LARK Distilling Co. Ltd.

Good morning and welcome to LAC Distilling's half-year FY26 results for the period ending 31 December 2025. Today we have LAC CEO Stuart Gregor and CFO Ian Short presenting. There will be opportunity at the end of the presentation to ask questions. Please submit your questions in the function at the bottom of the screen. I will now pass to Stu.

Thanks, Mel. Good morning, everyone. Thanks for joining us here for Lark's half-year results. I'm personally quite honoured and very thrilled to be presenting my first set of results as Lark's CEO seven weeks into the job. In 2023, under the leadership of my predecessor, CEO Sash Sharma, Lark established three foundational strategic projects. So some financial highlights. The first half In the last few months, we have seen a significant increase in sales revenue of $8.7 million for the half, a 10% increase. net sales saw an 18% increase compared to the first half of FY25. Gross profit for the half was $5.1 million, an increase of 2%. Gross margins were 58%, and while these were down due to the utilisation of our higher-cost acquired inventory, underlying margins remained stable at 63%. Again, Ian will detail the utilisation of inventory and the fair value impact on our financial statements a little later. Our net operating cash outflows have improved by approximately $0.3 million, or 10%. Improved net operating cash outflows reflected stronger underlying performance driven by stronger sales, moderated distilling through the commissioning of Potville, and increased interest income earned on cash balances. These improvements were partially offset by temporary timing impacts. Cash and capital discipline remains one of our key priorities, and we ended the half with $18.3 million of cash, providing flexibility to pursue our growth strategy as we move through this financial year and into the next. Operational execution. Operationally, we continue to execute on our strategic priorities. The Lark brand restage has been all but completed, with a refreshed brand positioning, including new packaging and bottle size, to elevate Lark as a leader in New World Whiskey on the international stage. Operationally, much of the groundwork this half was preparing for the official Lark brand restage launch. and Global Travel Retail to follow in H2, with incremental ranging and distribution secured for the launch across all channels. March 26th this year is the go-live date for our direct-to-consumer channels and our partners in the domestic and travel retail markets will begin selling the new look Lark from the back end of April this year. Importantly, the redevelopment of our long-term brand home in Pontville has now been finalised, and the completed site development is showing encouraging improvements across safety, quality and efficiencies. The blending facility at Pontville is now operational with whisky marriages undertaken as part of the commissioning process, resulting in significant quality improvements to final products and efficiency and labour utilisation. The finalisation of the Pontville development sees the completion of a future-proofed single-site operation and removal of production bottlenecks, enabling scaling to support growth. Pondville's annual distilling capacity is now circa 520,000 litres at bottle strength and 43% alcohol by volume, with a modular expansion that provides headroom for distilling volumes to increase as sales expand. LARC is looking to create repeatable, diversified revenue streams to support international sales momentum and domestic leadership. Renovations at Pondville and our Davie Street Hobart Celeb and consumer experience. The Davie Street Seller Door was reopened just prior to Christmas, with a reopening event held only last week, which was a tremendous success, and a leading member of the Tasmanian media called it a masterclass in how to do this style of event. We are winning over the Tasmanian media. E-commerce continues to play a pivotal role in our growth, and we continue to improve this channel operationally and support sales with specialty releases. Internationally, our momentum continued with a newly signed distribution agreement in global travel retail as we look to expand into international airports for the second half of this financial year. And growth in our direct export business now sees us exporting to 10 Asian markets. Our third strategic priority is cash and capital discipline. And as mentioned in the previous slide, we improved net operating cash outflows, notwithstanding ongoing marketing investment. We remain well Most importantly, we strongly believe that the continued execution across all three strategic pillars will drive long-term value for the business and shareholders alike. So, some good news. Positive momentum in net sales. This slide highlights the importance of the initiatives the team have undertaken over the past three years to drive growth across our three strategic pillars. LARC has continued to deliver improvements aligned to our strategic pillars, and there is no better reflection of this hard work than improving Nexars. The actions we have taken have set the foundation for LARC's next stage of growth. The trajectory of Nexars is especially encouraging when viewed against a challenging backdrop for the spirits market and consumer discretionary spending more broadly. LARC has sustained robust growth, even as the category overall has faced a few headwinds. I'd like to call out that in Q3 F25, Lark benefited from the initial release of the Seppelsfield Rare Cask Series with the Whiskey Club, the world's biggest online whiskey club. The comparable release for F26 is scheduled for Q4. Nevertheless, we remain confident that the forthcoming official launch of the brand restate will lay a strong foundation to support long-term sales momentum. So, building long-term value. Critically, the long-anticipated restaging of the Lark brand and portfolio has formed a cornerstone of our strategic vision. This initiative has given rise to an entirely refreshed portfolio, distinguished