prospectus

PROSPECTUS
Initial public offering of ordinary shares in
OneAll International Limited ACN 606 740 701
For the offer of 1,000,000 New Shares at an Offer Price of A$1.00 each
to raise A$1,000,000 with up to A$1,500,000 of oversubscrip ons and
the admission to the Official List of Australian Securi es Exchange
Important no ce
This is an important document, which should be read in its en rety before making any
investment decision. You should obtain independent advice if you have any ques ons about any
of the ma ers contained in this Prospectus.
Lead Arranger and Advisor
Secvest Capital Pty Ltd
CONTENTS
IMPORTANT INFORMATION
02
CHAIRMAN'S LETTER
06
01.
INVESTMENT OVERVIEW
08
02.
DETAILS OF THE OFFER
23
03.
INDUSTRY OVERVIEW
28
04.
COMPANY OVERVIEW
36
05.
KEY INDIVIDUALS, INTERESTS AND BENEFITS
50
06.
FINANCIAL INFORMATION
63
07.
INVESTIGATING ACCOUNTANT'S REPORT
79
08.
RISK FACTORS
86
09.
ADDITIONAL INFORMATION
92
10.
GLOSSARY
104
CORPORATE DIRECTORY
1
Important Informa on
Offer
The Offer contained in this Prospectus is an invita on to acquire Shares in OneAll Interna onal Limited (OneAll or
the Company).
Lodgement and lis ng
This Prospectus is dated 7 September 2015. A copy of this Prospectus was lodged with ASIC on 7 September 2015.
This Prospectus replaces the original prospectus dated 31 August 2015 (Original Prospectus).
The Company has applied to the ASX for admission to the Official List of ASX and for quota on of the Shares issued
under this Prospectus on ASX within seven days a er the date of the Original Prospectus. A copy of this Prospectus
will be lodged with ASX.
Neither ASIC nor ASX or their officers take any responsibility for the contents of this Prospectus or for the merits of
the investment to which this Prospectus relates.
Expiry date
No Shares will be allo ed or issued on the basis of this Prospectus later than 13 months a er the date of this
Prospectus.
Note to Applicants
The informa on in this Prospectus is not financial product advice and does not take into account your investment
objec ves, financial situa on or par cular needs. This Prospectus should not be construed as financial, taxa on,
legal or other advice.
This Prospectus is important and should, along with each of the documents incorporated by reference, be read in its
en rety prior to deciding whether to invest in the Company's Shares. There are risks associated with an investment
in the Shares and the Shares offered under this Prospectus must be regarded as a specula ve investment. Some of
the risks that should be considered are set out in Sec on 8 (Risk Factors) of this Prospectus. You should carefully
consider these risks in light of your personal circumstances (including financial and tax issues).
There may also be risks in addi on to these that should be considered in light of your personal circumstances. If you
do not fully understand this Prospectus or are in doubt as to how to deal with it, you should seek professional
guidance from your stockbroker, lawyer, accountant or other professional adviser before deciding whether to invest
in the Shares.
No person named in this Prospectus guarantees the Company's performance or any return on investment made
pursuant to this Prospectus.
No offering where offering would be illegal
This Prospectus does not cons tute an Offer or invita on in any place in which, or to any person to whom, it would
not be lawful to make such an offer or invita on. No ac on has been taken to register or qualify the Shares or the
Offer, or to otherwise permit a public offering of Shares, in any jurisdic on outside Australia. The taxa on treatment
of Australian securi es may not be the same as those for securi es in foreign jurisdic ons. If you are uncertain about
whether this investment is appropriate for you, you should seek the advice of an appropriately qualified financial
adviser.
The distribu on of this Prospectus outside Australia may be restricted by law and therefore any person who resides
outside Australia and who receives this Prospectus should seek advice on and observe any such restric ons. Any
person who has a registered address in any other country who receives this Prospectus may only apply for Shares
where that person is able to reasonably demonstrate to the sa sfac on of the Company that the person may
par cipate in the Offer relying on a relevant excep on from, or are not otherwise subject to, the lodgement, filing,
registra on or other requirements of any applicable securi es laws in the jurisdic on in which they have a registered
address.
The Company will not offer to sell, nor solicit an offer to purchase, any securi es in any jurisdic on where such offer,
sale or solicita on may not lawfully be made. Any failure to comply with these restric ons may cons tute viola on of
applicable laws.
Oneall Prospectus
2
No ce to United States residents
The securi es being offered pursuant to this Prospectus have not been registered under the US Securi es Act and
may not be offered or sold in the United States absent registra on or an applicable exemp on from registra on
under the US Securi es Act and applicable State securi es laws. This Prospectus does not cons tute an offer or
invita on to sell, or the solicita on of an offer to buy, nor shall there be any sale of these securi es in any state or
other jurisdic on in which such offer, solicita on or sale would be unlawful. Any hedging transac ons involving
these securi es may not be conducted unless in compliance with the US Securi es Act and applicable State
securi es laws.
No ce to Hong Kong residents
The contents of this Prospectus have not been reviewed by any regulatory authority in Hong Kong. You are advised
to exercise cau on in rela on to the Offer. If you are in any doubt about any of the contents of this Prospectus, you
should obtain independent professional advice.
No ce to PRC residents
The informa on in this document does not cons tute a public offer of the New Shares, whether by way of sale or
subscrip on, in the People's Republic of China (excluding, for purposes of this paragraph only, Hong Kong Special
Administra ve Region, Macau Special Administra ve Region and Taiwan). The New Shares may not be offered or sold
directly or indirectly in the PRC to legal or natural persons other than directly to "qualified domes c ins tu onal
investors".
Financial Informa on and amounts
The "Financial Informa on" sec on in Sec on 6 sets out in detail the Financial Informa on referred to in the
Prospectus. The basis of prepara on of the Financial Informa on is set out in the "Financial Informa on" in Sec on
6. All references to FY2012, FY2013, FY2014 and 1HFY2015 appearing in this Prospectus are to the financial years
ended or ending 31 December 2012, 31 December 2013, 31 December 2014, or 30 June 2015 respec vely, unless
otherwise indicated. Historical Financial Informa on has been prepared in accordance with the recogni on and
measurement principles prescribed by Interna onal Financial Repor ng Standards.
The Historical Financial Informa on in this Prospectus should be read in conjunc on with, and they are qualified by,
reference to the informa on contained in Sec on 6.
The func onal currency of the opera ng en es in the OneAll Group is Chinese Yuan (Renminbi or RMB). The
presenta on currency is Australian dollars (A$ or AUD). Save as set out above, the financial amounts referred to in
this Prospectus are expressed in Australian dollars unless stated otherwise. OneAll has adopted the foreign currency
transla on accoun ng policy set out in Sec on 6. Accordingly, investors should be aware that the amounts
represented in the Prospectus may change as a result of fluctua ons in the exchange rates between AUD and RMB.
Disclaimer
Investors should not rely on any informa on which is not contained in this Prospectus in making a decision as to
whether to acquire Shares in the Company under the Offer. No person is authorised by the Company or the Lead
Arranger and Advisor to give any informa on or make any representa on in connec on with the Offer that is not
contained in the Prospectus. Any informa on or representa on not contained in this Prospectus may not be relied
on as having been authorised by the Company, its Directors or any other person in connec on with the Offer. The
Company's business, financial condi on, results of opera ons and prospects may have changed since the date of this
Prospectus.
This Prospectus contains forward-looking statements concerning the Company's business, opera ons, financial
performance and condi on as well as the Company's plans, objec ves and expecta ons for its business, opera ons
and financial performance and condi on. Any statements contained in this Prospectus that are not of historical facts
may be deemed to be forward-looking statements. You can iden fy these statements by words such as “aim”,
“an cipate”, “assume”, “believe”, “could”, “due”, “es mate”, “expect”, “goal”, “intend”, “may”, objec ve”, “plan”,
“predict", "poten al”, “posi oned”, “should”, “target”, “will”, “would” and other similar expressions that are
predic ons of or indicate future events and future trends.
3
These forward-looking statements are based on current expecta ons, es mates and projec ons about the
Company's business and the industry in which the Company operates and management's beliefs and assump ons.
These forward-looking statements are not guarantees of future performance or development and involve known
and unknown risks, uncertain es and other factors that are in some cases beyond the Company's control. As a result,
any or all of the Company's forward-looking statements in this Prospectus may turn out to be inaccurate. Factors
that may cause such differences include, but are not limited to, the risks described under the heading “Risk factors”
in Sec on 8.
Poten al investors and other readers are urged to consider these factors carefully in evalua ng the forward-looking
statements and are cau oned not to place undue reliance on the forward-looking statements. These forwardlooking statements speak only as at the date of this Prospectus. Unless required by law, the Company does not
intend to publicly update or revise any forward-looking statements to reflect new informa on or future events or
otherwise. You should, however, review the factors and risks the Company describes in the reports to be filed from
me to me with the ASX a er the date of this Prospectus.
This Prospectus contains market data and industry forecasts that were obtained from industry publica ons, thirdparty market research and publicly available informa on. These publica ons generally state that the informa on
contained in them has been obtained from sources believed to be reliable, but the Company has not independently
verified the accuracy and completeness of such informa on.
Some numerical figures included in this Prospectus have been subject to rounding adjustments. Accordingly,
numerical figures shown as totals in certain tables may not be an arithme c aggrega on of the figures that preceded
them.
This Prospectus also includes trademarks, trade names and service marks that are the property of other
organisa ons.
Exposure Period
The Corpora ons Act prohibits the Company from processing Applica ons under the Offer in the seven-day period
a er the lodgement of this Prospectus with ASIC (Exposure Period). This Prospectus was lodged to address the
concerns raised by ASIC in respect of the content of the Original Prospectus. The purpose of the Exposure Period is to
enable this Prospectus to be examined by market par cipants prior to the raising of funds. ASIC Class Order 00/169
means that there is no addi onal exposure period under the Corpora ons Act for this Prospectus.
Electronic Prospectus
The electronic form of this Prospectus will be made available on www.oneallinterna onal.com/investor/prospectus.
Any references to documents included on the Company's website are for convenience only, and none of the
documents or other informa on available on the website is incorporated by reference in this Prospectus. The Offer
cons tuted by this Prospectus in electronic form is available only to persons receiving this Prospectus in electronic
form within Australia. Persons who access the electronic version of this Prospectus should ensure that they
download and read the en re Prospectus. If unsure about the completeness of the Prospectus received
electronically, or a print out of it, you should contact the Company. A paper copy of the Prospectus will be available
free of charge by contac ng:
Boardroom Pty Limited (Registry)
Tel: 1300 737 760 (within Australia)
Tel: +61 2 9290 9631 (outside Australia)
or
Secvest Capital Pty Ltd (Lead Arranger and Advisor)
Tel: 02 8030 7190 (within Australia)
Tel: +61 2 8030 7190 (outside Australia)
Applica ons for Shares under this Prospectus may only be made on a printed copy of the Applica on Form a ached
to or accompanying this Prospectus. The Corpora ons Act prohibits any person from passing the Applica on Form
Oneall Prospectus
4
on to another person unless it is a ached to a hard copy of the Prospectus or the complete and unaltered electronic
version of the Prospectus. If this Prospectus is found to be deficient, any Applica ons may need to be dealt with in
accordance with sec on 724 of the Corpora ons Act.
Privacy
By comple ng an Applica on Form, you are providing personal informa on to the Company and the Registry, which
is contracted by the Company to manage Applica ons, and consent to the collec on and use of that personal
informa on in accordance with these terms. That personal informa on will be collected held and used both in and
outside of Australia by the Company, and the Registry on its behalf, to process your Applica on, service your needs
as a Shareholder, provide facili es and services that you request and carry out appropriate administra on of your
investment. If you do not wish to provide this informa on, the Company may not be able to process your Applica on.
Once you become a Shareholder, the Corpora ons Act requires informa on about you (including your name, address
and details of the Shares you hold) to be included in the Company's public share register. This informa on must
con nue to be included in the Company's public share register even if you cease to be a Shareholder. The Company
and the Registry on its behalf, may disclose your personal informa on for purposes related to your investment to
their agents and service providers (which may be located outside of Australia) including those listed below or as
otherwise authorised under the Privacy Act 1988 (Cth):
Ÿ
the Registry for ongoing administra on of the Company's public share register;
Ÿ
the Lead Arranger and Advisor in order to assess your Applica on;
Ÿ
the Australian Tax Office and other government bodies as required by law;
Ÿ
printers and other companies for the purpose of prepara on and distribu on of statements and for handling
mail;
Ÿ
market research companies for the purpose of analysing the Shareholder base and for product development and
planning; and
Ÿ
legal and accoun ng firms, auditors, contractors, consultants and other advisers for the purpose of
administering, and advising on, the Shares and for associated ac ons.
Under the Privacy Act 1988 (Cth), you may request access to your personal informa on that is held by, or on behalf
of, the Company. You can request access to your personal informa on or obtain further informa on about the
Company's privacy prac ces by contac ng the Company or the Registry, details of which are set out elsewhere in this
Prospectus. The Company aims to ensure that the personal informa on it retains about you is accurate, complete
and up-to-date. To assist with this, please contact the Company or the Registry if any of the details you have provided
change. In accordance with the requirements of the Corpora ons Act, informa on on the Shareholder register will
be accessible by members of the public.
Defined words and abbrevia ons
Defined terms and abbrevia ons used in this Prospectus are defined in the "Glossary" sec on in Sec on 10.
Time
All references to me in this Prospectus refer to Australian Eastern Standard Time unless stated otherwise.
Photographs and diagrams
Photographs and diagrams used in this Prospectus that do not have descrip ons are for illustra on only and should
not be interpreted to mean that any person shown in them edorses this Prospectus or its contents or that the assets
shown in them are owned by the Company. Diagrams used in this Prospectus are illustra ve only. Unless otherwise
stated, all data contained in graphs and tables is based on informa on available as at the date of this Prospectus.
5
CHAIRMAN'S LETTER
7 September 2015
Dear investor,
On behalf of the Board of Directors, I am pleased to invite you
to become a shareholder of OneAll Interna onal Limited
(OneAll or Company).
Founded in 2001, OneAll operates under the GardenArt brand
in a number of countries around the world and is now a leading
premium outdoor furniture supplier with an integrated
business model that includes award winning in-house designs,
high-quality manufacturing, as well as direct distribu on to
established retailers in over 42 countries around the world. Over the last three years OneAll
has managed to achieve significant organic growth in both revenue (over 25% p.a.) and
profitability (40% p.a. in EBITDA) without borrowing as well as winning the pres gious global
Red Dot design award in 2015.
One of the key contributors to OneAll's success, as well as an important compe ve advantage
of OneAll over the last 15 years, is its human capital. This consists of a professional,
commi ed, efficient, and coopera ve management team, of which 60% has been with the
company for over 10 years. The Company also maintains strong rela onships with its business
partners, who share the same vision of con nued growth for the outdoor furniture industry
across interna onal markets.
The longer term macro outlook for the outdoor furniture market is very posi ve with improved
personal wealth globally and added mobility in modern life, which have made outdoor
furniture a new type of necessity, as people are wan ng and able to spend more me
outdoors. The outdoor furniture industry is currently experiencing rapid growth and change,
and is expected to con nue to do so in the future. OneAll believes its integrated business
model will enable the company to capture more market share through both organic growth as
well as value crea ng acquisi ons.
Australia, as the biggest outdoor furniture market in the southern hemisphere, plays an
important part of OneAll's overall growth strategy as outdoor furniture is subject to clear
seasonal cycles, and more than 90% of outdoor furniture is only used during summer. Most
outdoor furniture in Australia is not designed and manufactured locally, crea ng a strong
incen ve for OneAll to further increase its current market share (1%) in the local market.
Hence, the board of directors have decided to list on the Australian Securi es Exchange and
set up an Australian headquarters as a sign of our commitment to the Australian market, in
addi on to our exis ng strong affilia ons with the country.
Oneall Prospectus
6
Given its strong financial posi on, OneAll is only looking to raise a minimum amount of A$1
million. However, OneAll's lis ng as a public company and the corresponding improved
transparency and corporate governance will be a significant milestone in the company's
development. The lis ng also provides OneAll a unique opportunity to sincerely welcome
those investors who share our vision by becoming the first group of public shareholders of this
promising company.
OneAll is an Australian holding company subject to Australian regula ons, with business
opera ons in China. This Prospectus contains detailed informa on about the Offer, the
industry in which OneAll operates and its financial and opera ng performance. OneAll is
subject to a range of risks which are fully detailed in Sec on 8, including but not limited to risks
rela ng to significant control by the Exis ng Shareholders, liquidity risks, seasonal cycle risks,
sales channel risks and quality control risks. I encourage you to read this document carefully
and in its en rety before making your investment decision.
On behalf of the Directors, I invite you to subscribe for Shares in the Company and I look
forward to welcoming you as a shareholder of OneAll.
Yours sincerely,
Huatang (Douts) Li
Chairman
OneAll Interna onal Limited
7
01. Investment overview
Lounges
Le :Verona
Right:L-form
Bo om:Verona
Oneall Prospectus
8
The informa on set out in this Sec on is intended to be a summary only and should be read in conjunc on with the
more detailed informa on appearing elsewhere in this Prospectus. In deciding whether to apply for Shares, you
should read this Prospectus carefully and in its en rety. If you are in doubt as to the course you should follow, please
consult your professional advisers.
1.1
Summary of the Offer
This Prospectus provides investors with the opportunity to par cipate in the ini al public offering of New Shares in
OneAll Interna onal Limited, a company incorporated in Victoria.
The Offer
Key Offer Sta s cs
Minimum Subscrip on
Maximum Subscrip on
Offer price
A$1.00
A$1.00
Total number of New Shares to be issued
1,000,000
2,500,000
Number of Shares held by Exis ng Shareholders 1
116,000,000
116,000,000
Total number of Shares on issue at Comple on of the Offer
117,000,000
118,500,000
Total cash proceeds to the Company from the Offer
A$1,000,000
A$2,500,000
Market capitalisa on at comple on of the Offer 2
A$117,000,000
A$118,500,000
1. Shares held by some Exis ng Shareholders may be subject to escrow arrangements as required under ASX Lis ng Rules. See
Sec on 9.7 for further details of these escrow requirements.
2. Calculated as the total number of Shares on issue on Comple on of the Offer mul plied by the Offer Price.
Important dates
Event
Date and Time (Australian Eastern
Standard Time)
Lodgement of this Prospectus with ASIC
7 September 2015
Opening Date
8 September 2015
Closing Date
12 October 2015
Issue of New Shares
16 October 2015
Expected dispatch of holding statements
16 October 2015
Shares expected to begin trading on ASX
22 October 2015
These dates are indica ve only and may change. OneAll reserves the right to vary the dates and mes set out above subject to
Corpora ons Act and other applicable laws. OneAll reserves the right to vary the mes and dates of the Offer including to close the
Offer early, extend the Offer or to accept late Applica ons, either generally or in par cular cases, without no fica on. Applica ons
received under the Offer are irrevocable and may not be varied or withdrawn except as required by law. Investors are therefore
encouraged to submit their Applica on Forms as early as possible a er the Offer opens.
01 Investment Overview
9
How to invest
Applica ons for New Shares can only be made by comple ng and lodging the Applica on Form a ached to or
accompanying this Prospectus. Instruc ons on how to apply for Shares are set out in Sec on 2.2 of this Prospectus
and on the back of the Applica on Form.
Admission to the Official List of ASX
The Prospectus is also issued for the purpose of qualifying the Company for admission to the Official List of ASX. The
Company will apply to ASX for lis ng and quota on of its Shares, including the Shares, within seven days a er the
date of the Prospectus.
If ASX does not grant permission for official quota on of the Shares within three months a er the date of this
Prospectus, or such longer period permi ed by the Corpora ons Act, none of the Shares offered for subscrip on
under this Prospectus will be allo ed or issued and Applica on Monies will be refunded. No interest will be paid on
any Applica on Monies refunded as a result of the withdrawal of the Offer.
1.2 Overview of OneAll
Topic
Nature of the
Company's
business
Summary
OneAll is a leading premium outdoor furniture designer, manufacturer
and distributor recognised for its innova ve and award-winning designs,
as well as high-quality manufacturing capabili es. The company has over
220 patents and 270 products that are compe ng with mid- er and highend brands in the European, Australian and US outdoor furniture
markets and distributes over 95% of its products directly to established
retailers over 42 countries.
For more
informa on
Sec on 4.1
The company has experienced consistent organic growth of over 25%
p.a. in revenue and 40% p.a. in EBITDA in recent three years without
borrowings. With access to capital markets, OneAll has the poten al for
significant future growth, both organically and through ver cal and
horizontal integra ons.
The industry
OneAll operates
in and the market
size
Outdoor
furniture market
segmenta on
The global outdoor furniture industry in which OneAll operates is
es mated to be A$12.32 billion in 2014 based on ex-factory prices.
Sec on 3
The main target markets which OneAll distributes to include Western
Europe, US and Australia, which have market sizes of approximately
A$2.44 billion, A$2.11 billion and A$202 million respec vely, and are
es mated to grow at 3.0%, 1.5% and 3.9% per annum respec vely. China
is the dominant outdoor furniture producer and the largest exporter
globally.
The outdoor furniture market can be segmented by price- er, into lowend, mid- er and high-end / luxury. The mid- er segment typically
accounts for 40% to 50% of the overall outdoor furniture market while
the high-end / luxury segment accounts for 5% to 10% depending on the
region.
Sec on 3
Manufacturer margins are highest in the high-end / luxury segment,
where customer price sensi vity is generally low and customers are
prepared to pay a premium price for brand and quality. In these
segments, product design plays an important role in the customer
purchase decision. As a manufacturer and designer, OneAll is therefore
well-placed to compete in these segments.
Oneall Prospectus
10
Topic
Distribu on
channels and
margins for
outdoor furniture
Summary
Outdoor furniture is typically sold to consumers via retail outlets,
including specialist retailers (such as Outdoor Furniture Specialists in
Australia), general retailers (such as Domayne and Harvey Norman),
hardware stores and garden centres. Many manufacturers use
wholesalers / importers as intermediaries in the value chain, which
typically leads to lower margins, as mark-ups by wholesalers and/or
importers can be as high as 100%. Mark-ups through the value chain can
increase the retail price of outdoor furniture items by as much as 400%
to 500% when compared to manufacturers' ex-factory prices.
For more
informa on
Sec on 3
OneAll generally sells directly to retailers, bypassing wholesalers and/or
importers and allowing it to capture more margins in the value chain as
well as offering a more compe ve pricing structure to its retailers. This
is likely to be one of the reasons that OneAll's profitability is higher than
compe ng manufacturers.
Main compe tors In OneAll's target markets, the manufacture of outdoor furniture is a
of the Company
rela vely fragmented industry comprised of a large number of small to
medium sized privately owned manufacturers domes cally.
Sec on 3
The main compe tors in OneAll's target markets are as follows:
Ÿ
Ÿ
Ÿ
Ÿ
Ÿ
Product range of
the Company
Belgium: Royal Botania , Manu and Tribu
Spain: Ke al Group and Gandia Blasco
France: Fermob and Lafuma
US: Brown Jordan and Windward Design Group
Australia: Colonial Cas ngs and Tecno Furniture
OneAll has a comprehensive range of high-quality outdoor furniture
products consis ng of chairs, tables, sunbeds, lounges and accessories
with contemporary in-house designs.
Sec on 4.3
Top selling products
LIUS
Aluminium sling chair
L-FORM
Full Aluminium Lounge
JUNE
EXPLORER
Aluminium sling sunbed Aluminium Side Table
THEMIS
Aluminium/glass extension dining table
01 Investment Overview
11
Topic
The sales
network of the
Company
Summary
For more
informa on
The company distributes to over 42 countries around the globe with
approximately 58% of its revenue generated from European markets,
17% from North America, 8% from South America and 17% from the rest
of the world.
Sec on 3 and
Sec on 4.4.2
The company's market share in the mid- er to high-end segment of its
key markets is shown in the independent market research report and is
as follows:
Ÿ
Ÿ
Ÿ
Ÿ
Belgium: 18%
Spain: 7%
France: 1%
Australia: 1%
Whilst OneAll has a strong market posi on in some individual European
countries, its overall posi on in its target markets is s ll minimal, leaving
substan al opportuni es for growth going forward.
Key customers of
the Company
The company's client network consists of 120 clients globally, the key
clients include:
Client
Country
Sec on 4.4.3
Length of Client
rela onship (years)
13
Legio Purchasing NV
Belgium
Inicia va Exterior 3i, S.A.
Spain
13
Outdoor Imp. E Exp. Ltd
Brazil
6
City Furniture
USA
5
TalentiS.R.L.
