HALF YEARLY REPORT FOR THE SIX MONTHS ENDED 31
CONTENTS PAGES Executive Chairman and CEO s Review 1 Interim Condensed Consolidated Statement of Comprehensive Income 3 Interim Condensed Consolidated Statement of Changes in Equity 4 Interim Condensed Consolidated Statement of Financial Position 5 Interim Condensed Consolidated Statement of Cash Flows 6 Notes to the Condensed Financial Statements 7 Company Directory 17
Executive Chairman and CEO s Review For the six months ended 31 General Commentary Marlborough Wine Estates Group Limited ( MWE ) is pleased to release the results for the six months ended 31 (HY19). During the period, sales revenue increased 47% to 1.39 million, compared to 0.94 million for the corresponding period in 2017. The period has seen management focus on new distribution opportunities in other overseas markets beyond China. MWE has had a strong start in the Australian market during HY19 with multiple shipments sent to Australia. MWE is also working closely with various contacts to explore new distribution networks and sales channels in Europe, UK, Canada and other regions. The main driver of the HY19 revenue increase is greater customer reach and brand awareness in the New Zealand bottled wine sector. MWE launched its products into the Wellington and South Island regions in July 2018 and its products are now available at almost all major centres in NZ and the number of outlets is still growing. MWE also has been investing in new sales channels, building brand awareness and implementing marketing strategies to grow the domestic market. This has resulted in significant growth in domestic bottled wine sales. The growth in sales and marketing has been accompanied with higher operating expenses. The operating expenses for the six months ended 31 increased to 841,349, compared to 643,071 for the previous corresponding period. MWE s bulk wine business has been steady with 5 containers of bulk wine sold and shipped to the US in t HY19 (31 : 5 containers). Recent Awards MWE s wines have performed very well in recent global wine competitions, receiving medals in the below competitions: Blue Gold, OTU Classic Marlborough Sauvignon Blanc 2018, Sydney International Wine Competition Gold Medal, OTU Classic Marlborough Sauvignon Blanc 2017, CWSA 2018 Gold Medal, OTU Classic Hawkes Bay Rose 2018, CWSA 2018 Silver Medal, OTU Prestige Marlborough Sauvignon Blanc 2015, IWSC 2018 Silver Outstanding Medal, OTU Single Vineyard Marlborough Sauvignon Blanc 2017, IWSC 2018 Vineyard Development MWE has started planting Pinot Noir in its Donaldson and Hammond blocks. Marlborough Pinot Noir is proving to be an important wine export for New Zealand and is growing steadily in popularity. MWE will initially plant more than 11 ha of Pinot Noir and further plantings of Pinot Noir and Pinot Gris are planned for the next 2 3 years. MWE is expected to harvest its first Pinot Noir crop in the 2021 vintage. 1
MPI Update MWE understands that the dispute between the Ministry for Primary Industries (MPI) and MWE s former wine processor remains unresolved and the timing for a resolution remains uncertain. On 30 June 2017 MWE wrote down the value of the inventory subject to the dispute. Based on legal advice received, MWE considers it has a strong basis for claiming for a breach of contract from its former processor. MWE will work closely with the different parties involved and update the market as and when more information becomes available. OIO Update As previously advised to the market, the Overseas Investment Office (OIO) has formally concluded its investigation into the breaches and issued a warning letter to MWE and Mr Min Jia. In the warning letter, the OIO states that it considers that the breaches were at the low end of the range for possible breaches of the Act. The warning letter confirms that the OIO has decided to take no further enforcement action with respect to the breaches. Outlook MWE is looking forward to the upcoming 2019 vintage, with harvest expected to start by the end of March. The vintage looks promising so far and MWE is expecting to harvest of at least 1,800 tonnes of high-quality grapes. MWE s core strategy is to continue growing the sales of bottled wines and the Company will gradually allocate more of its grape production to bottled wine processing. MWE has gained market share in the New Zealand bottled wine sector rapidly and will continue to build on this strong momentum. The global wine market has been strong for the past few years and the appreciation and popularity of quality New Zealand wine continues to grow. MWE will continue to expand its market share in China and look to invest more resources to grow sales in the US, Japan, Australia, UK and Canada. We thank shareholders for their ongoing support of the Marlborough Wine Estates Group Limited. Min Jia Executive Chairman Catherine Ma Chief Executive Officer 2
