ACQUISITION OF BROADWAY AND EQUITY RAISING - AUMAKE INTERNATIONAL LIMITED - 61 FINANCIAL
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AuMake International Limited Acquisition of Broadway and Equity Raising April 2019
Important notices and disclaimer
The investor presentation (“Presentation”) has been Not an offer The distribution of this presentation in other jurisdictions Financial data
prepared by AuMake International Limited (ACN 150 110 outside Australia may also be restricted by law and any
This Presentation is for information purpose only and is not All dollar values are in Australia dollars (“A$”) and financial
017) (“ AuMake” or “company”). This presentation has been such restrictions should be observed. Any failure to comply
a prospectus, disclosure document, product disclosure data is presented as at and for the twelve months ending
prepared in connection with an equity offer (“Offer”) of new with such restrictions may constitute a violation of
statement or other offering document under Australian law 30 June 2019 unless otherwise stated. Investors should
AuMake ordinary shares (“New Shares”). The offer is being applicable securities laws (see “international offer
or other law (and will not be lodged with the Australian note that this presentation contains pro forma financial
conducted under section 708AA of the Corporations Acts restrictions”). By accepting this presentation you
Securities and Investments Commission (“ASIC”)0. The information. The pro forma financial information provided
2001 (cth) (“Corporations Act”) as modified by ASIC representation and warrant that you are entitled to receive
presentation is not and should not be considered an offer in this presentation is for illustrative purposes only and is
Corporations (Non- Traditional Rights Issues) Instrument such presentation in accordance with he above restrictions
or an invitation to acquire entitlements or New Shares or not represented as being indicative of AuMake‘s (or
2016/84. and agree to be bound by the limitations contained herein.
any other financial products. The offer will be made on the anyone else’s) views on AuMake’s future financial position
Summary information: basis of the information to be contained in the offer Not financial product advice and/or performance. The pro forma financial information is
booklet to be prepared for eligible shareholders in Australia based on the audited financial information of AuMake,
This Presentation contains summary information about the This presentation does not constitute financial product or
and New Zealand (“offer booklet”), and made available and the unaudited management accounts of Broadway
current activities of AuMake and its subsidiaries (“AuMake”) investment advice (nor tax, accounting or legal advice) nor
following its lodgement with ASX. Any eligible shareholder Group.
as at the date of this Presentation. The information in this is it a recommendation to acquire entitlements or New
in Australia and New Zealand who wishes to participate in
Presentation is of a general nature and does not purport to Shares and does not and will not form any part of any The pro forma financial information has been prepared by
the Entitlement offer should consider the offer booklet in
be complete. This Presentation does not purport to contain contract for the acquisition of entitlements or New Shares. AuMake in accordance with the measurement and
deciding to apply under that offer. Anyone who wishes to
all the information that an investor should consider when This presentation has been prepared without taking into recognition requirements, but not the disclosure
apply for New Shares under the entitlement offer will need
making an investment decision nor does it contain all the account the objectives, financial situation or needs of requirements, of applicable accounting standards and
to apply in accordance with the instructions contained in
information which would be required in a disclosure individuals. Before making an investment decision, other mandatory requirements in Australia. Refer to the
the offer booklet and the entitlement and acceptance
document or prospectus prepared in accordance with the prospective investors should consider the appropriateness “Basis of preparation of financial information” section of
form.
requirements of the Corporations Acts. It should be read in of the information having regard to their own objectives, this presentation for further detail.
conjunction with AuMake’s other periodic and continuous This presentation may not be released or distributed in the financial situation and needs and seek appropriate advice,
disclosure announcement lodged with the Australian United States. This presentation does not constitute an including financial, legal and taxation advice appropriate
Securities Exchange, which are available at www.asx.com. offer to sell, or a solicitation of an offer to buy, securities in to their jurisdiction. AuMake is not provide financial product
au. To the maximum extent permitted by law, AuMake, the the United States or in any other jurisdiction in which such advice in respect of AuMake shares. Cooling off rights do
lead manager, their, and their respective affiliates and an offer would be illegal. The entitlement and New Shares not apply to the acquisition of New Shares.
related bodies corporates’, office, employees , partners, have not been, and will not be, registered under the U.S.
agents and advisers make no representation or warranty Securities Act of 1933, as amended (the “U.S. Securities Act”)
(express or implied) as to the currency, accuracy, reliability or the securities laws of any state or other jurisdiction in the
or completeness of the information in this Presentation and United States. Accordingly, the New Shares may not be
disclaim all responsibility and liability for the information offered or sold, directly or indirectly, in the Unites States,
(including without limitation, liability for negligence). unless they have been registered under the U.S. Securities
Act (which AuMake has no obligation to do or procure), or
are offered and sold in a transaction exempt from, or not
subject to , the registration requirements of the U.S.
