ANNUAL
REPORT
2024
Lark Distilling Co. Ltd. APPENDIX 4E. Preliminary Final Report
LARK DISTILLING CO. LTD
Appendix 4E
PRELIMINARY FINAL REPORT
1. COMPANY DETAILS
Name of entity:
Lark Distilling Co. Ltd
ABN:
62 104 600 544
Reporting period:
For the year ended 30 June 2024
Previous period:
For the year ended 30 June 2023
2. RESULTS FOR ANNOUNCEMENT TO THE MARKET
Analysis of number of equitable security holders by size of holding:
$
Revenues from ordinary activities
down
15.8% to
16,730,759
Loss from ordinary activities after tax attributable
to the owners of Lark Distilling Co. Ltd
down
6.9% to
(4,567,915)
Loss for the year attributable to the owners of Lark Distilling Co. Ltd
down
6.9% to
(4,567,915)
Dividends
There were no dividends paid, recommended or declared during the current financial period.
Comments
Refer to attached review of operations for commentary over the results for the period.
3. NET TANGIBLE ASSETS
Reporting
period
Cents
Previous
period
Cents
Net tangible assets per ordinary security
102.91
104.62
Net tangible assets excludes intangible assets, and right-of-use assets recognised under AASB 16 Leases.
4. CONTROL GAINED/LOST OVER ENTITIES
Not applicable.
5. DIVIDENDS
Current period
There were no dividends paid, recommended or declared during the current financial period.
Previous period
There were no dividends paid, recommended or declared during the previous financial period.
SINGLE MALT WHISKY
ANNUAL
REPORT
2024
6. DIVIDEND REINVESTMENT PLANS
Not applicable.
7. DETAILS OF ASSOCIATES AND JOINT VENTURE ENTITIES
Not applicable.
8. FOREIGN ENTITIES
Details of origin of accounting standards used in compiling the report:
Not applicable.
9. AUDIT QUALIFICATION OR REVIEW
Details of audit/review dispute or qualification (if any):
The financial statements were subject to an audit and the audit report is attached as part of the Annual Report.
10. ATTACHMENTS
Details of attachments (if any):
The Annual Report of Lark Distilling Co. Ltd for the year ended 30 June 2024 is attached.
11. SIGNED
Domenic Panaccio
Non-Executive Chair
Date: 27 August 2024
SINGLE MALT WHISKY
Lark Distilling Co. Ltd. APPENDIX 4E. Preliminary Final Report
LARK Distilling Co. Ltd. Annual Report 2024 • 1
ANNUAL
REPORT
2024
LARK Distilling Co. LTD
ABN 62 104 600 544
A N N UA L R EP O RT
2 0 2 4
SINGLE MALT WHISKY
2
LARK Distillery, Cambridge, Tasmania
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
CONTENTS
MESSAGE FROM THE CHAIR
05
CHIEF EXECUTIVE OFFICER’S REPORT
06
A YEAR IN REVIEW
10
AWARDS
12
DIRECTORS’ REPORT
16
AUDITOR’S INDEPENDENCE DECLARATION
41
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
44
STATEMENT OF FINANCIAL POSITION
45
STATEMENT OF CHANGES IN EQUITY
46
STATEMENT OF CASH FLOWS
47
NOTES TO THE FINANCIAL STATEMENTS
48
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
82
DIRECTORS’ DECLARATION
83
INDEPENDENT AUDITOR’S REPORT
84
SHAREHOLDER INFORMATION
90
DIRECTORS
Mr Domenic Panaccio
Non-Executive Chair
Mr David Dearie
Non-Executive Director
Ms Laura McBain
Non-Executive Director
Mr Warren Randall
Non-Executive Director
CHIEF EXECUTIVE OFFICER
Mr Satya Sharma
COMPANY SECRETARY
Ms Melanie Leydin
REGISTERED OFFICE
AND PRINCIPAL PLACE
OF BUSINESS
Level 1, 91-93 Macquarie
Street, Hobart TAS 7000
AUDITOR
RSM Australia Partners
Level 27, 120 Collins Street
Melbourne, VIC 3000
STOCK EXCHANGE LISTING
Lark Distilling Co. Ltd
shares are listed on the Australian
Securities Exchange
(ASX code: LRK)
CORPORATE GOVERNANCE
STATEMENT
The Company’s 2024 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/
CORPORATE DIRECTORY
03
4
We are well-positioned to drive growth and expansion in future
years, with accelerated investment in brand marketing and
international expansion, facilitated by our recently announced
Strategic Partnership with Seppeltsfield Wines and equity
raising, which provides significant balance sheet strength.
- DOMENIC PANACCIO, CHAIR
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
05
MESSAGE FROM
THE CHAIR
DOMENIC PANACCIO
CHAIR
DEAR FELLOW SHAREHOLDERS,
I AM DELIGHTED TO PRESENT MY FIRST ANNUAL
REPORT AS CHAIR OF LARK DISTILLING
COMPANY, HAVING ASSUMED THE ROLE
IN JANUARY THIS YEAR. I WOULD LIKE TO
ACKNOWLEDGE MY PREDECESSOR, DAVID
DEARIE, WHO REMAINS A VALUED MEMBER OF
OUR BOARD, AND ALL THE OTHER LARK BOARD
MEMBERS FOR THEIR SUPPORT.
While the past year presented macro challenges,
including a difficult economic and market landscape, as
well as one-off impacts affecting our net sales, which
totalled $14 million, the company has made significant
progress in several areas and the Board believes these
developments have laid a strong foundation for Lark’s
future success.
At our Investor Day in October 2023, Management
outlined the Company’s Strategic Priorities, focusing on
building long-term brand value, delivering international
sales momentum, and maintaining our domestic
leadership position. These priorities are underpinned
by a renewed focus on cash and capital discipline. The
Board is highly supportive of the company’s direction
and confident that our strategy will deliver long-term
value for our shareholders.
The year has seen notable achievements, including the
signing of our first international Distribution Agreements
in South-East Asia, marking the initial step in our export
expansion. We have also made considerable progress in
Global Travel Retail, a crucial channel for building brand
awareness and loyalty. Our revised domestic sales
structure, through a distributor model, from 1 August
2024, will increase commercial coverage in Australia,
enabling us to reach more consumers and showcase
our exceptional products.
We are confident in our future prospects, underpinned
by our most significant asset in our Whisky Bank,
and the exceptional quality of our whisky, which has
received multiple awards, including Australia’s Best
Single Malt Whisky in the World Whisky Awards and
Gold awards for each of our core Single Malt Signature
range expressions at the Global Spirits Masters.
Furthermore, we have confidence in the strength and
expertise of our Management and Leadership team, led
by CEO Satya, who possess a deep understanding of
the industry and a clear vision for our future.
We are well-positioned to drive growth and expansion
in future years, with accelerated investment in brand
marketing and international expansion, facilitated by
our recently announced Strategic Partnership with
Seppeltsfield Wines and equity raising, which provides
significant balance sheet strength. We will maintain a
disciplined approach to capital allocation, ensuring our
strategy delivers long-term value for our shareholders.
DOMENIC PANACCIO
CHAIR
06
CHIEF EXECUTIVE
OFFICER’S REPORT
SATYA SHARMA
CEO
WE ARE PLEASED TO PRESENT OUR 2024
ANNUAL REPORT. WHILE THE YEAR HAS BEEN A
CHALLENGING ONE FOR THE COMPANY AND WIDER
SECTOR, WE HAVE MADE SOLID PROGRESS AGAINST
OUR AMBITION OF MAKING LARK A LEADER IN NEW
WORLD WHISKY. WE ARE WELL POSITIONED FOR
LONG-TERM GROWTH, WITH EXCITEMENT FOR THE
OPPORTUNITIES AHEAD.
FINANCIALS
Our 2024 Annual Report reflects a year of improved
operating momentum for Lark, set against the backdrop
of a challenging economic environment. Net Sales
(revenue after excise) decreased from $17.0 million
in 2023 to $14.0 million in FY24, primarily due to a
foreseen slowdown in the Chinese Indirect Export
channel and lower sales of old one-off releases. Softer
trading conditions in domestic B2B channels and
hospitality, mirroring broader consumer sentiment, were
partially offset by progress in new market openings, a
strong first year in Global Travel Retail, and a return to
growth in our E-commerce channel.
Despite these challenges, disciplined cost control
delivered an improvement of $1.2 million in net cash
used in operating activities, while maintaining brand
investment to support long-term growth.
STRATEGIC PRIORITIES
In October 2023, we outlined our strategic priorities
and growth plan, setting out our roadmap to make Lark
a Leader in New World Whisky. We are confident that
the priorities of Building Long Term Brand Value and
delivering international sales momentum alongside
domestic market leadership, underpinned by Cash &
Capital Discipline, and our high-quality Whisky Bank;
will deliver long-term shareholder value. While still early
in our roadmap, I am pleased with the ongoing progress
being made against our strategic priorities.
BUILDING LONG TERM BRAND VALUE
We have continued to build our brand reputation
through awards recognition, including recent Gold
awards at the Global Spirits Masters Competition for
each of Lark Classic Cask, Lark Tasmanian Peated,
Lark Chinotto Citrus, and Dark Lark. Our successful
partnership with Peter Gilmore has further enhanced
our brand’s luxury credentials, while working with
Australian bartender of the year, Milly Tang, allowed
the brand to reach new audiences through our Dark
Lark campaign. As Australia’s No. 1 Luxury Single Malt,
Lark is now the Australian Spirit of choice throughout
all Qantas First Class flights and Qantas First Class
lounges. The introduction of our ‘Rare & Remarkable’
products has driven halo and brand equity, and we have
commenced work on a portfolio restage, including the
appointment of a creative design agency.
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
07
INTERNATIONAL SALES MOMENTUM
& DOMESTIC LEADERSHIP
FY24 saw the signing of Lark’s first ever Distribution
Agreements with overseas distributors, marking our first
foray into sustainable export expansion, with
$0.9 million of Net Sales in H2 of this year, and focus
now on building brand awareness in market, including
through trade launches attended by Bill Lark in
Singapore and Indonesia during July 2024. Our nascent
Global Travel Retail channel has delivered significant
commercial success, with over $1.1 million of Net Sales
achieved in FY24. While the domestic Australia market
has been challenging, our recently announced change
to our Route to Market with Spirits Platform, Australia’s
leading independent distributor, for the B2B channel
gives us great confidence of increased commercial
success.
CASH & CAPITAL DISCIPLINE
We remain committed to exercising cash and capital
discipline, with a strong focus on cost control and
capital allocation and improvement in net operating
cashflows of $1.1 million for the year. The recent
Strategic Partnership with Seppeltsfield Wines and
Equity raising will equip Lark with the resources to
continue to produce exceptional whisky, providing
the balance sheet flexibility to continue to invest in
our brands and facilities while providing a high level
of confidence through to positive operating cashflows
during FY27.
FY25 PERSPECTIVES
For the coming year, we will continue to focus on
our Strategic Priorities. FY25 will be a pivotal year
for building long term brand value for Lark, with the
ongoing brand restage and portfolio development
finalised by end of the year to accelerate future
international expansion. We anticipate returning to Net
Sales growth in FY25, driven by additional commercial
coverage domestically, improved DTC, and continued
growth in Export and GTR. Our existing whisky bank
will continue to allow distilling production to be broadly
aligned with sales volumes in the year, with modest
development of our Pontville site to increase capacity
for the future as part of the transition to this being Lark’s
long term brand home.
ACKNOWLEDGEMENT AND APPRECIATION
The success of Lark is deeply rooted in the trust and
loyalty of our consumers, customers, and community.
We extend our sincerest gratitude for their ongoing
support and look forward to welcoming more to the
fold as we expand. We appreciate our team members’
dedication and hard work. Lastly, we thank our valued
shareholders for their trust, continued investment, and
support. The shared vision and opportunity for the
Company and brands is what drives us forward.
SATYA SHARMA
CEO
08
In October 2023, we outlined our strategic
priorities and growth plan, setting out our roadmap
to make Lark a Leader in New World Whisky.
- SATYA SHARMA, CEO
ANNUAL
REPORT
2024
LARK Distilling Co. Ltd. Annual Report 2022 • 9
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
10
A YEAR IN REVIEW
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
11
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
12
13
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
GLOBAL SPIRITS MASTERS
CLASSIC CASK
TASMANIAN PEATED
CHINOTTO CITRUS
DARK LARK 2024
LNY 2024
1911 2024
WORLD WHISKY AWARDS
SYMPHONY NO. 1 (BLENDED MALT)
GARAGE PROJECT (SINGLE MALT)
CLASSIC CASK
DARK LARK
TASMANIAN PEATED
2023/2024 LARK
AWARDS PORTFOLIO
CHINA WINE &
SPIRITS AWARDS
CASK STRENGTH
REBELLION
TASMANIAN PEATED
DARK LARK 23
TOKAY 100
CLASSIC CASK
HONG KONG WINE &
SPIRITS COMPETITION
TOKAY 100 95 POINTS
TASMANIAN PEATED
SYMPHONY N1
CLASSIC CASK
REBELLION
DARK LARK 23
CHINOTTO CASK STRENGTH II
INTERNATIONAL WINE
& SPIRITS COMPETITION
CHINOTTO CITRUS 93 POINTS
TASMANIAN PEATED 90 POINTS
LNY 2024 90 POINTS
CLASSIC CASK
14
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
15
FORTY SPOTTED GIN
AWARDS PORTFOLIO
WORLD GIN AWARDS
BUSH HONEY
CLASSIC
CITRUS & PEPPERBERRY
PINOT NOIR
GLOBAL SPIRITS
MASTERS COMPETITION
BUSH HONEY
CLASSIC
CITRUS & PEPPERBERRY
PINOT NOIR
WILD ROSE
16
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 2024.
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 Domenic Panaccio - Non-Executive Chair
(appointed as Chair on 24 January 2024)
Mr David Dearie - Non-Executive Director
(resigned as Chair on 24 January 2024)
Ms Laura McBain - Non-Executive Director
Mr Warren Randall - Non-Executive Director
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year
ended 30 June 2024 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
Lark Distilling Co Ltd is a Tasmanian based distiller
and marketer of premium and Luxury Australian spirits.
The Group’s flagship Lark Single Malt Whisky was
instrumental in the creation of the Tasmanian Whisky
category, being founded by Bill and Lyn Lark in 1992
as the first licensed distillery in the state in 154 years.
In addition to malt whisky, the Group also handcrafts a
range of award-winning Tasmanian Gins under the Forty
Spotted trademark.
The Group has invested behind developing a ‘Whisky
Bank’ of maturing inventory in barrel, stored in sites
across Tasmania, which underpins future growth
ambitions in both domestic and international markets.
The Group has expertise in the development, production,
and marketing of whisky and gin products, with
production and distilling assets across three sites in
Tasmania.
In addition to business to business sales, the Group
operates cellar door style hospitality venues in Tasmania
and owned e-commerce platform servicing consumers
directly in Australia.
OPERATIONAL HIGHLIGHTS
Market & Channel expansion:
Distribution Agreements were signed in the financial
year for four international markets (Singapore, Indonesia,
Malaysia and Philippines), with initial shipments taking
place in H2 marking the first phase of the Group’s
planned sustainable export expansion plans. FY24 also
saw the first full year of operations within Global Travel
Retail channel. This channel plays a key brand building
role for Luxury spirits brands and a unique opportunity to
engage with target audience and drive brand discovery
& awareness, with commercial and brand activation
delivered in the year through key Australian Airports.
Appointment of domestic market distribution partner:
In June 2024, the Group announced the appointment of
Australia’s leading independent spirits distributor, Spirts
Platform, as domestic distribution partner for both Lark
Whisky and Forty Spotted Gin, effective 1st August 2024.
This change in route-to-market sees Spirits Platform’s
DIRECTORS’
REPORT
17
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
sales team representing the brands in the domestic
business to business channels, increasing market
coverage by giving access to a significantly expanded
sales team. The Group will continue managing the
Domestic Hospitality, Ecommerce, and Australian GTR
channels post transition.
Brand Investment:
The year saw the continuation of focus on Lark’s core
Signature Single Malt range of Lark Classic Cask, Lark
Tasmanian Peated, and Lark Chinotto Citrus Cask as
‘always on’ offerings in Australia and new international
markets. Brand activity has focused on meaningful brand
partnerships to grow LARK’s awareness and reinforce
credibility with trade and consumers via trusted names.
