long
service
and fees
$US
fees
$US
$US
annuation
$US
leave
$US
Equity-
settled
options
$US
Issue of
shares
$US
Total
$US
30,056
41,327
37,570
-
382,800
-
-
-
-
-
4,029
-
346,700
455,653
-
382,800
112,000
112,000
-
4,029
-
-
-
-
-
-
202,372
-
-
-
-
30,056
630,528
37,570
431,152
633,524
-
889,852
- 1,588,006
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based payments
Cash salary
Consulting
Bonus
Super-
Long
service
and fees
$US
fees
$US
$US
annuation
$US
leave
$US
Equity-
settled
options
$US
Issue of
shares
$US
Total
$US
37,983
212,014
-
3,608
-
96,351
78,892
428,848
293,917
331,900
-
212,014
150,000
150,000
-
3,608
-
-
540,024
636,375
100,000 1,083,941
178,892 1,512,789
2021
Non-Executive
Directors:
Chi Kan Tang
Andrew Clark
James Baillieu
Executive
Director:
Keith Cohn
2020
Non-Executive
Directors:
Andrew Clark
Executive
Director:
Keith Cohn
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Chi Kan Tang
Andrew Clark
James Baillieu
Executive Directors
Keith Cohn
Fixed remuneration
2020
2021
At risk - STI
At risk - LTI
2021
2020
2021
2020
100%
68%
100%
100%
59%
100%
-
-
-
-
-
-
-
32%
-
-
41%
-
39%
27%
13%
14%
48%
59%
Cash bonuses are dependent on meeting defined performance measures. The amount of the bonus is determined having
regard to the satisfaction of performance measures and weightings as described above in the section 'Consolidated entity
performance and link to remuneration'.
9
Candy Club Holdings Limited
Directors' report
31 December 2021
The proportion of the cash bonus paid/payable or forfeited is as follows:
Name
Executive Directors:
Keith Cohn
Cash bonus paid/payable
2021
2020
Cash bonus forfeited
2020
2021
75%
100%
25%
-
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details
of these agreements are as follows:
Name:
Title:
Details:
Name:
Title:
Details:
Name:
Title:
Details:
Name:
Title:
Details:
Keith Cohn
Executive Director
US$275,000 per annum plus an allowance of US$1,750 per month. Employment can
be terminated by either party at any time with or without reason and with or without
notice.
James Baillieu
Non-Executive Chairman
$AU 50,000 per annum (plus superannuation)
Andrew Clark
Non-Executive Director
$AU 55,000 per annum (plus superannuation)
In addition, the company also had a consultancy agreement with Andrew Clark whereby
he may be engaged to provide consulting services at the monthly rate of US$25,000
per month pro-rata.
Chi Kan Tang
Non-Executive Director
$AU 40,000 per annum (plus superannuation).
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year
ended 31 December 2021.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
Grant date
19 July 2021
Number of options
Expiry date
Exercise price
($US)
8,025,000
24 August 2024
$US0.1772
Options granted carry no dividend or voting rights.
All options were granted over unissued fully paid ordinary shares in the company. The number of options granted was
determined having regard to the satisfaction of performance measures and weightings as described above in the section
'Consolidated entity performance and link to remuneration'. Options vest based on the provision of service over the vesting
period whereby the executive becomes beneficially entitled to the option on vesting date. Options are exercisable by the
holder as from the vesting date. There has not been any alteration to the terms or conditions of the grant since the grant
date. There are no amounts paid or payable by the recipient in relation to the granting of such options other than on their
potential exercise.
10
Candy Club Holdings Limited
Directors' report
31 December 2021
Additional information
The earnings of the consolidated entity for the four years to 31 December 2021 are summarised below:
2021
$US
2020
$US
2019
$US
2018
$US
Sales revenue
Net loss attributable to owners
16,540,956
(7,921,955)
8,673,772
(4,535,042)
4,705,618
(5,453,516)
748,789
(936,820)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
2021
2020
2019
2018
Share price at financial year end ($AU) *
Total dividends declared (cents per share) ($US)
Basic earnings per share (cents per share) ($US)
Diluted earnings per share (cents per share) ($US)
0.09
-
(2.34)
(2.34)
0.13
-
(1.86)
(1.86)
0.07
-
(3.75)
(3.75)
-
-
(1.22)
(1.22)
*
On 19 February 2019, the company successfully completed its IPO, and was officially admitted onto the Australian
Securities Exchange.
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of key management
personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at Received as
the start of
the year
part of
remuneration Additions
Disposals/
other
Balance at
the end of
the year
Ordinary shares
Keith Cohn
Chi Kan Tang
James Baillieu
Andrew Clark
10,957,619
31,011,429
63,988,942
2,831,780
108,789,770
-
40,192
- 20,051,082
- 30,658,367
306,350
-
- 51,055,991
(2,500,000)
8,497,811
- 51,062,511
- 94,647,309
3,138,130
-
(2,500,000) 157,345,761
Option holding
The number of options over ordinary shares in the company held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at Received as
the start of
the year
part of
remuneration Additions
Expired/
forfeited/
other
Balance at
the end of
the year
Options over ordinary shares
Keith Cohn
Chi Kan Tang
James Baillieu
Andrew Clark
15,600,000
11,214,718
25,161,506
4,350,000
56,326,224
5,350,000
-
-
2,675,000
8,025,000
-
-
-
-
-
- 20,950,000
- 11,214,718
- 25,161,506
-
7,025,000
- 64,351,224
Loans from key management personnel and their related parties
Entities related to James Baillieu and Chi Kan Tang had short term loans with a face value of $US650,000 outstanding at 31
December 2021 with interest being accrued at 1% per month. These loans may be converted into fully paid ordinary shares
at the discretion of the lender. Loans with a face value of US$600,000 plus accrued interest were converted during the year
upon the issue of 7,102,088 fully paid ordinary shares. The interest expense for the year ended 31 December 2021 on these
loans was $US99,223, and the total accrued interest balance is US$152,962.
11
Candy Club Holdings Limited
Directors' report
31 December 2021
Performance shares
On 28 November 2018, both Keith Cohn and Zachry Rosenberg (now resigned) were issued 2,000,000 performance rights
each, convertible into 2,000,000 fully paid ordinary shares upon the achievement of the milestones referred to below on or
before the date being three (3) years from the date of the company’s Admission to the ASX. There are 4 classes with each
recipient receiving 500,000 of each class:
●
●
●
●
Class A - the company achieving accumulated revenue of at least $AU15,000,000 within any 12 month period prior to
the expiry date of the performance shares;
Class B - the company achieving accumulated revenue of at least $AU20,000,000 within any 12 month period prior to
the expiry date of the performance shares;
Class C - the company achieving accumulated revenue of at least $AU25,000,000 within any 12 month period prior to
the expiry date of the performance shares;
Class D - the company achieving accumulated revenue of at least $AU30,000,000 within any 12 month period prior to
the expiry date of the performance shares;
An expense of $AU15,231 ($US11,445) has been recognised in relation to these performance shares. Half of this amount
relates to Keith Cohn and has been included in the remuneration report.
