ABN 62 104 600 544
Annual Report – 30 June 2021
Lark Distilling Co. Ltd
Corporate directory
30 June 2021
Directors
Mr David Dearie (Non-Executive Chairman)
Mr Geoff Bainbridge (Managing Director)
Mr Warren Randall (Non-Executive Director)
Ms Laura McBain (Non-Executive Director)
Company secretary
Ms Melanie Leydin
Registered office
Principal place of business
Auditor
Level 1
30 Argyle Street
Hobart TAS 7000
Level 1
30 Argyle Street
Hobart TAS 7000
Deloitte
Level 8
22 Elizabeth Street
Hobart TAS 7000
Stock exchange listing
Lark Distilling Co. Ltd shares are listed on the Australian Securities Exchange (ASX
code: LRK)
1
Lark Distilling Co. Ltd
Contents
30 June 2021
Letter from the chairman
Review of operations
Directors' report
Auditor's independence declaration
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors' declaration
Independent auditor's report to the members of Lark Distilling Co. Ltd
Shareholder information
3
5
6
18
19
20
21
22
23
52
53
57
2
Lark Distilling Co. Ltd
Letter from the chairman
30 June 2021
Dear Shareholders,
It has been another incredible year of challenges for Australian business and the general population with
COVID-19 continuing to influence and challenge every aspect of our daily activities. During 2021 the
continuing COVID lockdowns have challenged our business in many ways, none more than the closures of
restaurants, bars and tasting rooms throughout the country.
Despite the considerable challenges your board, executive leaders and the whole team have remained
focused on building our brands and creating a solid foundation to support sustainable, profitable growth. I
would like, on behalf of the board, to place on record our thanks and appreciation for the incredible resilience,
energy, dedication, and commitment shown from the Lark employees.
Our Managing Director, Geoff Bainbridge, and his executives have worked tirelessly to keep everyone focused
and fully informed on our priorities during the various lockdowns. We are looking forward to the day of a return
to normal working and to reconnecting with our colleagues and our loyal consumers. I am pleased to advise
that 100% of the Board and executive team at Lark have been vaccinated and all but a small handful of
employees have yet to be vaccinated.
Your business has performed well during these challenging trading conditions. Net Sales Revenue (revenue
after excise) for period was $12.92 million, up 98% year on year. Gross Margin, as a percentage of Net
Revenue achieved 67%, improving 5.1 ppts year on year, as a result, profit (before income tax) of $1.05
million) improved 183% or $2.32m over the previous corresponding period.
Despite this growth, our business has been impacted by COVID19, however we have made significant
progress in a number of key strategic initiatives. We have increased litres of whisky under maturing by 54% to
1,093,073 litres on 30 June 2021, up from 711,313 litres as of 30 June 2021. This has been a tremendous
achievement and provides the foundation for our future.
Lark Whisky under maturation is valued at $236 million on 30 June 2021. We anticipate growing this inventory
to some 1.8 million litres by the end of 2022. Due to increased mix, product innovation, channel diversification
and premiumisation of the portfolio the restated Net Sales Revenue per Litre increased from $139 to $216 a
55% increase year over year. Supporting this we invested $3.6 million in building a whisky “bank” through in
house production & outsource partnerships including the purchase of 30,000 of maturing whisky to address a
previously identified inventory shortfall required for fiscal years 2023 & 2024.
Some of the outstanding and innovative activities are listed below:
- Expansion of the Lark Limited Release Programme
- Expansion of Core Programme to 3 SKU’s (Classic, Cask Strength, Double Tawny)
- Launch of Lark Legacy at $1,800 per bottle
- Launch of Lark Rare Cask Series at $500 per bottle
- Launch of Symphony at $139 per bottle to enable more consumer to enter the Lark Brand Franchise
- Successful relaunch of Forty Spotted Gin - October 2020.
Supporting these brand initiatives, we moved to take direct control of the sales function by replacing the
mainland distributor with our own dedicated sales team. This highly motivated dedicated Lark team quickly
gained range extensions in all major domestic retailers. One notable success from our dedicated direct sales
focus is that Lark was the first Australian Whisky to exceed $100,000 of retail sales in one week at a leading
national account.
To further engage and communicate with our loyal and new brand lovers we opened the Forty Spotted Gin Bar
in Hobart, and it has quickly become a must visit destination in Tasmania. We look forward welcoming more
guests as on-premise and travel restrictions are lifted. We have an exciting new Whisky Bar development
currently underway and on target to open in November of 2021. I would like to place on record our thanks and
gratitude for our hospitality team who successfully navigated through a complete COVID shutdown of all
hospitality venues for the majority of the first half of the year.
3
Lark Distilling Co. Ltd
Letter from the chairman
30 June 2021
Rounding out our brand building efforts we have launched a new Lark Shopify website creating a seamless
experience for Lark Brand lovers. Our growth in online was in excess of 400% YOY and in the month of
November 2020 we recorded almost $500,000 of direct to consumer sales underpinned with the successful
launch of Rare Cask PARA50.
The combined hospitality and e-commerce businesses now represents in excess of 40% of the total company
sales.
Of course, to achieve these successes require exceptional quality whisky and gin and our distillers have
ensured that our brands gain international and domestic recognition with Lark nominated for Whiskey producer
of the year at the International Whiskey and Spirits Competition (outside of Scotland) - one of only 4 distillers.
At the IWSC awards we won 1 Gold, 7 Silver & 2 Bronze across our Core & Limited Release programs, an
outstanding recognition for the quality of our whisky. Not to be outdone Forty Spotted Gin received multiple
awards at recent Gin Masters Awards & World Gin Awards.
I am extremely proud that Lark became the first Australian Whisky Distiller to be Certified Carbon Neutral.
Accreditation is issued under the Federal Government’s Climate Active Program, one of the most widely
recognised carbon neutral programs of its kind in the world. This initiative was a personal crusade by our CEO,
Geoff Bainbridge and wholeheartedly embraced by the executive team and by every single employee.
Congratulations to everyone on this achievement.
I am quite confident that the scale and breadth of our whisky programme is world leading in terms of
innovation, number of releases and the quality of those releases and is a credit to the culture and quality of
personnel at Lark. To further strengthen the executive team we added new heads of finance, marketing, e-
commerce and production, and we are delighted with their contributions thus far.
Our whisky under maturation is the foundation that enables us to build our brands, to expand our distribution
base, to release uniquely Tasmanian whisky and to create shareholder value. We are in a strong position to
participate in the continued growth of the domestic and selected international spirits category where this sector
is both resilient and is witnessing sustainable premiumisation.
Finally, we appreciate your on-going support of Lark Distilling Company.
Sincerely yours,
David Dearie
Chairman
4
Lark Distilling Co. Ltd
Review of operations
30 June 2021
Lark is proud to report its maiden profit before providing for income tax that amounted to $1.05 million which represents a $2.32m or
183% improvement over the previous corresponding period (30 June 2020: loss of $1.27 million).
Key highlights:
• Revenue from ordinary activities for the year 30 June 2021 was $16.54 million, up 123% compared to last year at $7.40 million.
• Net Sales Revenue (revenue after excise) for period was $12.92 million, up 98% year on year.
•
Lark achieved an average Net Sales Revenue per Litre of $216, up 55% Year on year from $139 per litre.
• Gross Margin as a % of Net Revenue was 52% which represents an improvement year on year of 5.1 ppts.
•
Litres under maturation increased by 54% to 1,093,073 as at 30 June 2021, from 711,313 litres as at 30 June 2020.
Lark Distilling Co. ‐ Litres of Whisky Incl Settling as at June 2021 at 43% ABV
FY Maturing
2022
2023
2024
2025
2026
2027+
Litres of Whisky at
Maturation at 43% ABV
Liquidation Value Today
Net Sales Value at
Maturation Date
($216/litre)
113,004
$
24,408,802
$
24,408,802
145,753
$
25,505,745
$
31,482,627
214,227
$
28,703,507
$
46,273,047
204,033
$
18,970,967
$
44,071,218
245,837
$
12,776,978
$
53,100,792
170,219
$
3,404,379
$
36,767,304
Grand Total
1,093,073
$
113,770,379
$
236,103,791
Value at Cost June 2021
$20,356,155
The maturation market value is based on an estimated future net sales value which is equal to what the Group’s net sales value achieved today. The
market value presented has an inherent risk in that the estimated net sales value will be achieved on maturation, therefore consideration needs to
be given to market conditions at that point in time
• The value of the Whisky Bank based on maintaining the F21 NSR per Litre of $216 is estimated at $236m.
• During the period Lark received multiple awards and recognition for the quality of its products, including being nominated as one of
four distillers for Worldwide Whisky Producer of the Year. In addition, 28 medals were received recognising multiple SKUs from the
Core & Limited Release portfolio from numerous Whisky bodies and organisations around the world.
Financial Position
The net assets of Lark remain strong at $50.40 million as at 30 June 2021 (an increase of $13.02 million from 30 June 2020).
This increase is largely due to the following:
- Profit before income tax for the year of $1.05 million; driven by the following:
a) Gross profit of $8.65 million;
b) Other income of $0.72 million;
c) Operating expenses of $8.05 million;
d) Net finance costs of $0.27 million.
- Lark’s net assets were strengthened via institutional placement of $8.85 million completed in September 2020.
- Lark’s working capital (current assets less current liabilities) is $15.10 million at 30 June 2021 (30 June 2020: $9.00 million).
5
Lark Distilling Co. Ltd
Directors' report
30 June 2021
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter
as the 'Group') consisting of Lark Distilling Co. Ltd (referred to hereafter as the 'company' or 'parent entity') and the
entities it controlled at the end of, or during, the year ended 30 June 2021.
Directors
The following persons were directors of Lark Distilling Co. Ltd during the whole of the financial year and up to the date of
this report, unless otherwise stated:
Mr David Dearie (Non-Executive Chairman)
Mr Geoff Bainbridge (Managing Director)
Mr Warren Randall (Non-Executive Director)
Ms Laura McBain (Non-Executive Director)
Mr Laurent Ly (Non-Executive Director) - resigned on 22 April 2021
Principal activities
The principal activities of the Group during the year ended 30 June 2021 were in the further development of investment
opportunities in the Australian craft distilling industry and management of current equity investments in this industry,
including the operation of the Lark, Nant, and Forty Spotted Distilleries.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Significant changes in the state of affairs
On 3 July 2020 Lark Distilling Co. Ltd announced the appointment of Alex Aleksic as the Chief Financial Officer of the
group.
On 18 September 2020, Lark Distilling Co. Ltd successfully raised $8.85 million via an institutional placement of shares.
Total shares issued as part of this placement were 8,052,334 at a price of $1.10 per share. The proceeds raised under
the placement will be used to fund the inventory build of Lark’s whisky under maturation. The new shares issued were
settled on 23 September 2020.