by innovative branding and a sophisticated new look and feel, carefully crafted to resonate with the global luxury market. Beyond commercial repositioning, the brand's restage represents a powerful opportunity to elevate not only Lark, but Tasmanian and our unique provenance and our unrivalled craftsmanship. The initial portfolio comprises three core expressions in 700ml bottles, as you can see on the slide, a change that removes a long-standing barrier to international purchase and broadens accessibility. These initial launches will be supported by travel retail exclusives in addition to other product offerings being developed. The all-new visual identity has been created to ensure immediate cut-through in a crowded category. While simultaneously celebrating the distinctive elements that define Tasmania, our uncompromising climate, pristine waters and the creativity of our distillers converge to produce whiskies of genuine individuality and character. We are about to take some very distinctive, only from Tasmania whiskies to the world, rest assured. The brand restage will prove essential in unlocking the commercial potential of our whisky bank. which remains fundamental to driving the sustained future growth and sales momentum of the business. So here we are. We're underway. While we continue to invest in brand awareness in both Australia and overseas for the current range, a huge amount of work has been happening behind the scenes as we prepare for the coordinated, native launch of our new portfolio. I was up in Southeast Asia in just my third week in the job with Bill Lark and Chris Thompson, our master distiller, for launch events in both Singapore and Malaysia. The response to both markets was outstanding and you can see some of the photos of some of the coverage we received on screen now. We've also shown the new range to key partners in Sydney already to unanimous acclaim. So the following slide continues to show how well our global reputation is rising. Ahead of the relaunch, in rather, I must admit, exquisite timing, our master distiller, Chris Thompson, was named as Master Distiller Blender of the Year for the rest of the world at the World Whiskey Awards just in January. This category celebrates excellence across more than 40 whiskey-producing nations outside the traditional strongholds of Scotland, Ireland and the U.S., So the rest of the world includes whisky producing powerhouses such as Japan. It's an incredible accolade for Chris and congratulations to him and the distilling and blending team. News only got better later in that week when our founder and global ambassador Bill Lark was made a member of the Order of Australia, an AM. His contribution to the Australian whisky industry, Bill, is Australia's first modern capping a legacy that includes him being the first Australian inducted into the World Whiskey Hall of Fame back in 2015 and being the inaugural inductee into the Australian Distilling Hall of Fame. Bill's is an extraordinary legacy and we are very proud to have him still working with us today in his role as Global Ambassador. Bill Lark remains a huge asset for our business. He's enormously popular amongst consumers and trade both at home and abroad and we will continue to work closely with him in the years ahead. And importantly, as a sidebar, Bill absolutely loves the new whiskies and the new direction of the brand. International sales momentum and domestic leadership. Moving to slide 13, growing our presence internationally remains of critical importance for life. The half delivered export net sales of $1.3 million, an increase of $800,000 on the PCP. reflecting expanded distribution and improving completion momentum across Asia, as well as shipments of our new portfolio. The initial shipments of the new portfolio have been successfully delivered to 7 out of 10 key Asian markets ahead of the scheduled trade and consumer launch activities in the second half of this financial year. In China, the debut of Curio, our entry-level blended malt whisky, has generated impressive early momentum. Buoyed by enthusiastic consumer reception in the first three months of sales in market, our expectation is the product will gain even further traction across this year and beyond. A key priority for us remains growing brand awareness and presence in export markets. Key activities during the half focused on reinforcing LARC's luxury brand position and strengthening alignment with trade and distribution partners ahead of the global relaunch. Key activities included LARC's presence at the Singapore Grand Prix within the Singapore Tourism Board Suite, where VIP tastings were held across all three days, reinforcing LARC's luxury brand positioning with high-value consumers. Finally, distributor and trade partners were hosted in Hobart, deepening brand immersion and strengthening alignment ahead of our rollout into South East Asia. Moving to slide 14, and global travel retail. As most of you on this call know, Global Travel Retail, which we call GTR, is an exceptionally important part of building an international luxury brand, giving consumer eyes an ability to showcase our product with the right consumer, and I'm very pleased with the progress. Brand awareness for both domestic and international travellers continued in the first half of the year. GTR net sales rose 17% to $1 million, supported by a strong focus on brand visibility across Australian airports. six products, driving incremental performance and depleting well across airport retailers. Lark significantly enhanced its brand visibility through a strategic upgrade at Sydney Airport in this half. The existing brand of Wolbe has been transformed into one of the largest whisky features in the store, reinforcing a commanding presence within this vital international gateway. And from May, With our new restaged product, our presence at SYD will grow only further. In December 2025, Lark was the number four selling single malt whiskey from all countries at Sydney Airport. Not only were we well ahead of all Australian