LARK DISTILLING CO. LTD — Interim / Quarterly Report 2007

Jan 30, 2007

Montec International Limited ABN: 62 104 600 544

Level 6, 55 York Street Sydney NSW 2000 Australia

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

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

ASX & MEDIA RELEASE

31 January 2007

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

DECEMBER 2006 QUARTERLY REPORT FOR ENTITIES ADMITTED ON THE BASIS OF COMMITMENTS

Attached is the Montec International Limited ("Montec" or the "Company") December 2006 quarterly report for entities admitted on the basis of commitments.

Cash receipts from customers pertain to royalties received from Dairy Farmers in relation to licensing arrangements in New South Wales. Cash is not received by Montec for sales made to Montec's counterparty (MTR) in China. Rather, a corresponding increase in the level of prepaid funds held by the counterparty (MTR) for Montec's benefit is reflected on the Company's balance sheet. These prepaid funds are applied in the operations of Montec's China business. As Montec's China business has an ongoing requirement for operational funds during its establishment phase, the decision was taken by the Company's board to manage in part the China business funding requirements in this way. Further, the approach avoids unnecessary transaction and foreign exchange costs in receiving sales receipts and then subsequently resending operational funds to China.

The Company is in the process of establishing a wholly owned foreign entity in China. Once incorporated, this entity will conduct Montec's business in China. The consolidation of this wholly owned entity will then allow the recognition of cash receipts from the China business in the Company's consolidated financial accounts including cash flow statement.

Other working capital comprises balance sheet related expenditure including finished goods inventory and prepayments, expenditure on legal matters, general administration and compliance.

A placement by the Company of ordinary shares to sophisticated investors was made in November 2006 to provide immediate funding needs for the Company's China business. The details of this placement were announced to the market at the time.

Ends

Terry Cuthbertson Chairman Montec International Limited 02 9299 0011

Peter Herd Managing Director Montec International Limited 02 9299 0011

Investor Relations & Media Enquires:

Rod North Bourse Communications Pty Ltd 03 9510 8309 0408 670 706

ABOUT MONTEC INTERNATIONAL LIMITED

Montec International owns the Australian, New Zealand and Asian rights, to a unique technology that enables the production of monounsaturated, cholesterol-free dairy products including milk, icecream and yoghurts. NSW based milk processor Dairy Farmers has been licensed to market products in Australia using the technology.

Montec's principal focus is in developing the market for cholesterol-free dairy products in China using the technology. The company is currently building its range of plain, chocolate and strawberry flavoured milk under the "dairypure" and "Meng Tai" brands with distribution through more than 2,700 outlets predominantly in Beijing and Shanghai. Planned product extensions include ice cream and yoghurts.

Rule 4.7B

Appendix 4C

Quarterly report for entities admitted on the basis of commitments

Introduced 31/3/2000. Amended 30/9/2001

Name of entity

Montec International Limited

ABN

62 104 600 544

Quarter ended ("current quarter")

31 December 2006

Consolidated statement of cash flows

Cash flows related to operating activities		Current quarter SA'000	Y ear to date $(6$ months) \$A'000
1.1	Receipts from customers	65	113
1.2	(a) staff costs Payments for	(290)	(732)
	(b) advertising and marketing (c) research and development (d) leased assets	(88)	(261)
	(e) other working capital	(577)	(903)
1.3	Dividends received
1.4	Interest and other items of a similar nature received	20	46
1.5	Interest and other costs of finance paid
1.6	Income taxes paid
1.7	Other (provide details if material)
	Net operating cash flows	(870)	(1,737)

⁺ See chapter 19 for defined terms.

		Current quarter \$A'000	Year to date $(6$ months) \$A'000
1.8	Net operating cash flows (carried forward)	(870)	(1,737)
1.9	Cash flows related to investing activities Payment for acquisition of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non- current assets (e) other non-current assets	(2)	(3)
1.10	Proceeds from disposal of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non- current assets (e) other non-current assets
1.11 1.12 1.13	Loans to other entities Loans repaid by other entities Other (provide details if material)
	Net investing cash flows	(2)	(3)
1.14	Total operating and investing cash flows	(872)	(1,740)
1.15 1.16 1.17 1.18 1.19	Cash flows related to financing activities Proceeds from issues of shares, options, etc. Proceeds from sale of forfeited shares Proceeds from borrowings Repayment of borrowings Dividends paid	588	588
1.20	Other - Capital raising cost	(30)	(30)
	Net financing cash flows	558	558
	Net increase (decrease) in cash held	(314)	(1, 182)
1.21 1.22	Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20	1,404	2,272
1.23	Cash at end of quarter	1,090	1,090

⁺ See chapter 19 for defined terms.

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

		Current quarter SA'000
1.24	Aggregate amount of payments to the parties included in item 1.2	(118)
1.25	Aggregate amount of loans to the parties included in item 1.11

1.26 Explanation necessary for an understanding of the transactions

Payment comprises salary and allowance paid to Directors of Montec International Limited.

Non-cash financing and investing activities

$2.1$ Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

None
------	--

$2.2$ Details of outlays made by other entities to establish or increase their share in businesses in which the reporting entity has an interest

None

Financing facilities available

Add notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2).

		Amount available \$A'000	Amount used \$A'000
3.1	Loan facilities
3.2	Credit standby arrangements

⁺ See chapter 19 for defined terms.

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.		Current quarter \$A'000	Previous quarter \$A'000
4.1	Cash on hand and at bank	77	58
4.2	Deposits at call	1,013	1,346
4.3	Bank overdraft
4.4	Other (provide details)
	Total: cash at end of quarter (item 1.22)	1,090	1,404

Acquisitions and disposals of business entities

		Acquisitions (Item I. 9(a))	Disposals $(Item\ 1.10(a))$
5.1	Name of entity
5.2	Place of incorporation or registration
5.3	Consideration for acquisition or disposal
5.4	Total net assets
5.5	Nature of business

Compliance statement

• $\mathbf i$ This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act.
• $\overline{2}$ This statement does give a true and fair view of the matters disclosed.

Sign here:	[Original Signed] Company Secretary
Print name:	N J V Geddes

⁺ See chapter 19 for defined terms.

Notes

• $\mathbf{1}$ . The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
• $2.$ The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below.
• $6.2$ - reconciliation of cash flows arising from operating activities to $\bullet$ operating profit or loss
• $9.2$ - itemised disclosure relating to acquisitions
• itemised disclosure relating to disposals 9.4
• $12.1(a)$ policy for classification of cash items
• disclosure of restrictions on use of cash 12.3
• 13.1 - comparative information
• 1. Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

⁺ See chapter 19 for defined terms.