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INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the six months ended 31 Note restated Sales 3 1,390,899 943,701 3,984,984 Cost of sales 5 (1,114,007) (818,370) (2,444,433) Gross profit 276,892 125,331 1,540,551 Other income 4 37,608 8,573 11,083 Interest income 291 10,601 15,948 Loss on assets disposal - 898 (1,308) Operating expenses 6 (841,349) (643,071) (1,349,652) Interest expense and financing cost (150,954) (147,872) (290,448) Amortisation (3,005) (88,495) (176,991) Depreciation (109,813) (103,446) (225,964) Inventory write down 9 - - (152,477) Impairment loss on intangible assets - - (1,194,689) (Loss) for the period before taxation (790,330) (837,481) (1,823,947) Tax (expense)/benefit 218,700 204,421 117,034 (Loss) for the period attributable to shareholders of the company (571,630) (633,060) (1,706,913) Other Comprehensive Income - - - Total comprehensive (loss) / income for the period attributable to the shareholders of the Company (571,630) (633,060) (1,706,913) Basic and diluted (loss) / earnings per share 18 (0.002) (0.002) (0.006) The above statement of comprehensive income should be read in conjunction with the attached notes. 3
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 31 Share-based Share Capital Retained earnings Group Note payment reserve Total Balance at 1 July 2017 15,174,626 505,186 73,712 15,753,524 Total comprehensive income for the period Loss for the period (restated) - (633,060) - (633,060) Other comprehensive income - - - - Total comprehensive income for the period - (633,060) - (633,060) Transactions with owners Share-based payment options 7 - - 13,194 13,194 - - 13,194 13,194 Balance at 31 (unaudited) 15,174,626 (127,874) 86,906 15,133,658 Balance at 1 July 2017 15,174,626 505,186 73,712 15,753,524 Total comprehensive income for the period Loss for the period - (1,706,913) - (1,706,913) Other comprehensive income - - - Total comprehensive income for the period - (1,706,913) - (1,706,913) Transactions with owners Share-based payment options 7 - - 24,440 24,440 - - 24,440 24,440 Balance at 30 (audited) 15,174,626 (1,201,727) 98,152 14,071,051 Total comprehensive income for the period Loss for the period - (571,630) - (571,630) Other comprehensive income - - - - Total comprehensive income for the period - (571,630) - (571,630) Transactions with owners Share-based payment options 7 - - 5,669 5,669 - - 5,669 5,669 Balance at 31 (unaudited) 15,174,626 (1,773,357) 103,821 13,505,090 The above statement of changes in equity should be read in conjunction with the attached notes 4
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 Note restated ASSETS Current assets Cash and bank balances 8 214,668 466,375 684,251 Accounts receivable 11 338,396 805,128 1,071,235 Inventory 9 2,298,062 2,197,916 3,052,091 Biological work in progress 10 1,410,625 1,129,227 248,599 Prepayments 41,054 78,227 55,717 Deposits paid 41,610 41,610 41,610 GST receivable 26,110 23,167 81,717 Total current assets 4,370,975 4,741,650 5,235,220 Non-current assets Property, plant and equipment 14,952,186 14,784,228 14,695,146 Related party loan 15 3,203 8,443 3,203 Investments 72,250 72,250 72,250 Deferred tax 982,176 853,155 763,762 Intangible assets 18,118 1,304,307 21,123 Total non-current assets 16,027,933 17,022,383 15,555,484 Total assets 20,398,908 21,764,033 20,790,704 LIABILITIES Current liabilities Accounts payable 394,802 249,535 305,343 Accrued expenses 40,685 50,585 119,772 Revenue received in advance 72,466 22,230 - Current tax payable - 2,166 - Finance Lease 87,924 100,947 107,860 Interest bearing borrowings 12 6,100,000 6,100,000 6,100,000 Total current liabilities 6,695,877 6,525,463 6,632,975 Non-current liability Borrowing 12 152,855 - - Finance Lease 45,086 104,912 86,678 Total non-current liability 197,941 104,912 86,678 Total liabilities 6,893,818 6,630,375 6,719,653 Total net assets 13,505,090 15,133,658 14,071,051 EQUITY Capital Shares 7 15,174,626 15,174,626 15,174,626 Share-based payment reserve 7 103,821 86,906 98,152 Retained earnings (1,773,357) (127,874) (1,201,727) Total equity 13,505,090 15,133,658 14,071,051 Signed for and on behalf of the board by: - Signature: Signature: Executive Chairman: Min Jia Director: Danny Chan Date: 28 February 2019 The above statement of financial position should be read in conjunction with the attached notes. 