Securities Act and any other applicable state securities
laws.
AuMake International Limited 2
Important notices and disclaimer
Past performance There can be no assurance that actual outcomes will not Investment risk
differs materially from these forward- looking statements.
Past performance information given in this presentation is An investment in AuMake shares is subject to investment
A number of important factors could cause actual results or
given for illustrative purposes only and should not be relied and other known and unknown risks, some of which are
performance to differ materially from the forward looking
upon as (and is not) an indication of future performance. beyond the control of AuMake including possible loss of
statements, including the risk factors set out in this
income and principal invested. AuMake does not
Future performance presentation. Investors should consider the forward looking
guarantee any particular rate of return or the performance
statements contained in this presentation in light of those
This presentation contains certain “forward looking of AuMake, nor does it guarantee the repayment of capital
disclosures and not place reliance on such statements. The
statements”. Forward looking statements can generally be from AuMake or any particular tax treatment. In
forward looking statements are based on information
identified by the use of forward looking words such as, considering an investment in AuMake shares, investors
available to AuMake as at the date of this presentation. To
“expect”, “anticipate”, “likely”, “intend”, “ should”, “could”, should have regard to (amongst other things) the risks
the maximum extent permitted by law, AuMake and its
“may”, “predict”, “plan”, “purpose”, “will”, “believe”, “forecast”, outlined in this presentation.
directors, officers, employees, advisers, agents and
“estimate”, “target”, “outlook”, “guidance”, and other similar intermediaries disclaim any obligation or undertaking to
expressions within the meaning of securities laws of release any updates or revisions to the reflect any change
applicable jurisdictions and include, but are not limited to, in expectations or assumptions.
indications of, or guidance or outlook on, future earnings or
financial position or performance of AuMake the outcome Except as required by law or regulation (including the ASX
and effects of the offer and the use of proceeds. The listing rules), AuMake undertakes no obligation to provide
forward looking statements contained in this presentation any additional or updated information whether as a result
are not guarantees or predictions of future performance of new information, future events or results or otherwise.
and involve known and unknown risks and uncertainties Indications of, and guidance or outlook on, future earning
and other factors, many of which are beyond the control of or financial position or performance are also forward
AuMake, and may involve significant elements of looking statements.
subjective judgement and assumptions as to future events
which may or may not be correct. Refer to the risks section Effect of rounding
of this presentation for a summary of certain general and A number of figures, amounts, percentages, estimates,
AuMake specific risk factors that may affect AuMake. calculation of value and fractions in this presentation are
subject to the effect of rounding. Accordingly, the actual
calculation of these figures may differ from the figures set
out in this presentation.
AuMake International Limited 3
Acquisition of Broadway
— Announcement – AuMake International Limited (“AuMake”) has reached an agreement to purchase the business assets of
an affiliated retail store network (”Broadway”)
— Complementary business – Broadway operates eight (8) store locations in Australia and New Zealand (“ANZ”) providing
ANZ products to inbound Chinese tourists with a 20 year history in the industry
— Consideration – $14.18 million which is amortised in three (3) stages (50% cash and 50% shares)
— Implied acquisition multiple of 4.05 x FY19 EBITDA
— Committed vendor – Shares escrowed for a period of two years from issue based on 90 day vwap. All key staff retained.
