LARK DISTILLING CO. LTD — Annual Report 2014

Aug 28, 2014

MONTEC INTERNATIONAL LIMITED ABN 62 104 600 544 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2014

1. Details of the reporting period

Reporting period	Previous corresponding period
30 June2014	30 June2013

2. Results for announcement to the market

	Key Information	Current period $	Previous corresponding period $	Change %	Amount change $
2.1	Revenuesfromordinary activities	199,522	46,440	330	153,082
2.2	Loss from ordinary activities after taxattributable tomember	(421,748)	(588,713)	28	166,965
2.3	The total comprehensive loss for the period attributable tomember	(418,127)	(602,258)	318	184,131

2.4 Dividends/Distributions

No dividends declared in current or prior year.

2.5 Record date for determining entitlements to dividends N/A.

• 2.6 Refer point 14 below for explanation of figures in 2.1 to 2.3 above

3. Statement of Comprehensive Income and Other Comprehensive Income

Refer attached summary financial statements.

4. Statement of Financial Position

Refer attached summary financial statements.

5. Statement of Cash Flows

Refer attached summary financial statements.

6. Details of dividends or distributions

N/A

7. Details of dividend reinvestment plan

N/A

8. Statement of Changes in Equity

Refer attached summary financial statements.

9. Net tangible assets per security

	2014	2013
Net tangible assets per ordinary share	$0.001	$(0.0001)

MONTEC INTERNATIONAL LIMITED ABN 62 104 600 544 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2014

10. Details of entities over which control has been gained or lost during the period

N/A

11. Details of associates and joint venture entities

N/A

12. Other significant information

Refer point 14 below .

13. Accounting standards used by foreign entities

N/A

14. Commentary on results and explanatory information

The loss of the Group for the financial year after providing for income tax amounted to $421,748 (2013: $588,713).

During the year the Group acquired approximately a one-third ownership interest in Lark Distillery Pty Limited, a Tasmanian based whiskey distiller & distributor.

On 1 May 2014 the Company announced a renounceable Rights Issue to raise approximately $3,177,771 to be applied to the working capital needs of the Company. The Rights Issue was completed on 28 May 2014, 2,830,385,483 ordinary shares were issued at $0.001 per share to raise $2,830,385.

i. China business

During the year the Group maintained Chinese operations to the level of minimum presence, and the management continued to investigate other product opportunities, both within and outside the dairy category.

ii. Australia royalties

Royalties from licenses held in Australia have ceased operations in 2014 (2013: $30,178).

Financial Position

The net assets of the Group have increased by $2,082,760 from 30 June 2013 to net assets of $1,976,733 in 2014. This increase is largely due to the following factors:

• Operating expenses incurred during the year;

• Derivative revenue of $197,923;

• Interest expenses of $357,354; partially offset by

• Net proceeds from Rights issues of $2,500,887.

The Group’s working capital, being current assets less current liabilities, has decreased from net current liabilities of $106,027 in 2013 to $438,154 in 2014. It should be noted that the total current liabilities in 2014 includes an amount of $265,518 which shareholder approval shall be sought at the 2014 Annual General Meeting to convert such amount into shares in the company. In addition, current liabilities includes interest payable on convertible notes (converted into shares on 28 May 2014) amounting to $139,646. To

MONTEC INTERNATIONAL LIMITED ABN 62 104 600 544 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2014

comply with Chapter 7 of the Listing Rules shareholder approval is to be sought at the 2014 Annual General Meeting to authorize the issue of shares in the Company in full satisfaction of the interest payable.

15. Audit

The report is based on accounts which are in the process of being audited.

