Company No: 09347341 (England and Wales)

Contents

• Company Information
• Accountant's Report
• Balance Sheet
• Notes to the financial statements

DIRECTOR	D N Prior
REGISTERED OFFICE	c/o DWP LLP
	20 Fenchurch Street
	London
	EH3M 3AG
	United Kingdom
COMPANY NUMBER	09347341(England and Wales)
ACCOUNTANT	Deloitte LLP
	1 New Street Square
	London
	EC4A 3HQ
	United Kingdom
BANKERS	Royal Bank of Scotland
	St Andrew Square
	Edinburgh
	EH2 1AF
	United Kingdom
SOLICITORS	DWP LLP
	20 Fenchurch Street
	London
	EC3M 3AG
	United Kingdom

In order to assist you to fulfil your duties under the Companies Act 2006, we have prepared for your approval the financial statements of Bladnoch Distillery Limited for the financial year ended 30 June 2019 which comprises the Balance Sheet and the related notes 1 to 13 from the Company’s accounting records and from information and explanations you have given us.

We are subject to the ethical and other professional requirements of the Institute of Chartered Accountants in England and Wales (ICAEW) which are detailed at _http://www.icaew.com/en/members/regulations-standards-and-guidance/_.

It is your duty to ensure that Bladnoch Distillery Limited has kept adequate accounting records and to prepare statutory financial statements that give a true and fair view of the assets, liabilities, financial position and loss of Bladnoch Distillery Limited. You consider that Bladnoch Distillery Limited is exempt from the statutory audit requirement for the financial year.

We have not been instructed to carry out an audit or a review of the financial statements of Bladnoch Distillery Limited. For this reason, we have not verified the accuracy or completeness of the accounting records or information and explanations you have given to us and we do not, therefore, express any opinion on the statutory financial statements.

This report is made solely to the Director of Bladnoch Distillery Limited, as a body, in accordance with the terms of our engagement letter dated 10 October 2019. Our work has been undertaken solely to prepare for your approval the financial statements of Bladnoch Distillery Limited and state those matters that we have agreed to state to you in this report in accordance with ICAEW Technical Release 07/16 AAF. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than Bladnoch Distillery Limited and its Director as a body for our work or for this report.

Deloitte LLP
Accountant

1 New Street Square
London
EC4A 3HQ
United Kingdom

22 June 2020

		2019		2018
	Note	£		£
				restated - note 2
Fixed assets
Intangible assets	4	4,737,632		5,081,701
Tangible assets	5	13,078,549		12,827,292
Investments	6	5		5
		17,816,186		17,908,998
Current assets
Stocks	7	5,797,959		4,718,640
Debtors	8	779,661		709,123
Cash at bank and in hand		732,166		681,913
		7,309,786		6,109,676
Creditors
Amounts falling due within one year	9	( 18,113,972)		( 15,381,821)
Net current liabilities		(10,804,186)		(9,272,145)
Total assets less current liabilities		7,012,000		8,636,853
Creditors
Amounts falling due after more than one year	10	( 17,109,094)		( 17,623,473)
Net liabilities		(10,097,094)		(8,986,620)
Capital and reserves
Called-up share capital		100		100
Profit and loss account		( 10,097,194 )		( 8,986,720 )
Total shareholders' deficit		(10,097,094)		(8,986,620)

For the financial year ending 30 June 2019 the Company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.

Director's responsibilities:

• The members have not required the Company to obtain an audit of its financial statements for the financial year in accordance with section 476;
• The director acknowledges their responsibilities for complying with the requirements of the Act with respect to accounting records and the preparation of financial statements; and
• these financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and a copy of the Profit and Loss Account has not been delivered.

The financial statements of Bladnoch Distillery Limited (registered number: 09347341) were approved and authorised for issue by the Director on 22 June 2020. They were signed on its behalf by:

D N Prior Director

1. Accounting policies

The principal accounting policies are summarised below. They have all been applied consistently throughout the financial year and to the preceding financial year.

General information and basis of accounting

Bladnoch Distillery Limited (the Company) is a private company, limited by shares, incorporated in the United Kingdom under the Companies Act 2006 and is registered in England and Wales. The address of the Company's registered office is c/o DWP LLP , 20 Fenchurch Street, London , EH3M 3AG, United Kingdom.

