L AR K
D istilling
C o. LTD
ABN: 62 104 600 544
A N N U A L R E P O R T
twenty twenty two
LARK Distilling Co. Ltd. Annual Report 2022 • 1
DIRECTORS
Mr David Dearie (Non-Executive Chairman)
Mr Warren Randall (Non-Executive Director)
Ms Laura McBain (Non-Executive Director) -
appointed interim Managing Director on 16 February 2022
Mr Domenic Panaccio (Non-Executive Director)
- appointed on 1 March 2022
COMPANY SECRETARY
Ms Melanie Leydin
REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS
Level 1, 91-93 Macquarie Street
Hobart TAS 7000
AUDITOR
Deloitte Touche Tohmatsu
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)
CORPORATE GOVERNANCE STATEMENT
The Company’s 2022 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/
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CONTENTS
LETTER FROM THE CHAIRMAN
FINANCIAL HIGHLIGHTS
CELEBRATING 30 YEARS OF TASMANIAN WHISKY
AWARDS
DIRECTOR’S 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
SHAREHOLDER INFORMATION
THE FIRST CERTIFIED CARBON
NEUTRAL DISTILLERY IN AUSTRALIA
THE COMPANY HAS CONTINUED
TO DEVELOP ITS WHISKY BANK AS
A KEY PILLAR FOR ITS STRATEGIC
GROWTH OBJECTIVES.
- DAVID DEARIE, CHAIRMAN
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CHAIRMAN & MANAGING
DIRECTOR REPORT
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DAVID DEARIE
CHAIRMAN
LAURA MCBAIN
MANAGING DIRECTOR
Highlights for the year ended 30 June 2022 included:
2.1m LITRES OF WHISKY
UNDER MATURATION
Revenue
57%
to $24.3 million
Normalised
Operating
EBITDA of
$1.4m
Net revenue
(after excise)
$20.3m
Solid cash position of
$16.1m
+ undrawn bank facility of
$10.0m as at 30 June 2022
DEAR FELLOW SHAREHOLDERS,
ON BEHALF OF THE BOARD OF DIRECTORS
OF LARK DISTILLING CO. LTD, WE ARE PLEASED
TO PRESENT OUR 2022 ANNUAL REPORT. THE
COMPANY HAS BEEN ABLE TO INCREASE ITS
REVENUE FROM $16.5 MILLION IN 2021 TO
$24.3 MILLION IN 2022, CONTINUING ITS
GROWTH JOURNEY.
The COVID-19 pandemic continued to present varied
and unusual trading conditions through FY22 and the
company demonstrated flexibility, agility and innovation
during this time. Despite the uncertainty of these
unprecedented economic impacts that we are still
experiencing, the Company has performed very well
during this period.
The company has continued to develop its whisky bank
as a key pillar for its strategic growth objectives. LARK
achieved 2.1 million litres of whisky under maturation
(at 43% ABV) as at 30 June 2022, including approx.
450,000 litres on the acquisition of the Shene Estate.
The company is actively focused on continuing to develop
a robust whisky bank with a diverse cask program to
provide depth in its long-term whisky program.
The volume and diversity of our whisky bank, allows us
to deliver a broad range of classic and limited release
products, which this year included 20 year old Legacy
together with innovative products such as Chinotto
Cask and Dark Lark. These have contributed to
continued growth of our net sales value per during the
year with a 25% increase year on year on our net sales
value per litre to $269 per litre. Moving forward we will
continue to explore product range and mix that optimise
the use of the whisky that we have under maturation.
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LARK Distilling Co. LTDANNUALREPORT2022
CHAIRMAN & MANAGING
DIRECTOR REPORT, CONT’D
The quality of the whisky produced by Lark is not
only recognised by our consumers but also by the
international community. During FY22 Lark received a
slew of awards including;
WORLD WHISKY MASTERS
MASTERS MEDAL FOR CHINOTTO CASK STRENGTH
GOLD FOR CLASSIC CASK, PARA 1992, DARK LARK,
EVOLVED WHISKY BAR SERIES, SYMPHONY NO 1
SYMPHONY NO1 - BEST BLENDED MALT IN 2022
AUSTRALIAN WHISKY AWARDS
WHISKY DISTILLERY OF THE YEAR
WHISKY OF THE YEAR – CHRISTMAS CASK II
One of the highlights for Lark during FY22 was the
acquisition of the Pontville distillery otherwise known
as Shene Estate. The distillery itself contains significant
heritage listed buildings and enables us to develop a
true luxury tourism destination for new and existing
customers.
The site is also the intended home of our new distillery
where we will be able to produce around 1,000,000
litres of new make spirit annually which will grow the
whisky bank and is critical to the future success of Lark.
This year the company reached an important milestone,
the first licensed distillery in Tasmania, celebrating
30 years of LARK. There have been several activities
to celebrate this important achievement, including
the celebration at Pontville in May 2022 with 200 plus
retailers, partners, and media. This event built on the
traditions of Lark as an inclusive community-oriented
business and cemented its position as the leading
Australian luxury whisky brand.
During that 30 year anniversary celebration, Lark Rare
Cask by Glenfarclas was launched celebrating the
special connection that Lark has with the Scottish
whisky industry, through our founder Bill Lark and John
Grant. We want to extend our special thanks to both of
these captains of industry for their vision and continued
support of Lark as we continue the quite pursuit of the
extraordinary.
We have further extended the capabilities of our Board
through the appointment of Domenic Panaccio, an
experienced financial and corporate director with
strong knowledge of the liquor industry combined with
governance and financial insights.
On behalf of the Board, I would like to thank our Lark
team for their continued efforts and commitment
to outstanding whisky and gin; our customers who
are passionate and committed to the Lark and Forty
Spotted Gin brand and our trade partners and suppliers
who have navigated with us the challenges of FY22. I
would also like to thank my fellow Board members for
their contribution to the Company.
Finally, I thank you, the shareholders of Lark Distilling,
for your continued support of the Company.
DAVID DEARIE
CHAIRMAN
LAURA MCBAIN
MANAGING DIRECTOR
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“WE’VE BEEN CRAFTING SOME OF THE
FINEST AUSTRALIAN SPIRITS FOR 30 YEARS.”
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LARK Distilling Co. Ltd. Annual Report 2022 • 909
FINANCIAL
HIGHLIGHTS.
Record net sales1 of
$20.3 million
+57%
Year on Year
in line with guidance
Normalised EBITDA of
$1.4 million2
+31%
Year on Year
in line with guidance
$269/L
Whisky net sales value
+25%
Year on Year
achieved during FY22
1. Net sales = sales after excise.
2. Normalised for: (i) costs relating to the acquisition of Pontville Distillery & Estate,
and associate equity raise (FY22); and (ii) JobKeeper cashflow boost (FY21).
NET SALES ($ MILLIO N)
$20.3
$12.9
$6.5
FY20
FY21
FY22
25
20
15
10
5
0
10
Balance sheet flexibility
Solid cash position
of $16.1 million
+ undrawn bank facility of $10.0 million,
as at 30 June 2022
Successful aquisition
of Pontville Distillery
reflecting a strategic
turning point
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Strengthening whisky bank of 2.1 million litres*
+88%
Year on Year, underwriting future sales growth
* (at 43% ABV) as at 30 June 2022
Strengthening whisky bank
underwriting future sales growth
LITRES (M) OF WHIS KY UND ER MATURATI O N (AT 43 % A BV )
0.8
0.8
0.9
1.1
1.2
1.3
2.0
2.1
Q1FY21
Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q 2FY22 Q 3FY2 2 Q 4FY2 2
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CELEBRATING 30 YEARS
OF TASMANIAN WHISKY
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It’s been a year for cheer
As we continued to add to our trophy cabinet this financial year, Lark Distilling’s
passion for creating the finest Tasmanian whisky and gin grew stronger than
ever. We’re humbled and honoured to have been nominated and awarded a
variety of accolades both at home and around the world.
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FORTY SPOTTED GIN
AWARDS PORTFOLIO
AUSTRALIAN DISTILLED
SPIRITS AWARDS
GOLD
AUSTRALIAN
GIN AWARDS
GOLD
Tassie Bush Honey
SILVER
Classic + Wild Rose
BRONZE
Citrus & Pepperberry
HONG KONG IWSC
GOLD
Classic + Wild Rose
SILVER
Citrus & Pepperberry
TASTING AUSTRALIA
SPIRITS AWARDS
SILVER
Wild Rose
BRONZE
Classic
Classic Label - Packaging Award
BRONZE
Classic + Tassie Bush Honey + Pinot Noir
+ Raspberry & Rose
GIN MASTERS
MASTERS
Pinot Noir
GOLD
Classic + Wild Rose
WORLD GIN DESIGN AWARDS
GOLD
Classic + Citrus & Pepperberry + Tassie Bush Honey
SILVER
Bottle Design
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LARK Distilling Co. LTDANNUALREPORT2022 2022 LARK DISTILLERY
AWARDS PORTFOLIO
INTERNATIONAL WINE
& SPIRIT COMPETITION
RUM & PX SHERRY
TOKAY FINISHED
WHISKY CLUB 30TH ANNIVERSARY
CLASSIC CASK DOUBLE TAWNY
BRANDY & PX CASK
CLASSIC CASK: CASK STRENGTH
DARK LARK 2021
WBS: DEATH & TAXES
WBS: COBBLER
WBS: BOILERMAKER HOUSE
SYMPHONY NO. 1
SHERRY AGED & SHERRY FINISHED II
PARA 50
PARA 1992
FROGMORE CUVEE CASK
MIZUNARA CASK
PARA 100
WOLF OF THE WILLOW IV
WBS: NOLA
CLASSIC CASK
BROKENWOOD GRAVEYARD SHIRAZ
THE TASMAN DOCKS RELEASE
92 points
92 points
92 points
91 points
91 points
91 points
90 points
90 points
90 points
90 points
90 points
90 points
90 points
90 points
89 points
89 points
89 points
88 points
88 points
88 points
87 points
85 points
ICONS OF WHISKY
SUSTAINABLE
DISTILLERY OF THE YEAR
CAMPAIGN INNOVATOR OF THE YEAR
FOR WHISKY BAR SERIES
DISTILLER OF THE YEAR
HIGHLY COMMENDED
WORLD WHISKY AWARDS
SYMPHONY NO.1
MONTY CASK RELEASE
WBS: DEATH & TAXES
WBS: COBBLER
BROKENWOOD GRAVEYARD SHIRAZ CASK
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2021 LARK DISTILLERY
AWARDS PORTFOLIO
AUSTRALIAN
WHISKY AWARDS
AUSTRALIAN
DISTILLED SPIRITS AWARDS
WHISKY DISTILLERY
OF THE YEAR
SYMPHONY NO.1
WHISKY OF THE YEAR
CHRISTMAS CASK RELEASE III
CLASSIC CASK
CLASSIC CASK: CASK STRENGTH
WOLF OF THE WILLOWS IV
WHISKY PERSONALITY OF THE YEAR
BILL LARK
INTERNATIONAL WINE &
SPIRIT COMPETITION
HONG KONG
INTERNATIONAL WINE
& SPIRITS COMPETITION
GOLD
Classic Cask: Cask Strength
CHINOTTO CASK 49%
95 POINTS
PARA 100
CLASSIC CASK:
CASK STRENGTH
PARA 50
CLASSIC CASK
WOLF OF THE WILLOWS III
SYMPHONY NO. 1
CLASSIC CASK:
DOUBLE TAWNY
92 POINTS
92 POINTS
91 POINTS
91 POINTS
91 POINTS
91 POINTS
90 POINTS
RUBY PINOT CASK FINISH
CHRISTMAS CASK II
89 POINTS
86 POINTS
SILVER
Classic Cask
Chinotto Cask I
BRONZE
Ruby Pinot Release
TASTING AUSTRALIA
SPIRITS AWARDS
SILVER
Wolf of the Willows IV
BRONZE
Classic Cask: Cask Strength
Amaro Cask: Cask Strength
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LARK Distilling Co. LTDANNUALREPORT2022
DIRECTORS’
REPORT
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 2022.