Italy
3
Gardens&Roses
Israel
10
Kingfisher Asia Limited
France and UK
Sieger GmbH
Germany
13
10
DomayneDirect
Australia
6
Sindomex S.A De C.V
M exico
4
Manufacturing of
the products
OneAll owns and operates its 74,081.33m 2 manufacturing facili es
located at Dawang Industrial Park in Zhaoqing City of Guangdong
Province in China, where it produces over 50% (57 % in 2014) of total
produc on volume. The remaining orders are outsourced to affiliated
third-party manufacturers (43% in 2014) where the same quality control
standards are applied and monitored by the Company.
Sec on 4.5
Suppliers of the
Company
Raw materials such as aluminium, glass and fabrics account for a
substan al 77.49% of total costs of produc on. OneAll is careful in its
selec on and management of suppliers, and implements the following
strategies:
Sec on 4.6
Ÿ
Ÿ
Ÿ
Ÿ
Engaging mul ple vendors to reduce dependency and improve price
compe on amongst suppliers;
Establishing long-term partnerships with reputable suppliers to
secure quality materials at low prices;
Managing procurement schedules to mi gate seasonal bo lenecks
and maintain full capacity produc on; and
Planning aluminium purchases with respect to interna onal price
trends to secure volume while hedging risk.
Oneall Prospectus
12
Topic
Marke ng
strategies of the
Company
Summary
The Company promotes its products through the following ways:
Ÿ
Ÿ
For more
informa on
Sec on 4.7
par cipa on in major outdoor furniture exhibi ons in Europe and
China including the Spoga and Gafa Fairs, and the China Interna onal
Furniture Fair;
invi ng clients to visit the Company's sites to demonstrate the
Company's produc on capabili es, product range and quality; and
publica on of product catalogues in Europe, China and Australia.
Ÿ
Product
innova on and
brandings of the
Company
OneAll operates under the "GardenArt" and "Mezzo" trademarks. The
"GardenArt" brand is highly recognised in the European outdoor
furniture markets. The company has more than 220 patents around the
world and won the pres gious "Red Dot" design award in Germany in
2015.
Sec on 4.8
Material
agreements to
the Company's
business
Agreements that are material to the Company's business include:
Sec on 9.4
Key drivers of
growth
Key strategies for
growth
Ÿ
Ÿ
supply contracts for the supply of raw materials required for the
produc on of the Company's products; and
sales contracts to provide the Company's products.
The Company's key growth drivers include:
Ÿ
a mature Original Design Manufacturer (ODM) business model that is
dis nguished from compe tors who only focus on the manufacturing
of products;
Ÿ
development of Original Brand Manufacturer (OBM) business model,
with poten al margin expansion opportuni es;
Ÿ
award-winning research and development capabili es that has
developed designs for products that cater to trends in the consumer
market in a mely manner;
Ÿ
a strict quality control system that monitors the manufacturing
process from the sourcing of raw materials to the examina on of final
products to ensure that the Company's products sa sfy interna onal
standard on furniture quality;
Ÿ
high profit margins enabled by targe ng the mid- er to high-end
market and direct sales that bypass importers and wholesalers; and
Ÿ
a geographically diverse range of customers that minimises seasonal
fluctua ons in demand.
OneAll has conducted extensive analysis of the current state of the
industry and is implemen ng a 5 year business growth strategy covering
the following:
Ÿ
Con nued new product development and expansion of produc on
capabili es for organic growth and gaining market share;
Ÿ
Pursuing integra on opportuni es with a focus on brand building,
franchising, and addressing both the E-market and Chinese market;
Ÿ
Improving corporate management and enhancing internal staff
training; and
Ÿ
Providing be er returns to shareholders by improving financial
performance and implemen ng a dividend growth plan.
Sec on 4.10
Sec on 4.11
01 Investment Overview
13
1.3 Key investment features
Feature
Descrip on
Successful business
model
OneAll has a proprietary and integrated business model comprising of:
an innova ve, award-winning, customer focused, in-house design team which
designs 95% (OBM 30%) of its products and has registered more than 220 patents
globally providing margin expansion opportuni es;
Ÿ prudent supply management capabili es, to ensure a reliable and compe ve
supply channel;
Ÿ an all-year-round high-quality manufacturing base and a commi ed work force
providing consistent product quality and reliability; and
Ÿ mostly direct distribu ons to established retailers in the European, Australian
and US markets, compe ng in the more profitable mid- er to high-end / luxury
segments.
Ÿ
Its proprietary and integrated business model has enabled OneAll to not only
achieve a be er profit margin and growth in revenue over the past few years; but will
also form a strong founda on for the group to compete effec vely in the future as
the business expands.
Well-balanced Board
structure with room to
expand
The Board is comprised of three execu ve directors with extensive industry
experience, and two non-execu ve directors. The non-execu ve directors have
strong local knowledge in audi ng, accoun ng, tax, and experience in ASX listed
companies which will allow them to guide the company in compliance and
governance ma ers. The founding execu ve directors have a good command of
English, allowing for effec ve communica on with the board at all mes.
As the Company grows, the board intends to add at least one addi onal nonexecu ve director with the appropriate experience and background to further
strengthen the board.
Growth poten al
Once admi ed as a listed company, with the accompanying transparency,
governance and market awareness, OneAll is planning to increase product lines and
produc on capacity in the next 18 months in order to grow its revenue and profit
further by increasing its market share in exis ng and new markets.
In the longer term, the company is planning to open franchised retail stores to
further enhance brand awareness and improve margins, and break into the Chinese
market as well as implemen ng a suitable Online-to-Offline (O2O) model in targeted
geographic regions.
In addi on to organic growth, OneAll is also ac vely seeking both horizontal and
ver cal value crea ng integra on opportuni es.
Strong affilia on with
Australia
The founders of OneAll are Australian Permanent Residents and its products are
already distributed to well-known Australian furniture retailers, such as Domayne
and the Outdoor Furniture Specialists.
Given OneAll's low market share (1%) in Australia, along with a strong forecast for
growth in outdoor furniture consump on and its counter seasonal geographic
posi on, Australia is a very important market for the company's future growth.
Following the successful lis ng on ASX, OneAll also intends to setup its Australian
headquarters in Sydney within 12 months.
Strong financial
performance
The return on equity (ROE) was over 61% in 2014. EBITDA and revenue in FY14
increased 40% and 25% respec vely.
OneAll does not have any outstanding borrowings. This provides it with a poten al
sound funding base for future growth.
OneAll has sufficient cash flows to fund its current opera ons and current plans.
Cashflow generated through its opera ons in 2014 was A$12.1 million and over A$9
million for first half of 2015. Refer to Sec on 6 for further informa on.
Oneall Prospectus
14
Feature
Descrip on
Dividend policy
Going forward the targeted dividend pay-out ra o is between 60-80% of statutory
NPAT and the es mated 2015 unfranked dividend yield is 8% (based on issuing price).
The first interim unfranked dividend for 2015 of A$0.04 per share is expected to be
paid in December 2015 to all qualifying shareholders a er the successful lis ng on
ASX.
Commi ed founding
Shareholders
The IPO is for the purpose of a compliance lis ng to raise a minimum of AUD$1 million
and a maximum of AUD$2.5 million through issuing new shares from the company.
There is no sell-down from the original founders.
Highly transparent
earnings
More than 50% of OneAll's clients are established retailers providing a transparent
and predictable earnings base.
1.4
Key risk factors
Inves ng in Shares involves substan al risks. The key risks as listed in the table below are not exhaus ve and an
investment in OneAll should be considered specula ve. Before making an investment decision, poten al investors
should read the en re Prospectus. In par cular, investors should give full considera on to the detailed discussion on
the risks that are associated with, and which could affect the financial performance of, an investment in OneAll, as
set out in "Risk factors" in Sec on 8.
Risk factors
Summary
For more
informa on
Risk of significant
Control by
Exis ng
Shareholders
On Comple on of the Offer, all Exis ng Shareholders will hold Sec on 8.2.16
approximately 97.89% to 99.15% of the Shares (subject to subscrip on
amount), which enables the Exis ng Shareholders, if ac ng together, to
pass any shareholder resolu on (including a special resolu on) without
any new Shareholder. As a result, the Exis ng Shareholders would be
able to exert a significant degree of influence over the Company's
management affairs and over ma ers requiring Shareholders' approval.
Liquidity
There is a risk that OneAll may not be able to meet its financial Sec on 8.3.2
obliga ons as they fall due. OneAll manages liquidity risk by maintaining
adequate cash reserves and by con nuously monitoring forecast and
actual cash reserves. Any inability to manage this risk may lead to an
adverse effect on OneAll's financial performance.
On Comple on of the Offer, all Exis ng Shareholders will hold
approximately 97.89% to 99.15% of the Shares (subject to subscrip on
amount). Around 89.27% to 88.14% of the Shares held indirectly by
Jianhui (Roger) Cao, Huatang (Douts) Li and Jia Ying (Jimmy) Chen may be
classified by ASX as restricted securi es and may be required to be held
in escrow for up to 24 months from the date of quota on (please refer to
Sec on 9.7). The absence of sale of Shares by the Exis ng Shareholders
during the escrow period may cause, or at least contribute to, limited
liquidity in the market for the Shares. This may also affect the prevailing
market price at which Shareholders are able to sell their Shares.
01 Investment Overview
15
Risk factors
Summary
For more
informa on
Export market
risk
OneAll's products are mainly exported to Europe and the US. This
exposes the Company to foreign macroeconomic market vola lity in
addi on to the general economic risk in China. In the event that the
economic condi on of the countries that OneAll's products are sold to
worsen, consumers may postpone or cancel their shopping schedule,
which can adversely impact the opera onal outcome of OneAll's
business.
Sec on 8.2.1
Supply chain
risk
The sales channel of OneAll involves mul ple stages of work done by
factory workers, exporters, importers, wholesalers and retailers. Each
stage of a product's sales process requires coopera on by personnel
responsible for other stages of work to achieve their responsibility in a
mely fashion. When any of the middle components of the supply chain
fails, it may result in the Company losing part or all of its customers at
the end of the chain. Whilst OneAll adopts a direct to retailer sales
model, supply chain risks s ll exist.
Sec on 8.2.2
The effec veness
of quality control
As the Company has been experiencing high growth in recent years,
OneAll plans to expand its produc on capacity by a considerable scale to
meet the needs of increased purchasing orders from its clients. As the
scale of the Company's business opera ons expands, the Company is
exposed to a greater risk of deficiencies in its quality control process. In
the event that the average quality of the Company's products is
adversely impacted as a result of inadequate quality control, the
Company will suffer a substan al amount of damage to the reputa on.
Sec on 8.2.3
Seasonal cycle
effect
The outdoor furniture industry is subject to seasonal cycles in its sales.
Most orders for outdoor furniture are placed during the period from
October to March but there are significantly less orders for the other half
of the year. This makes it hard for manufacturers to adjust for different
levels of produc on volume. It also increases fixed overheads and
nega vely impacts profitability.
Sec on 8.2.4
While the Company is performing well in northern hemisphere markets,
it is also ac vely exploring the southern hemisphere markets to mi gate
this risk. The goal is to achieve a balanced ra o of the orders coming
from southern and northern hemispheres, so that the difference in
orders between off-season and busy season can be minimalised. In
addi on, the Company produces popular products in advance during offseason, so that it takes the pressure off the busy season, and the
Company is able to accept more orders during busy season.
Foreign exchange
risk
The Chinese Renminbi (RMB) is no longer solely determined by US
dollars (USD) and the RMB exchange rate mechanism has become more
flexible. As the Company exports majority of its products and the
transac ons are se led in USD, while se ling payment for most costs in
RMB, the profitability of the Company's business opera ons is reduced
in the event that the RMB appreciates against the USD.
Sec on 8.2.5
Poten al changes
to export tax
rebate policy
The export tax rebate policy is an economic policy of China that has
significant benefits for OneAll. The outdoor furniture manufactured by
the Company is en tled to a 15 % tax rebate rate. Given that most of the
Company's products are exported, a decrease in the tax rebate rate will
have a significant nega ve impact on the Company.
Sec on 8.2.6
Oneall Prospectus
16
Risk factors
Summary
For more
informa on
Labour cost
As a result of China's rapid industrialisa on and urbanisa on process, the
labour cost in China has increased significantly. The 2012, 2013 and 2014,
the Company's labour cost as a propor on of the total cost was 18.6%,
17.15%, 18.05% respec vely. Therefore, the Company's ability to
effec vely control labour cost is a key factor for the compe veness of the
products and ul mately affect the Company's performance. In the event
that the Company's labour costs increases, the profitability of the
Company's opera ons will be significantly reduced.
Sec on 8.2.7
Raw material
cost risk
Raw material costs make up 77.49 % of the total cost, which is a very
substan al component. Hence, any large fluctua on in the prices of raw
materials will increase the difficulty of produc on management. The
Company's profitability may also be affected by fluctua ons in the prices of
raw materials. The Company has been closely observing the markets the
raw materials that the Company used and aims to make procurement plans
on aluminium, stainless steel and plas cs according to the medium to
long-term trends of commodity prices. The Company also enters into
supply contracts early in advance in order to secure low raw material
prices.
Sec on 8.2.8
Intellectual
property rights
As a well-known ODM with compe ve design capacity, the Company has
received great a en on in the industry. Companies that lack design
capacity may imitate OneAll's design of its popular products. The
counterfeit products can be extremely similar in style and colour to
OneAll's products but with bad quality, which poses a threat to the brand
image of OneAll. Hence, the Company is very concerned about protec ng
its intellectual property rights. As of the beginning of 2015, the Company
has registered 75 design patents in China, 87 design patents in Europe, 67
design patents in Australia and a newly developed u lity model patent. In
addi on, the Company is also devoted to figh ng piracy and other acts of
infringements of intellectual property rights.
Sec on 8.2.9
Reliance on key
personnel
Similar to all successful businesses, OneAll's business is reliant upon the
provision of high-quality marke ng and opera onal services by its
founders and senior management team. It is also dependent on its skilled
staff and technical personnel for the successful and ongoing opera ng of
its business ac vi es. Any change in the quality or quan ty of these
services, or an inability to a ract qualified and mo vated personnel to
provide these services, could affect OneAll's business ac vi es and
financial performance in the longer term.
Sec on 8.2.10
Land-use Rights
in China
According to the relevant PRC laws, individuals, businesses and other Sec on 8.2.11
organisa ons can possess land by being granted land-use rights from the
local government for limited me periods. There is the risk that OneAll may
not be granted extensions for the land-use right where its factories and
dormitories are located; however the rights are due to expire no sooner
than 28 August 2058.
Compe ve
environment
While OneAll has no direct compe on in China, OneAll competes with the
top- er brands in Europe. Currently, while the Company's products are
compe ve in quality and design standards with its compe tors, it does
not have brand recogni on as strong as its compe tors. Nonetheless,
OneAll offers more affordable prices, due to the fact that the Company has
its own produc on facili es and a direct distribu on model.
Sec on 8.2.12
01 Investment Overview
17
Risk factors
Summary
For more
informa on
Poten al merger
and acquisi on
ac vi es
The company is planning to pursue value crea ng integra on through
mergers and acquisi ons if it generates sufficient capital through
fundraising or organic growth. The company is to implement strict
evalua on processes in any poten al M&A deals and has a preference
for companies that are closer to end-consumers. However, transac ons
may lead to unforeseen expenditures, integra on risks, and difficul es in
rela on to its opera onal, financial, control and management systems.
Sec on 8.2.13
Insurance
coverage
In the PRC it is not customary for businesses to take out extensive
insurance protec on. Zhaoqing Vcare has bought comprehensive
property insurance and vehicle insurance and Gardenart Guangzhou has
bought vehicle insurance.
Sec on 8.2.14
Any uninsured loss or damage, li ga on or business disrup on may
result in substan al costs to Zhaoqing Vcare and Gardenart Guangzhou,
which could have an adverse effect on Zhaoqing Vcare or Gardenart
Guangzhou's business, net assets, financial condi on, and opera onal
results.
Approvals,
permits and
licences
1.5
OneAll's subsidiaries require certain licenses and approvals to conduct
their business. The licenses are subject to check or declara on by the
competent PRC authori es, and the standards of compliance required
may change. While OneAll's subsidiaries have obtained all the necessary
licences and permits for their daily opera ons, they may fail to meet the
requirements of current rules or regula ons, and/or not be granted
renewal for the licences. These poten al outcomes could have a material
and adverse effect on OneAll's business, net assets, financial condi on
and results of opera ons.
Sec on 8.2.15
Key Financial informa on
The following table presents a summary of the Group's financial data which has been derived from the Financial
Informa on set out in Sec on 6 and should be read together with the Inves ga ng Accountant's Report on the
Financial Informa on as set out in Sec on 7.
This Financial Informa on has been prepared in accordance with the recogni on and measurement principles
prescribed in Australian Accoun ng Standards adopted by the Australian Accoun ng Standards Board which are
consistent with Interna onal Financial Repor ng Standards issued by the Interna onal Accoun ng Standards Board,
and the accoun ng policies of the Company.
The summarised financial data should be read together with the Management Discussion and Analysis of the
Financial Informa on in Sec on 6.
Oneall Prospectus
18
Historical consolidated Statements of Profit or Loss and Other Comprehensive Income
Historical
FY2012
FY2013
FY2014
1HFY2015
A$000
Audited
Audited
Audited
Reviewed
Revenue
Costs of Sales (COS)
21,733
(14,454)
28,566
(18,134)
36,382
(22,079)
23,310
(13,619)
Gross profit
Other revenue
Sales and marke ng expenses
Administra on expenses
Other expenses
7,280
595
(1,240)
(740)
(196)
10,432
140
(1,535)
(886)
(208)
14,303
187
(1,992)
(961)
(182)
9,691
59
(1,324)
(736)
(161)
EBITDA
Deprecia on
5,699
(288)
7,943
(303)
11,355
(318)
7,529
(204)
EBIT
Net interest expense
5,411
(36)
7,640
5
11,037
7
7,325
5
Net profit before tax
Taxa on expense
5,375
(93)
7,645
(221)
11,043
(359)
7,330
(743)
Net profit a er tax
Other comprehensive income
5,282
(8)
7,423
2,743
10,684
1,159
6,588
1,085
Total comprehensive income
5,274
10,167
11,844
7,673
1.6
Directors and key management
OneAll has assembled a well-creden aled and balanced Board, and a management team with extensive experience
in the outdoor furniture industry.
Name Posi on
Experience
Huatang (Douts) Li
Mr. Li is co-founder of OneAll and a permanent resident of Australia. He has 21 years'
experience in interna onal trade, with extensive knowledge and experience in
furniture produc on and marke ng. Mr. Li holds a bachelor degree in Economics
from Guangdong University of Foreign Studies.
Execu ve Chairman
Joint-CEO, Co-Founder
Jianhui (Roger) Cao
Managing Director
Joint-CEO, Co-Founder
Mr. Cao is co-founder of OneAll and a permanent resident of Australia. He has 21
years' experience in interna onal trade and has mul ple award-winning designs in
the global furniture industry. Mr. Cao holds a bachelor degree in Economics from
Guangdong University of Foreign Studies.
Jia Ying (Jimmy) Chen
Execu ve Director
Mr. Chen joined the company in 2006. He has extensive knowledge and experience in
the food and resource industries, and has founded companies in both the US and
China. Mr. Chen studied Business Management and Finance at Fuzhou University
and New York University.
Peter Neville Hogan
Non-Execu ve Director
Mr. Hogan is a resident of Australia and a Chartered Accountant. He has over 30
years of experience in corporate tax, including 17 years as a Partner at PwC, and has
served on the boards of several public companies and non-profit organisa ons.
Fook Weng (Phillip) Au
Non-Execu ve Director
Mr. Au is a resident of Australia and a Cer fied Prac cing Accountant. He has over 15
years' experience in business consultancy and is the principal consultant of Phillip
Au & Associates. Mr. Au holds a Bachelor of Arts, majoring in Accoun ng and
Economics from Macquarie University.
01 Investment Overview
19
Name Posi on
Experience
Dongyao (Tony) Zheng
Ac ng Chief Financial
Officer
Mr. Zheng is a resident of Australia and has over 16 years' experience in banking and
consul ng in China, Hong Kong and Australia. Mr. Zheng holds a Master of Applied
Finance and Bachelor of Economics majoring in Accoun ng and Finance from
Macquarie University.
Su-King Hii
Company Secretary
Mr. Hii is a resident of Australia and is the founder and principal of legal and financial
services advisory prac ce, Innoinvest. Mr Hii holds a Graduate Diploma of Applied
Finance & Investments, a Master of Professional Accoun ng, a Master of Laws
(Commercial Law) and a Bachelor of Laws (Hons) / Bachelor of Applied Science.
1.7 Use of Funds
The Company expects to receive proceeds of A$2,500,000 at Maximum Subscrip on and of A$1,000,000 at
Minimum Subscrip on from the issue of Shares at the Offer Price of A$1.00 per Share. The table below sets out the
proposed use of funds based on the Subscrip on (Total Funds). The amounts represented below may change as a
result of fluctua ons in the exchange rate.
Use of funds
Minimum Subscrip ons
Amount (A$)
1
% of Total Funds
Maximum Subscrip ons
Amount (A$)
% of Total Funds
Working capital
_
_
1,283,000
51
Costs of the Offer to be paid out of
proceeds raised 1
1,000,000
100
1,217,000
49
Total
1,000,000
100
2,500,000
100
Refer to Sec on 9.9 for more informa on about the costs of the Offer.
The proposed use of proceeds described above represents the Company's current inten ons based upon the present
plans and business condi ons. The amounts and ming of the actual expenditures may vary significantly and will
depend upon numerous factors, including the ming and success of the Company's development efforts.
1.8 Capital structure following the offer
The ownership structure of OneAll when the Offer has been completed will be as follows:
Shareholder
Minimum Subscrip ons
Simply Dynamic Ltd 1
Next Champion Ltd
1
Ideal Green Investments Ltd
1
Maximum Subscrip ons
Number of Shares
%
Number of Shares %
49,334,800
42.17
49,334,800
41.63
49,334,800
42.17
49,334,800
41.63
5,776,800
4.94
5,776,800
4.87
Oneall Prospectus
20
Shareholder
Minimum Subscrip ons
Maximum Subscrip ons
Number of Shares
%
Number of Shares %
Shares held by Exis ng Shareholders
who are non-related par es
11,553,600
9.88
11,553,600
9.73
Shares on issue at date of Prospectus
116,000,000
99.15
116,000,000
97.89
Shares offered under this Prospectus
1,000,000
0.85
2,500,000
2.11
Total
117,000,000
100.00
118,500,000
100.00
1 .Simply Dynamic Ltd, Next Champion Ltd and Ideal Green Investments Ltd will retain 89.27% of the Company if
Minimum Subscrip on is achieved and 88.14% if Maximum Subscrip on is achieved.
1.9 Answers to key ques ons
Topic
Summary
Who is the issuer of this OneAll Interna onal Limited, a company incorporated in Victoria.
Prospectus?
More
Informa on
Sec on 1.1
What is being offered?
Pursuant to the Offer, the Company invites Applica ons for Sec on 2.1
1,000,000 Shares with the right to accept oversubscrip ons up to
1,500,000 addi onal Shares at an Offer Price of A$1.00 each to raise
up to A$2,500,000.
What is the Offer Price?
The Offer Price is A$1.00 per Share.
Is the Offer
underwri en?
The offer is not underwri en.
What are the key dates
of the Offer?
The Offer closes on 12 October 2015.
Sec on 1.1
Sec on 1.1
The Shares are expected to be allo ed on 16 October 2015.
The Holding Statements are expected to be dispatched on 16
October 2015.
The Shares are expected to commence trading on ASX on 22
October 2015.
What is the amount to
be raised under the
Offer?
OneAll is offering 1,000,000 Shares with an oversubscrip on up to Sec on 1.1
1,500,000 Shares to raise up to A$2,500,000 before costs of the
Offer.
What is the Maximum
Subscrip on available
under the Offer?
OneAll is offering a Maximum Subscrip on of 2,500,000 Shares to Sec on 1.1
raise up to A$2,500,000.
What is the Minimum
Subscrip on available
under the Offer?
OneAll is offering a Minimum Subscrip on of 1,000,000 Shares to Sec on 1.1
raise A$1,000,000. If the Minimum Subscrip on amount is not
raised then OneAll will not proceed with the Offer and will repay
Applica on Monies received (without interest).
What will the market
capitalisa on of the
Company be upon
lis ng on ASX?
Based on the Offer Price of A$1.00 per Share, the market Sec on 1.1
capitalisa on is expected to be A$117,000,000 if the Minimum
Subscrip on of 1,000,000 Shares is reached, and A$118,500,000 if
the Maximum Subscrip on of 2,500,000 Shares is reached.
01 Investment Overview
21
Topic
Summary
More
Informa on
What are the significant The tax consequences of any investment in the Shares will depend Sec on 9.13
tax implica ons of
upon an investor's par cular circumstances. Applicants should
inves ng in the
obtain their own tax advice prior to deciding whether to invest.
