LARK DISTILLING CO. LTD — Interim / Quarterly Report 2021

Jan 28, 2021

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F21 H1 INVESTOR UPDATE (& OUTLOOK)

29 January 2021 Lark Distilling Co. Limited

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FY21 H1 KEY HIGHLIGHTS (UNAUDITED PERIOD ON PERIOD COMPARISON)

3 x Limited Releases Accounted for $1.2M of H1 Gross Revenue

• $7.5m +$3.6m (+95%)​

• Gross Revenue​

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• GP​ $3.8m +$1.7m (+78%)​

• EBIT​ $611k

• +$1.3m (+188%)​

• Cash Balance​ $11.97m

• +$7.7m (+180%)​

Christmas Cask Release II Wolf Release III $578K Gross Revenue $370K Gross Revenue Oct - Dec Aug - Nov

Rare Cask PARA50 $267K Gross Revenue Nov/Dec

• Whisky Under Maturation​

• 818,000 litres +264,000 (+48%) ​

• NSR / Value of Litres of Maturation​ $113,639,301

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A CLOSER LOOK AT THE NUMBERS

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The correct gross margin measurement is to GP/Net Sales (ie. after govt excise) but we have provided GP/Gross Sales for completeness. The decline in GP/Gross Sales is driven by the change to a direct sales model (we pay excise) from a distributor model (they pay excise).

Please Note reported EBT is not audited or reviewed and may be subject to change

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FY21 H1 CASHFLOW HIGHLIGHTS

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 Net operating activity cash outflows were $1.99m for H1. Q1 operating outflows of $1.83m were the result of a build-up of costs which had been deferred as part of COVID-19 government support measures, mainly PAYG $356k and excise tax $788k. Operating activity outflows of $154k in Q2 were the result of an uplift in inflows received from customers due to higher product demand and sales volumes. The driving force behind the increase in receipts related to the strong performance of online and the hospitality venues.

• Net investing activity cash outflows for H1 of $362k related to continued investment in the Cambridge production facility. Significant items included payment for the column still in Q1 $87k. A deposit for the Peat Smoker $64k, payment for 1000 litre IBC’s $133k and $51k to finalise the column still project in Q2. Other outflows for PPE related to production infrastructure and improvements to the hospitality venues.

• Net financing activity cash inflows for H1 of $8.20m was the result of the capital raise undertaken in Q1. Total funds received net of transaction costs was $8.4m and minor payments were made for truck and barrel finance. Net financing activity outflows were minimal for Q2. Minor payments of $85k related to truck and barrel finance repayments and lease liabilities.

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LITRES UNDER MATURATION

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• Litres under maturation during the half increased by 106,236 or 14.9% since 30 June 2020 with the Company now holding whisky inventories that at maturation would be valued at $113m

• Whisky production will increase materially in H2 as the full impact of outsourcing takes effect and it is anticipated that at the end of F21 the Company will be holding in excess of 1m litres of whisky under maturation

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FY21 H1 KEY BRAND HIGHLIGHTS

LARK BRAND MOMENTUM IS ACCELARATING IN ALL CHANNELS

• Strong Lark Sales Momentum; First Australian Whisky to Exceed $100K of Retail Sales in One Week in a Leading NKA

• Strong E-Commerce Growth (5x YOY) Driven by Lark Limited Release Programme

• Lark Christmas Cask Release II, 3 Month Campaign, 3,690 Units Sold Out, 7x YOY

• November – Record E-Commerce Sales @ $488k, Launched Rare Cask PARA50 (585 Units Sold Nov-Dec)

 December – Largest Revenue and Units Shipped Month in Company's History

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FY21 H1 KEY BRAND HIGHLIGHTS

RELAUNCH OF FORTY SPOTTED GIN

• New Packaging Launched Nov ’20 With Positive Consumer And Trade Response

• Successfully Opened Forty Spotted Gin Bar And Quickly Established As “Must See” Hobart Destination

• Roll Out Of New Brand Assets And Social Media / Influencer Campaign Accelerating in H2

• Early Indications Are That Our Baseline FSG Gin Sales Have Doubled (And Where Ranged Citrus Rate of Sale At Parity With Classic)

• Strong Trade Response to Half Strength Raspberry & Rose “Half Strength, Full Flavour” Proposition

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@katewaterhouse, reach: 155K

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@oceanstrachan, reach: 175K
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@staceykeillah, reach: 129K