— Funding – $7.0 million capital raising via Placement at $0.16/share to institutional, professional and sophisticated investors
(“Offer”)
— Market Capitalisation (post capital raising & acquisition) – $53.3 million with enterprise value of $43.6 million
— Capital Structure
Shares
Shares on issue 271,454,202
Placement 43,750,000
Initial Consideration Shares - Broadway Group1 17,725,000
Total 332,929,202
1 - Excluding deferred consideration shares, please refer to page 9 for additional information
AuMake International Limited 4
Proforma transaction impact
AuMake will have a significantly improved financial profile following the transaction
AuMake FY191 Broadway FY192 Proforma FY19 Uplift
Revenue ($m) 45 30 75 67%
Gross Margin 20% 30% 24% 20%
Gross Profit ($m) 9 9 18 100%
EBITDA ($m) minor loss 3.5 positive positive
AuMake FY191 Broadway FY192 Proforma FY19 Uplift Aspirational FY203
17 8 25 47% 25
Yes
25%+
10% 25% 20%+
4.5 7.5 12
5 30 35 70+
JD.com JD.com+
Footnotes 1,2,3 – please refer to page 32 for basis of preparation
AuMake International Limited 5
1. Transaction summary
Transaction summary
AuMake’s acquisition of Broadway increases earnings and expands store locations into all strategically relevant locations in Australia
and New Zealand (ANZ), enhancing AuMake’s influence in the cross border retail and inbound Chinese tourist markets
Transaction Compelling strategic Equity Positive outlook and
overview rationale raising clear strategy
AuMake to acquire Broadway, 20 year old business with highly Creation of the first multi- Acquisition consideration fully In line with AuMake’s accelerated
an inbound Chinese tourist experienced management and channel retail platform servicing funded by equity raising of market share expansion strategy
focused business with eight (8) extensive relationships in the daigou, Free Independent $7 million
affiliated store locations across inbound Chinese tourist markets Travellers (FITs) and Chinese tour Enhances the AuMake brand
ANZ both in Australia and China groups with significant cross Equity raising lead manager back in China to leverage further
pollination opportunities Ashanti Capital growth opportunities including
Acquisition of Broadway valued Market potential of inbound existing exclusive strategic
at $14.18 million which is Chinese tourist market estimated Extensive operational and partnership with JD Worldwide
amortised in 3 stages (50% cash to be $2 billion increasing corporate synergies are expected
and 50% shares) AuMake potential market to as a result of this acquisition
$4.5 billion in ANZ
Consideration represents an
implied acquisition multiple of AuMake with Broadway to
4.05 x FY19 EBITDA transform the way that inbound
Chinese tourists purchase ANZ
Compelling transaction metrics products
as significant synergies between
the businesses and opportunities
to introduce online and owned
brand sales.
AuMake International Limited 7
2. Acquisition rationale
Acquisition summary
Overview of the Acquisition of — AuMake to acquire Broadway, an inbound Chinese tourist focused business
Broadway Group — 20 years experience in the inbound Chinese tourist market with extensive relationships both in Australia and China.
— Eight (8) strategically located affiliate stores in ANZ
— Broadway Group partnering with AuMake to access capital markets in order to implement accelerated growth strategy
Key metrics — $5.672 million - upfront at settlement (40% of total consideration)
• $2.836 million payable in cash and $2.836 million to be satisfied by the issue of fully paid ordinary shares in the capital of the
Company (AU8 Shares) at 90-day VWAP
— $4.254 million – deferred cash consideration (30% of total consideration)
• $4,254 million payable in cash in eight (8) equal quarterly instalments from the date of settlement
— $4.254 million - deferred equity consideration (30% of total consideration)
• $2.127 million to be satisfied by the issue of AU8 Shares at 90-day VWAP on the date that is twelve (12) months from the date of
settlement
• $2.127 million to be satisfied by the issue of AU8 Shares at 90-day VWAP on the date that is twenty four (24) months from the
date of settlement
— Transaction increases AuMake’s total store count to 25 locations in 7 cities
Funding — Acquisition fully funded by an equity raising of $7 million (“Equity Raising”)
Conditions — The Acquisition is conditional on shareholder approval, transfer of business assets and execution of formal agreements
— Completion is expected by end of May 2019
AuMake International Limited 9
Compelling acquisition rationale
AuMake’s acquisition of Broadway increases Company earnings and expands the store footprint into
strategically relevant locations in ANZ, enhancing AuMake’s influence in the cross border retail and inbound
Chinese tourist markets
Respected inbound Chinese — Respected and trusted relationships built over 20 years with travel agencies and tour guides in China and ANZ