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
Ms Laura McBain - Managing Director (appointed as
interim Managing Director on 16 February 2022, resigned
as Non-Executive Director on 16 February 2022)
Mr Geoff Bainbridge - Managing Director
(resigned on 16 February 2022)
Mr Warren Randall - Non-Executive Director
Mr Domenic Panaccio - Non-Executive Director
(appointed on 1 March 2022)
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year
ended 30 June 2022 were in the production, marketing,
sale, and distribution of Australian craft spirits.
DIVIDENDS
There were no dividends paid, recommended or
declared during the current or previous financial year.
REVIEW OF OPERATIONS
The loss for the Group after providing for income
tax amounted to $470,398 (30 June 2021: profit of
$3,441,475).
KEY HIGHLIGHTS
Lark delivered record sales with revenue from
ordinary activities for the year ended 30 June 2022
of $24.3 million, up 47% compared to last year
Net Sales (revenue after excise) for the year was
$20.3 million, up 57% compared to last year
Lark achieved an average Whisky Net Sales Revenue
per Litre of $269, up 25% year on year from $216
per litre
•
•
•
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•
•
•
Gross profit came in at $13.5 million, reflecting gross
margins of 66.5% (% of net sales), broadly in line with
FY21 despite lingering COVID impacts during H1
Encouragingly, all sales channels observed
considerable growth during FY22 and while the
strength across eCommerce moderated somewhat
during H2, Lark-owned hospitality venues and
business-to-business both grew in excess of 60%
year on year. H2 margins also strengthened as a result
Normalised FY22 EBITDA was $1.4 million, adjusting
for: (i) costs relating to the acquisition of Pontville
Distillery & Estate and the associated equity raise
(FY22); and (ii) JobKeeper & cashflow boost (FY21).
OPERATING EXPENSES INCREASED DURING
THE YEAR DUE TO:
•
•
Lark’s brand remains core to the Company’s
ongoing strategy, and efforts to showcase the brand
at Lark-owned hospitality venues continued during
the year, positively driving new customers and
leveraging the retail sales opportunity. This includes
the new Tasmanian Whisky Bar “The Still”, which
successfully opened during the December quarter,
and the newly acquired site at Pontville, which
opened its freshly branded Lark Cellar Door during
the June quarter; and
Critical in enabling the Company to expand channels
and markets both domestically and overseas,
Lark expanded its headcount and capabilities
meaningfully enough to support future strategy and
sales growth. Beyond solidifying Lark’s executive
team, considerable progress was also made across
key functions, including expanding the sales team.
FINANCIAL POSITION
•
•
•
In February 2022, the Group completed the
acquisition of Kernke Family Shene Estate Pty Ltd,
the owner of the Pontville Distillery and Estate. The
acquisition expanded the Group’s Whisky holdings,
and increased production capacity to underpin
future sales growth
The acquisition was funded through the successful
capital raise of $56.6m completed
during the year; and
Balance sheet flexibility remains solid with a cash
position of $16.1 million, in addition to an undrawn
bank facility of $10.0 million, as at 30 June 2022.
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BUSINESS RISKS
CATEGORY
DESCRIPTION
RISK MITIGATION
Product/
Sales
Changes in consumer demand
adversely impacting on sales
Brand
Brand or reputational damage
People &
Culture
Failure to attract and
retain key roles
• Monitoring of consumer insights and trends and tailoring our product offering
to the customer
• Brand portfolio and product strategy including portfolio rationalisation
• Review of product mix and focus on premium products
• Entering new export markets
• Code of Conduct, Responsible Marketing Guidelines, Responsible Consumption
program, Responsible Procurement Code, Environment Policy and Standard,
Media Policy and Social Media Policy and incident management procedures
• Brand and intellectual property protection strategies
• Monitoring of brand health and consumer trends
• Ongoing commitment to training and developing our team
• Talent review and succession planning for key roles
• Market competitive remuneration and benefits
• Incentive and reward programs aligned to the achievement of Lark’s financial
and business goals
Whisky
holdings
Loss of whisky inventory
through damage or theft
• Adequate level of insurance cover
• Multiple bond stores across Tasmania, constructed with security measures
Supply Chain
Interruption to Lark supply chain
to minimise risk of loss
• Preventative maintenance
• Investment in strong and multifaced key partner relationships
• Joint business planning processes to support and align internal
and partner incentives
• Multi-regional and diversified supplier base
IT & Cyber
Loss of information through
cyber security or fraud thread
• Information Security Policy, supporting framework and specialised resources
• Restricted and segregated management of sensitive business/supplier/
Laws &
Regulations
Changes to laws or regulations
resulting in Lark not complying
Operational
Risk
Failure to comply with safety and
quality standards and other legal
and regulatory requirements
COVID 19
Climate
Change
The COVID-19 pandemic
may adversely impact Lark's
operations and performance
Adverse financial impact
due to transition to lower
a carbon economy
customer data
• Periodic employee training and alerts to ensure secure handling of sensitive data
• Crisis, business continuity and disaster recovery plans
• Defined cyber security strategy and governance
• Compliance framework
• Specialised and experienced resources and teams
• Company-wide policies, standards and procedures
• Relationships and engagements with key government, industry advocacy
and regulatory bodies
• Ongoing mandatory operational & safety training
• Company-wide Code of conduct, policies, standards and procedures
• Crisis management and business continuity plans
• Regular risk reviews including hazard identification & resolution
• COVID-19 safe work practices, business continuity plans
• Lark is certified carbon neutral under the Federal Government’s Climate Active
Program. The Group is committed to minimising its environmental footprint
and maintaining its carbon neutrality. This is expected to minimise any financial
impacts from legislative changes going forward
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
No matter or circumstance has arisen since 30 June 2022 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.
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DIRECTORS’ REPORT,
CONT’D
INFORMATION ON DIRECTORS
NAME: MR DAVID DEARIE
NAME: MR WARREN RANDALL
Title: Non-Executive Chairman
Title: Non-Executive Director
Qualifications: MHCIMA, Glasgow
College of Food and Technology,
Institute of Marketing Diploma,
University of Hull
Qualifications: Bachelor of Agricultural
Science & Wine Science(Adelaide),
Bachelor of Oenology (Wine Science)
(Charles Sturt)
Experience and expertise: 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.
Other current directorships: None
Former directorships
(last 3 years): None
Special responsibilities: Member of
the Audit and Risk Committee, and
member of the Remuneration and
Nomination Committee.
Interests in shares: 327,265
fully paid ordinary shares
Interests in rights: 620,000
performance rights
Experience and expertise: 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.
Other current directorships: None
Former directorships (last 3 years):
None
Special responsibilities: Chair
of Remuneration and Nomination
Committee, member of the Audit and
Risk Committee
Interests in shares: 2,889,295 (shares
are all held by Seppeltsfield Pty Ltd
(Seppeltsfield Estate A/C))
Interests in rights: 300,000
performance rights
LIKELY DEVELOPMENTS
AND EXPECTED RESULTS
OF OPERATIONS
The Group expects to continue to
grow its present level of operations,
in Australia and intends to continue
driving its growth and expansion as
a distillery business in the Australian
and International Market.
ENVIRONMENTAL
REGULATION
The Group is certified carbon neutral,
under the Federal Government’s
Climate Active Program, one of the
most widely recognised carbon
neutral programs of its kind. This
renowned certification is only
awarded to businesses that have
credibly reached a state of achieving
zero net emissions.
The Group’s operations are not
subject to significant environmental
regulation under a law of the
Commonwealth or of a state or
territory of Australia or China. The
Group’s management regularly and
routinely monitor compliance with
relevant environmental regulations
and has established procedures to
monitor and manage compliance
with existing regulations and new
regulations that may be established.
During the financial year, the
Directors have not been notified
or are aware to be in breach of any
environmental regulations.
The Group is committed to
minimising its environmental footprint
and maintaining its carbon neutrality.
This is expected to minimise any
financial impacts from legislative
changes going forward.
