LRKKF (LRKKF) Q4 2026 Earnings Report, Transcript and Summary

Hello, and welcome, everyone, to the LARK Distilling Investor Call for the 2026 Annual Results and Business outlook following the release of the FY '26 financial statements and annual report to the ASX earlier today. My name is David Allen from Hawkesbury Partners. I'm going to be your host for today's call. And joining us is Stu Gregor, CEO and Managing Director; and with him is Paul Bowker, the CFO of LARK. I'd add that today's call is being recorded. [Operator Instructions] We'll also have a recording of today's call on the LARK website shortly for future viewing. I now look forward to handing over to Stu Gregor, CEO of LARK, to start today's call.

Thanks, David. Good day, everyone. Welcome to my first results. It's been an incredible journey here in the last 6 months at LARK, I've thoroughly enjoyed myself since starting on January 5. For those of you who don't know me, I came out of the Four Pillars Gin business where we sold that business to Kirin in 2023. I then joined the LARK Board at the back end of 2024 and have been the CEO and Managing Director, still remaining on the Board since January 5 this year. We've been very lucky to get Paul Bowker on board. He's our new CFO. He's been with us just over 3 months now out of the Brick Lane Brewing business, a very talented lawyer, finance CFO for listed businesses and we're greatly lucky to have him on board. So welcome, Paul. And it's been a pretty good year. In fact, it's been a very good year. LARK is uniquely positioned amongst Australian spirits sector and most particularly amongst Australia's whiskey sector, I think, to show even improved growth over the next couple of years, but we're going to focus on FY '26. Our net sales are up by 15% in what is a challenging market, both domestically and internationally. $18 million of net sales is a really impressive result for this business. The most happily across every channel that we sell across domestically and internationally. We've got a $4.5 million operating EBITDA loss, which just basically reflects just the fact that we are continuing to invest ahead of the curve. We know that we can build this into one of the world's great drinks businesses, and we know that we have to invest in marketing and commercial roles. And we're doing that now ahead of what we consider to be really great potential future revenue growth. We have made some adjustments and noncash adjustments to goodwill and whiskey inventories that you will see there at point 4. Paul will talk to you a bit more about them in a couple of slides' time. I think both timely and necessary adjustments that I think will keep us with a clean balance sheet moving ahead for F '27 and beyond. Speaking of our balance sheet, we've got a really great balance sheet. We have plenty of cash in the bank, $14.25 million, $14.3 million in cash and cash equivalents. We've got no debt. And this allows us, I think, to have a really incredibly great base to fund growth in the future. And importantly, we have 2.4 million liters of some of the world's greatest whiskeys maturing at 43% ABV at our single site distillery now at Pontville. We have one of the greatest resources in the world. It is a magical place Pontville in -- just in the outskirt of Hobart. We have a really great scalable production asset. We're making the best whiskey that we have made in the history of LARK and Bill Lark told me that as recently as last week. So it is a year of foundational growth, and it really has been a really excellent year for the business for us to build a foundation moving ahead. So I just thought I'd give you a little overview of what the spirit of LARK is on the next slide. For those of you who might be a little bit newer to our shareholder base than others, we are the original single malt whiskey of Tasmania and of Australia in1992, Bill and Lyn Lark foundered this business. And that gives us a unique position amongst any Australian whiskey distilleries. We have won and continue to win. And most importantly, I'll show you on the next slide, continue to win more global awards than almost any Australian whiskey distillery and in fact, are most aligned to thinking that we might be one of the most successful this calendar year, one of the most successful whiskey businesses in the world in terms of international global recognition. And not just for the whiskey inside, but also the packaging outside. We actually won the world's Best Design and Best Range Design at the '26 World Whiskies Awards, for our new packaging, which you will hopefully have seen and if not, you will see a little bit later in the presentation. And Chris Thomson, who has been with us 19 years is actually the Master Distiller of the Year at the same World Whiskies Awards. As I said, we've got the 2.4 million liters of Whiskey Bank, great production assets feeding our 4 channels, which we call direct-to-consumer, business to business, which is selling the bars and restaurants in Australia, Global Travel Retail, the duty-free channel and our international channels which are growing at a great rate. International channels grew 69% Global Travel Retail, 43%. As I've said before, we have reinvented, repackaged and relaunched the LARK business in the last 6 months and the last -- basis -- essentially in the last quarter of the previous financial year. And the recognition for the new portfolio, the new format and the new identity has been quite astonishingly positive, and we think that this is going to build our momentum in the international markets and in the domestic markets to see a really great year of significant growth in 2027. Importantly, we are different -- we are differentiated from the broader Australian whiskey market, if you like, LARK is different. LARK is better. We have a more authentic original story, and I think that positions us really, really