On 22 April 2021, Lark Distilling Co. Ltd announced that Mr Laurent Ly resigned as Non-executive Director.
There were no other significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
On 1 July 2021 Lark Distilling Co. announced details of the renewal of the Company’s Managing Director, Geoff
Bainbridge’s Service Contract including the issue of additional Performance Rights, being the issue of 40,000 Tranche 2
and 35,000 Tranche 3 shares, subject to shareholder approval.
On 12 July 2021 Lark Distilling Co. announced the issue of 20,000 shares at $3.23, issued in relation to an incentive to
accelerate the Lark on-premises distribution strategy.
Also on 12 July 2021, Lark Distilling Co. announced the exercise of 8,337 options into shares at an exercise price of
$2.25.
On 2 August 2021, Lark Distilling Co. announced the expiry of 102,776 options at various exercise prices.
On 1 September 2021, Lark Distilling Co. announced the exercise of 8,337 options into shares at an exercise price of
$2.25.
No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect
the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Likely developments and expected results of operations
Information on likely developments in the operations of the Group 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 Group.
6
Lark Distilling Co. Ltd
Directors' report
30 June 2021
Environmental regulation
The consolidated Group’s operations are not subject to significant environmental regulation under a law of China, or of
the Commonwealth or of a state or territory of Australia. During the financial year, the Directors have not been notified or
are aware to be in breach of any environmental regulations.
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Mr David Dearie
Non-Executive Chairman
MHCIMA, Glasgow College of Food and Technology, Institute of Marketing
Diploma, University of Hull
A global beverage industry leader with over 30 years experience in alcohol retailing,
distribution and brand building. Founding CEO of Treasury Wines estates Ltd
(TWE), and senior executive positions with Fosters Group Ltd and Brown-Forman.
None
Other current directorships:
Former directorships (last 3 years): None
Special responsibilities:
Member of the Audit and Risk Committee, and member of the Remuneration and
Nomination Committee.
50,000 fully paid ordinary shares
680,000 performance rights
Interests in shares:
Interests in rights:
Experience and expertise:
Name:
Title:
Qualifications:
Mr Geoff Bainbridge
Managing Director
Bachelor of Business from RMIT with a major in Accounting and ASIC Graduate
Certificate in Applied Finance
Over 10 years at Fosters Group Pty Ltd with experience in group strategy and
business development in Australia, China, India and Vietnam; and Managing
Director for the domestic Continental Sprits business. Sales and marketing
specialist across a portfolio of brands including founding partner of Grill’d Burgers,
Bounce Trampolines, Happy Socks and Studio Ongarato and extensive experience
in business and people strategy across multiple sectors and geographies.
Other current directorships:
None
Former directorships (last 3 years): None
None
Special responsibilities:
3,474,033 (shares are held directly and indirectly by GJ Bainbridge Pty Ltd
Interests in shares:
(Bainbridge Super No. 1) and Bainbridge Family Pty Ltd (Bainbridge Family A/C))
960,000 performance rights
Interests in rights:
Experience and expertise:
Name:
Title:
Qualifications:
Mr Warren Randall
Non-Executive Director
Bachelor of Agricultural Science & Wine Science(Adelaide), Bachelor of Oenology
(Wine Science) (Charles Sturt)
43 years in the Australian Wine Industry graduating from Adelaide University in
Agricultural Science and Charles Sturt University in Wine Science, with experience
working for Seppelt Great Western Winery, Andrew Garrett Wines, Tinlins Wines,
Wynns Winegrowers, Seaview Champagne Cellars and Lindemans Wines. Warren
was also appointed a Director of the board at the Adelaide Football Club.
None
Other current directorships:
Former directorships (last 3 years): None
Special responsibilities:
Chair of Remuneration and Nomination Committee, member of the Audit and Risk
Committee
2,389,295 (shares are all held by Seppeltsfield Pty Ltd (Seppeltsfield Estate A/C))
300,000 performance rights
Interests in shares:
Interests in rights:
7
Lark Distilling Co. Ltd
Directors' report
30 June 2021
Name:
Title:
Experience and expertise:
Ms. Laura McBain
Non-Executive Director
Brand, marketing and strategy leader for Asia-Pacific FMCG businesses with
accounting background. MD/CEO of Bellamy’s Australia from 2007 to 2017
pioneering Australia’s infant formula brands in China. MD of Maggie Beer Holdings
Ltd 2017 to 2019, leading several acquisitions and integrations of premium food
businesses into public company. Strategic advisor to nutrition businesses and
former director of Export Finance Australia (Australia’s government export credit
agency). 2013 Telstra Australian Business Woman of the Year (Private and
Corporate) and Telstra Tasmanian Business Woman of the year. Holds a Bachelor
of Commerce and completed
IMD Leadership Challenge 2013 and
IESE/Wharton/CEIBS Global CEO program 2017.
Capitol Health Limited (ASX:CAJ) (appointed 1 July 2021)
Other current directorships:
Former directorships (last 3 years): Maggie Beer Holdings Limited (ASX:MBH) (resigned 27 November 2019)
Special responsibilities:
Chair of Audit and Risk Committee, member of the Remuneration and Nomination
Committee
29,000 (shares all held by Vermilion 21 Pty Ltd (McNelhaus Super Fund A/C))
90,000 performance rights
Interests in shares:
Interests in rights:
'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.
Chief Financial Officer
Mr. Alex Aleksic, CPA
Alex Aleksic is a senior business strategist and advisor with more than 20 years experience in commercial, operational
and financial roles within multinationals, ASX Top 50 organisations, Private Equity and High Networth ownership
structures. He was Chief Financial Officer at Accent Group, which owns a variety of brands including Platypus, HYPE
DC, Skechers & VANS and Shaver Shop. Alex has also held numerous senior multi-discipline roles within Goodyear
Dunlop (Beaurepaires), Telstra, Coles and Kodak Australasia.
Company secretary
Ms Melanie Leydin – BBus (Acc. Corp Law) CA FGIA
Melanie Leydin holds a Bachelor of Business majoring in Accounting and Corporate Law. She is a member of the
Institute of Chartered Accountants, Fellow of the Governance Institute of Australia and is a Registered Company Auditor.
She graduated from Swinburne University in 1997, became a Chartered Accountant in 1999 and since February 2000
has been the principal of Leydin Freyer. The practice provides outsourced company secretarial and accounting services
to public and private companies across a host of industries including but not limited to the Resources, technology,
bioscience, biotechnology and health sectors.
Melanie has over 25 years’ experience in the accounting profession and over 15 years as a Company Secretary. She
has extensive experience in relation to public company responsibilities, including ASX and ASIC compliance, control and
implementation of corporate governance, statutory financial reporting, reorganisation of Companies and shareholder
relations.
8
Lark Distilling Co. Ltd
Directors' report
30 June 2021
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') held during the year ended 30 June 2021,
and the number of meetings attended by each director were:
Mr David Dearie
Mr Geoff Bainbridge
Mr Warren Randall
Mr Laurent Ly
Ms Laura McBain
Directors' Meetings
Held
Attended
Audit and Risk Committee
Attended
Held
8
8
7
6
7
8
8
8
8
8
-
-
-
3
3
-
-
-
3
3
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 Group, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling
the activities of the entity, directly or indirectly, including all directors.
Remuneration Policy
The remuneration policy of the Company has been designed to align key management personnel objectives with
shareholder and business objectives. The board of the Company believes the remuneration policy to be appropriate and
effective in its ability to attract and retain the best key management personnel to run and manage the consolidated
group, as well as create goal congruence between directors, executives and shareholders.
The board’s policy for determining the nature and amount of remuneration for key management personnel of the
consolidated group is as follows:
●
●
●
The remuneration policy, setting the terms and conditions for the key management personnel, was developed by
the remuneration committee and approved by the board after seeking professional advice from independent
external consultants.
All key management personnel receive a base salary (which is based on factors such as length of service and
experience), superannuation, with the potential for options and other incentives. Options to be issued at the
discretion of the Board.
The remuneration committee reviews key management personnel packages annually by reference to the
consolidated group’s performance and executive performance.
The performance of key management personnel is reviewed annually and is based predominantly on the forecast growth
of the consolidated group’s profits and shareholders’ value. All bonuses and option incentives are issued at the
discretion of the Board. Any incentives or bonuses must be justified by reference to measurable performance criteria.
The policy is designed to attract the highest calibre of other key management personnel executives and reward them for
performance that results in long-term growth in shareholder wealth.
Key management personnel are also entitled to participate in the employee share and option arrangements
The key management personnel who are under employee agreements receive a superannuation guarantee contribution
required by the government, which is currently 10%, and do not receive any other retirement benefits. Some individuals,
however, may choose to sacrifice part of their salary to increase payments towards superannuation.
All remuneration paid to key management personnel is valued at the cost to the company and expensed, shares given to
key management personnel are valued as the difference between the market price of those shares and the amount paid
by key management personnel. Options are valued using Monte-Carlo or Black-Scholes methodology.
9
Lark Distilling Co. Ltd
Directors' report
30 June 2021
The board policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The
Company’s constitution and the ASX Listing Rules specify that the aggregate remuneration of non executive directors
shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then
divided between the directors as agreed. The latest determination was as outlined in the Company’s Initial Public
Offering prospectus of $300,000 per annum.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is
apportioned amongst directors is reviewed annually. The board considers advice from external parties as well as the
fees paid to non executive directors of comparable companies when undertaking the annual review process. Fees for
non-executive directors are not linked to the performance of the consolidated group. However, to align directors’
interests with shareholder interests, the directors are encouraged to hold shares in the company and are able to
participate in the employee option plan.
Key Management Personnel Remuneration Policy
The board seeks to set aggregate remuneration at a level which provides the company with the ability to attract and
retain key management of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
The remuneration structure for key management personnel is based on a number of factors, including length of service,
particular experience of the individual concerned, and overall performance of the company. The contracts for service
between the company and key management personnel are on a continuing basis, the terms of which are not expected to
change in the immediate future. Upon retirement key management personnel are paid employee benefit entitlements
accrued to date of retirement.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the Group are set out in the following tables.
The key management personnel of the Group consisted of the following directors of Lark Distilling Co. Ltd:
●
●
●
●
●
Mr David Dearie (Non-Executive Chairman)
Mr Geoff Bainbridge (Managing Director)
Mr Warren Randall (Non-Executive Director)
Mr Laurent Ly (Non-Executive Director) - resigned on 22 April 2021
Ms Laura McBain (Non-Executive Director)
And the following person:
●
Mr Alex Aleksic (Chief Financial Officer) - appointed on 3 July 2020
2021
Non-Executive Directors:
Mr David Dearie
Mr Warren Randall (c)
Mr Laurent Ly (a)
Ms Laura McBain
Executive Directors
Mr Geoff Bainbridge
Other KMP
Mr Alex Aleksic (b)
Short-term benefits
Post-
employmen
t benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
Super-
monetary annuation
$
$
Long
service
leave
$
Equity-
settled
$
Total
$
85,000
50,000
40,556
50,000
350,000
399,984
975,540
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
-
-
-
-
-
-
-
-
-
-
-
155,207
49,769
-
8,129
240,207
99,769
40,556
58,129
-
232,170
582,170
-
-
12,592
412,576
457,867 1,433,407
Lark Distilling Co. Ltd
Directors' report
30 June 2021
(a)
(b)
(c)
Mr Laurent Ly resigned as the Non-executive Director on 22 April 2021
Mr Alex Aleksic was appointed as the Chief Financial Officer on 3 July 2020.