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INFORMATION ON DIRECTORS
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NAME: MS. LAURA MCBAIN
NAME: MR DOMENIC PANACCIO
Title: Interim Managing Director
Experience and expertise: 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 Asia. MD of
Maggie Beer Holdings Ltd 2017 to 2019, leading
several acquisitions and integrations of premium
food businesses into public company. Former
director of Export Finance Australia (Australia’s
government export credit agency). Currently,
Non-executive director and Chair of the Audit
and Risk Committee of Tasmanian Irrigation Pty
Ltd (state owned infrastructure entity) and Non-
executive director and member of the Audit and
Risk Committee of Capitol Health Ltd (ASX:CAJ).
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.
Other current directorships: Capitol Health
Limited (ASX:CAJ) (appointed 1 July 2021)
Former directorships (last 3 years): Maggie Beer
Holdings Limited (ASX:MBH) (resigned
27 November 2019)
Interests in shares: 81,000 (shares all held
by Vermilion 21 Pty Ltd (McNelhaus Super
Fund A/C))
Interests in rights: 90,000 performance rights
Title: Non-Executive Director - appointed
on 1 March 2022
Qualifications: Certified Public Accountant
and member of the Australian Institute of
Company Directors
Experience and expertise: Domenic has
had a long and distinguished career in senior
management of large public companies including
20 years at Fosters Group and 10 years at
Westfield. From 2010 to 2014, Domenic was Chief
Executive Officer of Westfield Retail Trust, one of
the largest ASX listed property trusts in Australian
at that time. Domenic previously held a number of
senior positions including Deputy Chief Financial
Officer of Westfield Group, Chief Financial Officer
of Westfield America and Chief Financial Officer
for the Foster’s Group Wine Division, Beringer
Blass Wine Estates.
Other current directorships: None
Former directorships (last 3 years): None
Interests in shares: 12,000
‘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.
DIRECTORS’ REPORT,
CONT’D
INFORMATION ON DIRECTORS, CONT’D
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 net worth 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
Ms Leydin holds a Bachelor of Business majoring
in Accounting and Corporate Law. Ms Leydin is a
member of the Institute of Chartered Accountants,
Fellow of the Governance Institute of Australia
and is a Registered Company Auditor. Ms Leydin
graduated from Swinburne University in 1997,
became a Chartered Accountant in 1999 and since
February 2000 had been the principal of chartered
accounting firm, Leydin Freyer. Upon the merger
of Leydin Freyer with Vistra in November 2021, Ms
Leydin is the country head of Vistra Australia. Vistra
is a prominent provider of specialised consulting
and administrative services to clients in the Fund,
Corporate, Capital Markets, and Private Wealth
sectors.
Ms Leydin has over 25 years’ experience in
the accounting profession and has extensive
experience holding Board positions including
Company Secretary of ASX listed entities. 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, initial public offerings,
secondary raisings and shareholder relations.
22
MEETINGS OF DIRECTORS
The number of meetings of the company’s Board of
Directors (‘the Board’) held during the year ended 30
June 2022, and the number of meetings attended by
each director were:
Directors’
Meetings
Audit and Risk
Committee
Attended Held Attended Held
Mr David Dearie
Mr Geoff Bainbridge
Mr Warren Randall
Ms Laura McBain
Mr Domenic Panaccio
9
6
8
9
2
9
6
9
9
2
1
-
1
1
-
1
-
1
1
-
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, fringe benefits,
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.
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.
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
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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.
23
DIRECTORS’ REPORT,
CONT’D
REMUNERATION REPORT (AUDITED), CONT’D
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
Ms Laura McBain - Managing Director
(appointed as interim Managing Director on
16 February 2022, resigned as Non-Executive Director on 16 February 2022)
Mr Geoff Bainbridge - Managing Director
(resigned on 16 February 2022)
Mr Warren Randall - Non-Executive Director
Mr Domenic Panaccio - Non-Executive Director (appointed on 1 March 2022)
And the following person:
•
Mr Alex Aleksic - Chief Financial Officer
2022
Non-Executive Directors:
Mr David Dearie
Mr Warren Randall (a)
Mr Domenic Panaccio
Executive Directors
Ms Laura McBain (b)
Mr Geoff Bainbridge (b)
Other KMP
Mr Alex Aleksic
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
monetary
$
Super-
annuation
$
Long service
leave
$
85,000
50,000
16,667
-
-
220,417
288,630
378,352
1,039,066
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Equity-
settled
$
125,044
46,693
-
-
-
Total
$
210,044
96,693
16,667
-
-
115,870
336,287
12,813
301,443
52,421
430,773
352,841
1,391,907
(a) During the period ended 30 June 2022, the Group made purchases amounting to $353,100 (June 2021: $288,217)
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. These transactions are considered to be arms-length transactions.
(b) Mr Geoff Bainbridge resigned as Managing Director on 16 February 2022 and Ms Laura McBain (previously a Non-
Executive Director) was appointed interim Managing Director on 16 February 2022.
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Non-Executive Directors:
Mr David Dearie
Mr Warren Randall (b)
Mr Laurent Ly (a)
Ms Laura McBain
Executive Directors
Mr Geoff Bainbridge
Other KMP
Mr Alex Aleksic
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
monetary
$
Super-
annuation
$
Long service
leave
$
Equity-
settled
$
Total
$
85,000
50,000
40,556
50,000
350,000
399,984
975,540
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
155,207
240,207
49,769
-
8,129
99,769
40,556
58,129
232,170
582,170
12,592
412,576
457,867
1,433,407
(a) Mr Laurent Ly resigned as the Non-Executive Director on 22 April 2021.
(b) 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.
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:
Mr David Dearie
Non-Executive Chairman
Agreement commenced:
1 May 2020
Term of agreement:
No fixed term
Details:
Remuneration: $85,000 per annum
Tranche no.
Tranche 3
Tranche 4
Tranche 5
Mr David Dearie’s appointment as a Non-Executive Chairman is subject to retirement by rotation under
the Company’s constitution. Mr David Dearie can resign from office subject to written notice or in
accordance with the law or the Company’s constitution with a notice period acceptable to both parties.
As at 30 June 2022, the following Performance Rights remained on issue, with terms and conditions as
noted, and with an expiry of 31 December 2026:
Target market share price and continuous service to:
Performance rights to vest
$1.950 31 December 2022
$2.250 31 December 2022
$2.550 31 December 2023
70,000
200,000
350,000
25
DIRECTORS’ REPORT,
CONT’D
Name:
Title:
Mr Warren Randall
Non-Executive Director
Agreement commenced:
21 May 2019
Term of agreement:
No fixed term
Details:
Remuneration: $50,000 annual directors fee (excluding GST)
Mr Warren Randall’s appointment as a Non-Executive Director is subject to retirement by rotation under
the Company’s constitution. Mr Warren Randall can resign from office subject to written notice or in
accordance with the law or the Company’s constitution with a notice period acceptable to both parties.
As at 30 June 2022, 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
$2.250 31 December 2022
$2.550 31 December 2023
100,000
200,000
Mr Domenic Panaccio
Non-Executive Director
Tranche no.
Tranche 4
Tranche 5
Name:
Title:
Agreement commenced:
1 March 2022
Term of agreement:
No fixed term
Details:
Remuneration: $50,000 annual directors fee (excluding GST)
Mr Domenic Panaccio’s appointment as a Non-Executive Director is subject to retirement by rotation
under the Company’s constitution. Mr Domenic Panaccio can resign from office subject to written
notice or in accordance with the law or the Company’s constitution with a notice period acceptable
to both parties.
As at 30 June 2022, Domenic did not have any Performance Rights on issue.
Name:
Title:
Ms Laura McBain
Managing Director
Agreement commenced:
16 February 2022
Term of agreement:
12 months, until 15 February 2023
Details:
Remuneration: $500,000 annual directors fee (excluding GST)
The notice period for termination by both parties is 30 days. Employment may be ended immediately
by either party if at any time the other party is, or becomes, in breach of any terms of the agreement
and that breach is incapable of remedy or, if capable of remedy, continue for a period of 14 days after
the party not in breach gives the other party a notice in writing requiring the breach to be remedied.
As at 30 June 2022, 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
$2.250 December 2023
$2.550 December 2024
45,000
45,000
Tranche no.
Tranche 4
Tranche 5
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Name:
Title:
Mr Alex Aleksic
Chief Financial Officer
Agreement commenced:
29 June 2020
Term of agreement:
No fixed term
Details:
Mr Alex Aleksic’s remuneration is paid through Right Size Advisory on a base agreement of $378,352
per annum. Mr Alex Aleksic’s agreement can be terminated subject to written notice with a notice period
acceptable to both parties.
Employment may be ended immediately by either party if at any time the other party is, or becomes, in
breach of any terms of the agreement and that breach is incapable of remedy or, if capable of remedy,
continue for a period of 14 days after the party not in breach gives the other party a notice in writing
requiring the breach to be remedied.
As at 30 June 2022, 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
$1.950 December 2022
$2.250 December 2023
$2.550 December 2024
20,000
50,000
65,000
Tranche no.
Tranche 3
Tranche 4
Tranche 5
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 2022.
Options
There were no options issued to directors and other key management personnel as part of compensation that were
outstanding as at 30 June 2022.
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 2022 are set out below:
Name
Grant date
Expiry date
Number
granted
Geoff Bainbridge
29 November 2021
31 December 2026
75,000
Geoff Bainbridge
25 November 2019
31 December 2026
Geoff Bainbridge
29 November 2021
31 December 2026
Geoff Bainbridge*
25 November 2019
31 December 2026
Geoff Bainbridge*
29 November 2021
31 December 2026
David Dearie
25 November 2019
31 December 2026
-
-
-
-
-
Number
vested
-
50,000
50,000
-
-
60,000
Number
lapsed /
disposed
-
-
-
(910,000)
(25,000)
-
* Mr Geoff Bainbridge resigned as Managing Director on 16 February 2022. 935,000 performance rights held at that
time lapsed on resignation.