whiskey competitors, but ahead of all Japanese single malts. A new channel exclusive portfolio has been finalised and successfully presented to key Australian airport partners. The response has been overwhelmingly positive, with widespread support secured ahead of the planned May 2026 launch. Notably, every customer has confirmed their commitment to stocking the full suite of core GTR releases. The GTR channel is expected to grow further afield following the signing of a distribution agreement in December with CoLab, the leading travel retail agency based in Singapore. The agreement will cover the Asia-Pacific region, excluding Australia and New Zealand. The new relationship will look to build out airport coverage across the region with a new 700ml portfolio for the second half of this financial year. Heading to slide 15, direct-to-consumer. LARC's internally managed channels performed well, with direct-to-consumer net sales of $4.2 million, up 17%, versus PCP driven by continued momentum in e-commerce, which grew by 33%. Our e-commerce channel exhibited strong gifting demand, with key products including personalisation, The Christmas campaign kicked off in October 25 with a limited release Christmas cast achieving excellent sales. The subsequent introduction of Lunar New Year offerings in December brought the half year to a resounding close, supported by optimisation of digital acquisition and conversion to include digital channels such as RedNote to support Chinese consumer engagement. Our e-commerce platform remains a cornerstone of growth and we continue to refine and enhance this vital channel. We've developed a comprehensively restaged website with a new brand positioning, ready to switch over with the launch of a new portfolio at the end of March 2026. To strengthen our footprint in priority European markets, we have entered into a strategic agreement with a European-based e-commerce and logistics specialist. This partnership leverages established infrastructure and internal e-commerce expertise, enabling local fulfilment and logistics from a dedicated European hub. Consumer sales through this channel are expected to commence in Q4 of this financial year, allowing LARC to expand its B2C presence across key regions, including the Netherlands, Denmark, Germany and Austria, by seamlessly integrating with our existing e-commerce capabilities. We continue to assess our options for B2C as well as traditional retail across Europe and Great Britain. In the hospitality segment, at our brand homes in Hobart, sales were modestly lower than the prior corresponding period, primarily due to the three-month closure of our Hobart cellar door on Davie Street for significant renovations. The refreshed cellar door reopened in time for Christmas, just December 22, as it happens, with final enhancements to the venue's upper level completed just this month. We've observed strong performance across other venues, offsetting the closure of Davie Street, Pontville saw a 28% increase in distillery tours versus the prior corresponding period. Renovations of event spaces at Pontville were completed during the half with the support of our existing Tasmanian Tourism Innovation Grant. The revamped site sees additional space added to support increased booking and events to aid brand awareness. Domestic will head to domestic B2B Met Sales. Business-to-business net sales were $2.3 million for the half, which was a reduction versus last year, with a comparative period seeing the transition of our sales model to service domestic Australia. The part of the comparative period LARC operated under a direct sales approach prior to transition to a distribution partnership with Spirits Platform, the company's domestic distributor, to provide the opportunity for significantly greater commercial reach versus the prior model. In addition to this transition impact, domestic B2B sales performance was impacted by timing of shipments to Spirits Platform. Importantly, however, underlying trade performance for Lark Whiskey remains positive, with depletion volumes, that is sales from the distributor to our trade customers, up 9% versus the previous period, despite challenging market we're operating in. We're expecting ongoing momentum in H2, with incremental distribution of the new range secured. While the gin category remains subdued, as reflected in volume declines of 40 spotted gin, the brand has, however, demonstrated notable resilience versus the wider category, especially within our national accounts. Considerable effort is now underway with Sprua's platform to support the forthcoming launch of the refreshed LARC portfolio in the second half of this financial year. This includes intensified marketing investment and commercial execution plans. With the Spirits platform operating model now fully embedded, the streamlined route to market structure provides a robust foundation for the restaged LARC range. Incremental shelf placement has already been secured for the new portfolio, with products scheduled to appear in stores across both national accounts and independent outlets from April 2026. To our third strategic priority, cash and capital discipline. As mentioned earlier, LARC is a strong balance sheet and cash position to support its growth ambitions and support its strategic milestones. We will continue to be measured in our capital allocation to support growth plans through to our positive operating cash flow target during FY27. From a future capital allocation policy, it is important to note our pontual development has now been finalised, with major capital projects now complete. We will continue to invest in current and new export markets, including international and GTR expansion. We will commercialise the full whisky bank, including utilisation of acquired inventory in products like Curio and Lark Fire Trail to support future growth. Finally, and very importantly, we have the capital in place to execute our growth strategy. I'll now hand over to Ian to talk us through Pondville Distillery and our whisky bank. Ian.

