LARK Distilling Co. Ltd. (LRK.AX) Earnings Call Transcript & Summary

Good morning, and welcome to LARK Distilling's Full Year FY '25 Results Webinar for the Financial Year Ending 30 June 2025. Presenting today is LARK's CEO, Sash Sharma; and CFO, Iain Short. Today's format will begin with a run-through of the results presentation followed by a Q&A session, whereby investors can submit questions at the Q&A function at the bottom of this link. I'll now pass to Sash.

Good morning, everyone, and thank you for joining us today for our FY '25 results presentation. Joining me today is our CFO, Iain Short, and you've already heard from Mel in Investor Relations. At the conclusion of our presentation, Iain and I will take your questions submitted through the webinar platform. Moving to Slide 2. Our ambition is to make LARK a leader in New World whisky. Today, we are proudly Australia's #1 luxury single malt. And as you'll see in today's presentation, we have the platform to go bigger and further than ever before. We shared our strategic priorities with the market at our Investor Day in Hobart back in October 2023. Importantly, they remain unchanged and core to our ongoing growth plans. The disciplined execution of these strategic priorities has enabled the improvement in our financial performance in FY '25. Moving to Slide 5. Let me say upfront that FY '25 has been a very significant and successful year for LARK, both operationally and from a growth perspective. Importantly, we also made very strong progress against all of our strategic priorities with the foundations now in place for LARK's next stage of growth. Iain will cover off the detail later, but let me take you through a whistle-stop. From a financial perspective, net sales revenue was $15.6 million, this was up 12% or $1.7 million on FY '24, with whisky sales up 16%. Impressively, in FY '25, we achieved 4 consecutive quarters of improved net sales versus pcp, a strong performance in a challenging domestic and international environment. We achieved a gross profit of $10 million with a gross margin of 64% for FY '25, down from 68% in the prior year, but this decrease was primarily due to channel mix. Our net operating cash outflows was $2.9 million, an improvement of $1.3 million versus FY '24. Disciplined cost control again delivered savings in operating and overhead costs to the tune of $0.4 million versus FY '24. Offsetting this was the planned acceleration in marketing investment, which was $2.4 million higher versus FY '24. This step-up in marketing investment included our exciting brand restage as outlined in the use of funds at the time of our capital raise. Post our successful placement in half 1, we are very well capitalized with $23.1 million in cash and cash equivalents. Importantly, we have sufficient capital in place to execute our growth strategy. Moving to Slide 6. This slide sets out the operational progress and execution against each of our strategic priorities. Our first strategic priority is to create long-term brand value by establishing LARK as a globally recognized and differentiated luxury whisky brand. We completed the LARK brand restage as planned while continuing to increase awareness. And our Pontville redevelopment is now largely complete, solidifying the site's role as our long-term brand home. Our second strategic priority is to create international sales momentum and cement our domestic leadership position by creating repeatable, diversified revenue streams across markets and channels. We've made solid strides forward across all of our channels from D2C, GTR, export and the transition of our domestic B2B business to Spirits platform. Our third strategic priority is cash and capital discipline. I've largely covered this off in the slide above. But in short, our FY '25 operating cash outflows were significantly lower despite increased marketing investment. We've embedded cost and capital discipline within our business. It's now simply part of the way we do business. We've consolidated our stable of assets, driving greater focus, and we remain well capitalized. Importantly, delivery against these strategic priorities will create long-term and sustainable shareholder value. For transparency, we've included our unchanged scorecard that captures progress against all our milestones in the appendices. Moving to Slide 7. The enormous effort over the last 2 years to cement the foundations of this business should not be overlooked. LARK has never been stronger and more future-proof than it is at this very moment. On this slide, we have laid out some of the pivotal work streams, which have been kicked off in the last couple of years. I don't plan to cover every item on this slide. Suffice to say, the entire LARK team has worked incredibly hard to balance the day-to-day operational improvements in the business while keeping a firm eye on our longer-term strategic priorities to allow us to accelerate into the