5
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the six months ended 31 Note Cash flows from operating activities Cash was provided from: Receipts from customers 2,196,204 2,180,093 4,758,364 Other revenue 37,608 9,859 11,083 GST refund - 203,078 28,314 Income tax refund 286-3,731 Interest received 291 468 15,948 2,234,389 2,393,498 4,817,440 Cash was disbursed to: Payment to suppliers 1,653,063 1,522,664 3,019,695 Payments to employees 497,660 365,768 758,457 Interest paid 150,954 147,872 290,448 2,301,677 2,036,304 4,068,600 Net cash flow generated by / (used in) operating activities 16 (67,288) 357,194 748,840 Cash flows from investing activities Cash was provided from: Disposal of assets - 19,741 - Cash was disbursed to: Investment in other company - (2,500) (2,500) Payments for intangible assets - 1,326 1,326 Payments for property, plant and equipment 471,193 296,962 437,601 471,193 295,788 436,427 Net cash flow generated by / (used in) investing activities (471,193) (276,047) (436,427) Cash flows from financing activities Cash was provided from: Proceeds from borrowings 12 152,855 - - Cash was disbursed to: Repayment of lease obligation 83,846 113,558 127,037 Net cash flow generated by / (used in) financing activities 69,009 (113,558) (127,037) Net increase in cash (469,472) (32,411) 185,376 Cash and cash equivalents at the beginning of the Period 684,251 498,821 498,821 Exchange adjustment (111) (35) 54 Cash and cash equivalents at the end of the period 214,668 466,375 684,251 The above statement of cash flows should be read in conjunction with the attached notes. 6
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS For the six months ended 31 1 Significant Accounting Policy (a) General Information These unaudited financial statements are for Marlborough Wine Estates Group Limited (the Company) and its subsidiaries (together the Group, or MWE). The Company and its subsidiaries are incorporated and domiciled in New Zealand and are registered under the Companies Act 1993. The incorporation date of the Company is 18 March 2015. The Company was listed on NXT market on 30 June 2016. The Company is designated as a profit-oriented entity for financial reporting purposes. These financial statements were authorised for issue by the Board of Directors on 28 February 2019. The principle activities of the Group are vineyard maintenance, grape production and wine making. (b) Basis of preparation The unaudited interim financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice ("NZ GAAP"), and its interpretations and other relevant Financial Reporting Standards applicable to profit-oriented entities. The financial statements comply with International Financial Reporting Standards (IFRS). These condensed financial statements for the six months ended 31 have been prepared in accordance with NZIAS 34, Interim Financial Reporting and should be read in conjunction with the financial statements published in the Annual Report for the year ended 30. They also comply with the International Accounting Standard 34 interim Financial Reporting (IAS 34). The Company is a FMC reporting entity under the Financial Markets Conduct Act 2013. These unaudited interim financial statements have been prepared in accordance with the requirements of Financial Markets Conduct Act 2013. (c) Changing in accounting policy and disclosures Apart from the new accounting standards noted below which have been applied for the first time in the current financial year, the unaudited interim financial statements have been prepared using the same accounting policies and methods of computation detailed in the last Annual Report. For details of these