While Limited Edition and exclusive releases remain part
of the Lark offering, these have continued to move away
from numerous product led releases prevalent through
the Covid period, to an occasion led and scaleable
innovation pipeline including Personalisation, Dark
Lark, Christmas, and Lunar New Year, supplemented
by ‘Rare & Remarkable’ introduction including Lark
1911 Para Vintage Tawny Cask to provide brand halo
in key channels. Work started in the year on the Lark
brand restage to support future export expansion, with
the appointment of LOVE, a highly credentialed global
creative agency experienced in the Luxury alcohol space
to support this key project.
Recognition:
The quality of the Group’s whiskies continued to
be recognised through some of the industry’s most
influential and important awards, including Lark being
crowned Australia’s Best Single Malt for the Fresh IPA
Cask release, as well as Australia’s Best Blended Malt
with Symphony No.1, for the third consecutive year. The
most recent Global Spirits Masters competition saw
Gold Medals awarded for each of the core Signature
Single Malt range products along with 2024’s Dark Lark
release. These awards are testament to the quality of our
Whisky Bank, and the skill and capability of our distilling
and blending teams, while also providing reassurance to
consumers, customers, and distributors.
Production Operations:
Lark has a high quality ‘Whisky Bank’, with inventory
under maturation of 2.5 million litres (at 43% ABV).
This Whisky Bank is the source of our award-winning
whiskies and underpins the Group’s future growth
ambitions. The scale and profile of the inventory under
maturation provides significant flexibility to optimise
short to medium-term production and working capital
requirements. In FY24, distilling operations were
consolidated to Lark’s Cambridge site, with distilling
production reduced compared to previous financial years
and more closely aligned with current sales demand.
Inventory under maturation has therefore increased only
modestly in the year.
Organisational Design:
The financial year saw the embedding of revised
organisational structure announced in June 2023, with
restructuring of several roles delivering cost savings
to offset inflationary pressure and allowing investment
into new roles to support future growth areas of
innovation and international expansion. Following the
announcement in June 2024 of the change in Domestic
route to market, and the appointment of Spirits Platform,
restructuring of Lark’s domestic sales team took place,
with the removal of roles and associated cost saving to
offset Spirits Platform Distribution Margin.
Capital & Debt:
In February 2024, the Group secured an extension of its
existing committed bank facility with National Australia
Bank, with this facility now maturing in January 2028.
The facility remains undrawn, with the Group debt free
over the course of the year. Subsequent to financial
year end, the Group announced a Strategic Partnership
with Seppeltsfield Wines Pty Ltd, an entity associated
with non-executive director Warren Randall, and
associated equity raising. The Institutional Placement
was successfully completed on 30th July 2024, with
Conditional Placement subject to shareholder approval at
EGM to be held on 30th August 2024.
18
DIRECTORS’ REPORT,
CONT’D
FINANCIAL HIGHLIGHTS
Key Highlights:
•
Lark delivered revenue from ordinary activities for
the year ended 30 June 2024 of $16.7 million, down
15.8% compared to last year.
•
Net Sales (revenue after excise) for the year was
$14.0 million, down $3.1 million or 18% compared
to last year. Sales for the year were impacted by a
foreseen slowdown in the Chinese Indirect Export
channel, and softer trading conditions in domestic
B2B and Hospitality, partially offset by positive
performance in Direct Export, GTR and Ecommerce.
•
Direct exports under Distribution Agreements
commenced in H2 with initial shipments to new
launch markets of Singapore, Indonesia, Malaysia and
Philippines, delivering Net Sales of $0.9 million. Lark’s
nascent Global Travel Retail presence continues to
grow in key Australian airports, with Net Sales of
$1.1 million for FY24.
•
Gross profit margins (as a % of net sales) remained
strong at 67.8%. Whisky net sales per litre reduced
from $280 to $255 per litre primarily through channel
mix with lower contribution from hospitality venues.
Operating expenses decreased during the year due to:
•
Marketing investment (Selling & Distribution expense)
as a % of net sales increased from 18% to 21% year on
year as Lark continues to build long term brand equity
to support domestic sales and provide a strong
platform for international market expansion.
•
In June 2024, Lark announced the appointment of
Australia’s leading independent spirits distributor,
Spirits Platform, as Lark’s domestic distribution
partner – commencing 1 August 2024. A non-
recurring $0.2 million restructuring provision has
been included within the result.
•
Other operating costs in FY23 comparatives included
$2.3 million non-recurring and one-off costs relating
to CEO recruitment, obsolete stock and restructuring
costs. Excluding these non-recurring expenses, other
operating costs reduced $1.0 million vs FY23 due to
cost control measures implemented, including the
benefits of the restructure implemented in June 2023.
FINANCIAL POSITION
•
Lark ended the year with a cash balance of $2.4
million, with a further $15 million undrawn committed
bank facility fully available to be drawn and now
extended to January 2028.
•
Total inventory at cost increased by $2.2 million to
$64.1 million. The modest increase when compared
to previous years reflected the decision to centralise
whisky production at Cambridge as well as more
closely aligning distilling production levels with
current demand. This also contributed to Net
Operating Cash Outflows improving by $1.2 million
vs FY23.
BUSINESS STRATEGIES AND PROSPECTS FOR
FUTURE FINANCIAL YEARS
The Group outlined its Strategic Priorities and growth
plan at its Investor Day in October 2023 in pursuit of its
ambition of making Lark a Leader in New World Whisky.
The business strategy remains focused on these strategic
priorities, with delivery through:
•
Long Term Brand Value – building a globally
recognized and differentiated Luxury brand
•
International Sales Momentum & Domestic
Leadership Position – creation of repeatable and
diversified revenue streams.
•
Cash & Capital Discipline – prioritizing cash
generation to underpin growth while exercising
capital discipline.
The Group intends to make continued progress against
these priorities in the coming financial year, with a
brand restage underway for Lark to support future
export expansion and Whisky Bank commercialisation,
marketing support focused on driving brand awareness
in new markets and channels while embedding new
route-to-market for domestic Australia.
19
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
BUSINESS RISKS
RISK
DESCRIPTION
MITIGATION STRATEGIES
Health, Safety
& Wellbeing
The production and sale of spirits and operation
of hospitality venues involves the handling of
hazardous goods and the use of complex equipment
and processes that pose a risk of death, injury, or
illness. An incident could lead to significant financial,
operational and reputational impact to Lark.
Lark recognises the importance of managing existing
risks and monitoring emerging risks that have
potential to cause harm to employees, contractors
or visitors.
The health, safety and wellbeing of the Lark team
remains our highest priority. Key mitigation strategies
include:
• Formally defined, and periodically reviewed
Health, safety, and well-being policies, standards,
procedures and tools.
• Induction and ongoing training programs.
• Regular cleaning and maintenance schedule, with
inspections and preventative repairs & maintenance.
• Reporting & monitoring of health and safety practices
and performance with periodic reviews to identify
areas of improvement.
Incident leading to
reputational damage
to company and / or
brand(s)
Lark has built its reputation from the award-winning
quality of its whisky. The reputation of the Lark brand
is key to the success of the business. Risks to Lark’s
reputation include both internal and external activity
including quality incident, counterfeited product,
black market trade, and negative media coverage.
A significant incident could have a material adverse
effect on financial and operating performance.
• 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.
• Quality control measures and processes to mitigate
risk to Brand reputation through product quality
incident.
• Brand and intellectual property protection strategies.
Storage & Management
of Maturing Whisky
Lark has a significant amount of maturing whisky
stored in several facilities. Lark’s storage facilities
may be impacted by a fire or major weather event or
subject to malicious attack, which may result in loss,
damage, contamination or destruction of inventory.
If inventory is not adequately managed, it could
result in unfavourable whisky profiles or a mismatch
between consumer demand and available inventory.
• Multiple storage locations that are geographically
separated, with ongoing site security and safety
checks.
• Insurance coverage in place.
• Regular stocktakes, with barrel management and
tracking utilising RFID tagging, for both filled and
empty barrels, allowing automation of monitoring and
reporting.
• Regular sampling & audits of inventory under
maturation.
• Scale and quality of Whisky Bank provides flexibility
and optionality for future releases.
• Long Term modelling utilising industry data to identify
whisky requirements and appropriately manage
stock model.
• No-Age statement releases provide flexibility to marry
whiskies from different years, with Tasmanian climate
allowing longer maturation periods for optionality on
future range profiles.
20
RISK
DESCRIPTION
MITIGATION STRATEGIES
Failure to attract
& retain talent
The Company is heavily reliant on key personnel.
Loss of key personnel could cause significant
disruption to operational and financial performance.
• Market competitive remuneration and benefits
offering.
• Talent review and succession planning processes.
• Flexible working practices where roles allow.
• Incentive and reward programs aligned to the
achievement of Lark’s financial and business goals,
with Long Term Incentive plans in place for key roles.
Changes in consumer
preferences and / or
Competitive landscape
may have an adverse
impact on sales and
growth
Unforeseen changes to consumer preferences from
factors including health, economic conditions, and
market trends could have a material adverse impact
on operating and financial performance.
• History and Brand equity of Lark supporting position
in Australia, with expansion into export markets
(including Global Travel Retail) underway to diversify
revenue streams.
• Size and profile of Whisky Bank gives flexibility to
consider offerings across multiple price tiers, with
wood and finishing program allowing adaptation of
profile in time.
• Monitoring of brand health, consumer insights and
trends informing brand product & portfolio strategy.
• Representation on key industry bodies.
Quality standards
Sale of defective products due to non-compliance
with Lark operational quality processes could result
in damage to Lark’s brand reputation. This could also
lead to additional costs from product recall, penalties
and litigation.
• Maintenance of appropriate policies, standards and
procedures relating to Production & Operations,
including strict quality control measures.
• HACCP Accreditation.
• Regular auditing program.
Supply Chain
Disruptions or delays within Lark’s supply chain may
impact the production of new make whisky and/or
bottling of finished goods, which may impact future
and/or current sales volumes.
• Rolling Sales & Operations Planning Process (S&OP)
embedded within business providing future demand
signal for raw materials.
• Risk assessments undertaken on key suppliers.
• Multi-regional and diversified supplier base, with
broad range of potential suppliers.
• Supply agreements in place with key supply partners.
• Joint business planning processes to support and
align internal and partner incentives.
DIRECTORS’ REPORT,
CONT’D
21
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
RISK
DESCRIPTION
MITIGATION STRATEGIES
Route To Market & New
Market Entry
Appropriate Route to Market is required to ensure
long term sales development and sustainability for
Lark, with portfolio size and scale requiring Lark to
work with in-market distributors. Risks exist which
must be managed including finding and appointing
appropriate quality distributors and ensuring
sufficient focus on Lark’s brands. Lack of availability
of appropriate quality distributors may disrupt or
slow new market entry.
Entry to international markets may be disrupted
or slowed based on factors beyond Lark’s
control including local laws and regulations on
alcohol products, product registrations, and other
Government actions including changing duties
tariffs and quotas. Entry may also be disrupted or
slowed based on speed of ensuring appropriate
brand protections including trademark coverage,
with objections and speed of registrations potentially
slowing or disrupting market entry.
• Ongoing assessment and optimisation of Domestic
B2B Coverage Model.
• Direct to consumer / Hospitality business provides
diversification of Domestic sales business.
• Management team experienced working with
international distributors in Luxury spirits.
• Selectively targeting which export markets are
entered and diversifying across multiple markets to
mitigate loss from barriers to entry.
• Due Diligence on new Distributors in Export markets,
including references in trade as required.
• Distribution Agreements in place with Export
distributors, with appropriate distributor margins to
ensure aligned incentives.
• Relationships and engagement (where relevant) with
key government, industry advocacy and regulatory
bodies.
• Engagement with external subject matter experts
as required.
Capital Management
and access to funding
Insufficient funding may restrict Lark’s ability to trade,
including appropriate brand investment for entry
to new markets, or volume of whisky production,
restricting future sales growth. Lark is currently loss
making and is not cash flow positive which may
adversely impact Lark’s access to funding.
• Access to capital markets, with recent institutional
placement and forthcoming conditional placement
providing balance sheet strength to invest in brand,
infrastructure, and export market expansion.
• Long range corporate planning with assessment of
cash position, with size and profile of Whisky Bank
enabling flexible approach to distilling production.
• Banking facility in place and extended to January
2028.
• Flexibility on balance sheet, including land &
buildings that could be sold.
22
DIRECTORS’ REPORT,
CONT’D
RISK
DESCRIPTION
MITIGATION STRATEGIES
Data and cyber security
The business relies on IT infrastructure, systems and
processes to support ongoing business growth. The
use of these systems poses risk (including through
cyber-attack) of error and loss of access to systems
and data, which includes increased cost and
processing times or damage to business reputation,
or decision making based on inaccurate information.
The storage of information poses risk of data theft
which may impact Lark’s ability to trade, and/or give
rise to reputational risk.
• Independent external IT Security Assessments
performed to maintain IT maturity level.
• Information User Policy, supporting framework and
specialised resources.
• Restricted and segregated management of sensitive
business/supplier/customer data.
• Documented crisis, business continuity and disaster
recovery plans.
• Periodic employee training and alerts to ensure
secure handling of sensitive data.
• Outsourced IT experts bringing best practice
processes to supplement internal resource.
Non-compliance with
laws and regulations
Lark operates in a highly regulated industry in
the production of spirits and selling in various
overseas markets. Each of these markets have
differing regulations that govern many aspects
of Lark, including privacy, taxation, production,
manufacturing, pricing, marketing, advertising
and distribution, & ASX reporting requirements.
Remaining compliant with regulations, including
changes to existing, or new regulations, requires
ongoing monitoring by the business.
• Compliance framework.
• Specialised and experienced resources and teams
(including external subject matter experts as
required)
• Company-wide policies, standards and procedures.
• Relationships and engagement with key government,
industry advocacy and regulatory bodies.
Climate Change &
Environmental Risks
Lark faces climate change risks across both the
production and distribution of whisky. Risks include
adverse impact to whisky maturation time and
process, and distribution to supply chain including
Agri-risk.
Consumer awareness and retailer requirements on
environmental impact may require amendments to
packaging and labelling in certain markets.
• Maturation and wood program can be tailored over
time.
• R&D work on impact of climate on maturation.
• Accreditation of certified carbon neutral status under
Federal Government’s Climate Active Program, with
consideration to carbon footprint in supply chain.
• Regular risk assessments to identify and address
potential climate-related impacts, such as floods, on
production and distribution.
• Relationships and engagement with key government,
industry advocacy and regulatory bodies.
23
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
SIGNIFICANT CHANGES IN THE STATE
OF AFFAIRS
There were no significant changes in the state of affairs of
the Group during the financial year.
MATTERS SUBSEQUENT TO THE END OF
THE FINANCIAL YEAR
On 29 July 2024, the Company announced that it entered
into a Heads of Agreement for a Strategic Partnership with
Seppeltsfield Wines Pty Limited, an entity associated with
Non-Executive Director, Warren Randall. The Strategic
Partnership will secure access to, and exclusivity over,
premium oak barrels for Lark, formalising first right of
use arrangements to provide certainty over Lark’s future
maturation requirements. The Heads of Agreement is in
place with contract to be signed subject to completion of
the Conditional Placement to Seppeltsfield Wines Pty Ltd
detailed below.
On 29 July 2024, the Company announced that
it is undertaking an equity raising of approximately
$22.5 million equity in three (3) tranches.
• a $15.0 million conditional placement at $0.85 per
new share to Seppeltsfield Wines Pty Ltd, an entity
associated with Warren Randall (raising approximately
$14.5 million), Domenic Panaccio (raising approximately
$0.25 million) and David Dearie (raising approximately
$0.25 million), subject to shareholder approval at an
extraordinary general meeting (“EGM”) to be held on
30 August 2024.
• an unconditional institutional placement at $0.85 per
new share to raise approximately $6.5 million. The
institutional placement was completed on 30 July 2024
and the Company issued 7,647,059 new Shares on
2 August 2024.
• a non-underwritten share purchase plan intending
to raise up to $1.0 million at $0.85 per new Share
to eligible Lark shareholders to be completed
during August 2024. The plan was almost 5 times
oversubscribed versus the original target, with a scale
back of applications resulting in a total amount of $3.5
million to be raised. The new shares are scheduled to
be issued 27th August 2024.