future. I'd call out the brand restage, the strategic partnership with Seppeltsfield Wines, steps taken to rationalize and develop our stable of assets, our key domestic and international distributor relationships and the embedding of operational processes and controls as key highlights. Now that's all very nice, but what does it actually mean? In short, we're starting to see the fruits of our labor. This slide sets out net sales and operating cash flows over the last 5 years. It highlights the improvement in both of these critical measures in FY '25 and the positive trend, which has come from discipline, focus and making difficult decisions when they needed to be made. I won't repeat our achievements for FY '25 set out on this slide, but it should be clear that the actions we have taken have set the robust foundations for LARK's next stage of growth. Moving to Slide 9. In the previous slides, I covered off the strong progress we've made over the last few years, setting the foundations for our next growth phase. I thought it would be helpful to share with you recent category performance, which puts LARK's performance in context. This slide covers the period from 2009 to 2024 for the ultra-premium price brand, which is greater than $88 a 700 ml bottle. You can clearly see the COVID volume spike during the period from 2020 to 2022 in the Australian ultra-premium whisky category, consistent with global spirits trends and something LARK no doubt benefited from. Since then, category volumes have corrected post 2022, creating significant headwinds. Importantly, during this period, LARK has been able to grow while the category has not, emphasizing the quality of the performance delivered to date. The good news for LARK is that the current category volumes are still higher than the historic pre-COVID growth trend and that premium and luxury whisky remains a resilient and attractive segment, both domestically and globally. Moving to Slide 11, where I'll cover off Asian direct export. Growing LARK in international markets through in-market distributor partners is key to our success. We've made very good progress with our Asian export business. In FY '24, we signed our first distribution agreements in Asia, onboarding partners in Singapore, Indonesia, Malaysia and the Philippines. Then this year, we added new distribution agreements for Korea and Cambodia. We also formalized distribution agreements in Thailand and Vietnam with a focus for growth to be on the brand restage. We continue to have ongoing discussions with other markets for launch post our restage. Building trade and consumer awareness, distribution and depletions momentum remain our focus, supported by a dedicated brand ambassador in the region. In FY '25, direct export sales reached $1.1 million, up $0.2 million versus FY '24, noting that legacy indirect exports largely ceased in FY '24. Moving to Slide 12. As Australia's #1 luxury single malt whisky, the GTR channel is important in seeding of LARK to both domestic and international consumers as they discover and dwell as part of their travel ritual. We've had great engagement with our GTR partners with joint business plans delivering sales growth and outperformance. We are very proud to be the #1 Australian whisky and in the top 5 overall single malt whiskies in both Sydney and Melbourne Airport. That includes our scotch counterparts. We are encouraged that our high-profile brand activity continues in driving sales and brand awareness for domestic and international travelers. For FY '25, in only our second year of operations, net sales reached $1.5 million, up 18%, with permanent visibility now in place in all Australian airports. Planning is well advanced for international airport expansion as LARK's export markets grow, supported by the brand's international restage in FY '26. Moving to the next slide. LARK's internally managed D2C channels performed strongly in FY '25, with net sales of $7.1 million, up $1.1 million or 18%, driven by strong results in LARK's e-commerce channel, hospitality venues and direct engagement with high-net-worth individuals resulting in cask sales. In addition to being a sales driver, D2C channels play a crucial advocacy role, enabling us to offer exclusive products that complement our B2B range. Our hospitality and distillery sites engage and delight consumers, trade and distributor partners, creating an immersive LARK brand experience. In addition to LARK's own e-commerce D2C channels, we partnered with The Whisky Club this year to launch the LARK's Rare Seppeltsfield Tawny Cask, the first in a range of Seppeltsfield releases. This was the first of a multi-year release program and was fully sold out, which was a great result for LARK, was a great result for the Whisky Club and most importantly, a great result for the lucky Whisky Club members. Moving to our next slide. We successfully completed our transition to Spirits platform for our B2B business