australian whisky holdings limited for personal use only · this brings total whisky inventories...

AUSTRALIAN WHISKY HOLDINGS LIMITED ABN 62 104 600 544

APPENDIX 4D HALF YEAR REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

PROVIDED TO THE ASX UNDER LISTING RULE 4.2A.3

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Australian Whisky Holdings Limited Appendix 4D Half-year report

1. Company details Name of entity: Australian Whisky Holdings Limited ABN: 62 104 600 544 Reporting period: For the half-year ended 31 December 2019 Previous period: For the half-year ended 31 December 2018

2. Results for announcement to the market $ Revenues from ordinary activities up 35.5% to 3,818,689 Loss from ordinary activities after tax attributable to the owners of Australian Whisky Holdings Limited

down

49.3%

to

(743,321)

Loss for the half-year attributable to the owners of Australian Whisky Holdings Limited

down

49.3%

to

(743,321)

Cents per

share Cents per

share Basic loss per share (0.05) (0.10) Diluted loss per share (0.05) (0.10) Dividends There were no dividends paid, recommended or declared during the current financial period. Comments The loss for the Group after providing for income tax and non-controlling interest amounted to $743,321 (31 December 2018: $1,467,111). Before accounting for the non-controlling interest, this amounts to $743,321 (31 December 2018: $1,466,972).

3. Net tangible assets

Reporting

period Previous

period Cents Cents Net tangible assets per ordinary security 1.62 cents 2.10 cents

4. Control gained over entities Not applicable.

5. Loss of control over entities Not applicable.

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Australian Whisky Holdings Limited Appendix 4D Half-year report

6. 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.

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 a review by the auditors and the review report is attached as part of the Interim Report.

10. Attachments Details of attachments (if any): The Interim Report of Australian Whisky Holdings Limited for the half-year ended 31 December 2019 is attached.

11. Signed Signed ___________________________ Date: 28 February 2020 Geoff Bainbridge Managing Director

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Australian Whisky Holdings Limited

ABN 62 104 600 544

Interim Report - 31 December 2019

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Australian Whisky Holdings Limited Directors' report 31 December 2019

1

The Directors present their report, together with the interim financial statements, on the consolidated entity (referred to hereafter as the 'Group') consisting of Australian Whisky Holdings Limited (referred to hereafter as the 'Company' or 'Parent entity') and the entities it controlled at the end of, or during, the half-year ended 31 December 2019 (‘the period’, ‘half-year end’).

Directors The following persons were directors of Australian Whisky Holdings Limited during the whole of the financial half-year and up to the date of this report, unless otherwise stated: Mr David Dearie (Executive Chairman) Mr Geoff Bainbridge (Managing Director) Mr Warren Randall (Non-Executive Director) Mr Laurent Ly (Non-Executive Director) (appointed 2 September 2019)

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Principal activities The principal activities of the Group during the half year ended 31 December 2019 were in the further development of investment opportunities in the Australian craft distilling industry and management of current equity investments in this industry, including the operation of the Lark, Nant, Overeem and Forty Spotted Distilleries. Review of operations The loss for the Group after providing for income tax and non-controlling interest amounted to $743,321 (31 December 2018: $1,467,111). Before accounting for the non-controlling interest, this amounts to $743,321 (31 December 2018: $1,467,111).

Gross revenues during the half were 35.5% higher than the previous corresponding period with a gross margin of 55.7% which is +3.4ppt improvement on the previous corresponding period. The Company achieved strong growth across whisky and gin, mainland and Tasmania, and on premise and off premise. Key highlights:-

• Tasmanian wholesale direct was the standout with an increase of 51%; and • the Direct to Consumer business (hospitality and online) grew at only 12% however since the restructure of this

function in November 19 and the relaunch of larkdistillery.com there has been a dramatic improvement in these results well above existing trendlines.

Following the closure of the Sydney head-office and the associated restructure costs overall expenses rose 9% during the period. During the half there was a material increase in the marketing investment with the first ever National advertising campaign for Lark Whisky designed to raise mainland Australian brand awareness and provide support to our key off premise accounts. The EBT loss of $743,321 represents an improvement of $723,651 or 49% over the previous corresponding period.