The equity raise will provide Lark with additional balance
sheet capacity to invest in the Lark brand and facilities
over the next two years to drive the export strategy and
accelerate growth.
No other matter or circumstance has arisen since
30 June 2024 that has significantly affected, or may
significantly affect the Group’s operations, the results of
those operations, or the Group’s state of affairs in future
financial years.
LIKELY DEVELOPMENTS AND RESULTS
OF OPERATIONS
The Group expects to drive sales growth through
expansion to international markets. Additional
information on the operations and financial position
of Lark is set out in the Review of Operations
accompanying this Directors’ report.
ENVIRONMENTAL REGULATION
The Group is committed to minimising its
environmental footprint and is certified carbon neutral,
under the Federal Government’s Climate Active
Program, one of the most widely recognised carbon
neutral programs of its kind.
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 international markets that Lark export to. 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.
24
MR DAVID DEARIE
Title: Non-Executive Director
(resigned as Chair on 24 January 2024)
Qualifications: MHCIMA, Glasgow
College of Food and Technology, Institute
of Marketing Diploma, University of Hull
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
Interests in shares: 574,986
Interests in rights: 420,000
performance rights
Share rights: 10,478
DIRECTORS’ REPORT,
CONT’D
INFORMATION ON DIRECTORS
MR DOMENIC PANACCIO
Title: Non-Executive Chair
(appointed as Chair on 24 January 2024)
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
Australia 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
Special responsibilities: Chair of the Audit
and Risk Committee(a), and member of the
Remuneration and Nomination Committee(a).
Interests in shares: 109,954
fully paid ordinary shares
Interests in rights: None
25
MS. LAURA MCBAIN
Title: Non-Executive Director
(Resigned as Interim Managing Director and appointed
as Non-Executive Director on 1 May 2023)
Qualifications: Bachelor of Commerce and completed
IMD Leadership Challenge 2013 and IESE/Wharton/
CEIBS Global CEO program 2017
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 China. MD of Maggie Beer Holdings
Ltd 2017 to 2019, leading several acquisitions and
integrations of premium food businesses into public
company. Strategic advisor to nutrition businesses and
former director of Export Finance Australia (Australia’s
government export credit agency). 2013 Telstra
Australian Businesswoman of the Year (Private and
Corporate) and Telstra Tasmanian Businesswoman of
the year. Laura was appointed to the inaugural Board of
Tasmania Football Club in 2023.
Other current directorships: Capitol Health Limited
(ASX: CAJ) (appointed 1 July 2021)
Former directorships (last 3 years): None
Special responsibilities: Member of Audit and Risk
Committee(a), member of the Remuneration and
Nomination Committee(a)
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
MR WARREN RANDALL
Title: Non-Executive Director
Qualifications: Bachelor of Agricultural Science &
Wine Science (Adelaide), Bachelor of Oenology (Wine
Science) (Charles Sturt)
Experience and expertise: Over 40 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 has
also served as 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(a), member of the Audit and Risk
Committee(a)
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
DIRECTORS’ REPORT,
CONT’D
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
‘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 director-
ships of all other types of entities, unless otherwise stated.
(a) During the year, the roles and responsibilities of the Audit and Risk
Committee and Remuneration Committee were absorbed by the
Board following the appointment of Domenic Panaccio as Chair on
24 January 2024. The changes were made due to the size of the
Board and Domenic Panaccio being the Chair of the Audit and Risk
Committee at the time of his appointment as Chair.
26
DIRECTORS’ REPORT,
CONT’D
CHIEF EXECUTIVE OFFICER
Mr Satya Sharma, CA, B,Law
Mr Sharma joined Lark in May 2023 from William Grant
& Sons Ltd, where he was the Regional Managing
Director for Southeast Asia and Australasia. Mr Sharma
also had a complementary role as member of the board
for that company’s Branded Business Unit, which
is responsible for the business’s brands globally. In
this role, Mr Sharma was instrumental in driving the
momentum of William Grant & Sons portfolio across
Southeast Asia and the broader Asia Pacific region,
developing strong distributor relationships, growing
brand equity, and accelerating the contribution of
luxury to the group through the launch of the world’s
first “The Distiller’s Library” concept.
Over his 10-year career with William Grant & Sons
across Singapore, China, and UK, Mr Sharma
held roles including Head of Business Strategy &
Development, Interim Finance Director APAC, and
Head of Commercial. Prior to his time with William
Grant & Sons Ltd, Mr Sharma was based in Australia
and held various roles with Campbell Arnott’s, and
was a Senior Manager in Corporate Finance at Pitcher
Partners (previously Moore Stephens).
Mr Sharma holds degrees in Business and Law from
the University of Technology Sydney and is a member
of the Institute of Chartered Accountants Australia and
New Zealand.
CHIEF FINANCIAL OFFICER
Mr Iain Short, CA
Mr Short joined Lark in June 2023 from William Grant
& Sons Ltd, where he was the Finance Director -
Asia Pacific and Global Travel Retail. In this role Mr
Short was a key member of the development and
implementation of the strategy in the APAC region
which has seen significant distribution growth and
brand portfolio development for William Grant & Sons.
Mr Short had an extensive career with William Grant
& Sons, where he worked in numerous senior finance
and strategy roles including Finance and Operations
Director for Australia and New Zealand, and Finance
Director for UK and Ireland. Mr Short previously
worked at PwC in London, holds an economics degree
from The University of Edinburgh and is a Chartered
Accountant.
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 from February 2000
to October 2021 was the principal of Leydin Freyer
which was acquired by Vistra in November 2021. Ms.
Leydin is now Vistra Australia’s Managing Director
and Regional Managing Director. Vistra is a prominent
provider of governance and compliance solutions
and finance and accounting solutions in the Fund,
Corporate, Capital Markets, and Private Wealth sectors.
Ms. Leydin has over 30 years’ experience in the
accounting profession and over 20 years’ experience
holding Board positions including Company Secretary
and CFO of ASX listed entities. Ms. Leydin 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.
27
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
MEETINGS OF DIRECTORS
The number of meetings of the Company’s Board of
Directors (‘the Board’) and of each Board committee
held during the year ended 30 June 2024, and the
number of meetings attended by each director were:
Directors’
Meetings
Audit and Risk
Committee(a)
Attended
Held(b)
Attended
Held(b)
Mr Domenic Panaccio
10
10
2
2
Ms Laura McBain
10
10
2
2
Mr Warren Randall
10
10
2
2
Mr David Dearie
10
10
-
-
(a) During the year, the roles and responsibilities of the Audit and Risk
Committee and Remuneration Committee were absorbed by the
Board following the appointment of Domenic Panaccio as Chair on
24 January 2024. The changes were made due to the size of the
Board and Domenic Panaccio being the Chair of the Audit and Risk
Committee at the time of his appointment as Chair.
(b) 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 remuneration report is set out
under the following main headings:
•
Details of remuneration
•
Service agreements
•
Share-based compensation
•
Additional information
•
Additional disclosures relating to key
management personnel
The board’s policy for determining the nature and
amount of remuneration for key management personnel
of the 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 Group’s performance and executive
performance.
During the year, the roles and responsibilities of the
Remuneration Committee were absorbed by the Board
following the appointment of Domenic Panaccio as
Chair on 24 January 2024.
The performance of key management personnel is
reviewed annually and is based predominantly on the
forecast growth of the 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.
DIRECTORS’ REPORT,
CONT’D
28
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 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 of $400,000 per annum is as resolved at
the 2023 Annual General Meeting.
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 Group. However, to
align directors’ interests with shareholder interests, the
directors are encouraged to hold shares in the company
and are able to participate in the employee option plan.
Key Management Personnel Remuneration Policy
The board seeks to set aggregate remuneration at
a level which provides the company with the ability
to attract and retain key management of the highest
calibre, whilst incurring a cost which is acceptable to
shareholders.
The remuneration structure for key management
personnel is based on a number of factors, including
length of service, particular experience of the individual
concerned, and overall performance of the company.
The contracts for service between the company and
key management personnel are on a continuing basis,
the terms of which are not expected to change in the
immediate future. Upon retirement key management
personnel are paid employee benefit entitlements
accrued to date of retirement.
DETAILS OF REMUNERATION
Amounts of remuneration
Details of the remuneration of key management
personnel of the Group are set out in the following
tables.
The key management personnel of the Group consisted
of the following directors of Lark Distilling Co. Ltd:
•
Mr Domenic Panaccio - Non-Executive Chair
(appointed as Chair on 24 January 2024)
•
Mr David Dearie - Non-Executive Director (resigned
as Chair on 24 January 2024)
•
Ms Laura McBain - Non-Executive Director
•
Mr Warren Randall - Non-Executive Director
And the following persons:
•
Mr Satya Sharma - Chief Executive Officer
•
Mr Iain Short - Chief Financial Officer
DIRECTORS’ REPORT,
CONT’D
29
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
2024
Salary
and fees
$
Short term
bonus
$
Annual
leave(a)
$
Super-
annuation
$
Long service
leave(a)
$
Equity-
settled
$
Total
$
Non-Executive Directors:
Mr Domenic Panaccio
74,085
-
-
-
-
-
74,085
Mr David Dearie(c)
75,914
-
-
-
-
149,647
225,561
Ms Laura McBain
56,250
-
-
-
-
147,358
203,608
Mr Warren Randall(b)
56,250
-
-
-
-
82,608
138,858
Other KMP
Mr Satya Sharma
647,583
-
60,964
27,417
1,336
704,452
1,441,752
Mr Iain Short
365,000
-
18,843
26,796
676
50,446
461,761
1,275,082
-
79,807
54,213
2,012
1,134,511
2,545,625
(a) Employee leave benefits represent annual leave and long service leave entitlements, measured on an accrual basis, and reflects the net movement
in the entitlements over the year (i.e. leave entitlements that accrued during the year but were not used).
(b) During the period ended 30 June 2024, the Group made purchases amounting to $53,118 (30 June 2023: $144,558) 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.
(c) Fees for David Dearie includes 10,478 share rights valued at $12,500 that were issued in lieu of $12,500 cash fees.
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
2023
Salary
and fees
$
Short term
bonus
$
Annual
leave
$
Super-
annuation
$
Long service
leave(a)
$
Equity-
settled
$
Total
$
Non-Executive Directors:
Mr David Dearie
85,000
-
-
-
-
115,099
200,099
Mr Warren Randall(b)
50,000
-
-
-
-
50,309
100,309
Mr Domenic Panaccio
50,000
-
-
-
-
-
50,000
Ms Laura McBain(c)
425,000
-
-
-
-
144,376
569,376
Other KMP
Mr Satya Sharma(d)
112,449
500,000
-
6,323
-
115,908
734,680
Mr Iain Short(e)
56,154
-
-
2,211
-
-
58,365
Mr Alex Aleksic(f)
196,452
20,000
-
-
-
(24,587)
191,865
975,055
520,000
-
8,534
-
401,105
1,904,694
(a) Employee leave benefits represent annual leave and long service leave entitlements, measured on an accrual basis, and reflects the net movement
in the entitlements over the year (i.e. leave entitlements that accrued during the year but were not used).
(b) During the period ended 30 June 2023, the Group made purchases amounting to $144,558 (30 June 2022: $341,052) 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.
(c) Ms Laura McBain resigned as Interim Managing Director and appointed as Non-Executive Director on 1 May 2023.
(d) Mr Satya Sharma appointed as Chief Executive Officer 1 May 2023. Performance rights were issued to Mr Sharma in two tranches of 197,280 and
343,357 on 1 May 2023 and 19 June 2023, respectively. As per AASB 2 Share-based Payment, the fair value of these equity instruments were
measured at grant date, which is 1 May 2023.
(e) Mr Iain Short appointed as Chief Financial Officer on 12 June 2023. Salaries and fees included $35,096 fees for allowance paid for onboarding
while offshore from 8 May 2023 to 11 June 2023.
(f)
Mr Alex Aleksic resigned as Chief Financial Officer 31 December 2022.
DIRECTORS’ REPORT,
CONT’D
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
30
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Fixed remuneration
At risk - STI
At risk - LTI
Name
2024
2023
2024
2023
2024
2023
Non-Executive Directors:
Mr Domenic Panaccio
100%
100%
-
-
-
-
Mr Warren Randall
41%
50%
-
-
59%
50%
Mr David Dearie
34%
42%
-
-
66%
58%
Ms Laura McBain
28%
75%
-
-
72%
25%
Other Key Management Personnel:
Mr Satya Sharma
51%
16%
-
68%
49%
16%
Mr Iain Short
89%
100%
-
-
11%
-
Mr Alex Aleksic
-
102%
-
10%
-
(12%)
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:
Mr Domenic Panaccio
Title:
Non-Executive Chair
Agreement commenced:
1 May 2022
Term of agreement:
No fixed term
Details:
Remuneration: $120,000 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 2024, Mr Domenic did not have any Performance Rights on issue.
Name:
Mr Warren Randall
Title:
Non-Executive Director
Agreement commenced:
21 May 2019
Term of agreement:
No fixed term
Details:
Remuneration: $75,000 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 2024, the following Performance Rights remained on issue, with terms and conditions as
detailed and with an expiry date of 31 December 2026:
Tranche no.
Target market share price and continuous service to:
Performance rights to vest
Tranche 4
$2.250 31 December 2023
100,000
Tranche 5
$2.550 31 December 2024
200,000
DIRECTORS’ REPORT,
CONT’D
31
Name:
Mr David Dearie
Title:
Non-Executive Director
Agreement commenced:
1 March 2020
Term of agreement:
No fixed term
Details:
Remuneration: $75,000 per annum
Mr David Dearie can terminate the agreement with 3 months’ notice. The Company can terminate the
agreement with 3 months’ notice, or payment in lieu thereof. 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, continues 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 2024, the following Performance Rights remained on issue, with terms and conditions as
noted, and with an expiry of 31 December 2026:
Tranche no.
Target market share price and continuous service to:
Performance rights to vest
Tranche 3
$1.950 31 December 2022
70,000
Tranche 5
$2.550 31 December 2024
350,000
Name:
Ms Laura McBain
Title:
Non-Executive Director
Agreement commenced:
1 May 2023 (Continued service from 1 June 2020)
Term of agreement:
No fixed term
Details:
Remuneration: $75,000 annual directors fee (excluding GST)
Ms Laura McBain appointment as a Non-Executive Director is subject to retirement by rotation under
the Company’s constitution. Ms Laura McBain 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 2024, the following Performance Rights remained on issue, with terms
and conditions as detailed and with an expiry date of 31 December 2026:
Tranche no.
Target market share price and continuous service to:
Performance rights to vest
Tranche 4
$2.25 December 2023
45,000
Tranche 5
$2.55 December 2024
45,000
Name:
Mr Satya Sharma
Title:
Chief Executive Officer
Agreement commenced:
1 May 2023
Term of agreement:
No fixed term
Details:
Remuneration: $675,000 per annum (inclusive of superannuation)
Mr Sharma can terminate the agreement with 6 months’ notice. The Company can terminate the
agreement with 6 months’ notice, or payment in lieu thereof. The Company may terminate the contract at
any time without notice if a serious misconduct or breach of contract has occurred.
As at 30 June 2024, Mr Sharma was eligible for the following short-term and long-term incentives
including the Performance Rights remained on issue.
DIRECTORS’ REPORT,
CONT’D
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
32
Short Term Incentive (STI)
Mr Sharma is entitled to receive an annual bonus commencing from the year 1 July 2023 to 30 June 2024. He will be
entitled to the payment of one of the following bonuses on an annual basis, subject to the achievement of a range of
financial and non-financial targets, aligned with the Company’s strategy and business performance, to be determined
by the Board:
(a) Up to 50% of base salary less superannuation at target
(b) In the case of highly superior performance as assessed by the Board in its sole and absolute discretion, up to 75%
of base salary less superannuation
Any STI payments may be equity settled at the Board’s discretion.
CEO Sign-on Share Rights
An award of share rights (Share Rights) under the Company’s 2022 Equity Incentive Plan was granted subject to the
satisfaction of certain Grant Conditions. The Share Rights represent rights to receive ordinary shares in the Company
valued at $620,000 at the date of grant, will vest and be exercisable upon the satisfaction of service condition.