27
DIRECTORS’ REPORT,
CONT’D
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
1 July 2021
1 July 2021
1 July 2021
29 November 2021
29 November 2021
Vesting date and
exercisable date
31 December 2022
31 December 2023
31 December 2024
31 December 2022
31 December 2023
31 December 2024
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
Share price
hurdle for
vesting
Fair value
per right
at grant date
$1.950
$2.250
$2.550
$1.950
$2.250
$2.550
$2.250
$2.550
$1.00200
$0.96300
$0.95100
$3.27000
$3.27000
$3.27000
$4.84000
$4.84000
Performance rights granted carry no dividend or voting rights.
Additional information
The earnings of the Group for the five years to 30 June 2022 are summarised below:
Sales revenue
24,337,904
16,542,984
7,426,459
5,523,207
428,476
Profit / (loss) after income tax
(470,398)
3,441,475
(1,272,296)
(4,327,069)
(3,388,235)
2022
$
2021
$
2020
$
2019
$
2018
$
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
Ms Laura McBain
Mr Alex Aleksic
Mr Domenic Panaccio***
Balance at
the start of
the year
Received
as part of
remuneration
Additions*
Disposals/
other
Balance at
the end of
the year
50,000
3,474,033
2,389,295
29,000
-
-
5,942,328
-
-
-
-
-
-
-
277,265
-
327,265
672,000
(4,146,033)
-
500,000
52,000
10,000
12,000
-
-
-
-
2,889,295
81,000
10,000
12,000
1,523,265
(4,146,033)
3,319,560
* Additions during the year for Mr David Dearie and Mr Geoff Bainbridge includes shares issued on exercise of
performance rights, 50,000 and 100,000, respectively. Remainder of the additions are shares acquired through share
placement and on-market acquisitions during the year.
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** Mr Geoff Bainbridge resigned as Managing Director on 16 February 2022.
*** Mr Domenic Panaccio was appointed as a Non-Executive Director on 1 March 2022
and the holding represent the number of shares held at the date of appointment
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
Ms Laura McBain
Mr Alex Aleksic
Mr Domenic Panaccio
Balance at
the start of
the year
680,000
960,000
300,000
90,000
135,000
-
Granted
Vested
Expired/
forfeited/
other
Balance at
the end of
the year
-
(60,000)
-
620,000
75,000
(100,000)
(935,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
300,000
90,000
135,000
-
2,165,000
75,000
(160,000)
(935,000)
1,145,000
* Mr Geoff Bainbridge resigned as Managing Director on 16 February 2022. 935,000 performance rights held at that
time lapsed on resignation.
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
2 November 2020
31 December 2022
Exercise
price
$2.250
Number
under option
124,999
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
25/11/2019
16/03/2020
01/07/2021
18/10/2021
29/11/2021
Expiry date
31/12/2026
31/12/2026
31/12/2026
17/10/2022
31/12/2026
Number
895,000
160,000
665,000
60,500
115,000
1,895,500
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.
29
DIRECTORS’ REPORT,
CONT’D
INDEMNITY AND INSURANCE
OF OFFICERS
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.
ROUNDING OF AMOUNTS
Lark Distilling Co. Ltd is a type of Company that is
referred to in ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191 and therefore
the amounts contained in this report and in the financial
report have been rounded to the nearest dollar.
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 2022
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.
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AUDITOR’S INDEPENDENCE
DECLARATION
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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 2022
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 2022, 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
S Dare
Partner
Chartered Accountant
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation
31
32 • LARK Distilling Co. Ltd. Annual Report 2022
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FINANCIAL
STATEMENTS
LARK Distilling Co. Ltd. Annual Report 2022 • 33
Statement of profit or loss and other comprehensive income
FOR THE YEAR ENDED 30 JUNE 2022
Revenue
Revenue
Cost of sales
Gross profit
Other income
Expenses
Selling and distribution expenses
Administration expenses
Employee benefit expense
Depreciation and amortisation
Costs relating to acquisition and equity raise
Operating profit
Finance costs
Finance income
Note
Consolidated
2022
$
2021
$
5
24,337,904
(10,856,197)
16,542,984
(7,888,608)
6
7
8
9
10
13,481,707
8,654,376
633,147
723,022
(3,122,808)
(5,067,103)
(4,525,751)
(466,274)
(598,706)
(1,889,273)
(2,981,975)
(2,985,221)
(205,798)
-
334,212
1,315,131
(326,473)
3,378
(271,343)
2,167
Profit before income tax (expense) / benefit
11,117
1,045,955
Income tax (expense) / benefit
11
(481,515)
2,395,520
Profit / (loss) after income tax (expense) / benefit for the
year attributable to the owners of Lark Distilling Co. Ltd
(470,398)
3,441,475
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
2
2
376
376
Total comprehensive income / (loss) for the year
attributable to the owners of Lark Distilling Co. Ltd
(470,396)
3,441,851
Basic earnings per share
Diluted earnings per share
36
36
Cents
(0.66)
(0.66)
Cents
5.66
5.35
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
34 • LARK Distilling Co. Ltd. Annual Report 2022
Statement of financial position
AS AT 30 JUNE 2022
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
Borrowings
Financial liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
Consolidated
2022
$
2021
$
12
13
14
16
14
17
15
18
19
20
22
23
21
22
23
24
25
16,096,404
4,110,428
20,430,247
180,591
40,817,670
39,741,486
15,271,786
1,631,574
21,602,426
2,525,040
7,645,874
2,394,945
7,840,235
708,089
18,589,143
17,981,665
8,434,320
1,643,857
11,224,514
2,501,104
80,772,312
41,785,460
121,589,982
60,374,603
5,676,914
420,191
448,789
6,545,894
5,000,000
1,255,513
34,647
6,290,160
2,927,061
214,427
262,594
3,404,082
5,000,000
1,534,163
38,092
6,572,255
12,836,054
9,976,337
108,753,928
50,398,266
116,448,720
58,498,886
1,976,730
(9,671,522)
1,100,504
(9,201,124)
108,753,928
50,398,266
The above statement of financial position should be read in conjunction with the accompanying notes
LARK Distilling Co. Ltd. Annual Report 2022 • 35
Statement of changes in equity
FOR THE YEAR ENDED 30 JUNE 2022
Consolidated
Issued
capital
$
Reserves
$
Retained
profits
$
Balance at 1 July 2020
49,475,985
543,712
(12,642,599)
Profit after income tax benefit for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income for the year
-
-
-
-
376
376
Total equity
$
37,377,098
3,441,475
3,441,475
-
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 24)
Share-based payments
Issue of shares on exercise
of unlisted options
8,556,996
-
-
556,416
465,905
-
-
-
-
8,556,996
556,416
465,905
Balance at 30 June 2021
58,498,886
1,100,504
(9,201,124)
50,398,266
Consolidated
Balance at 1 July 2021
Loss after income tax benefit for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income
/ (loss) for the year
Transactions with owners in
their capacity as owners:
Contributions of equity, net of
transaction costs (note 24)
Share-based payments
Shares issued as Consideration for
business acquisition (note 24)
Issued
capital
$
58,498,886
Reserves
$
1,100,504
Retained
profits
$
Total equity
$
(9,201,124)
50,398,266
-
-
-
56,571,214
-
2
2
-
-
876,224
1,378,620
-
(470,398)
(470,398)
2
(470,398)
(470,396)
-
-
56,571,214
876,224
1,378,620
Balance at 30 June 2022
116,448,720
1,976,730
(9,671,522)
108,753,928
The above statement of changes in equity should be read in conjunction with the accompanying notes
36 • LARK Distilling Co. Ltd. Annual Report 2022
Statement of cash flows
FOR THE YEAR ENDED 30 JUNE 2022
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 and tax incentives received
Consolidated
Note
2022
$
2021
$
25,087,220
(17,344,696)
(15,835,380)
(260,715)
3,378
634,861
17,589,777
(8,669,289)
(15,778,286)
(271,343)
2,167
751,878
Net cash used in operating activities
35
(7,715,332)
(6,375,096)
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
32
(37,251,965)
Payments for property, plant and equipment
Payments for intangibles
Proceeds from sale of property, plant and equipment
(2,175,370)
(76,105)
5,000
-
(774,007)
(13,094)
150,000
Net cash used in investing activities
(39,498,440)
(637,101)
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from the exercise of options
Proceeds from borrowings
Repayment of borrowings
Repayment of financial liabilities
Payment of lease liabilities under AASB 16
Share issue transaction costs
57,860,000
55,053
5,000,000
(5,000,000)
(81,892)
(264,339)
(1,904,520)
8,857,503
465,905
-
-
(296,915)
(81,693)
(406,091)
Net cash from financing activities
55,664,302
8,538,709
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
8,450,530
7,645,874
1,526,512
6,119,362
Cash and cash equivalents at the end of the financial year
12
16,096,404
7,645,874
The above statement of cash flows should be read in conjunction with the accompanying notes
LARK Distilling Co. Ltd. Annual Report 2022 • 37
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 1. GENERAL INFORMATION
Critical accounting estimates
The financial statements cover Lark Distilling Co. Ltd 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 is:
Level 1
91-93 Macquarie 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 2022. 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 Lark Distilling Co Ltd and its controlled entities
comply with International Financial Reporting Standards
(IFRS). Lark Distilling Co Ltd 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.
38 • LARK Distilling Co. Ltd. Annual Report 2022
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.
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.
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 2. SIGNIFICANT
ACCOUNTING POLICIES, CONT’D
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.
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.
FINANCIAL LIABILITIES
Non-derivative financial liabilities (excluding financial
guarantees) are subsequently measured at amortised
cost using the effective interest rate method.
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.
Financial liabilities that are not
PRINCIPLES OF CONSOLIDATION
(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 recognised in
profit or loss.
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 33 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.
LARK Distilling Co. Ltd. Annual Report 2022 • 39
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 2. SIGNIFICANT
ACCOUNTING POLICIES, CONT’D
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.
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.
40 • LARK Distilling Co. Ltd. Annual Report 2022
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.
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.