Thanks, Stu. I'm on slide 19. As Stu just mentioned, the redevelopment of Pontville is now complete. As we've previously outlined, the distilling capacity on site has now increased to approximately Automation and site improvements have removed production bottlenecks and enhanced safety, quality and efficiency, supporting lower future production costs and the new make spirit that the team is now producing is exceptional. Our whisky bank of 2.4 million litres is a strategic asset for the company, underpinning both near-term growth initiatives and the longer-term expansion by growing export markets. The current sales profile is now carefully aligned with forward sales plans, enabling the optimization of short-term distilling volumes to broadly match current sales. There's obviously been significant work over the last couple of years on portfolio development. In addition to the more obvious consumer-facing pack and brand positioning to drive sales growth, a key tenet of this work has been ensuring utilization and commercialization of the full whiskey bank including inventory acquired in a pump bill acquisition back in FY22. This whisky has a higher book cost under acquisition accounting, as it includes a fair value uplift in addition to underlying costs of production. Through our portfolio work, we are now able to commercialise the acquired inventory at scale through products like Cura, Blended Malt and Lark Fire Trail. The deployment of this acquired inventory generates a non-cash impact on reported gross margins. This arises because the fair value uplift recognized under acquisition accounting flows through as an elevated cost of goods sold. As we continue to utilize this inventory at scale, it will impact reported gross margin for future periods. That's why, as previously outlined, to provide greater clarity, we will disclose the impact of this I'll talk more to this in the next section. Moving on to the H1 financial highlights and the P&L slide on slide 21. As Stu mentioned, net sales revenue grew by 10% and within this, whiskey net sales rose by 18% versus first half of FY25. The increase in net sales driven by growth in DTC, global travel retail and export distributor channels partially offset by lower net sales from domestic B2B. Net sales growth is a higher rate than gross sales including excise due to the relatively higher growth in export shipments which are not liable for Australian excise. As you mentioned, the domestic B2B comparatives were impacted by a change to the sales model back in August 2024, with part of the comparative period reflecting previous direct sales model, as well as shipment timing and one-off transition effects. As I outlined just before, the start of utilization of acquired inventory at scale saw a historical fair value uplift flow through COGS. This resulted in a reduction in gross profit by around and gross margins by around 5 percentage points versus the underlying production cost of the whisky. It's important to note that when removing the non-cash accounting impact, underlying gross margins remain broadly stable at 63%. We continue to prepare for the new portfolio launch in the second half of this financial year, and despite increased investment in consumer and trade activities in the half, we were able to reduce staff of last year due to non-recurring brand development spend in the comparative period. Expenses for share-based payments benefit from the reversal of previously recognised expense following the forfeiture of unvested performance rates and the P&L also benefited from government grant income of £0.6 million recognised in relation to the Pontville Distillery and Tourism operations. Turning to the balance sheet, cash and cash equivalents were $18.3 million at 31st December. Trade and other receivables rose to $1.1 million with the increase driven by growth in export sales as well as timing in relation to R&D income receipts. Total inventory with a full value of $65.2 million provides strong asset backing to underpin our future growth and this includes $48.6 million at cost of production, and £16.6 million fair value uplift on acquired inventory from the Pumpville acquisition in FY22. Properly planted equipment increased by £0.9 million versus June with £1.2 million invested in Davis Street Hobart cellar door redevelopment, Pumpville distillery and wider Pumpville site development. All major projects are now complete with minimal spend remaining. Trade payables reduced to 1.9 million versus June 25, with the prior period elevated by purchase timing, and a 0.6 million government grant reclassified to payables and subsequently repaid in July. The third tax asset remains prudently de-recognized, carry forward losses remain available, and we expect the DTA to be re-recognized in future periods when profits are expected to arise. Deferred government grants were down 0.6 million versus June with the income recognised in the P&L and full recognition criteria has now been met for the remaining 1.7 million balance and this will be amortised to income over the useful life of the related assets. Importantly, LARC remains debt free. Moving to the cash flow statement, we continue to focus on cash improvements partially offset by temporary timing impacts. These timing impacts included a reduction in creditors from the elevated June balance and the timing of R&D incentive receipts, with $0.5 million received in the prior year and the equivalent receipt expected in half two. Investing cash flows included payments for property, plants and equipment related to the and repayment of government grants related to the unutilised funding under the Modern Manufacturing Initiative, which was repaid in July, as just mentioned. Investments in the prior period reflected the timing of term deposit maturities, and consequently, net short-term investment activity on a full-year basis last year amounted to zero. With that, I'll hand back to Stuart.