Montec International Limited ABN 104 600 544 Controlled Entity

MONTEC INTERNATIONAL LIMITED

ACN 104 600 544

CONSOLIDATED ENTITY

SUMMARY FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014

Montec International Limited ABN 104 600 544 Controlled Entity

TABLE OF CONTENTS

Statement of Profit or Loss and Comprehensive Income Statement of Financial Position Statements of Changes in Equity Statement of Cash Flow Notes to the Financial Statements

Montec International Limited ABN 104 600 544 Controlled Entity

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2014

Note Revenue Derivative income Compliance and professional fees Administrative expenses Travel expenses Insurance expenses Impairment of financial assets Impairment of investments Finance costs Reversal of prior year accruals Loss before income tax Income tax expense Loss for the year Other comprehensive income Exchange differences on translating foreign operations Other comprehensive income for the period, net of tax Total comprehensive income for the period Loss for the period attributable to members of the parent entity Total comprehensive income for the period attributable to members of the parent entity Basic and diluted earnings per share (cents per share) 1	Consolidated Group 2014 2013 $ $ 1,599 46,440 197,923 - (176,009) (152,131) (22,286) (19,261) (36,177) (3,933) (25,444) (26,120) - (398,212) (4,000) - (357,354) (35,496) - -
	(421,748) (588,713) - -
	(421,748) (588,713)
	3,621 (13,545)
	3,621 (13,545)
	(418,127) (602,258)
	(421,748) (588,713)
	(418,127) (602,258)
	(0.0003) (0.0008)

The Summary Financial Statements should be read in conjunction with the accompanying notes.

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Montec International Limited ABN 104 600 544 Controlled Entity

STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2014

Note CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Financial assets Intangible assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Short-term provisions Financial liabilities TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Financial liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY	Consolidated Group 2014 2013 $ $ 389,240 286,489 19,551 21,608 3,387 3,395
	412,178 311,492
	2,414,887 - - -
	2,414,887 -
	2,827,065 311,492
	368,621 201,326 16,193 16,193 465,518 200,000
	850,332 417,519
	- -
	- -
	850,332 417,519
	1,976,733 (106,027)
	23,288,947 20,788,060 132,696 121,493 (21,444,910) (21,015,580)
	1,976,733 (106,027)

The Summary Financial Statements should be read in conjunction with the accompanying notes.

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Montec International Limited ABN 104 600 544 Controlled Entity

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2014

FOR THE YEAR ENDED 30 JUNE 2014
Consolidated Group Balance at 1 July 2012 Total comprehensive income for the period Shares issued during the year Shares issue cost Balance at 30 June 2013 Total comprehensive income for the period Foreign exchanges arising from translating Shares issued during the year Shares issue cost Balance at 30 June 2013	Reserves Issued Capital $ Accumulated Losses $ Share Options $ Foreign Exchange $ Total $ 20,200,910 (20,426,867) - 135,038 (90,919) - (588,713) - (13,545) (602,258) 703,062 - - - 703,062 (115,912) - - - (115,912)
	20,788,060 (21,015,580) - 121,493 (106,027) - (421,748) - 3,621 (418,127) - (7,582) - 7,582 - 2,830,385 - - - 2,830,385 (329,498) - - - (329,498)
	23,288,947 (21,444,910) - 136,696 1,976,733

The Summary Financial Statements should be read in conjunction with the accompanying notes.

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Montec International Limited ABN 104 600 544 Controlled Entity

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2014

Note CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payment for Investments Net cash provided by investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Shares issue cost Repayment of borrowings Proceeds from borrowings Net cash provided by financing activities Net increase in cash and cash equivalents held Cash and cash equivalents at start of year Cash and cash equivalents at end of year	Consolidated Group 2014 2013 $ $ - 37,716 (250,366) (194,036) 1,599 2,032
	(248,767) (154,288)
	(2,414,887) -
	(2,414,887) -
	2,830,385 703,062 (329,498) (115,912) - (350,000) 265,518 -
	2,766,405 237,150
	102,751 82,862 286,489 203,627
	389,240 286,489

The Summary Financial Statements should be read in conjunction with the accompanying notes.

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Montec International Limited ABN 104 600 544 Controlled Entity

NOTES TO THE SUMMARY FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014

OTE 1: EARNINGS PER SHARE a. Reconciliation of earnings to net loss Net loss Earnings used in the calculation of basic and diluted EPS b. Applying AASB 133: Weighted average number of ordinary shares outstanding during the year used in calculation of basic EPS Weighted average number of options outstanding not treated as dilutive Weighted average number of ordinary shares outstanding during the year used in calculation of dilutive EPS	Consolidated Group $ $ 2014 2013 (421,748) (588,713)
	(421,748) (588,713)
	1,322,909,439 772,250,985 - - 1,322,909,439 772,250,985

NOTE 1: EARNINGS PER SHARE

(i) As options exercise prices are in excess of the average market price for ordinary shares and the Company has made a loss during the year, they are considered anti-dilutive.

