LARK DISTILLING CO. LTD — Capital/Financing Update 2007

Aug 27, 2007

Montec International Limited ABN: 62 104 600 544

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Level 6, 55 York Street Sydney NSW 2000 Australia

montec@montec-international.com www.montec-international.com

Telephone:+61 2 9299 0011 Facsimile:+61 2 9299 1499

ASX & MEDIA RELEASE

28 August 2007

The Manager Company Announcements Office Australian Stock Exchange Limited 20 Bridge Street SYDNEY NSW 2000

BUSINESS UPDATE AUGUST 2007

The Directors of listed dairy products company, Montec International Limited (ASX: MTI) announce that following a review of its China operations, there has been a change in strategic priorities to now direct available resources to expanding the branded “healthy dairy” product offering and focussing on those areas identified as having greater potential to achieve volume and revenue growth during calendar 2008.

The stated priority had been to aggressively pursue distribution of its packaged UHT plain and flavoured monounsaturated, cholesterol-free milk with a target of 10,000 retail outlets by the end of calendar 2007. However, high store entry costs and required marketing expenditure, coupled with lower than anticipated volume growth per outlet and the ongoing requirement to fund market entry, made the continued pursuit of this pace of roll-out unfeasible, despite increasing market acceptance of the product concept by retailers.

New initiatives and strategy to be implemented by Montec include:

• Reduce the pace of new store roll out for UHT milk and focus on growing volume per store. Store numbers have been relatively steady at around 2,800 since March 2007 as attention and sales resources have been focussed on implementing price increases and introducing new packaging. The recent introduction of a 12 x 250ml multi pack has shown early signs of consumer acceptance and offers potential to grow volume in major supermarkets. The China market continues to segment between low priced, traditional

milk offerings and premium, specialty products, which has encouraged growth in the higher priced, premium end of the market and resulted in some needed upward movement in prices. This has provided Montec an opportunity for some margin improvement by following this movement in prices, a strategy which will be pursued as opportunity presents. The reduced pace of the roll-out will allow sales and marketing efforts to be better directed toward growing volume and building relationships in a lower than previously planned outlet base.

• The launch of fresh mono drinking yoghurt in Beijing only, commencing November 2007 and focussing on the high volume restaurant trade. Restaurants represent a major consumption occasion for this product, offer higher margins than retail stores and provide consumer sampling opportunities.

• The launch of a UHT fermented milk drink for children with initial test markets in October. This launch represents an extension of the “healthy dairy” concept to a proven product concept, specifically targeted at children. Three products are planned for the initial launch offering, two fruit flavours and one enhanced dietary fibre version. The product will be produced in Jinhua under a new production partnership recently initiated with the Zhejiang Jinhua Jalo Dairy and the initial launch conducted in Jinhua and Beijing, prior to planned roll-out to areas already serviced with our UHT milk offering.

• The launch of mono ice cream in December 2007. Formulations for fruit flavours have been completed and negotiations regarding production and market entry plans are at an advanced stage with Beijing Allied Faxi Foods (Faxi). While plans previously called for a contribution by Montec to initial market entry and ongoing marketing costs, agreement in principle has been reached with Faxi for a product licensing agreement whereby the product will be co-branded and marketed by Faxi, focusing on Beijing and Shanghai.

• Directors have resolved to seek acquisitions and other partnering arrangements compatible with Montec’s product offering and overall business model.

Montec Managing Director, Mr Peter Herd said,

“These initiatives, as part of our refined strategic direction are expected to deliver higher gross margins, increased sales volumes and provide a broader, more structured product offering for retailers.”

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“Whilst the strategy to rapidly expand retail distribution was effective in building brand and product recognition, available marketing resources were being spread too thinly, especially in view of high store access fees and the ongoing requirement to fund market entry. This new strategy will focus on increasing volumes and more specifically, volume per outlet with a more effective use of available resources.”

In commenting on potential acquisition targets, Montec’s Chairman, Mr Terry Cuthbertson said,

“Montec is looking to acquire equity positions in other companies where there is significant compatibility and the application of existing technologies and intellectual property can be beneficial to all parties.”

As at 31 July 2007, the company had cash on hand of approximately AU$3.2 million. The Directors believe that the existing cash reserves are sufficient to fund the business needs under this revised strategy at least for the next year.

Ends

Terry Cuthbertson Chairman Montec International Limited Tel: +61 2 9299 0011

Peter Herd Managing Director Montec International Limited Tel: +61 2 9299 0011

Investor Relations & Media Enquires:

Rod North Bourse Communications Pty Ltd Tel: +61 3 9510 8309 Mob: +61 (0) 408 670 706

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ABOUT MONTEC INTERNATIONAL LIMITED (MTI)

Listed dairy products company, Montec International Limited holds certain rights to the manufacture and marketing of monounsaturated, cholesterol-free dairy products. The Company’s current focus is on China, where it is building its range of white and flavoured milks under the registered trademarks “dairypure” and “Meng Tai”, currently distributed through more than 2,800 outlets, predominantly in Beijing and Shanghai. Planned outlet growth, brand development and extensions into monounsaturated ice cream, yoghurts and other products will provide the base for company’s future growth.

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