Tranche no.
Target market
share price
and continuous
service to:
Grant date
Expiry date
Performance
rights to vest
May 23 CEO Sign-on Share Rights
$0.00
1 May 2024
1 May 2023
1 May 2026
343,357
May 23 CEO Long Term Incentive
$4.00
1 May 2026
1 May 2023
1 May 2026
197,280
May 24 LTI - Tranche 2
$1.80
30 June 2025
27 May 2024
30 June 2030
628,922
May 24 LTI - Tranche 3
$2.10
30 June 2026
27 May 2024
30 June 2031
836,052
May 24 LTI - Tranche 4
$2.40
30 June 2027
27 May 2024
30 June 2032
1,046,948
May 24 LTI - Tranche 5
$2.70
30 June 2028
27 May 2024
30 June 2033
1,254,078
May 23 CEO LTI vesting condition
Mr Sharma’s long-term incentives are intended to be in the form of Share Rights to acquire Shares in the Company
valued at up to $975,000. The performance rights will vest and be exercisable upon the satisfaction of service condition
and performance conditions, which were agreed as part of the LTI. 197,280 performance rights noted in Mr Sharma’s
performance rights table and their fair value for accounting purposes have been determined based on estimated grant
date, probability of achieving the vesting conditions and the Company’s closing share price at 30 June 2023. Actual
number of performance rights may be different at the grant date.
Performance condition
The performance-based Vesting Condition is based on the Company’s Shares sustaining a certain 10-day volume
weighted average price for at least 20 consecutive days. If at any point during the Relevant Period the Company
achieves the target market share price specified in the table below, then Mr Sharma’s Share Rights will entitle him to
Shares equal to the value specified in the adjacent column, upon satisfaction of the service condition. The notes to the
table below provide further detail of how Mr Sharma’s entitlement is to be determined.
DIRECTORS’ REPORT,
CONT’D
Target market share price
Value of entitlement (AUD)
Notes
$4.00
$195,000
-
>$4.00 to $5.00
>$195,000 to $650,000
Entitlement is $195,000 plus additional entitlement determined
on a pro-rata, straight line basis from $4.00 to $5.00.
>$5.00 to $6.00
>$650,000 to $975,000
Entitlement is $650,000 plus additional entitlement determined
on a pro-rata, straight line basis from $5.00 to $6.00.
May 24 LTI vesting conditions
On 27 May 2024, the Company issued a total of 3,766,000 Performance Rights to Mr Sharma, which will vest and be
exercisable upon satisfaction of service condition and performance conditions agreed as part of the LTI. If the share
price hurdle for Year 4 and/or Year 5 is satisfied in Year 3, the vesting of Performance Rights for Year 4 and/or Year 5 (as
applicable) will be accelerated and vest together with those Year 3 Performance Rights.
In the event of a Corporate Control Event (as defined under clause 2 of the Company’s Plan) during any of the specified
continued employment periods set out in the table above, the following basis for vesting will instead apply to the
Performance Rights in Tranches 2 - 5:
(a) 40% of the issued Rights will vest immediately; and
(b) if the Corporate Control Event:
(i) Occurs on or before 31 December 2026, then a pro-rata amount of the remaining 60% of the issued Rights, based
on the number of days elapsed from 1 January 2024 to the date of the Corporate Control Event, as a proportion of
the total number of days from 1 January 2024 to 31 December 2026, will vest on the date of the Corporate Control
Event; or
(ii) Occurs on or after 31 December 2026, and before the Last Exercise Date of those Rights, then all such remaining
and outstanding Rights will vest at the date of the Corporate Control Event.
Name:
Mr Iain Short
Title:
Chief Financial Officer
Agreement commenced:
12 June 2023
Term of agreement:
No fixed term
Details:
Remuneration: $365,000 per annum (plus superannuation)
Mr Short can terminate the agreement with 3 months’ notice. The Company can terminate the agreement
with 3 months’ notice, or payment in lieu thereof. The Company may terminate the contract at any time
without notice if a serious misconduct or breach of contract has occurred.
As at 30 June 2024, the following Performance Rights remained on issue, with terms and conditions
as detailed.
Tranche no.
Target market
share price
and continuous
service to:
Grant date
Expiry date
Performance
rights to vest
May 24 LTI - Tranche 2
$1.80
30 June 2025
27 May 2024
30 June 2030
314,920
May 24 LTI - Tranche 3
$2.10
30 June 2026
27 May 2024
30 June 2031
418,637
May 24 LTI - Tranche 4
$2.40
30 June 2027
27 May 2024
30 June 2032
524,239
May 24 LTI - Tranche 5
$2.70
30 June 2028
27 May 2024
30 June 2033
627,955
DIRECTORS’ REPORT,
CONT’D
33
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
34
May 24 LTI vesting conditions
On 27 May 2024, the Company issued a total of 1,885,751 Performance Rights to Mr Short, which will vest and be
exercisable upon satisfaction of service condition and performance conditions agreed as part of the LTI. If the share
price hurdle for Year 4 and/or Year 5 is satisfied in Year 3, the vesting of Performance Rights for Year 4 and/or Year 5
(as applicable) will be accelerated and vest together with those Year 3 Performance Rights.
In the event of a Corporate Control Event (as defined under clause 2 of the Company’s Plan) during any of the specified
continued employment periods set out in the table above, the following basis for vesting will instead apply to the
Performance Rights in Tranches 2 - 5:
(a) 40% of the issued Rights will vest immediately; and
(b) if the Corporate Control Event:
(i) Occurs on or before 31 December 2026, then a pro-rata amount of the remaining 60% of the issued Rights, based
on the number of days elapsed from 1 January 2024 to the date of the Corporate Control Event, as a proportion of
the total number of days from 1 January 2024 to 31 December 2026, will vest on the date of the Corporate Control
Event; or
(ii) Occurs on or after 31 December 2026, and before the Last Exercise Date of those Rights, then all such remaining
and outstanding Rights will vest at the date of the Corporate Control Event.
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 2024.
Options
There were no options issued to directors and other key management personnel as part of compensation that were
outstanding as at 30 June 2024.
DIRECTORS’ REPORT,
CONT’D
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
35
Performance rights
Details of performance rights over ordinary shares granted and vested for directors and other key
management personnel as part of compensation during the year ended 30 June 2024 are set out below:
Performance Rights Granted
Name
Grant date
Vesting date and
exercisable date
Expiry date
Number
granted
Value of
granted $
Mr Satya Sharma
27 May 2024
30 June 2025
30 June 2030
628,922
250,437
Mr Satya Sharma
27 May 2024
30 June 2026
30 June 2031
836,052
412,675
Mr Satya Sharma
27 May 2024
30 June 2027
30 June 2032
1,046,948
570,377
Mr Satya Sharma
27 May 2024
30 June 2028
30 June 2033
1,254,078
729,497
Mr Iain Short
27 May 2024
30 June 2025
30 June 2030
314,920
125,401
Mr Iain Short
27 May 2024
30 June 2026
30 June 2031
418,637
206,639
Mr Iain Short
27 May 2024
30 June 2027
30 June 2032
524,239
285,605
Mr Iain Short
27 May 2024
30 June 2028
30 June 2033
627,955
365,281
Performance Rights Vested
Name
Grant date
Vesting date and
exercisable date
Expiry date
Number
vested
Mr David Dearie
12 December 2019
31 December 2023
31 December 2026
200,000
Mr Warren Randall
12 December 2019
31 December 2023
31 December 2026
100,000
Ms Laura McBain
9 February 2021
31 December 2023
31 December 2026
45,000
Mr Satya Sharma
1 May 2023
1 May 2024
1 May 2026
343,357
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
Vesting and
exercisable date
Expiry date
Share price
hurdle for
vesting
Fair value
per right
at grant date
25 November 2019
31 December 2023
31 December 2026
$2.250
$0.96300
25 November 2019
31 December 2024
31 December 2026
$2.550
$0.95100
1 July 2021
31 December 2023
31 December 2026
$2.550
$3.27000
1 July 2021
31 December 2024
31 December 2026
$2.550
$3.27000
29 November 2021
31 December 2023
31 December 2026
$2.550
$4.84000
29 November 2021
31 December 2024
31 December 2026
$2.250
$4.84000
1 May 2023
1 May 2024
1 May 2026
$4.000
$1.32000
1 May 2023
1 May 2024
1 May 2026
$0.000
$1.45600
27 May 2024
30 June 2025
30 June 2030
$1.800
$0.40000
27 May 2024
30 June 2026
30 June 2031
$2.100
$0.49000
27 May 2024
30 June 2027
30 June 2032
$2.400
$0.54000
27 May 2024
30 June 2028
30 June 2033
$2.700
$0.58000
Performance rights granted carry no dividend or voting rights.
DIRECTORS’ REPORT,
CONT’D
36
Additional information
The earnings of the Group for the five years to 30 June 2024 are summarised below:
2024
$
2023
$
2022
$
2021
$
2020
$
Sales revenue
16,730,759
19,877,457
24,337,904
16,542,984
7,426,459
Profit / (loss) after income tax
(4,567,915)
(4,908,029)
(470,398)
3,441,475
(1,272,296)
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:
Balance at
the start of
the year
Received
as part of
remuneration
Additions
Disposals/
other
Balance at
the end of
the year
Ordinary shares
Mr David Dearie
374,986
-
200,000
-
574,986
Mr Warren Randall
2,889,295
-
-
-
2,889,295
Ms Laura McBain
81,000
-
-
-
81,000
Mr Domenic Panaccio
109,954
-
-
-
109,954
Mr Satya Sharma
15,166
-
-
-
15,166
3,470,401
-
200,000
-
3,670,401
Share Rights
The number of share 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:
Balance at
the start of
the year
Received
as part of
remuneration(a)
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
Mr David Dearie
-
10,478
-
-
10,478
-
10,478
-
-
10,478
(a) During the year the Company issued 10,478 Share Rights in lieu of cash fees of $12,500 as approved by shareholders at the AGM held
on 23 November 2023.
DIRECTORS’ REPORT,
CONT’D
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
37
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:
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
Performance rights over ordinary shares
Mr David Dearie
620,000
-
(200,000)
-
420,000
Mr Warren Randall
300,000
-
-
-
300,000
Ms Laura McBain
90,000
-
-
-
90,000
Mr Satya Sharma(a)
540,637
3,766,000
-
-
4,306,637
Mr Iain Short
-
1,885,751
-
-
1,885,751
1,550,637
5,651,751
(200,000)
-
7,002,388
(a) Mr Satya Sharma’s Performance Rights holding include 197,280 performance rights that is part of the Long-Term Incentive plan.
Number of Performance Rights have been determined based on estimated grant date, probability of achieving the vesting conditions
and the Company’s closing share price at 30 June 2023.
This concludes the remuneration report, which has been audited.
SHARES UNDER OPTION
There were no outstanding Options over unissued ordinary shares of Lark Distilling Co. Ltd at the date of this report.
SHARES ISSUED ON THE EXERCISE OF OPTIONS
The were no shares issued on the exercise of options during the year.
DIRECTORS’ REPORT,
CONT’D
38
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
Expiry date
Number
25 November 2019
31 December 2026
720,000
16 March 2020
31 December 2026
122,000
12 February 2021
31 December 2026
110,000
25 June 2021
31 December 2026
180,000
29 November 2021
31 December 2026
90,000
1 March 2023
1 June 2025
15,734
3 January 2023
1 June 2025
3,252
3 March 2023
1 June 2025
13,006
8 March 2023
1 June 2025
16,783
14 March 2023
1 June 2025
78,671
15 March 2023
1 June 2025
49,825
16 March 2023
1 June 2025
20,979
1 May 2023
1 May 2026
537,274
10 May 2024
10 May 2039
10,478
27 May 2024
30 June 2030
1,151,858
27 May 2024
30 June 2031
1,463,989
27 May 2024
30 June 2032
1,738,220
27 May 2024
30 June 2033
2,055,100
8,377,169
(a) 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.
SHARES ISSUED ON THE EXERCISE OF PERFORMANCE RIGHTS
The following ordinary shares of Lark Distilling Co. Ltd were issued during the year ended 30 June 2024 and up to the
date of this report on the exercise of performance rights granted:
Date performance rights granted
Exercise
price
Number of
shares issued
12 December 2019
$0.000
200,000
30 June 2021
$0.000
80,000
29 June 2021
$0.000
25,000
305,000
DIRECTORS’ REPORT,
CONT’D
39
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
INDEMNITY AND INSURANCE OF OFFICERS
The Company has indemnified the directors and executives of the Company for costs incurred,
in their capacity as a director or executive, for which they may be held personally liable, except
where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives
of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance
prohibits disclosure of the nature of the liability and the amount of the premium.
INDEMNITY AND INSURANCE OF AUDITOR
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of
the Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
NON-AUDIT SERVICES
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
auditor are outlined in note 29 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed
by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 29 to the financial statements do not compromise
the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
•
none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board,
including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the
Company, acting as advocate for the Company or jointly sharing economic risks and rewards.
OFFICERS OF THE COMPANY WHO ARE FORMER PARTNERS
OF RSM AUSTRALIA PARTNERS
There are no officers of the Company who are former partners of RSM Australia Partners.