well to grow. And if you just have a look at the next slide, these are the awards that we have won just in the last 4 months. The World Whiskey Masters is where the trophies essentially are given that they called Masters Medals and Gold Medals, which are better established Gold Medals. And we have won 7 between Masters and Gold Medals. We won 3 Gold Medals at the Australian International Spirits Awards, which were just recently held in Melbourne. We also won the design award for best whiskey design. And at the World Spirits competitions in San Francisco, we won another handful of awards, 5, in fact, all for the new range of whiskeys. What we are seeing here is that the new whiskeys that are being made -- that are being released today, but also the new whiskeys that have been made at Pontville are the very best whiskeys, I think that LARK had ever made. And I think that the future of the business is astonishingly positive. It's also worth noting that Bill Lark, our founder and still our global ambassador and still very active in the trade. He was doing dinners as recently as last week in Sydney and also in Canberra. He was awarded an AM in January on the exact same week that Chris Thomson, was awarded Master Distiller, Master Blender of the year for the rest of the world in the World Whiskies Awards. So we started the year, the calendar year pretty well in the second half of the financial year. It's been quite a time for the LARK business. If we just have a look at the growing market opportunity, there are -- it's fair to say that there are some challenges in the liquor industry at the moment. There are some challenges in whiskey, but I think it's really important to have a look at the bigger picture. We are still playing in a world whiskey market that is valued at over USD 100 billion, with the Australian whiskey market at about 2% or 3% of that and still growing. Whiskey is still a growing category. We understand there are headwinds. We understand there are challenges for Australian drinks manufacturers and there are for global spirits giants as well. But we are still playing in a very big pond, if you like. And what we're going to be doing over the next couple of years is trying to do -- well, to continue the fishing metaphor, we're going to try to fish where the fish are. And we have to make some big decisions about making our whiskeys more accessible. We have to continue to sell the authenticity and the originality stories. We have to understand where consumers are going to meet us, what they're looking for in occasion-based drinking. We know that they're shopping on e-commerce, not to the levels they were obviously in the pandemic, but there is still significant growth in e-commerce, both in Asia Pacific and domestically and we are focused there both in the Australian market as well as the Chinese market and making sure that we are well positioned to e-commerce and one thing that we really have to do is we have to look at innovation and flavor and say, what are the new generation of whiskey drinkers looking for in terms of flavor, innovation, pack size. So there are many things that we have in the pipeline for the future of LARK. We can't just be a whiskey business selling extremely expensive Australian whiskeys, we have to be able to be more diverse. We have to be able to be more innovative, and that's where we're going to be looking at putting quite a significant amount of our focus over the next 12 to 24 months. So where are we looking at? If we have a look at the key focus areas to expand our future growth, we've got a very, very magical distillery that I would encourage anyone who has any interest in the LARK business to get down to just on the outskirts of Hobart. We have 2.5 million liters of the most incredible whiskey and we have a really strong balance sheet, a net cash position to support our growth that is unique, I think, in Australian whiskey distillers today. What do we have to do? We have to make great consumer connection. The key to us being a success, and this has sort of been my mantra for my entire career in this industry is that we have to become a brand that people love, a brand that people want to call out, a brand that people will seek not just a generic whiskey brand that people must ask for LARK. And that is across all our distribution channels, both in the on and the off trade, both in domestic and in international. It's really important for LARK that we stand head and shoulders above the category. We have the right to be the category leader and now we have to begin to behave as the category leader. And what that means is that we're just going to build better partner relationships. And those partner relationships with everyone from the larger on-premise groups across Australia, obviously, the large retailers across Australia, the global travel retail partners, whether that be in Australia, Heineman in Sydney Airport and Lotte who are in Melbourne and Brisbane Airport who have very, very significant aspirational plans to partner with LARK over the next few years to build our global travel retail presence in really important airports, particularly Melbourne and Brisbane as they grow, Brisbane is having a massive redevelopment. And Melbourne is very ambitious to become as important a gateway as Sydney. And for those who were at our presentation in June, it's worth noting that at Sydney Airport over the June, July period, we were actually the #1 single malt whiskey at Sydney Airport ahead of any of our Scottish competitors, pretty remarkable for a little Tasmanian brand. We have some real opportunities. We've just gone into Changi Airport as well in all 4 terminals. So we've got some big opportunities, I think, across the global travel retail network. So to dive into the numbers, I'd want to invite Paul across now to have a look at a couple of the FY '26 highlights. Over to you, Mr. CFO.