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of Candy Club Holdings Limited under option at the date of this report are as follows:
Issue date
Expiry date
Between 5 April 2017 and 15 August 2018
19 February 2019
13 June 2019 and 7 November 2019
3 July 2019
14 November 2019
17 January 2020 *
17 January 2020
17 January 2020
17 January 2020
17 January 2020
17 April 2020
5 June 2020
13 August 2020
11 September 2020
24 December 2020
13 January 2021
8 March 2021
2 June 2021
19 July 2021
22 December 2021
12 January 2022
48 months from the date of grant
48 months from the date of grant
31 May 2023
27 March 2023
23 October 2023
15 January 2024
15 January 2024
15 January 2024
15 January 2024
31 May 2023
31 May 2023
5 June 2023
31 May 2023
11 September 2020
31 May 2023
31 January 2025
4 March 2015
6 May 2025
19 July 2025
22 December 2025
9 June 2025
Exercise
price
Number
under option
167,279
$US0.0029
$US0.2310
2,000,000
$US0.0770 42,253,897
2,578,165
$US0.1194
160,000
$US0.0585
3,100,000
$US0.0000
5,200,000
$US0.1540
5,200,000
$US0.1926
$US0.2311
5,200,000
$US0.7700 27,744,939
6,175,000
$US0.7700
1,613,672
$US0.0394
1,250,000
$US0.0770
595,142
$US0.0761
3,000,000
$US0.1386
1,165,000
$US0.1001
5,067,000
$US0.1540
95,000
$US0.1316
8,025,000
$US0.1772
2,080,000
$US0.0982
105,000
$US0.9785
122,775,094
*
Exercise price is 150% of the company's 10 day VWAP immediately prior to exercise.
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
company or of any other body corporate.
12
Candy Club Holdings Limited
Directors' report
31 December 2021
Shares issued on the exercise of options
The following ordinary shares of Candy Club Holdings Limited were issued during the year ended 31 December 2021 and
up to the date of this report on the exercise of options granted:
Date of conversion
9 February 2021
Exercise
price
Number of
shares issued
$US0.0029
2,614
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
Since the end of the financial period, the company paid a premium in respect of a contract to insure the directors and
executives of the company against a liability 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.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company
or any related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the company, or to 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 part of those proceedings.
Non-audit services
There were no non-audit services provided during the financial year by the auditor.
Officers of the company who are former partners of HLB Mann Judd (Vic) Partnership
There are no officers of the company who are former partners of HLB Mann Judd (Vic) Partnership.
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
immediately after this directors' report.
Auditor
HLB Mann Judd (Vic) Partnership was appointed and continues in office in accordance with section 327 of the Corporations
Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Keith Cohn
Executive Director
30 March 2022
13
Auditor’s independence declaration
As lead auditor for the audit of the consolidated financial report of Candy Club Holdings Limited
for the year ended 31 December 2021, I declare that, to the best of my knowledge and belief,
there have been no contraventions of:
(a)
the auditor independence requirements as set out in the Corporations Act 2001 in relation
to the audit; and
(b)
any applicable code of professional conduct in relation to the audit.
This declaration is in relation to the Candy Club Holdings Limited and the entities it controlled
during the year.
HLB Mann Judd
Chartered Accountants
Melbourne
30 March 2022
Jude Lau
Partner
Candy Club Holdings Limited
Contents
31 December 2021
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members of Candy Club Holdings Limited
Shareholder information
General information
16
17
18
19
20
45
46
50
The financial statements cover Candy Club Holdings Limited as a consolidated entity consisting of Candy Club Holdings
Limited and the entities it controlled at the end of, or during, the period. The financial statements are presented in US dollars,
which is Candy Club Holdings Limited's presentation currency.
Candy Club Holdings Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business are:
Registered office
Principal place of business
C/- Automic Registry Services
Level 5, 126 Phillip Street,
SYDNEY, NSW, AUSTRALIA, 2000
5855 Green Valley Circle
Suite 101
Culver City, CA 90230
A description of the nature of the consolidated entity's operations and its principal activities are included in the directors'
report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 30 March 2022. The
directors have the power to amend and reissue the financial statements.
15
Candy Club Holdings Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 31 December 2021
Revenue
Other income
Interest revenue calculated using the effective interest method
Expenses
Cost of sales
Corporate and administration expenses
Marketing and promotional expenses
Employee benefits expense
Development expenses
Depreciation and amortisation expense
Technology expenses
Property expenses
Other expenses
Finance costs
Loss before income tax expense
Income tax expense
Consolidated
Note
2021
$US
2020
$US
5
6
7
7
8
16,540,956
8,673,772
-
113
302,434
64
(10,039,150)
(1,448,514)
(6,128,990)
(3,501,273)
(82,656)
(169,584)
(268,602)
(41,284)
(1,386,890)
(1,396,081)
(5,373,371)
(1,466,327)
(2,380,205)
(2,614,669)
(109,348)
(161,699)
(183,949)
(23,275)
(595,631)
(602,838)
(7,921,955)
(4,535,042)
-
-
Loss after income tax expense for the year attributable to the owners of Candy
Club Holdings Limited
(7,921,955)
(4,535,042)
Other comprehensive loss
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive loss for the year, net of tax
Total comprehensive loss for the year attributable to the owners of Candy
Club Holdings Limited
(141,820)
(427,305)
(141,820)
(427,305)
(8,063,775)
(4,962,347)
Cents
Cents
Basic earnings per share
Diluted earnings per share
31
31
(2.34)
(2.34)
(1.86)
(1.86)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
16
Candy Club Holdings Limited
Consolidated statement of financial position
As at 31 December 2021
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangibles
Other
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Consolidated
Note
2021
$US
2020
$US
9
10
12
5,203,752
1,763,019
7,094,141
377,376
14,438,288
2,018,492
448,667
3,554,504
294,360
6,316,023
11
12
46,967
844,902
91,851
47,105
1,030,825
5,286
315,367
17,123
29,500
367,276
15,469,113
6,683,299
13
14
15
14
15
2,174,793
2,062,292
592,804
4,829,889
1,838,789
1,385,155
80,400
3,304,344
5,280,634
129,826
5,410,460
1,412,059
117,695
1,529,754
10,240,349
4,834,098
5,228,764
1,849,201
16
17
32,495,417 21,835,441
(9,060,862)
(10,925,378)
(8,419,320)
(18,847,333)
5,228,764
1,849,201
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
17
Candy Club Holdings Limited
Consolidated statement of changes in equity
For the year ended 31 December 2021
Consolidated
Issued
capital
$US
Reserves
$US
Accumulated
losses
$US
Total equity
$US
Balance at 1 January 2020
15,344,101
(10,126,314)
(6,390,336)
(1,172,549)
Loss after income tax expense for the year
Other comprehensive loss for the year, net of tax
Total comprehensive loss for the year
-
-
-
-
(427,305)
(4,535,042)
-
(4,535,042)
(427,305)
(427,305)
(4,535,042)
(4,962,347)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 16)
Share based payments (note 17) and (note 32)
6,491,340
-
-
1,492,757
-
-
6,491,340
1,492,757
Balance at 31 December 2020
21,835,441
(9,060,862)
(10,925,378)
1,849,201
Consolidated
Issued
capital
$US
Reserves
$US
Accumulated
losses
$US
Total equity
$US
Balance at 1 January 2021
21,835,441
(9,060,862)
(10,925,378)
1,849,201
Loss after income tax expense for the year
Other comprehensive loss for the year, net of tax
Total comprehensive loss for the year
-
-
-
-
(141,820)
(7,921,955)
-
(7,921,955)
(141,820)
(141,820)
(7,921,955)
(8,063,775)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 16)
Share based payments (note 17) and (note 32)
10,659,976
-
-
783,362
- 10,659,976
783,362
-
Balance at 31 December 2021
32,495,417
(8,419,320)
(18,847,333)
5,228,764
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
18
Candy Club Holdings Limited
Consolidated statement of cash flows
For the year ended 31 December 2021
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Other revenue
Interest and other finance costs paid
Consolidated
Note
2021
$US
2020
$US
15,016,954
(25,157,318)
8,362,540
(13,339,222)
(10,140,364)
113
-
(957,244)
(4,976,682)
64
13,812
(443,084)
Net cash (used) in operating activities
28
(11,097,495)
(5,405,890)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Net cash (used) in investing activities
Cash flows from financing activities
Proceeds from issue of shares and options
Proceeds from borrowings
Share issue transaction costs
Repayment of borrowings
Repayment of lease liabilities
(53,507)
(96,663)
(150,170)
-
-
-
9,252,740
7,778,000
(421,598)
(1,857,000)
(140,823)
4,559,244
3,449,622
(218,517)
(760,497)
(174,713)
Net cash from financing activities
14,611,319
6,855,139
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
3,363,654