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 2. SIGNIFICANT
ACCOUNTING POLICIES, CONT’D
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.
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 18. 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, price achieved per litre and costs
to sell),
- expected growth rates and market share gains,
- overhead costs based on current and anticipated
market conditions; and
- the discount rates applicable to the future cash flows.
The above inputs have been considered and approved
by the Board for the value-in-use calculations. While the
Group have a level of control over the staff and overheads
cost, revenue forecasts inherently subject to uncertainty
due to macro-economic factors. Further information on
the goodwill impairment are included in note 18 to the
financial statements.
LARK Distilling Co. Ltd. Annual Report 2022 • 41
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;
Whisky, 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 2022, approximately 13.9%
of the Group’s external revenue was derived from sales to
one customer (FY21: 23%).
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
Ukraine conflict
The current evolving conflict between Ukraine and Russia
(Ukraine Conflict) is impacting global economic markets.
The nature and extent of the effect of the Ukraine Conflict
on the performance of the Group remains unknown.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible
temporary differences and carried forward losses only
if the Group considers it is probable that future taxable
amounts will be available to utilise those temporary
differences and carried forward losses. To the extent
possible, management’s expectation is to utilise the
available carried forward losses in the future.
Environmental, Social and Governance
The Group is certified carbon neutral, under the Federal
Government’s Climate Active Program, one of the
most widely recognised carbon neutral programs of
its kind. This renowned certification is only awarded
to businesses that have credibly reached a state of
achieving zero net emissions. The Group is committed to
minimising its environmental footprint and maintaining
its carbon neutrality. This is expected to minimise any
financial impacts from legislative changes going forward.
Business combination
Significant judgement is applied to the acquisition of
an asset or a group of assets to conclude if the asset
or group of assets acquired represents a business
combination. The Group follows a 4-step process:
•
Identification of the ‘acquirer’
• Determination of the ‘acquisition date’
•
Recognition and measurement of the identifiable
assets acquired, the liabilities assumed:
- Inventory was measured at fair value on a
discounted cash flow basis. Key assumptions for
the valuation included the estimated cash inflows
from whisky liquid acquired, and timings for when
the liquid was sold. Cash outflow assumptions
included bottling and selling costs, which were
based on the Group’s current costs. A pre- tax
discount rate of 15% has been used for the
valuation; and
- Fair value of Land and buildings were determined
utilising external valuation experts with valuation
prepared in accordance with International Valuation
Standards Committee (IVSC) definition of market
value endorsed by Australian Property Institute and
AASB13 Fair Value Measurement.
•
Recognition and measurement of goodwill or a gain
from a bargain purchase.
42 • LARK Distilling Co. Ltd. Annual Report 2022
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 4. OPERATING SEGMENTS, CONT’D
Operating segment information
Consolidated - 2022
Revenue
Sales to external customers
Other revenue
Interest income
Total revenue
EBITDA
Depreciation and amortisation
Finance costs
Profit / (loss) before income tax expense
Income tax expense
Loss after income tax expense
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
$
19,567,444
506,518
2,702
3,716,413
126,629
507
1,054,047
24,337,904
-
169
633,147
3,378
20,076,664
3,843,549
1,054,216
24,974,429
1,435,863
(373,019)
(261,178)
801,666
(724,028)
(69,941)
(48,971)
(842,940)
92,029
(23,314)
(16,324)
52,391
803,864
(466,274)
(326,473)
11,117
(481,515)
(470,398)
Whisky
$
Gin
$
Other
$
Total
$
11,705,953
723,022
2,167
12,431,142
1,151,315
(164,638)
(217,074)
769,603
3,764,285
1,072,745
16,542,983
-
-
-
-
723,022
2,167
3,764,285
1,072,745
17,268,172
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
LARK Distilling Co. Ltd. Annual Report 2022 • 43
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 5. REVENUE
Whisky revenue
Gin revenue
Other revenue
REVENUE RECOGNITION
The Group recognises revenue as follows:
Revenue from contracts with customers
Consolidated
2022
$
19,567,444
3,716,413
1,054,047
2021
$
11,705,953
3,764,285
1,072,746
24,337,904
16,542,984
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for
transferring goods 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 goods to be dispatch; and recognises revenue when or as each performance
obligation is satisfied in a manner that depicts the transfer to the customer of the goods 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 dispatch of goods. All revenue is stated net
of the amount of goods and services tax (GST).
Other revenue
Other revenue is a combination of Hospitality sales of Non-Lark products, as well as Slainte, Brandy, Rum & Sanitiser and is
recognised at the time of dispatch of goods.
NOTE 6. OTHER INCOME
Other income
R&D grant income
Government grant income
Excise rebates
Other income
44 • LARK Distilling Co. Ltd. Annual Report 2022
Consolidated
2022
$
118,203
164,938
-
350,006
2021
$
79,144
92,878
451,000
100,000
633,147
723,022
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 6. OTHER INCOME, CONT’D
Government grant income
Government grant income in 2021 was related to $351,000 of JobKeeper and $100,000 of Cashflow Boost payments received in
response to COVID-19.
Interest Income
Interest income 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.
NOTE 7. ADMINISTRATION EXPENSES
Consulting fees
Legal fees
Directors' fees
Insurance costs
Inventory losses
Occupancy costs
IT and communications
Travel, transport and entertainment
Other administration and corporate costs
NOTE 8. EMPLOYEE BENEFIT EXPENSE
Salaries and wages
Superannuation
Movement in employee benefit provisions
Share based payments expense
Other employee expenses
Consolidated
2022
$
1,045,776
279,128
653,334
244,486
506,123
713,686
41,324
373,793
1,209,453
2021
$
440,558
120,634
575,885
356,908
578,910
337,428
42,388
132,967
396,297
5,067,103
2,981,975
Consolidated
2022
$
2021
$
3,033,290
2,236,849
231,408
132,316
876,224
252,513
109,817
51,281
556,416
30,858
4,525,751
2,985,221
LARK Distilling Co. Ltd. Annual Report 2022 • 45
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 9. DEPRECIATION AND AMORTISATION
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangibles
Consolidated
2022
$
268,695
178,924
18,655
2021
$
97,304
90,599
17,895
466,274
205,798
Depreciation capitalised into inventory
379,307
235,785
NOTE 10. FINANCE COSTS
Interest expense
Bank and other fees
Consolidated
2022
$
193,538
132,935
2021
$
259,563
11,780
326,473
271,343
46 • LARK Distilling Co. Ltd. Annual Report 2022
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 11. INCOME TAX EXPENSE/(BENEFIT)
Income tax benefit
Deferred tax - origination and reversal of temporary differences
Adjustment in respect of prior year
Aggregate income tax expense/(benefit)
Consolidated
2022
$
2021
$
388,694
92,821
(2,395,520)
-
481,515
(2,395,520)
Numerical reconciliation of income tax expense/(benefit) and tax at the statutory rate
Profit before income tax (expense) / benefit
11,117
1,045,955
Tax at the statutory tax rate of 25% (2021: 26%)
2,779
271,948
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Share-based payments
R&D offset income
Cashflow boost
Other
Acquisition related costs
Prior period tax losses now recognised
Year 1 deferred tax assets and liabilities now recognised
Restate tax effect balances to reflect change in tax rate
Prior year under/over
219,056
(41,235)
-
24,087
91,380
296,067
-
-
92,627
92,821
144,668
(23,684)
(26,000)
38,317
-
405,249
(2,321,500)
(479,269)
-
-
Income tax expense/(benefit)
481,515
(2,395,520)
The Group qualifies as a base rate entity as defined from the Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities)
Act 2018. Accordingly at 30 June 2022, the Group’s tax rate reduced to 25% in 2021/22 financial year (2020/21: 26%) as per the
requirements of the Treasury Laws Amendment Act 2018.
LARK Distilling Co. Ltd. Annual Report 2022 • 47
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 11. INCOME TAX EXPENSE/(BENEFIT), CONT’D
Amounts credited directly to equity
Deferred tax assets (note 19)
Tax losses not recognised
Consolidated
2022
$
2021
$
(476,130)
(105,584)
Unused tax losses for which no deferred tax asset has been recognised
18,362,305
18,177,860
Potential tax benefit @ 25% (2021:26%)
4,590,576
4,726,244
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.
The franking account balance as at 30 June 2022 was Nil (June 2021: Nil).
NOTE 12. CASH AND CASH EQUIVALENTS
Current assets
Cash on hand
Cash at bank
Consolidated
2022
$
2021
$
2,313
2,410
16,094,091
7,643,464
16,096,404
7,645,874
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 13. TRADE AND OTHER RECEIVABLES
Current assets
Trade receivables
Other receivables
Expected future credit losses
Deposits paid
48 • LARK Distilling Co. Ltd. Annual Report 2022
Consolidated
2022
$
2021
$
3,998,130
36,978
-
75,320
2,306,857
40,609
(8,082)
55,561
4,110,428
2,394,945
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 13. TRADE AND OTHER RECEIVABLES, CONT’D
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 14. INVENTORIES
Current assets
Raw materials - at cost
Work in progress - at cost
Finished goods - at cost
Inventory in casks
Provision for obsolescence
Non-current assets
Inventory in casks
Finished Goods - at cost
Consolidated
2022
$
2021
$
3,843,114
1,737,390
3,793,620
11,222,598
(166,475)
1,736,215
2,299,983
1,163,852
2,801,691
(161,506)
20,430,247
7,840,235
39,519,561
221,925
17,981,665
-
39,741,486
17,981,665
Accounting policy for inventories
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost is determined using
the weighted average cost basis of all inventory items based on the individual costs and the quantity of each item held in stock.
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.