DIRECTORS’ REPORT,
CONT’D
40
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
RSM Australia Partners 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
Domenic Panaccio
Non-Executive Chair
27 August 2024
DIRECTORS’ REPORT,
CONT’D
41
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
RSM Australia Partners
Level 27, 120 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 (0) 3 9286 8000
F +61 (0) 3 9286 8199
www.rsm.com.au
AU DITOR’ S IN DE PE N DE N CE DE CLARATION
As lead auditor for the audit of the financial report of Lark Distilling Co. Ltd. for the year ended 30 June 2024, I
declare that, to the best of my knowledge and belief, there have been no contraventions of:
( i)
the auditor independence req uirements of the Corporations Act 2001 in relation to the audit; and
( ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
B Y CHAN
Partner
Dated: 27 August 2024
Melbourne, Victoria
AUDITOR’S INDEPENDENCE
DECLARATION
42
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
FINANCIAL
STATEMENTS
LARK Distilling Co. LTD
ANNUAL
REPORT
2024
44 • LARK Distilling Co. Ltd. Annual Report 2024
Statement of profit or loss and other comprehensive income
FOR THE YEAR ENDED 30 JUNE 2024
Consolidated
Note
2024
$
2023
$
Revenue
Revenue
5
16,730,759
19,877,457
Cost of sales
(7,275,291)
(8,151,411)
Gross profit
9,455,468
11,726,046
Other income
6
828,925
383,465
Expenses
Selling and distribution expenses
(2,980,247)
(3,087,660)
Administration expenses
7
(3,781,276)
(6,401,106)
Employee benefit expense
8
(7,710,000)
(7,366,216)
Depreciation and amortisation
9
(1,062,430)
(877,235)
Costs relating to acquisition and equity raise
-
(346,813)
Loss before interest and tax expense
(5,249,560)
(5,969,519)
Finance costs
10
(267,959)
(267,799)
Finance income
41,660
42,268
Loss before income tax benefit
(5,475,859)
(6,195,050)
Income tax benefit
11
907,944
1,287,021
Loss after income tax benefit for the year attributable
to the owners of Lark Distilling Co. Ltd
(4,567,915)
(4,908,029)
Other comprehensive income for the year, net of tax
-
-
Total comprehensive loss for the year attributable
to the owners of Lark Distilling Co. Ltd
(4,567,915)
(4,908,029)
Cents
Cents
Basic earnings per share
36
(6.05)
(6.51)
Diluted earnings per share
36
(6.05)
(6.51)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
LARK Distilling Co. Ltd. Annual Report 2024 • 45
ANNUAL
REPORT
2024
Consolidated
Note
2024
$
2023
$
Assets
Current assets
Cash and cash equivalents
12
2,355,162
7,159,778
Trade and other receivables
13
1,095,995
1,994,999
Inventories
14
14,773,179
15,993,162
Prepaid assets
16
97,287
116,820
Total current assets
18,321,623
25,264,759
Non-current assets
Inventories
14
49,360,108
45,916,614
Property, plant and equipment
17
14,624,543
15,201,278
Right-of-use assets
15
2,101,684
4,521,931
Intangibles
18
21,317,037
21,238,641
Deferred tax
19
4,902,333
3,994,389
Total non-current assets
92,305,705
90,872,853
Total assets
110,627,328
116,137,612
Liabilities
Current liabilities
Trade and other payables
20
2,486,518
2,676,684
Financial liabilities
22
506,210
369,906
Employee benefits
23
536,784
463,448
Deferred government grants
24
3,975,000
3,675,000
Total current liabilities
7,504,512
7,185,038
Non-current liabilities
Financial liabilities
22
1,683,946
4,216,367
Employee benefits
23
75,942
59,664
Total non-current liabilities
1,759,888
4,276,031
Total liabilities
9,264,400
11,461,069
Net assets
101,362,928
104,676,543
Equity
Issued capital
25
116,486,221
116,486,221
Reserves
26
4,024,173
2,769,873
Accumulated losses
(19,147,466)
(14,579,551)
Total equity
101,362,928
104,676,543
The above statement of financial position should be read in conjunction with the accompanying notes
Statement of financial position
AS AT 30 JUNE 2024
46 • LARK Distilling Co. Ltd. Annual Report 2024
Statement of changes in equity
FOR THE YEAR ENDED 30 JUNE 2024
Consolidated
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total equity
$
Balance at 1 July 2022
116,448,720
1,976,730
(9,671,522)
108,753,928
Loss after income tax benefit for the year
-
-
(4,908,029)
(4,908,029)
Other comprehensive income
for the year, net of tax
-
-
-
-
Total comprehensive loss for the year
-
-
(4,908,029)
(4,908,029)
Transactions with owners in
their capacity as owners:
Contributions of equity, net of
transaction costs (note 25)
37,501
-
-
37,501
Share-based payments (note 37)
-
793,143
-
793,143
Balance at 30 June 2023
116,486,221
2,769,873
(14,579,551)
104,676,543
Consolidated
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total equity
$
Balance at 1 July 2023
116,486,221
2,769,873
(14,579,551)
104,676,543
Loss after income tax benefit for the year
-
-
(4,567,915)
(4,567,915)
Other comprehensive income
for the year, net of tax
-
-
-
-
Total comprehensive loss for the year
-
-
(4,567,915)
(4,567,915)
Transactions with owners in
their capacity as owners:
Share-based payments (note 37)
-
1,254,300
-
1,254,300
Balance at 30 June 2024
116,486,221
4,024,173
(19,147,466)
101,362,928
The above statement of changes in equity should be read in conjunction with the accompanying notes
ANNUAL
REPORT
2024
LARK Distilling Co. Ltd. Annual Report 2024 • 47
Consolidated
Note
2024
$
2023
$
Cash flows from operating activities
Receipts from customers (inclusive of GST)
19,232,470
24,192,173
Payments to suppliers and employees (inclusive of GST)
(18,241,862)
(19,700,209)
Purchase of inventory
(5,870,017)
(10,162,510)
Interest paid
(209,842)
(203,067)
Interest received
41,660
42,268
Government rebates and tax incentives received
828,805
379,755
Net cash used in operating activities
35
(4,218,786)
(5,451,590)
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
-
(1,119,850)
Payments for property, plant and equipment
(436,140)
(610,005)
Payments for intangibles
(137,895)
(204,026)
Proceeds from sale of property, plant and equipment
37,000
9,091
Government Grants towards purchase of equipment
300,000
3,675,000
Net cash (used in)/from investing activities
(237,035)
1,750,210
Cash flows from financing activities
Proceeds from issue of shares
-
37,501
Repayment of borrowings
-
(5,000,000)
Payment of lease liabilities under AASB 16
(348,795)
(272,747)
Net cash used in financing activities
(348,795)
(5,235,246)
Net decrease in cash and cash equivalents
(4,804,616)
(8,936,626)
Cash and cash equivalents at the beginning of the financial year
7,159,778
16,096,404
Cash and cash equivalents at the end of the financial year
12
2,355,162
7,159,778
The above statement of cash flows should be read in conjunction with the accompanying notes
Statement of cash flows
FOR THE YEAR ENDED 30 JUNE 2024
48 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 1. GENERAL INFORMATION
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 27 August
2024. The directors have the power to amend and reissue
the financial statements.
NOTE 2. MATERIAL ACCOUNTING
POLICY INFORMATION
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 Group
(“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.
Critical accounting estimates
The preparation of the financial statements requires the
use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process
of applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to
the financial statements, are disclosed in note 3.
The accounting policies that are material to the Group
are set out either in the respective notes or below. The
accounting policies adopted are consistent with those of
the previous financial year, unless otherwise stated.
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. Annual Report 2024 • 49
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 2. MATERIAL ACCOUNTING
POLICY INFORMATION, 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.
Financial liabilities that are not
(i) contingent consideration of an acquirer in a business
combination,
(ii) held-for-trading, or
(iii) designated as at fair value through profit or loss
(“FVTPL”), are measured subsequently at amortised
cost using the effective interest method. The effective
interest method is a method of calculating the
amortised cost of a financial liability and of allocating
interest expense over the relevant period. The
effective interest rate is the rate that exactly discounts
estimated future cash payments (including all fees and
points paid or received that form an integral part of
the effective interest rate, transaction costs and other
premiums or discounts) through the expected life of
the financial liability, or (where appropriate) a shorter
period, to the amortised cost of a financial liability.
Derecognition
Financial liabilities are derecognised where the related
obligations are either discharged, cancelled or expire.
The difference between the carrying value of the financial
liability extinguished or transferred to another party and
the fair value of consideration paid, including the transfer
of non-cash assets or liabilities assumed, is recognised in
profit or loss.
Impairment of assets
At each reporting date, the group reviews the carrying
values of its tangible and intangible assets to determine
whether there is any indication that those assets
have been impaired. If such an indication exists, the
recoverable amount of the asset, being the higher of the
asset’s fair value less costs to sell and value in use, is
compared to the asset’s carrying value. Any excess of
the asset’s carrying value over its recoverable amount
is expensed to the statement of profit or loss and other
comprehensive income.
Impairment testing is performed at each reporting period
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.
Parent entity information
In accordance with the Corporations Act 2001, these
financial statements present the results of the Group only.
Supplementary information about the parent entity is
disclosed in note 32.
Principles of consolidation
A controlled entity is any entity that the Company has
the power to control the financial and operating policies
of the entity so as to obtain benefits from its activities.
In assessing the power to govern, the existence and
effect of holdings of actual and potential voting rights are
considered.
A list of controlled entities is contained in Disclosure
statement 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 Group during the year, their operating results
have been included from the date control was obtained.
All inter-company balances and transactions between
entities in the Group, including any unrealised profits
or losses, have been eliminated on consolidation.
Accounting policies of subsidiaries have been changed to
ensure consistencies with those policies applied by the
parent entity.
50 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 2. MATERIAL ACCOUNTING
POLICY INFORMATION, CONT’D
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.
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.
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.
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;
LARK Distilling Co. Ltd. Annual Report 2024 • 51
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 2. MATERIAL ACCOUNTING
POLICY INFORMATION, CONT’D
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.
Deferred tax assets and liabilities are always classified as
non-current.
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.
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.
Rounding of amounts
The Company is of a kind referred to in Corporations
Instrument 2016/191, issued by the Australian Securities
and Investments Commission, relating to ‘rounding-
off’. Amounts in this report have been rounded off in
accordance with that Corporations Instrument to the
nearest dollar.
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.
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 at each reporting period, 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. Critical accounting judgements, estimates and
assumptions have been applied in the assessment
of impairment. Further information on the goodwill
impairment assessment is included in note 18 to the
financial statements.
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 committed to minimising its environmental
footprint and is certified carbon neutral, under the Federal
Government’s Climate Active Program, one of the most
widely recognised carbon neutral programs of its kind.
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 international markets that Lark export to. 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.
Revenue from contracts with customers involving
sale of goods
When recognising revenue in relation to the sale of
goods to customers, the key performance obligation of
the Group is considered to be the point of delivery of the
goods to the customer, as this is deemed to be the time
that the customer obtains control of the promised goods
and therefore the benefits of unimpeded access.
52 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 3. CRITICAL ACCOUNTING
JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS, CONT’D
Provision for impairment of inventories
The provision for impairment of inventories assessment
requires a degree of estimation and judgement. The level
of the provision is assessed by taking into account the
recent sales experience, the ageing of inventories and
other factors that affect inventory obsolescence.
Estimation of useful lives of assets
The Group determines the estimated useful lives and related
depreciation and amortisation charges for its property, plant
and equipment and finite life intangible assets. The useful
lives could change significantly as a result of technical
innovations or some other event. The depreciation and
amortisation charge will increase where the useful lives are
less than previously estimated lives, or technically obsolete
or non-strategic assets that have been abandoned or sold
will be written off or written down.
Lease term
The lease term is a significant component in the
measurement of both the right-of-use asset and lease
liability. Judgement is exercised in determining whether
there is reasonable certainty that an option to extend
the lease or purchase the underlying asset will be
exercised, or an option to terminate the lease will not
be exercised, when ascertaining the periods to be
included in the lease term. In determining the lease term,
all facts and circumstances that create an economical
incentive to exercise an extension option, or not to
exercise a termination option, are considered at the lease
commencement date. Factors considered may include
the importance of the asset to the Group’s operations;
comparison of terms and conditions to prevailing market
rates; incurrence of significant penalties; existence of
significant leasehold improvements; and the costs and
disruption to replace the asset. The Group reassesses
whether it is reasonably certain to exercise an extension
option, or not exercise a termination option, if there is a
significant event or significant change in circumstances.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be
readily determined, an incremental borrowing rate is
estimated to discount future lease payments to measure
the present value of the lease liability at the lease
commencement date. Such a rate is based on what the
Group estimates it would have to pay a third party to
borrow the funds necessary to obtain an asset of a similar
value to the right-of-use asset, with similar terms, security
and economic environment.
Employee benefits provision
As discussed in note 23, the liability for employee
benefits expected to be settled more than 12 months from
the reporting date are recognised and measured at the
present value of the estimated future cash flows to be
made in respect of all employees at the reporting date. In
determining the present value of the liability, estimates of
attrition rates and pay increases through promotion and
inflation have been taken into account.
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 are 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. 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 2024, approximately 21.3%
of the Group’s external revenue was derived from sales
to one customer (FY23: 18.5%) with revenue of the Group
from direct customers being materially derived from the
Australian geographical market.
LARK Distilling Co. Ltd. Annual Report 2024 • 53
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 4. OPERATING SEGMENTS , CONT’D
Operating segment information
Consolidated - 2024
Whisky
$
Gin
$
Other
$
Total
$
Revenue
Sales to external customers
13,024,752
2,678,095
1,027,912
16,730,759
Other revenue
645,311
132,686
50,928
828,925
Total revenue
13,670,063
2,810,781
1,078,840
17,559,684
EBITDA
(2,581,684)
(1,298,097)
(307,349)
(4,187,130)
Depreciation and amortisation
(827,093)
(170,063)
(65,274)
(1,062,430)
Finance costs
(208,604)
(42,892)
(16,463)
(267,959)
Interest Income
32,432
6,668
2,560
41,660
Loss before income tax benefit
(3,584,949)
(1,504,384)
(386,526)
(5,475,859)
Income tax benefit
907,944
Loss after income tax benefit
(4,567,915)
Consolidated - 2023
Whisky
$
Gin
$
Other
$
Total
$
Revenue
Sales to external customers
16,014,758
2,506,771
1,355,928
19,877,457
Other revenue
308,948
48,359
26,158
383,465
Total revenue
16,323,706
2,555,130
1,382,086
20,260,922
EBITDA
(3,406,246)
(1,299,999)
(386,039)
(5,092,284)
Depreciation and amortisation
(706,766)
(110,629)
(59,840)
(877,235)
Finance costs
(215,759)
(33,772)
(18,268)
(267,799)
Interest Income
34,055
5,330
2,883
42,268
Loss before income tax benefit
(4,294,716)
(1,439,070)
(461,264)
(6,195,050)
Income tax benefit
1,287,021
Loss after income tax benefit
(4,908,029)
Accounting policy for operating segments
Operating segments are presented using the ‘management approach’, where the information presented is on the same basis as the
internal reports provided to the Chief Operating Decision Makers (‘CODM’). The CODM is responsible for the allocation of resources
to operating segments and assessing their performance. The CODM does not review balance sheet information by segment.
54 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 5. REVENUE
Consolidated
2024
$
2023
$
Whisky revenue
13,024,752
16,014,758
Gin revenue
2,678,095
2,506,771
Other revenue
1,027,912
1,355,928
16,730,759
19,877,457
Revenue recognition
The Group recognises revenue as follows:
Accounting policy for revenue from contracts with customers
Revenue relating to sale of goods is recognised at a point in time. The amount recognised 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 is recognised at the time of transfer of ownership of goods. Typically,
this occurs at the time of dispatch of goods, unless otherwise specified in the trading terms of that customer. 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 other products including Slainte and Brandy,
and is recognised when it is received or when the right to receive payment is established.
LARK Distilling Co. Ltd. Annual Report 2024 • 55
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 6. OTHER INCOME
Consolidated
2024
$
2023
$
Excise rebates
350,000
350,000
R&D grant income
444,459
-
Other income
43,877
29,755
Gain / loss on sale of fixed assets
(9,411)
3,710
Other income
828,925
383,465
Accounting policy for R&D tax incentive income
Research and Development tax incentives are recognised in accordance with AASB 120: Accounting for Government Grants and
Government Assistance. The Research and development tax credit is recognised when there is reasonable assurance that the
grant will be received, and all conditions have been complied with.
Accounting policy for excise rebates and other incomes
Excise rebates and other incomes are recognised when it is received or when the right to receive payment is established.
NOTE 7. ADMINISTRATION EXPENSES
Consolidated
2024
$
2023
$
Consulting fees
429,091
694,806
Legal fees
40,415
234,243
Directors' fees
262,499
610,001
Insurance costs
247,915
311,561
Inventory losses
71,287
1,331,953
Occupancy costs
622,899
580,686
IT, Licenses & Subscriptions
696,670
546,537
Travel, transport and entertainment
293,633
565,731
Other administrative costs
647,516
897,635
Other corporate costs
469,351
627,953
3,781,276
6,401,106
56 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 8. EMPLOYEE BENEFIT EXPENSE
Consolidated
2024
$
2023
$
Salaries and wages
5,478,377
5,715,254
Superannuation
545,410
525,005
Movement in employee benefit provisions
89,613
39,676
Share based payments expense
1,254,300
793,143
Other employee expenses
342,300
293,138
7,710,000
7,366,216
Employee benefits expense capitalised into inventory
1,890,469
2,353,674
NOTE 9. DEPRECIATION AND AMORTISATION
Consolidated
2024
$
2023
$
Depreciation of property, plant and equipment
787,471
577,725
Depreciation of right-of-use assets ("ROU")
215,461
228,227
Amortisation of intangibles
59,498
71,283
1,062,430
877,235
Depreciation capitalised into inventory
182,357
411,607
ROU Depreciation capitalised into inventory
108,878
-
291,235
411,607
NOTE 10. FINANCE COSTS
Consolidated
2024
$
2023
$
Interest expense
73,417
65,939
Bank and other fees
194,542
201,860
267,959
267,799
Accounting policy for finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed
in the period in which they are incurred.
LARK Distilling Co. Ltd. Annual Report 2024 • 57
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 11. INCOME TAX (BENEFIT) / EXPENSE
Consolidated
2024
$
2023
$
Income tax (benefit)/expense
Deferred tax - origination and reversal of temporary differences
(1,163,380)
(1,256,913)
Adjustment in respect of prior year
255,436
(30,108)
Aggregate income tax (benefit) / expense
(907,944)
(1,287,021)
Numerical reconciliation of income tax benefit and tax at the statutory rate
Loss before income tax benefit
(5,475,859)
(6,195,050)
Tax at the statutory tax rate of 25%
(1,368,965)
(1,548,763)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Share-based payments
313,575
198,286
R&D offset income
(111,115)
-
Other
3,125
6,861
Acquisition related costs
-
86,703
(1,163,380)
(1,256,913)
Prior year under/(over)
255,436
(30,108)
Income tax benefit
(907,944)
(1,287,021)
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 2024, the Group’s tax rate 25% in 2023/24 financial year (2022/23: 25%) as per the requirements
of the Treasury Laws Amendment Act 2018.