Thanks, Stu. And thank you for the introduction and the overview. Like Stuart mentioned, I'm a relatively recent convert into LARK as well, having started this year and like Stu, I'm incredibly honored to be part of LARK what is a pivotal moment in its history. One thing when you start at LARK, you pretty quickly realized the love for LARK, not just across customers and consumers, but the team internally, it's a magical place to use your word back at you, Stu. It's an excellent description actually of what it's like at team LARK. The financial highlights. So Stu has obviously touched on these. The key thing for us, really, as we look at FY '26, but also into FY '27 is the sales number. LARK is entering the growth phase of its journey. And over the course of FY '26, we grew sales by 15% to $18 million. There's a couple -- we'll break out that down in a bit more detail when we look at the split between domestic and international and the different channels. But at a high level, the really impressive part of that sales growth is -- it comes from a couple of components. One is effectively the baseload predictable organic growth domestic business that we sit on. And the other is the outsized growth path, which is through international and GTR. And we'll touch on that in a bit more detail, but it's a very solid number and very pleasing for the team. The operating EBITDA for the year was negative $4.5 million, broadly in line with FY '25. The key factors that sit behind the negative EBITDA, as we'll get into in a bit more detail. is really around the investment for growth. As Stu touched on, the last couple of years, the business has invested very heavily in its portfolio, in its brand, in its infrastructure and that's all being done with a view to long-term growth. And we intend to continue to do that in FY '27, and we'll touch on balance sheet in a bit more detail, but we have the firepower to continue that growth model. Cash position, the business is in a very strong cash position. We have no debt. We have $14.3 million in cash. We also have significant assets backing the business, including our home of LARK, the magical place at Pontville and also our whiskey bank, which is approximately $50 million worth of whiskey that we're sitting on. The other key factor in the FY '26 accounts that we need to bring forward is the impairment to goodwill and the write-down of the whiskey inventories. We took the decision this year to impair goodwill, the majority of our goodwill by just over $20 million. Much of that goodwill arose from previous acquisitions within LARK and no need to go back through the deep history, but LARK is effectively a roll up of a number of different distilleries over time to get where it is today and the decision was made to write down the goodwill in some of those historic acquisitions, many of which are 5 more -- 5 years or more ago. The other key factor was an assessment of our whiskey bank, and we took the decision to reduce the net asset value in the whiskey bank from $64 million, down to $49 million. Then as we touch on the balance sheet, and this is really one of the strengths of LARK and we're in this incredible position that we're in to enable a future growth mindset because of the hard work that's going on in the business over the last few years. And we've had a very strong focus on ensuring we've got a strong balance sheet to enable growth without straining the business. And Michael Andrews and his team who look after the finance within the business have done a tremendous job of ensuring that we've got a very solid cash position. We run no debt and also that we've been investing even ahead of the growth curve in continuing to build both the quality and the flexibility of our whiskey bank. All these items mean that from this position, we're able to continue to invest in the operating side of the business, predominantly sales and marketing knowing that we've got all these assets within the business that are there to be commercialized and properly deployed. So this is a bit of an overview just to touch on the momentum in sales. As you can see, the business historically has had a good track record, particularly over the last few years of steady growth of its underlying core business, I'd call it. That business predominantly has been around the domestic market, driven through our sales within the national retailers, a little bit of on-prem and also through our own channels. And it's been very good to see that organically, this business can continue to grow even in what is in some parts a challenged market. The key thing to note with this graph, which we'll get into in a bit more detail is that this is really based off organic growth of our pre-existing portfolio, in FY '26 towards the back end of FY '26. We relaunched our range, including a signature range. And those sales trickle through in the end of FY '26 as we just released them, but will form a very core part of FY '27 as well a focus on global travel, retail and international. So in our view, we'll continue to see growth in sales of the business through the core business, if you will. But also there's this opportunity for outsized growth, outsized performance across those key areas of GTR and international. So if we touch on a bit more detail now. And I'll just split these 2 slides, our channels into domestic and international. And within those, there's different paths to market. As I said, historically, domestic has been the core focus of our business. It's a very, very strong position that we've got in the market. And there is a lot of love for LARK within Australia. We have a good position in it. Within the domestic channels, we have a direct-to-consumer business, which goes from strength to strength, so Kam Blight who runs that business for us, has done an incredible job of capturing a leading position in the Australian D2C market for whiskey, spirits and in fact, drinks. It's a sophisticated operation. We have a database of around 80,000 people. who regularly read our communications and buy our whiskeys. The other key thing just to bleed into a little bit of international off this slide is that Kam has spent the last year focusing very heavily on how we expand that D2C business. And over the last week, it's very pleasing to see that we are now available in China and also in Europe through our owned D2C channel, which has required an incredible amount of work on Kam's part but it also means that dominant position we have in D2C in the domestic market, we can now leverage that and expand out into much bigger markets internationally. The B2B component, a very important part of our business and a touch point for, I guess, the mass consumer and being available in national retail, which for us is Endeavour Group and Coles is incredibly important to give people ready access to our whiskeys. We do that through one of our very good partner, exclusive partner in the distribution space, which is Spirits Platform. The team there through Ian, Neil, Ryan and others have done an incredible job of really expanding our presence, both in the off-premise, so in retail outlets. But increasingly, we're starting to trickle into on-premise, which will provide us excellent trial to a broader base of consumer. And Stewart Graham continues to impress everyone within the business and outside the business on his dedication to growing that channel. The other part that we don't need to touch on in too much detail, but as Stu mentioned this, LARK has been around for a long time. It started small. And the way it really started with a hand sell one-on-one with the consumer. And we've continued to carry that ethos through the business, and we now have a venue and hospitality business that covers 4 venues within in Hobart and surrounds, and that continues to drive an incredibly important channel for trial of our product, for hosting people for bringing people into the magical world of LARK. I'll keep using that word of yours, Stu, that I've now adopted. And it also provides an excellent channel for new product development and one-off releases and really getting immediate market feedback. So the key message out of domestic is really that this is a core part of our business. It's in steady growth, it's very reliable cash flow business that we understand well and a great touch point for the consumer. If we move across into the international channel, if domestic is our core business, international is where we are aiming for outsized performance. International for us covers 2 elements. One is international into countries globally. And the other one is a specific subset of that, which is Global Travel Retail. So if we look at in-country export distribution, we've made inroads into China. China is our focus. We're unashamed about that. FY '26, we did just under $2 million in China off a low base. We have 4 people, 4 full-time staff based in Southeast Asia. And we've got a very strong program over the next 12 months to continue to make inroads into China. We also touch on other South Asian markets, but again, our focus of our marketing sales, dollar spend is in that China market, and we've got very good hopes for that. We've also got our new Signature range, is arriving on the shores of Shenzhen in about 10 days. So that new range will also be going hard into China too. The other key -- and that's Alfred Goh, who I think is on this call as well. So congratulations, Alfred on a tremendous year in, getting China up and running. Global Travel Retail is an absolute powerhouse of international retail, not just in alcohol spirits, but in categories globally, it is growing. It's growing heavily, passenger numbers are increasing. There's premiumization. This is an incredibly important channel for us. It's one that we've only recently entered at scale. We've been in it with our historic portfolio, but the new Signature range has really now just started to flow through. And we are seeing some absolutely incredible numbers, particularly out of the Sydney Airport, where we have large activations, and back -- off the back of the results for that and proof in market, we've now rolled into Changi. We're in 4 venues in Changi in Singapore as well. And through the efforts of Stewart Graham, we're going to continue to roll that channel out in the future. So there's some exciting opportunities there, both in terms of base load, but also in terms of outsized growth and it's a really promising year ahead that we have. Thank you.