Company?
What are the costs of
T h e C o m p a ny ' s co st s o f t h e O ffe r a re e s m ate d to to ta l Sec on 9.9
the Offer payable by the approximately A$1,514,000 (exclusive of tax) based on the
Company?
Maximum Subscrip on amount.
How do I apply for
Shares?
You can apply for Shares by submi ng a valid Applica on Form Sec on 2.2
contained within or accompanying this Prospectus (including the
electronic version of the Prospectus) in accordance with the
instruc ons contained within.
What is the alloca on
policy?
The Company will determine the basis for the alloca on of Shares.
When will I receive
confirma on that my
Applica on has been
successful?
Holding Statements confirming Applicants' alloca ons under the Sec on 1.1
Offer are expected to be dispatched to Shareholders on 16 October
2015.
Sec on 2.3
Why is the admission of The ASX operates in a world-class regulatory environment mee ng
the Company to the
the highest global standards and is the largest western "free"
Official List of ASX being capital market in the Asian me zones.
sought?
A lis ng on the ASX will become the cornerstone for OneAll's global
growth. Not only does the lis ng elevate business percep on and
enhances brand awareness, it be er posi ons OneAll to grow in the
local Australian market from its current low base of 1% market
share organically as well as through value crea ng acquisi ons.
1.10 Ques ons or further informa on
If you have queries in rela on to this Prospectus, including how to complete the Applica on Form or how to obtain
addi onal copies, then you can:
Ÿ
contact the Offer Informa on Line on 1300 737 760 (for Australian investors) or +61 2 9290 9631 (for
Interna onal investors) open from 8.30am un l 5.00pm (AEST) Monday to Friday un l Comple on of the Offer;
Ÿ
visit www.oneallinterna onal.com/investor/prospectus to download and print an electronic copy of the
Prospectus. You may only download an electronic copy of the Prospectus if you are a resident of Australia and
access the website from within Australia.
If you are unclear in rela on to any ma er or are uncertain as to whether OneAll is a suitable investment for you,
then you should seek professional advice from your stockbroker, accountant, financial adviser, lawyer or other
professional adviser.
Oneall Prospectus
22
02. Details of the Offer
Chair & Table
Le :Artena
Right:Miami
Bo om:California
02 Details of the Offer
23
2.1
The Offer
OneAll is seeking to raise A$1,000,000 with an oversubscrip on amount of A$1,500,000 through the issue of up to
2,500,000 Shares under the Offer. The Offer is a general public offer. The alloca on of Shares between the
Applicants is determined by OneAll at its absolute discre on.
The Offer is not underwri en.
A Minimum Subscrip on amount of A$1,000,000, represen ng 1,000,000 Shares at the Offer Price of A$1.00 per
Share, is required under the Offer. The Offer will not proceed and all Applica ons and associated Applica on Monies
will be returned to Applicants (without interest), unless the Minimum Subscrip on amount of A$1,000,000 is raised
under the Offer. The Company reserves the right not to proceed with the Offer or any part of it at any me before
allotment of Shares to Applicants under the Offer.
New Shares will be issued as fully paid Shares and when issued will rank equally with the exis ng Shares on issue.
2.2
How to apply for Shares under the Offer
2.2.1
Comple ng the Applica on Form
Except as set out below, to par cipate in the Offer, you must complete the Applica on Form a ached to, or
accompanying this Prospectus. The Applica on Form contains detailed instruc ons on how to complete the form.
2.2.2
Payment and submi ng the Applica on Form
Payment by BPAY®
You may apply for Shares online and pay your Applica on Monies by BPAY®. Applicants wishing to pay by BPAY®
should complete the online Applica on Form accompanying the electronic version of this Prospectus which is
available at www.oneallinterna onal.com/investor/prospectus and follow the instruc ons on the online Applica on
Form (which includes the Biller Code and your unique Customer Reference Number (CRN)).
You should be aware that you will only be able to make a payment via BPAY® if you are the holder of an account with
an Australian financial ins tu on which supports BPAY® transac ons.
When comple ng your BPAY® payment, please make sure you use the specific Biller Code and your unique CRN
provided on the online Applica on Form. If you do not use the correct CRN your Applica on will not be recognised as
valid. It is your responsibility to ensure that payments are received by 5.00pm (Sydney me) on the Closing Date.
Your bank, credit union or building society may impose a limit on the amount which you can transact on BPAY®, and
policies with respect to processing BPAY® transac ons may vary between banks, credit unions or building socie es.
The Company accepts no responsibility for any failure to receive Applica on Monies or payments by BPAY® before
the Closing Date arising as a result of, among other things, processing of payments by financial ins tu ons.
Payment by cheque(s) or bank dra (s):
Once your Applica on Form is completed, please send your Applica on Form and cheque or bank dra
Applica on Monies to the Registry at the address set out below:
for the
Mailing Address
Boardroom Pty Limited
GPO Box 3993,
Sydney
NSW 2001
Oneall Prospectus
24
Hand Delivery
Level 12, 225 George Street,
Sydney
NSW 2000
Cheque(s) or bank dra (s) must be:
in Australian currency;
drawn at an Australian branch of a financial ins tu on;
crossed “Not Nego able”; and
made payable: to “OneAll Interna onal Limited – Offer A/C”
If paying by cheque(s), Applicants should ensure that sufficient funds are held in the relevant account(s) to cover
your cheque(s). If the amount of your cheque(s) for Applica on Monies (or the amount for which those cheques
clear in me for the alloca on) is insufficient to pay for the amount you have applied for in your Applica on Form,
you may be taken to have applied for such lower amount as your cleared Applica on Monies will pay for (and to have
specified that amount in your Applica on Form) or your Applica on may be rejected.
2.2.3
Acceptance of Applica ons
Regardless of the method of lodgement, the Registry must receive the relevant Applica on by no later than the close
of the Offer (unless OneAll varies the dates and mes).
A completed Applica on Form cons tutes an irrevocable offer to OneAll to subscribe for Shares on the terms and
condi ons set out in this Prospectus (including any supplementary or replacement prospectus), and as set out in the
Applica on Form.
OneAll reserves the right to:
reject any Applica on, including Applica ons that have not been correctly completed or are accompanied by
payments that are dishonoured;
accept late Applica ons received a er the close of the Offer;
allocate to any Applicant a lesser number of Shares than that for which any Applicant applied; and
waive or correct any errors made by an Applicant in their Applica on.
2.2.4
Withdrawal or early close of the Offer
OneAll reserves the right to withdraw the Offer at any me before the issue of Shares to successful Applicants. If the
Offer is withdrawn, then Applica on Monies will be refunded. No interest will be paid on any Applica on Money
refunded as a result of the withdrawal of the Offer or otherwise. OneAll will retain any interest, which accrues on
Applica on Monies.
OneAll reserves the right to close the Offer early.
2.2.5
Brokerage, commission and stamp duty
You do not have to pay brokerage, commission or stamp duty if you acquire Shares under the Offer. Fees are payable,
in rela on to the Offer, to Secvest Capital Pty Ltd, the Lead Arranger and Advisor to the Offer. An Applica on
processing fee of 2% will also be paid for stamped successful Applica ons lodged by stockbrokers and/or
appropriately licensed AFSL holders.
Details are set out in “Interests of advisers” in Sec on 5.2.2 . These fees will be paid out of the proceeds of the Offer.
2.3
Alloca on of Shares
The acceptance of Applica ons and the alloca on of Shares are at the discre on of the Company. In considera on
for the Directors agreeing to consider an Applicant's Applica on, the Applicant agrees its Applica on is an
irrevocable offer, which cannot be withdrawn. The Company reserves the right to reject any applica on and to allot
to an Applicant a lesser number of Shares than the number for which the Applicant applies. No Applicant under the
Offer has any assurance of being allocated all or any Shares applied for.
02 Details of the Offer
25
2.4
Applica on Monies
All Applica on Monies will be held in a special purpose trust account un l Shares are issued to successful
Applicants.
Applica on Monies will be refunded (in full or in part) if:
an Applica on is rejected;
an Applica on is subject to scale-back;
the Offer is withdrawn or cancelled;
the Minimum Subscrip on is not met; or
permission for quota on of the Shares is not granted within three (3) months a er the date of this
Prospectus or such longer me as permi ed by the Corpora ons Act.
No interest will be paid on any Applica on Monies that are refunded. A er Lis ng, or if Lis ng does not occur,
OneAll will retain any interest earned on Applica on Monies. Refund cheques will be sent a er the close of the Offer
or as otherwise applicable under the circumstances outlined above.
2.5
ASX Lis ng
OneAll will, within seven days a er the date of this Prospectus, apply for admission to the official list of ASX and for
official quota on on ASX of the Shares offered under this Prospectus. Trading of Shares on ASX is expected to
commence on 22 October 2015.
OneAll will apply to par cipate in the Clearing House Electronic Sub-register System, known as CHESS, operated by
ASX Se lement Pty Ltd (a wholly owned subsidiary of the ASX), in accordance with the Lis ng Rules and ASX
Se lement Opera ng Rules. On admission to CHESS, OneAll will operate an electronic issuer-sponsored sub-register
and an electronic CHESS sub-register. The two sub-registers together will make up the principal register of securi es.
Under CHESS, OneAll will not issue share cer ficates to successful Applicants following allotment, OneAll will
provide each Shareholder whose address is in Australia with a holding statement (similar to a bank account
statement) which sets out the number of Shares allo ed to the Shareholder under this Prospectus. If applicable, the
holding statement will also advise Shareholders of their Holder Iden fica on Number (HIN) or Sponsoring Issuer
Number (SRN). If a Shareholding changes during a month, the Shareholder will receive a statement at the end of that
month. Shareholders may also request statements at any other me (although OneAll may charge an administra on
fee). It is the responsibility of Applicants to determine their alloca on prior to the trading of the Shares. Applicants
who sell Shares before they receive no ce of their alloca on do so at their own risk.
It is expected that the ini al Holding Statements will be despatched by standard post on 16 October 2015 and that
trading of Shares on a normal se lement basis will commence on 22 October 2015. If you apply, then it is your
responsibility to determine your alloca on before you trade in Shares. If you trade in Shares before you receive your
ini al Holding Statement, then you do so at your own risk.
The fact that ASX may agree to grant Official Quota on to any Shares is not to be taken in any way as an indica on of
the merits of OneAll or the Shares offered. ASX takes no responsibility for the contents of this Prospectus.
If permission for quota on of the Shares is not granted within 3 months a er the date of this Prospectus, Applica on
Monies will be refunded without interest as soon as prac cable.
2.6
Tax implica ons of inves ng in the Company
The tax consequences of any investment in the Shares will depend upon an investor's par cular circumstances.
Applicants should obtain their own tax advice prior to deciding whether to invest. A general summary of the tax
implica ons of inves ng in the Company is contained in Sec on 9.13 .
Oneall Prospectus
26
2.7
Foreign investors
This Prospectus and the Offer do not cons tute an offer or invita on in any place in which, or to any person to whom,
it would not be lawful to make such an offer or invita on. No ac on has been taken to register or qualify the Shares
or the Offer, or to otherwise permit a public offering of Shares, in any jurisdic on outside Australia.
2.7.1 PRC residents
The informa on in this document does not cons tute a public offer of the New Shares, whether by way of sale or
subscrip on, in the People's Republic of China (excluding, for purposes of this paragraph, Hong Kong Special
Administra ve Region, Macau Special Administra ve Region and Taiwan). The New Shares may not be offered or sold
directly or indirectly in the PRC to legal or natural persons other than directly to "qualified domes c ins tu onal
investors".
2.7.2 Hong Kong residents
This document has not been, and will not be, registered as a prospectus under the Hong Kong Companies Ordinance,
nor has it been authorised by the Securi es and Futures Commission in Hong Kong pursuant to the Securi es and
Futures Ordinance (Cap. 571) of the Laws of Hong Kong (SFO). No ac on has been taken in Hong Kong to authorise or
register this document or to permit the distribu on of this document or any documents issued in connec on with it.
Accordingly, the Shares have not been and will not be offered or sold in Hong Kong other than to "professional
investors" (as defined in the SFO).
No adver sement, invita on or document rela ng to the Shares has been or will be issued, or has been or will be in
the possession of any person for the purpose of issue, in Hong Kong or elsewhere that is directed at, or the contents
of which are likely to be accessed or read by, the public of Hong Kong (except if permi ed to do so under the
securi es laws of Hong Kong) other than with respect to Shares that are or are intended to be disposed of only to
persons outside Hong Kong or only to professional investors (as defined in the SFO and any rules made under that
ordinance). No person allo ed Shares may sell, or offer to sell, such securi es in circumstances that amount to an
offer to the public in Hong Kong within six months following the date of issue of such securi es.
The contents of this document have not been reviewed by any Hong Kong regulatory authority. You are advised to
exercise cau on in rela on to the offer. If you are in doubt about any contents of this document, you should obtain
independent professional advice.
2.7.3 United States residents
This document may not be released or distributed in the United States. This document does not cons tute an offer to
sell, or a solicita on of an offer to buy, securi es in the United States. Any securi es described in this document have
not been, and will not be, registered under the US Securi es Act of 1933 and may not be offered or sold in the United
States except in transac ons exempt from, or not subject to, registra on under the US Securi es Act and applicable
US state securi es laws.
02 Details of the Offer
27
03. Industry overview
Sunbed
Le :Verona
Right:Xanthus
Bo om:Jupiter
Oneall Prospectus
28
Frost & Sullivan Australia Pty. Ltd.
Suite 1, Level 9, 189 Kent Street
Sydney, NSW 2000
Tel: 02 8247 8900 Fax: 02 9252 8066
www.frost.com
“We Accelerate Growth”
The Directors
OneAll Interna onal Limited
Level 27, AMP Centre
50 Bridge Street
Sydney, NSW 2000
August 14th, 2015
Dear Directors
Independent Industry Report on the Outdoor Furniture Market
Introduc on
OneAll Interna onal Ltd (OneAll), through its wholly-owned subsidiary GardenArt
Furniture Co. Ltd., is a designer, manufacturer and distributor of outdoor furniture.
OneAll designs and manufactures in China, and distributes mainly into overseas
markets, including Western Europe, the USA and Australia. OneAll is proposing to
undertake an Ini al Public Offering (IPO) on the Australian Securi es Exchange (ASX)
and has commissioned an Independent Industry Report from Frost & Sullivan for the
purpose of inclusion in the prospectus related to the IPO. Frost & Sullivan is an
independent market research and consul ng firm opera ng in over 40 countries
globally. Founded in New York in 1961, Frost & Sullivan now employs over 1,500 staff.
Frost & Sullivan has undertaken a number of market studies in the furniture market and
related sectors on behalf of market par cipants and financial ins tu ons.
In undertaking this assessment, Frost & Sullivan has relied on secondary informa on
derived from recognised public sources, as well as undertaking primary research and
store visits. The research was undertaken in the months of July and August 2015. All
effort has been made by Frost & Sullivan to ensure that informa on in this report is
accurate and appropriate at the me of wri ng. Conclusions, and assump ons a ached
to those conclusions, are based on Frost & Sullivan's inves ga ons and analyses of the
facts as they are known as at August 2015 and Frost & Sullivan is of the opinion that the
conclusions and underlying assump ons are reasonable.
Beijing
Bogota
Buenos Aires
Cape Town
Chennai
Delhi
Kuala Lumpur
London
Manha an
Melbourne
Mexico City
Mumbai
New York
Oxford
San Antonio
Sao Paulo
Seoul
Shanghai
Singapore
Sydney
Tokyo
Toronto
Auckland
Bangalore
Bangkok
Frankfurt
Kolka a
Palo Alto
Paris
Dubai
1
03 Industry Overview
29
Frost & Sullivan Australia Pty Ltd
2015
When conver ng from other currencies in this report, the following exchange rates have been used. 1
US$1 =
Europe
Australia
China
€0.75
A$1.11
RMB6.10
Company Overview and Business Model
OneAll designs, manufactures and distributes a range of outdoor furniture which is sold
both under retailer brands as well as its own brand (GardenArt) in the 42 countries in
which it does business. These business models are known as original design
manufacturer (ODM) and original brand manufacturer (OBM) respec vely. OneAll's
product range includes lounges, tables, chairs and sun-loungers. Products are
manufactured primarily in metal, but also include wood (for example, on table tops),
fabric and upholstery.
Frost & Sullivan understands that OneAll's sales revenue in 2014 was approximately
US$32.8 million (A$36.4 million), and its largest end-markets were Belgium, France,
Spain and Australia. These countries accounted for approximately US$15.4 million
(A$17.1 million) of sales in total. The sales by country in 2014 were;
Belgium - US$8.30 million (A$9.21 million)
Spain - US$3.48 million (A$3.86 million)
France - US$2.16 million (A$2.40 million)
Australia - US$1.44 million (A$1.60 million)
OneAll sells to consumers via retailers in each country, with the main retailers to which
OneAll sells including Domayne and Outdoor Furniture Specialists (OFS) in Australia,
Bristol Garden in Belgium and Castorama and Jardiland in France. OneAll generally sells
directly to retailers rather than through distributors or importers, allowing it to capture
more value in the distribu on channel.
OneAll designs, manufactures and distributes products that address the mid- er and
high-end / luxury segments of the outdoor furniture market. The mid- er segment
includes products which combine design aesthe cs with quality materials, but which
are sold at an affordable price point. The high-end / luxury segment comprises products
manufactured in small volumes with a very high level of design and using very high
quality materials. OneAll's products have a significant design element, differen a ng
the company from many other China-based manufacturers that focus on low-end
products with minimal design.
1
Average exchange rates for 2014 (source: OANDA.com)
2
Oneall Prospectus
30
Frost & Sullivan Australia Pty Ltd
2015
Execu ve Summary
Outdoor furniture comprises a segment of the broader furniture market. In 2014, the
es mated value of global furniture produc on at manufacturers' prices was US$555
billion ² (A$616 billion). Since 2010, the value of furniture produc on has increased at a
CAGR of 8.7%, with this growth the result of a number of factors, including recovery
from the impact of the Global Financial Crisis (GFC) and recovering housing markets in
many countries (as purchase of furniture is o en linked to a house move).
The manufacture of furniture is increasingly globalised, with cross-border trade in
furniture es mated at 29% of global produc on in 2014. Global trade in furniture is
likely to con nue to grow, and Frost & Sullivan an cipates that it will account for almost
50% of global furniture markets by 2019. China is the dominant producer of furniture
globally, and the largest exporter of furniture. In 2012, China accounted for an
es mated 40% of global furniture produc on. Exports of furniture from China are
an cipated to reach US$170 billion (A$189 billion) by 2019. ³ The growth in the Chinese
furniture industry is the result of a number of factors, including the greater integra on
of China into the global economy, the combina on of a skilled and rela vely low cost
workforce, the focus by Chinese manufacturers on design and quality improvement to
address interna onal markets, suppor ve policies by the Chinese Government (such as
reducing tariffs on raw material imports) and the opening in China of produc on
facili es by many global companies.
Independent Industry Report on the Outdoor Furniture Market
Outdoor furniture is es mated to account for approximately 2% of global furniture
produc on, or approximately US$11.1 billion (A$12.32 billion) in 2014. Outdoor
furniture is typically manufactured in three main materials, although a single product
can some mes use more than one material (e.g. metal and wood are some mes
combined):
Natural materials (primarily wood but also ra an and cane);
Plas c; and
Metal.
Addi onally, tex les or upholstery are o en used on outdoor furniture.
Outdoor furniture made from natural materials typically uses teak or pine, which are
durable in outdoor se ngs. Plas c furniture is typically manufactured from synthe c
resins or fiberglass. Metal furniture is generally manufactured in steel, aluminum or
cast iron. Aluminum is a rela vely light material, yet is durable and can be formed into a
variety of shapes. Unlike stainless steel, it does not require regular upkeep to prevent it
from rus ng. Metal furniture is es mated to be the largest segment of the outdoor
furniture market, accoun ng for around 50% of global sales.⁴
Based on industry research, Frost & Sullivan es mates that the total market size for
outdoor furniture across OneAll's main target markets of Western Europe, ⁵
ⁿ
$⁴.²⁸
ⁿ ⁽ $⁴.⁷⁵
ⁿ⁾ ⁿ ²⁰¹⁴,
2
3
4
5
The EU Furniture Market Situa on and a Possible Furniture Products Ini a ve, Centre for European Policy Studies, 2014
Ibid
Frost & Sullivan es mate
Western Europe comprises Austria, Belgium, Denmark, France, Germany, Italy, the Netherlands, Spain,
Switzerland and the United Kingdom (UK)
3
03 Industry Overview
31
Frost & Sullivan Australia Pty Ltd
2015
with the USA accoun ng for US$1.9 billion (A$2.11 billion), Western Europe US$2.2
billion (A$2.44 billion) and Australia US$182 million (A$202 million). ⁶ These market
sizes are based on manufacturers' ex-factory prices. Given mark-ups through the
distribu on channel the market value at retail prices is considerably higher.
Within Western Europe, the largest market is Germany, followed by the UK, France and
Italy (see Figure 1).
Figure 1: Western European Outdoor Furniture Market Split by Country, 2014
Source: Frost & Sullivan es mates
The Global Financial Crisis had a significant impact on demand for outdoor furniture,
and over recent years, there has been limited growth in outdoor furniture sales in
Western Europe and the USA, largely a result of flat economic condi ons and weak
housing markets. The es mated size of the outdoor furniture market in 2014 in both
Western Europe and the USA is s ll below the pre-GFC levels. However, Frost & Sullivan
expects that economic growth and recovery in housing markets will s mulate growth in
outdoor furniture consump on over the next five years, with the overall market in
Western Europe, USA and Australia forecast to grow at a CAGR of 2.4% to reach US$4.82
billion (A$5.35 billion) in 2019. ⁷ The strongest growth is an cipated to be in Australia.
This is illustrated in Figure 2.
6
7
Frost & Sullivan es mates
Frost & Sullivan forecasts
4
Oneall Prospectus
32
Frost & Sullivan Australia Pty Ltd
2015
Figure 2: Outdoor Furniture Market by Region, 2010 to 2019F
Source: Frost & Sullivan forecasts
Generally, import penetra on of outdoor furniture is increasing in developed markets,
as a result of reducing import barriers, improved quality levels by exporters, and the
establishment of produc on facili es in loca ons such as China by domes c producers.
In Western Europe, imports are es mated to account for around 50% of consump on in
2014, a similar propor on in the USA and approximately 70% in Australia. China is the
largest source of imports in each region.⁸
Outdoor furniture is typically sold to consumers via retail outlets. A number of different
types of retailers sell outdoor furniture, such as specialist outdoor furniture retailers
(such as Outdoor Furniture Specialists in Australia), general furniture retailers (such as
Super Amart, Domayne and Harvey Norman), hardware stores and garden centres.
Many manufacturers use wholesalers / importers as intermediaries in the value chain,
however, this can o en lead to loss of margin, as mark-ups by wholesalers / importers
can be as high as 100%. Overall, mark-ups through the value chain can increase the
retail price of outdoor furniture items by as much as 400% to 500% when compared to
manufacturers' ex-factory FOB ⁹ prices. This is illustrated in Figure 3.
8
9
Frost & Sullivan es mates
FOB stands for free-on-board and defines the point at which the supplier transfers ownership to the buyer. The buyer is
esponsible for transporta on costs from the country of manufacture to the country of sale
5
03 Industry Overview
33
Frost & Sullivan Australia Pty Ltd
2015
Figure 3: Distribu on Channel Mark-ups for Outdoor Furniture
Sources: CBI Market Informa on Database, Garden Furniture in Europe; Frost & Sullivan es mates
Frost & Sullivan understands that OneAll generally adopts a business model of selling
directly to retailers, bypassing wholesalers / importers and allowing OneAll to capture
more margin in the value chain as well as offering a more compe ve pricing structure
to its retailers. This is likely to be one of the reasons that OneAll's profitability is higher
than compe ng manufacturers.
Outdoor furniture can be segmented by price er, and can be broadly divided into three
segments: low-end (o en unbranded and basic products with limited styling); mid- er
(branded products with styling but at rela vely affordable cost); and high-end / luxury
(expensive and rela vely opulent furniture o en purchased for status). Manufacturer
margins are generally higher in the mid- er and high-end / luxury segments. In the mider and high-end / luxury segments, the use of design is important to customers, as
well as the incorpora on of quality materials. As a manufacturer with a strong focus on
design, OneAll is therefore well-placed to compete in these segments.