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 15. RIGHT-OF-USE ASSETS
Non-current assets
Land and buildings - right-of-use
Less: Accumulated depreciation
Consolidated
2022
$
2021
$
1,933,250
(301,676)
1,766,452
(122,595)
1,631,574
1,643,857
LARK Distilling Co. Ltd. Annual Report 2022 • 49
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 15. RIGHT-OF-USE ASSETS, CONT’D
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out following:
Consolidated
Balance at 1 July 2020
Additions
Depreciation expense
Balance at 30 June 2021
Additions
Depreciation expense
Balance at 30 June 2022
Land and
building
right-of-use
$
206,930
1,527,526
(90,599)
1,643,857
166,641
(178,924)
Total
$
206,930
1,527,526
(90,599)
1,643,857
166,641
(178,924)
1,631,574
1,631,574
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.
NOTE 16. PREPAID ASSETS
Current assets
Prepaid wood
Prepaid packaging and other
Consolidated
2022
$
176,451
4,140
2021
$
98,716
609,373
180,591
708,089
50 • LARK Distilling Co. Ltd. Annual Report 2022
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 17. PROPERTY, PLANT AND EQUIPMENT
Non-current assets
Freehold 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
Consolidated
2022
$
2021
$
9,364,644
(529,683)
8,834,961
1,514,502
(261,109)
1,253,393
5,819,243
(1,553,472)
4,265,771
154,044
(102,525)
51,519
4,564,644
(529,683)
4,034,961
515,743
(66,265)
449,478
4,345,421
(1,097,433)
3,247,988
154,044
(92,800)
61,244
Capital work in progress
866,142
640,649
15,271,786
8,434,320
LARK Distilling Co. Ltd. Annual Report 2022 • 51
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 17. PROPERTY, PLANT AND EQUIPMENT, CONT’D
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Consolidated
Land and
building
$
Building
improvement
$
Plant,
equipment
and
production
assets
$
Motor vehicle
$
Capital WIP
$
Total
$
Balance at 1 July 2020
4,034,961
155,464
2,800,537
Additions
Capitalised to inventory
Transfers in/(out)
Depreciation expense
-
-
-
-
2,360
-
346,142
(54,488)
241,089
(229,401)
474,802
(39,039)
71,405
-
(6,384)
845,250
616,343
7,907,617
859,792
-
(235,785)
-
(820,944)
-
(3,777)
-
(97,304)
Balance at 30 June 2021
4,034,961
449,478
3,247,988
61,244
Additions
-
18,998
483,178
Additions through business
combinations (note 32)
4,800,000
Disposals
Depreciation capitalised
to inventory
Transfers in/(out)
Depreciation expense
-
-
-
-
574,267
(3,113)
-
-
-
(371,541)
(7,766)
-
-
-
640,649
1,612,128
-
-
-
8,434,320
2,114,304
5,374,267
(3,113)
(379,307)
972,485
(187,568)
414,150
(79,158)
-
(1,386,635)
-
(1,959)
-
(268,685)
Balance at 30 June 2022
8,834,961
1,253,393
4,265,771
51,519
866,142
15,271,786
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:
Building improvements
Plant, machinery & production assets
Motor vehicles
2.5%
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.
52 • LARK Distilling Co. Ltd. Annual Report 2022
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 18. INTANGIBLES
Non-current assets
Goodwill - at cost
Intangible assets - at cost
Less: Accumulated amortisation
Consolidated
2022
$
2021
$
21,231,628
10,934,839
534,810
(164,012)
370,798
474,845
(185,170)
289,675
21,602,426
11,224,514
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 2020
Additions
Disposals
Amortisation expense
Balance at 30 June 2021
Additions
Additions through business combinations (note 32)
Amortisation expense
Goodwill
$
10,934,839
-
-
-
10,934,839
-
10,296,789
-
Other
intangibles
$
294,476
30,000
(15,957)
(18,844)
289,675
78,506
21,272
(18,655)
Total
$
11,229,315
30,000
(15,957)
(18,844)
11,224,514
78,506
10,318,061
(18,655)
Balance at 30 June 2022
21,231,628
370,798
21,602,426
Goodwill is attributable to business acquisitions and has been allocated to the Whisky segment (cash generating unit or CGU).
Goodwill is considered to have an indefinite useful life due to the on-going cash generation attributable to the respective CGU and
its recoverable value is assessed annually on a value-in-use (VIU) discounted cash flows basis. The key bases and assumptions on
which VIU is determined includes most recent budget or forecast for the CGU, projections of financial performance over the future
6-year period which include revenue growth rates, profit margin, changes in working capital and capital expenditure based on
historical and expected future trends (referenced against industry projections).
The discount rate of 15% pre-tax reflects management’s estimate of the time value of money and the Group’s weighted average cost
of capital, the risk free rate and the volatility of the share price relative to market movements.
Management believes the projected revenue growth rate is prudent and justified, based on the past 24 months revenue actual and
current trends in the market.
Management believes that other reasonable changes in the key assumptions on which the recoverable amount of the goodwill is
based would not cause the cash-generating unit’s carrying amount to exceed its recoverable amount.
LARK Distilling Co. Ltd. Annual Report 2022 • 53
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 18. INTANGIBLES, CONT’D
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.
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.
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
Useful life
Other intangible assets
5-8 years
Amortisation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
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.
54 • LARK Distilling Co. Ltd. Annual Report 2022
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 19. 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:
Tax losses
Inventories
Provisions and accruals
Other liabilities
Capital raising costs
Foreign exchange
Fixed assets and right of use assets
Prepayments
Consolidated
2022
$
2021
$
1,799,906
2,122,071
214,364
232,333
418,926
76,168
12,117
(703,868)
(1,036)
-
148,970
443,389
226,543
12,601
(530,099)
(27,955)
Total deferred tax asset recognised in profit or loss
2,048,910
2,395,520
Amounts recognised in equity:
Transaction costs on share issue
Net deferred tax asset
Movements:
Opening balance
Credited/(charged) to profit or loss (note 11)
Credited to equity (note 11)
Additions through business combinations
476,130
105,584
2,525,040
2,501,104
2,501,104
(481,515)
476,130
29,321
-
2,395,520
105,584
-
Closing balance
2,525,040
2,501,104
LARK Distilling Co. Ltd. Annual Report 2022 • 55
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 20. TRADE AND OTHER PAYABLES
Current liabilities
Trade payables
Sundry creditors and accrued expenses
Deferred consideration payable on business combination
Other payables
Refer to note 26 for further information on financial instruments.
NOTE 21. BORROWINGS
Non-current liabilities
Loan- National Australia Bank
Loan - Quality Life Pty Ltd
Consolidated
2022
$
2021
$
2,161,743
210,784
1,000,000
2,304,387
1,825,198
488,299
-
613,564
5,676,914
2,927,061
Consolidated
2022
$
5,000,000
2021
$
-
-
5,000,000
5,000,000
5,000,000
During the period, the Company secured a $15 million debt facility from National Australia Bank. Out of this facility, $5m has been
used to settle $5m loan from Quality Life Pty Ltd in full. The key terms of the debt facility from National Australia Bank are as follows:
•
•
•
Facility amount up to $15,000,000 ($5m drawn as at 30 June 2022);
Interest rate based on BBSY+ 1.97% per annum;
Interest only loan with principal due at the end of the term
• Maturity on 31 January 2024;
•
Key covenant - Minimum Interest Cover Ratio of 2.5 times, measured as 12-month period EBITDA divided by total interest
payments ending on June 30th and thereafter yearly
Assets pledged as security
The loan is secured by a registered security interest in real property and whisky held by the Group.
Accounting policy for borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are
subsequently measured at amortised cost using the effective interest method.
56 • LARK Distilling Co. Ltd. Annual Report 2022
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 22. FINANCIAL LIABILITIES
Current liabilities
Lease liability
Other financial liabilities
Non-current liabilities
Lease liability
Consolidated
2022
$
420,191
-
2021
$
134,756
79,671
420,191
214,427
1,255,513
1,534,163
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.
Refer note 26 for further information lease maturity and interest rates.
Accounting policy for financial liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value
of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate
cannot be readily determined, the consolidated entity’s incremental borrowing rate. Lease payments comprise of fixed payments
less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under
residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and
any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the
period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there
is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease
term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the
corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
NOTE 23. EMPLOYEE BENEFITS
Current liabilities:
Current liabilities
Employee benefits - current
Non-current liabilities
Employee benefits
Refer to note 26 for further information on financial instruments.
Consolidated
2022
$
2021
$
448,789
262,594
34,647
38,092
LARK Distilling Co. Ltd. Annual Report 2022 • 57
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 23. EMPLOYEE BENEFITS, CONT’D
Accounting policy for employee benefits
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.
NOTE 24. ISSUED CAPITAL
Ordinary shares - fully paid
75,306,377
63,069,350
116,448,720
58,498,886
Consolidated
2022
Shares
2021
Shares
2022
$
2021
$
58 • LARK Distilling Co. Ltd. Annual Report 2022
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 24. ISSUED CAPITAL, CONT’D
Movements in ordinary share capital
Details
Balance
Date
1 July 2020
Issue of shares
23 September 2020
7 January 2021
12 March 2021
26 March 2021
15 April 2021
30 June 2021
12 July 2021
12 July 2021
1 September 2021
22 October 2021
22 November 2021
23 December 2021
6 January 2022
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
Balance
Issue of shares
Exercise of options
Exercise of options
Placement of shares
Share purchase plan
Placement of shares
to the Directors
Conversion of vested
performance rights
Consideration shares in
relation to the acquisition
of the Pontville Distillery
Issue of shares
Exercise of options
Transactions costs for period
Shares
Issue price
$
54,452,878
8,052,334
150,000
138,046
138,046
138,046
-
63,069,350
20,000
8,334
8,334
9,300,000
1,000,000
1,272,000
293,332
$1.100
$0.000
49,475,985
8,857,567
-
$0.900
124,241
$1.125
155,302
$1.350
$0.000
$3.230
$2.250
$2.250
$5.000
$5.000
$5.000
$0.000
186,362
(300,571)
58,498,886
64,600
18,752
18,752
46,500,000
5,000,000
6,360,000
-
1 February 2022
306,360
$4.896
1,378,620
18 March 2022
25 March 2022
12,000
16,667
-
$3.590
$0.000
$0.000
19,950
17,549
(1,428,389)
Balance
30 June 2022
75,306,377
116,448,720
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.