Thanks, Paul. So what's next? I mean it's not a complicated business. We need to increase distribution points, and then we need to increase depletions at those distribution points. One of the things that we really need to do is we need -- as Paul said, we need to increase our availability across the Australian domestic retail channel and also across Australia's domestic on-premise channel, which is bars and restaurants. We've often been seen as being an exclusive and expensive whiskey that is a little bit too expensive to have a nip of if you're in a whiskey bar in Sydney or Brisbane and Melbourne. We need to readjust our thinking, we need to readjust some pricing, which we have done with a new product called DARK LARK that was only released just in June, where we have brought some pricing down in order to significantly increase the volume and the ability for people to enter the LARK world. So we are going to be doing a lot more with the on-premise market right across the country. And we're also going to be doing a lot more with the on-premise market across Southeast Asia and into China. And what we just simply have to do is increase sales into the distribution points. We have to make sure that we are depleting that by making sure the consumers are asking for our products. We think the Spirits Platform are the absolute correct partner, and I thank them for the efforts that they're putting this year. Global travel retail will be a huge focus for us. I mean as recently as yesterday, we were talking to the Lotte business who do run the Melbourne and Brisbane concessions, as we've said, about some of the developments that we can engage in at both of those airports. They also run a concession at Changi. They have -- there's 4 terminals at Changi and 30 stores at Changi, just to give you a sense of the scale there. And obviously, Lotte is one of the biggest Korean businesses, and we're already talking to them hopefully about whether or not we can get into some of the other markets where Lotte exists. It is a big opportunity for us. We'll be talking to New Zealand. All of the Southeast Asia regions, and of course, will be probably be going into the Middle East in the F '27, F '28 period. Our focus, however, will remain in the Asia Pacific region, it will remain on China, it will remain in Australia, New Zealand and Southeast Asia. If there are opportunistic -- if there are sort of opportunities that present themselves in other regions, we will obviously be talking to them. We -- one of the things that is happening to this business now, I think as we're getting better known, better recognized and more successful. We are finding that a few more importers and distributors around the world are more interested in our business. And that's something that I have learned from the Four Pillars days. Once you should begin to get some traction, once you begin to gain some attention both domestically and internationally, you really do have a greater opportunity to get the right sorts of partners in the right markets, be strategic. But build those relationships. And luckily, we have a few of those great relationships around the world from my time sort of running the Four Pillars business. So it is great opportunity for us. So FY '27, if we built the foundations in FY '26, what we now have to do is build the first several levels of the LARK castle, if you like, now. I think it's going to be a very exciting year. I don't think that we're going to be anything less than incredibly ambitious. We're going to be a much more aggressive business. We are -- we have some genuine targets to become Australia's preeminent whiskey business, both in terms of value and volume. It's a big year for us FY '27. So I just want to thank you all for listening. Thank you, Paul, for participating. Thank you, David, for pulling it all together. Thank you for Kate in my office here for sorting out my inevitable tech issues. And we're more happy to open up for questions.