on the 1st of August this year -- sorry of FY '25. Spirits platform are Australia's leading independent spirits distributor and the market leader in ultra-premium and above single malt. The net sales impact from having Spirits Platform's distribution margin embedded in LARK selling price has been more than offset by underlying operating cost savings, which means improved channel profitability. In FY '25, our domestic B2B channel delivered a resilient performance with sales of $4.5 million with increased momentum in the wholesale channel, reflecting an impressive 13% increase in depletions. Keeping in mind, this is set against the backdrop of a declining market that is still correcting. We're extremely happy with the performance to date of Spirits platform, which is showing the benefit of market-leading scale and unmatched portfolio strength and commercial reach to drive both brand equity and sales growth across current and crucially future restaged LARK portfolio. Moving to our next slides. LARK continues to grow its global reputation with medals across leading international awards programs, including a recent gold and double gold medals at the San Fran Awards. These awards and accolades continue to elevate our position in the global landscape, reinforcing LARK's reputation for unparalleled quality and innovation. It's wonderful independent and global recognition for Chris and the entire team that we are making some of the best whisky in the world. Moving to Slide 17. KURIO is the first release from the House of LARK. KURIO is a Tasmanian blended malt whisky that comes in a 700 ml bottle with 40% ABV and an RRP of $120. KURIO, Crimson Jam blends exceptional Tasmanian single malts uniquely finished in Tasmanian cherry and sparkling wine-seasoned casks, showing our ability to innovate and differentiate in a crowded and evolving category. We launched KURIO in April 2025 through Endeavour Drinks and Independents with full national ranging in Dan Murphy's and Tasmanian BWS stores. Pleasingly, Spirits platform's commercial coverage has delivered listings in greater than 650 independent retailers since launch. This type of broad reach just was not possible under our previous internal sales model. Importantly, KURIO expands audience and consumer occasions. It commercializes the Whisky Bank prioritizing cash generation and its flexible production provides the scalability through our own and third-party distilled whisky. Planning is underway to launch KURIO for export via our distributor partners. Moving to Slide 18. Whisky from another world. This is a teaser of our restage, which I'm excited to share with you later on in the presentation in more detail. However, it would be wrong for me not to recognize it in this section related to brand value due to the amount of time and resources it's taken during FY '25 to set us up for the future. We'll come back to the restage in a few moments. Moving to Slide 20. Post the successful placement that occurred during half 1, LARK has a strong balance sheet and cash position to achieve our strategic milestones. We will continue to be disciplined and measured with our capital allocation in order to support our growth plans through to our positive operating cash flow target during FY '27. From a future capital allocation perspective, it's important to note the following. The LARK restage is now complete. The Pontville redevelopment largely complete. The current and new export markets, we will invest behind our restage brand, including international GTR expansion. And finally, no further capital is required to fund CapEx or to execute our growth strategy in the short to medium-term. Moving to Slide 21. The redevelopment of Pontville as the home of LARK is now largely complete. It's reflective of Australia's #1 luxury single malt with commissioning underway and open to the public with our hospitality offering. Key equipment and processes have been transferred from Cambridge, providing continuity of new make house style for our award-winning whisky. Development sees distilling, coopering, maturing whisky storage, blending and finishing, bottling, tourism and back office, all on one site. Importantly, we achieved all of the objectives of the larger proposed development 4 years ago at approximately 25% of the original scoped cost. The upgrades that were made in FY '25 as part of the development and supported by the existing government grant include, site capacity increased to 520,000 liters at 43%. 70,000 liter blending equipment installed with integrated chill filtration. The new site removes previous bottlenecks enabling scale to support growth. And the automation and site upgrades improve efficiency, safety and flexibility. Importantly, the modular approach will allow for future expansion of 800,000 liters at 43% with modest additional CapEx as and when required. I'll now hand over to Iain to take us through the full year financial results in more detail.