The financial statements have been prepared under the historical cost convention, and in accordance with Section 1A of Financial Reporting Standard 102 (FRS 102) ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ issued by the Financial Reporting Council.

The functional currency of Bladnoch Distillery Limited is considered to be pounds sterling because that is the currency of the primary economic environment in which the Company operates.

Going concern

Since the period under review, the rapid spreading of COVID-19 has become a significant emerging risk to the global economy. The director continues to monitor the impact of the virus on the business as more information about the epidemic emerges. Initial uncertainty on the potential impact on production operating levels, has diminished with changing work practices enabling production to increase to full capacity. This is in response to customer demands for fulfilment of long term contracts. The Company is monitoring the UK Government’s directives and the director acknowledges that the position is changing day by day. However, with reports that the peak of the outbreak has passed, many governments in particular in the UK, US, Europe and Australia are focusing on opening the affected parts of their economies. Economies in these regions are now progressively opening.

During the phases of re-opening the speed of economic recovery is unpredictable leading to difficulty in forecasting. However, the director believes the financial support in place from the Company’s bankers and its shareholder is currently providing adequate resources to meet forecast cash flow needs. Therefore he continues to prepare the financial statements on the going concern basis.

Foreign currency

Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the Balance Sheet date are reported at the rates of exchange prevailing at that date.

Exchange differences are recognised in the Profit and Loss Account in the period in which they arise except for exchange differences arising on gains or losses on non-monetary items which are recognised in the Statement of Comprehensive Income.

Turnover

Turnover is stated net of VAT and trade discounts and is recognised when the significant risks and rewards are considered to have been transferred to the buyer. Turnover from the sale of goods is recognised when the goods are physically delivered to the customer. Turnover from the supply of services represents the value of services provided under contracts to the extent that there is a right to consideration and is recorded at the fair value of the consideration received or receivable. Where a contract has only been partially completed at the Balance Sheet date turnover represents the fair value of the service provided to date based on the stage of completion of the contract activity at the Balance Sheet date. Where payments are received from customers in advance of services provided, the amounts are recorded as deferred income and included as part of creditors due within one year.

Employee benefits

The Company operates a defined contribution scheme. The amount charged to the Profit and Loss Account in respect of pension costs and other post-retirement benefits is the contributions payable in the financial year. Differences between contributions payable in the financial year and contributions actually paid are included as either accruals or prepayments in the Balance Sheet.

Taxation

Current tax
Current tax is provided at amounts expected to be paid (or recoverable) using the tax rates and laws that have been enacted or substantively enacted at the Balance Sheet date.

Deferred tax
Deferred tax arises as a result of including items of income and expenditure in taxation computations in periods different from those in which they are included in the Company's financial statements. Deferred tax is provided in full on timing differences which result in an obligation to pay more or less tax at a future date, at the average tax rates that are expected to apply when the timing differences reverse, based on current tax rates and laws.

Deferred tax assets and liabilities are not discounted.

Intangible assets

Intangible assets acquired as part of an acquisition of a business are capitalised separately from goodwill if the fair value can be measured reliably on initial recognition. Subject to initial recognition, intangible assets are stated at cost less accumulated amortisation and accumulated impairment. The carrying value of intangible assets is reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable. Based on the directors assessment:

Goodwill is amortised over a period of 10 years on a straight line basis.
Intellectual property rights shown as other intangible assets in note 5, are amortised over 20 years on a straight line basis.

Trademarks, patents and licences

Separately acquired patents, trademarks and licences are included at cost and amortised in equal annual instalments over a period of 10 years which is their estimated useful economic life. Provision is made for any impairment.

Tangible fixed assets

Tangible fixed assets are stated at cost or valuation, net of depreciation and any provision for impairment. Depreciation is provided on all tangible fixed assets, other than assets under the course of construction and freehold land, at rates calculated to write off the cost or valuation, less estimated residual value, of each asset on a straight-line basis over its expected useful life, as follows:

Land & Buildings 40 — 50 years (land is not depreciated)
Plant & Machinery 1 — 15 years
Assets under course of construction - depreciation not charged until the asset is brought into use.

Residual value represents the estimated amount which would currently be obtained from disposal of an asset, after deducting estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.

Leases

The Company as lessee
Rentals under operating leases are charged on a straight-line basis over the lease term, even if the payments are not made on such a basis. Benefits received and receivable as an incentive to sign an operating lease are similarly spread on a straight-line basis over the lease term.