Thank you, Stu. Now we've got a few questions already. [Operator Instructions] So our first question comes from Lachlan Scott of Moelis. And the question is, given LARK has now entered in export markets and a recent first shipment to China, what feedback are you hearing from the distributors and consumers in those markets, especially relating to your new signature range.

Yes. Look, the answer is it's almost too early to tell. As Paul said, I think the first serious order of Signature range to China is actually still 10 days away from landing. We had some good early success with a product called Kurio as well as the classic releases. But certainly, in Singapore and Malaysia, where we have been with our Singapore range -- with our Signature range now for the best part of 4 or 5 months. The response has been fantastic. They love the 700 ml format. They love the bright colors. They love the packaging and both for consumption and for gifting. I think measurable feedback has been nothing short of extremely positive. And I think we will go very well in each of those markets. Paul was in China only 2 or 3 weeks ago with Alfred, I will be back in Hong Kong, Shenzhen, Singapore, in October, November, we're putting a considerable effort there and the feedback so far has been terrific.

We've got a follow-on question in relation to that, and that is export sales grew 69% this year, mainly in China. Can you just unpack a little bit about what's driving that momentum? And how repeatable you think that might be?

I think it's utterly repeatable, in fact. I think it's just very -- it's come off a very low base. So I think we've actually -- we are endeavoring to establish a reasonably unique route to market based primarily in the southern states of China. I think we have put an enormous amount of research and effort into doing it because we do understand that if we were just to try to do what everyone else might try to do into China, then we would in some ways, moderate our potential for great success. We've been doing some great work with a partner with whom we're going to have a distribution agreement very soon. I think we've got a great opportunity because there is an innate love of -- and maybe not a full understanding of but certainly a love of Tasmania and Australia, and there is an amazing consumption and love for whiskey. And there's a burgeoning part of the Chinese community. And you can see it with the Chinese, for instance, the first time ever in Asia's 50 Best Bars, the first time in history, a Chinese bar actually won Asia's 50 Best Bars. There's more of a cocktail culture coming. And we know that when there's a cocktail culture coming into a country, they start looking for brands other than just the big hitters. They're looking for this originality and authenticity, and they're looking for something that will differentiate themselves. And that's both from a consumer point of view as well as an on- and off-trade point of view. So we think we've got terrific opportunity in the southern parts of China, and we're going to be really investing. And we're looking -- I mean, we're employing now for commercial and marketing roles to be based in China in preparation for us to have these first significant shipments going. So a bit too early to tell, but we should know on this call next year, we should have a really good read on it.

Great. Next question from Allan Franklin at Canaccord. There's a couple of questions. I might just do them one at a time. Could you talk to the process undertaken with the noncash write-down of your inventory? What literage was written down? And what does this suggest for the value or the quality of the whiskey bank that you've got left or stands today? It might be for you, Paul?