The Group made purchases amounting to $288,217 (June 2020: $73,084) from an entity associated with Mr
Warren Randall (Non-Executive Director). These transactions were for the purchase of wooden barrels from
Seppeltsfield Wines Pty Ltd (ABN: 97 127 078 282) for the Group to use in its’ production process of Lark.
These transactions are considered to be arms-length transactions
Short-term benefits
Post-
employmen
t benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
Super-
monetary annuation
$
$
Long
service
leave
$
Equity-
settled
$
Total
$
50,000
41,667
4,167
122,917
324,247
121,953
664,951
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,490
10,490
-
-
-
-
-
-
-
47,670
47,670
-
97,670
89,337
4,167
187,501
168,433
310,418
492,680
-
132,443
451,274 1,126,715
2020
Non-Executive Directors:
Mr Warren Randall (f)
Mr Laurent Ly (a)
Ms Laura McBain (b)
Executive Directors
Mr David Dearie (d)
Mr Geoff Bainbridge (c)
Other KMP
Mr Brendan Waights (e)
(a) Mr Laurent Ly was appointed 2 September 2019. Fees for the period were paid through director services company
Spica Capital on behalf of Laurent Ly.
(b) Ms Laura McBain was appointed 25 May 2020.
(c) Mr Geoff Bainbridge was appointed into the executive role of Managing Director effective 4 October 2019.
(d) Mr David Dearie was appointed into the executive role of Executive Chairman effective 4 October 2019 to 1 May
2020, Non-executive Chairman from that day forward.
(e) Mr Brendan Waights resigned 31 August 2019. The cash salary figure above includes $71,250 paid in relation to Mr
(f)
Waights resignation.
The Group made purchases amounting to $73,084 (June 2019: NIL) from an entity associated with Mr Warren
Randall (Non-Executive Director). These transactions were for the purchase of wooden barrels from Seppeltsfield
Wines Pty Ltd (ABN: 97 127 078 282) for the Group to use in its’ production process of Lark. These transactions
are considered to be arms-length transactions.
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:
Agreement commenced:
Term of agreement:
Details:
Mr David Dearie
Non-Executive Chairman
4 October 2019
No fixed term
Remuneration: $85,000 per annum
Time commitment to board meetings, meetings of Board committees and general
meetings.
In a prior year, Mr Dearie was issued 1,180,000 Performance Rights. As at 30 June
2021, the following Performance Rights remained on issue, with terms and
conditions as noted, and with an expiry of 31 December 2026:
11
Lark Distilling Co. Ltd
Directors' report
30 June 2021
Tranche no.
Tranche 2
Tranche 3
Tranche 4
Tranche 5
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Tranche no.
Tranche 2
Tranche 3
Tranche 4
Tranche 5
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Tranche no.
Tranche 4
Tranche 5
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Tranche no.
Tranche 4
Tranche 5
Target market
share price
and continuous service to:
Performance
rights to vest
$1.650 31 December 2021
$1.950 31 December 2022
$2.250 31 December 2022
$2.550 31 December 2023
60,000
70,000
200,000
350,000
Mr Geoff Bainbridge
Managing Director
4 October 2019
No fixed term
Remuneration: $300,000 per annum
Time commitment: 3 days per week
Executive role responsibilities: direct management and oversight of operations;
investor relations.
In addition to the above, in a prior year, Mr Bainbridge was issued 1,060,000
Performance Rights. As at 30 June 2021, the following Performance Rights
remained on issue, with terms and conditions as detailed and with an expiry date of
31 December 2026:
Target market
share price
and continuous service to:
Performance
rights to vest
$1.650 31 December 2021
$1.950 31 December 2022
$2.250 31 December 2022
$2.550 31 December 2023
50,000
60,000
350,000
500,000
Mr Warren Randall
Non-Executive Director
21 May 2019
No fixed term
Remuneration: $50,000 annual directors fee (excluding GST)
In a prior year, Mr Randall was issued 300,000 Performance Rights. As at 30 June
2021, the following Performance Rights remained on issue, with terms and
conditions as detailed and with an expiry date of 31 December 2026:
Target market
share price
and continuous service to:
$2.250 31 December 2022
$2.550 31 December 2023
Performance
rights to vest
100,000
200,000
Ms Laura McBain
Non-Executive Director
1 June 2020
No fixed term
Remuneration: $50,000 annual directors fee (excluding GST). During the year, Ms
Laura McBain was granted the following performance rights, however they are
subject to issue upon shareholder approval.
Target market
share price
and continuous service to:
$2.25 December 2023
$2.55 December 2024
Performance
rights to vest
45,000
45,000
12
Lark Distilling Co. Ltd
Directors' report
30 June 2021
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Tranche no.
Tranche 3
Tranche 4
Tranche 5
Mr Alex Aleksic
Chief Financial Officer
3 July 2020
No fixed term
Mr Alex Aleksic's remuneration is paid through Right Size Advisory.
During the year Mr Alex Aleksic was granted the following performance rights. They
were issued subsequent to year end.
Target market
share price
and continuous service to:
Performance
rights to vest
$1.95 December 2022
$2.25 December 2023
$2.55 December 2024
20,000
50,000
65,000
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 30 June 2021.
Options
There were no options issued to directors and other key management personnel as part of compensation that were
outstanding as at 30 June 2021.
Performance rights
Details of performance rights over ordinary shares granted, vested and lapsed for directors and other key management
personnel as part of compensation during the year ended 30 June 2021 are set out below:
Name
Grant date
Expiry date
granted
granted
$
vested
$
Number
Value
Value
Number
lapsed /
disposed
Value
lapsed
$
Alex Aleksic
Laura McBain*
Alex Aleksic**
12 February 2021
25 June 2021
25 June 2021
31 December 2026
31 December 2026
31 December 2026
105,000
90,000
30,000
88,077
70,902
21,631
12,539
8,129
53
-
-
-
-
-
-
*
**
Mr Alex Aleksic's performance rights were announced post year end, on 1 July 2021.
Ms Laura McBain's performance rights are subject to approval by shareholders and have not been issued as of
signing date.
13
Lark Distilling Co. Ltd
Directors' report
30 June 2021
The terms and conditions of each grant of performance rights 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
25 November 2019
25 November 2019
25 November 2019
25 November 2019
12 February 2021
12 February 2021
12 February 2021
12 February 2021
25 June 2021
25 June 2021
25 June 2021
Vesting date and
exercisable date
31 December 2021
31 December 2022
31 December 2023
31 December 2024
31 December 2021
31 December 2022
31 December 2023
31 December 2024
31 December 2022
31 December 2023
31 December 2024
Expiry date
31 December 2026
31 December 2026
31 December 2026
31 December 2026
31 December 2026
31 December 2026
31 December 2026
31 December 2026
31 December 2026
31 December 2026
31 December 2026
Performance rights granted carry no dividend or voting rights.
Additional information
The earnings of the Group for the five years to 30 June 2021 are summarised below:
Share price Fair value
per right
hurdle for
at grant date
vesting
$1.650
$1.950
$2.250
$2.550
$1.650
$1.950
$2.250
$2.550
$1.950
$2.250
$2.550
$1.04700
$1.00200
$0.96300
$0.95100
$1.44900
$1.38500
$1.34400
$1.28200
$3.27000
$3.27000
$3.27000
2021
$
2020
$
2019
$
2018
$
2017
$
Sales revenue
Profit / (loss) after income tax
16,542,984
3,441,475
7,302,136
(1,272,296)
5,523,207
(4,327,069)
428,476
(3,388,235)
96,570
(2,637,474)
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 Group, including their personally related parties, is set out below:
Ordinary shares
Mr David Dearie
Mr Geoff Bainbridge
Mr Warren Randall
Mr Laurent Ly*
Ms Laura McBain
Mr Alex Aleksic
Balance at Received
the start of as part of
the year
remuneration Additions
Disposals/
other
Balance at
the end of
the year
-
3,069,033
2,389,295
4,748,373
11,000
-
-
10,217,701
-
-
-
-
-
-
-
-
50,000
405,000
-
-
18,000
-
-
473,000
-
-
-
(4,748,373)
-
-
-
(4,748,373)
50,000
3,474,033
2,389,295
-
29,000
-
-
5,942,328
*
Mr Laurent Ly resigned as the Non-executive Director on 22 April 2021.
14
Lark Distilling Co. Ltd
Directors' report
30 June 2021
Performance rights holding
The number of performance rights over ordinary shares in the company held during the financial year by each director
and other members of key management personnel of the Group, including their personally related parties, is set out
below:
Performance rights over ordinary shares
Mr David Dearie
Mr Geoff Bainbridge
Mr Warren Randall
Mr Laurent Ly*
Ms Laura McBain**
Mr Alex Aleksic***
Balance at
the start of
the year
Granted
Expired/
forfeited/
other
Balance at
the end of
the year
Vested
1,180,000
1,060,000
300,000
300,000
-
-
-
2,840,000
-
-
-
-
90,000
135,000
-
225,000
(50,000)
(100,000)
-
-
-
-
-
(150,000)
(450,000)
-
-
(300,000)
-
-
-
(750,000)
680,000
960,000
300,000
-
90,000
135,000
-
2,615,000
*
**
Mr Laurent Ly resigned as the Non-executive Director on 22 April 2021. The balance of performance rights held
lapsed on resignation
Ms Laura McBain's performance rights are based on grant date as per offer acceptance date during the year,
however issue date is subject to shareholder approval.
*** Mr Alex Aleksic's performance rights are based on grant date as per offer acceptance during the year, however
they were issued subsequent to year end.
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of Lark Distilling Co. Ltd under option at the date of this report are as follows:
Grant date
Expiry date
Exercise
price
Number
under option
2 November 2020
31 December 2022
$2.250
216,667
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.
Shares under performance rights
Unissued ordinary shares of Lark Distilling Co. Ltd under performance rights at the date of this report are as follows:
Grant date*
17/12/2019
16/03/2020
12/02/2021
25/06/2021
Expiry date
31/12/2026
31/12/2026
31/12/2026
31/12/2026
Number
1,940,000
323,333
595,000
265,000
3,123,333
* Grant date used for accounting purposes; performance rights dated 12/02/2021 and 25/06/2021 were issued on
01/07/2021.