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During the half-year end the Group has made further investment into the stock of whisky inventories with a net increase of 19.6%, or 91,723 litres, over the 6 month reporting period. The focus of the business operations remains maximising the production of new make spirit within the current infrastructure constraints, and due to a combination of the introduction of a 2nd shift at Cambridge as well as efficiency yields, there has been a 109,163 additional litres produced by the Group. This brings total whisky inventories under maturation to 553,847 litres with a cost value of $13.4m and a maturation value of $77.5m. The maturation market value is a conservative valuation based on an estimated future net sales value which is lower than the company’s net sales value achieved today. The valuation method is consistent with that presented in the AGM presentation and is used by the Group to illustrate the intrinsic value of the inventory. The market value presented has an inherent risk in that the net sales value will be achieved on maturation, therefore consideration needs to be given to market conditions at that point in time.

Financial Position The net assets of the Group have decreased by $0.54 million from 30 June 2019 to net assets of $37.5 million as at 31 December 2019. This decrease is largely due to the following: Net loss for year of $0.74 million; driven by the following:

a) Gross profit of $2.13 million; b) Other income of $0.13 million; c) Operating expenses of $2.96 million; d) Net finance costs of $0.04 million.

The Group’s working capital, being current assets less current liabilities, has decreased by $3.8 million to $7.8 million at 31 December 2019 (30 June 2019: $11.6 million). Net cash outflows utilised in funding operating activities during the half year was $1.9m. However, this included $1.9 million in inventory costs paid to lay down new make spirit for future sale. The inventory payments represent a significant investment in the Group’s inventory to underpin future revenue streams.

Significant changes in the state of affairs On 2 September 2019 Australian Whisky Holdings Limited announced the appointment of Laurent Ly as a Non-Executive Director. On 12 September 2019 Australian Whisky Holdings Limited announced the appointment of Melanie Leydin as Company Secretary, concurrent with the resignation of Gary Stewart as Company Secretary.

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On 4 October 2019 Australian Whisky Holdings Limited announced the appointment of Geoff Bainbridge and David Dearie into Executive Director roles. Mr Bainbridge took the position of Managing Director, while Mr Dearie took up the position of Executive Chairman. Also on this date, the Company announced the issue of 31,800,000 performance rights and 35,400,000 performance rights to Mr Bainbridge and Mr Dearie, respectively, subject to shareholder approval. There were no other significant changes in the state of affairs of the Group during the half-year end.

Matters subsequent to the end of the financial half-year On 19 February 2020, Australian Whisky Holdings Limited announced the sale of the Overeem Single Malt Whisky trademark and limited inventory for the sum of $962,000. No other matter or circumstance has arisen since 31 December 2019 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. Commitments The Group announced during the period its' intention to finalise its' management obligations under the Nant Barrel Management Agreement. As a result, the Group finished the audit of investor casks during the period and provided Offer Letters to investors on 24 December 2019. Offer Letters included an acceptance close date of 31 January, with an obligation to pay accepted offers by 14 February. Second round offers were made 31 January, with an offer close date of 14 February, with an obligation to pay accepted offers by 28 February. Offers accepted and paid as at report signing date total $973,508. Offers accepted and owing at signing of report date total $37,881.

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.

This report is made in accordance with a resolution of directors, pursuant to section 306(3)(a) of the Corporations Act 2001. On behalf of the directors ___________________________ Geoff Bainbridge Managing Director 28 February 2020

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Australian Whisky Holdings Limited Table of Contents 31 December 2019

6

Consolidated statement of profit or loss and other comprehensive income 7

Consolidated statement of financial position 8

Consolidated statement of changes in equity 9

Consolidated statement of cash flows 10

Notes to the consolidated financial statements 11

Directors' declaration 21

Independent auditor's review report to the members of Australian Whisky Holdings Limited 22

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Australian Whisky Holdings Limited Consolidated statement of profit or loss and other comprehensive income For the half-year ended 31 December 2019

Consolidated

Note 31 December

2019 31 December

2018 $ $

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

7

Revenue Sales revenue 3,818,689 2,818,802 Cost of sales (1,692,628) (1,345,854) Gross profit 2,126,061 1,472,948 Other income 137,197 450