Impairment of assets

Assets, other than those measured at fair value, are assessed for indicators of impairment at each Balance Sheet date. If there is objective evidence of impairment, an impairment loss is recognised in the Profit and Loss Account as described below.

Non-financial assets
An asset is impaired where there is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated recoverable value of the asset has been reduced. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use.

Where indicators exist for a decrease in impairment loss, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.

Financial assets
For financial assets carried at amortised cost, the amount of impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets carried at cost less impairment, the impairment loss is the difference between the asset’s carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date.

Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.

Stocks

Stocks are stated at the lower of cost and net realisable value. Cost includes all costs incurred in bringing each product to its present location and condition, as follows:

Raw materials, consumables and goods for resale - Purchase cost on a first-in, first out basis;

Work in progress and finished goods - Cost of direct materials and labour plus attributable overheads based on a normal level of activity.

Net realisable value is based on estimated selling price less any further costs expected to be incurred on completion and disposal.

Financial instruments

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.

Financial assets and liabilities
All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through the Profit and Loss Account, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a financing transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.

Financial assets and liabilities are only offset in the Balance Sheet when, and only when there exists a legally enforceable right to set off the recognised amounts and the Company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Financial assets are derecognised when and only when a) the contractual rights to the cash flows from the financial asset expire or are settled, b) the Company transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or c) the Company, despite having retained some, but not all, significant risks and rewards of ownership, has transferred control of the asset to another party.

Financial liabilities are derecognised only when the obligation specified in the contract is discharged, cancelled or expires.

Investments
Investments in non-convertible preference shares and non-puttable ordinary or preference shares (where shares are publicly traded or their fair value is reliably measurable) are measured at fair value through the Profit and Loss Account. Where fair value cannot be measured reliably, investments are measured at cost less impairment.

2. Prior year adjustment

Amortisation charge

In previous accounting years the goodwill and intellectual property rights have not been amortised. The Company director considers that this provides a fairer presentation of the result and of the financial position of the Company as the goodwill and intellectual property rights are amortised over their useful economic life. The comparative figures in the financial statements and notes have been restated to reflect the amortisation charge. The effects of the charge are summarised below:

The profit and loss account at 30 June 2017 as previous stated was net liabilities of £7,696,676 . The change in accounting policy has resulted in an opening balance adjustment of (£673,082) (representing amortisation of goodwill (£140,168) and intellectual property rights of (£532,914)). The profit and loss account at 1 July 2018 as restated shows net liabilities of £8,369,758.

The amortisation charge has resulted in an increase in the loss for 2018 of (£336,541).

3. Employees

	2019	2018
	Number	Number
Average number of persons employed by the Company during the year, including Director	15	12

4. Intangible assets

	Goodwill	Trademarks, patents and licences	Other intangible assets	Total
	£	£	£	£
Cost
At 01 July 2018	700,841	75,278	5,329,149	6,105,268
At 30 June 2019	700,841	75,278	5,329,149	6,105,268
Accumulated amortisation
At 01 July 2018	210,252	13,944	799,371	1,023,567
Charge for the financial year	70,084	7,528	266,457	344,069
At 30 June 2019	280,336	21,472	1,065,828	1,367,636
Net book value
At 30 June 2019	420,505	53,806	4,263,321	4,737,632
At 30 June 2018	490,589	61,334	4,529,778	5,081,701

Included in other intangible assets are Intellectual Property Rights of £5,329,149 (2018: £5,329,149).

5. Tangible assets

	Land and buildings	Assets under construction	Fixtures and fittings	Total
	£	£	£	£
Cost/Valuation
At 01 July 2018	6,460,755	0	7,304,959	13,765,714
Additions	227,893	155,215	571,113	954,221
Disposals	0	0	( 94,416)	( 94,416)
At 30 June 2019	6,688,648	155,215	7,781,656	14,625,519
Accumulated depreciation
At 01 July 2018	412,305	0	526,117	938,422
Charge for the financial year	152,707	0	465,813	618,520
Disposals	0	0	( 9,972)	( 9,972)
At 30 June 2019	565,012	0	981,958	1,546,970
Net book value
At 30 June 2019	6,123,636	155,215	6,799,698	13,078,549
At 30 June 2018	6,048,450	0	6,778,842	12,827,292

Included in land and buildings is freehold land of £250,000 (2018: £250,000 ) which is not depreciated.
The Company has fixed and floating charges on all of its fixed assets.