Thanks, Ian, and turning to our growth priorities and perspectives for the second half. As we look to the future, we look to executing on our three strategic pillars to generate the long-term value for all shareholders. Our growth strategy focuses on this orchestrated rollout of the Refresh portfolio, designed to build momentum across key markets and channels while reinforcing our position as a global, scalable luxury brand. In the second half of F26, we will execute coordinated consumer and trade launches across all channels. Export trade launches commenced from January, enabling early international presence. The domestic Australian market will follow in March and April, capitalising on heightened local anticipation. And GTR activations will begin in May, aligning with peak travel seasons to capture high-value aspirational consumers. To support this ambitious expansion, marketing investment will remain substantially elevated with a deliberate shift in allocation toward consumer-facing activations and trade engagement. This focused approach will drive awareness and loyalty while amplifying the portfolio's premium appeal. Concurrently, we will continue the systematic rollout of our updated brand positioning and visual identity across all consumer touchpoints. These enhancements are crafted to strengthen our luxury credentials, ensuring a cohesive, sophisticated narrative that resonates globally and supports long-term scalability. International sales momentum and domestic leadership remains a core priority. We anticipate sustained growth even amid challenging market conditions propelled by rigorous operational discipline, the compelling introduction of a new portfolio and the strengthened brand positioning. Within Australia, initial B2B shipments of the Refresh Portfolio are slated to commence in Q3 of F26, and meanwhile, sales through the Whiskey Club of the rare Settlesfield series, which was seen in Q3 of F25, is scheduled for Q4 of this year, as stated earlier. And, as Ian outlined, commercialisation at scale of acquired inventory will continue to see a modest non-cash impact to reported gross margins. On the cash and capital front, we maintain unwavering discipline. Operating cash flows will reflect the upfront weighting of marketing expenditure in the next year or so before turning positive in FY27 as sales momentum accelerates. The pot build commissioning process is now fully complete, with distilling volumes adjusted to anticipated demand and sales trajectories. With major capital projects now concluded, we've secured the necessary resources to execute our growth agenda. Future capital allocation will remain sharply focused on brand building initiatives and commercial expansion, ensuring we continue to invest strategically in the drivers of sustainable, premium and long-term growth. As I said at the top, it's an exciting time for LARC. And that, my friends, is it from me. And I'm happy to hand back to Mel, who can facilitate any questions you might have.