No person entitled to exercise the performance rights had or has any right by virtue of the performance right to
participate in any share issue of the company or of any other body corporate.
15
Lark Distilling Co. Ltd
Directors' report
30 June 2021
Shares issued on the exercise of options
The following ordinary shares of Lark Distilling Co. Ltd were issued during the year ended 30 June 2021 and up to the
date of this report on the exercise of options granted:
Date options granted
22 May 2018
22 May 2018
22 May 2018
22 May 2018
22 May 2018
Exercise
price
Number of
shares issued
$0.900
$1.125
$1.350
$2.250
$2.250
138,046
138,046
138,046
8,337
8,337
430,812
Shares issued on the exercise of performance rights
The following ordinary shares of Lark Distilling Co. Ltd were issued during the year ended 30 June 2021 and up to the
date of this report on the exercise of performance rights granted:
Date performance rights granted
25 November 2019
Exercise
price
Number of
shares issued
$0.000
150,000
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.
During the financial year, 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 Deloitte Touche Tohmatsu
There are no officers of the company who are former partners of Deloitte Touche Tohmatsu.
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
Deloitte Touche Tohmatsu continues in office in accordance with section 327 of the Corporations Act 2001.
16
Lark Distilling Co. Ltd
Directors' report
30 June 2021
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
___________________________
David Dearie
Non-Executive Chairman
30 September 2021
17
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Level 8, 22 Elizabeth Street
Hobart, TAS, 7000
Australia
Phone: +61 3 6237 7000
www.deloitte.com.au
Lark Distilling Co. Ltd
Level 1
30 Argyle Street
Hobart TAS 7000
30 September 2021
Dear Board Members
Lark Distilling Co. Ltd
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Lark Distilling Co. Ltd.
As lead audit partner for the audit of the financial statements of Lark Distilling Co. Ltd for the financial
year ended 30 June 2021, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Carl Harris
Partner
Chartered Accountant
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation
18
Lark Distilling Co. Ltd
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2021
Revenue
Revenue
Cost of sales
Gross profit
Other income
Expenses
Selling and distribution expenses
Administration expenses
Employee benefit expense
Depreciation and amortisation
Operating profit/(loss)
Finance income
Finance costs
Note
Consolidated
2021
$
2020
$
5
9
16,542,984
(7,888,608)
7,426,459
(3,384,365)
8,654,376
4,042,094
6
723,022
748,803
9
7
8
10
(1,889,273)
(2,981,975)
(2,985,221)
(205,798)
(824,856)
(2,401,675)
(2,541,438)
(127,068)
1,315,131
(1,104,140)
11
12
2,167
(271,343)
19,117
(187,273)
Profit/(loss) before income tax benefit
1,045,955
(1,272,296)
Income tax benefit
13
2,395,520
-
Profit/(loss) after income tax benefit for the year attributable to the owners of
Lark Distilling Co. Ltd
9
3,441,475
(1,272,296)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income / (loss) for the year attributable to the owners
of Lark Distilling Co. Ltd
376
376
447
447
3,441,851
(1,271,849)
Cents
Cents
Basic earnings per share
Diluted earnings per share
39
39
5.66
5.35
(2.34)
(2.34)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
19
Lark Distilling Co. Ltd
Statement of financial position
As at 30 June 2021
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepaid assets
Total current assets
Non-current assets
Inventories
Property, plant and equipment
Right-of-use assets
Intangibles
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Financial liabilities
Employee benefits
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Financial liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
Consolidated
2021
$
2020
$
14
15
16
17
7,645,874
2,394,945
7,840,235
708,089
6,119,362
1,532,937
4,950,050
21,244
18,589,143 12,623,593
18
19
20
21
22
23
26
24
25
26
24
8,434,320
1,643,857
17,981,665 14,329,411
7,907,617
206,930
11,224,514 11,229,315
-
41,785,460 33,673,273
2,501,104
60,374,603 46,296,866
2,927,061
214,427
262,594
3,404,082
3,054,055
423,612
150,263
3,627,930
-
5,000,000
1,534,163
38,092
6,572,255
17,247
5,000,000
176,060
98,531
5,291,838
9,976,337
8,919,768
50,398,266 37,377,098
27
28
29
58,498,886 49,475,985
1,100,504
543,712
(9,201,124) (12,642,599)
50,398,266 37,377,098
The above statement of financial position should be read in conjunction with the accompanying notes
20
Lark Distilling Co. Ltd
Statement of changes in equity
For the year ended 30 June 2021
Consolidated
Issued
capital
$
Retained
Reserves
$
profits
$
Total equity
$
Balance at 1 July 2019
49,361,969
47,641 (11,370,303) 38,039,307
Loss after income tax benefit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income / (loss) for the year
-
-
-
-
447
(1,272,296)
-
(1,272,296)
447
447
(1,272,296)
(1,271,849)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 27)
Share-based payments (note 40)
114,016
-
-
495,624
-
-
114,016
495,624
Balance at 30 June 2020
49,475,985
543,712 (12,642,599) 37,377,098
Consolidated
Issued
capital
$
Retained
Reserves
$
profits
$
Total equity
$
Balance at 1 July 2020
49,475,985
543,712 (12,642,599) 37,377,098
Profit after income tax benefit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
-
-
-
-
376
3,441,475
-
3,441,475
376
376
3,441,475
3,441,851
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs and tax (note
27)
Share-based payments (note 40)
Issue of shares on exercise of unlisted options
8,556,996
-
465,905
-
556,416
-
-
-
-
8,556,996
556,416
465,905
Balance at 30 June 2021
58,498,886
1,100,504
(9,201,124) 50,398,266
The above statement of changes in equity should be read in conjunction with the accompanying notes
21
Lark Distilling Co. Ltd
Statement of cash flows
For the year ended 30 June 2021
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Purchase of inventory
Interest paid
Interest received
Government grants received
Note
Consolidated
2021
$
2020
$
17,589,777
(8,669,289)
(15,778,286)
(271,343)
2,167
751,878
8,348,262
(3,858,586)
(7,887,738)
(163,315)
33,385
-
Net cash used in operating activities
38
(6,375,096)
(3,527,992)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Proceeds from sale of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue transaction costs
Proceeds from the exercise of options
Proceeds from borrowings
Repayment of financial liabilities
Payment of lease liabilities under AASB 16
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
(774,007)
(13,094)
150,000
(1,330,644)
(244,996)
6,000
(637,101)
(1,569,640)
8,857,503
(406,091)
465,905
-
(296,915)
(81,693)
-
-
-
5,000,000
(490,354)
(23,958)
8,538,709
4,485,688
1,526,512
6,119,362
(611,944)
6,731,306
Cash and cash equivalents at the end of the financial year
14
7,645,874
6,119,362
The above statement of cash flows should be read in conjunction with the accompanying notes
22
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 1. General information
The financial statements cover Lark Distilling Co. Ltd (previously Australian Whisky Holdings Limited) as a Group
consisting of Lark Distilling Co. Ltd and the entities it controlled at the end of, or during, the year. The financial
statements are presented in Australian dollars, which is Lark Distilling Co. Ltd's functional and presentation currency.
Lark Distilling Co. Ltd is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business are:
Registered office
Level 1
30 Argyle Street
Hobart TAS 7000
Principal place of business
Level 1
30 Argyle Street
Hobart TAS 7000
A description of the nature of the Group'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 September 2021.
The directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
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').
The financial statements cover Lark Distilling Co. Limited (“Company”) and its controlled entities as a consolidated entity
(“Group”). Lark Distilling Co. Limited is a company limited by shares, incorporated and domiciled in Australia.
Compliance with Australian Accounting Standards ensures that the financial statements and notes of Australian Whisky
Holdings Limited and its controlled entities comply with International Financial Reporting Standards (IFRS). Australian
Whisky Holdings Limited is a for profit entity for the purpose of preparing the financial statements.
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.
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 Group'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 3.
New or amended Accounting Standards and Interpretations adopted
The group 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.
23
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Financial Instruments
Financial Assets
Recognition and Initial Measurement
Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group
becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at
fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or
financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular
way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame
established by regulation or convention in the marketplace. All recognised financial assets are measured subsequently
in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market and are subsequently measured at amortised cost using the effective interest rate method.
Non-current investments are measured on the cost basis to the extent they represent investments in wholly owned
subsidiaries which are consolidated in accordance with note 2. The carrying amount of non-current investments is
reviewed annually by directors to ensure it is not in excess of the recoverable amount of these investments. The
recoverable amount is assessed by comparing the underlying net assets to carrying value recognised in the Company.
Impairment of financial assets
The Group recognises lifetime expected credit losses for trade receivables. The expected credit losses on these
financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted
for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well
as the forecast direction of conditions at the reporting date, including time value of money where appropriate.
For all other financial instruments, the Group recognises lifetime expected credit losses (“ECL”) when there has been a
significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not
increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an
amount equal to 12-month ECL.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred
to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits
associated with the asset.
24
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Financial Liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using
the effective interest rate method.
Financial liabilities that are not
(i) contingent consideration of an acquirer in a business combination,
(ii) held-for-trading, or
(iii) designated as at fair value through profit or loss (“FVTPL”), are measured subsequently at amortised cost using the
effective interest method. The effective interest method is a method of calculating the amortised cost of a financial
liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the
effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial
liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.
Derecognition
Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The
difference between the carrying value of the financial liability extinguished or transferred to another party and the fair
value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognized in profit or
loss.
Impairment of assets
At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether
there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the
asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying
value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of profit or loss
and other comprehensive income.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where it is not possible
to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-
generating unit to which the asset belongs.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the
extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.
Principles of consolidation
A controlled entity is any entity that the Company has the power to control the financial and operating policies of the
entity so as to obtain benefits from its activities. In assessing the power to govern, the existence and effect of holdings of
actual and potential voting rights are considered.
A list of controlled entities is contained in note 36 to the consolidated financial statements. All controlled entities have a
June financial year-end, except for Aowei Liquor Industries Beijing Limited (former name Beijing Montec Commercial
Limited), which has a December year end; and Australian Whisky Holdings (HK) Limited (former name Montec
International (HK) Limited), which has a March year end.
As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated
financial statements as well as their results for the year then ended. Where controlled entities have entered the
consolidated group during the year, their operating results have been included from the date control was obtained.
All inter-company balances and transactions between entities in the Group, including any unrealised profits or losses,
have been eliminated on consolidation. Accounting policies of subsidiaries have been changed to ensure consistencies
with those policies applied by the parent entity.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Lark Distilling Co. Ltd's functional and presentation
currency.
25
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Foreign currency transactions
Foreign currency transactions are translated into Australian 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.