accounting policies please refer to the 2018 Annual Report. Application of new and revised standards, amendments and interpretations NZ IFRS 9 requires financial assets to be classified into two measurement categories; those measured as at fair value and those measured at amortised cost. The determination is made at the initial recognition. Under NZ IFRS 9 the expected credit loss model for impairment of financial assets replaces the incurred loss model used in NZ IAS 39. The Group has applied the simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and requires recognition from initial recognition of the trade receivables. To measure expected credit losses, trade receivables have been grouped and reviewed on the basis of number of days have been outstanding. Judgement is used in selecting the inputs to the impairment calculation and is based on past history and forward-looking assumptions. The implementation of this NZ IFRS has not had a material impact on the interim financial statements. NZ IFRS 15 replaces NZ IAS 18 Revenue and introduces a five-step process for revenue recognition with the core principle being for entities to recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Group have determined that NZ IFRS 15 has not resulted in a change to either recognition or measurement of revenue and therefore there is no requirement to restate revenue reported in prior periods. The majority of the Group s revenue is from the sale of goods. Each of these transactions create a standard short-term performance obligation on the Group. Once the performance obligation has been performed the corresponding revenue is recognised. Pricing is not bundled for multiple performance obligations. The Group will continue to recognise revenue in line with the date that the goods are delivered. 2 Seasonal Business The bulk grape sales are subject to seasonality with the grape harvest occur once a year in April to May. All the bulk grapes sales will be recognised in the second half financial year. And for six months ended in 31, the bulk grape sales is nil (31 : nil, 30 : 2,213,280). 7
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS For the six months ended 31 3 Sales Bulk grape sales - - 2,213,280 Bulk wine sales 480,264 509,873 987,017 Bottled wine sales 867,484 433,828 784,687 Other sales 43,152 - - 1,390,900 943,701 3,984,984 Prices of two grape sale agreements are based on the Marlborough district regional average price (MDA). The group uses its best estimation of transaction prices for each agreement to record the revenue. 43,152 has been recorded in the six months ended 31 due to the MDA adjustment. 4 Other Income Lease of farmland 1,773 1,773 3,546 Compensation from customer 20,000 - - Others 15,835 6,800 7,537 37,608 8,573 11,083 5 Cost of sales The group runs a vineyard and wine producing business and as a consequence has incurred 1,114,007 of cost of sales for the six months ended 31. These costs relate to growing grapes on vines and producing wine. Cost of sales 1,114,007 818,370 2,444,433 Total Cost of sales 1,114,007 818,370 2,444,433 6 Operating expenses Accounting expenses - 2,970 13,540 Auditor's remuneration for annual audit - Deloitte 2,275 2,150 62,875 Consulting & advisory 140,195 149,005 317,810 Share-based payments 5,670 13,194 24,440 Salaries & wages 346,795 229,972 475,075 Kiwisaver contribution 6,762 3,910 8,361 Foreign exchange losses 111 35 (54) Office Rent 18,445 16,242 33,314 Finish wine storage 68,581 44,548 104,907 Other expenses 252,515 181,045 309,384 841,349 643,071 1,349,652 7 Equity Share Capital Number Balance of ordinary share capital at 1 July 2017 290,872,000 15,174,626 Ordinary shares issued during the period - - Share options exercised during the period - - Balance at 31 (unaudited) 290,872,000 15,174,626 8