Thanks, Steve. Our first question is actually about yesterday's news. Would you be able to give us a little bit of an update on the CFO process and Paul's appointment?

Yes, so yesterday we were thrilled to announce that Paul Bowker will be joining the business. He was one of the co-founders of the Brick Lane Brewery, and he's been a former CFO of a listed business for about six years at Logicam, which is called ASX Listed Business. We're thrilled to get Paul, whilst sad to lose Ian, who's sitting on my left. Paul is a lawyer by trade, has a Master's in Finance. He's entrepreneurial in spirit, and he starts on Monday. So it's a good time for us. It's a good transition with him and Ian that will go through the entire month of March. And I hope we're good to go. Very, very excited to get him on board. And from some of the notes I've got from the trade and from some of the people in the finance world, is pretty well regarded, so we're thrilled to get him.

Great, thanks, Stu. We might stick with you. Nick from Baron Joey has asked, what are the key learnings from your time at Four Pillars that could apply to LARC?

Oh, I mean, where to begin? I mean, some of the key learnings are... How we can build a brand globally. You know, not many people probably gave a gin brand from the Yarra Valley much of a chance to become a globally recognised brand and a brand that is doing particularly well in the global travel retail as an example. So I think we can learn from that. I think what it does is gives me confidence that the world wants to see some And we had, I think we crafted a great story of Four Pillars, but what Lark has that even Four Pillars didn't have is we have the genesis story. We have the story of leadership. We were the first to do it. We've got the best reputation amongst all Tasmanian whiskeys. So we have a huge competitive advantage against our Australian competitive set. And I think we're going to be able to take really new world whiskeys. These are very different. We're trying to mimic Japanese styles. We're trying to mimic Scottish or Irish or American styles. These are very uniquely Australian and uniquely Tasmanian whiskeys. I think the other thing I've learned is that whiskey's more complicated than gin. Potentially more fun, but definitely more complicated. So I think we've learned a lot from Four Pillars, but I think we can also apply some of the things that we probably maybe didn't get entirely right with Four Pillars, so hopefully we can get it. Get a bit of the second time around.

Great. Love to hear it. So the next question is, what does the product pyramid look like once reset fully? Which parts of the product pyramid are going offshore and what price point is sustainable at scale?

Let's just talk about that. There are three core components. Three core brands that start at what we're going to call $170 Australian. There will be some differentiation in pricing across markets, depending on local taxes and everything else. But I think that is a sustainable price for our entry-level whiskey, which will be the Fire Trail. I think that that's a product that is competitive enough in pricing. It's high enough quality for us to, I think, be able to sell that We will then have a product around $200, The Devil's Storm. I think one of the things to remember is that these are going to be about price parity to our current products, but you've got 40% more. So you're a 700ml product rather than a... 500ml product, and we're trying to keep the prices about parallel. I think they are sustainable pricing, and I think that when we look at the market of luxury whiskey, so I'm going to call that whiskeys above $100 a bottle for a 700ml bottle, that is the segment of the category that is in greatest growth globally. It's the real low-value products that are really suffering at the moment, and I think that are really suffering at that really commercial level where price, just aggressive price discounting is happening everywhere. And I think it's going to be happening in Australia a little bit more as well. So I think that $170, then to $200, and then the Ruby Abyss, which will be in our core, which is the red label, if we go back a few slides, will be in the sort of $380 to $400, and that will be very much our first of our sort of super luxury products. And I think that that will become a bit of an iconic product without wanting to overuse a term that gets overused, I think review this will become something really quite special. There will be other products. There will be a Dark Lark coming in, and again, that will be in that sort of $200 Australian price point. Again, a little bit, you know, once we work on travel retail, we'll be able to adjust those pricings without that enormous excise that we have to pay in Australia. So these whiskeys will be price parity across the world. But I think price-wise, we're good. So that's the pyramid, if you understand. There'll be exclusive products coming to the Global Travel Retail Channel, and there might even be exclusive products going to the On-Premise Channel. But our pyramid is currently free, but there'll be a few more coming in at prices. And then there'll be Curio, which will be around the $100 blended malt price point moving forward. Great. I hope that answers your question. Thank you.

Ian, we might switch to you. Lachlan from MOLUS has asked, how much in cost savings are you expecting from the completion of the Pontville site redevelopment?

Yeah, all right. So the Pontville site development, as I explained earlier, there's a couple of sort of key elements to that. One is significant automation versus the very manual development Distilling Co. Ltd. Distilling Co. Ltd. Distilling Co. Ltd. Distilling Co. Ltd. So we should have efficiencies in that lending cost as well, which will help us in Cogs in particular as we scale. But probably the critical bit is the development does allow us to scale in addition to that cost base.

Great, thanks. And we might just stick there because Nick, also from OLS, has congratulated you on the results. And he's asking if you could share some insights on how management and the board are thinking to the potential expansion of Pontville to that 800,000 litres. What do you need to see to make the decision to pursue the expansion? And given the modular design, would you look to increase capacity in stages?