Exchange differences arising on the translation of monetary items are recognised in the statement of Profit or Loss and
other Comprehensive Income.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that
the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the statement of
Profit or Loss and other Comprehensive Income. Group companies
The financial results and position of foreign operations whose functional currency is different from the group’s
presentation currency are translated as follows:
●
●
●
assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
income and expenses are translated at average exchange rates for the period, where this approximates the rate at
date of transaction; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign currency
translation reserve in the statement of Financial Position. These differences are recognised in the statement of Profit or
Loss and other Comprehensive Income in the period in which the operation is disposed.
Other revenue is recognised when it is received or when the right to receive payment is established.
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.
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.
26
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Lark Distilling Co. Ltd (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated
group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the
'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the
tax consolidated group.
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
Group'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 Group'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.
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.
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.
Note 3. 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.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may
have, on the Group based on known information. This consideration extends to the nature of the products and services
offered, customers, supply chain, staffing and geographic regions in which the Group operates. Other than as addressed
in specific notes, there does not currently appear to be either any significant impact upon the financial statements or any
significant uncertainties with respect to events or conditions which may impact the Group unfavourably as at the
reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees 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 Monte Carlo 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.
27
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Goodwill and other indefinite life intangible assets
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether
goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting
policy stated in note 21 . The recoverable amounts of cash-generating units have been determined based on value-in-
use calculations. These calculations require the use of assumptions, including:
- the forecasting of future cash flows (driven by litres available for sale and price achieved per litre)
- the discount rates applicable to the future cash flows and
- expected growth rates.
Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into three operating segments: whisky, gin, and other. These operating segments are 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 operations of the Group in management of equity investments is consistent with the Groups’ strategy to continue its
investment and growth in both whisky (“Lark” as the hero brand) and gin (“Forty Spotted Gin”). Whisky and gin are
assessed as separate segments by the CODM due to the differences in production processes, inventory life cycle,
market categories, working capital requirements and financial contribution to the Group. The “other” segment is
representative of function’s that attribute to Group results but are not directly attributable to whisky or gin segments, and
include hand sanitiser sales. Operating segments are therefore split into the three segments; Lark, Gin and other.
The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies
adopted for internal reporting to the CODM are consistent with those adopted in the financial statements.
The information reported to the CODM is on a monthly basis.
Intersegment receivables, payables and loans
Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans
payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment
loans are eliminated on consolidation.
Major customers
During the year ended 30 June 2021, approximately 23% of the Group's external revenue was derived from sales to one
customer (FY20: 19%).
Operating segment information
Consolidated - 2021
Revenue
Sales to external customers
Other revenue
Interest income
Total revenue
EBITDA
Depreciation and amortisation
Finance costs
Profit/(loss) before income tax benefit
Income tax benefit
Profit after income tax benefit
Whisky
$
Gin
$
Other
$
Total
$
11,705,953
723,022
2,167
12,431,142
3,764,285
-
-
3,764,285
1,072,745 16,542,983
723,022
2,167
1,072,745 17,268,172
-
-
1,151,315
(164,638)
(217,074)
769,603
50,584
(30,870)
(40,701)
(20,987)
321,197
(10,290)
(13,568)
297,339
1,523,096
(205,798)
(271,343)
1,045,955
2,395,520
3,441,475
28
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 4. Operating segments (continued)
Consolidated - 2020
Revenue
Sales to external customers
Other revenue
Total revenue
EBITDA
Depreciation and amortisation
Finance costs
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
Note 5. Revenue
Whisky revenue
Gin revenue
Other revenue
Revenue recognition
The Group recognises revenue as follows:
Whisky
$
Gin
$
Other
$
Total
$
4,889,830
748,803
5,638,633
1,360,944
-
1,360,944
1,175,685
-
1,175,685
7,426,459
748,803
8,175,262
(29,364)
(82,594)
(165,259)
(277,217)
(685,711)
(25,414)
(1,656)
(712,781)
(261,996)
(19,060)
(1,242)
(282,298)
(977,071)
(127,068)
(168,157)
(1,272,296)
-
(1,272,296)
Consolidated
2021
$
2020
$
11,705,953
3,764,285
1,072,746
4,889,832
1,360,944
1,175,683
16,542,984
7,426,459
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in
exchange for transferring goods or services to a customer. For each contract with a customer, the Group: 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 returns, any potential bonuses receivable from the customer and any other contingent events.
Such estimates are determined and consistently applied 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 derived from all sale of inventories to customers are recognised at the time of delivery, except for online sales
which are recognised on dispatch of goods.
All revenue is stated net of the amount of goods and services tax (GST).
29
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 5. Revenue (continued)
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 a combination of Hospitality sales of Non-Lark products, as well as Slainte, Brandy, Rum & Sanitiser
and is recognised when it is received or when the right to receive payment is established.
Note 6. Other income
R&D grant income
Government grant income
Excise rebates
Gain on sale of Overeem brand
Other income
Other income
Consolidated
2021
$
2020
$
92,878
451,000
100,000
-
79,144
30,185
336,457
100,000
165,000
117,161
723,022
748,803
Government grant income
Government grant income relates to $351,000 of JobKeeper and $100,000 of Cashflow Boost payments received in
response to COVID-19.
Gain on sale of Overeem brand
On 19 February 2020 the Group executed a binding Heads of Agreement with Sawford Distillery Pty Ltd for the sale of
the Overeem Single Malt Whisky trademark and limited whisky inventory.
Note 7. Administration expenses
Consolidated
2021
$
2020
$
578,910
575,885
440,558
356,908
337,428
132,967
120,634
42,388
396,297
-
542,997
499,728
112,967
234,674
98,840
336,307
48,476
527,686
2,981,975
2,401,675
Inventory losses
Directors' fees
Consulting fees
Insurance costs
Occupancy costs
Travel, transport and entertainment
Legal fees
IT and communications
Other administration and corporate costs
30
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 8. Employee benefit expense
Salaries and wages
Share based payments expense
Superannuation
Other employee expenses
Movement in employee benefit provisions
Note 9. Profit / loss before income tax expense
Profit / loss before income tax determined after
Cost of goods sold
Directors and consulting fees
Selling and marketing expenses
Legal fees
Occupancy costs
Transport, travel and entertainment
Note 10. Depreciation and amortisation
Depreciation of property, plant and equipment
Amortisation of intangibles
Depreciation of right-of-use assets
Depreciation capitalised into inventory
Note 11. Finance income
Interest income
31
Consolidated
2021
$
2020
$
2,236,849
556,416
109,817
30,858
51,281
1,784,508
495,624
158,345
50,996
51,965
2,985,221
2,541,438
Consolidated
2021
2020
(7,888,608)
(1,016,443)
(1,889,273)
(120,634)
(337,428)
(132,912)
(3,260,042)
(1,042,725)
(824,857)
(336,307)
(234,674)
(98,840)
(11,385,298)
(5,797,445)
Consolidated
2021
$
2020
$
97,304
17,895
90,599
48,097
47,135
31,836
205,798
127,068
235,785
171,406
Consolidated
2021
$
2020
$
2,167
19,117
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 12. Finance costs
Interest expense
Bank and other fees
Note 13. Income tax benefit
Income tax benefit
Deferred tax - origination and reversal of temporary differences
Aggregate income tax benefit
Deferred tax included in income tax benefit comprises:
Increase in deferred tax assets (note 22)
Numerical reconciliation of income tax benefit and tax at the statutory rate
Profit/(loss) before income tax benefit
Tax at the statutory tax rate of 26% (2020: 27.5%)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Share-based payments
R&D offset income
Cashflow boost
Other
Tax losses not recognised
Prior period tax losses now recognised
Year 1 deferred tax assets and liabilities now recognised
Income tax benefit
Amounts credited directly to equity
Deferred tax assets (note 22)
Consolidated
2021
$
2020
$
259,563
11,780
147,672
39,601
271,343
187,273
Consolidated
2021
$
2020
$
(2,395,520)
(2,395,520)
(2,395,520)
-
-
-
1,045,955
(1,272,296)
271,948
(349,881)
144,668
(23,684)
(26,000)
38,317
405,249
-
(2,321,500)
(479,269)
148,687
(8,300)
-
-
(209,494)
209,494
-
-
(2,395,520)
-
Consolidated
2021
$
2020
$
(105,584)
-
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 26% (2020: 27.5%)
18,177,860 27,106,708
4,726,244
7,454,345
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 and future taxable profits are available to offset against the carry forward tax losses.
32
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 13. Income tax benefit (continued)
The franking account balance as at 30 June 2021 was NIL (June 2020: NIL).
Note 14. Current assets - cash and cash equivalents
Cash on hand
Cash at bank
Consolidated
2021
$
2020
$
2,410
7,643,464
3,767
6,115,595
7,645,874
6,119,362
Accounting policy for cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents includes cash on hand and at call deposits
with banks or financial institutions, net of bank overdrafts.
Note 15. Current assets - trade and other receivables
Trade receivables
Other receivables
Expected future credit losses
Deposits paid
Consolidated
2021
$
2020
$
2,306,857
40,609
(8,082)
55,561
1,228,265
279,376
(20,828)
46,124
2,394,945
1,532,937
Accounting policy for trade and other receivables
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.
Note 16. Current assets - inventories
Raw materials - at cost
Work in progress - at cost
Finished goods - at cost
Inventory in casks
Provision for obsolescence
Consolidated
2021
$
2020
$
1,736,215
2,299,983
1,163,852
2,801,691
(161,506)
1,486,300
784,961
346,094
2,332,695
-
7,840,235
4,950,050
Accounting policy for inventories
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value on a
'weighted average' basis. Cost comprises of direct materials and delivery costs, direct labour, import duties and other
taxes, an appropriate proportion of variable and fixed overhead expenditure based on normal operating capacity, and,
where applicable, transfers from cash flow hedging reserves in equity. Costs of purchased inventory are determined
after deducting rebates and discounts received or receivable. Work in progress inventory reflects whisky and gin
currently in production but not yet bottled or barrelled.
33
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 16. Current assets - inventories (continued)
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.
Note 17. Current assets - Prepaid assets
Prepaid wood
Prepaid packaging and other
Note 18. Non-current assets - inventories
Inventory in casks
Consolidated
2021
$
2020
$
98,716
609,373
-
21,244
708,089
21,244
Consolidated
2021
$
2020
$
17,981,665 14,329,411
Non-current inventory represents whisky in casks that is expected to be maturing for at least a further 12 months. The
company does not expect these casks to be decanted or sold within the next 12 months.