2,018,492
(178,394)
1,449,249
543,342
25,901
5,203,752
2,018,492
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
19
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Going concern
The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business
activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The consolidated entity
incurred a loss from ordinary activities of $US7,921,955 for the period ended 31 December 2021 (2020: $US4,535,042) and
had negative cash from operating activities of $US11,097,495 (2019: $US5,405,890).
The directors have reviewed the cashflow forecasts and believe that there are reasonable grounds to believe that the
consolidated entity will be able to continue as a going concern due to the following factors:
●
●
●
●
The consolidated entity’s products continue to sell well at retail accounts as evidenced by the consolidated entity’s
growth in 2021 driven by aggressive new customer acquisition and top customers reordering at a 90%+ rate on a
quarterly basis and is on track to scale revenues in 2022;
In Q1 2022, the consolidated entity signed a new agreement with its fulfillment and warehouse centre that will lower its
production costs, effective immediately, as well as implemented a 10% price increase. These two initiatives will improve
gross margins and cash flow in 2022;
In the first quarter of 2022, the consolidated entity hired a US based investment bank to explore various financing and
M&A opportunities should the Board choose to go in this direction; and
The company has the ability to raise additional capital without the requirement to obtain shareholder approval under its
15% general placement capacity under ASX listing rule 7.1, and also has an additional 10% capacity which was
approved by shareholders on 30 July 2021. The consolidated entity has engaged a leading mid-market US based
investment bank that specialises in food and beverage to help it explore strategic opportunities in the US.
Accordingly, the Directors believe that the consolidated entity will be able to continue as a going concern and that it is
appropriate to adopt the going concern basis in the preparation of the financial report.
In the event that the consolidated entity is unsuccessful in implementing the above-stated initiatives, a material uncertainty
exists, that may cast significant doubt on the consolidated entity's ability to continue as a going concern and its ability to
recover assets and discharge liabilities in the normal course of business and at the amounts shown in the financial report.
Should the consolidated entity be unable to continue as a going concern it may be required to realise its assets and discharge
its liabilities other than in the normal course of business and at amounts different from those stated in the financial
statements.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other
comprehensive income, investment properties, certain classes of property, plant and equipment and derivative financial
instruments.
20
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 1. Significant accounting policies (continued)
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in note 2.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in note 25.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Candy Club Holdings Limited
('company' or 'parent entity') as at 31 December 2021 and the results of all subsidiaries for the year then ended. Candy Club
Holdings Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity
when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting, unless it is an acquisition involving
entities or businesses under common control. For common control acquisitions the excess of the purchase price over the
identifiable fair value of net assets acquired, is recognised in equity as a reserve.
A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference
between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised
directly in equity attributable to the parent.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The
consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained
together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis
as the internal reports provided to the Board of Directors being the Chief Operating Decision Makers ('CODM'). The CODM
is responsible for the allocation of resources to operating segments and assessing their performance.
The consolidated entity operates the business of selling candies. The consolidated entity currently manages the B2B
business line as part of the overall candy selling business, whereby no discrete financial information between the B2C and
B2B lines is maintained other than the revenue generated. The Board being the chief operating decision maker monitors the
financial performance and position of the group as a whole and not by the business line. To this end, the group has been
assessed as one business segment during the year ended 31 December 2021.
Foreign currency translation
The financial statements are presented in US dollars, which is Candy Club Holdings Limited's presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into US dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss.
21
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 1. Significant accounting policies (continued)
Translation to presentation currency
The assets and liabilities of entities where the functional currency is not US dollars are translated into US dollars using the
exchange rates at the reporting date. The revenues and expenses are translated into US dollars using the average exchange
rates, which approximate the rates at the dates of the transactions, for the period. The exchange difference from the
translation is recognised in other comprehensive income.
Revenue recognition
The consolidated entity recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled
in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity:
●
●
●
●
●
identifies the contract with a customer;
identifies the performance obligations in the contract;
determines the transaction price which takes into account estimates of variable consideration and the time value of
money;
allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling
price of each distinct good or service to be delivered; and
recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the
customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates
are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration
is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject
to the constraining principle are recognised as a refund liability.
Sale of goods
Revenue from the sale of goods is recognised at the point in time when the product is shipped to the customer. No element
of financing is deemed present as the sales are generally made with terms ranging from customer pre-payment to credit
terms of 30 to 60 days.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Government grants
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them
with the costs that they are intended to compensate.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
22
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 1. Significant accounting policies (continued)
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
●
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor
taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
●
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within
12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used
to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle;
it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are amounts due from customers for goods sold in the ordinary course of business. Trade receivables are
initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any
allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The consolidated
entity holds accounts receivable with the objective of collecting the contracted cashflows.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days
overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Inventories
Stock on hand is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of
rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
23
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 1. Significant accounting policies (continued)
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment
(excluding land) over their expected useful lives as follows:
Plant and equipment
Computer equipment
4-5 years
2 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the
cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and
restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful
life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at
the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or
adjusted for any remeasurement of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to
profit or loss as incurred.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at
the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising
from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying
amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in
the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or
period.