Thanks, Sash, and good morning, everyone. In my section, I'll take you through our FY '25 financials and our Whisky Bank. I'm on Slide 23. As Sash outlined earlier, our net sales revenue was $15.6 million, up 12% or $1.7 million versus last year. This increase in net sales was driven by growth in D2C channels, travel retail and export sales via in-market distributors, partially offset by lower net sales from domestic B2B and the legacy indirect export channel. Domestic B2B comparatives in FY '25 were impacted by a change to our sales model with distributor margin now included in net sales price. Importantly, this distributor margin has been fully offset by overhead savings from the removal of our internal sales team in Q1. With this transition of our domestic B2B business to a distributor model from the 1st of August, there was a change in excise treatment with Spirits platform now responsible for excise payments for domestic B2B sales rather than LARK. For us, this means lower excise within both statutory revenues and cost of goods. However, no change to the underlying economics. To assist with this transition, we've included a slide in the appendix that highlights the different excise treatment by channel and a reconciliation of statutory revenue and cost of sales. Also included in there is a slide in the appendix that sets out the unit economics of our route-to-market change in Australia and is the same slides as at our half year '25 results presentation. With our increase in net sales, we reported gross profit of $10 million, up $0.6 million versus last year. As anticipated, the shift towards a distributor-led sales model in both domestic and export markets contributed to a decline in reported gross profit margin with a reduction of around 3.5 percentage points to 64% for the year. As planned, investment and marketing expenses increased by $2.4 million to $5.3 million in F '25. This is around 34% of net sales and reflects the strategic investment made on both LARK brand restage and KURIO development and launch as well as increased brand awareness driving activity. Pleasingly, our operating costs continue to decline, down $0.4 million to $9.8 million, supported by savings from the removal of the internal domestic sales team. For this year, we reported one-off net income of $0.3 million. This relates to the recognition of government grant income of $1.3 million, partially offset by $1 million of non-cash write-off of fixed assets relating to legacy Cambridge commissioning costs and early-stage Pontville plans from the previously scoped development. Moving to our balance sheet highlights on Slide 24. Following the successful placement announced in July 2024, LARK raised $24.4 million net of transaction costs in the first half. And in the second half, we realized $4 million from the sale of Bothwell. Cash and cash equivalents were $23.1 million at 30 June. And our trade receivables were impacted by the transition to a distributor-based sales model, which has changed the timing of receipts through changes in order patterns. We had total inventory with a book value of $65.3 million, up $1.2 million or 2% versus last year. This provides strong asset backing to underpin future growth. And of this figure, maturing inventory and barrel was $57.2 million, marginally down on prior year with a slowdown in distilling production as we consolidated sites. Property, plant and equipment of $13.5 million was down $1.2 million versus last year, with additions of $4.5 million, primarily through the Pontville redevelopment being more than offset by the sale of the Bothwell site, depreciation and the fixed asset write-offs I just mentioned earlier. Trade payables increased by $2.1 million versus F '24, and these were elevated through the timing of purchases and payments as well as $0.6 million government grant reclassified to payables. In relation to deferred government grants, there were a few moving pieces through the year, overall reducing by $1.6 million for the year. $1.3 million was recognized in other income, $0.6 million was reclassified to payables, as I just mentioned, and these were partly offset by a $0.3 million increase with the receipt of the third tranche of our tourism innovation grant to enhance the visitor experience at the redeveloped Pontville site. On the borrowing side, LARK remains debt-free with an undrawn $5 million committed facility available with NAV. Moving to Slide 25 for our cash flow highlights. Our focus on cash and capital discipline continues in the business with FY '25 net operating cash outflows of $2.9 million. This was an improvement of $1.3 million year-on-year while investing in brand marketing. As I mentioned earlier, under the revised domestic sales model, alcohol excise payments are now the responsibility of Spirits platform. So there's around $1.8 million less excise in both statutory revenue and cost of goods year-on-year through -- as a result of this change. This has reduced excise collected within customer receipts in the cash flow with a corresponding offset in payments. Our improved net operating cash outflows reflect the increase in our net sales delivery. The impact of the timing of purchases reflected in an increase in creditors year-on-year, moderated distilling production levels through the Pontville redevelopment, interest income earned on cash balances with these being partially offset by the planned acceleration in marketing investment in line with our strategic priorities. Investing cash flows were broadly flat in the year with payments of $4.2 million for property, plant and equipment, primarily relating to Pontville, largely being offset by receipts from the sale of our Bothwell site. Financing cash flows primarily reflect the successful placement in the year, which raised a net $24.4 million. Turning now to Slide 26 on our Whisky Bank. LARK's whisky under maturation at 30 June was 25 -- excuse me 2.5 million liters at bottle strength with a book value of $57.2 million. Our Whisky Bank is a strategic asset that supports our near-term growth and export expansion plans. We have a stock profile aligned with current and future sales plans. And the size and profile of the Whisky Bank allows us to optimize production levels and have distilling volumes broadly in line with our current sales. Importantly, brand developments in this financial year, our LARK brand restage and the KURIO introduction have been tailored to ensure we unlock the long-term commercial potential of our Whisky Bank with scalable and consumer-driven portfolio of LARK products. The portfolio development will see the whisky from the Shene acquisition back in FY '22 being utilized at scale from FY '26. While most of the whisky in the Whisky Bank is on our books at production cost, this acquired inventory is at fair value under acquisition accounting, so a higher cost per liter. From next year, the acquired inventory is expected to impact gross margins as this higher cost inventory is sold through more significant volumes. Noting there is no cash impact to the different whisky utilized, and we will separately identify this non-cash margin impact in future reporting periods. With that, I'll now hand back to Sash.