Consolidated
2024
$
2023
$
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
18,362,305
18,362,305
Potential tax benefit @ 25% (2023:25%)
4,590,576
4,590,576
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 2024 was Nil (30 June 2023: Nil).
58 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 12. CASH AND CASH EQUIVALENTS
Consolidated
2024
$
2023
$
Current assets
Cash on hand
2,313
2,313
Cash at bank
2,352,849
7,157,465
2,355,162
7,159,778
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
Consolidated
2024
$
2023
$
Current assets
Trade receivables
1,080,199
1,965,557
Less: Allowance for expected future credit losses
(45,000)
(45,000)
1,035,199
1,920,557
Other receivables
59,352
19,442
Deposits paid
1,444
55,000
1,095,995
1,994,999
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.
Other receivables are recognised at amortised cost.
LARK Distilling Co. Ltd. Annual Report 2024 • 59
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 14. INVENTORIES
Consolidated
2024
$
2023
$
Current assets
Raw materials - at cost
1,726,003
2,023,326
Work in progress - at cost
2,776,449
2,605,512
Finished goods - at cost
2,142,783
2,049,282
Inventory in casks
8,597,877
9,940,969
Provision for obsolescence
(469,933)
(625,927)
14,773,179
15,993,162
Non-current assets
Inventory in casks
49,136,891
45,693,973
Finished Goods - at cost
223,217
222,641
49,360,108
45,916,614
Accounting policy for inventories
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value.
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.
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.
Work in progress inventory reflects whisky and gin currently in production but not yet bottled or barrelled.
60 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 15. RIGHT-OF-USE ASSETS
Consolidated
2024
$
2023
$
Non-current assets
Land and buildings - right-of-use
2,705,576
5,047,082
Less: Accumulated depreciation
(603,892)
(525,151)
2,101,684
4,521,931
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
buildings
right-of-use
$
Total
$
Balance at 1 July 2022
1,631,574
1,631,574
Additions
3,118,584
3,118,584
Depreciation expense
(228,227)
(228,227)
Balance at 30 June 2023
4,521,931
4,521,931
Additions
762,146
762,146
Disposals
(2,858,054)
(2,858,054)
Depreciation expense
(324,339)
(324,339)
Balance at 30 June 2024
2,101,684
2,101,684
Additions and disposals of right-of-use assets during the year related to the leasing of property for the storage of whisky.
The Group leases land and buildings for its offices, warehouses and retail outlets under agreements of between five to fifteen
years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are
renegotiated. The Group also leases plant and equipment under agreements of between three to seven years.
The Group leases office equipment under agreements of less than two years. These leases are either short-term or low-value,
so have been expensed as incurred and not capitalised as right-of-use assets.
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.
LARK Distilling Co. Ltd. Annual Report 2024 • 61
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 16. PREPAID ASSETS
Consolidated
2024
$
2023
$
Current assets
Prepaid packaging and other
97,287
116,820
NOTE 17. PROPERTY, PLANT AND EQUIPMENT
Consolidated
2024
$
2023
$
Non-current assets
Land and buildings at cost
9,364,644
9,464,644
Impairment
(529,683)
(529,683)
8,834,961
8,934,961
Building improvements - at cost
1,645,955
1,514,502
Less: Accumulated depreciation
(956,945)
(607,923)
689,010
906,579
Plant, equipment & production assets - at cost
6,413,421
6,222,273
Less: Accumulated depreciation
(2,632,297)
(2,032,005)
3,781,124
4,190,268
Motor vehicles - at cost
94,157
94,157
Less: Accumulated depreciation
(62,522)
(55,712)
31,635
38,445
Capital work in progress
1,287,813
1,131,025
14,624,543
15,201,278
62 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
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
buildings
$
Building
improvements
$
Plant,
equipment
and
production
assets
$
Motor
vehicles
$
Capital work
in progress
$
Total
$
Balance at 1 July 2022
8,834,961
1,253,393
4,265,771
51,519
866,142
15,271,786
Additions
100,000
-
245,122
-
264,883
610,005
Additions through
business combinations
-
-
314,200
-
-
314,200
Disposals
-
-
-
(5,381)
-
(5,381)
Capitalised to inventory
-
-
(406,788)
(4,819)
-
(411,607)
Depreciation expense
-
(346,814)
(228,037)
(2,874)
-
(577,725)
Balance at 30 June 2023
8,934,961
906,579
4,190,268
38,445
1,131,025
15,201,278
Additions
-
31,454
153,148
-
251,538
436,140
Disposals
-
-
(43,047)
-
-
(43,047)
Capitalised to inventory
-
-
(181,930)
(427)
-
(182,357)
Transfers in/(out)
(100,000)
100,000
94,750
-
(94,750)
-
Depreciation expense
-
(349,023)
(432,065)
(6,383)
-
(787,471)
Balance at 30 June 2024
8,834,961
689,010
3,781,124
31,635
1,287,813
14,624,543
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 Group commencing from
the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Property, plant and equipment
depreciation rates
Building improvements
2.5% - 44%
Plant, equipment and production assets
5% - 33%
Motor vehicles
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 asset’s carrying amount is greater than its
estimated recoverable amount.
LARK Distilling Co. Ltd. Annual Report 2024 • 63
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 18. INTANGIBLES
Consolidated
2024
$
2023
$
Non-current assets
Goodwill - at cost
20,735,100
20,735,100
Intangible assets - at cost
876,730
738,836
Less: Accumulated amortisation
(294,793)
(235,295)
581,937
503,541
21,317,037
21,238,641
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Consolidated
Goodwill
$
Other
intangibles
$
Total
$
Balance at 1 July 2022
21,231,628
370,798
21,602,426
Additions
-
204,026
204,026
Transfers out to property, plant and equipment
(496,528)
-
(496,528)
Amortisation expense
-
(71,283)
(71,283)
Balance at 30 June 2023
20,735,100
503,541
21,238,641
Additions
-
137,894
137,894
Amortisation expense
-
(59,498)
(59,498)
Balance at 30 June 2024
20,735,100
581,937
21,317,037
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 at each reporting period on a value-in-use (VIU) discounted cash flows basis.
The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations
require the use of assumptions, including:
Cash flow forecasts
Forecast future cash flows are based on the most recent board approved six-year financial plans.
The financial plans comprise forecasts of revenue, profit margin, staff costs, selling and distribution costs, and overheads. The
financial plans have been based on current and anticipated market conditions, and anticipated costs of expanding to new
export markets and have been referenced against industry projections. While the Group have a level of control over the staff and
overheads cost, revenue forecasts are inherently subject to uncertainty due to macro-economic factors and timing of expansion
into new export markets. The financial plans include assumptions to changes in working capital based on historical and expected
future trends.
For the purposes of assessing impairment of goodwill, cash forecasts have assumed that the whisky litres under maturation
balance is maintained over time. Capital expenditure has been based on historical and expected future costs to maintain this
inventory level.
64 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 18. INTANGIBLES, CONT’D
Long- term growth rates
Cash forecasts beyond a six-year period have been
extrapolated using a conservative terminal growth rate
of 2%. The rate has been applied for the purposes of
assessing impairment of goodwill only, which Management
and the board believe is prudent in assessing for indicators
of impairment.
Discount rates
The discount rate applied 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.
Sensitivity Analysis
Increases in discount rates or changes in other key
assumptions, such as operating conditions or financial
performance, may cause the recoverable amount to fall
below carrying values. Management and the board have
assessed sensitivity analysis of the impact of reductions to
cash flow growth, and increases to the discount rate. Based
on the extent of changes to these assumptions required to
reduce headroom to nil, Management and the Board are
comfortable that there are no indicators of impairment as at
30 June 2024.
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.
Goodwill
Goodwill is carried at cost less any accumulated
impairment losses.
Goodwill is calculated as the excess of the sum of:
(i) the consideration transferred;
(ii) any non-controlling interest (determined under either
the full goodwill or proportionate interest method); and
(iii) the acquisition date fair value of any previously held
equity interest; over the acquisition date fair value of any
identifiable assets acquired and liabilities assumed.
Changes in the Group’s ownership interests in subsidiaries
that do not result in the Group losing control over the
subsidiaries are accounted for as equity transactions. The
carrying amounts of the Group’s interests and the non-
controlling interests are adjusted to reflect the changes in
their relative interests in the subsidiaries. Any difference
between the amount by which the non-controlling interests
are adjusted and the fair value of the consideration paid or
received is recognised directly in equity and attributed to
owners of the Company.
The amount of goodwill recognised on acquisition of
each subsidiary in which the Group holds less than 100%
interest will depend on the method adopted in measuring
the non-controlling interest. The Group can elect in most
circumstances to measure the non-controlling interest in
the acquiree either at fair value (full goodwill method) or
at the non-controlling interest’s proportionate share of the
subsidiary’s identifiable net assets (proportionate interest
method). In such circumstances, the Group determines
which method to adopt for each acquisition and this is
stated in the respective note to the financial statements
disclosing the business combination.
Under the full goodwill method, the fair value of the
non-controlling interest is determined using valuation
techniques which make the maximum use of market
information where available.
Goodwill on acquisition of subsidiaries is included in
intangible assets. Goodwill on acquisition of associates is
included in investments.
Goodwill is tested for impairment at each reporting period
and is allocated to the Group’s cash-generating units or
groups of cash-generating units, representing the lowest
level at which goodwill is monitored and not larger than an
operating segment. Gains and losses on the disposal of an
entity include the carrying amount of goodwill related to the
entity disposed of.
Changes in the ownership interests in a subsidiary that do
not result in a loss of control are accounted for as equity
transactions and do not affect the carrying amounts of
goodwill.
Other intangible assets
Other intangible assets including patents and trademarks,
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.
LARK Distilling Co. Ltd. Annual Report 2024 • 65
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 18. INTANGIBLES, CONT’D
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.
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.
Consolidated
2024
$
2023
$
Deferred tax asset and liabilities comprises deductible
temporary differences attributable to:
Tax losses
4,324,144
3,407,650
Inventories
13,030
15,283
Provisions and accruals
353,001
372,757
Other liabilities
547,539
1,146,568
Capital raising costs
210,757
367,811
Foreign exchange
(388)
55
Other
78,732
63,857
Fixed assets and right of use assets
(600,160)
(1,350,386)
Prepayments
(24,322)
(29,206)
Net deferred tax asset
4,902,333
3,994,389
Movements:
Opening balance
3,994,389
2,525,040
Credited to profit or loss (note 11)
907,944
1,287,021
Additions through business combinations
-
182,328
Closing balance
4,902,333
3,994,389
66 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 20. TRADE AND OTHER PAYABLES
Consolidated
2024
$
2023
$
Current liabilities
Trade payables
1,136,664
1,053,024
Sundry creditors and accrued expenses
1,349,854
1,623,660
2,486,518
2,676,684
Refer to note 27 for further information on financial instruments.
Accounting policy for trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which
are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured
and are usually paid within 30 days of recognition.
NOTE 21. BORROWINGS
The Company maintains a $15 million debt facility from National Australia Bank. The key terms of the debt facility from National
Australia Bank are as follows:
•
Facility amount up to $15,000,000;
•
Interest rate based on BBSY+ 2.09% per annum;
•
Interest only loan with principal due at the end of the term;
•
Maturity on 31 January 2028; and
•
Financial covenant – The Tangible Net Worth of the Group must not be less than $60,000,000. Tangible Net Worth is defined as
the Total Tangible Assets less Total Liabilities under IFRS.
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.
LARK Distilling Co. Ltd. Annual Report 2024 • 67
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 22. FINANCIAL LIABILITIES
Consolidated
2024
$
2023
$
Current liabilities
Lease liability
506,210
369,906
Non-current liabilities
Lease liability
1,683,946
4,216,367
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 27 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 Group’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:
Consolidated
2024
$
2023
$
Current liabilities
Employee benefits - current
536,784
463,448
Non-current liabilities
Employee benefits
75,942
59,664
68 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 23. EMPLOYEE BENEFITS, CONT’D
Accounting policy for employee benefits
Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes all unconditional entitlements where employees have completed the required
period of service and also those where employees are entitled to pro-rata payments in certain circumstances. The entire amount
is presented as current, since the Group does not have an unconditional right to defer settlement. However, based on past
experience, the Group does not expect all employees to take the full amount of accrued leave or require payment within the next 12
months.
Short-term employee benefits
Provision is made for the 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 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. DEFERRED GOVERNMENT GRANTS
Consolidated
2024
$
2023
$
Current liabilities
Deferred government grants
3,975,000
3,675,000
Government grant
Grants from the government are recognised at their fair value (where there is a reasonable assurance that the grant will be
received), and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised
in profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grants
relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited
to the income statement on a straight-line basis over the expected lives of the related assets.
NOTE 25. ISSUED CAPITAL
Consolidated
2024
Shares
2023
Shares
2024
$
2023
$
Ordinary shares - fully paid
75,743,044
75,430,044
116,486,221
116,486,221
LARK Distilling Co. Ltd. Annual Report 2024 • 69
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 25. ISSUED CAPITAL, CONT’D
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
1 July 2022
75,306,377
116,448,720
Exercise of options
9 September 2022
16,667
$2.250
37,501
Exercise of performance rights
17 October 2022
57,000
$0.000
-
Exercise of performance rights
28 February 2023
30,000
$0.000
-
Exercise of performance rights
14 March 2023
20,000
$0.000
-
Balance
30 June 2023
75,430,044
116,486,221
Exercise of performance rights
7 September 2023
10,000
$0.000
-
Exercise of performance rights
27 December 2023
8,000
$0.000
-
Exercise of performance rights
21 February 2024
260,000
$0.000
-
Exercise of performance rights
13 March 2024
35,000
$0.000
-
Balance
30 June 2024
75,743,044
116,486,221
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.
Accounting policy for issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
70 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 26. RESERVES
Consolidated
2024
$
2023
$
Foreign currency reserve
48,466
48,466
Share-based payments reserve
3,975,707
2,721,407
4,024,173
2,769,873
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 27. 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 2024 (30 June 2023: Nil).
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.
LARK Distilling Co. Ltd. Annual Report 2024 • 71
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 27. 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:
Financial Assets
Non-interest
Bearing
2024
$
Non-interest
Bearing
2023
$
Total
2024
$
Total
2023
$
Cash
2,355,162
7,159,778
2,355,162
7,159,778
Trade and other receivables
1,095,995
1,994,999
1,095,995
1,994,999
Financial liabilities
Total
2024
$
Total
2023
$
Trade payables
2,486,518
2,676,684
Leases
Implicit
interest rate
2024
%
Implicit
interest rate
2023
%
Total
2024
$
Total
2023
$
Operating leases
2.70%
2.70%
2,190,156
4,586,273
Trade and other payables are expected to be paid as follows:
30 June
2024
$
30 June
2023
$
Less than 6 months
2,486,518
2,676,684
Consolidated
2024
$
2023
$
Maturity analysis of total lease liabilities as at the reporting date are as follows:
1 year or less
573,000
582,217
Between 1 and 2 years
511,368
551,853
Between 2 and 5 years
430,745
1,542,670
Over 5 years
945,247
3,195,216
2,460,360
5,871,956
On 15 October 2021, the Group secured a $15 million secured loan facility. In February 2024, the facility was extended
until January 2028.
72 • LARK Distilling Co. Ltd. Annual Report 2024
NOTE 27. FINANCIAL INSTRUMENTS, CONT’D
Consolidated
2024
$
2023
$
Undrawn
15,000,000
15,000,000
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 these risks are not material to the Group.