tourist retailer with extensive — Strong and unique local networks at each specific store location
networks in China, ANZ — Opportunity to transform the inbound Chinese tourist business model to increase market share in ANZ
Strengthens the AuMake — Immediately positions AuMake as the dominant cross border retail and inbound Chinese tourist brand in ANZ
brand and customer value — Increasing relevance and access to opportunities in the China market (e.g. existing exclusive strategic partnership with
JD.com)
proposition
— Significant cross pollination opportunities between AuMake stores and Broadway customers
Enhanced product offering — Anticipated increase in owned brand product sales given Chinese tourist appetite for new products
capabilities — Significant opportunity to leverage online sales, as online services not currently offered to Broadway customers
— Anticipated material improvement in purchasing power and reduction in cost of goods sold
— Increased likelihood of new product traction given multiple store locations and increased total (offline and online) foot
traffic across the AuMake business
Increased diversification — Diversification of AuMake’s business by adding significant inbound Chinese tourist numbers to existing daigou customer
base
— Improve resiliency of AuMake business model to future regulation changes
— Further exposure of AuMake to the growing Chinese tourist market both in Australia and in particular New Zealand
AuMake International Limited 10Opportunity to transform the cross border retail and inbound Chinese tourist markets
in ANZ
Significant market share to ——With a total of 25 stores, AuMake will be the market leader in Australia and NZ
influence product trends ——Capability to create trends for what Chinese consumers buy and what products become popular particularly with Chinese tourists
——Ability to significantly increase sales of lesser known and owned brand products
Transform antiquated Chinese ——Antiquated business model that has largely remained unchanged for last 15 years
tour group business model ——Significant scope to cost efficiently create visually appealing stores and new products utilising AuMake supply chain
——Apply the proven strategy used in daigou market to significantly improve sales and gross margins by through the introduction of
online and own brand product sales
——Opportunities to cater to the existing and known demand from inbound tourists from other countries (e.g. Korea and Taiwan)
Further acquisition and ——Combination of AuMake and Broadway will attract further potential acquisitions targets in ANZ
consolidation opportunities ——Expanded footprint increases the relevance and strengthens the relationship with large e-commerce and retail players in China
(e.g. JD.com)
available
AuMake International Limited 11Industry statistics1
Australia Chinese visitation New Zealand Chinese visitation Chinese visitor arrivals by purpose: 2006–07 to 2026–27
Data sources: Overseas Arrivals and Departures, Department of Home Affairs; Tourism Forecasts 2017, Tourism Research Australia
Tourism Research Australia (TRA) forecasts Approximately 450,000 inbound arrivals
for the next decade paint a positive from China as at January 2019, which
picture for growth in Chinese visitation. demonstrates a 13% increase in visitation
over the previous 12 months. This number 4500
Between 2016–17 and 2026–27, inbound is expected to grow to 913,000 in 2023. 4000
arrivals from China are predicted to (Tourism New Zealand) 3500
increase from 1.3 million to 3.9 million – an
VISITORS ('000)
average annual growth rate of 11.9% over 3000
the period. 2500
2000
1500
1000
500
0
“Between 2016-17 and 2026-27,
inbound arrivals from China... HOLIDAY VFR EDUCATION OTHER
increase from 1.3 million to 3.9
million...”
Tourism Research Australia
1. Source: Tourism Research Australia Chinese free and independent travellers – their potential for regional Australia, Full Report March 2019
AuMake International Limited 12Industry statistics1
As demand for outbound travel AuMake empirical data Forecast proportion of Chinese household income by city tier,
derives from all age groups From industry observation over the last 12 2016 to 2030
across different cities, package months, AuMake estimates that 500,000 Data source: Global cities, Oxford Economics 2017
and group tours as well as FITs inbound Chinese tourists who visited
Australia came in tour groups. Similarly,
will all co-exist. AuMake estimates 250,000 inbound
At the same time, there is geographic Chinese tourists visited New Zealand over
segmentation due to differences in the same period of time.
wealth. Consequently, package and
group tourists are mainly from lower-tier Tour group numbers in ANZ are expected
cities, while FITs are mostly from Beijing, to grow due to 1) increasing total inbound
Shanghai and other first-tier cities. Chinese tourists and 2) increasing incomes
from lower-tier cities in China.