6. Fixed asset investments

	Investments in subsidiaries
	£
Cost
At 01 July 2018	5
At 30 June 2019	5
Carrying value at 30 June 2019	5
Carrying value at 30 June 2018	5

Bladnoch Distillery Limited owns 100% of the ordinary shares in its subsidiary undertaking Bladnoch Distillery Pty Limited, which is registered in Australia at L 9 550 Bourke Street, 3000 Melbourne, Australia. The principal activity of Bladnoch Distillery Pty Limited is that of the distribution, sales and marketing of case finished goods.

7. Stocks

	2019	2018
	£	£
Stocks	0	38,006
Raw materials	726,214	404,972
Work in progress	4,627,719	3,887,215
Finished goods	444,026	388,447
	5,797,959	4,718,640

8. Debtors

	2019	2018
	£	£
Trade debtors	177,433	316,952
Amounts owed by Group undertakings	138,492	85,886
Other debtors	463,736	306,285
	779,661	709,123

9. Creditors: amounts falling due within one year

	2019	2018
	£	£
Trade creditors	338,006	492,094
Amounts owed to Group undertakings	831,867	675,476
Other creditors	16,915,471	14,174,490
Other taxation and social security	28,628	39,761
	18,113,972	15,381,821

Included within other creditors is a RBS Invoice Financing (ABL Facility) £4,366,498 (2018 : £2,703,179). During the year the ABL Facility uncommitted revolving credit facility was increased from £3m to £7m. The variable interest rate being the Bank of England base rate plus a margin of 2.25%.

Included within other creditors is a director's loan of £12,315,319 (2018: £11,027,942). Whilst this has been classified as falling due within one year due to the loan being repayable on demand, the director confirms he will not request the loan to be repaid within the next twelve months unless the Company has sufficient funds to do so.

Amounts owed by group undertakings are unsecured, interest free with no specific repayment requirements.

10. Creditors: amounts falling due after more than one year

	2019	2018
	£	£
Bank loans	1,959,997	2,152,321
Amounts owed to Group undertakings	401,272	517,643
Other creditors	14,747,825	14,953,509
	17,109,094	17,623,473

Amounts owed by group undertakings are unsecured, interest free with no specific repayment requirements.

The bank loan is an equipment loan towards the refurbishment of the Distillery over 60 months with a fixed interest rate of 4.33%.

Amounts repayable after more than 5 years are included in creditors falling due over one year:

	2019	2018
	£	£
Other creditors	14,603,820	14,807,496
	14,603,820	14,807,496

11. Related party transactions

Included within creditors: amounts falling due within one year is a director's loan of £12,315,319 (2018 : £11,027,942) owed to D N Prior, a director of the Company. The loan is unsecured and interest free. The total aggregate director's remuneration for the year was £nil (2018 : £nil). The director is the only key management personnel of this Company.

In accordance with FRS 102 Section 33, the Company has not disclosed any related party transactions between this company and other group companies as they are wholly-owned entities.

Included within other creditors amounts falling due after more than one year is an unsecured loan of £14,603,820 (2018 : £14,807,496) owed to the Prior Family Foundation (PFF). The loan is a 30 year loan with no principal repayments required during the term. The revised net interest rate effective from 10 January 2019 to 9 January 2020 is 5.24%. This is made up of a base rate of 1.74% and an interest margin of 3.5%.

Included within other creditors amounts falling due after more than one year is a loan of £144,005 (2018 : £146,013) owed to Kiania Pty Ltd, a related party through the ultimate controlling party David Prior.

12. Post Balance Sheet events

Since the period under review, the rapid spreading of COVID-19 has become a significant emerging risk to the global economy. Management continue to monitor the impact of the virus on the business as more information about the epidemic emerges and adjust the business’ operations to respond to the circumstances. The director notes this is a non-adjusting post balance sheet event. Please refer to going concern section in the accounting policies in note 1 for further information.

13. Ultimate controlling party

The Company is a wholly owned subsidiary of Pure Scot Pty Ltd,; a private limited company registered in Australia which is regarded as the immediate controlling party.

The ultimate controlling party is considered to be David Prior, who is the sole Director of the Company.