Note 19. Non-current assets - property, plant and equipment
Consolidated
2021
$
2020
$
4,564,644
(529,683)
4,034,961
4,564,644
(529,683)
4,034,961
515,743
(66,265)
449,478
166,885
(11,421)
155,464
4,345,421
(1,097,433)
3,247,988
3,689,468
(888,931)
2,800,537
154,044
(92,800)
61,244
154,044
(82,639)
71,405
640,649
845,250
8,434,320
7,907,617
Land - at cost
Impairment
Building improvements - at cost
Less: Accumulated depreciation
Plant, equipment & production assets - at cost
Less: Accumulated depreciation
Motor vehicles - at cost
Less: Accumulated depreciation
Capital work in progress
34
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 19. Non-current assets - property, plant and equipment (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Land and
building
$
Building
improvement
$
Plant,
equipment
and
production
assets
$
Motor vehicle
$
Capital WIP
$
Total
$
4,034,961
-
-
-
100,039
64,231
-
-
2,584,868
560,716
(26,644)
(118,909)
82,608
-
-
-
-
845,250
-
-
6,802,476
1,470,197
(26,644)
(118,909)
-
-
(8,806)
(28,088)
(11,203)
-
(171,406)
-
-
-
(48,097)
(171,406)
Consolidated
Balance at 1 July 2019
Additions
Disposals
Transfer to intangible
Depreciation expense (through
profit or loss)
Depreciation expense
(capitalised to inventory)
Balance at 30 June 2020
Additions
Capitalised to inventory
Transfers in/(out)
Depreciation expense
4,034,961
-
-
-
-
155,464
2,360
-
346,142
(54,488)
2,800,537
241,089
(229,401)
474,802
(39,039)
71,405
-
(6,384)
-
(3,777)
845,250
616,343
-
(820,944)
-
7,907,617
859,792
(235,785)
-
(97,304)
Balance at 30 June 2021
4,034,961
449,478
3,247,988
61,244
640,649
8,434,320
Accounting policy for property, plant and equipment
Items of property, plant and equipment are measured at cost, less accumulated depreciation and any accumulated
impairment losses.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as
separate items (major components) of property, plant and equipment.
Freehold land is not depreciated.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and
losses are recognised in profit and loss.
The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to the
consolidated group commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Freehold improvements
Office and computer equipment
Plant, machinery & production assets
Motor vehicles
2.5%
25% - 33%
5% - 33%
10% - 20%
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
An asset's carrying amount is written down immediately to its recoverable amount if the assets carrying amount is
greater than its estimated recoverable amount.
35
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 20. Non-current assets - right-of-use assets
Land and buildings - right-of-use
Less: Accumulated depreciation
Consolidated
2021
$
2020
$
1,766,452
(122,595)
238,766
(31,836)
1,643,857
206,930
The Group leases land and buildings for its offices, warehouses and retail outlets under agreements of 5 years with,
options to extend up to an additional 10 years. The leases have various escalation clauses. On renewal, the terms of the
leases are renegotiated. The incremental borrowing rate applicable to the leases ranged from 2.7% to 5.45%.
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 July 2019
Additions
Depreciation expense
Balance at 30 June 2020
Additions
Depreciation expense
Balance at 30 June 2021
Land and
building right-
of-use
$
Total
$
-
238,766
(31,836)
-
238,766
(31,836)
206,930
1,527,526
(90,599)
206,930
1,527,526
(90,599)
1,643,857
1,643,857
Accounting policy for 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 Group 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 Group 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.
36
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 21. Non-current assets - intangibles
Goodwill - at cost
Intangible assets - at cost
Less: Accumulated amortisation
Consolidated
2021
$
2020
$
10,934,839 10,934,839
474,845
(185,170)
289,675
461,752
(167,276)
294,476
11,224,514 11,229,315
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 July 2019
Additions
Capitalisation of costs
Amortisation expense
Balance at 30 June 2020
Additions
Disposals
Amortisation expense
Balance at 30 June 2021
Goodwill
$
Other
intangibles
$
Total
$
10,934,839
-
-
-
10,934,839
-
-
-
96,633 11,031,472
126,069
118,909
(47,135)
126,069
118,909
(47,135)
294,476 11,229,315
30,000
(15,957)
(18,844)
30,000
(15,957)
(18,844)
10,934,839
289,675 11,224,514
Accounting policy for 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.
37
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 21. Non-current assets - intangibles (continued)
Goodwill
Goodwill is carried at cost less any accumulated impairment losses.
Goodwill is calculated as the excess of the sum of:
(i) the consideration transferred;
(ii) any non-controlling interest (determined under either the full goodwill or proportionate interest method); and
(iii) the acquisition date fair value of any previously held equity interest;
over the acquisition date fair value of any identifiable assets acquired and liabilities assumed.
Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over the
subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-
controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference
between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or
received is recognised directly in equity and attributed to owners of the Company.
The amount of goodwill recognised on acquisition of each subsidiary in which the Group holds less than 100% interest
will depend on the method adopted in measuring the non-controlling interest. The Group can elect in most
circumstances to measure the non-controlling interest in the acquiree either at fair value (full goodwill method) or at the
non-controlling interest’s proportionate share of the subsidiary’s identifiable net assets (proportionate interest method).
In such circumstances, the Group determines which method to adopt for each acquisition and this is stated in the
respective note to the financial statements disclosing the business combination.
Under the full goodwill method, the fair value of the non-controlling interest is determined using valuation techniques
which make the maximum use of market information where available.
Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included
in investments.
Goodwill is tested for impairment annually and is allocated to the Group’s cash-generating units or groups of cash-
generating units, representing the lowest level at which goodwill is monitored and not larger than an operating segment.
Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity disposed of.
Changes in the ownership interests in a subsidiary that do not result in a loss of control are accounted for as equity
transactions and do not affect the carrying amounts of goodwill.
Other intangible assets
Other intangible assets including patents and trademarks and the whisky barrel fund, that are acquired by the Group and
have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific
asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is
recognised in profit or loss as incurred.
Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-
line method over their estimated useful lives, and is generally recognised in profit or loss. Goodwill is not amortised. The
estimated useful lives for current and comparative periods are as follows:
Intangible asset
Intangible assets
Useful life
5-8 years
38
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 21. Non-current assets - intangibles (continued)
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Note 22. Non-current assets - deferred tax
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis. The following is the analysis of the deferred tax balances
(after offset) for financial reporting purposes.
Deferred tax liabilities comprises taxable temporary differences attributable to:
Amounts recognised in profit or loss:
Fixed assets and right of use assets
Prepayments
Total deferred tax liability recognised in profit or loss
Deferred tax asset comprises deductible temporary differences attributable to:
Amounts recognised in profit or loss:
Tax losses
Provisions and accruals
Other liabilities
Capital raising costs
Foreign exchange
Total deferred tax asset recognised in profit or loss
Amounts recognised in equity:
Transaction costs on share issue
Net deferred tax asset
Movements:
Opening balance
Credited to profit or loss (note 13)
Credited to equity (note 13)
Closing balance
Consolidated
2021
$
2020
$
(530,099)
(27,955)
(558,054)
Consolidated
2021
$
2020
$
2,122,071
148,970
443,389
226,543
12,601
2,953,574
105,584
2,501,104
-
2,395,520
105,584
2,501,104
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
39
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 23. Current liabilities - trade and other payables
Trade payables
Sundry creditors and accrued expenses
Other payables
Refer to note 30 for further information on financial instruments.
Note 24. Current liabilities - employee benefits
Current liabilities:
Employee benefits
Non-current liabilities:
Employee benefits
Accounting policy for employee benefits
Consolidated
2021
$
2020
$
1,825,198
488,299
613,564
1,010,227
1,377,569
666,259
2,927,061
3,054,055
Consolidated
2021
$
2020
$
262,594
150,263
Consolidated
2021
$
2020
$
38,092
98,531
Short-term employee benefits
Provision is made for the consolidated group’s liability for employee benefits arising from services rendered by
employees to balance date. Employee benefits expected to be settled within one year, have been measured at the
amounts expected to be paid when the liability is settled plus related on-costs. Other employee benefits payable later
than one year have been measured at the present value of the estimated future cash outflows to be made for those
benefits. Those cashflows are discounted using market yields on national government bonds with terms to maturity that
match the expected timing of cashflows.
Contributions are made by the consolidated group to employee superannuation funds and are charged as expenses
when incurred.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up
to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary
levels, experience of employee departures and periods of service. Expected future payments are discounted using
market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as
closely as possible, the estimated future cash outflows.
40
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 25. Non-current liabilities - borrowings
Loan - Quality Life Pty Ltd
Refer to note 30 for further information on financial instruments.
The key terms of the loan are as follows:
- Facility amount up to AUD $5,000,000 (fully drawn as at 30 June 2021);
- Term is 5 years after initial drawdown (initial drawdown in March 2020);
- Interest rate of 4% per annum plus the RBA published cash rate paid quarterly;
- Interest only loan with principal due at the end of the term.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Loan - Quality Life Pty Ltd
Consolidated
2021
$
2020
$
5,000,000
5,000,000
Consolidated
2021
$
2020
$
5,000,000
5,000,000
Assets pledged as security
The loan is secured by a registered security interest in real property and whisky held by the Group.
Note 26. Financial liabilities
Current:
Barrel Finance and Logistics
Lease liability
Motor vehicle lease
Non-current:
Lease liability
Consolidated
2021
$
2020
$
48,877
134,756
30,794
329,570
47,026
47,016
214,427
423,612
Consolidated
2021
$
2020
$
1,534,163
176,060
The carrying value of lease liabilities is determined based on cash cost and term of leases, with future lease payments
discounted to present value using the Group's assessed incremental borrowing rate.
Maturity analysis of total discounted lease liabilities as at the reporting date are as follows:
41
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 26. Non-current liabilities - financial liabilities (continued)
1 year or less
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
Accounting policy for financial liabilities
Consolidated
2021
$
2020
$
134,756
139,802
350,228
1,044,133
47,026
50,187
125,873
-
1,668,919
223,086
Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present
value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the
lessor is included in the statement of financial position as a finance lease obligation.
Note 27. Equity - issued capital
Consolidated
2021
Shares
2020
Shares
2021
$
2020
$
Ordinary shares - fully paid
63,069,350
54,452,878 58,498,886 49,475,985
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
Issue of shares to settle liabilities
Issue of shares to settle liabilities
Consolidation of shares on 30 for 1 basis
1 July 2019
16 March 2020
16 March 2020
28 April 2020
1,630,579,441
2,297,436
718,121
(1,579,142,120)
49,361,969
89,600
24,416
-
$0.039
$0.034
$0.000
Balance
Issue of shares
Issue of shares on conversion of Performance
Rights
Issue of shares on exercise of unlisted options
Issue of shares on exercise of unlisted options
Issue of shares on exercise of unlisted options
Transactions costs for period
30 June 2020
23 September 2020
54,452,878
8,052,334
49,475,985
8,857,567
$1.100
7 January 2021
12 March 2021
26 March 2021
15 April 2021
150,000
138,046
138,046
138,046
-
$0.000
$0.900
$1.125
$1.350
$0.000
-
124,241
155,302
186,362
(300,571)
Balance
30 June 2021
63,069,350
58,498,886
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.