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS For the six months ended 31 7 Equity(continued) Number Balance of ordinary share capital at 1 July 2017 290,872,000 15,174,626 Ordinary shares issued during the period - - Cash contribution from option holders - - Share options exercised during the period - - Balance at 30 (audited) 290,872,000 15,174,626 Number Balance of ordinary share capital at 1 July 2018 290,872,000 15,174,626 Ordinary shares issued during the period - - Cash contribution from option holders - - Share options exercised during the period - - Balance at 31 (unaudited) 290,872,000 15,174,626 Share-based payment reserve Number Balance of ordinary share capital at 1 July 2017 2,400,000 73,712 Share based expenses for the period - 13,194 Share options granted during the period - - Share options exercised during the period - - Balance at 31 (unaudited) 2,400,000 86,906 Number Balance of ordinary share capital at 1 July 2017 2,400,000 73,712 Share based expenses for the period - 24,440 Share options granted during the period - - Share options exercised during the period - Balance at 30 (audited) 2,400,000 86,906 Number Balance of ordinary share capital at 1 July 2018 2,400,000 98,152 Share based expenses for the period - 5,669 Share options granted during the period - - Share options exercised during the period - - Balance at 31 (unaudited) 2,400,000 103,821 Total number of security registered as at 31 293,272,000 At 31, share capital comprised 293,272,000 authorised and issued shares (31 : 293,272,000). Other than the 2,400,000 shares issued under the Group's Employee Share Ownership Plan (ESOP) all issued share are fully paid. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to vote at meetings of the Company and on any written resolution and rank equally with regards to the Company s residual assets. Proportionate rights for the holders of unpaid shares issued under ESOP - until a Share is fully paid it shall have the same rights and privileges as an Ordinary Share but only in the proportion to which it has been paid up. For example, if a Share is 50% paid up it will confer half of a right to vote on a poll at a meeting of shareholders and a right to receive half of the amount of any dividend paid on an Ordinary Share. However, the Shares will carry identical rights to Ordinary Shares in terms of entitlements to participate in any issue of equity (including securities convertible into equity capital) in the Company. Issue of shares MWE has issued no shares (31 : nil) or share options (31 : nil) during the 31. And no existing share options has been exercised during the 31 (31 : nil) 9
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS For the six months ended 31 8 Cash and bank balances Cash at bank (ANZ Bank, BNZ Bank and Industrial Commercial Bank of China) Term deposit at bank (ANZ Bank and Industrial Commercial Bank of China) 214,668 466,375 498,821 - - - 214,668 466,375 498,821 Cash and cash equivalents comprise cash on hand, cash at bank and investments on call or in short-term deposits with an initial maturity of 3 months or less. 9 Inventories Wines bottled 1,002,272 1,254,257 1,540,459 Wines - work in progress 1,126,004 755,085 1,338,210 Dry goods 169,785 188,574 173,422 Total wine in inventory and work in progress 2,298,061 2,197,916 3,052,091 Impairment of Inventory Balance at the beginning of the period 152,477 1,293,761 1,293,761 Provision provided during the period - - 152,477 Inventory written off during the period - - (1,293,761) Balance at the end of the period 152,477 1,293,761 152,477 Inventories are valued at the lower of cost, net realisable value. Cost is calculated on an FIFO basis. 10 Biological work in progress restated Growing costs related to next harvest 1,410,625 1,129,227 248,599 The growth on the vines in the period from last harvest to 31 cannot be reliably measured due to the lack of market information and the variables in completing the biological transformation process between the time of harvest and the balance date. The cost of agricultural activity in the period to 31 has been recognised as biological work in progress for the next harvest. This assumes the cost of the agricultural activity approximates the fair value of the biological transformation that has occurred in that period. The value of biological work in progress at balance date was 1,410,625 (31 : 1,129,227) Reclassification of comparative figures in the condensed consolidated statement of comprehensive income During the last financial year, the Directors reclassified the depreciation on vines & vineyards to Biological work in progress and subsequently to cost of sales at harvest to reflect the nature of these items being intricate to the cost of producing grapes and bottles wines for sale. Prior year comparative figures () have also been reclassified for consistency with current year presentation. This change has been made in order to produce users of the financial statements with a more comparable benchmark for measuring cost of sales and improve the understanding of the financials overall. 10