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KEY INITIATIVES FOR BALANCE F21

REVENUE, BRAND, MARGIN, ENVIRONMENT AND EXPENSES ARE THE FOCUS

 Will Become The First Australian Whisky Distiller Certified Carbon Neutral By End Of Q3

 Anticipated National Key Account Distribution Gains in H2:

 National Costco Ranging For Lark And Forty Spotted (9 Doors)

 First Choice: Lark Classic Cask From 13 to 96 Doors; Forty Spotted Raspberry Rose To Be Available In 50 Doors

 Liquorland: Lark Classic Cask To Be Ranged In 10 Premium Doors(Currently 0); Forty Spotted From 12 To 48 Doors

 Dan Murphy’s: Will Expand Symphony Ranging (Stores TBC)

 "Lark Legacy” - 19 Year Old Lark Single Malt - Launching During Q3

 Continued Acceleration Of Lark Limited Release And Collab Programme (To Drive F22 Volumes And Revenues)

 Finalisation Of Holiday 21/22 Gifting Programme (New Revenues)

 New Tasmanian Whisky Bar Project Confirmed At The Old Franklin Restaurant Site (Opening End of F21)

 New Lark Shopify Website On Track For Q4 Implementation

 2 Additional Bond Stores Opening And 120,000+ Litres Of Outsourced Whisky By End Of Q4

 Material Reduction In Finished Goods Component Costs To Be Achieved By End Of Q4 : Glass & Closures

 Installation And Commissioning Of World First New Peat Smoker By End Of Q3 (> 1 Year Payback)

 Reconfiguration Of Cambridge Site To Accommodate 100% Again Growth In F22 (> 1 Year Payback)

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KEY INITIATIVES FOR BALANCE F21

CONTINUED ACCELERATION OF LIMITED RELEASE AND COLLAB PROGRAMME

Feb ’20 - Half Strength, Full Flavour Campaign

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Jan – Tokay Tokay Release

Feb – Oloroso Cask Release

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Feb – PARA100
c. 375 bottles @ $1,000
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Mar – Legacy 19YO 538 bottles @ $1,950

Jan - Mandarin & Jasmine Apr – Pinot Noir Gin Jul – Tassie Toffee Apple

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LARK H1 RESULTS INVESTOR CALL

WEDNESDAY, 3 FEBRUARY 2021

Investors are invited to join a live audio webcast and Q&A hosted by Managing Director Geoff Bainbridge on Wednesday 3 February 2021 at 9:00am Australian Eastern Daylight Time (AEDT).

To register for the webcast, please follow this link:

https://us02web.zoom.us/webinar/register/WN_JPIo2ZgKShK8_gJEmeR2uw

Registered participants will receive a confirmation email contacting the Zoom access link and alternative phone dial-in details.

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DISCLAIMER

The information contained in this presentation has been prepared by Lark Distilling Co. Limited (“LARK”). This presentation is not an offer, invitation, solicitation or other recommendation with respect to the subscription for, purchase or sale of any securities in LARK. This presentation has been made available for information purposes only and does not constitute an offering document of any type.

This presentation may contain certain forward looking statements, projections, strategies and corporate objectives. Such forward looking statements/projections are estimates for discussion purposes only and should not be relied upon as representation or warranty, express or implied, of LARK. They are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors many of which are beyond the control of LARK. The forward looking statements/projections are inherently uncertain and may therefore differ materially from results ultimately achieved.

While the information contained in this presentation has been prepared in good faith, neither LARK, nor any of its respective directors, officers, agents, employees or advisors make any representation or give any warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information, forward looking statement, opinions and conclusions contained in this presentation. Accordingly, to the maximum extent permitted by law, LARK nor any of its respective directors, officers, employees, agents or advisers, nor any other person accepts any liability whether direct or indirect, express or limited, contractual, tortuous, statutory or otherwise, in respect of the accuracy or completeness of the information or for any of the opinions contained in this presentation or for any errors, omissions or misstatements or for any loss, howsoever arising, from the use of this presentation. LARK disclaims any obligation to update or revise any forward looking statements based on new information, future events or otherwise except to the extent required by applicable laws.

Investors should exercise caution when dealing in the securities of LARK. In the case of any doubt, they should seek their own professional advice and consult with their own bank manager, stockbroker, solicitor, accountant, tax adviser or other professional adviser.

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