Expenses Selling and distribution expenses (304,655) (228,298) Administration expenses (1,291,384) (1,314,913) Employee benefits expense (1,231,333) (888,914) Share based payments 18 (91,388) - Depreciation and amortisation expense 10,11 (39,245) (27,573) Impairment expense - (254,231) Operating loss (694,747) (1,240,531) Finance income 17,715 47,547 Finance costs (66,289) (273,988) Loss before income tax expense (743,321) (1,466,972) Income tax expense - - Loss after income tax expense for the half-year (743,321) (1,466,972)

Other comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation (58) (1,031) Other comprehensive income for the half-year, net of tax (58) (1,031) Total comprehensive income for the half-year (743,379) (1,468,003) Loss for the half-year is attributable to: Non-controlling interest - 139 Owners of Australian Whisky Holdings Limited (743,321) (1,467,111) (743,321) (1,466,972) Total comprehensive income for the half-year is attributable to: Non-controlling interest - 139 Owners of Australian Whisky Holdings Limited (743,379) (1,468,142) (743,379) (1,468,003) Cents Cents Basic loss per share 17 (0.05) (0.10) Diluted loss per share 17 (0.05) (0.10)

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Australian Whisky Holdings Limited Consolidated statement of financial position As at 31 December 2019

Consolidated

Note 31 December

2019 30 June

2019 $ $

The above consolidated statement of financial position should be read in conjunction with the accompanying notes 8

Assets Current assets Cash and cash equivalents 4 4,280,241 6,731,306 Trade and other receivables 5 1,382,655 525,868 Inventories 6 4,320,449 6,306,572 Prepaid assets 341,741 39,368 Total current assets 10,325,086 13,603,114 Non-current assets Trade and other receivables 8 5,628 185,705 Inventories 7 11,519,239 8,469,516 Financial assets 9 300,000 300,000 Property, plant and equipment 10 6,948,444 6,802,476 Intangibles 11 11,163,049 11,031,472 Total non-current assets 29,936,360 26,789,169 Total assets 40,261,446 40,392,283

Liabilities Current liabilities Trade and other payables 1,783,291 1,277,015 Financial liabilities 12 527,258 474,024 Employee benefits 184,995 161,337 Total current liabilities 2,495,544 1,912,376 Non-current liabilities Payables - 5,017 Financial liabilities 13 219,902 377,236 Employee benefits 44,667 35,492 Provisions - 22,855 Total non-current liabilities 264,569 440,600 Total liabilities 2,760,113 2,352,976 Net assets 37,501,333 38,039,307

Equity Issued capital 14 49,361,969 49,361,969 Reserves 252,988 47,641 Accumulated losses (12,113,624) (11,370,303) Total equity 37,501,333 38,039,307 F

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Australian Whisky Holdings Limited Consolidated statement of changes in equity For the half-year ended 31 December 2019

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes 9

Issued Foreign

Exchange Accumulated

Non-controlling

Total equity capital Reserve losses interest Consolidated $ $ $ $ $ Balance at 1 July 2018 37,964,572 47,813 (7,047,849) 4,615 30,969,151 Profit/(loss) after income tax expense for the half-year

-

-

(1,467,111)

139

(1,466,972)

Other comprehensive income for the half-year, net of tax

-

(1,031)

-

-

(1,031)

Total comprehensive income for the half-year - (1,031) (1,467,111) 139 (1,468,003) Shares issued during the period 11,946,049 - - - 11,946,049 Shares issue cost (548,255) - - - (548,255) Balance at 31 December 2018 49,362,366 46,782 (8,514,960) 4,754 40,898,942

Issued Foreign

Exchange Share based

payment Accumulated

Non-controlling

Total equity capital Reserve reserve losses interest Consolidated $ $ $ $ $ $ Balance at 1 July 2019 49,361,969 47,641 - (11,370,303) - 38,039,307 Loss after income tax expense for the half-year

-

-

-

(743,321)

-

(743,321)

Other comprehensive income for the half-year, net of tax

-

(58)

-

-

-

(58)

Total comprehensive income for the half-year

-

(58)

-

(743,321)

-

(743,379)

Share-based payments (note 18)

-

-

205,405

-

-

205,405

Balance at 31 December 2019 49,361,969 47,583 205,405 (12,113,624) - 37,501,333

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Australian Whisky Holdings Limited Consolidated statement of cash flows For the half-year ended 31 December 2019