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS For the six months ended 31 December 10 Biological work in progress (continued) The differences arising from the reclassification is noted below: Reclassification As previously Comparative reported reported Biological work in progress 1,012,203 117,024 1,129,227 Depreciation 220,470 (117,024) 103,446 Tax expense (237,380) 32,959 (204,421) Deferred tax asset 886,114 (32,959) 853,155 1,232,673-1,232,673 11 Accounts receivable Trade receivables (net of provision for doubtful debts) 338,396 805,128 1,071,235 The standard credit terms on sales of goods given to domestic bottled wine customers are 20th of month following the issue of invoice. Before accepting any new customer, the Group assess the potential customer's credit quality and defines credit limits by customer. For overseas and major customers, credit quality is assessed individually. Clients with customised purchase orders might receive a different payment term, normally not longer than 180 Days. 12 Borrowings Loan - ICBC 6,100,000 6,100,000 6,100,000 6,100,000 6,100,000 6,100,000 Borrowing from major shareholder 152,855 - - 152,855 - - Current 6,100,000 6,100,000 6,100,000 Non-current 152,855 - - 6,252,855 6,100,000 6,100,000 A subsidiary of the Group entered into a loan agreement with ICBC on 18 December 2014 for loan amount of 6.1 million. The loan is secured by way of registered charge over land located at Blind River Loop Road, Seddon. The loan is interest only and as such no principle repayments have been made. The interest rate at 31 was 4.78%. The loan was refinanced by the group and will mature on 30 September 2019. The Group has obtained a loan facility with its major shareholder, Min Jia. Total amount of this facility was capped at 500,000. The loan is interest fee and payable on 31 July 2020. Borrowings are initially recognised at the fair value of the consideration received, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. 11
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS For the six months ended 31 December 13 Contingent Liabilities There were no contingent liabilities as at 31. Previously, there was a possible breach to Overseas Investment Act, as at 31, the Overseas Investment Office (OIO) formally concluded its investigation into the breaches and issued a warning letter to MWE and Mr. Min Jia. In the warning letter, the OIO states that it considers that the breaches were at the low end of the range for possible breaches of the Act. The warning letter confirms that the OIO has decided to take no further enforcement action with respect to the breaches. 14 Capital Commitments There was no capital expenditure commitment as at 31 (31 : nil). 15 Related Party Disclosures (a) Identity of related party The Group has a related party relationship with its key management personnel. All members of the Group are considered to be the related parties of the Parent, Marlborough Wine Estates Group Limited (MWE). This includes the subsidiaries identified below. This has been remained the same as last year. Subsidiaries Marlborough Vineyard Group Limited Otuwhero Trustee Limited O:TU Investments Limited MB Wine Limited Principal Activity International Marketing Wine production, sales and marketing Vineyards operation Music Bay trade mark Proportion of ownership Accounting balance date Jurisdiction 100% 30 June New Zealand 100% 30 June New Zealand 100% 30 June New Zealand 100% 30 June New Zealand The Group has a related party relationship with the entities below: New Zenith International Trading (Shanghai) Co., Ltd (NZIT) Lily Investments Company Limited Lily Investments 227 Limited Blind River Irrigation Limited Lily Nelson Centro LP Lily Nelson Altro LP Lily investment 265 Trust PersoVino By NOA GmbH Flowerzone International Ltd OTU Australia Pty Ltd Min Jia, the founder, major shareholder and director of MWE, owns NZIT in China. NZIT sells, distributes and markets MWE s wine in China. Min Jia and Ly Lee, directors of MWE, own Lily Investment Company Limited. Min Jia and Ly Lee, directors of MWE, own