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 28. KEY MANAGEMENT PERSONNEL DISCLOSURES
Directors
The following persons were directors of Lark Distilling Co. Ltd during the financial year:
Mr Domenic Panaccio
Non-Executive Chair -appointed Non-Executive Chair on 24 January 2024
Mr David Dearie
Non-Executive Director - resigned Non-Executive Chair and
appointed Non- Executive Director on 24 January 2024
Ms Laura McBain
Non-Executive Director
Mr Warren Randall
Non-Executive Director
Other key management personnel
The following persons 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 Satya Sharma
Chief Executive Officer
Mr Iain Short
Chief Financial Officer
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set out below:
Consolidated
2024
$
2023
$
Short-term benefits to employee / consultants
1,411,114
1,503,589
Share-based payments
1,134,511
401,105
2,545,625
1,904,694
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
LARK Distilling Co. Ltd. Annual Report 2024 • 73
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 29. REMUNERATION OF AUDITORS
During the financial year the following fees were paid or payable for services provided by RSM Australia Partners,
the auditor of the Company:
Consolidated
2024
$
2023
$
Audit or review of the financial statements
RSM Australia Partners
103,500
75,000
Deloitte Touche Tohmatsu
-
82,000
103,500
157,000
RSM Australia Partners replaced Deloitte Touche Tohmatsu (Resigned as auditor on 5 April 2023), as the auditor of the Company
following the completion of the half year review for the period ended 31 December 2022.
NOTE 30. COMMITMENTS AND CONTINGENT LIABILITIES
The Group is in planning phase for distillery expansion, but no commitments 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 2024.
The Group had no contingent liabilities as at 30 June 2024 and 30 June 2023.
NOTE 31. RELATED PARTY TRANSACTIONS
Parent entity
Lark Distilling Co. Ltd is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 33.
Key management personnel
Disclosures relating to key management personnel are set out in note 28 and the remuneration report included in the directors’ report.
Transactions with related parties
During the period ended 30 June 2024, the Group made purchases amounting to $53,118 (30 June 2023: $144,558) 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 2024 (30 June 2023: Nil).
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
74 • LARK Distilling Co. Ltd. Annual Report 2024
NOTE 32. PARENT ENTITY INFORMATION
Statement of financial position
Parent
2024
$
2023
$
Total current assets
1,233,819
4,504,520
Total assets
105,157,352
106,314,857
Total current liabilities
1,836,896
2,269,843
Total liabilities
2,461,765
3,649,434
Equity
Issued capital
116,486,222
116,486,222
Foreign currency reserve
16,397
16,397
Share-based payments reserve
3,975,707
2,721,407
Accumulated losses
(17,782,739)
(16,558,603)
Total equity
102,695,587
102,665,423
Financial performance
Parent
2024
$
2023
$
Loss for the year
1,236,901
2,578,503
Other comprehensive loss
-
-
Total comprehensive loss
1,236,901
2,578,503
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 2024 and 30 June 2023.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2024 and 30 June 2023.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2024 and 30 June 2023.
Material accounting policy information
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.
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
LARK Distilling Co. Ltd. Annual Report 2024 • 75
ANNUAL
REPORT
2024
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:
Ownership interest
Name
Principal place of business /
Country of incorporation
2024
%
2023
%
Australian Whisky Holdings
Bothwell Pty Ltd
Level 1, 91-93 Macquarie Street 7000
100.00%
100.00%
Australian Whisky Holdings
Services Pty Ltd
Level 1, 91-93 Macquarie Street 7000
100.00%
100.00%
Australian Whisky Holdings
Management Pty Ltd
Level 1, 91-93 Macquarie Street 7000
100.00%
100.00%
Aowei Liquor Industries Beijing Limited
Beijing PRC 100022
100.00%
100.00%
Australian Whisky Holdings (HK) Limited
Kowloon, Hong Kong
100.00%
100.00%
Lark Distillery Pty Ltd
40 Denholms Road,
Cambridge, TAS 7170
100.00%
100.00%
Kernke Family Shene Estate Pty Ltd
76 Shene Rd, Pontville TAS 7030
100.00%
100.00%
Shene Distillery Pty Ltd
76 Shene Rd, Pontville TAS 7030
100.00%
100.00%
ACN 167 487 050 Pty Ltd
14 Davey St, TAS 7000
100.00%
100.00%
NOTE 34. EVENTS AFTER THE REPORTING PERIOD
On 29 July 2024, the Company announced that it entered into a Heads of Agreement for a Strategic Partnership with Seppeltsfield
Wines Pty Limited, an entity associated with Non-Executive Director, Warren Randall. The Strategic Partnership will secure access to,
and exclusivity over, premium oak barrels for Lark, formalising first right of use arrangements to provide certainty over Lark’s future
maturation requirements. The Heads of Agreement is in place with contract to be signed subject to completion of the Conditional
Placement to Seppeltsfield Wines Pty Ltd detailed below.
On 29 July 2024, the Company announced that it is undertaking a $22.5 million equity raising in three (3) tranches.
•
a $15.0 million conditional placement at $0.85 per new share to Seppeltsfield Wines Pty Ltd, an entity associated with Warren
Randall (raising approximately $14.5 million), Domenic Panaccio (raising approximately $0.25 million) and David Dearie (raising
approximately $0.25 million), subject to shareholder approval at an extraordinary general meeting (“EGM”) to be held on 30 August
2024.
•
an unconditional institutional placement at $0.85 per new share to raise approximately $6.5 million. The institutional placement
was completed on 30 July 2024 and the Company issued 7,647,059 new Shares on 2 August 2024.
•
a non-underwritten share purchase plan intending to raise up to $1.0 million at $0.85 per new Share to eligible Lark shareholders
to be completed during August 2024. The plan was almost 5 times oversubscribed versus the original target, with a scale back of
applications resulting in a total amount of $3.5 million to be raised. The new shares are scheduled to be issued 27th August 2024.
The equity raise will provide Lark with additional balance sheet capacity to invest in the Lark brand and facilities over the next two years
to drive the export strategy and accelerate growth.
No other matter or circumstance has arisen since 30 June 2024 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.
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
76 • LARK Distilling Co. Ltd. Annual Report 2024
NOTE 35. RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH USED
IN OPERATING ACTIVITIES
Consolidated
2024
$
2023
$
Loss after income tax benefit for the year
(4,567,915)
(4,908,029)
Adjustments for:
Depreciation and amortisation
1,062,430
877,235
Net loss/(gain) on disposal of property, plant and equipment
9,411
(3,710)
Movement in deferred taxes related to acquisition
-
182,328
Non-cash share-based payments
1,254,300
793,143
Change in operating assets and liabilities:
Decrease in trade and other receivables
899,009
2,115,424
Increase in inventories
(1,932,275)
(1,326,436)
Increase in deferred tax assets
(907,944)
(1,469,349)
Decrease in prepayments
19,533
63,771
Increase in other provisions
89,613
39,676
Decrease/Increase in trade creditors and accruals
(144,948)
(1,815,643)
Net cash used in operating activities
(4,218,786)
(5,451,590)
NOTE 36. LOSS PER SHARE
Consolidated
2024
$
2023
$
Loss after income tax attributable to the owners of Lark Distilling Co. Ltd
(4,567,915)
(4,908,029)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
75,549,466
75,375,916
Weighted average number of ordinary shares used in
calculating diluted earnings per share
75,549,466
75,375,916
Cents
Cents
Basic earnings per share
(6.05)
(6.51)
Diluted earnings per share
(6.05)
(6.51)
As at 30 June 2024, the Group had 8,370,054 Performance Rights over ordinary shares, and 10,478 share rights issued in lieu of cash
payment, 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 share nor increase the loss per share, from continuing operations.
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
LARK Distilling Co. Ltd. Annual Report 2024 • 77
ANNUAL
REPORT
2024
NOTE 36. LOSS PER SHARE, CONT’D
Accounting policy for earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Lark Distilling Co. Ltd, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year,
adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average
number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
NOTE 37. SHARE-BASED PAYMENTS
Employee incentive plan
An employee incentive plan (“Plan”) has been established by the Group and approved by shareholders at a general meeting, whereby
the Group may, at the discretion of the Board, grant Options and Performance Rights over ordinary shares in the Company to eligible
key management personnel and employees of the Group. These Options and Performance Rights are issued for nil consideration and
are granted in accordance with performance guidelines established by the Board.
The valuations of Options and Performance Rights issued under the Plan are determined by using an industry standard option pricing
model taking into account the terms and conditions upon which the instruments were issued. Set out below are summaries of
Performance Rights granted, exercised and expired / forfeited under the Plan and their vesting conditions;
Tranche name
Vesting condition
2020 H1 - Tranche 1
Target Market Share Price $1.35 and Service Condition 31 December 2020
2020 H1 - Tranche 2
Target Market Share Price $1.65 and Service Condition 31 December 2021
2020 H1 - Tranche 3
Target Market Share Price $1.95 and Service Condition 31 December 2022
2020 H1 - Tranche 4
Target Market Share Price $2.25 and Service Condition 31 December 2023
2020 H1 - Tranche 5
Target Market Share Price $2.55 and Service Condition 31 December 2024
2020 H2 - Tranche 2
Target Market Share Price $1.65 and Service Condition 31 December 2021
2020 H2 - Tranche 3
Target Market Share Price $1.95 and Service Condition 31 December 2022
2020 H2 - Tranche 4
Target Market Share Price $2.25 and Service Condition 31 December 2023
2020 H2 - Tranche 5
Target Market Share Price $2.55 and Service Condition 31 December 2024
2021 H2 - Tranche 4
Target Market Share Price $2.25 and Service Condition 31 December 2023
2021 H2 - Tranche 5
Target Market Share Price $2.55 and Service Condition 31 December 2024
2021 H2 - Tranche 3
Target Market Share Price $1.95 and Service Condition 31 December 2022
2022 H1 - Tranche
12 months from grant date, Continued Service
2023 H2 - Tranche 1
Service condition until 30 June 2025
2023 H2 - Tranche 2
Target Market Share Price $3.814 and service condition until 30 June 2025
May 23 CEO Sign-on Share Rights
12 months from grant date, Continued Service
May 23 CEO LTI
May 2023 CEO LTI vesting condition*
May 24 LTI - Tranche 1
Continued Service to 30 June 2025
May 24 LTI - Tranche 2
Target Market Share Price $1.80 and Continued Service to 30 June 2025**
May 24 LTI - Tranche 3
Target Market Share Price $2.10 and Continued Service to 30 June 2026**
May 24 LTI - Tranche 4
Target Market Share Price $2.40 and Continued Service to 30 June 2027**
May 24 LTI - Tranche 5
Target Market Share Price $2.70 and Continued Service to 30 June 2028**
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
78 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 37. SHARE-BASED PAYMENTS, CONT’D
•
May 23 CEO LTI vesting condition
Mr Sharma’s long-term incentives are intended to be in the form of Share Rights to acquire Shares in the Company valued at up
to $975,000. The performance rights will vest and be exercisable upon the satisfaction of service condition and performance
conditions, which were agreed as part of the LTI. 197,280 performance rights noted in Mr Sharma’s performance rights table and
their fair value for accounting purposes have been determined based on estimated grant date, probability of achieving the vesting
conditions and the Company’s closing share price at 30 June 2023. Actual number of performance rights may be different at the
grant date. The table below provide further detail of how Mr Sharma’s entitlement is to be determined.
Target market share price
Value of entitlement (AUD)
Notes
$4.00
$195,000
-
>$4.00 to $5.00
>$195,000 to $650,000
Entitlement is $195,000 plus additional entitlement
determined on a pro-rata, straight line basis from
$4.00 to $5.00.
>$5.00 to $6.00
>$650,000 to $975,000
Entitlement is $650,000 plus additional entitlement
determined on a pro-rata, straight line basis from
$5.00 to $6.00.
** May 24 LTI vesting conditions
In May 2024, the Company issued 6,409,167 Performance Rights to employees and key management personal which will vest
and be exercisable upon satisfaction of service condition and performance conditions agreed as part of the LTI. If the share price
hurdle for Year 4 and/or Year 5 is satisfied in Year 3, the vesting of Performance Rights for Year 4 and/or Year 5 (as applicable) will
be accelerated and vest together with those Year 3 Performance Rights.
In the event of a Corporate Control Event (as defined under clause 2 of the Company’s Plan) during any of the specified continued
employment periods set out in the table above, the following basis for vesting will instead apply to the Performance Rights in
Tranches 2 - 5:
(a) 40% of the issued Rights will vest immediately; and
(b) if the Corporate Control Event:
(i) Occurs on or before 31 December 2026, then a pro-rata amount of the remaining 60% of the issued Rights, based on the number
of days elapsed from 1 January 2024 to the date of the Corporate Control Event, as a proportion of the total number of days from 1
January 2024 to 31 December 2026, will vest on the date of the Corporate Control Event; or
(ii) Occurs on or after 31 December 2026, and before the Last Exercise Date of those Rights, then all such remaining and outstanding
Rights will vest at the date of the Corporate Control Event.
LARK Distilling Co. Ltd. Annual Report 2024 • 79
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 37. SHARE-BASED PAYMENTS, CONT’D
2024
Grant date
Expiry date
Tranche
name
Balance at
the start of
the year
Granted Exercised/
converted
Expired/
other
changes
Balance at
the end of
the year
25 November 2019
31 December 2026
2020 H1 - Tranche 3
70,000
-
-
-
70,000
25 November 2019
31 December 2026
2020 H1 - Tranche 4
300,000
-
(200,000)
-
100,000
25 November 2019
31 December 2026
2020 H1 - Tranche 5
550,000
-
-
-
550,000
16 March 2020
31 December 2026
2020 H2 - Tranche 3
30,000
-
(8,000)
-
22,000
16 March 2020
31 December 2026
2020 H2 - Tranche 4
90,000
-
-
-
90,000
27 February 2020
31 December 2026
2020 H2 - Tranche 5
105,000
-
-
-
105,000
12 February 2021
31 December 2026
2021 H2 - Tranche 3
10,000
-
(10,000)
-
-
12 February 2021
31 December 2026
2021 H2 - Tranche 4
130,000
-
(95,000)
-
35,000
25 June 2021
31 December 2026
2021 H2 - Tranche 5
160,000
-
-
-
160,000
29 November 2021
31 December 2026
2021 H2 - Tranche 4
45,000
-
-
-
45,000
29 November 2021
31 December 2026
2021 H2 - Tranche 5
45,000
-
-
-
45,000
1 July 2022
1 June 2025
2023 H2 - Tranche 1
39,652
-
-
-
39,652
1 July 2022
1 June 2025
2023 H2 - Tranche 2
158,598
-
-
-
158,598
1 May 2023
1 May 2026
May 23 CEO Sign-on rights
343,357
-
-
-
343,357
1 May 2023
1 May 2026
May 23 CEO LTI
197,280
-
-
-
197,280
27 May 2024
30 June 2030
May 24 LTI - Tranche 1
-
45,633
-
-
45,633
27 May 2024
30 June 2030
May 24 LTI - Tranche 2
-
1,106,225
-
-
1,106,225
27 May 2024
30 June 2031
May 24 LTI - Tranche 3
-
1,463,989
-
-
1,463,989
27 May 2024
30 June 2032
May 24 LTI - Tranche 4
-
1,738,220
-
-
1,738,220
27 May 2024
30 June 2033
May 24 LTI - Tranche 5
-
2,055,100
-
-
2,055,100
2,273,887
6,409,167
(313,000)
-
8,370,054
80 • LARK Distilling Co. Ltd. Annual Report 2024
NOTE 37. SHARE-BASED PAYMENTS, CONT’D
2023
Grant date
Expiry date
Tranche
name
Balance at
the start of
the year
Granted Exercised/
converted
Expired/
other
changes
Balance at
the end of
the year
25 November 2019
31 December 2026
2020 H1 - Tranche 3
70,000
-
-
-
70,000
25 November 2019
31 December 2026
2020 H1 - Tranche 4
300,000
-
-
-
300,000
25 November 2019
31 December 2026
2020 H1 - Tranche 5
550,000
-
-
-
550,000
16 March 2020
31 December 2026
2020 H2 - Tranche 3
60,000
-
(30,000)
-
30,000
16 March 2020
31 December 2026
2020 H2 - Tranche 4
90,000
-
-
-
90,000
27 February 2020
31 December 2026
2020 H2 - Tranche 5
105,000
-
-
-
105,000
12 February 2021
31 December 2026
2021 H2 - Tranche 3
50,000
-
-
(40,000)
10,000
12 February 2021
31 December 2026
2021 H2 - Tranche 4
130,000
-
-
-
130,000
25 June 2021
31 December 2026
2021 H2 - Tranche 5
160,000
-
-
-
160,000
1 July 2021
31 December 2026
2021 H2 - Tranche 5
130,000
-
-
(130,000)
-
1 July 2021
31 December 2026
2021 H2 - Tranche 4
100,000
-
-
(100,000)
-
18 October 2021
17 October 2022
2022 H1 - Tranche
60,500
-
(57,000)
(3,500)
-
29 November 2021
31 December 2026
2021 H2 - Tranche 4
45,000
-
-
-
45,000
29 November 2021
31 December 2026
2021 H2 - Tranche 5
45,000
-
-
-
45,000
1 July 2022
1 June 2025
2023 H2 - Tranche 1
-
39,652
-
-
39,652
1 July 2022
1 June 2025
2023 H2 - Tranche 2
-
158,598
-
-
158,598
1 May 2023
1 May 2026
May 23 CEO Sign-on rights
-
343,357
-
-
343,357
1 May 2023
1 May 2026
May 23 CEO LTI
-
197,280
-
-
197,280
1,895,500
738,887
(87,000)
(273,500)
2,273,887
The weighted average share price during the financial year was $1.29 (2023: $2.18).