Website
Significant costs associated with the development of the revenue generating aspects of the website, including the capacity
of placing orders, are deferred and amortised on a straight-line basis over the period of their expected benefit, being their
finite life.
Software
Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their expected
benefit, being their finite life.
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount.
24
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 1. Significant accounting policies (continued)
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial
year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method. Borrowings are derecognised when the
obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount
extinguished and the consideration paid, including any non cash assets transferred or liabilities assumed is recognised in
profit and loss as other finance costs.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the statement
of financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market rate for an
equivalent non-convertible bond and this amount is carried as a non-current liability on the amortised cost basis until
extinguished on conversion or redemption. The increase in the liability due to the passage of time is recognised as a finance
cost. The remainder of the proceeds are allocated to the conversion option that is recognised and included in shareholders
equity as a convertible note reserve, net of transaction costs. The carrying amount of the conversion option is not remeasured
in the subsequent years. The corresponding interest on convertible notes is expensed to profit or loss.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or,
if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise of
fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is
reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on
an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured
if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset
is fully written down.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
Employee benefits
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees and directors in
exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where
the amount of cash is determined by reference to the share price.
25
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 1. Significant accounting policies (continued)
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently determined using
either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option,
the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine
whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of
any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
●
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
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.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Candy Club Holdings Limited,
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.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
26
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 1. Significant accounting policies (continued)
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a net basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the consolidated entity for the annual reporting period ended 31 December 2021. The
consolidated entity has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees and directors by reference to the
fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the
Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were granted.
The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the
carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit
loss rate for each group. These assumptions include recent sales experience and historical collection rates.
Provision for impairment of inventories
The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the
provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that
affect inventory obsolescence.
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement
is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying
asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included
in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise
an extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors
considered may include the importance of the asset to the consolidated entity's operations; comparison of terms and
conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold improvements;
and the costs and disruption to replace the asset. The consolidated entity reassesses whether it is reasonably certain to
exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in
circumstances.
27
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 2. Critical accounting judgements, estimates and assumptions (continued)
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to discount
future lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is
based on what the consolidated entity estimates it would have to pay a third party to borrow the funds necessary to obtain
an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment.
Note 3. Impact of COVID 19 pandemic
During the current financial year the COVID 19 pandemic had a significant impact on the global economy. In response to
the pandemic, the US, state and local governments announced a series of measures aimed at preventing the spread of
COVID-19 (“measures”), which had the subsequent effect of impacting the state of the US economy (i.e. impact on supply
chain, customers, availability of finance, consumer confidence, etc).
●
●
●
●
Enacting Candy Club’s stated business continuity plan of enabling all consolidated entity employees, including head
office and sales staff, to work remotely, until further notice;
To date, no business interruptions have occurred in either the consolidated entity’s warehousing and distribution center
operations, located primarily in Indiana, nor in its supply chain of core product or packaging vendors, as we and our
facility are classified as a food manufacturer and currently considered “essential critical business infrastructure”; given
the fluidity of the situation this is subject to change in the future;
There are segments of the consolidated entity’s business that have been negatively impacted by these events, such as
sales to retail stores and hospitality outlets, and segments that have been positively impacted as a result of these
measures, including e-commerce and grocery customers. While the consolidated entity’s revenue has increased since
the beginning of the pandemic, the situation in the US remains fluid and it is still too early to tell how revenue, earnings
and cash flow for FY2022 could be impacted by the measures required by COVID-19 should another significant outbreak
occur; and
The consolidated entity’s board of directors and management continually review and revise Candy Club’s 2022
operating plans, including operating expense management solutions and associated cashflow budget, to adapt to the
impact of the ongoing COVID-19 crisis.
Management continues to monitor other possible impacts associated with COVID 19. Management also recognises that the
situation associated with the management of COVID-19 continues to evolve on a daily basis and it is difficult to estimate with
any degree of certainty the resulting impact (financial and operational) which this may have on Candy Club and its future
results and financial position.
Note 4. Operating segments
Identification of reportable operating segments
The consolidated entity is organised into one operating segment, being the candy distribution in the United States of
America. This operating segment is based on the internal reports that are reviewed and used by the Board of Directors (who
are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation
of resources.
The consolidated entity operates the business of selling candies. CODM manages the Business to Business (B2B) line as
part of the overall candy selling business, whereby no discrete financial information between the Business to Customer (B2C)
and B2B lines is maintained other than the revenue generated. The Board being the chief operating decision maker monitors
the financial performance and position of the group as a whole and not by the business line. To this end, the group has been
assessed as one business segment during the year ended 31 December 2021. Refer to note 5 for split of total revenue per
business line.
Note 5. Revenue
Sales of goods
Consolidated
2021
$US
2020
$US
16,540,956
8,673,772
28
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 5. Revenue (continued)
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Major revenue streams
Sale of goods - business to consumer
Sale of goods - business to business
Geographical regions
United States of America
Consolidated
2021
$US
2020
$US
2,070,406
14,470,550
2,028,337
6,645,435
16,540,956
8,673,772
16,540,956
8,673,772
Timing of revenue recognition
Goods transferred at a point in time - being when shipped and ownership transfers
16,540,956
8,673,772
Note 6. Other income
Government COVID stimulus
PPP loan forgiven
Other income
Note 7. Expenses
Loss before income tax includes the following specific expenses:
Depreciation
Plant and equipment
Right of use assets
Total depreciation
Amortisation
Intangible assets
Total depreciation and amortisation
Finance costs
Interest and finance charges paid/payable on bridging finance - from director related entities
Interest and finance charges paid/payable on lease liabilities
Interest and finance charges paid/payable on US loan facilities (inc share based payments)
Finance costs expensed
29
Consolidated
2021
$US
2020
$US
-
-
-
13,812
288,622
302,434
Consolidated
2021
$US
2020
$US
11,826
135,823
18,590
104,325
147,649
122,915
21,935
38,784
169,584
161,699
99,223
11,660
1,285,198
236,041
16,100
350,697
1,396,081
602,838
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 8. Income tax expense
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Tax effect of different tax rates in US
US tax losses not recognised
US state taxes
Tax losses not recognised
Non deductible items
Income tax expense
Australian tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 30%
Consolidated
2021
$US
2020
$US
(7,921,955)
(4,535,042)
(2,376,587)
(1,360,513)
564,575
1,778,941
(469,428)
285,927
216,572
277,717
973,313
(267,196)
310,155
66,524
-
-
Consolidated
2021
$US
2020
$US
2,703,342
1,892,569
811,003
567,771
The above potential tax benefit for tax losses has not been recognised in the statement of financial position. These tax losses
can only be utilised in the future if the continuity of ownership test is passed, or failing that, the same business test is passed.
US tax losses
The consolidated entity has total accumulated net operating tax losses of $USD37,734,000 (2020: $US31,689,000) which
have not been recognised as the recovery of this benefit is uncertain. The tax losses are yet to be tested to check if they will
be able to be utilised.