LARK Distilling Co. Ltd. Annual Report 2022 • 59
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 25. RESERVES
Foreign currency reserve
Share-based payments reserve
Consolidated
2022
$
48,466
1,928,264
2021
$
48,464
1,052,040
1,976,730
1,100,504
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 26. FINANCIAL INSTRUMENTS
a. Financial Risk Management Policy
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.
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 2022.
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.
60 • LARK Distilling Co. Ltd. Annual Report 2022
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 26. FINANCIAL INSTRUMENTS, CONT’D
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:
Cash
Trade and other receivables
Financial liabilities
Trade payables
Loan – Quality Life (Fixed interest rate)
Loan- National Australia Bank
(Floating interest rate)
Leases
Lease – BOQ
Logistics
Operating leases
Non-interest
Bearing
2022
$
16,096,404
4,110,428
Non-interest
Bearing
2021
$
7,645,874
2,394,945
Interest Rate
2022
%
Interest Rate
2021
%
-
-
-
4.00%
Total
2022
$
16,096,404
4,110,428
Total
2022
$
4,676,914
-
Total
2021
$
7,645,874
2,394,945
Total
2021
$
2,927,061
5,000,000
2.38%
-
5,000,000
-
Implicit
interest rate
2022
%
Implicit
interest rate
2021
%
-
-
2.70%
10.30%
12.30%
2.70%
Total
2022
$
-
-
Total
2021
$
31,400
48,877
1,675,704
1,668,919
Trade and sundry payables are expected to be paid as follows:
Less than 6 months
Over 6 months
Maturity analysis of total borrowings as at the reporting date are as follows:
Payable within 12 months
Payable after 12 months
30 June
2022
$
4,676,914
-
30 June
2021
$
2,924,979
2,082
4,676,914
2,927,061
Consolidated
2022
$
-
2021
$
-
5,000,000
5,000,000
5,000,000
5,000,000
LARK Distilling Co. Ltd. Annual Report 2022 • 61
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 26. FINANCIAL INSTRUMENTS, CONT’D
Maturity analysis of total un-discounted lease liabilities
as at the reporting date are as follows:
1 year or less
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
On 15 October 2021, the Group secured a $15 million secured loan facility.
Drawn
Undrawn
Consolidated
2022
$
2021
$
420,191
189,768
355,653
710,092
134,756
139,802
350,228
1,044,133
1,675,704
1,668,919
Consolidated
2022
$
5,000,000
10,000,000
15,000,000
2021
$
-
-
-
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 earlier.
NOTE 27. KEY MANAGEMENT PERSONNEL DISCLOSURES
Directors
The following persons were directors of Lark Distilling Co. Ltd during the financial year:
Mr David Dearie
Non-Executive Chairman
Ms Laura McBain
Managing Director (appointed as interim Managing Director on 16 February 2022,
resigned as Non-Executive Director on 16 February 2022)
Mr Geoff Bainbridge
Managing Director (resigned on 16 February 2022)
Mr Warren Randall
Non-Executive Director
Mr Domenic Panaccio
Non-Executive Director (appointed on 1 March 2022)
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
62 • LARK Distilling Co. Ltd. Annual Report 2022
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 27. KEY MANAGEMENT PERSONNEL DISCLOSURES, CONT’D
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set out below:
Short-term benefits to employee / consultants
Share-based payments
Consolidated
2022
$
1,039,066
352,841
2021
$
975,540
457,867
1,391,907
1,433,407
NOTE 28. REMUNERATION OF AUDITORS
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
NOTE 29. COMMITMENTS
Consolidated
2022
$
2021
$
142,800
106,500
The Group is in planning phase for 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 2022.
NOTE 30. RELATED PARTY TRANSACTIONS
During the period ended 30 June 2022, the Group made purchases amounting to $353,100 (June 2021: $288,217) 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. There was no balance
payable or receivable as at the period ended 30 June 2022.
Subsidiaries
Interests in subsidiaries are set out in note 33.
Key management personnel
Disclosures relating to key management personnel are set out in note 27 and the remuneration report included in the directors’ report.
LARK Distilling Co. Ltd. Annual Report 2022 • 63
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 31. 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
2022
$
2021
$
12,628,686
6,363,381
110,831,267
55,145,455
713,083
197,908
6,417,986
5,197,908
116,448,720
58,498,887
16,397
1,928,264
(13,980,100)
16,397
1,052,040
(9,619,777)
104,413 ,281
49,947,547
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 2022 and 30 June 2021.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2022 and 30 June 2021.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2022 and 30 June 2021.
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.
64 • LARK Distilling Co. Ltd. Annual Report 2022
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 32. BUSINESS COMBINATIONS
On 2 February 2022, the Group acquired 100% of the ordinary shares of Kernke Family Shene Estate Pty Ltd, the owner of the Pontville
Distillery and Estate, for the total consideration of $39,998,469. The business is a whisky producer business and was acquired to
increase the whisky production capacity of the Group. The goodwill of $10.3 million is the fair value of consideration paid in excess of
the fair value of acquired assets and liabilities, and represents the residual value of the inputs, processes and outputs acquired as part
of the business combination.
Details of the acquisition are as follows:
Cash and cash equivalents
Trade receivables
Inventories
Raw materials
Finished goods
Land and buildings
Property, Plant and equipment
Patents and trademarks
Trade and other payables
Deferred tax asset
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid to vendor
Lark Distilling Co. Ltd shares issued to vendor
Cash payable to vendor (deferred consideration)
Working capital adjustment payable
Cash acquired on business combination
Purchase consideration paid to vendor
Net cash used in business combination
Fair value
$
248,035
111,437
23,948,174
45,993
100,001
4,800,000
574,267
21,272
(176,821)
29,322
29,701,680
10,296,789
39,998,469
37,500,000
1,378,620
1,000,000
119,849
39,998,469
Consolidated
2022
$
248,035
(37,500,000)
(37,251,965)
As part of the acquisition outlined above, the Group agreed to pay $1,000,000 on a deferred consideration basis for cooperage assets.
The accounting for the business combination is final, except for the final determination of the fair value of these cooperage assets and
the recognition of deferred taxes thereon. The deferred consideration has been recognised as a current liability and is expected
LARK Distilling Co. Ltd. Annual Report 2022 • 65
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 32. BUSINESS COMBINATIONS, CONT’D
to be settled on 01/02/2023, at which time the Group will take possession of the cooperage assets. This element of the business
combination has been accounted for on a provisional basis and the fair value of the cooperage assets acquired will be finalised
upon possession. Any adjustment as a result of the determination of the fair value of the cooperage assets is expected to result in a
corresponding adjustment to goodwill recognised.
Accounting policy for business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other
assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or
liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For
each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of
the acquiree’s identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate classification
and designation in accordance with the contractual terms, economic conditions, the Group’s operating or accounting policies and
other pertinent conditions in existence at the acquisition-date.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in
the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration
classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in
the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is
recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net
assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer
on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-
controlling interest in the acquiree, if any, the consideration transferred and the acquirer’s previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts
recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained
about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12
months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value.
NOTE 33. 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
Ownership interest
Principal place of business /
Country of incorporation
2022
%
2021
%
Level 1, 91-93 Macquarie Street 7000
100.00%
100.00%
Level 1, 91-93 Macquarie Street 7000
100.00%
100.00%
Level 1, 91-93 Macquarie Street 7000
Aowei Liquor Industries Beijing Limited
Beijing PRC 100022
Australian Whisky Holdings (HK) Limited
Kowloon, Hong Kong
Lark Distillery Pty Ltd
40 Denholms Road,
Cambridge, TAS 7170
Kernke Family Shene Estate Pty Ltd
76 Shene Rd, Pontville TAS 7030
Shene Distillery Pty Ltd
76 Shene Rd, Pontville TAS 7030
66 • LARK Distilling Co. Ltd. Annual Report 2022
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
-
-
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 34. EVENTS AFTER THE REPORTING PERIOD
No matter or circumstance has arisen since 30 June 2022 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.
NOTE 35. RECONCILIATION OF PROFIT / (LOSS) AFTER INCOME TAX TO NET CASH
USED IN OPERATING ACTIVITIES
Profit / (loss) after income tax (expense) / benefit for the year
(470,398)
3,441,475
Consolidated
2022
$
2021
$
Adjustments for:
Depreciation and amortisation
Movement in deferred taxes recognised to equity
Non-cash share based payments
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in inventories
Decrease/(increase) in deferred tax assets
Decrease/(increase) in prepayments
Increase in other provisions
Decrease/Increase in trade creditors and accruals
466,274
476,129
1,015,830
(1,473,324)
(9,876,356)
5,386
527,498
182,750
1,430,879
205,798
105,584
556,792
(862,008)
(6,542,439)
(2,501,104)
(686,845)
51,892
(144,241)
Net cash used in operating activities
(7,715,332)
(6,375,096)
NOTE 36. EARNINGS PER SHARE
Consolidated
2022
$
2021
$
Profit / (loss) after income tax attributable to the owners of Lark Distilling Co. Ltd
(470,398)
3,441,475
Weighted average number of ordinary shares used in calculating basic earnings per share
71,033,931
60,808,172
Number
Number
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
-
-
336,111
3,203,334
71,033,931
64,347,617
LARK Distilling Co. Ltd. Annual Report 2022 • 67
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 36. EARNINGS PER SHARE, CONT’D
Basic earnings per share
Diluted earnings per share
Cents
(0.66)
(0.66)
Cents
5.66
5.35
As at 30 June 2022, the Group had 191,667 Options and 1,935,500 Performance Rights over ordinary shares, which are excluded from
the calculation of basic and diluted earnings per share. These equity instruments are considered to be anti-dilutive, as their inclusion
would not decrease earnings per shar nor increase the loss per share, from continuing operations.
NOTE 37. SHARE-BASED PAYMENTS
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.