Frost & Sullivan es mates that the mid- er segment typically accounts for 40% to 50%
of the overall outdoor furniture market and the high-end / luxury segment 5% to 10%,
depending on the country in ques on. The overall value of the mid- er and high-end /
luxury segments in OneAll's target markets is approximately US$2,064 million (A$2,291
million). ¹⁰ With sales of US$32.8 million (A$36.4 million), OneAll therefore has an
es mated share of under 2% of the mid- er and high-end / luxury segments, sugges ng
significant opportunity to grow. OneAll's share varies significantly by country, and is
es mated at 18% in Belgium and 7% in Spain, which are its two largest markets. In
Australia, OneAll's market share is es mated at 1%, again sugges ng that it has
significant scope to grow sales in Australia. OneAll's es mated market share in its main
markets is summarised in Table 1.
10
Frost & Sullivan es mates
6
Oneall Prospectus
34
Frost & Sullivan Australia Pty Ltd
2015
Table 1: Market Size, Segment Size and OneAll Market Share by Country, 2014
Belgium
France
Spain
Australia
Outdoor Furniture
Market Size
(US$ million)
Mid- er and
High-end /
Luxury Segment
(US$ million)
OneAll Sales
(US$ million)
OneAll Market
Share (mid- er
and high-end /
luxury segments)
94
290
105
182
47
145
52
109
8.30
2.16
3.48
1.44
18%
1%
7%
1%
Source: Frost & Sullivan forecasts
The manufacture of outdoor furniture is a fragmented industry, largely comprised of
small-to-medium sized privately-owned companies with revenue in the range of US$11
million to US$33 million (A$12 million to A$37 million), with few significantly larger
companies (Yotrio Group in China and Brown Jordan in the USA are excep ons). OneAll
is therefore at the upper-end of the revenue scale for most manufacturers. Based on
companies for whom financial data is available, typical opera ng profit margins for
European outdoor furniture manufacturers are in the range of 2% to 9%, with an
average opera ng profit margin in the latest financial year for companies for which
financial data is available of 6.2% (excluding loss-making companies). ¹¹
Yotrio Group, based in Taizhou, Zhejiang, China is one of the largest global
manufacturer of outdoor furniture, with sales in 2014 of RMB3.30 billion (US$532
million, A$591 million), an opera ng profit of RMB72 million (US$12 million, ¹² A$13
million) and an opera ng profit margin of 2.2%. ¹³ Frost & Sullivan understands that
OneAll's opera ng profit margin in 2014 was approximately 30%, indica ng that OneAll
has significantly higher opera ng profit margins than other outdoor furniture
manufacturers in its target markets for which financial data is available, as well as when
compared to Yotrio Group. This is indicated in Table 2.
Table 2: Comparison of OneAll Opera ng Profit Margin with Other Outdoor Furniture
Manufacturers
Opera ng Profit Margin
OneAll
Yotrio Group
Average of
European Manufacturers¹⁴
30%
2.2%
6.2%
Source: calculated by Frost & Sullivan based on OneAll audited accounts, 2014, Yotrio Group annual report, 2014, and financial
reports for European companies (latest available year)
Frost & Sullivan an cipates that the markets for outdoor furniture in Western Europe,
the USA and Australia will con nue to grow in the period from 2015 to 2019, at an
overall CAGR of 2.4%. The mid- er and high-end / luxury segments in which OneAll
competes account for almost 50% of sales of outdoor furniture in these markets, and
imports (especially from China) are accoun ng for a growing propor on of sales in
OneAll's key markets.
Yours Sincerely
Mark Dougan
Managing Director, Australia & New Zealand
11
12
13
14
Calculated based on reported company financial data
Excludes investment profits
Yotrio Group annual report
Companies included are Manu , Tribu, Fermob, Hedone, Lafuma, Ke al, Gandia Blasco and Alco
7
03 Industry Overview
35
04. Company overview
Our Brand
Le :Cup
Right:Platemate
Bo om:Service tray
Oneall Prospectus
36
4.1
Introduc on
OneAll is a leading premium outdoor furniture designer, manufacturer and distributor recognised for its innova ve
and award-winning designs, as well as high-quality manufacturing capabili es. The company has over 220 patents
and 270 products that are compe ng with mid- er and high-end brands in the European, Australian and US outdoor
furniture markets and distributes over 95% of its products directly to established retailers over 42 countries.
Established in 2001, OneAll is now headquartered in Guangzhou, China with its manufacturing base in Zhaoqing,
China, and is supported by a permanent work force of 299 employees. The company has a commi ed management
team with many years of experience and co-founders who are ac vely involved in the day-to-day management of the
Group. In recent three years, the Group has experienced consistent growth of over 25% p.a. in revenue and 40% p.a.
in EBITDA. With access to capital markets, OneAll has the poten al for significant future growth, both organically
and through ver cal and horizontal integra ons.
4.2
History
A meline of some of the significant events and milestones for OneAll is set out below.
Year
2001
Event
Ÿ
OneAll was established with a focus on outdoor furniture trading
Ÿ
OneAll par cipated in the Spoga Fair (the biggest professional outdoor furniture fair in
Ÿ
“Golden Era” collec on was announced at the Spoga Fair
Ÿ
OneAll's first patent was registered
Europe held in Germany every September) for the first me with a 30m² booth
2002
Ÿ
OneAll a ended the Spoga Fair for the second me with a bigger 100m² booth
Ÿ
“Jupiter II” collec on was announced at the Spoga Fair
Ÿ
OneAll met its two largest clients during the Spoga Fair and long-term close strategic
partnerships were established. They con nue to be the largest clients of OneAll to date.
2003
Ÿ
OneAll registered its first trade mark in China
2006
Ÿ
OneAll commenced construc on of its new factory in Zhaoqing
2007
Ÿ
OneAll registered its first trade mark in Europe
Ÿ
OneAll commenced test produc on from its factory in Zhaoqing
2008
Ÿ
The Zhaoqing factory became fully opera onal and commenced produc on
2009
Ÿ
OneAll was awarded mul ple patents in the Guangzhou Yuexiu region
2011
Ÿ
“Pyramid” collec on won the design award in the 27
China Interna onal Furniture Fair
(CIFF)
2015
Ÿ
Ÿ
“Mountain” collec on won the Red Dot Design Award in Germany
OneAll became a regular par cipant at the Spoga Fair with a substan ally expanded booth
of 532m².
04 Company Overview
37
4.3
Product Range
OneAll has a comprehensive range of high-quality outdoor furniture products. The outdoor furniture segment is
comprised of the chairs, tables, sunbeds, lounges and accessories product categories.
4.3.1 Chairs
OneAll designs and manufactures contemporary-inspired products including dining chairs, bar stools and
conversa on chairs. OneAll's chairs are ergonomically designed to bring consumers tremendous comfort and
enjoyment during their outdoor hours.
A rustproof tubular aluminium frame is the main material for all of OneAll's chairs. Aluminium is excep onally strong
and durable, and has adequate machinability, thus making it an op mal choice for the outdoor environment. The
aluminium frames are finished with powder coa ng in different colours to give the chairs a modern and Europeaninspired look.
OneAll covers the aluminium frame with a durable mesh fabric that has the elegance of indoor upholstered
furniture. OneAll also integrates teakwood into its chairs. Teakwood is natural and durable, and weathers to a silvery
grey colour in the outdoor environment, making it an ideal material to put in gardens. OneAll's chairs are breathable,
easy to care for and weather-friendly.
Chair product examples
LIUS
Aluminium sling chair
#1 top selling product
COMOS
Aluminium sling chair
#3 top selling product
SOHO
Aluminium sling chair
#4 top selling product
VERONA
Full aluminium chair
For the high-end market
4.3.2 Tables
OneAll's tables are made with wrought aluminium frames coupled with a large range of choices for the table top,
including a tempered glass painted top, aluminium slat top, outdoor ceramic top, honeycomb aluminium top and
teakwood top.
OneAll's table range can be dis nguished by the many func ons it covers. OneAll offers dining tables, extendable
tables, bar tables, coffee tables, side tables, folding tables as well as picnic tables in various different sizes to suit
venues such as cafés, balconies, galleries and private gardens, among others. The modern design and premium
materials of OneAll's tables also makes them a sensible choice for the indoors.
Oneall Prospectus
38
Table product examples
ORLANDO
Aluminium/teak dining
table
White frame & teaktop
VERONA
Aluminium/glass dining
table
For the high-end market
THEMIS
Aluminium/glass
extension dining table
#5 top selling product
FANO
Aluminium/glass round
dining table
Central base design
4.3.3 Sunbeds
OneAll's sunbeds have simple, contemporary designs. The standard sunbed is equipped with a durable powdercoated aluminium frame with UV-resistant and fade-resistant mesh fabric. The recline offers to 4 to 5 posi ons,
offering support and comfort for different ac vi es, such as reading, tanning and napping.
Addi onally, customers have the choice of making use of OneAll's easy-care, weather-friendly cushions and to
choose from a range of mildew and fade-resistant materials.
Sunbed product examples
JUNE
Aluminium sling sunbed
#2 top selling product
VERONA
Full Aluminium sunbed
For the high-end market
BOSTON
Aluminium sling sunbed
DERBY
Aluminium sling sunbed
With wheel system
For the hotel market
4.3.4 Lounges
OneAll's sofa lounges consist of a powder-coated aluminium base, resin wicker, mesh sling and other outdoor
fabrics. Depending on the design, materials such as teakwood, honeycomb aluminium, belt, rope and tempered
glass are also used in OneAll's lounge range. OneAll's lounges provide durable sea ng comfort to consumers and are
used both outdoors and indoors.
OneAll's sofa lounges are designed in different sizes and combina ons. Consumers have the choice of the classic
range, including conversa on sets with armchairs, loveseat and sofa, or the indoor-inspired range including the
sec onal modular sofa loungers.
04 Company Overview
39
Lounge product examples
EXPLORER
Aluminium sling lounge
Good size for Apartment Pa os
FERMO
Full Aluminium Lounge
Popular Model
PIEMONTE
Full Aluminium Lounge
For the high-end market
L-FORM
Full Aluminium Lounge
Special design with simple line
4.3.5 Accessories
The accessories range offers complimentary func ons to the main product lines. The range of accessories includes
service trays, magazine shelves, serving trolleys, table linen, flower pots and func onal side tables, among others.
The accessories are also iconic products that are eye-catching, and which differen ate OneAll from its compe tors.
Accessories product examples
EXPLORER
Aluminium Side Table
In & Outside Use
SEDONA
Aluminium sling Rack
Foldable & Lightweight
DERBY
Aluminium Serving Trolley
Wheel System
FERMO
Aluminium Service Tray
Prac cal & Lightweight
Oneall Prospectus
40
4.4
Sales and Key Clients
4.4.1 Sales Strategy
OneAll's key sales strategy involves shortening the delivery chain. The strategy is to eliminate the involvement of
importers and wholesalers and, instead, establish a direct rela onship with retail stores. The shortened sales
channel allows the Company to not only increase its profit margin but also offer more compe ve pricing. The
Company now has a sales network consis ng of 120 clients in 2015, of which 85% are retailers, indica ng the
successful implementa on of OneAll's sales strategy.
4.4.2 Sales Channels
With 15 years of successful expansion, the Company currently exports to over 42 countries around the globe. Its
major markets include Europe, North America, South America, Australia and the Middle East. The sales channel
includes large furniture chain stores and exclusive outdoor furniture stores, and some of the key clients include
Legio Purchasing NV, Ini a va Exterior 3I SA and Domayne Australia.
4.4.3 Key clients
OneAll categorises clients into three classes (A, B and C) based on their order quan ty. Currently 8.1% of clients are
categorised as Class A, who collec vely account for 55% of total sales, while the remaining 91.9% of the clients are
categorised as Class B and Class C, accoun ng for 45% of total sales.
The categorisa on structure allows OneAll to be er manage and serve its clients. Class A clients, being fewer in
number but with a large orders provides business stability and enables OneAll's factories to schedule regular
produc on. Class B and C clients, being large in number but with smaller orders at higher sales prices, provides the
Company with higher profit margins and poten al for future development and growth.
List of top 10 clients in 2014 (based on order quan ty)
Client
Country
Legio Purchasing NV
Belgium
Inicia va Exterior 3i S.A. Spain
Profile
Ÿ
Ÿ
Ÿ
Ÿ
Outdoor Imp. E Exp. Ltd
Brazil
Ÿ
Ÿ
City Furniture
USA
Ÿ
Ÿ
Ÿ
Talen S.R.L
Italy
Ÿ
Gardens & Roses
Israel
Ÿ
Ÿ
Kingfisher Asia Limited
France, UK
Ÿ
Ÿ
Ÿ
Sieger GmbH
Germany
Ÿ
Ÿ
Domayne Direct
Australia
Ÿ
Sindomex S.A De C.V
Mexico
Ÿ
Ÿ
Length of Client
rela onship (years)
The largest outdoor furniture chain store in Belgium
Total of 20 stores
Distributor of a famous Spanish outdoor furniture brand
Sales cover North Africa region, Spain, Portugal and the
Mediterranean coast.
Distributor of famous Brazilian outdoor furniture brand
Sales cover most of South America.
General furniture chain store in Florida
Total of 17 stores
Sales cover both indoor and outdoor furniture.
Distributor of an Italian outdoor furniture brand
Outdoor furniture chain store in Israel
One of the most influen al furniture stores with a total of 7
stores
One of the companies listed among Fortune 500
Ranked third in the Home Renova on Retail Industry globally
A total of over 600 stores in Asia and Europe
Distributor of a renowned German outdoor furniture brand
Largest furniture chain store targe ng mid- er to high-end
consumers
A total of 18 stores covering the en re Australia
Famous Mexican furniture chain store
Total of 5 stores and expanding rapidly
13
13
6
5
3
10
13
10
6
4
04 Company Overview
41
4.5
Manufacturing
Orders received by the Company are allocated to one of the two produc on op ons below:
Ÿ
In-house manufacturing. The orders are manufactured in Zhaoqing Factory. The total output from Zhaoqing
Factory accounted for 57 % of the total produc on in 2014.
Ÿ
Outsourced manufacturing. The orders are outsourced to affiliated third-party manufacturers, which
accounted for 43% of the total produc on in 2014.
The Company has an efficient produc on management system, where the high-demand products can be
manufactured in advance during off-seasons in order to reduce the pressure on produc on during busy seasons.
4.5.1 In-house manufacturing
The Company owns and operates its 74,081.33m 2 manufacturing facili es located at Dawang Industrial Park in
Zhaoqing City of Guangdong Province, China. The facili es consist of three factories of 9,600m 2 , 9,200m 2 , and
4,800m 2 respec vely, and three workers' dormitories of 2,400m 2 , 2,000m 2 and 1,500m 2 respec vely. Currently there
are 281 permanent employees in the factory, who provide a produc on capacity of 40,000 pieces of furniture per
month or 440,000 pieces of furniture per year (the factory operates 11 months of the year, and closes for one month
every year during the Chinese New Year holiday and for maintenance).
The machineries in the factory include 20 automated industrial sewing machines, 30 raw tube processing machines,
10 special lathe, planer, milling machines and 3 powder-coa ng lines.
The manufacturing site is also equipped with other facili es including an electricity substa on, a sewage disposal
system, exhaust fan devices, compression system, fire services, and gas infrastructure.
4.5.2 Outsourced manufacturing
OneAll currently has two designated external manufacturers for the Company, which ensures the quality and
meliness of the produc on.
The Company has very extensive evalua on processes and strict selec on criteria for external producers with
sustainable business philosophy that integrates with OneAll's development plans, including due diligence of the
external manufacturers on the following aspects:
Ÿ
Ÿ
Ÿ
Ÿ
quality control system to ensure that their product quality is in line with the Company's standards
accoun ng system and capital management structure to ensure there is sufficient produc on capital for the
orders
produc on capacity to ensure that there will be no delay on product delivery
cost management to ensure compe ve pricing that is close to or below the market price
The Company also takes measures to ensure the sufficient protec on on its intellectual property rights.
4.5.3 Quality Control System
OneAll has a strict quality control system in place for the development, produc on and sale of its products.
Development Phase:
Ÿ
Ÿ
The Quality Control (QC) Department is involved in product development phase, tes ng design samples
produced by its R&D department against high quality standards focusing on product func onality and safety.
OneAll, as a mid- er to high-end supplier, adopts EN-581 as its lowest quality control standard.
If the design samples meet internal standards, OneAll carries out small scale pilot produc on for further
monitoring and quality checks. The decision on whether the new design can enter into the produc on phase is
based on the results of the quality control evalua on conducted by the QC and R&D departments.
Oneall Prospectus
42
Produc on Phase:
Ÿ
Ÿ
Mass produc on begins with incoming quality control tests on all materials and accessories, both in-house and
outsourced, used in the produc on process. Any material or accessory that fails tes ng will be rejected and
returned to suppliers for replacement.
Throughout the produc on process, OneAll implements in-process quality control tests at every stage of
manufacturing on a daily basis. This ensures that quality faults are iden fied and solved across different
departments, and that no defec ve items are passed onto the next stage in the produc on process.
Sale/A er-market Phase:
Ÿ
Ÿ
Upon assembly, products must pass final quality control and outgoing quality control tests specific to the product
and its characteris cs, which may also include customer-specific requirements. Unsa sfactory products are
returned to the relevant departments for rework, and not accepted for packaging and sale.
A er products are delivered, feedback from the market and customers regarding product quality and sa sfac on
is collected. OneAll's Quality Control Department analyses the informa on and develops ways to improve both
the produc on process and customers' experiences.
4.6
Suppliers
The Company mainly uses aluminium, fabrics (mesh), glass, and PE wicker to produce furniture, accoun ng for a
substan al 77.49% of total costs of produc on. Therefore, the selec on and management of materials suppliers is
an important aspect of produc on management.
Mul ple Suppliers
Main materials all have two or more suppliers, reducing the dependence on a single producer and hedges supply
risks. Moreover, using mul ple suppliers also promotes compe on amongst suppliers on price, quality, delivery
me and other service components. With the appropriate amount of supplier compe on, the Company is able to
enjoy the provision of quality service at low cost.
Long-term Rela onships
The Company strives to work and establish long-term strategic partnerships with well-known raw materials
companies in the industry. This ensures that materials supplied meet the quality standards of the Company, and the
steady quality increases consumers' confidence in the Company's products. Moreover, because well-known
suppliers grasp development trends and have deep knowledge of the industry, their designs are industry-leading and
bring the Company an advantage that normal Chinese companies cannot match.
Procurement Management
The outdoor furniture industry typically faces seasonal bo lenecks in the procurement of raw materials. However,
the Company, according to specific circumstances and produc on plans, places orders in suppliers' periods of undercapacity. This not only results in the Company being able to run at full capacity 11 months of the year, but also in
receiving raw materials at preferen al prices, shorter delivery mes and addi onal advantages.
Aluminium Purchase Planning
Aluminium, at 34% of total purchases in 2014, is the largest raw material component of the Company's purchases.
The Company has clear purchase plans, according to medium to long term price trends in domes c and interna onal
markets, with the two main suppliers of aluminium. Ul mately, the Company is able to secure prices that are either
in line or be er than prevailing market prices, and prevents a high cost being passed on to consumers.
4.7
Marke ng
4.7.1 Exhibi ons
Spoga and Gafa are the biggest outdoor furniture exhibi ons in Europe in terms of scale and influence and they are
held in Germany every September. OneAll has been a ending the Spoga and Gafa exhibi ons every year since 2001
04 Company Overview
43
and had a 532m 2 booth in 2015. The Company officially announces its new products for the next year at Spoga. The
exhibi on is also a great pla orm for the Company to meet poten al clients and enhance rela onships with exis ng
ones.
China Interna onal Furniture Fair, which is held annually in March in Guangzhou, China, is another major exhibi on
that the Company a ends. As a leading outdoor furniture company, OneAll has always been provided with a
prominently located and generously spaced booth of over 600m 2 .
Because of the geographic and ming difference of the two major exhibi ons, Spoga and CIFF provide the Company
with a wider range of clients and seasonal balance for product orders.
4.7.2 Site Visits
In addi on to exhibi ons, partnerships between the Company and its clients are enhanced through site visits. New
clients can visit the Company to gain be er understanding of the business in terms of its produc on scale, product
quality and product range. Exis ng clients mostly visit the Company to discuss their exis ng partnership and make
plans for the development and produc on of new products. Relevant personnel from the sales and design
departments visit clients in different markets regularly in order to understand the latest trend of each market. The
informa on gathered allows the Company to develop future expansion strategies accordingly.
4.7.3 Product Catalogues
The major markets for outdoor furniture are western developed countries, where outdoor ac vi es are integrated
as part of the country's culture. Given that China is an emerging market for outdoor furniture and, as such, s ll lacks
the environment and culture for the market to rapidly grow, the Company has devoted large amounts of resources to
produce catalogues catering to the western market. This process includes delivering new products to Europe and
Australia for catalogue photos to be taken. As a result, the product catalogue has received posi ve comments from
many clients, and increased sales volume.
4.8
Product innova on
4.8.1 Design and development
Product design and development are key factors to the Company's sustainable growth as an ODM supplier targe ng
mid- er to high-end markets. The Design and Development Department researches the outdoor furniture designs in
the global market and then makes plans for new product developments according to the latest trends in the global
market.
Jianhui (Roger) Cao, who is also one of the founders of the Company, is the director of the design department. Roger
is in charge of both the Design Department and distribu on management. One of the most common mistakes that
many designers make is having an ar s c masterpiece with li le to no commercial value. Roger has the ability to
incorporate into his work both unique design concepts and commercially realisable value. Moreover, the Company
also obtains the latest news in the market through Roger's ac ve involvement with retailers. As a consequence, the
new products being designed cater to the needs of the market, resul ng in a be er market share.
The Design Department consists of five key experienced and skilled designers who have been with the Company for
some me. They are responsible for undertaking the ini al collec on of data in the market and the analysis of the
raw data. They are also involved in the en re process of idea genera on, new product design, development,
sampling, evalua on, approval of samples and, finally, mass produc on in the Produc on Department. Addi onally,
the designers work closely with the Quality Control Department to implement the high-quality control standards.
95% of OneAll's current products were developed through the in-house design team. The Company holds more than
220 design patents around the globe. The “MOUNTAIN” Collec on, the latest of OneAll's designs, won the 2015 Red
Dot award in Germany in its first year of entering the compe on.
Oneall Prospectus
44
4.8.2 Intellectual Proper es and Brandings
Style your nature!
OneAll Group has 5 registered trademarks in Europe, 4 registered trademarks in China, 3 in Canada and 2 in New
Zealand. The Group's five key registered trademarks are shown above.
The Group also has a number of registered patents for the design of its products in Australia, China and Europe. The
quan ty of the registered patents in each area is set out in the following table.
Product Range
Number of registered patents
China
Europe
Australia
Chairs
23
25
20
Tables
14
15
10
Sunbeds
7
10
6
Lounges
24
30
25
Accessories
7
7
6
4.9 Employees
OneAll currently has a total number of 299 employees of which 277 employees are working at the factory and 22
employees are working at the Company. The Company consists of a design team of five people and other senior
management personnel.
4.10 Key Growth Drivers
4.10.1 Successful Business Model
The majority of the companies in the outdoor furniture industry in China implement the Original Equipment
Manufacturer (OEM) model instead of the Original Design Manufacturer (ODM) model. OEM is a model where the
company is involved only in the manufacturing of products that is designed and sold by the manufacturer's
customers. This model constrains the manufacturing company's growth, as the client controls the aspects that add
much more value to the final product. As a result, the manufacturing company is at the lowest level of the supply
chain, where the profit margin is low and risk is high.
OneAll, on the other hand, is a leading company in the ODM business, where 95% of the Company's total revenue is
generated from ODM orders. Under the ODM model, the Company is responsible for the design and sales of products
as well as manufacturing. The Company adds value for clients through its designing, manufacturing and sales
channels. OneAll is engaged in conversa ons with the Company's clients to explore new markets and ways to
increase market share. With clients are relying heavily on the Company's brand, design and produc on capability,
the Company is able to implement strategic decisions on product development, marke ng and sales to enhance the
profitability of the Company's business opera ons.
4.10.2 Research and Development Capabili es
As the outdoor furniture industry grows, consumer demand for more unique and trendy designs, as well as high
04 Company Overview
45
func onality and comfort of the furniture increases. This has set a higher standard for all the outdoor furniture
companies. Companies that cannot provide reasonably priced products with good quality will be eliminated by the
market.
Since establishment, the Company's research and development capability in crea ng new designs has been the core
compe ve advantage of the Company for the past 15 years and has successfully differen ated the Company from
other players in the market. Jianhui (Roger) Cao is the design director as well as one of the co-founders of the
Company. He has years of experience in the manufacturing, distribu on and design of outdoor furniture. His work
includes the “Golden Era,” the “Soho,” the “Jupiter II,” the “Sedona,” the “Mountain,” and the “Verona” series, which
are widely recognised by industry professionals and end consumers. Mr. Cao's design philosophy is that a product's
design must incorporate both the market's wants and the designer's interpreta ons. This is also the Company's
standard when designing new products.