Note 9. Trade and other receivables
Current assets
Trade receivables
Less: Allowance for expected credit losses
Other receivables
BAS receivable
Consolidated
2021
$US
2020
$US
1,877,984
(245,352)
1,632,632
435,397
(111,000)
324,397
126,188
4,199
115,421
8,849
1,763,019
448,667
Refer to note 19 for information on credit risk. No allowance for credit loss has been recognised as none of the balances are
considered impaired.
Allowance for expected credit losses
The consolidated entity has recognised a loss of US$205,000 (2020: $US111,000) in profit or loss in respect of the expected
credit losses for the year ended 31 December 2021.
30
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 9. Trade and other receivables (continued)
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Consolidated
Not overdue
0 to 3 months overdue
3 to 6 months overdue
Over 6 months overdue
Expected credit loss rate
2021
%
2020
%
Carrying amount
2020
$US
2021
$US
Allowance for expected
credit losses
2021
$US
2020
$US
-
16%
90%
98%
-
-
71%
-
1,098,522
629,062
33,630
116,770
113,032
166,027
156,338
-
-
100,650
30,267
114,435
-
-
111,000
-
1,877,984
435,397
245,352
111,000
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Closing balance
Note 10. Inventories
Current assets
Stock on hand - at cost
Less: Provision for impairment
Consolidated
2021
$US
2020
$US
111,000
134,352
-
111,000
245,352
111,000
Consolidated
2021
$US
2020
$US
7,244,106
(149,965)
3,946,951
(392,447)
7,094,141
3,554,504
The consolidated entity's inventory has been pledged as security for borrowings. Refer to note 14.
Note 11. Right-of-use assets
Non-current assets
Land and buildings - right-of-use
Less: Accumulated depreciation
Plant and equipment - right-of-use
Less: Accumulated depreciation
31
Consolidated
2021
$US
2020
$US
275,806
(161,886)
113,920
827,231
(96,249)
730,982
275,806
(89,937)
185,869
161,873
(32,375)
129,498
844,902
315,367
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 11. Right-of-use assets (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 January 2020
Depreciation expense
Balance at 31 December 2020
Additions
Depreciation expense
Balance at 31 December 2021
Plant and
equipment
$US
Land and
buildings
$US
Total
$US
161,873
(32,375)
257,819
(71,950)
419,692
(104,325)
129,498
665,358
(63,874)
185,869
-
(71,949)
315,367
665,358
(135,823)
730,982
113,920
844,902
The consolidated entity's assets have been pledged as security for the borrowings, refer to note 14.
Consolidated
2021
$US
2020
$US
377,376
294,360
28,750
18,355
29,500
-
47,105
29,500
Consolidated
2021
$US
2020
$US
1,705,185
469,608
1,351,451
487,338
2,174,793
1,838,789
Note 12. Other
Current assets
Prepayments
Non-current assets
Security deposits
Other deposits
Note 13. Trade and other payables
Current liabilities
Trade payables
Other payables
Refer to note 19 for further information on financial instruments.
All trade and other payables are unsecured liabilities and recognised at amortised cost.
32
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 14. Borrowings
Current liabilities
Bridging finance - from entities related to current and former directors
Loan facility
Non-current liabilities
Loan facility
Refer to note 19 for further information on financial instruments.
Consolidated
2021
$US
2020
$US
806,114
1,256,178
1,385,155
-
2,062,292
1,385,155
5,280,634
1,412,059
The bridging finance includes a balance with a face value of $US650,000 with interest being accrued at 1% per month. These
loans may be converted into fully paid ordinary shares at the discretion of the lenders.
The consolidated entity executed a debt facility in April 2021 for up to US $7.5m of which all US$7.5 million has been drawn
down, with the most recent draw of US$2.5m on November 12, 2021. Under the debt facility, there will be Interest only (12%)
payments for twelve (12) months followed by thirty (30) months of principal and interest repayments. The debt facility ranks
as first priority lien and is secured by all of Candy Club Holding Inc's assets. The debt facility is subject to certain financial
and reporting covenants. There have been no events of defaults on the debt facility during the year ended 31 December
2021.
Total direct borrowing costs of US$1,229,165 have been capitalized and offset against the debt balance. At 31 December
2021, the unamortized borrowing costs offsetting the debt balance totalled US$963,188.
Note 15. Lease liabilities
Current liabilities
Lease liability
Non-current liabilities
Lease liability
Consolidated
2021
$US
2020
$US
592,804
80,400
129,826
117,695
Refer to note 19 for further information on financial instruments.
Note 16. Issued capital
Ordinary shares - fully paid
365,465,931 288,552,735 32,495,417 21,835,441
Consolidated
2021
Shares
2020
Shares
2021
$US
2020
$US
33
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 16. Issued capital (continued)
Movements in ordinary share capital
Details
Date
Shares
Issue price
$US
Balance
Shares issued to settle trade payables
Shares issued to KMP and employees as part of
remuneration
Issue of shares
Shares issued on conversion of debt and accrued
interest
Issue of shares
Issue of shares
Issue of shares
Shares issued to KMP as part of remuneration
Issue of shares
Exercise of options
Cost of capital raising
1 January 2020
17 January 2020
174,911,079
412,500 $US0.0450
15,344,101
18,487
17 January 2020
17 January 2020
4,104,478
$US0.0540
18,750,000 $US0.0450
220,000
840,328
17 January 2020
17 April 2020
24 July 2020
13 August 2020
13 August 2020
1 December 2020
2 December 2020
31,801,055
$US0.0410
6,175,000 $US0.0150
19,646,310 $US0.0886
1,250,000 $US0.0253
1,581,780 $US0.0499
29,166,667 $US0.0884
753,866 $US0.0028
- $US0.0000
1,302,724
94,255
1,740,172
31,656
78,892
2,578,800
2,139
(416,113)
Balance
Conversion of options
Shares issued upon conversion of debt
Issue of shares
Issue of shares
Shares to be issued to settle fees in relation to US
debt
Issue of shares
Issue of shares
Cost of capital raising
31 December 2020
9 February 2021
9 February 2021
9 February 2021
20 April 2021
13 August 2021
13 August 2021
24 August 2021
288,552,735
2,614 $US0.0030
7,102,088 $US0.0966
12,500,001 $US0.0927
34,147,727 $US0.1702
21,835,441
8
685,972
1,159,050
5,813,172
8,942,168
$US0.1278
7,785,865 $US0.1614
6,432,733 $US0.1591
- $US0.0000
1,142,862
1,256,747
1,023,763
(421,598)
Balance
31 December 2021
365,465,931
32,495,417
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion
to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company
does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so that
it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital. Refer to going concern disclosures in Note 1.