“…package and group
tourists are mainly from
lower-tier cities”
Tourism Research Australia
1. Source: Tourism Research Australia Chinese free and independent travellers – their potential for regional Australia, Full Report March 2019
AuMake International Limited 133. Overview of Broadway
Broadway Business Model
Existing Broadway
Model During FY19 over 30,000
tourists visit broadway stores
across eight locations
Tourists purchase products on
Relationship with tour guides
average of A$1,000 per head;
and travel agencies –
product mix includes popular
Broadway features on Chinese
brands, owned brand
tourist itinerary as Shopping
products, generally high value,
destination
low volume products
Under AuMake
Operation
Tourists can continue to Potential to increase spend by
purchase products online increasing tourist visitation to
in China at competitive prices 70,000+ for FY20 and
(WeChat currently 30% of changing the product mix
AuMake sales, (from experience in AuMake
0% in Broadway) stores). More competitive
Tourists can pack and ship pricing on popular brands
items in-store using
competitive logistic and
distribution network
(profitable for AuMake)
AuMake International Limited 15Broadway – strategic locations
Cairns
Gold Coast
Sydney
Auckland
Rotorua
Melbourne
AuMake International Limited 16Broadway – stores overview
Cairns Cairns Gold Coast Gold Coast
Store Coral Legend Pty Ltd Coral Legend Pty Ltd Gold Port Souvenir Outlet - Q1 Gold Port Souvenir Outlet
Location T68, DFO Cairns, 9/1 Marlin Parade Cairns T4&5 at Q1 building, 19 Warehouse Road Southport QLD
274 Mulgrave Road Cairns QLD QLD 4870 Australia 3003 Surfers Paradise Boulevard, 4215 Australia
4870 Australia Surfers Paradise QLD 4217
FY19 Sales % 4% New store 8% 6%
AuMake International Limited 17Broadway – stores overview
Sydney Melbourne Auckland Rotorua
Store Broadway Tax Free Pty Ltd Maxbuy Australia Pty Ltd PNL Souvenir Centre Sweet Dream
Location Suite GB 11, 22-36 Mountain St, 52 Market St, Melbourne VIC 3000 Unit 1, 106 St Georges Bay Road 120 Riri Street Rotorua,
Ultimo NSW 2007 Australia Australia Parnell, Auckland, New Zealand New Zealand
FY19 Sales % 24% 21% 13% 24%
AuMake International Limited 184. Combined group profile
AuMake & Broadway locations
JD.com —Combined 25 store locations in Queensland,
CHINA New South Wales, Victoria and New
Zealand.
x2 —Major Chinese Tourist locations covered with
Cairns highly experienced staff at each location.
—Bring ‘look and feel’ of Broadway stores in
AUSTRALIA x1 line with AuMake stores.
x2
Brisbane
—All key management and staff retained
Gold Coast
x15 x1
x1
Sydney Auckland
Rotorua
Melbourne
x1
x1
x1 AuMake store Broadway Group store
NEW ZEALAND
AuMake International Limited 20The Opportunity – Apply AuMake model to Broadway
Three significant revenue and profit streams
in addition to retail gross margin
Increase online sales — Currently Broadway does not provide online functionality to its customer base:
• Online appeals to a younger demographic
• Online increases repeat sales
— Currently 30% of AuMake total sales are online sales (WeChat)
Increase owned — 25% of current Broadway sales consist of owned brand product sales, opportunity to replace with AuMake owned
brand products, which have a 50%+ gross margin
brand product sales
— Chinese tourists have significant appetite for new products and brands
Increasing number of — Ability to increase number of Chinese tour groups and FITs exponentially by expanding existing relationships with
Chinese tour agencies and tour guides. Aspirational target of 70,000 Chinese tourists for FY20 (35,000 FY19)
Chinese tourists
AuMake International Limited 21Proforma transaction impact
AuMake will have a significantly improved financial profile following the transaction
AuMake FY191 Broadway FY192 Proforma FY19 Uplift
Revenue ($m) 45 30 75 67%
Gross Margin 20% 30% 24% 20%
Gross Profit ($m) 9 9 18 100%
EBITDA ($m) minor loss 3.5 positive positive
AuMake FY191 Broadway FY192 Proforma FY19 Uplift Aspirational FY203
17 8 25 47% 25
Yes
25%+
10% 25% 20%+
4.5 7.5 12
5 30 35 70+
JD.com JD.com+
Footnotes 1,2,3 – please refer to page 32 for basis of preparation
AuMake International Limited 22Proforma statement of financial position
AuMake will have a significantly improved financial profile following the acquisition of Broadway
AuMake as at 31 .12.184 Equity Raising5 Broadway acquisition Proforma Combined
Group as at 31.12.18
$m $m $m $m
Cash 8.0 6.7 -5.06 9.7
Inventory 3.8 - 1.5 5.3
Fixed assets 2.8 - 2.77 5.5
Intangible assets 2.4 - 12.28 14.6