NOTE 2: SEGMENT REPORTING

Identification of reportable segments

Montec International Limited has identified its operating segments based on the internal reports that are reviewed and used by the board of directors (chief operating decision makers) in assessing performance and determining the allocation of resources.

The operations of the Group, being investing in Lark Distillery Pty Ltd in Australia and the sale and marketing of monounsaturated dairy technology and products in Australia and China. Operating segments are therefore determined on the same basis.

Basis of accounting for purposes of reporting by operating segments

Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker with respect to operating segments are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.

Inter segment transactions

Segment revenues, expenses and results include transfers between segments. The prices charged on inter-segment transactions are the same as those charged for similar goods to parties outside of the consolidated group at an arm’s length. These transfers are eliminated on consolidation.

Segment assets

Assets include all assets used by a segment and consist principally of cash, receivables, inventories, intangibles and property, plant and equipment, net of allowances and accumulated depreciation and amortisation. While most such assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly by two or more segments is allocated to the segments on a reasonable basis.

Segment liabilities

Liabilities consist principally of accounts payable, employee entitlements, accrued expenses, provisions and borrowings.

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Montec International Limited ABN 104 600 544 Controlled Entity

NOTES TO THE SUMMARY FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2014

NOTE 2: SEGMENT REPORTING (CONTINUED)

2014 REVENUE Interest income Other income Total segment revenue Total revenue SEGMENT RESULT Expenses Loss before income tax expense Income tax expense Loss after income tax expense ASSETS Segment assets Total assets LIABILITIES Segment liabilities Total liabilities OTHER Depreciation and amortisation of segment assets OTHER NON-CASH SEGMENT EXPENSES Impairment of investments	Australia China Eliminations Consolidated Group $ $ $ $ 1,599 - - 1,599 197,923 - - 197,923	Australia China Eliminations Consolidated Group $ $ $ $ 1,599 - - 1,599 197,923 - - 197,923
	199,522 -	- 199,522
	(616,852) (4,418)	199,522 - (621,270)
	(417,330) (4,418) 2,823,127 3,938	(421,748) -
		(421,748)
		- 2,827,065
	2,823,127 3,938	- 2,827,065
	790,230 444,321 (384,218) 850,332
	790,230 444,321 (384,218) 850,332
	- - - - 4,000 - - 4,000

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Montec International Limited ABN 104 600 544 Controlled Entity

NOTES TO THE SUMMARY FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2014

NOTE 2: SEGMENT REPORTING (CONTINUED)

2013 REVENUE External sales Interest income Total segment revenue Total revenue SEGMENT RESULT Expenses Loss before income tax expense Income tax expense Loss after income tax expense ASSETS Segment assets Total assets LIABILITIES Segment liabilities Total liabilities OTHER Depreciation and amortisation of segment assets OTHER NON-CASH SEGMENT EXPENSES Impairment of financial assets	Australia China Eliminations Consolidated Group $ $ $ $ 30,178 - - 30,178 16,262 - - 16,262	Australia China Eliminations Consolidated Group $ $ $ $ 30,178 - - 30,178 16,262 - - 16,262
	46,440 -	- 46,440
	(630,801) (4,352)	46,440 - (635,153)
	(584,361) (4,352) 308,034 3,458	(588,713) -
		(588,713)
		- 311,492
	308,034 3,458	- 311,492
	357,739 451,580 (391,800) 417,519
	357,739 451,580 (391,800) 417,519
	- - - - 398,212 - - 398,212

Major customer

The Group supplies one single customer in the Australia segment which accounts for 100% of external revenue (2013: 100%).

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Montec International Limited ABN 104 600 544 Controlled Entity

NOTES TO THE SUMMARY FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2014

NOTE 3: EVENTS SUBSEQUENT TO REPORTING DATE

No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

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