Yes. Thanks, David, and thanks for the question, Allan. So when we look at the inventory, and we're predominantly talking here about our whiskey bank, which is whiskey effectively under bond and in barrel awaiting a home on the consumers' lips. Within that whiskey bank, we've got -- we look at it at different tranches. So there's whiskey there that we've distilled ourselves at our Pontville distillery, there's whiskey that we've distilled at former distilleries and there's whiskey that we've brought into the business through prior acquisitions. Now within that -- within those different tranches, we have on the balance sheet that whiskey at different prices. So as part of, obviously, our audit review, we go through that, we test the value of the balance sheet, and we see what's appropriate. So when we went through this year, we had a look very closely at what we can actually now produce whiskey for and how that compares to other whiskey on the balance sheet. Importantly, we also had a look at what our path to market for the whiskey is. And in a real positive, previously, we were focused on the super premium and luxury, which remains an incredibly important part of the business, but we've now opened up new channels into high-volume whiskeys, including the release of DARK LARK at $150 a bottle. What that means is when we draw down from the whiskey bank, we're putting it into a slightly lower-margin product but obviously higher volume product. And when we pulled all those things together, we did a calculation around the whiskey bank and made the decision to adjust the value from $64 million to $49 million. Now that doesn't mean that it changes the amount of literage that we have in our bank or under bond. It's no change to the quality. It just means that we're now able to produce that whiskey very efficiently through our own production facility. And we also have paths to market that move outside of the super premium and luxury categories into categories where we hope to drive more volume.

Great. Thank you Changing gears a little bit. Another one from Allan. With GTR, it's great to see the Changi range. There looks to be 4 doors. What prospects for rate of sale does an airport like this hold and how should we think about the margins here versus, say, the rest of the portfolio?

Yes. So in GTR, and Changi is incredibly exciting to launch there in 4 channels off the bat is an amazing outcome. GTR is a high-growth part of the market. Last year, we grew 43% in GTR. We did $2.2 million in revenue. And that was off a fairly small start, small base standing start almost. GTR is a low-margin channel. There's margin for the airport. There's margin for the retailer. But what it does allow us to do is to move good volume, but also enter new markets with a really low setup cost. For us, GTR is run by one person Stewart Graham, who seems to be getting a few shout-outs today. But he's able to run that GTR operation effectively by himself with the support of on ground activations. It allows us to enter 4 markets off the bat without an increase in resource. It allows us to go into new countries internationally and really form a base for further international distributions. Compressed margins, but higher volume, and we have an excellent portfolio of products with -- that are volume and super high margin. And once we blend the volume products in with the higher margin, retail exclusive products, we end up having a very sustainable margin.

Yes. And it's important to note that one thing in that GTR channel and even as recently as this week, we've been having these conversations is that whilst the margin for the mainstream whiskeys that we're making will be low. There's an increasing demand particularly ex Australia and in Asia for mega -- what I'm going to call mega premium products. And these are whiskeys at $5,000 and above. And one of the things I think that is most special about LARK is our ability to make volume. We noted that we made a Whiskey Club whiskey this year of well over 20,000 bottles that's winning Gold Medals and Masters Awards, but we were also making Mizunara Cask whiskeys that are $1,000 a bottle that sell almost exclusively in GTR as well as our direct channels, but we will be making some products for the travel retail channels that will be in the $4,000 to $6,000 a bottle, and there are good margins there for everyone.

Great. Just one final one from Allan Franklin moving forward. Could you give a little bit more color on FY '27 execution? And specifically, what success would DARK LARK look -- what would success for DARK LARK look like? And what would success look like for international as well?

Look, I think if we start with DARK LARK, we're having a decent-sized bet on that, and it's requiring the business to -- we have to make sure that we can meet my -- our level at the executive and Board level of expectation for the product. We wanted to turn that product without giving away too much. I mean I would expect in 2 or 3 years that we will be selling somewhere in the vicinity of 15 to 20x of the current volumes of DARK LARK, we have a very, very aggressive plan for that. We seek to become Australia's #1 value whiskey. And the other -- so DARK LARK will also be a door opener for us, both in travel retail as well as on-premise in Australia. I want everyone in this country and in the region and potential across the world to realize that DARK LARK is the entry point for them to Australian whiskey. So our ambition for DARK LARK should not be understated. And the other question was about our -- what was the other question, David?

It was about what is your international -- what will be success look like for international?