95% of the Company's products have been developed by the Company's in-house team. The Company, which
primarily implements the ODM model, is steadily moving into a more Original Brand Manufacturer ( OBM)-oriented
business, where the Company's products are iden fied with the Group's own branding.
As a testament to the Company's research and development capacity, the Company owns more than 220 design
patents around the globe. In 2015, OneAll's new “Mountain” Collec on won the Red Dot Award in Germany. This
award reflects the recogni on that OneAll design team has received from the industry on a global level.
4.10.3 High-Quality Products
Mid- er to high-end markets adopt very high product quality standards, which prevents many Chinese companies
from entering this market. The Company's current quality control system is established with strict evalua on criteria
based on the conven onal European EN-581 standard. This ensures that all OneAll products meet the high quality
requirement by the market.
The Company also has strict selec on criteria for its suppliers on raw materials. Most of the suppliers are leaders in
their industry and the Company has established long-term strategic partnerships with its suppliers. For example, the
Company sources a large amount of acrylic fabric, which is used in seat cushions, from a major supplier in Spain.
Moreover, all raw materials go through internal quality control procedures before entering the warehouse, so that
the quality can be ensured from the beginning of the manufacturing process.
The Company have control measures that monitor the quality of finished and par ally finished goods in the factory,
which ensures the product quality at each stage of the manufacturing process. In addi on, the Company engages an
authorised third-party ins tute to conduct regularly checks on the Company's product quality to ensure that the
products are not only qualified under the Company's standards, but also qualified under the EN-581 standard in
Europe.
Under the strict quality control management system, the Company has maintained a good record of product quality
with no instances of significant quality issues (or defects).
4.10.4 High-Margin Model
The total sales volume across different categories of products in 2014 is 520,000 pieces. The gross profit margin is
39.31 % in FY2014. The higher profit margin is primarily achieved through the following factors:
Ÿ
Ÿ
Ÿ
The Company targets the mid- er to high-end market and directly competes with top er brands in Europe. The
mid- er to high-end market has a far higher profit margin compared to the low-end market.
The Company is posi oned at the higher end of the smiling curve due to its brand name and design capabili es.
Moreover, it also has the capital to provide more value-adding services as well as produc on quality control.
The Company adopts a sales strategy that goes directly from factory to retailers which, in essence, bypasses
importers and wholesales. Hence, part of the profit from the importers and wholesalers now contributes to the
Company's higher profit margin as well as lower prices.
Oneall Prospectus
46
4.10.5 Minimal Seasonal Fluctua ons
The outdoor furniture market is subject to strong seasonal fluctua ons, where resources are focused on produc on
in winter and sales in summer. Most of the Chinese furniture manufacturers concentrate their produc ons between
October and March every year, which is when they receive most orders from the Northern Hemisphere. These orders
are usually have short deadlines and puts great pressure on the produc on lines. This problem is especially true
during the Chinese New Year when the busiest period in the factory coincides with na onal public holidays. Many
company's management teams face this problem, but for which they have yet to find a solu on. On the other hand,
the number of orders reduces significantly for the other half of the year (i.e., April to September) and, thus, the
demand for produc on declines sharply. As a result, companies reduce a large por on of their employees while
manufacturing overheads increase for the whole year, which, in turn, lowers the profit margin.
OneAll's minimises seasonal fluctua ons by ac vely exploring the Southern Hemisphere markets in addi on to
exis ng business in the Northern Hemisphere. This strategy allows the Company to achieve a more balanced
por olio of clients in terms of geographical loca on, which provides a solu on to the seasonal fluctua on problem
that many other Chinese companies face. Moreover, the Company produces some of the highly demanded products
in advance during off-seasons, which more efficiently allocates the produc on capability throughout the year and
increases the Company's ability to accept more orders during busy-seasons. This strategy also allows the Company
to run at full produc on capacity for 11 months a year, with reduced produc on levels during the Chinese New Year
and other public holidays. While the compe tors hire labour workers only on a contractual basis for busy seasons
with higher pay rates, OneAll's approach increases employees' loyalty to the Company and equips the Company with
a more efficient workforce.
4.11
Strategies for Growth
The company is market-oriented and targets the mid- er to high-end outdoor furniture industry. It is also ac vely
seeking to improve product quality, increasing produc on capacity and inves ng more resources into R&D, as well as
u lising the internet to make sales to customers from all over the world. Moreover, the company plans to further
enhance brand awareness based on its sustainable development business philosophy combined with capital
management advantages, and become a company with R&D as its core compe ve advantage backed by
manufacturing capabili es. The company will ul mately develop a franchise network that integrates into the exis ng
supply chain to promote its brands directly to consumers.
The Company has analysed the current trends and state of the industry as well as its major compe tors. Based on
that analysis, a five-year development plan below has been made. In execu ng its plan, OneAll will consider both
organic growth and merger and acquisi on opportuni es to determine what will achieve the best outcome for all
shareholders.
4.11.1 Product design and development
Design development is the core of the compe ve advantage of the Company that allows the Company to
differen ate itself from its compe tors. Hence, the Company will keep increasing its investment in design and
development. The Company's plan to enhance its design and development capabili es involves:
Ÿ
Ÿ
expansion of the current design and development team – The Company will offer a rac ve remunera on for the
right candidates. Training and external study opportuni es will also be provided to increase the overall human
capital;and
strengthening coopera on with various reputable furniture ins tu ons and design studios around the world to
develop new products with different styles to make use of external resources that can complement the exis ng
design team.
4.11.2 Brand building
Since the incep on of the Company in 2001, the Company has become one of the leading outdoor furniture ODM in
China. The high brand awareness is not only within the professional area. It is also well-recognised by consumers in
the EU and US regions. The Company is planning on inves ng more into brand building and further increasing the
brand awareness of GardenArt in the market. In addi on, strict quality control measures, be er a er-sales services
and leadership in new products will help convert brand awareness to loyalty to the brand, which will eventually
enable the Company to take part in different components of the supply chain.
04 Company Overview
47
China is one of the largest producers for outdoor furniture, but most of the manufacturers are s ll implemen ng the
OEM model, which suffers from low profitability and weak compe veness. OneAll has adopted a very mature ODM
model, which differen ates itself from its peers in China. However, the Company has also realised that it needs to
switch from ODM to OBM to really stand out in the industry and endure the fluctua ons in the market.
4.11.3 Expansion of produc on capacity
As the business has grown rapidly in recent years, the produc on capacity of the factory can no longer meet the
needs of the market and the Company has had to reject orders every year due to its limited produc on capacity. The
main reasons for this are the fact that the factory in Zhaoqing is already running at full capacity, the labour supply in
the southern area of China is decreasing, and annual increases in labour cost. The Company's plan to increase its
produc on capacity comprises the following ac ons:
Ÿ
Ÿ
Ÿ
inves ga on and evalua on of different ci es in mainland China to select an op mal loca on for the new
produc on base. One of the criteria for the loca on selec on is adequate labour supply where labour cost is
lower than the coastal area of China. This will enable the Company to increase its produc on capacity while
having produc on cost under control. The ini al plan is to have the construc on of the new produc on base
completed in three stages and at comple on to possess the same produc on capacity as the Zhaoqing factory.
This will double the total produc on capacity of the Company.
introduc on of cu ng-edge produc on facili es, improving the automa on level of produc on in order to
improve produc on efficiency.
strengthen affilia ons with industry leaders. Some of the regular products with uncomplicated produc on
process can be outsourced to other companies, thereby increasing produc on capacity with external support.
4.11.4 Franchised stores development under the brand “GardenArt”
Franchising can act as a good channel to promote the brand. A franchising network can also help improve
performance and sustain growth. In the next five years, the Company will execute a strategy to break into the retail
industry by gradually establishing “GardenArt” branded franchised stores around the globe.
The exis ng sales channel includes furniture chain stores and exclusive outdoor furniture stores in the markets of
Europe, Australasia, South America, North America, Middle East and Africa, among others. The main countries
include Belgium, Spain, France, US, Australia and Israel. More than 85 % of our clients are retailers. The client base
includes a network of over 120 clients of different sizes. The Company will try to convert a por on of the clients into
our own branded chain stores through acquiring some of the retailers of the Company's products. Furthermore, the
clients can also choose to join to operate a franchise store to form a closer partnership.
Addi onally, flagship chain stores will be established in major ci es to s mulate sales in the local sales network and
further enhance brand awareness of GardenArt. It will also support the development and training of new
franchisees.
4.11.5 E-commerce pla orm
The Company plans to implement plans to take advantage of the recent growth in e-commerce. The Company will
adopt an online-to-offline (O2O) model where the Company will operate an online store that requires purchasers to
collect their purchases at the Company's offline retail stores, thereby encouraging consumers to engage with the
Company's sales and promo onal personnel.
In recent years, there have been a number of furniture e-commerce pla orms emerging in western developed
countries such as the US, Canada, France and the UK, among others. These pla orms are mature and large in scale.
As a tradi onal company, OneAll's biggest hurdle in stepping into e-commerce is its lack of experience in online
opera ons and lack of a professional e-commerce team. Therefore, the Company will choose to collaborate with
exis ng e-commerce pla orm providers to study the industry and geographical trends in order to develop a business
model that suits the Company's needs.
Oneall Prospectus
48
4.11.6 Explora on of the Chinese market
In recent years, the standard of living in China has increased as a result of rapid economic growth. The culture of
modern Chinese has also been gradually more influenced by western culture. This has created a huge opportunity
for the outdoor furniture market in China for the next two to ten years.
he Company will establish a sales team dedicated to the domes c market that will focus on developing partnerships
with distributors and furniture designers at various parts of China to cater to the high-end housing market. Once
experience has been accumulated in the industry, the Company will set up flagship stores and franchised stores in
the major ci es of China.
The Company will also target the high-end hotels predominantly located in the coastal areas of China. The outdoor
furniture provided for the gardens and restaurants in those hotels has long been dominated by foreign brands. The
Company's products have a huge compe ve advantage in terms of design, quality and price for value. Hence, the
Company will focus on obtaining contracts to provide outdoor furniture to those hotels.
4.11.7 Team building and talent acquisi on
As the Company increases its produc on capacity, launches its e-commerce pla orm, and establishes its retail
network according to the development plan of the Company, the Company will face a greater demand for human
resources. Hence, the main focus areas for human resources management for the next five years are the following:
Ÿ
Ÿ
Ÿ
Ÿ
Ÿ
se ng up a training centre where employees from different areas of the business can be trained in skills that
allow them to work in the factory, sales department, finance department and other managerial roles. The
training will be provided to increase the skills of the human capital of the Company.
establishing a comprehensive training system that would include on-board training, on-the-job training,
management training, sales skills training and product knowledge training, among others to improve
produc vity of employees.
recrui ng high-quality graduates from reputable universi es in China, especially graduates whose majors are
design, sales and management. A talent reserve can be established through various types of training in order to
meet the Company's requirements in its high-growth stages.
improving the evalua on and remunera on system. The employees will be evaluated on their contribu on and
performance. Employee remunera on will be adjusted according to their evalua on result to mo vate
employees.
gradually establishing addi onal incen ve mechanisms to a ract the talent to provide long-term service to the
Company.
4.11.8 Improved management
A er 15 years of development, the Company has established an opera ons management system that covers design,
produc on, quality control, sales, storage, logis cs and a er-sales services. We also realised that in order to
accomplish the next five-year plan, all the exis ng opera ng systems need to be adjusted and improved. The
Company considers this IPO as an opportunity to further op mise the corporate and management structure to
improve the efficiency of the Company's business opera ons in order to achieve sustainable growth.
In terms of financial management and internal control, the Company provide training to employees to improve on
their skills in capital deployment and budget management. This will help support the Company as it seeks to increase
ver cal integra on in the supply chain.
The Company will also improve its exis ng informa on systems to enhance its ability to collect and analyse
informa on collected in the market. The Company will also establish a central database to promote the u lisa on of
data analysis, especially the analysis of the characteris cs of consumers in different markets. This analysis will
provide significant support to the management team of the Company in making decisions.
04 Company Overview
49
生产
and benefits
05. Key individuals,interests
Produc on
Le :Upholster Chair
Right:Aluminium Welding
Bo om: Factory Entrance
Oneall Prospectus
50
The Company is very cognizant of investor expecta ons with respect to governance and communica ons. In that
regard, the majority of the OneAll Board is cons tuted of Australian resident directors who have extensive skills and
experience in both business opera ons and governance. The Board and senior management have a broad base of
experiences covering opera onal, technical, corporate and commercial backgrounds spanning a number of decades
across a range of different industries. The Board is well posi oned to implement, oversee and monitor the
Company's strategic objec ves. Addi onally, OneAll's bilingual Joint-CEOs, Roger Cao and Douts Li, spend about half
of their me in Australia to facilitate mely and accurate engagement with the market.
5.1
Board of Directors and Management Team
At Lis ng, the Board will comprise five members, consis ng of the Execu ve Chairman, the Managing Director, one
Execu ve Director and two Independent, Non-execu ve Directors. The following table provides informa on
regarding the Directors, including their posi ons and exper se.
Experience
Mr Li graduated with a degree in economics from Guangdong University of
Foreign Studies in 1994. He has 21 years of experience in interna onal
business, more than 13 years of which were spent in procurement in China.
Mr. Li has held a decision-making role in selec ng Chinese suppliers for two
European furniture & houseware chain shops. During this me, he visited
and evaluated more than 300 Chinese factories. He s ll maintains very close
rela onships with various industry leading companies. Moreover, Mr. Li also
provided consulta on and training for companies with regard to produc on,
business expansion and development. He has long-term collabora ve
rela onships with senior execu ves of the European furniture shops.
Huatang (Douts) Li
Mr. Li is highly familiar with the needs and trends of the western retail
market and he manages the Company's opera ons based on his in-depth
knowledge of the market, which has resulted in the Company's outstanding
performance.
Role
Execu ve Chairman, Joint-CEO, Co-Founder
Exper se / Qualifica ons
Bachelor of Economics
Loca on
Gold Coast, Australia
Independence or
affilia ons
Not independent, founding shareholder and joint-CEO
Legal or disciplinary
ac on
Nil
Insolvent companies
Nil
05 Key Individuals, Interests and Benefits
51
Experience
Jianhui (Roger) Cao
Mr Cao graduated with a degree in economics from Guangdong University of
Foreign Studies in 1994. He has accumulated 21 years of experience in
interna onal business and has been working in the furniture sector since
gradua on. He has in-depth knowledge of the designing, manufacturing and
marke ng process of metal furniture. From 1999 to 2000, he gained
experience collabora ng with European mul na onal corpora ons, with his
main du es including administra on, furniture procurement, product
development and design. While handling the role, he had great exposure to
the advanced European corporate management and opera ng
methodologies, which inspired him and gave him in-depth understandings of
the western market. Mr Cao also worked with European designers and
developed new product designs.
Some of Mr. Cao's achievements in design include the following:
In the year of GardenArt's establishment in 2001, he designed and
developed the “GoldenEra” series, which achieved great success in the
Spoga Exhibi on in September of that year. This series of products
became the best-seller in the following three years and the design was
replicated by most of the domes c and foreign compe tors throughout
2002-2006.
He developed other products series, including Jupiter, Soho, Boston,
Lisbon, Sedona, Verona, with either an innova ve design in the physical
structure, a breakthrough in the func onality of the product or a pioneer
use of the advanced material mix. Each series has outshone compe tors
in the market and achieved high popularity and cri cally acclaimed
results throughout each period.
In 2015, his design piece “Mountain Picnic Table” won the Red Dot Award
in Germany.
Role
Managing Director, Joint-CEO, Co-Founder
Exper se / Qualifica ons
Bachelor of Economics / professional designer
Loca on
Gold Coast, Australia
Independence or affilia ons
Not independent, founding shareholder and joint-CEO
Legal or disciplinary
ac on
Nil
Insolvent companies
Nil
Oneall Prospectus
52
Experience
Jia Ying (Jimmy) Chen
Mr Chen Started ter ary educa on in Fuzhou University in 1990 with a major
in Business Management and started further educa on in New York
University Stern School of Business in 1993 with a major in Business
Management and Finance. Mr Chen established a food logis cs opera ng
company, CHINA WOK, in the US, supplying products and providing
management services to more than 1000 Chinese restaurants during the
peak seasons. Mr Chen then returned to China in 2006 and joined GardenArt
focusing on the execu on and management of special projects. Meanwhile,
he also established Stone Monkey Company Limited and transi oned from
marble mining to commercial trading. Currently, the company is con nuously
expanding the business in the supply chain of the stone processing industry
under his management.
Role
Execu ve Director
Exper se / Qualifica ons
Bachelor of Business Management
Loca on
New York, US
Independence or affilia ons
Not independent, Execu ve Director
Legal or disciplinary
ac on
Nil
Insolvent companies
Nil
Experience
Peter is a chartered accountant and is currently a strategy & development
execu ve with Incitec Pivot Ltd (ASX:IPL).
Peter commenced a 16-year career with the Australian Taxa on Office (ATO)
in 1969, where he worked in the Assessing, Inves ga on and Appeals
branches. He has also held senior management posi ons in the ATO for four
years.
Peter Neville Hogan
Peter le the ATO in 1985 to join Coopers & Lybrand as a tax manager. In 1991,
he was admi ed as a tax partner of Coopers & Lybrand, which subsequently
merged with Price Waterhouse in 1998 to form PricewaterhouseCoopers
(PwC). A er 23 years with PwC and 17 years as a corporate tax partner
advising public and private companies and Australian subsidiary companies
of mul na onal groups on corporate tax ma ers, the majority of which
operated in the manufacturing sector, he re red from PwC on 31 March 2008.
Peter is a director of Carbon Energy Ltd (ASX:CNX), was a recent director of
Fabchem China Ltd (SGX:I54), Quantum Fer lisers Ltd (HK) and Nitromak dnx
A.S. (Turkey).
Peter is also the deputy chairperson of Villa Maria Catholic Homes Ltd and is a
board member and treasurer of The Edmund Rice Founda on (Australia).
Role
Non-execu ve Director
Exper se / Qualifica ons
B. Bus.(Accoun ng), ACA
05 Key Individuals, Interests and Benefits
53
Experience
Loca on
Melbourne, Australia
Independence or affilia ons
Independent, Non-execu ve Director
Legal or disciplinary
ac on
Nil
Insolvent companies
Nil
Experience
Mr Au is the principal consultant of Phillip Au & Associates, a firm that
specialises in accoun ng, taxa on, real estate and business management
consul ng services. He has more than 15 years of experience in business
consultancy and has offices in Australia, Singapore, Malaysia, Jakarta and China.
Mr Au was appointed as a non-execu ve director of Novarise Renewable
Resources Interna onal Ltd, an Australian public listed company, from 20102011. Novarise is a leading producer of polypropylene filament yarn in China.
The company's products are sold within China and interna onally.
Fook Weng (Phillip) Au
Mr Au was a member of the NSW Asia Council. As a member, he advised the
government of NSW on effec ve strategies and ac ons to promote trade and
investment opportuni es in Asia. Mr Au also used his experience to discuss a
wide range of current issues important to Asia's future, such as trade between
Australia and Asia.
In 2002, Mr Au became the economic consultant to the government of the
Republic of Nauru. He advised cabinet ministers of the Republic of Nauru on
issues of infrastructure and the economic development of the na on.
In 1986, he was appointed by the NSW governor to become a jus ce of the
peace and now holds an official licence as a business agent, which was granted
by the Office of Fair Trading. He is also a NSW-registered property consultant.
In addi on, Mr Au had worked in the ATO for a number of years at a senior
management level in the audit and fringe benefit tax sec on.
Mr Au graduated from Macquarie University in Sydney with a degree in arts
majoring in accoun ng and economics. He is a cer fied prac sing accountant
(CPA).
Role
Non-execu ve Director
Exper se / Qualifica ons
Bachelor of Arts, Cer fied Prac sing Accountant(CPA)
Loca on
Sydney, Australia
Independence or
affilia ons
Independent, Non-execu ve Director
Legal or disciplinary
ac on
Nil
Insolvent companies
Nil
Oneall Prospectus
54
Experience
Mr. Zheng is a chartered financial analyst and has years of experience in
banking and consul ng industries.
From 2009 to 2014, Mr. Zheng was the Chief Risk Officer of Bank of Jinzhou
in China, oversaw the bank's overall risk management func ons including
credit, market and opera onal risk management and compliance. He also
chaired the HQ risk management commi ee, reviewed and approved major
risk management and investment decisions, issues and policies.
Dongyao (Tony) Zheng
From 2003 to 2009, Mr. Zheng was a director of Pricewaterhouse Coopers
Advisory Services in China, and provided corporate governance, policy and
procedure, management process reengineering, risk management tools
and techniques consul ng services to banks and financial ins tu ons in
China, Hong Kong and Australia.
From 1997 to 2003, Mr. Zheng was a corporate banking manager with Bank
of America in Australia and Hong Kong , where he assumed the
responsibili es of managing a USD mul -billion credit por olio to financial
ins tu ons and large corpora ons in China, Hong Kong and Macau and
oversaw the capital market transac ons of Southeast Asia region (except
Japan).
Mr Zheng graduated from Macquarie University in Sydney with a master
degree in applied finance, and bachelor degree of economics majoring in
accoun ng and finance.
Role
Ac ng Chief Financial Officer
Exper se / Qualifica ons
Master of Applied Finance, Bachelor of Economics
Loca on
Sydney, Australia
Independence or
affilia ons
Not independent, CFO
Legal or disciplinary
ac on
Nil
Insolvent companies
Nil
05 Key Individuals, Interests and Benefits
55
Experience
Mr Hii is the founder and principal of Innoinvest - a legal and financial services
advisory prac ce specialising in Australian financial services licensing, credit
licensing, managed investment schemes, compliance and corporate advisory.
He is also a leading expert in financial services compliance field, with
experience including roles as Responsible Manager and Compliance
Consultants of financial services licence holders, as well as General Manager
of Compliance and Supervision at Asia Pacific Exchange (APX).
Su-King Hii
Mr Hii is a member of Market Supervision and Compliance Commi ee for APX,
member of the Law Society of New South Wales and Accredited External
AUSTRAC Auditor. He was also the Chairman of Adjudicatory Tribunal for APX
and a member of APX Quota on Commi ee.
Company Secretary
Role
Exper se / Qualifica ons
Graduate Diploma of Applied Finance & Investments, Master of Professional
Accoun ng, Master of Laws (Commercial Law) and Bachelor of Laws (Hons) /
Bachelor of Applied Science
Sydney, Australia
Loca on
Not independent, Company Secretary
Independence or affilia ons
Legal or disciplinary
ac on
Nil
Insolvent companies
Nil
5.2
Interests and benefits
This sec on sets out the extent of the interests and fees of certain persons involved in the Offer. Other than as set
out below or elsewhere in this Prospectus, no:
Ÿ
Director or proposed Director of OneAll;
Ÿ
Person named in this Prospectus and who has performed a func on in a professional, advisory or other capacity
in connec on with the prepara on or distribu on of this Prospectus;
Ÿ
Promoter of the Company; or
Ÿ
Underwriter to the Offer or financial services licensee named in this Prospectus as a financial services licensee
involved in the Offer,
holds, at the me of lodgement of this Prospectus with the ASIC, or has held in the two years before lodgement of
this Prospectus with the ASIC, an interest in:
Ÿ
the forma on or promo on of OneAll;
Oneall Prospectus
56
Ÿ
the property acquired or proposed to be acquired by OneAll in connec on with its forma on or promo on, or in
connec on with the Offer; or
Ÿ
the Offer;
and no amount (whether in cash, Shares or otherwise) has been paid or agreed to be paid, nor has any benefit been
given or agreed to be given to any such persons for services in connec on with the forma on or promo on of OneAll
or the Offer or to any Director or proposed Director to induce them to become, or qualify as, a Director of OneAll.
5.2.1
Directors' and managements' interests and remunera on
Non-execu ve Directors' remunera on
The Directors decide the total amount paid to each Director as remunera on for their services. Under ASX lis ng
rules the total amount paid to all Non-execu ve Directors must not exceed in total in any financial year the amount
fixed in a general mee ng of the company. This amount is currently A$165,000 per annum. Annual fees agreed to be
paid to the Non-execu ve Directors are A$72,000 p.a. to each Non-execu ve Director. All Directors fees include
superannua on at the statutory rate.
Non-execu ve Directors may be paid such addi onal or special remunera on as the Directors decide is appropriate
where a Director performs extra work or services which are not in the capacity as a Director of the company.
There are no re rement benefit schemes for Directors other than statutory superannua on contribu ons.