34
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 17. Reserves
Foreign currency reserve
Share-based payments reserve
Commonly controlled reserve
Consolidated
2021
$US
2020
$US
(452,673)
4,422,330
(12,388,977)
(310,853)
3,638,968
(12,388,977)
(8,419,320)
(9,060,862)
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to US dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign operations.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Commonly controlled reserve
This reserve is used to account for commonly controlled acquisitions, and the reserve represents the excess of the purchase
price over the identifiable fair value of net assets acquired from US subsidiaries.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 January 2020
Foreign currency translation
Share based payments
Balance at 31 December 2020
Foreign currency translation
Share based payments
Foreign
currency
$US
Share based Commonly
payments
controlled
$US
$US
Total
$US
116,452
(427,305)
-
2,146,211
-
1,492,757
(12,388,977)
-
-
(10,126,314)
(427,305)
1,492,757
(310,853)
(141,820)
-
3,638,968
-
783,362
(12,388,977)
-
-
(9,060,862)
(141,820)
783,362
Balance at 31 December 2021
(452,673)
4,422,330
(12,388,977)
(8,419,320)
Note 18. Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 19. Financial instruments
Financial risk management objectives
The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, and
interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the
consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is exposed.
These methods include sensitivity analysis in the case of interest rate, foreign exchange, ageing analysis for credit risk.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors
('the Board'). These policies include identification and analysis of the risk exposure of the consolidated entity and appropriate
procedures, controls and risk limits. Finance reports to the Board on a monthly basis.
35
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 19. Financial instruments (continued)
Market risk
Foreign currency risk
The consolidated entity is exposed to foreign exchange risk in relation to the operation of its subsidiaries in the United States
of America. It does not hedge any of these risks as the US denominated debts are expected to be paid using US dollar
denominated receipts.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and
cash flow forecasting.
The carrying amount of the consolidated entity's foreign currency denominated financial assets and liabilities at the reporting
date were as follows:
Consolidated
Australian dollars
Assets
Liabilities
2021
$US
2020
$US
2021
$US
2020
$US
1,291,355
105,275
981,244
1,535,483
Consolidated - 2021
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
USD strengthened
Effect on
USD weakened
Effect on
Australian dollars
10%
-
31,011
-
-
(31,011)
Consolidated - 2020
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
USD strengthened
Effect on
USD weakened
Effect on
Australian dollars
10%
-
(143,021)
10%
-
143,021
Price risk
The consolidated entity is not exposed to any significant price risk.
Interest rate risk
The consolidated entity is not exposed to significant interest rate risk. Its only borrowings were short term bridging finance
with a fixed interest rate and US loan facility with a fixed rate of 12% per annum.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
consolidated entity. The consolidated entity is exposed to credit risk in relation to it business to business customers, whic h
represented 87.48% (2020: 76.62%) of revenue from customers. The remainder of the revenue was business to customer
sales where payment is received before delivery is made. The total trade receivable balance at 31 December 2021 was
$1,877,984 (2020: $435,397). An impairment of $205,000 was recognised in the current year (2020: $111,000). Average
credit terms are 30 days.
The consolidated entity credit risk by country is summarised below:-
United States
36
Consolidated
2021
$US
2020
$US
1,877,984
435,397
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 19. Financial instruments (continued)
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Refer to going concern disclosures in Note 1 for further details.
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Consolidated - 2021
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - variable
Lease liability
Lease liability
Short term loans from current
and former directors
Loan facilities
Total non-derivatives
Consolidated - 2020
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - fixed rate
Lease liability
Loan facility
Short term loans from current
and former directors
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$US
Between 1
and 2 years
$US
Between 2
and 5 years
$US
Over 5 years
$US
Remaining
contractual
maturities
$US
-
-
1,705,185
469,608
-
-
7.00%
10.00%
12.00%
12.00%
84,769
547,018
50,735
128,457
806,144
2,103,191
5,715,915
-
3,447,959
3,627,151
-
3,064,856
3,064,856
-
-
-
-
-
-
-
-
1,705,185
469,608
135,504
675,475
806,144
-
-
8,616,006
- 12,407,922
Weighted
average
interest rate
%
1 year or less
$US
Between 1
and 2 years
$US
Between 2
and 5 years
$US
Over 5 years
$US
Remaining
contractual
maturities
$US
-
-
1,351,451
487,338
-
-
-
-
7.00%
19.00%
12.00%
80,400
-
80,400
1,412,059
1,385,155
3,304,344
-
1,492,459
37,295
-
-
37,295
-
-
-
-
-
-
1,351,451
487,338
198,095
1,412,059
1,385,155
4,834,098
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Measurement of financial assets
The totals for each category of financial instruments, measured in accordance with AASB 9: Financial Instruments as detailed
in the accounting policies to these financial statements, are as follows:
37
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 19. Financial instruments (continued)
Financial assets
Financial assets measured at amortised cost
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Financial liabilities at amortised cost
Trade and other payables
Borrowings
Lease liabilities
Total financial liabilities
Consolidated
2021
$US
2020
$US
5,203,752
1,758,820
2,018,492
448,667
6,962,572
2,467,159
Consolidated
2021
$US
2020
$US
2,174,793
7,342,926
722,630
1,838,789
2,797,214
198,095
10,240,349
4,834,098
None of the consolidated entity's financial instruments are recorded at fair value subsequent to initial recognition.
Note 20. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity
is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Note 21. Remuneration of auditors
Consolidated
2021
$US
2020
$US
950,453
4,029
633,524
693,914
3,608
815,267
1,588,006
1,512,789
During the financial year the following fees were paid or payable for services provided by HLB Mann Judd (Vic) Partnership,
the auditor of the company, and its network firms:
Audit services - HLB Mann Judd (Vic) Partnership
Audit or review of the financial statements
Audit services - network firms
Audit or review of the financial statements
38
Consolidated
2021
$US
2020
$US
32,761
26,012
70,000
67,000
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 22. Contingent liabilities/assets
The consolidated entity has no contingent assets and liabilities at the end of the current and prior financial years.
Note 23. Commitments
The consolidated entity has no commitments at the end of the current and prior financial years.
Note 24. Related party transactions
Parent entity
Candy Club Holdings Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 26.
Key management personnel
Disclosures relating to key management personnel are set out in note 20 and the remuneration report included in the
directors' report.
Transactions with related parties
The following transactions occurred with related parties:
Other expenses:
Finances costs to key management personnel and their related entities.
Consolidated
2021
$US
2020
$US
99,223
236,041
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current payables:
Other payables to key management personnel
Bonus accrued to key management personnel
Consolidated
2021
$US
2020
$US
124,126
112,000
81,564
112,500
Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:
Current borrowings:
Loans from key management personnel and their related entities *
Consolidated
2021
$US
2020
$US
802,962
1,381,810
*
The bridging finance includes a loans with face value of $US650,000 with interest being accrued at 1% per month.
These loans may be converted into fully paid ordinary shares at the discretion of the lender.
39
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 25. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive loss
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Foreign currency reserve
Share-based payments reserve
Accumulated losses
Total equity/(deficiency)
Parent
2021
$US
2020
$US
(9,404,084)
(6,868,315)
(9,404,084)
(6,868,315)
Parent
2021
$US
2020
$US
1,310,830
107,490
1,310,830
107,490
981,244
1,535,483
981,244
1,535,483
32,495,417 21,835,441
(497,467)
2,438,805
(25,204,772)
(617,497)
3,060,522
(34,608,856)
329,586
(1,427,993)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 31 December 2021 and 31 December
2020.