42
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 28. Equity - reserves
Foreign currency reserve
Share-based payments reserve
Consolidated
2021
$
2020
$
48,464
1,052,040
48,088
495,624
1,100,504
543,712
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian 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.
Note 29. Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Profit/(loss) after income tax benefit for the year
Accumulated losses at the end of the financial year
Note 30. Financial instruments
a. Financial Risk Management Policy
Consolidated
2021
$
2020
$
(12,642,599) (11,370,303)
(1,272,296)
3,441,475
(9,201,124) (12,642,599)
The Group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable, loans to and
from subsidiaries.
The Board and Management monitor risks on a regular basis as part of formal board meeting and ad-hoc management
discussion.
i. Financial Risk Exposures and Management
The main risks the Group is exposed to through its financial instruments are liquidity risks, foreign currency risk and
credit risk.
Liquidity risks
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its
liabilities when they are due, under both normal and stressed conditions.
Foreign currency risk
The Group does not have any material foreign currency risk exposure.
43
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 30. Financial instruments (continued)
Credit risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to
recognised financial assets is the carrying amount, net of any provisions for doubtful debts of those assets, as disclosed
in the statement of financial position and notes to the financial statements.
There are no material amounts of collateral held as security at 30 June 2021.
The Group does not have any material credit risk exposure to any single debtor or group of debtors under financial
instruments entered into by the Group.
b. Financial Instruments
i. Derivative Financial Instruments
The Group has not participated in the use of any derivative financial instruments during the year.
ii. Financial instrument composition and maturity analysis
The tables below reflect the weighted average effective interest rate on classes of financial assets and financial
liabilities:
Effective
Interest
Rate
2021
%
Effective
Interest
Rate
2020
%
Floating
Interest
Rate
2021
$
Floating
Interest
Rate
2020
$
Non-
interest
Bearing
2021
$
Non-
interest
Bearing
2020
$
Total
2021
$
Total
2020
$
Cash
Trade and other
receivables
-
-
-
-
-
-
- 7,645,874 6,119,362 7,645,874 6,119,362
-
2,394,945
1,532,937
2,394,945
1,532,937
Financial liabilities
Trade payables
Loan – Quality Life
Leases
Lease – BOQ
Logistics
Operating leases
Fixed Interest
Rate
2021
%
Fixed Interest
Rate
2020
%
Total
2021
Total
2020
-
4.00%
-
4.00%
2,927,061
5,000,000
3,071,302
5,000,000
Implicit
interest rate
2021
%
Implicit
interest rate
2020
%
Total
2021
$
Total
2020
$
10.30%
12.30%
2.70%
10.30%
12.30%
5.45%
31,400
48,877
1,668,919
46,633
271,560
233,086
Trade and sundry payables are expected to be paid as follows:
Less than 6 months
Over 6 months
44
30 June
2021
$
30 June
2020
$
2,924,979
2,082
3,054,055
17,247
2,927,061
3,071,302
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 30. Financial instruments (continued)
Interest Rate Risk and Foreign Currency Risk
The Group has not performed a sensitivity analysis relating to its exposure to interest rate risk and foreign currency risk
at balance date as this risk is not material.
Remaining contractual maturities
The amounts disclosed in the above tables are the maximum amounts allocated to the earliest period in which the
guarantee could be called upon. The Group does not expect these payments to eventuate.
Note 31. Key management personnel disclosures
Directors
The following persons were directors of Lark Distilling Co. Ltd during the financial year:
Mr David Dearie
Mr Geoff Bainbridge
Mr Warren Randall
Mr Laurent Ly
Ms Laura McBain
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director - resigned on 22 April 2021
Non-Executive Director
Other key management personnel
The following person also had the authority and responsibility for planning, directing and controlling the major activities
of the Group, directly or indirectly, during the financial year:
Mr Alex Aleksic
Chief Financial Officer
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set
out below:
Short-term employee benefits
Long-term benefits
Share-based payments
Note 32. Remuneration of auditors
Consolidated
2021
$
2020
$
975,540
-
457,867
664,951
10,490
451,274
1,433,407
1,126,715
During the financial year the following fees were paid or payable for services provided by Deloitte Touche Tohmatsu, the
auditor of the company:
Audit services - Deloitte Touche Tohmatsu
Audit or review of the financial statements
Consolidated
2021
$
2020
$
106,500
108,000
45
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 33. Commitments
The Group is exploring possible distillery expansion including further barrel storage options, but no decisions have been
made in relation to these capital costs as at the date of this report.
There are no other commitments for the Group for the period ended 30 June 2021.
Note 34. Related party transactions
During the period ended 30 June 2021, the Group made purchases amounting to $288,217 (June 2020: $73,084) from
an entity associated with Warren Randall (Non-Executive Director). These transactions were for the purchase of wooden
barrels from Seppeltsfield Wines Pty Ltd (ABN: 97 127 078 282) for the Group to use in its’ production process of Lark.
Subsidiaries
Interests in subsidiaries are set out in note 36.
Key management personnel
Disclosures relating to key management personnel are set out in note 31 and the remuneration report included in the
directors' report.
Note 35. Parent entity information
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
Parent
2021
$
2020
$
6,363,381
4,500,312
55,145,455 44,154,887
197,908
197,013
5,197,908
5,197,013
58,498,887 49,475,985
16,397
16,397
1,052,040
471,208
(9,619,777) (11,005,716)
49,947,547 38,957,874
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 30 June 2021 and 30 June 2020.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30 June 2020.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the
following:
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
46
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 36. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy:
Name
Australian Whisky Holdings Bothwell Pty Ltd
Australian Whisky Holdings Services Pty Ltd
Australian Whisky Holdings Management Pty Ltd
Aowei Liquor Industries Beijing Limited (former name Beijing
Montec Commercial Limited)
Australian Whisky Holdings (HK) Limited (former name
Montec International (HK) Limited)
Lark Distillery Pty Ltd
Principal place of business /
Country of incorporation
Level 1, 30 Argyle Street, Hobart TAS
7000
Level 1, 30 Argyle Street, Hobart TAS
7000
Level 1, 30 Argyle Street, Hobart TAS
7000
Beijing PRC 100022
Kowloon, Hong Kong
40 Denholms Road, Cambridge, TAS
7170
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%
100.00%
Note 37. Events after the reporting period
On 1 July 2021 Lark Distilling Co. announced details of the renewal of the Company’s Managing Director, Geoff
Bainbridge’s Service Contract including the issue of additional Performance Rights, being the issue of 40,000 Tranche 2
and 35,000 Tranche 3 shares, subject to shareholder approval.
On 12 July 2021 Lark Distilling Co. announced the issue of 20,000 shares at $3.23, issued in relation to an incentive to
accelerate the Lark on-premises distribution strategy.
Also on 12 July 2021, Lark Distilling Co. announced the exercise of 8,337 options into shares at an exercise price of
$2.25.
On 2 August 2021, Lark Distilling Co. announced the expiry of 102,776 options at various exercise prices.
On 1 September 2021, Lark Distilling Co. announced the exercise of 8,337 options into shares at an exercise price of
$2.25.
No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect
the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
47
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 38. Reconciliation of profit/(loss) after income tax to net cash used in operating activities
Profit/(loss) after income tax benefit for the year
3,441,475
(1,272,296)
Consolidated
2021
$
2020
$
Adjustments for:
Depreciation and amortisation
Movement in deferred taxes recognised to equity
Payables settled via share issue
Non-cash share based payments
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in inventories
Increase in deferred tax assets
Decrease/(increase) in prepayments
Increase in other provisions
Decrease in financial assets
Decrease/Increase in trade creditors and accruals
Net cash used in operating activities
Note 39. Earnings per share
205,798
105,584
-
556,792
298,492
-
114,016
496,071
(862,008)
(6,542,439)
(2,501,104)
(686,845)
51,892
-
(144,241)
(862,490)
(4,503,373)
-
18,124
29,110
300,000
1,854,354
(6,375,096)
(3,527,992)
Consolidated
2021
$
2020
$
Profit/(loss) after income tax attributable to the owners of Lark Distilling Co. Ltd
3,441,475
(1,272,296)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares
Performance rights over shares
Weighted average number of ordinary shares used in calculating diluted earnings per
share
Basic earnings per share
Diluted earnings per share
Note 40. Share-based payments
60,808,172
54,381,840
336,111
3,203,334
-
-
64,347,617
54,381,840
Cents
Cents
5.66
5.35
(2.34)
(2.34)
A share option plan has been established by the Group and approved by shareholders at a general meeting, whereby
the Group may, at the discretion of the Nomination and Remuneration Committee, grant options over ordinary shares in
the company to certain key management personnel of the Group. The options are issued for nil consideration and are
granted in accordance with performance guidelines established by the Nomination and Remuneration Committee.
48
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 40. Share-based payments (continued)
Set out below are summaries of options granted under the plan:
2021
Grant date
Expiry date
price*
Exercise
Balance at
the start of
the year
Granted
Expired/
forfeited/
other
Balance at
the end of
the year
Exercised
22/05/2018
22/05/2018
22/05/2018
22/10/2018
28/11/2017
02/11/2020
30/05/2021
30/05/2021
30/05/2021
01/11/2020
31/07/2021
31/12/2022
2020
$0.900
$1.125
$1.350
$0.960
$2.250
$2.250
138,046
138,046
138,046
103,842
141,667
-
659,647
-
-
-
-
-
233,335
233,335
(138,046)
(138,046)
(138,046)
-
-
-
(414,138)
-
-
-
(103,842)
(38,891)
-
(142,733)
-
-
-
-
102,776
233,335
336,111
Grant date
Expiry date
price*
Exercise
Balance at
the start of
the year
Granted
Expired/
forfeited/
other**
Balance at
the end of
the year
Expired
31/12/2017
31/12/2017
22/05/2018
22/05/2018
22/05/2018
22/10/2018
28/11/2017
30/11/2019
17/10/2019
30/05/2021
30/05/2021
30/05/2021
01/11/2020
31/07/2021
$1.830 14,983,337
3,724,975
$1.140
4,141,380
$0.900
4,141,380
$1.125
4,141,380
$1.350
3,115,265
$0.960
4,250,000
$2.250
38,497,717
- (14,983,337)
-
-
-
(3,724,975)
-
-
(4,003,334)
-
-
(4,003,334)
-
-
(4,003,334)
-
-
(3,011,423)
-
-
(4,108,333)
- (18,708,312) (19,129,758)
-
-
138,046
138,046
138,046
103,842
141,667
659,647
*
**
Exercise price includes the effects of the 30 for 1 consolidation completed in April 2020.
Movement as a result of the 30 for 1 consolidation completed in April 2020.
The weighted average remaining contractual life of options outstanding at the end of the financial year was 1.07 years
(June 2020: 0.86 years).