Lily Investment 227 Limited. The Group holds 7.8% ownership in Blind River Irrigation Limited. Min Jia and Ly Lee, directors of MWE, are ultimate beneficiaries of a trust who is a partner in Lily Nelson Centro LP. Min Jia and Ly Lee, directors of MWE, are ultimate beneficiaries of a trust who is a partner in in Lily Nelson Altro LP. Min Jia and Ly Lee, directors of MWE, are beneficiaries of Lily Investment 265 Trust. Jan Kux, winemaker of MWE, owns PersoVino By NOA GmbH. Danny Chan, director of MWE, is a director and shareholder in Flowerzone International Ltd. Catherine Ma, CEO of MWE, is a close relative of the director of OTU Australia Pty Ltd. 12
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS For the six months ended 31 December 15 Related Party Disclosures (continued) (b) Transactions with related party 12 months ended Transaction value Wine Sales New Zenith International Trading (Shanghai) Co., Ltd 117,169 182,880 300,384 Lily Nelson Altro LP 1,821 2,970 2,970 Lily Investment 265 Trust - - 25,512 PersoVino By NOA GmbH - 4,704 4,704 Flowerzone International Ltd 8,392-4,284 OUT Australia Pty Ltd 49,364 - - Office rent and other payments Lily Investments Company Ltd 17,865-36,636 Lily Investments 227 Ltd 17,868-35,736 Blind River Irrigation Ltd 2,298 5,294 32,463 Assets/(liability) New Zenith International Trading (Shanghai) Co., Ltd - 320,223 - Transactions with Directors and Key Management Personnel Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the entity, either directly or indirectly. The key management personnel are the directors and senior officers of the Group. 12 months ended Directors' Fees Min Jia (Executive Chairman) 22,500 22,500 45,000 Ly Lee 10,000 10,000 20,000 Jack Zhong Yin 15,950 15,000 34,334 Danny Chan 20,000 20,000 40,000 Songyuan Huang 15,000 15,000 30,000 Total Directors' Fees 83,450 82,500 169,334 Assets/(liability) Min Jia (Executive Chairman) (18,750) (3,750) (3,750) Ly Lee (8,333) (1,667) (1,667) Jack Zhong Yin - - - Danny Chan (10,000) (10,000) (30,000) Songyuan Huang - - - Share-based payments for directors Jack Zhong Yin 3,509 8,171 16,264 Total Share-based payments for directors 3,509 8,171 16,264 Senior officers compensation (excludes directors) Short-term employee benefits 105,931 103,755 265,759 Share-based payments 2,160 5,023 8,176 Total senior officers compensation (excludes directors) 108,091 108,778 273,935 13
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS For the six months ended 31 December 15 Related Party Disclosures (continued) 12 months ended Shareholder loan- Min Jia Amount owed to Min Jia at the beginning of the period - - - Amount advanced by Min Jia during the period 152,855 - - Amount withdrawn by Min Jia during the period - - - Amount owed to Min Jia at the end of the period 152,855 - - Amounts owing from related parties Blind River Irrigation Ltd-Loan 3,203 8,443 3,203 3,203 8,443 3,203 Other related party transactions during the period Wine purchased by shareholders and senior officers 400 3,324 3,324 Payments reimbursed to senior officers and shareholders 5,768 1,770 23,897 Irrigation water charged by Blind River Irrigation Ltd 1,010 5,294 28,228 All shareholder loan balances are interest free and are not repayable within 12 months of signing the financial statements. No amounts owed by related parties have been written off or forgiven during the year. All other related party balances are repayable within 12 months. The loan from shareholder is unsecured and has been subordinated in favour of all other creditors of the company. The shareholder has also agreed not to demand repayment for any portion of the loan for a period of no less than 12 months following the approval of the financial statements. 