Execu ve Chairman and Joint-CEO remunera on – Mr Huatang (Douts) Li
Mr Li is Execu ve Chairman and Joint-CEO of the Group. From 1 October 2015, Mr Li will receive an annual fixed
remunera on of RMB 300,000 (A$62,893). Pursuant to Mr Li's labour contract, Mr Li may resign from his posi on by
giving 6 months' no ce in wri ng. Mr Li's employment may be terminated by his employer (a member of the Group)
by giving 6 months' no ce in wri ng or by making a payment in lieu of no ce. In the event of serious misconduct or
other specific circumstances warran ng summary dismissal, Mr Li's employment contract may be terminated
immediately by no ce in wri ng and without payment in lieu of no ce. Upon the termina on of Mr Li's labour
contract (whether by resigna on or termina on), Mr Li will be subject to a restraint of trade period of up to 12
months. The restraint of trade period may be reduced or eliminated in its en rety at the discre on of the Company.
Managing Director and Joint-CEO remunera on – Mr Jianhui (Roger) Cao
Mr Cao is Managing Director and Joint-CEO of the Group. From 1 October 2015, Mr Cao will receive an annual fixed
remunera on of RMB 300,000 (A$62,893). Pursuant to Mr Cao's labour contract, Mr Cao may resign from his
posi on by giving 6 months' no ce in wri ng. Mr Cao's employment may be terminated by his employer (a member
of the Group) by giving 6 months' no ce in wri ng or by making a payment in lieu of no ce. In the event of serious
misconduct or other specific circumstances warran ng summary dismissal, Mr Cao's employment contract may be
terminated immediately by no ce in wri ng and without payment in lieu of no ce. Upon the termina on of Mr Cao's
labour contract (whether by resigna on or termina on), Mr Cao will be subject to a restraint of trade period of up to
12 months. The restraint of trade period may be reduced or eliminated in its en rety at the discre on of the
Company.
Execu ve Director remunera on – Mr Jia Ying (Jimmy) Chen
Mr Chen is Execu ve Director of the Group. From 1 October 2015, Mr Chen will receive an annual fixed
remunera on of RMB 240,000 (A$50.314). Pursuant to Mr Chen's labour contract, Mr Chen may resign from his
posi on by giving 6 months' no ce in wri ng. Mr Chen's employment may be terminated by his employer (a member
of the Group) by giving 6 months' no ce in wri ng or by making a payment in lieu of no ce. In the event of serious
misconduct or other specific circumstances warran ng summary dismissal, Mr Chen's employment contract may be
terminated immediately by no ce in wri ng and without payment in lieu of no ce. Upon the termina on of Mr
Chen's labour contract (whether by resigna on or termina on), Mr Chen will be subject to a restraint of trade period
of up to 12 months. The restraint of trade period may be reduced or eliminated in its en rety at the discre on of the
Company.
05 Key Individuals, Interests and Benefits
57
Ac ng Chief Financial Officer remunera on – Mr Dongyao (Tony) Zheng
Mr Zheng is the Ac ng CFO of the Group. Mr Zheng was specifically appointed to strengthen the current finance
team in prepara on of the IPO process and beyond. Due to his current family commitments, Mr Zheng is only
available on a part me basis post IPO and has agreed to work with the board to accommodate a suitable alterna ve
should the addi onal responsibili es created as an ASX listed en ty require a full me commitment. From 1 October
2015, Mr Zheng will receive an annual fixed remunera on of A$51,600. Pursuant to Mr Zheng's labour contract, Mr
Zheng may resign from his posi on by giving one month's no ce in wri ng. Mr Zheng's employment may be
terminated by his employer (a member of the Group) by giving one month's no ce in wri ng or by making a payment
in lieu of no ce. In the event of serious misconduct or other specific circumstances warran ng summary dismissal,
Mr Zheng's employment contract may be terminated immediately by no ce in wri ng and without payment in lieu of
no ce. Upon the termina on of Mr Zheng's labour contract (whether by resigna on or termina on), Mr Zheng will
be subject to a restraint of trade period of up to 12 months. The restraint of trade period may be reduced or
eliminated in its en rety at the discre on of the Company.
Directors' and managements' interest in Shares and other securi es
Directors and the Company Secretary's interests' at the date of this Prospectus are as follows.
Name
Role
Shares
Huatang (Douts) Li
Execu ve Chairman
49,334,800 1
Jianhui (Roger) Cao
Managing Director
49,334,800 2
Jia Ying (Jimmy) Chen
Execu ve Director
5,776,800 3
Peter Neville Hogan
Non-Execu ve Director
Nil
Fook Weng (Phillip) Au
Non-Execu ve Director
Nil
1. Huatang (Douts) Li's Shares are indirectly owned through Simply Dynamic Ltd, a company of which Huatang (Douts) Li is the sole shareholder.
2. Jianhui (Roger) Cao's Shares are indirectly owned through Next Champion Ltd, a company of which Jianhui (Roger) Cao is the sole shareholder.
3. Jia Ying (Jimmy) Chen's Shares are indirectly owned through Ideal Green Investments Ltd, a company of which Jia Ying (Jimmy) Chen is the sole
shareholder.
Senior management interests' at the date of this Prospectus are as follows.
Name
Role
Shares
Dongyao (Tony) Zheng
Ac ng CFO
Nil
5.2.2
Interests of advisers
The following en es have been engaged as professional advisers to various members of the Group for the purposes
of the Offer. The details of work provided and the fees payable are summarised below.
Adviser
Role
Fee (exclusive of tax) 1
Secvest Capital Pty Ltd
Australian Lead Arranger and Advisor to the
Company
A$840,000 2
Baker & McKenzie
Australian legal adviser to the Company in
connec on with the Offer and has performed
A$180,000
Oneall Prospectus
58
Adviser
Role
Fee (exclusive of tax) 1
work in rela on to due diligence enquiries
on Australian legal ma ers
Trend Associates
Chinese legal adviser to the Company in
connec on with the Offer and has performed
work in rela on to due diligence enquiries on
Chinese legal ma ers
Charles Chu & Kenneth Sit
in associa on with Wang
Jing & Co. Law Firm
Hong Kong legal adviser to the Company and
has performed the work in rela on to due
diligence
Harney Westwood &
Riegels
Bri sh Virgin Islands legal adviser to the
Company and has performed the work in
rela on to due diligence enquiries on Bri sh
Virgin
RMB 980,000 (A$205,451)
(at exchange rate AUD$ 1 :
RMB 4.77)
HK$17,000 (A$2,852)
(at exchange rate AUD$ 1 :
HKD 5.96)
US$1,500 (A$1,948)
(at exchange rate AUD$ 1 :
US$ 0.77)
BDO Corporate Finance
(East Coast) Pty Ltd
Inves ga ng Accountant to the Company and
has prepared the Inves ga ng Accountant's
Report in Sec on 7
A$52,000
BDO East Coast
Partnership
Australian tax advisers to the Company and
has prepared the Taxa on Report for the
A$15,000
Frost & Sullivan Australia
Pty. Ltd.
Independent expert to the Group and has
prepared the Independent Market Report in
Sec on 3
HK$160,000 (A$26,846)
(at exchange rate AUD$ 1 :
HKD 5.96)
1. These amounts and other expenses of the Offer will be paid by the Company (or one of its subsidiaries) out of funds raised under
the Offer. Further informa on on the use of proceeds from the Offer and costs of the Offer are set out in Sec ons 1.7 and 9.9
respec vely.
2. Amount is based on the assump on that the Maximum Subscrip on is raised under the Offer.
5.3
Corporate governance
The Board of OneAll is cognizant of the need for a well-ar culated and robust corporate governance framework and
believes that good corporate governance is essen al to the preserva on and enhancement of shareholder value.
The Board believes that the success of the business is strengthened by implemen ng clearly ar culated policies to
enhance accountability, efficiency and the reliable measurement of performance.
The Board has adopted a Board Charter (the Charter), which sets out the key corporate governance principles and
procedures of OneAll. The Charter and other corporate governance documents are available on the Company's
website at oneallinterna onal.com. These key documents will be kept under review by the Board and amended from
me to me.
The Charter and the other governance measures adopted reflect the Board's endorsement of the recommenda ons
contained in the ASX Corporate Governance Council's Principles and Recommenda ons, 3rd edi on, 2014
(Principles). Those Principles marked with a either have not been fully implemented or are to be addressed during
the FY2015 repor ng year. The commentary addresses the reasons for the departure from the requirements.
Principle 1 – Lay solid founda ons for management and oversight
1.1
The Board has outlined in its charter, its roles and responsibili es and has established a clear
dis nc on between its func ons and those delegated to management.
1.2
Appropriate checks including criminal record checks have been carried out on all Board members
05 Key Individuals, Interests and Benefits
59
prior to their appointment. The Company will provide shareholders with all material informa on in
its possession relevant to a decision on whether or not to elect or re-elect a Director at future
general mee ngs.
1.3
All Directors and senior execu ves have a wri en agreement with the Company or a member of
the OneAll Group se ng out the terms of their appointment.
1.4
The Company Secretary is accountable directly to the Board, through the Chairman on all ma ers
to do with the proper func oning of the Board .
1.5
The Board has adopted a Diversity Policy (a copy of which is on the Company's website). The
Diversity Policy requires the Board to set measurable objec ves for obtaining gender diversity. The
Board has not yet set measurable objec ves but intends to review the diversity sta s cs within the
Company and use those measures to formulate measurable objec ves.
1.6
At least once per year the Board will, with the advice and assistance of the Nomina on and
Remunera on Commi ee (NRC), review and evaluate the performance of the Board, each Board
commi ee and each individual Director against the relevant charters, corporate governance
policies, and agreed goals and objec ves.
1.7
Performance reviews for Execu ve Directors and Senior Management will take place at least
annually. The NRC has accountability in its Charter to oversee these reviews and report to the
Board on their outcomes. The Company intends to ensure the appropriate disclosures in the
remunera on report are made in rela on to each repor ng period as to the performance
evalua ons that were undertaken and the process that was followed.
Principle 2 – Structure the Board to add value
2.1
The Board has formed a Nomina on and Remunera on Commi ee. The charter for the Nomina on
and Remunera on Commi ee is available on the Company's website. Membership of the Nomina on
and Remunera on Commi ee is: Peter Neville Hogan, Fook Weng (Phillip) Au and Jia Ying (Jimmy)
Chen.
2.2
In establishing the Board of OneAll, regard was had to the skills and exper se required of the
Directors relevant to OneAll's business, its lis ng in Australia and opera ons in China and its
franchising network. Directors with the desired skills and exper se were carefully selected for
appointment to the Board.
2.3
&
2.4
The Board Charter sets out the criteria adopted by the Board for considering if a Director is
independent. The Board is comprised of five members, two of whom are independent. Peter
Neville Hogan and Fook Weng (Phillip) Au are considered independent as none of them has a
material shareholding in the Company or is an advisor or supplier to the Company or has any other
material contractual rela onship with the Company other than their posi on as a Director. The
Company has considered the recommenda on of having a majority of the Board as independent
Directors. However, the Board considers the Company's immediate requirements as it transits to
an ASX-listed company and is sa sfied that the composi on of the Board reflects an appropriate
range of independence and skill and experience in the period immediately a er lis ng on the ASX.
Together, the Directors have a broad range of experience, exper se, skills, qualifica ons and
contacts relevant to the business of the Company.
2.5
The Board recognises the recommenda on that the chairman should be an independent nonexecu ve director. However, the Board believes that Mr. Huatang (Douts) Li is the most
appropriate person to act as Chairman and lead the Board given his extensive experience and
applica on of sound judgment to issues falling within the scope of the role of Chairman. Further,
Mr. Li has unmatched and extensive knowledge of the Group's opera ons and important business
rela onships that the Group as a whole benefits from.
Oneall Prospectus
60
2.6
All Non-execu ve Directors have had an extensive induc on into the business of the Company
prior to accep ng their appointment and have received con nuing informa on on the Company
and its opera ons since being appointed. The induc on process has included site visits in China
and presenta ons by management.
Directors are also given access to con nuing educa on in rela on to the Company extending to its
business, the industry in which it operates, and other informa on required by them to discharge
the responsibili es of their office.
Principle 3 – Act ethically and responsibly
3.1
The Board has adopted a code of conduct applicable to all Directors, senior execu ves
and employees, a copy of which is disclosed on the Company's website.
Principle 4 – Safeguard integrity in financial repor ng
4.1
The Board has established an audit and risk commi ee. The audit and risk commi ee is comprised
a majority of Non-execu ve Directors. Its composi on being Peter Neville Hogan, Fook Weng
(Phillip) Au and Jianhui (Roger) Cao. The qualifica ons of the members of the audit and risk
commi ee are set out in the Prospectus in Sec on 5.1.
A copy of the audit and risk commi ee's charter is on the Company's website.
4.2
The board of OneAll has not yet had to approve the en ty's financial statements for a financial
period and accordingly has not been required to receive relevant declara ons from the Managing
Director and CFO in respect of the financial records of the OneAll Group. It is the inten on of the
Board that these declara ons will be required for both the half-year and full-year results and this
fact has been communicated to both the Managing Director and CFO
4.3
OneAll has not yet held an AGM but it is the inten on of the Board to ensure that its external auditor
a ends the AGM and is available to answer ques ons from security holders relevant to the audit.
Principle 5 – Make mely and balanced disclosure
5.1
The Board has established a wri en con nuous disclosure policy to ensure compliance with ASX
Lis ng Rule disclosure requirements and to ensure accountability for compliance. Each Board
mee ng considers whether any con nuous disclosure issues arose during the course of the
mee ng. The con nuous disclosure policy is on the Company's website.
Principle 6 – Respect the rights of Shareholders
6.1
OneAll has established an English website which provides informa on about the OneAll Group,
Directors and execu ves, key governance policies and other informa on relevant to its investors.
The website will be a key communica on tool between the Company and the shareholders.
6.2
OneAll has not yet designed and implemented an investor rela ons program to facilitate effec ve
two-way communica on with investors, however, the Board recognises its importance and will put
in place a tailored program following the Comple on.
05 Key Individuals, Interests and Benefits
61
6.3
The Board has adopted a shareholder communica on policy and will provide shareholders with
opportuni es to have ques ons addressed at shareholder mee ngs, irrespec ve of whether the
shareholder is able to a end. A copy of the shareholder communica on policy is on the Company's
website.
6.4
All shareholders of OneAll will be able to communicate with the Company and its share registry
electronically and in fact this method of communica on is encouraged.
Principle 7 – Recognise and manage risk
7.1
The Board has established a combined audit and risk commi ee. The audit and risk commi ee is
comprised a majority of Non-execu ve Directors. Its composi on being Peter Neville Hogan, Fook
Weng (Phillip) Au and Jianhui (Roger) Cao. The qualifica ons of the members of the audit and risk
commi ee are set out in the Prospectus in Sec on 5.1.
A copy of the audit and risk commi ee's charter is on the Company's website.
7.2
The risk management framework for the OneAll Group has not yet been formally reviewed by the
Board but the Board has requested a report from management by December 2015. The Board has
appointed the ARC to assist it with discharging its oversight func on in respect of material business
risks and to determine if the system of risk management is sound. Outcomes of those reviews will
be reported in the corporate governance statement annually.
7.3
The OneAll Group has various quality assurance func ons throughout the business but not a
dedicated internal audit func on. It is the Board's inten on that the ARC reviews the need for an
internal audit func on, the scope of any func on should one be required and whether it will be
in-sourced or outsourced. The outcome of the review will be reported in the Company's annual
report.
7.4
As men oned under Principle 7.2, the Board expects a report on the risk management framework
in December 2015 and has requested that management address economic, environmental and
sustainability risks. The outcome of that review will be reported in the Company's annual report.
Principle 8 – Remunerate fairly and responsibly
8.1
The Board has formed a combined Nomina on and Remunera on Commi ee. Membership of the
Nomina on and Remunera on Commi ee is: Peter Neville Hogan, Fook Weng (Phillip) Au and
Jia ying (Jimmy) Chen. A copy of the charter for the NRC is provided on the company's website.
The qualifica ons of the members of the nomina on and remunera on commi ee are set out in
the Prospectus in Sec on 5.1.
A copy of the charter for the NRC is provided on the Company's website.
8.2
The Board has adopted a remunera on policy for Non-Execu ve Directors. A remunera on policy
for Execu ve Directors and other Senior Execu ves will be developed post Comple on. A copy of
the Non-execu ve Director remunera on policy is provided on the Company's website.
8.3
The Company's Securi es Trading Policy prohibits par cipants of any equity-based remunera on
scheme entering into transac ons which limits the economic risk of a par cipant.
Oneall Prospectus
62
生产
06. Financial informa on
Company Life
Le :Factory Staffs
Right:Basketball match
Bo om:Company travel
06 Financial Informa on
63
6.1
Introduc on
This Sec on contains a summary of the historical financial informa on and pro forma historical financial informa on
of OneAll Interna onal Limited (collec vely the “Financial informa on”), which has been prepared by the Directors
of OneAll Interna onal Limited.
The Historical Financial Informa on comprises the:
Ÿ
historical consolidated Statements of Profit or Loss and Other Comprehensive Income for the financial years
ended 31 December 2012 (FY2012), 31 December 2013 (FY2013) and 31 December 2014 (FY2014) and the six
month period ended 30 June 2015 (1HFY2015) (Historical consolidated Statements of Profit or Loss and Other
Comprehensive Income); and
Ÿ
historical consolidated Statements of Cash Flows for FY2012, FY2013 and FY2014 and the six month period ended
30 June 2015 (Historical consolidated Statements of Cash Flows).
The Pro Forma Historical Financial Informa on of OneAll Interna onal Limited comprises the:
Ÿ
pro forma historical consolidated Statement of Financial Posi on as at 30 June 2015.
The Historical Financial Informa on has been audited (in respect of FY2012, FY2013 and FY2014) and reviewed (in
respect of 1HFY2015) by BDO East Coast Partnership (BDO), and the Pro Forma Historical Financial Informa on has
been reviewed by BDO Corporate Finance (East Coast) Pty Ltd (BDO Corporate Finance). BDO Corporate Finance's
Inves ga ng Accountant's Report on the Pro Forma Historical Financial Informa on is contained in Sec on 7.
Investors should note the scope and limita ons of that report (refer to Sec on 7).
Also summarised in this Sec on are:
Table 1: Overview of Financial Informa on
Sec on
Heading
6.2
Basis of Prepara on and Presenta on of the Financial Informa on
6.3
Historical consolidated Statements of Profit or Loss and Other Comprehensive Income
6.4
Historical consolidated Statements of Cash Flows
6.5
Pro Forma historical consolidated Statement of Financial Posi on as at 30 June 2015
6.6
Management Discussion and Analysis of the Financial Informa on
6.7
Debt facili es
6.8
Lease commitments
6.9
Liquidity and Capital Resources
6.10
Dividend Policy
6.11
Significant Accoun ng Policies
6.12
Cri cal accoun ng judgements, es mates and assump ons
The informa on in this Sec on 6 should be read in conjunc on with the risk factors set out in Sec on 8 and other
informa on contained in this Prospectus.
All amounts disclosed in the tables are presented in Australian dollars, and unless otherwise noted, are rounded to
the nearest thousand dollars.
6.2
Basis of Prepara on and Presenta on of the Financial Informa on
6.2.1 Overview
The Directors of OneAll Interna onal Limited are responsible for the prepara on and presenta on of the Financial
Informa on.
The Financial Informa on included in this Sec on 6 has been prepared in accordance with the recogni on and
Oneall Prospectus
64
measurement principles prescribed in Australian Accoun ng Standards (AAS) adopted by the Australian Accoun ng
Standards Board (AASB), which are consistent with Interna onal Financial Repor ng Standards (IFRS) issued by the
Interna onal Accoun ng Standards Board, and the accoun ng policies of OneAll Interna onal Limited. The
Financial Informa on and accompanying commentary presented in this Sec on has also been disclosed with
considera on to regulatory guidance issued by ASIC.
The Financial Informa on is presented in an abbreviated form insofar as it does not include all the presenta on and
disclosures, statements or compara ve informa on as required by AAS and other mandatory professional repor ng
requirements applicable to general purpose financial reports prepared in accordance with the Corpora ons Act.
In preparing the Financial Informa on, the accoun ng policies of OneAll Interna onal Limited have been applied
consistently throughout the periods presented. The significant accoun ng policies of OneAll Interna onal Limited
relevant to the Financial Informa on are set out in Sec on 6.11.
The Directors have considered ASIC Regulatory Guide 170, and having regard to the requirements of this Regulatory
Guide, note any prospec ve financial informa on would contain a broad range of poten al outcomes and
possibili es such that the Directors have concluded OneAll Interna onal Limited cannot include prospec ve
financial informa on in this Prospectus.
6.2.2 Prepara on of Historical Financial Informa on
The Historical Financial Informa on of OneAll Interna onal Limited has been extracted from the consolidated
financial statements of Gardenart Furniture Co. Ltd (and its controlled en es) for the financial years ended 31
December 2012, 31 December 2013 and 31 December 2014, and for the six month period ended 30 June 2015.
The financial statements of Gardenart Furniture Co. Ltd (and its controlled en es) for the financial years ended 31
December 2012, 31 December 2013 and 31 December 2014 have been audited by BDO. BDO issued qualified audit
opinions in respect of each of these financial years because BDO were appointed as auditor a er the financial year
ended 31 December 2014 and hence were not able to observe the coun ng of the physical inventories at each
repor ng period prior to 31 December 2014. As the opening and closing inventory balances affect the
determina on of the results of opera ons, BDO were unable to determine whether adjustments to the results of
opera ons and opening retained earnings might be necessary for each of the financial years ended 31 December
2012, 31 December 2013 and 31 December 2014. BDO's audit opinions on the financial reports in respect of each of
the years ending 31 December 2012, 31 December 2013 and 31 December 2014 were modified accordingly.
The consolidated financial statements of Gardenart Furniture Co. Ltd (and its controlled en es) for the six month
period ended 30 June 2015 have been reviewed by BDO, who have issued an unqualified review opinion in respect of
this period.
6.2.3 Prepara on of Pro Forma Historical Financial Informa on
The Pro Forma Historical Financial Informa on has been prepared solely for the purposes of inclusion in this
Prospectus, and has been extracted from the consolidated financial statements of Gardenart Furniture Co. Ltd (and
its controlled en es) with adjustments applied to reflect OneAll Interna onal Limited's capital structure that will
be in place following Comple on of the Offer. Refer to Sec on 6.5 for a reconcilia on between the Pro Forma
Historical Financial Informa on and the statutory equivalent financial informa on.
On 14 August 2015 an internal restructure took place resul ng in a newly incorporated company, OneAll
Interna onal Limited, becoming the legal parent of the Gardenart Furniture group of en es.
The Directors have elected to account for the restructure as a capital re-organisa on rather than a business
combina on. In the Directors' judgement, the con nua on of exis ng accoun ng values is consistent with the
accoun ng that would have occurred if the assets and liabili es had already been in a structure suitable to IPO and
most appropriately reflects the substance of the internal restructure.
As such, the consolidated financial statements of OneAll Interna onal Limited will be presented as a con nua on of
the pre-exis ng accoun ng values of assets and liabili es in the consolidated Gardenart Furniture Co. Ltd financial
statements with Gardenart Furniture Co. Ltd deemed to be the acquirer for accoun ng purposes.
06 Financial Informa on
65
In adop ng this approach the Directors note that there is an alternate view that such a restructure could be
accounted as a business combina on, with OneAll Interna onal Limited being the acquirer. If this view is taken, the
net assets of the group would have been upli ed to fair value by A$105.3 million, based on assumed market
capitalisa on at IPO of A$117.0 million (assuming the Minimum Subscrip on), with consequen al impacts on the
Statement of Comprehensive Income and Statement of Financial Posi on. The Directors an cipate that the excess
of the fair value compared to the book value of net assets would primarily be allocated to intangibles.
An IASB project on accoun ng for common control transac ons is likely to address such restructures in the future.
However, the precise nature of any new requirements and the ming of these are uncertain. In any event, history
indicates that any poten al changes are unlikely to require retrospec ve amendments to the financial statements.
The Pro Forma Historical Financial Informa on presented in this Prospectus has been reviewed by BDO Corporate
Finance. Investors should note the scope and limita ons of BDO Corporate Finance's Inves ga ng Accountant's
Report (refer to Sec on 7).
6.2.4 Explana on of certain non-IFRS and other financial measures
OneAll Interna onal Limited uses certain measures to manage and report on its business that are not recognised
under AAS or IFRS. These measures are collec vely referred to as 'non-IFRS financial measures'. Non-IFRS financial
measures are intended to supplement the measures calculated in accordance with the Australian Accoun ng
Standards and not as a subs tute for those measures. As non-IFRS financial measures are not defined by the
recognised body of accoun ng standards, they do not have a prescribed meaning and the way that OneAll
Interna onal Limited calculates them may be different to the way that other companies calculate similarly tled
measures. Readers should therefore not place undue reliance on non-IFRS financial informa on.
In the disclosures in this Prospectus, OneAll Interna onal Limited uses the following non-IFRS measures of
performance to assist prospec ve investors with understanding the trends in financial performance and profitability.