Contingent liabilities
The parent entity had no contingent liabilities as at 31 December 2021 and 31 December 2020.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31 December 2021 and 31 December
2020.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except
for the following:
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
40
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 26. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 1:
Name
Candy Club Holdings Inc.
Candy Club LLC
Candy Club Retail 1 LLC
Candy Club Retail 2 LLC
Candy Club Retail 3 LLC
Candy Club Retail 4 LLC
Candy Club Retail 5 LLC
Candy Club Retail 6 LLC
Candy Club Retail 7 LLC
Principal place of business /
Country of incorporation
USA
USA
USA
USA
USA
USA
USA
USA
USA
Ownership interest
2020
2021
%
%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
-
-
-
-
-
-
-
Note 27. Events after the reporting period
On 12 January 2022, a total of 74,124 options over ordinary shares lapsed unexercised.
Also on 12 January 2022, the company issued 105,000 unlisted options under the employee incentive scheme. The options
have an exercise price of AU$13.5 cents and expire on 9 June 2025.
On 9 March 2022, 2,000,000 performance rights held by Keith Cohn and another former director were converted into ordinary
shares following satisfaction of performance conditions. In addition, on the same date 2,000,000 performance rights lapsed
due to conditions not being satisfied.
Since 31 December 2021, the consolidated entity has engaged a leading mid-market US based investment bank that
specialises in food and beverage to help it explore strategic opportunities in the US.
No other matter or circumstance has arisen since 31 December 2021 that has significantly affected, or may significantly
affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future
financial years.
41
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 28. Reconciliation of loss after income tax to net cash (used) in operating activities
Loss after income tax expense for the year
(7,921,955)
(4,535,042)
Consolidated
2021
$US
2020
$US
Adjustments for:
Depreciation and amortisation
Share-based payments
Foreign exchange differences
Settlement of operating liabilities through issue of shares
Non-cash finance costs
PPP loan forgiven
Provision for expected credit losses
Movement in provision for inventory impairment
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in inventories
Increase in other operating assets
Increase/(decrease) in trade and other payables
Decrease in other provisions
Net cash (used) in operating activities
Note 29. Non-cash investing and financing activities
169,584
783,362
51,283
-
438,837
-
205,000
319,769
161,699
734,340
-
314,354
146,131
(288,622)
111,000
(253,552)
(1,519,352)
(3,859,406)
(100,621)
336,004
-
(311,232)
(978,236)
(150,147)
(306,583)
(50,000)
(11,097,495)
(5,405,890)
During the year, the company issued 16,044,256 fully paid ordinary shares (2020: 31,801,055) settling liabilities valued at
$1,828,834 (2020: US$1,302,724).
Note 30. Changes in liabilities arising from financing activities
Consolidated
Leases
$US
Loan
Facility
$US
Bridging
loans
$US
Total
$US
Balance at 1 January 2020
Net cash from/(used in) financing activities
PPP loan forgiven
Other changes (conversions and accruals of interest)
372,808
(174,713)
-
-
428,497
1,439,125
(288,622)
(166,941)
1,220,998
1,250,000
-
(1,085,843)
2,022,303
2,514,412
(288,622)
(1,252,784)
Balance at 31 December 2020
Net cash from/(used in) financing activities
Additions
Other changes (foreign currency, conversions and non cash
interest)
198,095
(140,823)
665,358
1,412,059
5,921,000
-
1,385,155
-
-
2,995,309
5,780,177
665,358
-
(796,247)
(579,041)
(1,375,288)
Balance at 31 December 2021
722,630
6,536,812
806,114
8,065,556
42
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 31. Earnings per share
Loss after income tax attributable to the owners of Candy Club Holdings Limited
(7,921,955)
(4,535,042)
Weighted average number of ordinary shares used in calculating basic earnings per share
338,555,341 243,896,364
Weighted average number of ordinary shares used in calculating diluted earnings per share 338,555,341 243,896,364
Number
Number
Consolidated
2021
$US
2020
$US
Basic earnings per share
Diluted earnings per share
Note 32. Share-based payments
Cents
Cents
(2.34)
(2.34)
(1.86)
(1.86)
Total share based payments of $US783,362 (2020: $US1,492,757) have been recognised in relation to the options issued
to employees, directors and contractors.
The terms of options as share based payments are as follows:
2021
01/01/2015
01/01/2015
Balance at
the start of
the year
26,887,336
26,887,336
Lapsed
Granted
Exercised
- 16,432,000
- 16,432,000
Balance at
the end of
the year
- 43,319,336
- 43,319,336
Weighted average exercise price
$US0.1042 $US0.0000 $US0.1487 $US0.0000 $US0.1211
2020
Balance at
the start of
the year
Lapsed
Granted
Exercised
Balance at
the end of
the year
01/01/2015
01/01/2015
5,095,449
5,095,449
(1,363,061) 23,908,814
(1,363,061) 23,908,814
(753,866) 26,887,336
(753,866) 26,887,336
Weighted average exercise price
$US0.2342 $US1.1700 $US0.1038 $US0.0290 $US0.1042
The weighted average remaining contractual life of options outstanding at the end of the financial period was 2.45 years
(2020: 2.83 years).
The fair value of the options granted to employees, directors and contractors is considered to represent the value of the
employee services received over the vesting period.
43
Candy Club Holdings Limited
Notes to the consolidated financial statements
31 December 2021
Note 32. Share-based payments (continued)
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
Share price Exercise
at grant date
price
Expected
volatility
Dividend
Risk-free
Fair value
yield
interest rate at grant date
12/01/2021
04/03/2021
06/05/2021
09/06/2021
30/07/2021
10/11/2021
12/01/2025
04/03/2025
06/05/2025
09/06/2025
30/07/2025
10/11/2024
$US0.1010 $US0.0943
$US0.1540 $US0.1451
$US0.0000 $US0.1234
$US0.0000 $US0.0980
$US0.1256 $US0.1774
$US0.0850 $US0.0907
82.880%
82.880%
82.880%
82.880%
93.800%
80.000%
-
-
-
-
-
-
0.460%
0.460%
0.460%
0.460%
0.343%
0.750%
$US0.060
$US0.091
$US0.080
$US0.062
$US0.075
$US0.048
44
Candy Club Holdings Limited
Directors' declaration
31 December 2021
In the directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at
31 December 2021 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable, taking into accounts the matters outlined in the going concern disclosures in Note 1 of the financial
statements.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Keith Cohn
Executive Director
30 March 2022
45
Independent Auditor’s Report to the Members of Candy Club Holdings Limited
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
We have audited the financial report of Candy Club Holdings Limited (“the Company”) and its
controlled entities (“the Group”), which comprises the consolidated statement of financial
position as at 31 December 2021, the consolidated statement of profit or loss and other
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
(a) giving a true and fair view of the Group’s financial position as at 31 December 2021 and of
its financial performance for the year then ended; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements
of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of the Company, would be in the same terms if given to the
directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Material Uncertainty Regarding Going Concern
We draw attention to the Going Concern note as contained in Note 1 of the financial report,
which indicates that the Group incurred a net loss of $7,921,955 (2020: $4,535,042) during the
year ended 31 December 2021 and incurred net cash outflows in operations of $11,097,495
(2020: $5,405,890). As stated in the Going Concern note as contained in Note 1 of the financial
report, these events or conditions, along with other matters as set forth in the Going Concern
note as contained in Note 1 of the financial report, indicate that a material uncertainty exists
that may cast significant doubt on the Group’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters. In addition to the
matter described in the Material Uncertainty Related to Going Concern section, we have
determined the matters described below to be the key audit matters to be communicated in our
report.