Thanks, Iain. Now looking to the future and perspectives, all critically underpinned by our brand restage. Moving to Slide 28. We first talked about our LARK brand restage at our Investor Day in October 2023 for delivery at the end of FY '25. This has been a significant amount of rewarding and company-defining work for the entire team, including our creative partners, the highly credentialed team at Love Design. We know that great brands don't materially change year-on-year. The foundations must be done right and done once, meaning this will be one of the most significant steps in brand evolution we will take in the history of the company. I can tell you the feedback from our partners, customers and consumers have been overwhelmingly positive, which gives us incredible confidence in the bold choices we've made and the bright future ahead. Moving to the next slide. The restage has given us an incredible opportunity to create a world-class brand. It allows us to tap into a global audience with ownable reasons to believe that resonate with our target consumer. It provides an opportunity to deliver a clear positioning and navigation, which is compelling while building a rich and discoverable brand world, which invites consumers to peel back layers of storytelling from our founder story to our whisky-making ethos to the incredible people, product and place, which are intertwined in who we are and what we do. We're owning luxury New World whisky in everything we do. Our packaging, liquid profile and assets are reflective of a luxury brand on the global stage. And our architecture and channel differentiation provides us the ability to access a bigger pool of consumers. Importantly, a shift to a 700 ml format removes a key barrier to purchase. We're delivering standout and cut-through on shelf while value engineering our packs. Our restaged box and bottle have been value engineered under the restage to provide a more cost-effective solution than present. We've developed scalable brand assets and tools across key touch points to arm distributors to go-to-market while driving consistency, which means more funds are spent in execution versus doubling up on creation. The restage is backed by resoundingly positive independent consumer research and testing, which has been further validated by wonderful feedback by customers and partners. Importantly, the restage provides the opportunity to commercialize our Whisky Bank while recognizing we have significant capacity to respond to strong demand signals. Moving to the next slide. Going into how we arrived at where we are today, we built our positioning focusing on 3 key areas. People, the amazing attitude, psyche, passion and freethinking spirit encapsulating New World thinking. Product, the components and conditions which go into making our unique whisky profile with New World processes and our access to the extraordinary cask from Seppeltsfield Wines, some dating back over a century. And place, beautiful Tasmania, home to ancient rainforest via luminescent sees smooth and sandy beaches. Every extreme element of the island shapes our spirit from the purest air and water to the whisky super climate with its dramatic temperature swings that deepen maturation, making our world-class whisky. While all 3 are imperative to our brand DNA, the Mystical Island of Tasmania creates our greatest point of difference against the global competitive set, aligning directly with the values and desires of our consumer. Ever indebted to one incredible island, the LARK brand positioning leads with place, the magnificent landscapes, natural produce and whisky super climate, all the elements that unlock whisky from another world. When it comes to our [ whisky the art, ] there has been a relentless drive in the pursuit of excellence from longer formats, encouraging innovation and questioning conventional wisdom, capitalizing on the whisky super climate, which creates ideal maturation conditions, access to some of the best cask in the world through our ongoing relationship with Seppeltsfield Wines, creation of our bespoke cask seasoning program with a vintage Solera system being developed. Chris and the whisky making team continue to build some of the most exciting whiskies on the planet with our new restage having what Chris describes as the best whisky he has created in 20 years. Now I do suspect there might be a little bit of bias there, but a pretty big call nonetheless. Now moving into the design elements, starting with our bottle. There is a clear nod to our previous glass shape. You will see the evolution of the LARK word mark on both box and bottle, which embodies craft and upward flight in the direction of its text. The LARK bird icon has evolved to sit upon Cradle Mountain and have the native blue gum bud detail added to its wing, the native flower of Tasmania. The sides of the bottle represent the wings of the LARK bird and are a beautifully unique detail, which reflect the light providing shelf standout. The bottom of the bottle is sprayed with violet luminous and blue, creating a distinct and ownable element. Both the top and the bottom of the bottle invite with the words the island is calling. The labels allow navigation with our whisky recipe numbering system, variant name and tasting notes and the color marries with the color of the outer box, helping with variant recall and standout. The Tasmania Australia roundel sits proudly on the bottle and box, helping ensure those engaging with it can pinpoint its origin. Through our research, this is one of the most important features as the understanding of Tasmania is limited outside of Australia. The out-of-box is absolutely stunning. It