Ÿ
Ÿ
Ÿ
Gross profit is calculated as revenue less costs of sales;
EBITDA is earnings before interest, tax, deprecia on and amor sa on expenses; and
EBIT is earnings before interest and tax expenses.
6.3
Historical consolidated Statements of Profit or Loss and Other
Comprehensive Income
Set out below is a summary of OneAll Interna onal Limited's historical consolidated Statements of Profit or Loss and
Other Comprehensive Income for FY2012, FY2013, FY2014 and 1HFY2015.
Table 2: Historical consolidated Statements of Profit or Loss and Other Comprehensive Income
Historical
Audited
Audited
Audited
1HFY2015
Reviewed
Revenue
Costs of Sales (COS)
21,733
(14,454)
28,566
(18,134)
36,382
(22,079)
23,310
(13,619)
Gross profit
Other revenue
Sales and marke ng expenses
Administra on expenses
Other expenses
7,280
595
(1,240)
(740)
(196)
10,432
140
(1,535)
(886)
(208)
14,303
187
(1,992)
(961)
(182)
9,691
59
(1,324)
(736)
(161)
EBITDA
Deprecia on
5,699
(288)
7,943
(303)
11,355
(318)
7,529
(204)
A$000
Oneall Prospectus
66
Historical
Audited
Audited
Audited
1HFY2015
Reviewed
EBIT
Net interest expense
5,411
(36)
7,640
5
11,037
7
7,325
5
Net profit before tax
Taxa on expense
5,375
(93)
7,645
(221)
11,043
(359)
7,330
(743)
Net profit a er tax
Other comprehensive income
5,282
(8)
7,423
2,743
10,684
1,159
6,588
1,085
Total comprehensive income
5,274
10,167
11,844
7,673
A$000
Notes:
All amounts disclosed in the tables are presented in Australian dollars and, unless otherwise noted, are
rounded to the nearest A$1,000. Rounding in the Financial Informa on may result in some immaterial rounding
differences between totals and sums of components and the total percentage calcula ons outlined within
tables, figures and commentary.
6.4
Historical consolidated Statements of Cash Flows
Set out below is a summary of OneAll Interna onal Limited's historical consolidated Statements of Cash Flows for
FY2012, FY2013, FY2014 and 1HFY2015.
Table 3: Historical consolidated Statements of Cash Flows
Historical
Audited
Audited
Audited
1HFY2015
Reviewed
EBITDA
5,699
7,943
11,355
7,529
Non-cash items in EBITDA
-
4
-
-
930
2,436
Net cash flow from opera ng ac vi es before
inves ng ac vi es, financing ac vi es and tax
4,853
5,873
12,285
9,965
Purchase of property, plant and equipment
(82)
(33)
(147)
(109)
Proceeds from disposal of property, plant and
equipment
12
-
-
-
Net cash flow before interest, tax and financing
ac vi es
4,783
5,839
12,137
9,857
Net repayment of borrowings
(1,575)
-
-
-
Net interest expense
(36)
5
7
5
Taxa on paid
(79)
(174)
(247)
(743)
Dividends paid
(3,984)
(3,469)
(11,235)
(2,165)
Net cash flow
(892)
2,202
662
6,954
A$000
Movement in working capital
Notes:
All amounts disclosed in the tables are presented in Australian dollars and, unless otherwise noted, are
rounded to the nearest A$1,000. Rounding in the Financial Informa on may result in some immaterial rounding
differences between totals and sums of components and the total percentage calcula ons outlined within
tables, figures and commentary.
The cash flow informa on has been constructed using the indirect method (i.e. reconciling EBITDA to opera ng
cash flows).
06 Financial Informa on
67
6.5
Pro Forma historical consolidated Statement of Financial Posi on
as at 30 June 2015
6.5.1 Overview
Set out in the table below are the adjustments that have been made to the reviewed consolidated statement of
financial posi on of Gardenart Furniture Co. Ltd as at 30 June 2015 to present the pro forma statement of financial
posi on of OneAll Interna onal Limited. The adjustments include the impact of the change in capital structure that
will be in place immediately following Comple on of the Offer, as if the Offer had occurred as at 30 June 2015. These
adjustments include assump ons rela ng to ma ers that are known as at the date of the Prospectus.
Table 4: Pro Forma historical consolidated Statement of Financial Posi on as at 30 June 2015
As at 30 June
2015
(A$000)
Pro forma adjustments
Gardenart Furniture
Offer
Offer
Co. Ltd
(2)
proceeds
costs (3)
Reviewed
OneAll Interna onal
Pro forma
Current Assets
Cash and cash equivalents
13,885
1,000
(1,217)
13,668
Trade and other receivables
7,433
7,049
7,443
341
-
7,443
Prepayments
-
(384)
Inventories
Total current assets
29,103
1,000
(1,601)
28,501
4,758
-
4,758
480
341
Non-current assets
Prepaid lease assets
832
Deferred tax asset
-
-
Total non-current assets
5,590
-
480
480
Total assets
34,693
1,000
(1,121)
34,572
Trade and other payables
(8,729)
(803)
Dividends payable
(14,442)
Total current liabili es
(23,975)
Total liabili es
(23,975)
-
(8,729)
Income tax payables
-
Net assets
10,718
1,000
(1,121)
10,597
Share capital
1,297
1,000
(9)
2,289
Other reserves
4,980
4,980
4,441
-
-
Retained earnings
(1,112)
3,329
Total equity
10,718
1,000
(1,121)
10,597
Property, plant and equipment
832
6,071
Current liabili es
(803)
(14,442)
(23,975)
(23,975)
Equity
Notes:
(1) All amounts disclosed in the tables are presented in Australian dollars and, unless otherwise noted, are
rounded to the nearest A$1,000. Rounding in the Financial Informa on may result in some immaterial rounding
differences between totals and sums of components and the total percentage calcula ons outlined within
tables, figures and commentary.
(2) Offer proceeds - The Offer is expected to raise a minimum of A$1.0 million before payment of Offer costs.
(3) Offer costs - Offer costs are expected to total approximately A$1.6 million (inclusive of non-recoverable GST
where applicable). Of these costs, A$9,000 is recorded against share capital (tax effected) and A$1.1 million is
recorded against retained earnings (tax effected) based on the nature of the cost and whether it is considered
directly a ributable to the Offer. It is assumed the Offer costs are deduc ble to OneAll Interna onal Limited for
tax purposes over five years, resul ng in a deferred tax asset of A$0.5 million.
(4) The dividend payable as at 30 June 2015 is expected to be paid by 30 September 2015 but will only be paid if
there is sufficient cash available to meet the exis ng day to day opera onal requirements.
Oneall Prospectus
68
6.6
Management Discussion and Analysis of the Financial Informa on
The management discussion and analysis (MD&A) below relates to the historical consolidated Statements of Profit
or Loss and Other Comprehensive Income and Statements of Cash Flows and should be read in conjunc on with the
descrip on of the basis upon which the informa on has been prepared.
The MD&A provides a brief discussion of the general factors which affected OneAll Interna onal Limited's historical
opera ng and financial performance between FY2012 and 1HFY2015. The discussion of these general factors is
intended to provide a summary only and does not detail all the factors that affected OneAll Interna onal Limited's
historical opera ng and financial performance.
The informa on in this Sec on should also be read in conjunc on with the risk factors set out in Sec on 8 and other
informa on contained in this Prospectus.
6.6.1 Year on year management discussion and analysis
Fy2012 compared to FY2013
Table 5: Selected financial performance and cash flow items
Historical
A$000
Change (%)
Audited
Audited
Revenue
21,733
28,566
31.4%
Costs of Sales (COS)
(14,454)
(18,134)
(25.5)%
Gross profit
7,280
10,432
43.3%
Gross profit %
33.5%
36.5%
-
Opera ng expenses
(2,176)
(2,630)
(20.9)%
EBITDA
5,699
7,943
39.4%
EBITDA %
26.2%
27.8%
-
EBIT
5,411
7,640
41.2%
EBIT %
24.9%
26.7%
-
EBITDA
5,699
7,943
Non-cash items in EBITDA
-
4
Change in net working capital
(847)
(2,074)
Net cash flow from opera ng ac vi es before inves ng
ac vi es, financing ac vi es and tax
4,853
5,873
Capital expenditure
Capital expenditure
(82)
(33)
Proceeds on disposal of property, plant and equipment
12
-
Net cash flows before interest, tax and financing ac vi es
4,783
5,839
Revenue
The increase in revenue from A$21.7 million in FY2012 to A$28.6 million in FY2013 was primarily driven by expansion of
business opera ons in light of increased market demand.
Gross profit %
The improvement in gross profit % during FY2013 was due in part by the revenue growth discussed above supported
by reduc ons in material cost (for example, aluminum prices decreased from US$2,023/ton in FY2012 to
US$1,846/ton in FY2013).
06 Financial Informa on
69
Opera ng expenses
The increase of opera ng expenses in FY2013 was primarily caused by increases in logis cs and packaging expenses
due to the increased sales volumes, and also increases in personnel costs (par cularly in the finance and
administra on departments) to support the business growth.
EBITDA and EBIT margins
EBITDA and EBIT margins increased marginally during FY2013 due to a combina on of the factors discussed above.
Net cash flow from opera ng ac vi es before inves ng ac vi es, financing ac vi es and tax
Net cash flow from opera ng ac vi es before inves ng ac vi es, financing ac vi es and tax increased during
FY2013 due to a combina on of the business growth and increased focus on improving the collec on of trade
receivables although opera ng cash flows were impacted during FY2013 by the purchase of significant amounts of
teakwood in late FY2013.
Capital expenditure
Capital expenditure primarily relates to the purchase of property, plant and equipment with purchases reducing
from A$82,000 in FY2012 to A$33,000 in FY2013.
FY2013 compared to FY2014
Table 6: Selected financial performance and cash flow items
Historical
Change (%)
A$000
Audited
Audited
Revenue
28,566
36,382
27.4%
Costs of Sales (COS)
(18,134)
(22,079)
(21.8)%
Gross profit
10,432
14,303
37.1%
Gross profit %
39.3%
-
Opera ng expenses
36.5%
(2,630)
(3,135)
(19.2)%
EBITDA
7,943
11,355
43.0%
EBITDA %
27.8%
31.2%
-
EBIT
7,640
11,037
44.5%
EBIT %
26.7%
30.3%
-
EBITDA
7,943
11,355
Non-cash items in EBITDA
4
-
Change in net working capital
(2,074)
930
Net cash flow from opera ng ac vi es before inves ng
ac vi es, financing ac vi es and tax
5,873
12,285
Capital expenditure
(33)
(147)
Proceeds on disposal of property, plant and equipment
-
-
Net cash flows before interest, tax and financing ac vi es
5,839
12,137
Capital expenditure
Revenue
The increase in revenue from A$28.6 million in FY2013 to A$36.4 million in FY2014 (annual growth of 27.4%) is
representa ve of the con nued growth of the business reflec ng sustained increases in customer and market
demand.
Oneall Prospectus
70
Gross profit %
The improvement in gross profit % during FY2014 was driven by the revenue growth, which in turn was reflec ve of
propor onate increases in sales of higher margin products, especially aluminum frame plas c sofa (gross profit % of
30%) and aluminum chair (gross profit % of 35%).
Opera ng expenses
The increase in opera ng expenses in FY2014 is largely due to the con nued business growth resul ng in increases
to logis c and packaging expenses, exhibi on fees, adver sing fees and commissions.
EBITDA and EBIT margins
EBITDA and EBIT margins increased due to a combina on of the factors discussed above.
Net cash flow from opera ng ac vi es before inves ng ac vi es, financing ac vi es and tax
The increase in net cash flow from opera ng ac vi es before inves ng ac vi es, financing ac vi es and tax during
FY2014 was partly due to the increase of sales during the year and also further improvements in the collec on of
trade receivables.
Capital expenditure
Capital expenditure during FY2014 relates to purchases of property, plant and equipment.
1HFY2014 compared to 1HFY2015
Table 7:Selected financial performance and cash flow items
Historical
A$000
1HFY2014
Reported (1)
1HFY2015
Reviewed
Change (%)
Revenue
18,977
23,310
22.8%
Costs of Sales (COS)
(11,163)
(13,619)
(22.0)%
Gross profit
7,814
9,691
24.0%
Gross profit %
41.2%
41.6%
-
Opera ng expenses
(1,734)
(2,221)
(28.1)%
EBITDA
6,198
7,529
21.5%
EBITDA %
32.7%
32.3%
-
EBIT
6,033
7,325
21.4%
EBIT %
31.8%
31.4%
-
EBITDA
6,198
7,529
Non-cash items in EBITDA
-
-
Change in net working capital
3,509
2,436
Net cash flow from opera ng ac vi es before inves ng
ac vi es, financing ac vi es and tax
9,708
9,965
Capital expenditure
(4)
(109)
Proceeds on disposal of property, plant and equipment
-
-
Net cash flows before interest, tax and financing ac vi es
9,704
9,857
Capital expenditure
Note:
BDO has not reviewed the financial informa on of OneAll Interna onal Limited for the six month period ended 30
June 2014, which has been extracted from the financial statements of Gardenart Furniture Co. Ltd for the six
month period ended 30 June 2015.
06 Financial Informa on
71
Revenue
The revenue growth from A$19.0 million in 1HFY2014 to A$23.3 million in 1HFY2015 (represen ng period-on-period
revenue growth of 22.8%) was primarily due to con nued increases in exis ng customer demand and the addi on of
new customers.
Gross profit %
Gross profit % remained rela vely consistent across the 1HFY2014 and 1HFY2015 periods.
Opera ng expenses
As with previous periods, the increase in opera ng expenses during 1HFY2015 was reflec ve of the con nued business
expansion, with sales and marke ng expenses increasing by A$258,000 and administra on expenses increasing
by A$275,000.
EBITDA and EBIT margins
EBITDA and EBIT margins were rela vely consistent across the 1HFY2014 and 1HFY2015 periods.
Net cash flow from opera ng ac vi es before inves ng ac vi es, financing ac vi es and tax
Net cash flow from opera ng ac vi es before inves ng ac vi es, financing ac vi es and tax increased marginally in
1HFY2015 primarily due to the impact of a rela ve reduc on in the collec ons rate of trade receivables (although
the directors are confident trade receivables as at 30 June 2015 are recoverable in the ordinary course of business).
Capital expenditure
Capital expenditure during 1HFY2015 primarily related to purchases of property, plant and equipment.
6.7
Debt facili es
Immediately following comple on of the Offer, OneAll Interna onal Limited will have no bank debt arrangements or
other financing arrangements with third par es.
6.8
Lease commitments
Immediately following comple on of the Offer, OneAll Interna onal Limited will have no contractual obliga ons and
commitments in rela on to off balance sheet opera ng leases, finance lease commitments, or capital expenditure
commitments.
6.9
Liquidity and Capital Resources
Following Comple on of the Offer, OneAll Interna onal Limited's principal sources of funds will be cash flow from
opera ons and proceeds from the Offer.
6.10 Dividend Policy
A FY2015 interim unfranked dividend of four cents per Share will be paid in December 2015 in respect of the six
month period ended 30 June 2015 represen ng a payout ra o of approx. 72% of statutory NPAT. Going forward the
Board is targe ng a dividend payout ra o in the range of 60% to 80% of statutory NPAT. The level of payout ra o is
expected to vary between periods depending on factors the Directors may consider, including the Group's earnings,
financial posi on, tax posi on, financing and capital requirements. The Directors currently believe that a payout
ra o around 60% to 80% of NPAT is appropriate in light of the nature of the business.
The ability to pay dividends depends on a number of factors. Dividends paid out of profits generated outside of
Australia will be unfranked. The Directors do not provide any assurance of the future level of dividends or the extent
to which they are franked, and there may be periods in respect of which dividends are not paid.
Within the Pro Forma historical consolidated Statement of Financial Posi on as at 30 June 2015 is a dividend payable
amount of A$14.4 million. This liability relates to dividends declared to the exis ng shareholders pre-IPO and is
expected to be paid by 30 September 2015 but will only be paid if there is sufficient cash available to meet the
exis ng day to day opera onal requirements.
Oneall Prospectus
72
6.11
Significant Accoun ng Policies
The significant accoun ng policies adopted in the prepara on of the financial informa on are set out below. These
policies have been consistently applied to all the periods presented, unless otherwise stated.
6.11.1 Basis of prepara on
The financial informa on has been prepared in accordance with Australian Accoun ng Standards and Interpreta ons
issued by the Australian Accoun ng Standards Board (AASB). The financial informa on also complies with
Interna onal Financial Repor ng Standards as issued by the Interna onal Accoun ng Standards Board (IASB).
Historical cost conven on
The financial informa on has been prepared under the historical cost conven on.
Cri cal accoun ng es mates
The prepara on of the financial informa on requires the use of certain cri cal accoun ng es mates. It also requires
management to exercise its judgement in the process of applying the consolidated en ty's accoun ng policies. The
areas involving a higher degree of judgement or complexity, or areas where assump ons and es mates are
significant to the financial informa on, are disclosed in Sec on 6.12.
Foreign currency transla on
The financial informa on is presented in Australian dollars. The func onal currency of Gardenart furniture Co.
imited is Hong Kong dollars and that of its subsidiaries is Chinese Yuan Renminbi.
Foreign currency transac ons
Foreign currency transac ons are translated into Australian dollars using the exchange rates prevailing at the dates
of the transac ons. Foreign exchange gains and losses resul ng from the se lement of such transac ons and from
the transla on at financial year-end exchange rates of monetary assets and liabili es denominated in foreign
currencies are recognised in profit or loss.
Foreign opera ons
The assets and liabili es of foreign opera ons are translated into Australian dollars using the exchange rates at the
repor ng date. The revenues and expenses of foreign opera ons are translated into Australian dollars using the
average exchange rates, which approximate the rate at the date of the transac on, for the period. All resul ng
foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in
equity.
The foreign currency reserve is recognised in profit or loss when the foreign opera on o r net investment is disposed
of.
6.11.2 Business combina ons
Acquisi ons from en
es under common control
Business combina ons arising from transfer of interests in en es that are under the control of the shareholder that
controls the Group are accounted for as if the acquisi on had occurred at the beginning of the earliest compara ve
year presented or, if later, at the date that common control was established; for this purpose compara ves are
restated. The assets and liabili es acquired are recognised at the carrying amounts recognised previously in the
Group controlling shareholder's consolidated financial statements. The components of equity of the acquired
en es are added to the same components within the Group equity and any gain/loss arising is recognised directly in
equity.
Subsidiaries
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated
from the date that control ceases. Poten al vo ng rights that are currently exercisable or conver ble are considered
when assessing control.
06 Financial Informa on
73
Consolidated financial informa on includes all the subsidiaries other than those acquired in business combina ons
involving en es under common control from the date that control commences un l the date that control ceases.
The financial statements of subsidiaries are prepared for the same repor ng period as the parent, using consistent
accoun ng policies.
All intercompany balances and transac ons, including unrealised profits arising from intragroup transac ons have
been eliminated. Unrealised losses are also eliminated unless the transac on provides evidence of the impairment
of the asset transferred.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated
Statement of Profit or Loss and Other Comprehensive Income and Statement of Financial Posi on respec vely.
Investments in subsidiaries are accounted for in the parent en ty financial statements at cost.
6.11.3 Revenue recogni on
Revenue is recognised when it is probable that the economic benefit will flow to the consolidated en ty and the
revenue can be reliably measured. Revenue is measured at the fair value of the considera on received or receivable.
Sale of goods
Sale of goods revenue is recognised at the point of sale, which is where the customer has taken delivery of the goods,
the risks and rewards are transferred to the customer and there is a valid sales contract. Amounts disclosed as
revenue are net of sales returns and trade discounts.
Interest
Interest revenue is recognised as interest accrues using the effec ve interest method. This is a method of calcula ng
the amor sed cost of a financial asset and alloca ng the interest income over the relevant period using the effec ve
interest rate, which is the rate that exactly discounts es mated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
6.11.4 Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdic on, adjusted by changes in deferred tax assets and liabili es a ributable
to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabili es are recognised for temporary differences at the tax rates expected to apply when
the assets are recovered or liabili es are se led, based on those tax rates that are enacted or substan vely enacted,
except for:
Ÿ
When the deferred income tax asset or liability arises from the ini al recogni on of goodwill or an asset or
liability in a transac on that is not a business combina on and that, at the me of the transac on, affects neither
the accoun ng nor taxable profits; or
Ÿ
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures,
and the ming of the reversal can be controlled and it is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred tax assets are recognised for deduc ble temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to u lise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each repor ng date. Deferred
Oneall Prospectus
74
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be
available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the
extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabili es are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabili es and deferred tax assets against deferred tax liabili es; and they relate to the same
taxable authority on either the same taxable en ty or different taxable en es which intend to se le
simultaneously.
6.11.5 Current and non-current classifica on
Assets and liabili es are presented in the Statement of Financial Posi on based on current and non-current
classifica on.
An asset is current when: it is expected to be realised or intended to be sold or consumed in normal opera ng cycle;
it is held primarily for the purpose of trading; it is expected to be realised within 12 months a er the repor ng
period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to se le a liability for
at least 12 months a er the repor ng period. All other assets are classified as non-current.
A liability is current when: it is expected to be se led in normal opera ng cycle; it is held primarily for the purpose of
trading; it is due to be se led within 12 months a er the repor ng period; or there is no uncondi onal right to defer
the se lement of the liability for at least 12 months a er the repor ng period. All other liabili es are classified as
non-current.
Deferred tax assets and liabili es are always classified as non-current.
6.11.6 Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial ins tu ons, other short-term,
highly liquid investments with original maturi es of three months or less that are readily conver ble to known
amounts of cash and which are subject to an insignificant risk of changes in value.
6.11.7 Trade and other receivables
Trade receivables are ini ally recognised at fair value and subsequently measured at amor sed cost using the
effec ve interest method, less any provision for impairment. Trade receivables are generally due for se lement
within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are
wri en off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when
there is objec ve evidence that the consolidated en ty will not be able to collect all amounts due according to the
original terms of the receivables.
Other receivables are recognised at amor sed cost, less any provision for impairment.
6.11.8 Inventories
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value on a 'first
in first out' basis. Cost comprises direct materials and delivery costs, direct labour, import du es and other taxes and
an appropriate propor on of variable and fixed overhead expenditure based on normal opera ng capacity.
Net realisable value is the es mated selling price in the ordinary course of business less the es mated costs of
comple on and the es mated costs necessary to make the sale.
6.11.9 Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated deprecia on and impairment. Historical cost
includes expenditure that is directly a ributable to the acquisi on of the items.
06 Financial Informa on
75
Deprecia on is calculated on a straight-line basis to write off the net cost of each item of property, plant and
equipment over their expected useful lives as follows:
Buildings
Plant and Machinery
Office equipment
Motor vehicles
Other equipment
The residual values, useful lives and
repor ng date.
5-30 years
5-10 years
3-10 years
5-10 years
5-10 years
deprecia on methods are reviewed, and adjusted if appropriate, at each
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit
to the consolidated en ty. Gains and losses between the carrying amount and the disposal proceeds are taken to
profit or loss.
6.11.10 Prepaid lease assets
Rights to use land
Rights to use land have a finite useful life and are carried at cost less accumulated amor sa on and impairment
losses. Amor sa on is calculated using the straight-line method to allocate the cost of rights to use land over the
contracted period, which is 50 years for industry usage.
6.11.11 Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's
carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is
the present value of the es mated future cash flows rela ng to the asset using a pre-tax discount rate specific to the
asset or cash-genera ng unit to which the asset belongs. Assets that do not have independent cash flows are
grouped together to form a cash-genera ng unit.
6.11.12 Trade and other payables
These amounts represent liabili es for goods and services provided to the consolidated en ty prior to the end of the
financial year and which are unpaid. Due to their short-term nature they are measured at amor sed cost and are not
discounted. The amounts are unsecured and are usually paid within 30 days of recogni on.
6.11.13 Finance costs
Finance costs a ributable to qualifying assets are capitalised as part of the asset. All other finance costs are
expensed in the period in which they are incurred.
6.11.14 Employee benefits
Short-term employee benefits
Liabili es for wages and salaries, including non-monetary benefits, and annual leave expected to be se led within
12 months of the repor ng date are recognised in current liabili es in respect of employees' services up to the
repor ng date and are measured at the amounts expected to be paid when the liabili es are se led.
Other long-term employee benefits
The liability for annual leave not expected to be se led within 12 months of the repor ng date is recognised in noncurrent liabili es, provided there is an uncondi onal right to defer se lement of the liability. The liability is
Oneall Prospectus
76
measured as the present value of expected future payments to be made in respect of services provided by
employees up to the repor ng date using the projected unit credit method. Considera on is given to expected
future wage and salary levels, experience of employee departures and periods of service. Expected future payments
are discounted using market yields at the repor ng date on na onal government bonds with terms to maturity and
currency that match, as closely as possible, the es mated future cash ou lows.