Continued significant growth, both in the -- what we need to do is we need to firm up our foundation, Southeast Asian markets, first of all, before we go exploring into Europe, the Middle East and the United States. So what I want to see is good growth across all of our established 10 markets. I want to see us expanding into some other markets within our region. There are a couple of obvious ones. And I want to see us having a presence in airports in regions where we are selling because what one does is if we're available at the airport, even if we don't get the sale, then people have had enough opportunity for brand recognition that they might buy it if they go into retail within the market. So that would be Kuala Lumpur as an example. That would certainly be Hong Kong, that would certainly be Shenzhen airport, that would certainly be Singapore.

Just following on from that. There's another question. Apart from Asia, what other international markets are you targeting? And what sort of time frame and likely costs are you looking at to get into those?

I'd say that our focus remains -- I mean, hopefully, I sort of gave that a good crack a minute ago. But I mean the focus has to be in these Asian markets. What we have to do is solidify the markets that we're already in, that we've already opened in because remembering that some of these markets, we launched into, let's call it, Japan, Korea, Thailand, Vietnam, with what we're going to call old classic product rather than a Signature product and only now are they getting the new product and I think we've got to make sure that we emphasize getting a solid foundation in these markets first before we go and look elsewhere. We -- as Paul said, we do have availability in the European markets, direct-to-consumer. We will -- we have -- we are now getting inbound inquiries from distributors, for instance, in the United Kingdom. We are definitely getting inbound inquiries from distributors in the United States. But for those who know how the United States liquor distribution world is going at the moment, it's complicated, and it's -- there's all manner of challenges in the U.S. liquor distribution market at the moment. So that's probably not a priority. Would we like to have a presence in some of the Middle Eastern airports when they get back to full capacity? Absolutely, we would. So -- but we need to be a bit strategic. If I did -- some people often ask me, did I learn -- what are the good things and the bad things I learned around Four Pillars. One of them is that you can't just take a scattergun approach to export markets. They are -- I mean, I think one of the questions was what's it going to cost? They're expensive markets to manage. And as Paul said, one of the things -- one of the reasons we like the GTR is that we can run the GTR business with 1 or 2 people almost globally working out of Sydney, whereas if we're going to appoint distributors in far-flung nations, that is an expensive market to service. So we have to be strategic whilst keeping an open mind for opportunities, for instance, Canada fell in our lap recently because they no longer like drinking American whiskeys. There is a small opportunity there. It might be a one-off, but it's definitely worth us exploring.

Got another financial question here from Nick McGarrigle at Barrenjoey. Can you talk -- and this is probably for you, Paul, can you talk about your gross margins and the dip in FY '26. How did that track over time? And did this get impacted by the inventory write-down?

Yes. Thanks, Nick. So I guess to look at a comparison around gross margin, we probably need to look at where the business came from. And as we've touched on, historically, it had a fairly narrow path to market and very high-priced product. So we naturally have run high gross margins because we capture this very small top of the mountain type portion of the market. As we've now moved into the growth phase of the business, we've expanded our channels and also our product mix. So if we take both of those in turn, our channel mix is now rather than skewing very, very heavily to our own high-margin channels. We're now pushing, particularly into other channels like GTR, those are going to deliver a big increase in volume but also at a lower gross margin. If we then also look at our product mix, again, we're now entering new markets where we're required to or where the biggest opportunities are ensuring that we've got more accessible products. And if we look at a product like DARK LARK, we expect that to deliver significant incremental dollar margin, but the percentage margin will be lower. So those historic margins of mid-60s, even 70% that the business has experienced in the past came down to 60% in FY '26, and we'd expect to tickle lower as we continue to expand our channel mix and also our product mix.

Thank you. We have another question here. And it says, as a long-term shareholder and a little customer having visited your Tasmanian sites. I'd like to hope that we could be rewarded with a 15% to 20% retail discount with online purchase. Is that something that you would consider?

Well. It sounds like a Dorothy Dixer for me, but I'm not sure it's 15% or 20%. But we are letting shareholders know today that we are -- we have just created a loyalty club for the LARK club. It is fantastic initiative. We're looking at more like 10%. So apologies, 10% discount for shareholders across some of our limited releases and Signature ranges. And every shareholder today will get some communication, I believe, around the tier of membership that they're going to get. So each LARK shareholder will become a member of our loyalty club, and they will get benefits of great VIP visits, private tasting, special discounts if they come to our homes, and an online discount of around 10%. So apologies, I didn't quite hit your 15% to 20%. But as the previous question said, we need to retain our margins, right? We need to maintain some margin. And as a shareholder, I know you understand that.