has vibrant colors, unmissable shelf standout and a distinctively New World feel. It isn't trying to be pretending to be something it isn't. And it is bold and proud and very, very hard to walk past. The illustrated LARK wraps around the box and has incredible detailing made up of the native flora of Tasmania. The inner door holds our brand manifesto and story and the words Whisky from another World are evocative and inviting. Our permanent launch portfolio is striking with 3 domestic market SKUs and 1 GTR exclusive. However, there are more in the works as we build out our portfolio. Development is already in place for NPD and halo products. And I've just seen the future dark LARK, rest assured, it's going to be amazing and the best yet. Bringing it all together, this captures on one page our new brand world, inviting and disruptive, an asset we've used to present to customers, and I find very powerful. It talks about our history, our unique island of abundance, our people, our whisky, our packaging and our brand home. As a team, we feel proud of what we've created and the choices we've made. And with that, we come to this visual. LARK is whisky from another world, our key communication line for launch. And as you can see in the Australian market, Classic Cask continues to provide the bridge between what is on shelf today and the transition to our restage brand. This is important for consumers and customers to recognize. Classic Cask is our #1 SKU and as it has done for 3 decades, plays an important role in defining our future. Moving to the next slide. With the restage, we've also worked on the development of go-to-market tools and assets to assist our distributors and customers. While there is nuance in every market, the path to purchase in the consumer thought process and journey is similar. It's for this reason we've worked on aligning tools and with the path to purchase, ensuring the tools and assets help deliver results, whether that be about growing awareness and consideration utilizing PR and KOLs, social media or trade shows or delivering execution standards in the on-trade environment or retail environment where consumers are purchasing or ensuring retention and building advocates through loyalty programs or encouraging user-generated content. This takes away ongoing creation and ensures the focus is on executing tools brilliantly. Now what does the path ahead look like? We have presented our restage to distributors and customers who are nothing short of pump to get this into their hands, along with the tools and assets to help them execute. We've successfully undertaken our initial production runs and been able to deliver a cost-effective design with the ability to automate into the future. Our ladder will start at an RRP (sic) [ RRSP ] of $180 per 700 ml, and we've differentiated our GTR offering to excite and engage travelers. In terms of timings, long lead time shipments to Asian markets will take place in half 1. Registration samples need to be undertaken first as we have previously discussed. Domestic and GTR shipments from -- will take place in the second half of FY '26. All of this will culminate in a coordinated global consumer launch in April with upweighted marketing investment to support LARK 's brand awareness. The existing range will remain in Australia anchored by Classic Cask. Now it's important to recognize this is more than a presentation. Our distillery and hospitality venues are already migrating to our new brand world. Products of our new range have been bottled and will be ready to ship. And together, we are ushering in an exciting new chapter for the company as a whole. Now turning to the next slide and our perspectives for '26. As we look ahead, this will be set against the backdrop of an ongoing challenging trading environment where consumers remain cautious. However, we remain focused on executing against our strategic priorities. We're exiting FY '25 with good momentum, making tangible progress against all our KPIs. We're doing what we said we would, and we're walking the walk as we execute our strategy to grow from the foundations we have set to generate long-term and sustainable shareholder value. For our first strategic priority, building long-term brand value, we will launch our restage brand in export markets in half 1 with the global consumer launch of our restage portfolio aligned with domestic and GTR markets and export markets in April '26. Our marketing investment will remain elevated with spend shifted to consumer and trade activations. And we'll transform our Davie Street Cellar Door to reinforce LARK's luxury positioning in Q2. Our second strategic pillar, international sales momentum and domestic market leadership. Despite challenging market conditions, we expect to achieve growth driven by disciplined execution. We expect export-led growth via H1 shipments and an uplift in H2 from -- in the domestic market with all regions supported by increased marketing, noting that we expect a channel mix shift towards distributors versus D2C, which will likely be modestly impacting our margins. For our third pillar, cash and capital discipline, operating cash flows will again be impacted by upfront marketing investment before moving to positive during FY '27. Pontville commissioning is progressing very well with distilling volumes to be aligned to sales. Importantly, we have the required capital in place and it will continue to be deployed with continued discipline. With that, I'd like to thank you for your ongoing commitment and support to LARK. Before I open up to questions, I'm going to play a quick video, which hopefully brings our restage to life. [Presentation]