Other assets 1.3 - - 1.3
Total assets 18.3 6.7 11.4 36.4
Interest bearing loans -0.1 - - -0.1
Other liabilities -3.4 - -11.49 -14.8
Total liabilities -3.5 - -11.4 -14.9
Net assets 14.8 6.7 - 21.5
Net debt 0.1 0.1
Footnotes 4,5,6,7,8,9 – Please refer to page 32 for basis of preparation
AuMake International Limited 235. Equity raising overview
Equity raising overview
Transaction financed by equity raising to allow for maximum shareholder upside to acquisition
Offer size and structure — Equity raising of $7 million
— 43.75 million new AuMake shares to be issued
Offer pricing — Offer price of $0.16 per New Share, represents a:
• 21% discount to 30 day vwap
• 23.8% discount to last traded price
Use of proceeds — The net proceeds from the equity raising will be used to partly fund the acquisition of Broadway and associated transaction
costs/working capital requirements
Timing — Offer conducted from 15 April to 17 April 2019
Ranking — New Shares issued under the Offer will rank equally with existing shares on issue
Lead manager — Ashanti Capital
Sources of funds $m Uses of funds $m
Gross proceeds from equity raising 7.0 Acquisition of Broadway (including upfront cash consideration, 5.0
inventory, store renovations and leasing bonds)
Transaction costs, online sales functionality, targeted marketing and working 2.0
capital
Total source of funds 7.0 Total use of funds 7.0
AuMake International Limited 25Indicative equity raising timetable Event Date ASX trading halt 15 April 2019 ASX announcement of the Proposed Transaction and capital raising 17 April 2019 Appendix 3B, cleansing notice and issue of Placement shares 30 April 2019 Issue of Notice of meeting seeking approval for issue of consideration shares for the Proposed Transaction End April 2019 Shareholder meeting Late May 2019 Satisfaction (or waiver) of all conditions precedent to Proposed Transaction Late May 2019 Completion of Proposed Transaction Late May 2019 Appendix 3B and issue of Initial Consideration Shares Late May 2019 AuMake International Limited 26
6. Summary
Company highlights
With the acquisition of Broadway Group, AuMake has created a platform for long-term sustainable growth
1 2 3 4
AuMake transformed into Broadway provides Leveraging AuMake model Company changing
the dominant brand in the immediate presence for to significantly improve transaction to deliver long
cross border retail and AuMake in all strategic sales and profitability of term profitability and
inbound Chinese tourist Chinese tourist locations in Broadway (online, owned creation of platform for
markets in ANZ ANZ brand and increasing growth into China
number of Chinese tourists)
AuMake International Limited 28FY20 outlook and beyond
Market — Highly attractive and long term growth prospects
— Chinese visitor spend is forecast to rise to $26.2 billion in 2026–27 from $9.8 billion in 2016–17
— Cross border retail and Chinese tourist markets in ANZ continuing to be major channel for delivery of products to China
— Combined ANZ cross border retail and inbound Chinese tourist markets worth an estimated $4.5 billion per annum
— Positions AuMake to take advantage of growing number of Chinese tour groups from third tier Chinese cities over the next
decade
Operational — AuMake with Broadway creates ANZ’s first retail platform combining daigou and inbound Chinese tourists in one place
— Economies of scale never achieved before in this market
— Most experienced management team ever assembled in one place
— AuMake presence in every key strategic location in ANZ
Financial — Highly accretive acquisition to significantly grow revenue immediately with increasing margins
— Platform for profitability in place for the future from the application of the AuMake model (online and owned brand products)
— Existing opportunity to accelerate market share and be dominant cross border retail brand in ANZ
— Leveraging existing fixed cost base to increase efficiencies to drive down total operational costs and cost of goods sold
— Combined group increases relevance and opportunities in China e.g. JD.com
AuMake International Limited 29Key risk factors
Loss of key management The Company’s ability to remain productive, profitable and competitive and to implement planned growth initiatives depends on
the continued employment and performance of senior executives and other key members of management. The Company’s
personnel and ability to performance also depends on its ability to attract and retain skilled workers with the relevant industry and technical experience.