The options issued during the period were calculated using the following inputs in a Hoadley ESO2 option valuation
model:
Item
Expected volatility (%)
Risk free interest rate (%)
Expected life of options (years)
Expected dividends
Exercise price ($)
Share price at grant date ($)
Range
65%
0.14%
2 years
Nil
$2.25
$1.35
49
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 40. Share-based payments (continued)
Set out below are summaries of performance rights granted under the plan:
2021
Vesting
Balance at
the start of
Grant date
Expiry date
hurdle
the year
Granted*
Converted
Expired/
forfeited
other
changes
25/11/2019
25/11/2019
25/11/2019
25/11/2019
25/11/2019
16/03/2020
16/03/2020
16/03/2020
16/03/2020
12/02/2021
12/02/2021
12/02/2021
25/06/2021
25/06/2021
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
$1.350
$1.650
$1.950
$2.250
$2.550
$1.650
$1.950
$2.250
$2.550
$1.950
$2.250
$2.550
$2.250
$2.550
150,000
110,000
130,000
950,000
1,500,000
200,000
180,000
160,000
140,000
-
-
-
-
-
3,520,000
-
-
-
-
-
-
-
-
-
90,000
248,332
256,668
88,334
176,666
860,000
(150,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
(150,000)
-
-
-
(300,000)
(450,000)
(66,667)
(110,000)
(96,667)
(83,334)
-
-
-
-
-
(1,106,668)
Balance at
the end of
the year
-
110,000
130,000
650,000
1,050,000
133,333
70,000
63,333
56,666
90,000
248,332
256,668
88,334
176,666
3,123,332
*
Performance rights granted during the year based on offer accepted date. 770,000 of these options were issued
subsequent to year end on 1 July 2021, with the remainder to be issued upon shareholder approval.
2020
Vesting
Balance at
the start of
Grant date
Expiry date
hurdle*
the year
Granted
Exercised
25/11/2019
25/11/2019
25/11/2019
25/11/2019
25/11/2019
16/03/2020
16/03/2020
16/03/2020
16/03/2020
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
$1.350
$1.650
$1.950
$2.250
$2.550
$1.650
$1.950
$2.250
$2.550
4,500,000
-
3,300,000
-
-
3,900,000
- 28,500,000
- 45,000,000
6,000,000
-
5,400,000
-
4,800,000
-
-
4,200,000
- 105,600,000
Effect of
share
Balance at
the end of
consolidation*
*
the year
-
(4,350,000)
-
(3,190,000)
-
(3,770,000)
- (27,550,000)
- (43,500,000)
-
(5,800,000)
-
(5,220,000)
-
(4,640,000)
-
(4,060,000)
- (102,080,000)
150,000
110,000
130,000
950,000
1,500,000
200,000
180,000
160,000
140,000
3,520,000
*
**
Exercise price includes the effects of the 30 for 1 consolidation completed in April 2020.
Movement as a result of the 30 for 1 consolidation completed in April 2020.
The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was
5.5 years (June 2020: 6.5 years).
50
Lark Distilling Co. Ltd
Notes to the financial statements
30 June 2021
Note 40. Share-based payments (continued)
For the performance rights 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
12/02/2021
12/02/2021
12/02/2021
25/06/2021
25/06/2021
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
Share price
at grant date
Vesting
hurdle
Expected
volatility
Dividend
yield
Risk-free
interest rate at grant date
Fair value
$1.510
$1.510
$1.510
$3.270
$3.270
$1.950
$2.250
$2.550
$2.250
$2.550
60.00%
60.00%
60.00%
55.00%
55.00%
-
-
-
-
-
0.41%
0.41%
0.41%
0.77%
0.77%
$1.38500
$1.34400
$1.28200
$3.27000
$3.27000
51
Lark Distilling Co. Ltd
Directors' declaration
30 June 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 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June
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.
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
___________________________
David Dearie
Non-Executive Chairman
30 September 2021
52
Deloitte Touche Tohmatsu
ABN 74 490 121 060
83
Level 8
22 Elizabeth Street
Hobart TAS 7000
GPO Box 777
Hobart TAS 7001 Australia
Tel: +61 3 6237 7000
Fax: +61 3 6237 7001
www.deloitte.com.au
Independent Auditor’s Report to the Members of
Lark Distilling Co Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Lark Distilling Co. Limited (the “Company”) and its
subsidiaries (the “Group”) which comprises the consolidated statement of financial position as at 30
June 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 other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
financial performance for the year then ended; and
(ii)
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 & Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (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.
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 for 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.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
53
Key Audit Matter
How the scope of our audit responded to the Key Audit Matter
Our procedures included, but were not limited to:
• Obtaining an understanding of the inventory production
process, lifecycle and cost allocation processes, including
identifying and testing key controls;
Testing a sample of new make inventory during the period to
a supporting bill of materials;
Testing manufacturing overhead capitalisation against the
requirements of AASB 102: Inventories;
•
•
• Detailed testing of costs capitalised to maturing whisky in the
•
cask during the period; and
Testing that inventory is appropriately recognised at the lower
of cost and net realisable value.
We have also assessed the appropriateness of the disclosures made in
the financial statements.
Valuation of whisky inventory
At 30 June 2021, Lark has
reported inventories of
$25,821,900 of which $7,840,235
is classified as current and
$17,981,665 is classified as non-
current. The accounting policy for
inventory is disclosed in note 16.
Inventory is classified as either
current or non-current based on its
stage in the maturation life-cycle,
with inventory classified as current
being ready for bottling and sale
within 12 months of year end and
inventory requiring maturing for a
period greater than 12 months of
year end being classified as non-
current.
AASB 102: Inventories requires
the cost of inventories to comprise
all costs of purchase, costs of
conversion and other costs
incurred in bringing the inventories
to their present location and
condition.
The long life cycle of whisky
inherently increases the audit risk
associated with the valuation of
inventory as costs are required to
be capitalized to whisky under
maturation over a number of
financial years and elements of
judgement are required.
Other Information
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 30 June 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 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.
54
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 has 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 the 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
intentional omissions,
involve collusion,
fraud may
misrepresentations, or the override of internal control.
forgery,
• 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’s audit. We remain
solely responsible for our audit opinion.
55
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, actions
take to eliminate threats or safeguards applied.
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 the Directors’ Report for the year ended 30
June 2021.
In our opinion, the Remuneration Report of Lark Distilling Co. Limited, for the year ended 30 June
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.
DELOITTE TOUCHE TOHMATSU
Carl Harris
Partner
Chartered Accountants
Hobart, 30 September 2021
56
Lark Distilling Co. Ltd
Shareholder information
30 June 2021
The shareholder information set out below was applicable as at 29 September 2021
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
% of total
shares
issued
-
-
-
5
9
-
-
-
9.62
90.38
Options over ordinary
shares
Performance rights over
ordinary shares
Ordinary shares
Number
of holders
% of total
shares
issued
Number
of holders
% of total
shares
issued
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
1,132
803
220
243
60
0.81
3.09
2.57
11.74
81.79
-
2
1
9
-
-
3.85
3.85
92.30
-
Holding less than a marketable
parcel
Equity security holders
2,458
100.00
12
100.00
14
100.00
58
-
-
-
-
-
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
Number held
% of total
shares
issued
6,004,513
3,430,054
3,417,897
3,333,333
2,985,478
2,937,068
2,895,205
2,389,295
1,987,147
1,544,166
1,518,095
1,449,400
1,171,250
1,166,666
1,075,578
1,020,000
1,001,666
844,000
700,000
618,578
9.51
5.44
5.42
5.28
4.73
4.65
4.59
3.79
3.15
2.45
2.41
2.30
1.86
1.85
1.70
1.62
1.59
1.34
1.11
0.98
41,489,389
65.77
Quality Life Pty Ltd (The Neill Family A/C)
HSBC Custody Nominees (Australia) Limited
Malcolm Property Pty Ltd (Malcolm Property A/C)
HSBC Custody Nominees (Australia) Limited-Gsco Eca
Bainbridge Family Pty Ltd (Bainbridge Family A/C)
National Nominees Limited
J P Morgan Nominees Australia Pty Limited
Seppeltsfield Pty Ltd (Sepplesfield Estate A/C)
C H Malcolm Super Pty Ltd (Malcolm Super Fund A/C)
Mr Timothy Tulloch Brock Lewis & Mrs Catherine Anne Lewis (Jg Lewis No2 Will A/C)
Citicorp Nominees Pty Limited
Mirrabooka Investments Limited
Fairisle Holdings Pty Limited (The Tilanbi A/C)
Rhodium Capital Pty Ltd (Rhodium Investment A/C)
Sandhurst Trustees Ltd (Endeavor Asset Mgmt Mda A/C)
Suetone Pty Ltd (The Ak Shadforth Family A/C)
Mark Murton Pty Ltd (Mark Murton P/L S/F A/C)
Rex Family Pension Plan Pty Ltd (Rex Family Pension Plan A/C)
PJ & KE O'Dwyer Super Pty Ltd (Pj & Ke O'Dwyer S/F A/C)
Glenlore Super Pty Ltd (Glenlore Super Scheme A/C)
Unquoted equity securities
There are no unquoted equity securities.
57
Lark Distilling Co. Ltd
Shareholder information
30 June 2021
Substantial holders
Substantial holders in the company are set out below:
Ordinary shares
Number held
% of total
shares
issued
Quality Life Pty Ltd (The Neill Family A/C)
HSBC Custody Nominees
Malcolm Property Pty Ltd (Malcolm Property A/C)
Geoff Bainbridge (Geoff Bainbridge, GJ Bainbridge Super Fund Pty Ltd) (Bainbridge S/F
No. 1 A/C & Bainbridge Family Pty Ltd) (Bainbridge Family A/C)
HSBC Custody Nominees (Australia) Limited GSCO
7,156,769
3,430,054
3,417,897
3,474,033
3,333,333
11.34
5.44
5.42
5.51
5.28
Voting rights
The voting rights attached to ordinary shares are set out below:
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.
Securities subject to voluntary escrow
Corporate Governance Statement
The Company’s 2021 Corporate Governance Statement has been released to ASX on this day and is available on the
Company’s website at: https://larkdistillery.com/investor-centre/
Annual General Meeting and Director Nomination
Lark Distilling Co. Ltd advises that its Annual General Meeting will be held on or about Thursday, 25 November 2021.
The time and other details relating to the meeting will be advised in the Notice of Meeting to be sent to all Shareholders
and released to ASX immediately upon despatch.
The Closing date for receipt of nomination for the position of Director is Thursday, 7 October 2021. Any nominations
must be received in writing no later than 5.00pm (Melbourne time) on This date at the Company’s Registered Office. The
Company notes that the deadline for nominations for the position of Director is separate to voting on Director elections.
Details of the Director’s to be elected will be provided in the Company’s Notice of Annual General Meeting in due
course.
58