Key Audit Matter
How our audit addressed the key audit matter
Share-based payments
Refer to note 16 (Issued capital), 17 (Reserves) and 32 (Share-based payments).
The Group pays its employees,
directors and suppliers via the
issue of ordinary shares and
options over shares.
During the year, there were
several share-based payments
made to employees, directors
and lenders.
The valuation and accounting
for share-based payments is
complex and
to
management’s estimates and
judgement.
is subject
Our audit procedures included:
• Verifying the key terms and conditions of equity settled
share-based payments in respect of ordinary shares and
options over shares to the relevant agreements, for
services rendered by employees and directors as well as
the loan agreements with lenders.
• Assessing and testing the fair value calculation of share-
based payments by checking the accuracy of the inputs to
source documents and performing a cross check against
our own findings.
• Testing
the accuracy of
the share-based payments
amortisation over the vesting periods (where applicable)
and the recording of expenses in the statement of profit or
loss and movement in the share-based payment reserve.
• Checking the adopted disclosures for compliance with the
requirements of AASB 2 Share-based Payment.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 31 December 2021, but
does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this
regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the
Group to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a
whole is free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including
the disclosures, and whether the financial report represents the underlying transactions
and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial
report. We are responsible for the direction, supervision and performance of the Group
audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of
most significance in the audit of the financial report of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
REPORT ON THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 7 to 12 of the directors’ report for
the year ended 31 December 2021.
In our opinion, the Remuneration Report of Candy Club Holdings Limited for the year ended 31
December 2021 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
HLB Mann Judd
Chartered Accountants
Melbourne
30 March 2022
Jude Lau
Partner
Candy Club Holdings Limited
Shareholder information
31 December 2021
The shareholder information set out below was applicable as at 16 March 2022.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Ordinary shares
% of total
Options over ordinary
shares
% of total
Number
of holders
shares
issued
Number
of holders
shares
issued
15
49
54
284
208
610
-
0.05
0.12
3.68
96.15
2
12
8
38
58
-
0.06
0.09
2.64
97.21
100.00
118
100.00
Holding less than a marketable parcel
50
0.03
-
-
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
MUTUAL TRUST PTY LTD
CITICORP NOMINEES PTY LIMITED
10 BOLIVIANOS PTY LTD
VENTURE LENDING & LEASING IX LLC
BNP PARIBAS NOMINEES PTY LTD (IB AU NOMS RETAILCLIENT DRP)
CHI KAN TANG
SOPRIS CREEK PTY LTD
GINGA PTY LTD (TG KLINGER S/F A/C)
BEDWELL PTY LTD (BEDWELL DISCRETIONARY A/C)
KEC VENTURES II LP
ATFR PTY LTD (RH SUPER FUND A/C)
GIOVANNI NOMINEES PTY LTD (GIOVANNI FAMILY FUND A/C)
FORDHOLM CONSULTANTS PTY LTD (DIANA BOEHME SUPER FUND A/C)
UBS NOMINEES PTY LTD
BORRMAN HOLDINGS PTY LTD THE BROEREN FAMILY A/C)
SKYMAKER PTY LTD
T G F HOLDINGS (QLD) PTY LTD (T FORD SUPERANNUATION A/C)
PKT SPRINGBROOK PTY LTD (SPRINGBROOK FAMILY A/C)
MR WILLIAM NEIL STEWART COATS
MR ANDREW BAINES CLARK
Ordinary shares
% of total
shares
issued
Number held
103,253,559
55,485,926
11,616,153
8,942,168
8,725,901
8,080,500
7,750,000
7,164,290
5,506,509
5,322,351
4,000,000
4,000,000
4,000,000
3,764,852
3,690,958
3,500,000
3,478,834
3,340,340
3,250,379
3,138,130
28.10
15.10
3.16
2.43
2.37
2.20
2.11
1.95
1.50
1.45
1.09
1.09
1.09
1.02
1.00
0.95
0.95
0.91
0.88
0.85
258,010,850
70.20
50
Candy Club Holdings Limited
Shareholder information
31 December 2021
Options over ordinary
shares
% of total
options
issued
Number held
MUTUAL TRUST PTY LTD
CITICORP NOMINEES PTY LIMITED
10 BOLIVIANOS PTY LTD
PKT SPRINGBROOK PTY LTD (SPRINGBROOK FAMILY A/C)
BUMBLETON PTY LTD (WILLIAM COATS S/F A/C)
MR WILLIAM NEIL STEWART COATS
MR DEAN RODNEY RYAN & MRS JULIA LEONIE RYAN (DEAN RYAN SUPER A/C)
GRANET SUPERANNUATION AND INVESTMENT SERVICES PL (GRANET SUPER
FUND A/C)
MR GRAHAM JOHN WALKER
ROUSE EQUITIES PTY LTD (ROUSE INVESTMENT A/C)
BEDWELL PTY LTD (BEDWELL DISCRETIONARY A/C)
MR ANDREW BAINES CLARK
T G F HOLDINGS (QLD) PTY LTD (T FORD SUPERANNUATION A/C
JAG HILFORD SUPER PTY LTD (JAG HILFORD SUPER FUND A/C)
BLUE LAKE PARTNERS PTY LTD
CERDIK
AUSITANO HOLDINGS PTY LTD
RIADY TJANDRA
MRS ANGELA CATHERINE ROUSE & MR EDMUND DAVID GORDON ROUSE (DAVID
ROUSE SUPERANNUAT A/C)
TOOTING BEC PTY LTD (ANTHONY SUPERFUND A/C)
25,161,506
11,214,711
3,853,881
3,041,336
2,745,982
2,295,365
1,658,503
1,450,300
1,419,800
1,400,000
1,250,000
1,250,000
1,176,496
1,025,000
937,500
897,434
848,598
768,775
650,000
600,000
32.49
14.48
4.98
3.93
3.55
2.96
2.14
1.87
1.83
1.81
1.61
1.61
1.52
1.32
1.21
1.16
1.10
0.99
0.84
0.77
63,645,187
82.17
Unquoted equity securities
In addition, the company has 650,000 convertible notes held by 2 holders.
Substantial holders
Substantial holders in the company are set out below:
JAMES BAILLIEU AND ASSOCIATES
CHI KAN TANG
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
% of total
shares
issued
Number held
95,597,309
52,372,566
26.02
14.25
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
There are no other classes of equity securities.
51