Consolidated

Note 31 December

2019 31 December

2018 $ $

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes 10

Cash flows from operating activities Receipts from customers 3,157,907 2,708,536 Payments to suppliers and employees (3,040,315) (2,215,121) Purchase of inventory (2,025,579) (2,890,180) Interest received 31,983 47,547 Interest and other finance costs paid (66,289) (297,020) Net cash used in operating activities (1,942,293) (2,646,238)

Cash flows from investing activities Payments for property, plant and equipment 10 (382,832) (583,164) Payments for intangibles 11 (30,368) (33,500) Proceeds from sale of property, plant and equipment 10 6,819 - Net cash used in investing activities (406,381) (616,664)

Cash flows from financing activities Proceeds from issue of shares 14 - 11,946,049 Proceeds from borrowings 595,364 262,300 Share issue transaction costs - (687,264) Repayment of borrowings (697,755) (5,777,757) Net cash from/(used in) financing activities (102,391) 5,743,328

Net increase/(decrease) in cash and cash equivalents (2,451,065) 2,480,426 Cash and cash equivalents at the beginning of the financial half-year 6,731,306 6,860,819 Cash and cash equivalents at the end of the financial half-year 4,280,241 9,341,245

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Australian Whisky Holdings Limited Notes to the consolidated financial statements 31 December 2019

11

Note 1. Significant accounting policies These general purpose financial statements for the interim half-year reporting period ended 31 December 2019 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'. These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2019 and any public announcements made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, 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. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Group. The following Accounting Standards and Interpretations are most relevant to the Group: AASB 16 Leases The Group has adopted and complied with AASB 16 from 1 July 2019. This standard sets out the principles for the recognition, measurement, presentation and disclosure of leases. The objective is to ensure that lessees and lessors provide relevant information in a manner that faithfully represents those transactions. This information gives a basis for users of financial statements to assess the effect that leases have on the financial position, financial performance and cash flows of an entity. On adoption of AASB 16 from 1 July 2019, the Group is not required to make any financial statement adjustment on application of this standard. The Group did not have any off-balance sheet leases in the prior period to bring on-balance sheet. The Group has leases that relate to raw materials inventory and production equipment which have been recognised according to the nature of the assets at the time of lease commencement with the corresponding lease obligation recognised. On recognition of the lease liabilities in the relative prior periods, the asset has been identified and disclosed in relation to its’ nature and characteristic. Part of the current financial liabilities balance at half year end relate to the leasing of production equipment, these assets have been recognised as Plant & Equipment and depreciated accordingly, pursuant to AASB 116. All other leases as at period end relate to the leasing of wooden casks and have been recognised on lease recognition in accordance with AASB 102. These costs are held in raw materials inventory (where the cask is not yet filled with spirit), or whisky in casks inventory (utilising the raw materials inventory per the qualifying assets absorption costing of inventories), or, expensed through COGS where that cask filled with spirit has been decanted and sold. All inventories are carried at cost and not depreciated. The Group has not entered into any new lease transactions during the half year end period ended 31 December 2019. Going concern In the six months to 31 December 2019, the Group have: ● Incurred a loss after tax of $743,321 (31 December 2018: $1,466,972) and ● Used cash in operating activities of $1,942,293 (31 December 2018: $2,646,238).

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Note 1. Significant accounting policies (continued)

12

Notwithstanding the above loss and cash outflow, the Directors have reviewed and approved the cash flow forecast for the Group over the next 12 months to 28 February 2021 and are confident that the Group will be able to pay its debts as and when they fall due. On this basis, the preparation of the half-year financial report in accordance with the Going Concern assumption is appropriate.