Yeah, so I'll cover that one up. So, yeah, it's a modular design, so that means that we can, in the future, expand the capacity with pretty minimal capex. Importantly, we have just increased the capacity to just over half a million litres, which gives us pretty significant headroom versus where we are now. We've talked for the last little while about broadly matching distilling production levels with our current sales. In round numbers, we can talk probably for this calendar year, somewhere in the region of 100,000 litres overall. So where we are right now is round numbers 100,000 litres. We've got headroom and capacity to get to 500,000 litres. And as we grow, we will be growing sales. So as we grow sales, we'll be growing distilling. So you can think of the whiskey bank in volume terms as broadly saying about that. We've got a few questions here on Asian markets. So firstly, what early data points can you see at the distributor level for depletions of initial shipments?

And what are your expectations for the size of reorders in key export markets like China, Japan and Southeast Asia?

I can start off. In terms of initial data points, very, very limited right now. The new shipments of the new portfolio sort of back end of the half landing in around about Christmas time with the first markets to go being Singapore, Very, very early days, and maybe Stu can give a bit of colour because I wasn't there, but the reception from our customers, i.e. our distributor partners, trade, consumers, media, was pretty exceptional by all accounts. In terms of what that means for depletions, it's too early to tell. Distilling Co. Ltd.

in the week of January, and that stock had only recently arrived. What we do know is that we depleted most of the stock that came out of bond already in Malaysia, so that's a good start. It's got a high-end whiskey trade in Kuala Lumpur, very strong. Singapore was also good. We know that Curio has gone well in China, but again, it's a particularly hard time to get data out of the Asian markets with China's New Year and everything else. But we're hoping that in March, April, we'll start seeing some real numbers coming back. So we should have something a bit better to report in the second half, I would hope.

So wait for Q3.

I think seven out of ten of our markets in Asia have got or are on the water with a new product. So some of that. For instance, I had a meeting with them. I had dinner last night with our Fijian agency. Lovely little market there. Nice little bit of progress going on there. They're still selling the old product into the luxury market in Fiji. I'll get the new product significantly later in the year, I imagine. Okay. Excuse me.

And just sticking with that, in terms of feedback from Asia and how Lark stacks up versus traditional single malts, What other investments does LARC need to do to drive awareness and perception of the BRAT?

In short, a bit, quite a bit. We are going to a market that loves its whiskey, huge market. We just talked about Asia for the time being, that loves its whiskey, is whiskey drinking. A significantly greater percentage of spirits drinkers drink whiskey than, for instance, gin. But we are going with new products. We're going with products that taste a little bit different. I think that their taste profile, they're very rich, unctuous, viscous, sweet, beautiful Tasmanian whiskies. They don't taste like Macallan, which is a clear market leader in many of the markets that I've visited recently. I think they're going to appeal as flavour-forward rich whiskies. Why Australian whiskey, and Tasmanian whiskey in particular, doesn't need to be matured for 15 years to taste as good as it does. So there's a lot to do. We have to educate. We have to have people on the ground in Singapore. We have to do hand-to-hand combat at our level. It's not a big advertising campaign, for instance. It's getting individual bars, individual retailers, individual travel retail ambassadors and advocates Why this is such great whiskey. It's going to be a really interesting and engaging time up there. I can't wait. And we're going to have three people on the ground in Singapore full time whose sole role is going to be selling that story and these whiskeys to those markets.

Great. Ian, we might switch to you. Could you talk to how you think about gross margins for the next little while? You touched on it, but it looks like we should expect acquired inventory to continue to be sold through. I appreciate this is a non-cash pass-through, but for how long might this be?

Yeah, okay. So, yeah, as I mentioned, non-cash impact. And just to give a bit of sort of quantum statistics, is just a little bit less than 20% of the whisky bank, and we've only just in this half started sort of selling out at scale. So, reasonable size volumes of that acquired inventory as a proportion. At this point in time, Curio and Lark Fire Trail are the current products which allow us to really utilise the acquired inventory at scale. And obviously the utilisation depends on the trajectory of those products and equally the relative impact of gross margin depends on the relativity between those products and other products which are utilising our own whisky. So quite difficult to pin an exact number because there's multiple variables but probably Gross Margin in this half, something similar for the next little while, you know, because it's not just acquired inventory selling. So it's going to be a relatively modest impact, that sort of 5-ish percent. And as it's just under 20% of the whiskey bank, you know, we'll deplete that as we grow, but it's probably there for the medium term. Yeah, great.