Options
Set out below are summaries of options granted under the plan:
2022
Grant date
Expiry date
28/11/2017
31/07/2021
02/11/2020
31/12/2022
2021
Grant date
Expiry date
22/05/2018
30/05/2021
22/05/2018
30/05/2021
22/05/2018
30/05/2021
22/10/2018
01/11/2020
28/11/2017
31/07/2021
02/11/2020
31/12/2022
Exercise
price
$2.250
$2.250
Balance at
the start of
the year
102,776
233,335
336,111
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
(33,335)
(33,335)
(102,776)
(58,334)
(161,110)
-
141,666
141,666
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
$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)
-
-
-
-
-
-
(103,842)
(38,891)
-
(414,138)
(142,733)
-
-
-
-
102,776
233,335
336,111
The weighted average remaining contractual life of options outstanding at the end of the financial year was 0.5 years
(June 2021: 1.07 years).
68 • LARK Distilling Co. Ltd. Annual Report 2022
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 37. SHARE-BASED PAYMENTS, CONT’D
Performance rights
Set out below are summaries of performance rights granted under the plan:
2022
Grant date
Expiry date
25/11/2019
25/11/2019
25/11/2019
25/11/2019
31/12/2026
31/12/2026
31/12/2026
31/12/2026
16/03/2020
31/12/2026
16/03/2020
31/12/2026
16/03/2020
31/12/2026
16/03/2020
31/12/2026
12/02/2021
31/12/2026
12/02/2021
31/12/2026
12/02/2021
31/12/2026
25/06/2021
31/12/2026
25/06/2021
31/12/2026
18/10/2021
17/10/2022
29/11/2021
29/11/2021
29/11/2021
29/11/2021
31/12/2026
31/12/2026
31/12/2026
31/12/2026
Vesting
hurdle
Balance at
the start of
the year
Granted*
$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
$0.000
$1.650
$1.950
$2.250
$2.550
110,000
130,000
650,000
1,050,000
133,333
70,000
63,334
56,666
80,000
248,332
256,668
98,334
176,666
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
85,750
50,000
25,000
-
-
Shares
Issued/
Exercised**
Expired/
forfeited/
other
changes***
(110,000)
-
-
-
-
(133,333)
-
-
-
-
-
-
-
-
-
(50,000)
-
-
-
(60,000)
(350,000)
(500,000)
-
(10,000)
(10,000)
(10,000)
(30,000)
(85,000)
(80,000)
-
-
(25,250)
-
(25,000)
45,000
45,000
Balance at
the end of
the year
-
70,000
300,000
550,000
-
60,000
53,334
46,666
50,000
168,332
171,668
98,334
176,666
60,500
-
-
45,000
45,000
3,123,333
160,750
(293,333)
(1,095,250)
1,895,500
*
For the 85,750 Performance Rights granted on 18 October 2021, the Rights will vest if the holder is continually employed by the
Company, or continually serves as a Director of the Company, or both, to 17 October 2022. Upon vesting, the Rights will convert to
ordinary shares automatically.
The Company also issued 50,000 and 25,000 additional rights as approved by Shareholders at the Annual General Meeting on 29
November 2021.
** A total of 293,333 performance rights were exercised during the year. These include 110,000 performance rights issued in
November 2019, 133,333 performance rights issued in March 2020 and 50,000 performance rights issued in November 2021.
*** The Company issued 90,000 performance rights to a director (in two tranches of 45,000 with vesting hurdle of $2.25 and $2.55,
respectively) in February 2021. These performance rights were approved by Shareholders at the 2021 Annual General Meeting of
the Company held on 29 November 2021. Under IG4, which is set out in the Appendix to AASB 2 Share Based Payments, these
performance rights were re-measured at the approval date.
LARK Distilling Co. Ltd. Annual Report 2022 • 69
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2022
NOTE 37. SHARE-BASED PAYMENTS, CONT’D
2021
Grant date
Expiry date
25/11/2019
25/11/2019
25/11/2019
25/11/2019
25/11/2019
31/12/2026
31/12/2026
31/12/2026
31/12/2026
31/12/2026
16/03/2020
31/12/2026
16/03/2020
31/12/2026
16/03/2020
31/12/2026
16/03/2020
31/12/2026
12/02/2021
31/12/2026
12/02/2021
31/12/2026
12/02/2021
31/12/2026
25/06/2021
31/12/2026
25/06/2021
31/12/2026
Vesting
hurdle
Balance at
the start of
the year
Granted*
Converted
$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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
80,000
248,332
256,668
98,334
176,666
(150,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
Expired/
forfeited
other
changes
-
-
-
(300,000)
Balance at
the end of
the year
-
110,000
130,000
650,000
(450,000)
1,050,000
(66,667)
(110,000)
(96,666)
(83,334)
-
-
-
-
-
133,333
70,000
63,334
56,666
80,000
248,332
256,668
98,334
176,666
3,520,000
860,000
(150,000)
(1,106,667)
3,123,333
* Performance rights granted during the year 2021 was recognised based on offer acceptance date. 770,000 of these rights were on
1 July 2021, with the remainder 90,000 rights were issued on 29 November 2021 upon shareholder approval.
The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was 4.37 years
(June 2021: 5.5 years).
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
Share price
at grant date
18/10/2021
19/11/2021
17/10/2022
31/12/2026
$5.060
$5.060
Vesting
hurdle
$0.000
$0.000
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value
at grant date
55.00%
55.00%
-
-
0.14%
0.78%
$5.06000
$4.84000
70 • LARK Distilling Co. Ltd. Annual Report 2022
LARK DISTILLING CO. LTD
DIRECTORS’ DECLARATION
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 2022 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 2022
LARK Distilling Co. Ltd. Annual Report 2022 • 71
72 • LARK Distilling Co. Ltd. Annual Report 2022
Lark Distilling Co. Ltd
Independent Auditor’s Report
Deloitte Touche Tohmatsu
ABN 74 490 121 060
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 2022, 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:
• Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial
performance for the year then ended; and
• 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 Asia Pacific Limited and the Deloitte organisation.
LARK Distilling Co. Ltd. Annual Report 2022 • 73
Lark Distilling Co. Ltd
Independent Auditor’s Report
Key Audit Matter
How the scope of our audit responded to the Key
Audit Matter
Valuation of whisky inventory
Our procedures included, but were not limited to:
At 30 June 2022 the Group has total
inventories of $60,171,733 (2021:
$25,821,900) of which $20,430,247
(2021: $7,840,235) is current and
$39,741,486 (2021: $17,981,665) is
non-current. The accounting policy
for inventory is disclosed in note 14.
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.
During the current year there was
significant inventory acquired as part
of a business combination. The fair
value of inventory acquired at
acquisition date amounted to
$23,948,174.
The long life cycle of whisky means
costs are required to be capitalized to
whisky under maturation over a
number of financial years.
Acquisition of Kernke Family Shene
Estate Pty Ltd and Shene Distillery
Pty Ltd (“Shene”)
During the current year the Group
acquired 100% of Shene. The
effective date for the acquisition was
2 February 2022 and the fair value of
the total consideration transferred or
transferrable to complete the
acquisition was $39,998,469. Details
of the business combination and
74 • LARK Distilling Co. Ltd. Annual Report 2022
• Obtaining an understanding of the inventory
production process, lifecycle and cost allocation
processes, including understanding key controls
• Assessing manufacturing overhead capitalisation
against the requirements of AASB 102:
Inventories
• Detailed testing of direct costs capitalised to
maturing whisky in the cask during the period
• Evaluating the determination of the fair value of
inventory acquired as part of the business
combination (refer further details in separate
key audit matter below); and
• Evaluating whether inventory is appropriately
recognised at the lower of cost and net
realisable value.
We have also assessed the adequacy of the disclosures
made in the financial statements.
Our procedures included, but were not limited to:
•
•
•
evaluating management’s identification of the
identifiable assets acquired and the liabilities
assumed
assessing management’s determination of the
fair value of these assets and liabilities
assessing, in conjunction with our valuation
specialists,
o
the determination of the fair value of the
whiskey acquired; and,
the external valuation obtained relating
to land and buildings acquired.
o
Lark Distilling Co. Ltd
Independent Auditor’s Report
associated accounting policy is
disclosed in Note 32.
We have also assessed the adequacy of the disclosures
made in the financial statements.
The business combination is
accounted for in accordance with
AASB 3 Business Combinations.
The assets and liabilities acquired
were measured at their fair values,
which were determined at the
acquisition date as part of the
purchase price allocation exercise
which was performed. This resulted in
net assets acquired measured at fair
value amounting to $29,701,680 and
goodwill recognised amounting to
$10,296,789.
The purchase price allocation
performed requires Management and
the Board to exercise judgement and
make assumptions in determining the
fair value of the assets and liabilities
acquired. Changes in these
assumptions may have a material
impact on the fair values determined.
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 2022, 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.
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.
LARK Distilling Co. Ltd. Annual Report 2022 • 75
Lark Distilling Co. Ltd
Independent Auditor’s Report
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 fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group’s audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken 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.
76 • LARK Distilling Co. Ltd. Annual Report 2022
Lark Distilling Co. Ltd
Independent Auditor’s Report
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 22 to 29 of the Directors’ Report for
the year ended 30 June 2022.
In our opinion, the Remuneration Report of Lark Distilling Co. Limited, for the year ended 30 June
2022, 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
S Dare
Partner
Chartered Accountants
Hobart, 30 September 2022
LARK Distilling Co. Ltd. Annual Report 2022 • 77
Lark Distilling Co. Ltd
Shareholder information
30 JUNE 2022
The shareholder information set out below was applicable as at 20 September 2022.
DISTRIBUTION OF EQUITABLE SECURITIES
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Number of
holders of
ordinary
shares
2,523
1,575
374
374
66
Number of
ordinary
shares held
Percentage
of ordinary
shares held
1,096,940
3,828,820
2,726,874
9,965,091
57,705,319
1.460
5.080
3.620
13.230
76.610
4,912
75,323,044
100.00
Holding less than a marketable parcel
551
64,635
0.085
EQUITY SECURITY HOLDERS
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
QUALITY LIFE PTY LTD
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