Note 2. Operating segments Identification of reportable operating segments The Group is organised into three operating segments: whisky, gin, and other. These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. The operations of the Group in management of equity investments is consistent with the Groups’ strategy to continue its investment and growth in both whisky (“Lark” as the hero brand) and gin (“Forty Spotted Gin”). Whisky and gin are assessed as separate segments by the CODM due to the differences in production processes, inventory life cycle, market categories, working capital requirements and financial contribution to the Group. The “other” segment is 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 half year ended 31 December 2019 approximately 30% of the Group's external revenue was derived from sales to Proof & Company (“Distributor” of Lark whisky, Overeem whisky and Forty Spotted gin). Operating segment information Whisky Gin Other Total Consolidated - 31 December 2019 $ $ $ $ Revenue Sales to external customers 2,422,680 937,174 458,835 3,818,689 Other revenue 137,197 - - 137,197 Interest income 17,715 - - 17,715 Total income 2,577,592 937,174 458,835 3,973,601 Cost of goods sold (964,553) (499,930) (228,145) (1,692,628) Other expenses (1,998,217) (652,462) (373,615) (3,024,294) Loss before income tax expense (385,178) (215,218) (142,925) (743,321) Income tax expense - Loss after income tax expense (743,321)

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Note 2. Operating segments (continued)

13

Whisky Gin Other Total Consolidated - 31 December 2018 $ $ $ $ Revenue Sales to external customers 1,561,477 829,718 427,607 2,818,802 Other revenue 450 - - 450 Interest income 47,547 - - 47,547 Total income 1,609,474 829,718 427,607 2,866,799 Cost of goods sold (720,720) (344,677) (280,457) (1,345,854) Other expenses (1,679,849) (519,082) (788,988) (2,987,919) Loss before income tax expense (791,094) (34,041) (641,837) (1,466,972) Income tax expense - Loss after income tax expense (1,466,972)

Note 3. Loss before income tax expense

31 December

2019 31 December

2018 $ $ Loss before income tax determined after: Impairment expense - Nant acquisition - (254,231) Cost of goods sold (1,692,628) (1,345,854) Directors and consulting expenses (604,160) (400,351) Selling and distribution expenses (304,665) (228,298) Legal Fees (175,111) (90,177) Occupancy costs (97,803) (122,101) Transport, travel and entertainment (58,680) (151,683) (2,933,047) (2,592,695)

Note 4. Current assets - cash and cash equivalents Consolidated

31 December

2019 30 June

2019 $ $ Petty Cash 9,657 4,253 Cash at bank 4,270,584 668,520 Cash on deposit - 6,058,533 4,280,241 6,731,306 F

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Note 5. Current assets - trade and other receivables Consolidated

31 December

2019 30 June

2019 $ $ Trade receivables 1,145,481 397,017 Other receivables 94,750 89,832 Provision for doubtful debts (3,978) (5,442) Deposits paid 146,402 44,461 1,382,655 525,868

Note 6. Current assets - inventories Consolidated

31 December

2019 30 June

2019 $ $ Raw materials - at cost 1,877,325 1,831,490 Work in progress - at cost 182,211 - Finished goods - at cost 352,603 518,562 Inventory in casks 1,908,310 3,956,520 4,320,449 6,306,572

Note 7. Non-current assets - inventories Consolidated

31 December

2019 30 June

2019 $ $ Inventory in casks 11,519,239 8,469,516

Note 8. Non-current assets - Trade and other receivables Consolidated

31 December

2019 30 June

2019 $ $ Deposit paid 4,891 184,621 Other receivables 737 1,084 5,628 185,705 F

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Note 9. Non-current assets - Financial assets Consolidated

31 December

2019 30 June

2019 $ $ Investment in Old Kempton - at fair value 300,000 300,000

Note 10. Non-current assets - property, plant and equipment Consolidated

31 December

2019 30 June

2019 $ $ Land - at cost 4,564,644 4,564,644 Revaluation (529,683) (529,683) 4,034,961 4,034,961 Freehold improvements - at cost 297,482 102,654 Less: Accumulated depreciation (3,933) (2,615) 293,549 100,039 Office and computer equipment 3,238 35,617 Less: Accumulated depreciation (1,265) (4,282) 1,973 31,335 Plant, machinery & production assets 3,265,620 3,181,780 Less: Accumulated depreciation (724,716) (628,247) 2,540,904 2,553,533 Motor vehicles - at cost 154,044 154,044 Less: Accumulated depreciation (76,987) (71,436) 77,057 82,608 6,948,444 6,802,476 Reconciliations Reconciliations of the written down values at the beginning and end of the current financial half-year are set out below:

Land and building

Building improvement

Plant machinery

and production assets**

Total Consolidated $ $ $ $ Balance at 1 July 2019 4,034,961 100,039 2,667,476 6,802,476 Additions - 195,769 186,859 382,628 Disposals - - (14,266) (14,266) Capitalised to inventory- - - (81,939) (81,939) Transfers in/(out)* - - (118,909) (118,909) Depreciation expense - (2,258) (19,288) (21,546) Balance at 31 December 2019 4,034,961 293,550 2,619,933 6,948,444

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Note 11. Non-current assets - intangibles Consolidated

31 December

2019 30 June

2019 $ $ Other intangible assets - at cost 11,300,889 11,151,612 Less: Accumulated amortisation (137,840) (120,140) 11,163,049 11,031,472 Reconciliations Reconciliations of the written down values at the beginning and end of the current financial half-year are set out below:

Goodwill Other

intangibles

Total Consolidated $ $ $ Balance at 1 July 2019 10,934,839 96,633 11,031,472 Additions - 30,367 30,367 Transfers in/(out)* - 118,909 118,909 Amortisation expense - (17,699) (17,699) Balance at 31 December 2019 10,934,839 228,210 11,163,049 * Amount transferred from plant machinery and production assets in current year.

Note 12. Current liabilities - Financial liabilities Consolidated

31 December

2019 30 June

2019 $ $ Barrel Finance and Logistics 328,870 366,634 Motor vehicles 21,325 18,336 Eclipx - 89,054 Insurance premium funding 177,063 - 527,258 474,024 Payment instalments with interest rate at 2.96% with Attvest Finance, insurance funding.

Note 13. Non-current liabilities - Financial liabilities Consolidated

31 December

2019 30 June

2019 $ $ Barrel Finance and Logistics 184,569 329,573 Motor vehicles 35,333 47,663 219,902 377,236

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Note 14. Equity - issued capital Consolidated

31 December

2019 30 June

2019 31 December

2019 30 June

2019 Shares Shares $ $ Ordinary shares - fully paid 1,630,579,441 1,630,579,441 49,361,969 49,361,969 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.

Note 15. Related party transactions During the period, the Group made purchases amounting to $67,056 (December 2018: NIL) 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 whisky. This amount is included in trade creditors as at this period end. During the prior period ending 31 December 2018, the Group made purchases totaling $286,186 from entities associated with Mr Chris Malcolm during his tenure as Chief Executive Officer. These include payments for the cooperage of wood (casks) and the purchase of barrels from related entities.

Note 16. Events after the reporting period On 19 February 2020, Australian Whisky Holdings Limited announced the sale of the Overeem Single Malt Whisky trademark and limited inventory for the sum of $962,000. On 21 February 2020, Australian Whisky Holdings Limited announced the change of the Company’s registered office and principal place of business to Level 1, 30 Argyle Street, Hobart TAS 7000. No other matter or circumstance has arisen since 31 December 2019 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

Note 17. Earnings per share Consolidated

31 December

2019 31 December

2018 $ $ Loss after income tax (743,321) (1,466,972) Non-controlling interest - (139) Loss after income tax attributable to the owners of Australian Whisky Holdings Limited (743,321) (1,467,111)

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Note 17. Earnings per share (continued)

18

Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 1,630,579,441 1,413,093,139 Adjustments for calculation of diluted earnings per share:

Options over ordinary shares - 6,840,240 Weighted average number of ordinary shares used in calculating diluted earnings per share 1,630,579,441 1,419,933,379 Cents Cents Basic loss per share (0.05) (0.10) Diluted loss per share (0.05) (0.10)

Note 18. Share-based payments A share option plan has been established by the Group and approved by shareholders at a general meeting, whereby the Group may, at the discretion of the Nomination and Remuneration Committee, grant options over ordinary shares in the Company to certain key management personnel of the Group. The options are issued for nil consideration and are granted in accordance with performance guidelines established by the Nomination and Remuneration Committee. Set out below are summaries of options granted under the plan: 31 December 2019 Balance at Expired/ Balance at Exercise the start of forfeited/ the end of