attract and retain skilled
workers If any one of these individuals resigns or becomes unable to continue in his or her present role and is not adequately replaced in a
timely manner, business operations and the ability to implement the Company’s strategies could be materially disrupted. The loss
of a number of key personnel or inability to attract additional personnel may have an adverse impact on the financial and
operating performance of the Company.
There can be no assurance that the Company will be able to attract and retain skilled and experienced employees and, should it
lose any of its key management personnel or fail to attract qualified personnel, its business may be harmed, and its operational
and financial performance could be adversely affected.
Regulatory risks Changes in legislative and administrative regimes, taxation laws, interest rates, other legal and government policies in Australia
and China may have an adverse effect on the assets, operations and ultimately the financial performance of the Company and
the market price of Shares.
Market conditions Demand for the Company’s products depends in significant part upon the purchasing activities by its customers.
Notwithstanding the recent product prices, the occurrence of, timing and sustainability of the market is uncertain and even in the
case where the recent strength in market conditions continues, the corresponding increase in volumes and improvement in the
Company’s performance may be significantly delayed or short term in nature due to other factors such as market competition,
difficulty in achieving synergies or the loss of key personnel.
Competition The Company is for the supply of products and a customer may prefer to purchase directly from the supplier, however the
Company believes this would be difficult for the majority of the Company’s customers. There are a number of competitors,
including other retail stores, distributors and wholesalers, that currently provide products similar to those provided by the Company.
The Company generally competes on the basis of, among other things, reliability, price, service offerings and the age, mix and
relative attractiveness of its products.
AuMake International Limited 30Key risk factors
Economic risk and external Various factors including political movements, stock market trends, changing customer preferences, interest rates, inflation levels,
commodity prices, foreign exchange rates, industrial disruption, environmental impacts, international competition, taxation
market factors changes and legislative or regulatory changes, may have an adverse impact on the Company’s operating costs, profit margins and
Share price. There factors are beyond the control of the Company and it cannot, to any degree of certainty, predict how they will
impact on the Company.
Prolonged deterioration in general economic conditions could potentially have an adverse impact on the Company and its
operations and may adversely impact the trading price of AuMake shares.
AuMake International Limited 31Proforma financials – basis of preparation 1. The annualised financial performance of of AuMake includes its half year report as at 31 December 2018, unaudited management accounts from 1 January 2019 to 31 March 2019 and a management forecast for the period between 1 April 2019 to 30 June 2019; 2. The annualised financial performance of Broadway includes an unaudited management account for the period between 1 July 2018 and 31 March 2019 and AuMake & Broadway management forecast for the period between 1 April 2019 to 30 June 2019; and 3. The aspirational figures used are management estimations based on historical data and future markets trends. 4. Position of the Company as stated in its half year report as at 31 December 2018 released on ASX on 28 February 2019; 5. Funds received from the capital raising are net of $0.3m capital raising costs; 6. In accordance with the Sale Agreement, this cash payment consists of $2.8m cash consideration, $1.5m inventory and $0.7m reimbursement for store fit outs and leasing bonds; 7. Based on the preliminary fair value of the store fit-outs, plant and equipments, and is subject to final fair value of assets of Broadway as at Settlement date; 8. The recognition of any intangible assets may arise as a result of fair value adjustments is subject to final fair value of net assets of Broadway as at Settlement date; and 9. This balance represents the deferred consideration payments as per the Sale Agreement. AuMake International Limited 32
Contact details CORPORATE WEBSITE www.aumake.com.au MEDIA RELATIONS Lynn Semjaniv, Sauce Communications Mobile: 0481 004 797 Email: lynn@saucecommunications.com.au INVESTOR RELATIONS Keong Chan Executive Chairman Email: keong.chan@aumake.com.au Twitter: @AuMakeAus Instagram: @aumake LinkedIn: www.linkedin.com/company/aumake
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