And I think probably importantly, we're going to keep reporting underlying margins. Absolutely, yeah, yeah, yeah. So... Could you also talk to what we should see as consumers with the brand restage activations domestically, assuming there'll be some differences in your strategies to sell through to the D2C and the B2B audiences?

Yeah. I mean, you'll see a whole new lark coming to market. The question was what we as consumers should expect to see. So you'll expect to see a whole new product on the shelves. A whole new, so totally new brand. You'll see a new website. You'll see new digital advertising. Once we go into the larger retail partners, you'll see an increased presence at Sydney, Melbourne, not just Sydney, Sydney, Melbourne and Brisbane Airport primarily. You'll see a totally new, you'll see some new positioning. around the island is calling, you know, whiskeys from a new world, those sorts of things. And you will start seeing, I think you will see more increased presence on the back One of our focuses is going to be making these whiskies much more available for people to taste in the higher end on-premise market, whether that's Sydney, Melbourne, Brisbane, Adelaide, Perth. And then you'll hopefully see us in as much retail at the higher end as we possibly can. They're much brighter. They're much livelier. And I think they will have increased shelf presence. So we think that people will hopefully want to take them off the shelves. more regularly.

Great. And maybe just talking about channels there, could you talk to what are the next steps in the GTR journey or is it all about sell-through volumes now?

I mean, look, the next step in the GTR journey, well, Sydney is a priority gateway for us. It's a priority gate. It's an important door globally for whisky brands if you just stick to whisky. A relationship with Sydney and Heinemann is crucial, not to diminish Lotte, not to diminish Brisbane and Melbourne, are very important gates as well, increasingly so in Brisbane in particular. You will see us having whole new... Our new positioning will appear from May. We will have... In Sydney, we will have a whole new area dedicated to Lark. We will have all the new brand... New product there, new packaging there. It's an interesting world, the travel retail. You have ambassadors on the floor selling your product and that sort of stuff. So we'll be taking all of them down to Tasmania. I think what you'll see is an increased presence in all of the Australian airports. I would very much hope that we would have a relationship with at least one or two of the key Asian gates. Before the end of this financial year, we have begun conversations with some of the more important airports. There's no guess, no massive mystery around what those would be for us. We will hope to have some presence in some of those markets. We've had those first meetings in literally the last three to four weeks, and it is, as you can imagine, these are very, very large businesses, and it takes a little while for them to arrange new Australian whiskeys. So I hope that answers the question. I would think, and from a domestic perspective, Just from a domestic retail perspective, I hope you see us across a lot more independence and major chains. And as I said, I hope one of the things I really want to prioritise is seeing us more in bars so people can get that little taste of a nip of one of our larks and go, that's something I want to buy, whether it's next time I go to a retailer or next time I go overseas. So, yeah, we need to get, we all call it liquid on lips, right? We need to get people tasting these new larks. And that's a priority for the business is to get as many people to taste these larks. Because one of the things we've found is that a lot of people know of lark and like the brand intuitively. But then when you ask, well, have you tasted lark? They tend to go, no, I haven't had it, but I like the brand. So we just think that's the level of conversion we need. We need to get everyone to say, I like it, I want to buy it, and I want to taste it and drink it.

Great. That brings us to the end of the question. So, Stu, I might pass to you for final comments.

Oh, look, it's been a, I'm not going to lie, it's been a whirlwind seven weeks. We've got a new Chief Financial Officer. We've been up to Asia. Bill and Chris have won a couple of awards. So it certainly has been a, it's definitely been an interesting seven weeks. We've had a lot of fun. I think, you know, we only reopened the Tasmanian Cellar Door last Thursday, officially, with all the local dignitaries in Hobart down there. It's really exciting. The distillery looks fantastic. coming from Chris and Bill. So the spirit that's going to be coming through as Lark over the next five, ten years is going to be an incredible spirit. The new products are getting an incredibly, incredibly unanimously positive reception. So I think they'll really hit the market. March 26 is our go-live date from our internal perspective. So I think this half is going to be a really interesting half. It's going to have Thank you, Stuart. Thank you, team. Thank you, everyone.