Grant date Expiry date

price

the half-year

Granted

Exercised

other

the half-year

31/12/2017 30/11/2019 $0.06050 14,983,337 - - (14,983,337) - 31/12/2017 17/10/2019 $0.03758 3,724,975 - - (3,724,975) - 22/05/2018 30/05/2021 $0.03000 4,141,380 - - - 4,141,380 22/05/2018 30/05/2021 $0.03750 4,141,380 - - - 4,141,380 22/05/2018 30/05/2021 $0.04500 4,141,380 - - - 4,141,380 22/10/2018 01/11/2020 $0.03210 3,115,265 - - - 3,115,265 28/11/2017 31/07/2021 $0.07500 4,250,000 - - - 4,250,000 01/07/2019 31/12/2022 $0.07500 - 4,583,333 - - 4,583,333 01/07/2019 31/12/2022 $0.07500 - 4,583,333 - - 4,583,333 01/07/2019 31/12/2022 $0.07500 - 4,583,333 - - 4,583,333 38,497,717 13,749,999 - (18,708,312) 33,539,404

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Note 18. Share-based payments (continued)

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The options issued during the period were calculated using the Black-Scholes option pricing model with the following inputs: Item Range Expected volatility (%) 67% Risk free interest rate (%) 0.92% Expected life of options (years) 3.5 years Expected dividends Nil Option exercise price ($) $0.075 Share price at grant date ($) $0.04 Probability of vesting 73% The weighted average remaining contractual life of options outstanding at the end of the financial half-year was 1.4 years (December 2018: 1.15 years). Set out below are summaries of performance rights granted under the plan: 31 December 2019 Balance at Expired/ Balance at Vesting the start of forfeited/ the end of Grant date Expiry date hurdle the half-year Granted Exercised other the half-year 25/11/2019 31/12/2026 $0.04500 - 4,500,000 - - 4,500,000 25/11/2019 31/12/2026 $0.05500 - 3,300,000 - - 3,300,000 25/11/2019 31/12/2026 $0.06500 - 3,900,000 - - 3,900,000 25/11/2019 31/12/2026 $0.07500 - 28,500,000 - - 28,500,000 25/11/2019 31/12/2026 $0.08000 - 45,000,000 - - 45,000,000 - 85,200,000 - - 85,200,000 The performance rights issued during the prior period were calculated using the following inputs: Item Range Expected volatility (%) 70% Risk free interest rate (%) 1.09% Expected life of performance rights (years) 6.1 years Expected dividends Nil Vesting hurdle ($) $0.045 - $0.085 Share price at grant date ($) $0.037 The weighted average remaining contractual life of performance rights outstanding at the end of the financial half-year was 7 years (December 2018: n/a years).

Note 19. General information The financial statements cover Australian Whisky Holdings Limited as a Group consisting of Australian Whisky Holdings Limited and the entities it controlled at the end of, or during, the half-year. The financial statements are presented in Australian dollars, which is Australian Whisky Holdings Limited 's functional and presentation currency. Australian Whisky Holdings Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office is: Australian Whisky Holdings Limited Level 1, 30 Argyle Street, Hobart TAS 7000 Australia

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Note 19. General information (continued)

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Its principal places of business are: Australian Whisky Holdings Limited Australian Whisky Holdings Bothwell Pty Ltd Australian Whisky Holdings Services Pty Ltd Level 1, 30 Argyle Street, Hobart TAS 7000 Australian Whisky Holdings Management Pty Ltd Level 1, 30 Argyle Street, Hobart TAS 7000

Aowei Liquor Industries Beijing Limited (former name Beijing Montec Commercial Limited) Beijing PRC 100022 Australian Whisky Holdings (HK) Limited (former name Montec International (HK) Limited) Kowloon, Hong Kong Lark Distillery Pty Ltd (including Overeem Whisky Pty Ltd) 20 Denholms Road, Cambridge, TAS 7170 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 28 February 2020.

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Australian Whisky Holdings Limited Directors' declaration 31 December 2019

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In the directors' opinion: ● the attached financial statements and notes comply with the Corporations Act 2001, Australian Accounting Standard

AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professional reporting requirements;

● the attached financial statements and notes give a true and fair view of the Group's financial position as at 31 December

2019 and of its performance for the financial half-year ended on that date; and ● there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due

and payable. Signed in accordance with a resolution of directors made pursuant to section 303(5)(a) of the Corporations Act 2001. On behalf of the directors ___________________________ Geoff Bainbridge Managing Director 28 February 2020

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australian whisky holdings limited for personal use only · this brings total whisky inventories...

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