16 Notes to Cash Flow Statement restated 12 months ended Reconciliation of net profit after tax to net cash flow from operating activities: Net (loss) / profit after tax (571,630) (633,060) (1,706,913) Add: Non-cash items Amortisation 3,005 88,495 176,991 Depreciation 109,813 103,446 467,081 Tax expense (218,700) (204,421) (117,034) Loss on asset disposal - (898) 1,308 Impairment loss - - 1,194,689 Foreign exchange movement 111 35 (54) Share-based payments 5,669 13,194 24,440 Withholding tax adjustment - - 2,006 Other non-cash adjustment - - 28,315 (Increase) / Decrease in assets: (Increase) / Decrease in accounts receivables 732,839 1,198,068 931,958 (Increase) / Decrease in GST receivable 56,512 32,266 (51,795) (Increase) / Decrease in inventory & biological WIP (284,250) (228,073) 318,644 (Increase) / Decrease in prepayments 14,213 15,406 37,916 (Increase) / Decrease in related party loan - - 5,240 Increase / (Decrease) in liabilities: Increase / (Decrease) in trade payables 89,459 10,658 66,466 Increase / (Decrease) in revenue received in advance 72,466 - (22,230) Increase / (Decrease) in tax paid 2,292 3,891 1,725 Increase / (Decrease) in accrued expenses (79,087) (41,812) 27,375 Net cash (out flows)/ inflows from operating activities (67,288) 357,194 748,840 14
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS For the six months ended 31 December 17 Subsequent Events There have been no subsequent events since the balance sheet date which would impact on these financial statements. 18 Earnings per share (a) Basic earnings per share Basic earnings per share is calculated by dividing the profit/(loss) attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares. Year Ended Number Number Number Number of ordinary share at the beginning of the period 290,872,000 290,872,000 290,872,000 Ordinary shares issued and paid during the period - - - Number of ordinary share at the end of period 290,872,000 290,872,000 290,872,000 Weighted average number of ordinary shares 290,872,000 290,872,000 290,872,000 Year Ended restated (Loss) / profit attributable to equity holders of the Company (in dollars) (571,630) (633,060) (1,706,913) Weighted average number of ordinary shares on issue 290,872,000 290,872,000 290,872,000 Basic (loss) per share (in dollars) (0.002) (0.002) (0.006) (b) Diluted earnings per share Same earning was used for diluted earnings per share Year Ended Weighted average number of ordinary shares used in the calculation of basic earnings per share 290,872,000 290,872,000 290,872,000 Share options 2,400,000 2,400,000 2,400,000 Weighted average number of ordinary shares used in the calculation of diluted earnings per share 293,272,000 293,272,000 293,272,000 Diluted (loss) per share (in dollars) (0.002) (0.002) (0.006) (c) Net tangible assets per share Net tangible assets (in dollars) 13,486,972 13,892,351 14,049,928 Net tangible assets per share (in dollars) 0.046 0.047 0.048 19 Dividends Declared and Paid No dividends were declared or paid relating to the Group results for the 31 (31 : nil). 15
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS For the six months ended 31 December 20 Segment Reporting The Group operates in the wine industry and is considered to operate in a single segment. The Group operates in one principal geographical area - Marlborough, New Zealand. During the financial year, majority of Group's sales were generated from suppling products to customers based in New Zealand, United States and China. At balance date, the Group held all non-current assets in Marlborough, New Zealand. The below represents a geographical analysis of sales: Sales New Zealand 540,433 187,820 2,611,910 United States 480,264 480,000 984,989 China 209,011 182,880 295,680 Others 118,040 92,877 92,405 Total 1,347,748 943,577 3,984,984 For the 31, there were 2 customers (31 : 2 customers) who individually accounted for greater than 10% of the Group's total sales. The following table shows only the amount which is greater than 10% of the Group's total sales. Customer 1 - - 1,087,159 Customer 2-182,880 - Customer 3 - - 511,506 Customer 4 480,264 480,000 927,000 Customer 5 366,536 - - Total 480,264 662,880 2,525,665 16
Company Directory As at 31 Company Registration Number 5639568 Registered office Directors Auditors Solicitors Bankers NXT Advisor Share Registrar Level 3, 205 Queen Street Auckland Central New Zealand Min Jia (Chairman) Ly Lee Jack Zhong Yin Danny Chan Songyuan Huang Deloitte Deloitte Centre 80 Queen Street P.O. Box 115033, Auckland 1140 New Zealand Duncan Cotterill Level 2, Chartered Accountants House 50 Customhouse Quay, Wellington Industrial Commercial Bank of China (New Zealand) Limited ANZ Bank Limited Bank of New Zealand CM Partners Limited Level 26, PWC Tower, 188 Quay Street, Auckland 1140 Link Market Services Limited Deloitte Centre, 80 Queen Street, Auckland 17
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