Thank you. This is a future-looking question. All the projections look to be saying that LARK could be profitable in a couple of years at the bottom line. So is it intended to issue dividends when that's possible. And what proportion of profit might you be allocating to dividends at that time?

Yes. So I'll answer that question in 2 parts. I guess as we touched on from a capital perspective, the business is -- has a very, very strong balance sheet. We've already preinvested in our Pontville brewery, which you can see behind me. We've got $50 million worth of whiskey. We have -- we don't have any significant need for any funds to be deployed into capital projects. That's effectively being presold. The other side is our operating expenditure. And that's obviously -- we run that harder than our income at the moment, which is why we've got negative EBITDA. Our plan and our forecast are certainly for FY '27 and beyond to continue to run sales and marketing hard. We're seeing growth -- good growth already from that investment. The Signature range has only just been relaunched, and we're not taking the foot off the pedal at the moment. So we would expect to continue to invest in that. In terms of dividends, that's something we assess on a regular basis through the Board at some point when we believe we've hit the optimum pre-investment or ahead of the curve investment into our sales results, then we'll consider whether or not the earnings of the business justify handing or declaring a dividend.

Yes. Another forward-looking question here. Is LARK receptive or interested in potentially being acquired by a bigger player in the industry if the right deal was to be presented to you?

We would say, in all honesty, that the appetite for the larger players globally for investing in businesses like ours might be limited somewhat at the moment given the macro situation of some of our larger competitors, that said, there is some activity going on in Europe at the moment where we think one of the big companies is going to acquire a mid-tier white spirit distillery. Look, it's not something that we need to -- that we can afford to focus on for the time being, right? We need to -- to Paul's point before, we need to work this business on a pathway to profitability. We need to work our assets hard. We need to create much greater consumer demand. And sure, if there's a knock on the door somewhere down the track, then we will obviously have a conversation. But we need to look after our own affairs, and we need to make ourselves the most attractive potential proposition as we can. And then if the cycle -- we all know those of us who've been in the industry long enough understand that the cycle -- we're in a particular part of the cycle at the moment, where acquisitions are probably not front of mind for most of the international players, but they will come back and Australia will become of interest to the international players. And we need to make sure that if Australia is of interest to international players that LARK is the forefront of that interest.

Great. Just a follow-up here from Nick McGarrigle at Barrenjoey. With the recent Whiskey Club release sales, can you just comment on that and how you see that as being repeatable in FY '27?

Well, unfortunately, it's not repeatable in FY '27 because they have a very strict cycle of how often they will partner with a particular distillery. And our next Whiskey Club is April 2028, I think, is our next one. So it's not repeatable next year. I mean The Whiskey Club, which is based in Tasmania is a phenomenal business, and we love partnering with them. And the fact of the matter is that the LARK whiskey club addition, which was just -- which was the July month for whiskey of the month, is in the 3 most successful whiskeys that The Whiskey Club has ever produced and sold. And in fact, there were 2,500 people who missed out on getting their allocated bottle. So we love partnering with The Whiskey Club, but there will not be a Whiskey Club order in the next financial year, but there will be one in a subsequent financial year. And hopefully, by that time, it might even be a big uplift on the one we did this July.

Okay. Stu, there's no further questions. So I hand you back for any final closing remarks.

I just want to thank the shareholders. I want to thank everyone who's -- I want to thank the shareholders, the analysts, anyone who's paying attention to this webinar. I want to thank the internal team at LARK, they have done a really terrific job. It has been a year of transition, right? We talk about foundational growth. It has been a year of transition. We had -- I want to thank Sash and Iain, our former CEO and CFO for the commitment and hard work they did, both of them finished up in the financial year of FY '26 and both of them did a phenomenal job on building the foundations that we're now growing upon at LARK, so thank you to Iain and thank you to Sash. Thank you to Paul and my -- our executive team. I think there's a great opportunity for LARK. I think the key for us is that the market and the industry more broadly and the consumers understand that LARK is uniquely positioned. We are Australia's original single-malt whiskey distillery. We are Australia's great single malt whiskey distillery. And I think if we can continue to delight our customers, delight anyone who visits Tasmania and make the best whiskeys in the world. We'll be very, very well positioned at this time next year and the subsequent years to be known as one of the world's great drinks businesses because that's the only aspiration we can really live for. So thank you for everyone for their ongoing support, and I hope we have a terrific FY '27.

Thank you, everybody. That does conclude the call today. We will be putting this up on to the website. We appreciate your participation, and you can now disconnect. Thanks very much.

Thank you all.