I hope that gives you a glimpse into where we're going. Now let's open up to Q&A. Mel, have we got any questions that have come through?

Yes, we do. Thanks, Sash. We might just start with export channels. There have been a few questions there. So could you provide an update on China, firstly?

Mel, sorry, just if you just want to let me share the video, I can share my video. Yes. Sorry, about the question was.

Sorry. So just starting with export channels. Can you just update us on China plans?

Yes. Obviously, China is an extremely important market for us. We're in pretty advanced discussions and conversations with potential distributor partners. The key to obviously unlocking that was ensuring that we had our brand restage up and ready. And we'd like to be in a position probably over the next, I'd say, within -- in the first half, where we'll have a pretty distinct plan for China and go-to-market launches.

Okay. And just sticking with that, do you see any geopolitical risks in Southeast Asia or economic growth threats in the region with deglobalization?

Yes, I'm sure there are. But when you're starting from nothing, it basically means that it's not high on our, let's call it, our risk register. I think what it does create is the opportunity for us to enter markets as opposed to play defense. We've talked about the great opportunity we've got with our restage. We need to be focused on what we can control. And I think based on the partners we've got and their feedback, it's probably not our greatest concern at this stage.

And then can you talk through any sell-through data available in the export market and GTR to unpick channel full sales versus underlying sales?

Yes. So I think the key in this is, I assume that's the -- what are the depletions for shipments. So GTR is a very, very simple answer. Global travel retail customers don't hold a lot of stock. So broadly, shipments equal depletions. Obviously, when we've got registrations, we've got long lead times, we are shipping ahead of time to our distributors, and it is lumpy. What we've focused our time and effort on over the last little while is to effectively phase out or deplete the legacy range or the signature range as we start phasing in the restage brand. As we're currently standing, we're monitoring those depletions very carefully. But suffice to say, you can see that the sales over the last couple of years, we don't have enormous amounts of stock in market.

I'll probably just build on to that, the majority of the export sales from FY '25 is replenishment orders to market [indiscernible].

So just on Pontville redevelopment, it's largely complete, but presumably, this relates to an initial staging, not the original plan. Can you expand on that?