The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was 6.43 years
(June 2023: 3.21 years).
Set out below are the performance rights exercisable at the end of the financial year:
Grant date
Expiry date
2024
Number
2023
Number
25 November 2019
31 December 2026
70,000
70,000
16 March 2020
31 December 2026
22,000
30,000
12 February 2021
31 December 2026
-
10,000
25 November 2019
31 December 2026
100,000
-
16 March 2020
31 December 2026
53,334
-
12 February 2021
31 December 2026
68,332
-
25 June 2021
31 December 2026
3,334
-
29 November 2021
31 December 2026
45,000
-
1 May 2023
1 May 2026
343,357
-
705,357
110,000
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
LARK Distilling Co. Ltd. Annual Report 2024 • 81
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Notes to the financial statements
30 JUNE 2024
NOTE 37. SHARE-BASED PAYMENTS, CONT’D
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
Vesting
hurdle
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value
at grant date
27/05/2024
30/06/2030
$0.990
$0.000
54.00%
-
2.83%
$0.99000
27/05/2024
30/06/2030
$0.990
$1.800
54.00%
-
2.83%
$0.40000
27/05/2024
30/06/2031
$0.990
$2.100
54.00%
-
2.83%
$0.49000
27/05/2024
30/06/2032
$0.990
$2.400
54.00%
-
2.83%
$0.54000
27/05/2024
30/06/2033
$0.990
$2.700
54.00%
-
2.83%
$0.58000
Accounting policy for share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering
of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by
reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the
Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution,
the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest
rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that
entitle the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period.
The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of
awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the
cumulative amount calculated at each reporting date less amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the Binomial
or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted. The
cumulative charge to profit or loss until settlement of the liability is calculated as follows:
•
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the expired
portion of the vesting period.
•
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to settle the
liability.
Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions are
considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional
expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based
compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any
remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is
recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as
if they were a modification.
82 • LARK Distilling Co. Ltd. Annual Report 2024
Entity name
Entity type
Place formed / Country of incorporation
Ownership
interest
%
Tax
residency
Australian Whisky Holdings Bothwell Pty Ltd
Body corporate
Level 1, 91-93 Macquarie Street 7000
100.00%
Australia
Australian Whisky Holdings Services Pty Ltd
Body corporate
Level 1, 91-93 Macquarie Street 7000
100.00%
Australia
Australian Whisky Holdings Management Pty Ltd Body corporate
Level 1, 91-93 Macquarie Street 7000
100.00%
Australia
Aowei Liquor Industries Beijing Limited
Body corporate
Beijing PRC 100022
100.00%
China
Australian Whisky Holdings (HK) Limited
Body corporate
Kowloon, Hong Kong
100.00%
Hong Kong
Lark Distillery Pty Ltd
Body corporate
40 Denholms Road, Cambridge, TAS 7170
100.00%
Australia
Kernke Family Shene Estate Pty Ltd
Body corporate
76 Shene Rd, Pontville TAS 7030
100.00%
Australia
Shene Distillery Pty Ltd
Body corporate
76 Shene Rd, Pontville TAS 7030
100.00%
Australia
ACN 167 487 050 Pty Ltd
Body corporate
14 Davey St, TAS 7000
100.00%
Australia
Lark Distilling Co. Ltd
Consolidated entity disclosure statement
30 JUNE 2024
LARK Distilling Co. Ltd. Annual Report 2024 • 83
ANNUAL
REPORT
2024
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 2024 and of its
performance for the financial year ended on that date;
•
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable;
and
•
the information disclosed in the attached consolidated entity disclosure statement is true and correct.
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
Domenic Panaccio
Non-Executive Chair
27 August 2024
Lark Distilling Co. Ltd
Directors’ Declaration
84 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Independent Auditor’s Report
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
RSM Australia Partners
Level 27, 120 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 (0) 3 9286 8000
F +61 (0) 3 9286 8199
www.rsm.com.au
O
INDEPENDENT AUDITOR’S REPORT
To the Members of Lark Distilling Co. Ltd
pinion
We have audited the financial report of Lark Distilling Co. Ltd ( the Company)
and its subsidiaries ( the
G roup, which comprises the consolidated statement of financial position as at 30 June 2024, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in
eq uity and the consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including material accounting policy information, the consolidated entity disclosure statement and
the directors' declaration.
In our opinion the accompanying financial report of the G roup is in accordance with the Corporations Act 2001,
including:
i.
giving a true and fair view of the G roup's financial position as at 30 June 2024 and of its financial
performance for the year then ended; and
ii.
complying with Australian Accounting Standards and the Corporations Regulations 2001 .
Bas is f or O pinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Aud itor' s Responsibilities f or the Aud it of the F inancial Report section of
our report. We are independent of the G roup in accordance with the auditor independence req uirements of the
Corporations Act 2001 and the ethical req uirements of the Accounting Professional and E thical Standards B oard's
APE S 1 1 0 Cod e of E thics f or P rof essional Accountants ( includ ing ind epend ence stand ard s) ( 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 req uired 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.
LARK Distilling Co. Ltd. Annual Report 2024 • 85
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Independent Auditor’s Report
K ey Aud it Matters
K ey audit matters are those matters that, in our professional j udgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
K ey Aud it Matter
How our aud it ad d res s ed this matter
R ev enu e R ec ognition
Refer to N ote 5 in the financial statements
Revenue for the year ended 30 June 2024 was $ 1 6 .7
million.
Revenue recognition was considered a K ey Audit
Matter due to the materiality and significance of the
balance.
Our audit procedures in relation to the recognition of
revenue included:
•
Assessing
whether
the
G roup’ s
revenue
recognition policies were in compliance with AASB
1 5 Rev enue f rom Contracts w ith Customers;
•
E valuating and testing the operating effectiveness
of the G roup’ s internal controls related to revenue
recognition;
•
Performing tests of detail on a sample basis to test
the validity and accuracy of revenue transactions,
including the inspection of sales contracts and
delivery documentation;
•
Performing
cut- off
testing
over
transactions
recorded either side of the period end, to ensure
that revenues were recorded in the appropriate
period; and
•
Assessing the appropriateness of the disclosures
in the financial report.
86 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Independent Auditor’s Report
K ey Aud it Matters ( c ontinued )
K ey Aud it Matter
How our aud it ad d res s ed this matter
V alu ation of inv entory
Refer to N ote 1 4 in the financial statements
The G roup has inventory with a carrying value of
$ 6 4.1 million as at 30 June 2024.
The existence and valuation of inventory is
considered a K ey Audit Matter, due to the materiality
of the balance,
and the significant j udgments
involved in:
•
Valuing finished goods, including assumptions
about the conversion costs of direct labour,
overheads, utilities, raw materials and other
variable costs;
•
Assessing the net realisable value of inventories;
and
•
The
determination
of
a
provision
for
obsolescence.
Our audit procedures in relation to the valuation of
inventory included:
•
Performing analytical procedures on the inventory
balance;
•
Attending year end inventory counts for a sample
of locations;
•
Testing inventory costing by verifying the key inputs
in the costing calculations against supporting
documentation and evaluating the reasonableness
of management's estimates;
•
Verifying that inventory is being held at the lower of
cost and net realisable value;
•
Assessing the reasonableness of the G roup's
inventory
methodology
for
determining
the
provision for obsolescence and its application; and
•
E valuating
management
assumptions
and
estimates applied to the provision for obsolescence
through analysis of historical sales levels by
inventory product.
LARK Distilling Co. Ltd. Annual Report 2024 • 87
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Independent Auditor’s Report
K ey Aud it Matters ( c ontinued )
K ey Aud it Matter
How our aud it ad d res s ed this matter
Impairment of goodwill and intangible assets
Refer to N ote 1 8 in the financial statements
The G roup has goodwill and intangible assets of
$ 21 .3 million as at 30 June 2024.
Management is req uired to assess the intangible
assets for impairment in accordance with AASB 1 36
I mpairment of Assets, with a value in use cashflow
model needing to be prepared for each identified
cash- generating- unit ( CG U ) . There is an inherent risk
that the future cash flows of each CG U do not support
the carrying value of intangible assets.
Managements’ assessment of the ‘ value in use’ of
the CG U involves j udgements about the future
underlying cash flows of the CG U and the discount
rates applied to them.
F or the year ended 30 June 2024 management have
performed
impairment
assessments
over
the
Intangibles and G oodwill by:
•
Identifying the CG U s to which the goodwill
belongs;
•
Calculating the value in use for the CG U using a
discounted cash flow model. These models used
cash flows ( revenues, expenses and capital
expenditure) for the CG U for 6 years;
•
The model includes a terminal growth rate
applied to the 6 th year;
•
These cash flows were then discounted to net
present value using CG U specific weighted
average cost of capital ( “ WACC” ) ; and
•
Comparing the resulting value in use of the CG U
to the respective book values.
Our audit procedures in relation to impairment of
intangibles and goodwill included:
•
Assessing management’ s determination of the
CG U applied to the goodwill based on the nature of
the G roup’ s business and the manner in which
results are monitored and reported;
•
Assessing the overall valuation methodology used
to determine the value in use;
•
Checking the mathematical accuracy of the
discounted cash flow models and reconcile input
data to supporting evidence;
•
Considering and challenging the reasonableness
of key assumptions, including the cash flow
proj ections, budgets, revenue growth rated,
discount rates and sensitivities used; and
•
Reviewing the accuracy of disclosures of critical
estimates and assumptions in the financial
statements
in
relation
to
the
valuation
methodologies.
88 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Independent Auditor’s Report
O ther Inf ormation
The directors are responsible for the other information. The other information comprises the information included
in the G roup's annual report for the year ended 30 June 2024, but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are req uired to report that fact. We have nothing to report in this regard.
Res pons ib il ities of the D irec tors f or the F inanc ial Report
The directors of the Company are responsible for the preparation of:
a.
the financial report ( other than the consolidated entity disclosure statement) that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001; and
b.
the consolidated entity disclosure statement that is true and correct in accordance with the Corporations
Act 2001, and
for such internal control as the directors determine is necessary to enable the preparation of:
i.
the financial report ( other than the consolidated entity disclosure statement) that gives a true and fair
view and is free from material misstatement, whether due to fraud or error; and
ii.
the consolidated entity disclosure statement that is true and correct and is free of misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the G roup 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 liq uidate the G roup or to cease operations, or have no realistic
alternative but to do so.
Aud itor' s Res pons ib il ities f or the Aud it of the F inanc ial Report
Our obj ectives 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.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards B oard website at: https:/ / www.auasb.gov.au/ admin/ file/ content1 02/ c3/ ar2_ 2020.pdf This
description forms part of our auditor's report.
LARK Distilling Co. Ltd. Annual Report 2024 • 89
ANNUAL
REPORT
2024
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 27 to 37 of the directors' report for the year ended
30 June 2024.
In our opinion, the Remuneration Report of Lark Distilling Co. Ltd, for the year ended 30 June 2024, 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.
RSM AUSTRALIA PARTNERS
B Y CHAN
Partner
Date: 27 August 2024
Melbourne, Victoria
90 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Shareholder Information
30 JUNE 2024
The shareholder information set out below was applicable as at 12 August 2024
DISTRIBUTION OF EQUITABLE SECURITIES
Analysis of number of equitable security holders by size of holding:
Fully Paid Ordinary Shares
Number of
holders of
ordinary
shares
Number of
ordinary
shares held
Percentage
of ordinary
shares held
1 to 1,000
1,963
847,586
1.02%
1,001 to 5,000
1,230
2,958,753
3.55%
5,001 to 10,000
313
2,317,476
2.78%
10,001 to 100,000
332
9,305,408
11.16%
100,001 and over
65
67,960,880
81.50%
3,903
83,390,103
100.00%
Holding less than a marketable parcel
1,327
346,039
0.4149%
Unquoted Performance Rights – Issued under
the Company’s Employee Incentive Plan
Number of
holders of
rights
Number of
ordinary
rights held
Percentage of
rights held
1 to 1,000
-
-
-
1,001 to 5,000
-
-
-
5,001 to 10,000
-
-
-
10,001 to 100,000
12
580,548
93.07%
100,001 and over
8
7,796,621
6.93%
20
8,377,169
100.00%
Holding less than a marketable parcel
-
-
-
LARK Distilling Co. Ltd. Annual Report 2024 • 91
ANNUAL
REPORT
2024
Lark Distilling Co. Ltd
Shareholder Information
30 JUNE 2024
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
Number
held
% of total
shares
issued
QUALITY LIFE PTY LTD
15,597,364
18.704
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
9,359,971
11.224
CITICORP NOMINEES PTY LIMITED
7,322,224
8.781
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
3,962,235
4.751
BAINBRIDGE FAMILY PTY LTD
3,782,723
4.536
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
3,333,678
3.998
SEPPELTSFIELD PTY LTD
2,889,295
3.465
MR TIMOTHY TULLOCH BROCK LEWIS &
MRS CATHERINE ANNE LEWIS
1,544,166
1.852
LEE MING-TEE
1,411,765
1.693
GLENLORE SUPER PTY LTD
1,253,278
1.503
RHODIUM CAPITAL PTY LTD
1,166,666
1.399
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
1,004,728
1.205
MARK MURTON PTY LTD
1,001,666
1.201
REX FAMILY PENSION PLAN PTY LTD
945,000
1.133
FAIRISLE HOLDINGS PTY LIMITED
843,450
1.011
PJ & KE O'DWYER SUPER PTY LTD
750,000
0.899
BNP PARIBAS NOMINEES PTY LTD
732,756
0.879
GJ BAINBRIDGE SUPER FUND PTY LTD
638,928
0.766
PARAMUL PTY LTD
476,416
0.571
SUETONE PTY LTD
473,999
0.568
58,490,308
70.141
Unquoted equity securities
There are no unquoted equity securities.
SUBSTANTIAL HOLDERS
Substantial holders in the company are set out below:
Ordinary shares
Number
held
% of total
shares
issued
QUALITY LIFE PTY LTD
16,538,716
19.83%
PERENNIAL VALUE MANAGEMENT LIMITED
9,859,374
13.02%
LEE MING-TEE
5,971,765
7.16%
92 • LARK Distilling Co. Ltd. Annual Report 2024
Lark Distilling Co. Ltd
Shareholder Information
30 JUNE 2024
VOTING RIGHTS
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall
have one vote.
There are no other classes of equity securities.
CORPORATE GOVERNANCE STATEMENT
The Company’s 2024 Corporate Governance Statement has been released to ASX on this day and is available on the Company’s
website at: https://larkdistillery.com/investor-centre/
ANNUAL GENERAL MEETING AND DIRECTOR NOMINATION
Lark Distilling Co. Ltd advises that its Annual General Meeting will be held on or about Wednesday, 20 November 2024. The time
and other details relating to the meeting will be advised in the Notice of Meeting to be sent to all Shareholders and released to ASX
immediately upon despatch.
The Closing date for receipt of nomination for the position of Director is Wednesday, 2 October 2024. Any nominations must be
received in writing no later than 5.00pm (Melbourne time) on Wednesday, 2 October 2024 at the Company’s Registered Office. The
Company notes that the deadline for nominations for the position of Director is separate to voting on Director elections. Details of the
Director’s to be elected will be provided in the Company’s Notice of Annual General Meeting in due course.
ANNUAL
REPORT
2024
LARK Distilling Co. LTD
(03) 6231 9088
info@larkdistilling.com
larkdistilling.com
SINGLE MALT WHISKY