Defined contribu on superannua on expense
Contribu ons to defined contribu on superannua on plans are expensed in the period in which they are incurred.
6.11.15 Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recogni on or disclosure purposes,
the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly
transac on between market par cipants at the measurement date; and assumes that the transac on will take place
either: in the principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assump ons that market par cipants would use when pricing the asset or liability,
assuming they act in their economic best interest. For non-financial assets, the fair value measurement is based on
its highest and best use. Valua on techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the
use of unobservable inputs.
6.11.16 Issued capital
Ordinary shares are classified as equity.
Incremental costs directly a ributable to the issue of new shares or op ons are shown in equity as a deduc on, net
of tax, from the proceeds.
6.11.17 Chinese Value Added Tax (VAT)
Revenues, expenses and assets are recognised net of the amount of VAT, except where the amount of VAT incurred is
not recoverable from the local tax office. In these circumstances the VAT is recognised as part of the cost of
acquisi on of the asset or as part of an item of expense. Receivables and payables in the Statement of Financial
Posi on are shown inclusive of VAT.
6.11.18 New Accoun ng Standards and Interpreta ons not yet mandatory or early
adopted
Australian Accoun ng Standards and Interpreta ons that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated en ty for the annual repor ng period ended 30 June
2015. The consolidated en ty's assessment of the impact of these new or amended Accoun ng Standards and
Interpreta ons, most relevant to the consolidated en ty, are set out below.
6.11.19 AASB 9 Financial Instruments
This standard is applicable to annual repor ng periods beginning on or a er 1 January 2018. The standard replaces
all previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recogni on and
Measurement'. AASB 9 introduces new classifica on and measurement models for financial assets. A financial asset
shall be measured at amor sed cost, if it is held within a business model whose objec ve is to hold assets in order to
collect contractual cash flows, which arise on specified dates and solely principal and interest. All other financial
instrument assets are to be classified and measured at fair value through profit or loss unless the en ty makes an
irrevocable elec on on ini al recogni on to present gains and losses on equity instruments (that are not held-fortrading) in other comprehensive income (OCI). For financial liabili es, the standard requires the por on of the
change in fair value that relates to the en ty's own credit risk to be presented in OCI (unless it would create an
accoun ng mismatch). New simpler hedge accoun ng requirements are intended to more closely align the
06 Financial Informa on
77
accoun ng treatment with the risk management ac vi es of the en ty. New impairment requirements will use an
'expected credit loss' (ECL) model to recognise an allowance. Impairment will be measured under a 12-month ECL
method unless the credit risk on a financial instrument has increased significantly since ini al recogni on in which
case the life me ECL method is adopted. The standard introduces addi onal new disclosures. The consolidated
en ty will adopt this standard from 1 July 2018 but the impact of its adop on is yet to be assessed by the
consolidated en ty.
6.11.20 IFRS 15 Revenue
In May 2014 the IASB issued IFRS 15 Revenue which sets out the requirements for recognising revenue that apply to
all contracts with customers (except for contracts that are within the scope of the standards on leases, insurance
contracts and financial instruments). The Company has yet to consider the impacts of this standard on the
consolidated en ty.
6.12 Cri cal accoun ng judgements, es mates and assump ons
The prepara on of the financial informa on requires management to make judgements, es mates and assump ons
that affect the reported amounts in the financial informa on. Management con nually evaluates its judgements and
es mates in rela on to assets, liabili es, con ngent liabili es, revenue and expenses. Management bases its
judgements, es mates and assump ons on historical experience and on other various factors, including
expecta ons of future events, management believes to be reasonable under the circumstances. The resul ng
accoun ng judgements and es mates will seldom equal the related actual results. The judgements, es mates and
assump ons that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabili es within the next financial year are discussed below.
6.12.1 Es ma on of useful lives of assets
The consolidated en ty determines the es mated useful lives and related deprecia on and amor sa on charges for
its property, plant and equipment and finite life prepaid lease assets. The useful lives could change significantly as a
result of technical innova ons or some other event. The deprecia on and amor sa on charge will increase where
the useful lives are less than previously es mated lives, or technically obsolete or non-strategic assets that have
been abandoned or sold are wri en off or wri en down.
6.12.2 Income tax
The consolidated en ty is subject to income taxes in the jurisdic ons in which it operates. Significant judgement is
required in determining the provision for income tax. There are many transac ons and calcula ons undertaken
during the ordinary course of business for which the ul mate tax determina on is uncertain. The consolidated en ty
recognises liabili es for an cipated tax audit issues based on the consolidated en ty's current understanding of the
tax law. Where the final tax outcome of these ma ers is different from the carrying amounts, such differences will
impact the current and deferred tax provisions in the period in which such determina on is made.
6.12.3 Provision for impairment of receivables
The provision for impairment of receivables assessment requires a degree of es ma on and judgement. The level of
provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical
collec on rates and specific knowledge of the individual debtors' financial posi on.
6.12.4 Provision for impairment of inventories
The provision for impairment of inventories assessment requires a degree of es ma on and judgement. The level of
the provision is assessed by taking into account the recent sales experience, the ageing of inventories and other
factors that affect inventory obsolescence.
Oneall Prospectus
78
07. Inves ga ng accountant’s
report
Exhibi on
Le :CIFF
Right:Spoga
Bo om:Spoga
07 Inves ga ng Accountant’s Report
79
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Level 14, 140 William St
Melbourne VIC 3000
GPO Box 5099 Melbourne VIC 3001
Australia
The Directors
OneAll Interna onal Limited
AMP Centre
Level 27, 50 Bridge Street
SYDNEY NSW 2000
7 September 2015
Dear Directors
INVESTIGATING ACCOUNTANT'S REPORT
Introduc on
BDO Corporate Finance (East Coast) Pty Ltd (BDO) has been engaged by OneAll
Interna onal Limited (OneAll Interna onal or the Company) to prepare this
Inves ga ng Accountant's Report (Report) in rela on to certain financial
informa on of OneAll Interna onal, for the ini al public offering of shares in OneAll
Interna onal which will wholly own the Gardenart Furniture Group of controlled
en es, for inclusion in a prospectus proposed to be issued on or about 7
September 2015 (Prospectus).
Unless stated otherwise in this Report, expressions defined in the Prospectus have
the same meaning in this Report.
This Report has been prepared for inclusion in the Prospectus. We disclaim any
assump on of responsibility for any reliance on this Report or on the financial
informa on to which it relates for any purpose other than that for which it was
prepared.
Scope
You have requested BDO to perform a limited assurance engagement in rela on to
the pro forma historical informa on described below and disclosed in the
Prospectus.
The pro forma historical financial informa on is presented in the Prospectus in an
abbreviated form, insofar as it does not include all of the presenta on and
disclosures required by Australian Accoun ng Standards and other mandatory
professional repor ng requirements applicable to general purpose financial reports
prepared in accordance with the Corpora ons Act 2001.
Our limited assurance engagement has not been carried out in accordance with
audi ng or other standards and prac ces generally accepted in China and
accordingly should not be relied upon as if it had been carried out in accordance
with those standards and prac ces.
BDO Corporate Finance (East Coast) Pty Ltd ABN 70 050 038 170 AFS Licence No. 247 420 is a member of a na onal associa on of independent en es
which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Corporate Finance (East Coast) Pty
Ltd and BDO (Australia) Ltd are members of BDO Interna onal Ltd, a UK company limited by guarantee, and form part of the interna onal BDO network
of independent member firms.Liability limited by a scheme approved under Professional Standards Legisla on, other than for the acts or omissions of
financial services licensees.
1
Oneall Prospectus
80
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Level 14, 140 William St
Melbourne VIC 3000
GPO Box 5099 Melbourne VIC 3001
Australia
Pro Forma Historical Financial Informa on
You have requested BDO to review the following pro forma historical financial
informa on (the “Pro Forma Historical Financial Informa on”) of OneAll
Interna onal included in the Prospectus:
Ÿ
the pro forma historical consolidated Statement of Financial Posi on as at 30
June 2015.
The Pro Forma Historical Financial Informa on has been derived from the historical
financial informa on of the controlled en es within the Gardenart Furniture
Group, a er adjus ng for the effects of pro forma adjustments described in sec on
6 of the Prospectus. The stated basis of prepara on is the recogni on and
measurement principles contained in Australian Accoun ng Standards applied to
the historical financial informa on and the event(s) or transac on(s) to which the
pro forma adjustments relate, as described in sec on 6 of the Prospectus, as if
those event(s) or transac on(s) had occurred as at the date of the historical
financial informa on. Due to its nature, the Pro Forma Historical Financial
Informa on does not represent the Company's actual or prospec ve financial
posi on, financial performance, and/or cash flows.
The Pro Forma Historical Financial Informa on has been compiled by OneAll
Interna onal to illustrate the impact of the event(s) or transac on(s) described in
Sec on 6 of the Prospectus on OneAll Interna onal's financial posi on as at 30 June
2015. As part of this process, informa on about OneAll Interna onal's financial
posi on has been extracted by OneAll Interna onal from the consolidated financial
statements of Gardenart Furniture Co. Ltd (and its controlled en es) for the six
month period ended 30 June 2015.
The consolidated financial statements of Gardenart Furniture Co. Ltd (and its
controlled en es) for the six month period ended 30 June 2015 were reviewed by
BDO East Coast Partnership in accordance with the Australian Accoun ng
Standards. BDO East Coast Partnership issued an unqualified review opinion on the
financial report rela ng to those financial statements.
Directors' Responsibility
The directors of OneAll Interna onal are responsible for the prepara on and
presenta on of the Pro Forma Historical Financial Informa on, including the
selec on and determina on of pro forma adjustments made to the historical
financial informa on and included in the Pro Forma Historical Financial
Informa on. This includes responsibility for such internal controls as the directors
determine are necessary to enable the prepara on of Pro Forma Historical Financial
Informa on that is free from material misstatement, whether due to fraud or error.
Our Responsibility
Our responsibility is to express limited assurance conclusions on the Pro Forma
Historical Financial Informa on, based on our limited assurance engagement. We
2
07 Inves ga ng Accountant’s Report
81
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Level 14, 140 William St
Melbourne VIC 3000
GPO Box 5099 Melbourne VIC 3001
Australia
have conducted our engagement in accordance with the Standard on Assurance
Engagement ASAE 3450 Assurance Engagements involving Corporate Fundraisings
and/or Prospec ve Financial Informa on.
Our limited assurance procedures consisted of making enquiries, primarily of
persons responsible for financial and accoun ng ma ers, and applying analy cal and
other review procedures. A limited assurance engagement is substan ally less in
scope than an audit conducted in accordance with Australian Audi ng Standards and
consequently does not enable us to obtain reasonable assurance that we would
become aware of all significant ma ers that might be iden fied in a reasonable
assurance engagement. Accordingly, we do not express an audit opinion.
Our engagement did not involve upda ng or re-issuing any previously issued audit or
limited assurance reports on any financial informa on used as a source of the
financial informa on.
Conclusions
Pro Forma Historical Financial informa on
Based on our limited assurance engagement, which is not an audit, nothing has come
to our a en on that causes us to believe that the Pro Forma Historical Financial
Informa on as described in sec on 6 of the Prospectus, and comprising:
Ÿ
the pro forma historical consolidated Statement of Financial Posi on of OneAll
Interna onal as at 30 June 2015;
Ÿ
is not presented fairly, in all material respects, in accordance with the stated basis
of prepara on, as described in sec on 6 of the Prospectus.
SUBSEQUENT EVENTS
Ÿ
Apart from the ma ers dealt with in this Report, and having regard to the scope of
this Report and the informa on provided by the Directors, to the best of our
knowledge and belief no material transac on or event outside of the ordinary
business of OneAll Interna onal not described in the Prospectus, has come to our
a en on that would require comment on, or adjustment to, the informa on
referred to in our Report or that would cause such informa on to be misleading or
INDEPENDENCE
BDO is a member of BDO Interna onal Ltd. BDO does not have any interest in the
outcome of the proposed IPO other than in connec on with the prepara on of this
Report and par cipa on in due diligence procedures, for which professional fees will
be received.
3
Oneall Prospectus
82
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Level 14, 140 William St
Melbourne VIC 3000
GPO Box 5099 Melbourne VIC 3001
Australia
GENERAL ADVICE WARNING
This Report has been prepared, and included in the Prospectus, to provide investors
with general informa on only and does not take into account the objec ves,
financial situa on or needs of any specific investor. It is not intended to be a
subs tute for professional advice and poten al investors should not make specific
investment decisions in reliance on the informa on contained in this Report.
Before ac ng or relying on any informa on, poten al investors should consider
whether it is appropriate for their objec ves, financial situa on or needs.
Without modifying our conclusions, we draw a en on to the Prospectus, which
describes the purpose of the financial informa on, being for inclusion in the
Prospectus. As a result, the financial informa on may not be suitable for use for
another purpose.
BDO has consented to the inclusion of this Report in the Prospectus in the form and
context in which it is included. At the date of this Report this consent has not been
withdrawn. However, BDO has not authorised the issue of the Prospectus.
Accordingly, BDO makes no representa on regarding, and takes no responsibility
for, any other statements or material in or omissions from the Prospectus.
FINANCIAL SERVICES GUIDE
Our Financial Services Guide follows this Report. This guide is designed to assist
retail clients in their use of any general financial product advice in our Report.
Yours faithfully
Greg Ellis
Director and Representa ve
4
07 Inves ga ng Accountant’s Report
83
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Level 14, 140 William St
Melbourne VIC 3000
GPO Box 5099 Melbourne VIC 3001
Australia
Financial Services Guide
This Financial Services Guide is issued in rela on to an inves ga ng accountant's
report (“Report“) prepared by BDO Corporate Finance (East Coast) Pty Limited (ABN
70 050 038 170) (“BDO CF“) at the request of the directors (“Directors“) of OneAll
Interna onal Limited (“OneAll Interna onal”) to provide general financial product
advice in the form of a Report in rela on to the ini al public offering of shares in
OneAll Interna onal (“Proposal”). The Report is intended to accompany a
Prospectus (“Document”) that is to be provided by the Directors to help poten al
investors make an informa on decision in rela on to the financial product.
Engagement
BDO CF has been engaged by the Directors to prepare the Report expressing our
opinion in respect of the financial informa on to be included in the Document to be
issued in connec on with the Proposal.
Financial Services Guide
BDO CF holds an Australian Financial Services Licence (Licence No: 247420)
(“Licence”). As a result of our Report being provided to you BDO CF is required to
issue to you, as a retail client, a Financial Services Guide (“FSG”). The FSG includes
informa on on the use of general financial product advice and is issued so as to
comply with our obliga ons as holder of a Licence.
Financial services BDO CF is Licenced to provide
The Licence authorises BDO CF to provide reports for the purposes of ac ng for and
on behalf of clients in rela on to proposed or actual mergers, acquisi ons,
takeovers, corporate restructures or share issues, to carry on a financial services
business to provide general financial product advice for securi es and certain
deriva ves to retail and wholesale clients.
BFOCF provides financial product advice by virtue of an engagement to issue the
Report in connec on with the issue of securi es of another person.
Our Report includes a descrip on of the circumstances of our engagement and
iden fies the party who has engaged us. You have not engaged us directly but will
be provided with a copy of our Report (as a retail client) because of your connec on
with the ma ers on which our Report has been issued.
Our Report is provided on our own behalf as an Australian Financial Services
Licensee authorised to provide the financial product advice contained in the
Report.
General financial product advice
Our Report provides general financial product advice only, and does not provide
personal financial product advice, because it has been prepared without taking into
account your par cular personal circumstances or objec ves (either financial or
otherwise), your financial posi on or your needs.
Some individuals may place a different emphasis on various aspects of poten al
investments.
An individual's decision in rela on to the Proposal described in the Document may
be influenced by their par cular circumstances and, therefore, individuals should
seek independent advice.
5
Oneall Prospectus
84
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Level 14, 140 William St
Melbourne VIC 3000
GPO Box 5099 Melbourne VIC 3001
Australia
Benefits that BDO CF may receive
BDO CF has charged fees for providing our Report. The basis on which our fees will
be determined has been agreed with, and our fees will be paid by, the person who
engaged us to provide the Report. Our fees have been agreed on either a fixed fee
or me cost basis.
BDO CF will receive a fee of approximately $52,000 (plus GST and disbursements) in
rela on to the prepara on of the Report. The fee is not con ngent upon the
outcome of the Proposal, and accordingly, does not have any pecuniary or other
interests that could reasonably be regarded as being capable of affec ng its ability
to give an unbiased opinion in rela on to the Proposal.
Remunera on or other benefits received by our employees
All our employees receive a salary. Employees may be eligible for bonuses based on
overall produc vity and contribu on to the opera on of BDO CF or related en es
but any bonuses are not directly connected with any assignment and in par cular
are not directly related to the engagement for which our Report was provided.
Referrals
BDO CF does not pay commissions or provide any other benefits to any par es or
person for referring customers to us in connec on with the reports that BDO CF is
Licenced to provide.
Associa ons and rela onships
BDO CF is a member of a na onal associa on of independent en es which are all
members of BDO (Australia) Ltd, an Australian company limited by guarantee. BDO
CF and BDO (Australia) Ltd are members of BDO Interna onal Ltd, a UK company
limited by guarantee, and form part of the interna onal BDO network of
independent member firms.
BDO CF's contact details are as set out on our le erhead.
Complaints resolu on
As the holder of a Licence, we are required to have a process for handling
complaints from persons to whom we provide financial product advice. All
complaints must be in wri ng, addressed to The Complaints Officer, BDO Corporate
Finance (East Coast) Pty Limited, Level 10, 1 Margaret Street, Sydney NSW 2000.
On receipt of a wri en complaint we will record the complaint, acknowledge
receipt of the complaint and seek to resolve the complaint as soon as prac cal. If
we cannot reach a sa sfactory resolu on, you can raise your concerns with the
Financial Ombudsman Service Limited (“FOS”). FOS is an independent body
established to provide advice and assistance in helping resolve complaints rela ng
to the financial services industry. BDO CF is a member of FOS. FOS may be
contacted directly via the details set out below.
Financial Ombudsman Service Limited
GPO Box 3
Melbourne VIC 3001
Toll free: 1300 78 08 08
Email: [email protected]
6
07 Inves ga ng Accountant’s Report
85
08. Risk factors
The award “Red Dot”for high design quality,expressing innovation in
form and function in an exemplary manner,is presented to:
Die Auszeichnung,,Red Dot” fur hohe Designqualitat,die in beispielhafter
Weise lnnovation in Form und Funktion ausdruckt,wird verliehen an:
Statement by the jury
Mountain impresses as a contemporary
interpretation of a classic product.
Simple lines achieve a distinctive
appearance.
Mountain
Outdoor-Furniture
Outdoor-Mobel
Manufacturer
Guangzhou Gardenart Furniture Co.,Ltd.,
Guangzhou,China
In-house design
Roger Cao
Red Dot Award
Le :Mountain
Right:Mountain
Bo om:Cer ficate
Oneall Prospectus
86
8.1
Introduc on
OneAll is subject to various risks. Some of these are specific to its business ac vi es. Others could affect the whole
industry or are more general in nature. Individually or in combina on, these risks may affect the future opera ng
and financial performance of OneAll and the value of its Shares. There can be no guarantee that OneAll will achieve
or realise its stated business strategy or any of its forward-looking statements contained in this prospectus.
Investors should note that past performance is not a reliable indicator of future performance.
This sec on describes poten al risks associated with OneAll's business and risks associated with an investment in
the Shares. It does not purport to list every risk that may be associated with OneAll's business or with an investment
in the Shares now or in the future. The occurrence or consequences of some of the risks described in this sec on are
par ally or completely outside the control of OneAll, its directors and its senior management.
The risks described in this sec on have been grouped into the following:
Ÿ
Ÿ
Risks that relate specifically to OneAll and the way it operates its businesses
General risks that relate to inves ng in OneAll Shares
Before applying for Shares, investors should sa sfy themselves that they have sufficient understanding of the risks of
inves ng in OneAll, of inves ng in the industry and of inves ng in shares in general, with regard to their own
investment objec ves, financial circumstances and taxa on posi on. Investors should read this Prospectus in its
en rety and should consider consul ng their professional advisers before deciding on whether or not to apply for
the Shares.
8.2
Risks specific to the Company
8.2.1 Export market risk
OneAll's products are mainly exported to Europe and the US. This exposes the Company to foreign macroeconomic
market vola lity in addi on to the general economic risk in China. In the event that the economic condi on of the
countries that OneAll's products are sold to worsen, consumers may postpone or cancel their shopping schedule,
which can adversely impact the opera onal outcome of OneAll's business.
8.2.2 Supply chain risk
The sales channel of OneAll involves mul ple stages of work done by factory workers, exporters, importers,
wholesalers and retailers. Each stage of a product's sales process requires coopera on by personnel responsible for
other stages of work to achieve their responsibility in a mely fashion. When any of the middle components of the
supply chain fails, it may result in the Company losing part or all of its customers at the end of the chain. Such events
may include changes of suppliers or insolvency of importers or wholesalers. The company minimizes the risk by
selling products directly to retailers thus shortening the supply chain.
8.2.3 The effec veness of quality control
As the Company has been experiencing high growth in recent years, OneAll plans to expand its produc on capacity
by a considerable scale to meet the needs of increased purchasing orders from its clients. This involves the
establishment of addi onal produc on facili es. As the scale of the Company's business opera ons expands, the
Company is exposed to a greater risk of deficiencies in its quality control process. In the event that the average
quality of the Company's products is adversely impacted as a result of inadequate quality control, the Company will
suffer a substan al amount of damage to the reputa on, especially given that the Company's target market is the
mid- er to high-end furniture market, which has high requirements on the quality of products.
8.2.4 Seasonal cycle effect
The outdoor furniture industry is subject to seasonal cycles in its sales. Most orders for outdoor furniture are placed
during the period from October to March, especially during the Chinese New Year period. However, there are
significantly less orders for the other half of the year. This makes it hard for the company to adjust for different levels
of produc on volume. It also increases the fixed overhead and reducing the profit for the whole year. This is the
seasonal cycle the en re outdoor furniture industry faces.
08 Risk Factors
87
While the Company is performing well in northern hemisphere markets, it is also ac vely exploring the southern
hemisphere markets to mi gate this risk. The goal is to achieve a balanced ra o of the orders coming from southern
and northern hemispheres, so that the difference in orders between off-season and busy season can be minimalised.
In addi on, the Company produces popular products in advance during off-season, so that it takes the pressure off
the busy season, and the Company is able to accept more orders during busy season. Currently, the Company is
running at full produc on capacity for 11 months in a year, and the remaining 1 month is public holidays and Chinese
New Year Holidays.
8.2.5 Foreign exchange risk
The People's Bank of China (PBC) announced on 21 July 2005 that the reformed currency policy will be marketoriented. The new policy is based on the demand and supply in the market, which takes a basket of currencies into
account. The Chinese Renminbi (RMB) is no longer solely determined by USD and, thus, the RMB exchange rate
mechanism has become more flexible. Since the exchange rate policy reform in 2005, the PBC has made three
improvements on the policy and the RMB has steadily appreciated through the reform.
As the Company exports majority of its products and the transac ons are se led in USD, while se ling payment for
most costs in RMB, the profitability of the Company's business opera ons is reduced in the event that the RMB
appreciates against the USD.
8.2.6 Poten al changes to export tax rebate policy
“Export tax rebate” refers to the policy that refunds tax to exporters in China to increase the compe veness of the
goods exported, so that the goods can enter the interna onal market at a price that does not include tax. The
purpose of export tax rebate is to avoid any double taxa on on cross-border transac ons, in order to eliminate the
difference caused by different tax systems in different countries and, in turn, promote fair compe ons.
In addi on to encouraging exporta on, the policy also improves social welfare and economic efficiency. The export
tax rebate system has also been established in many countries, in order to promote interna onal trades. The export
tax rebate policy is one of the fundamental economic policies in China. This policy s mulates exports, increase
foreign currency income and increase employment rate. The adjustments of tax rebate can also op mise the
industry structure. The export tax rebate policy has undergone mul ple significant changes in China.
Currently, the outdoor furniture manufactured by the Company is en tled to a 15 % tax rebate rate. Given that most
of the Company's products are exported, a decrease in the tax rebate rate will have a significant nega ve impact on
the Company. However, it should be noted that outdoor furniture manufacturing is not part of heavy-pollu on or
heavy-energy consump on industry and, thus, it is unlikely for the government to significantly decrease the tax
rebate rate for furniture in the near future.
8.2.7 Labour cost risk
As a result of China's rapid industrialisa on and urbanisa on process, the labour cost in China has increased
significantly. The 2012, 2013 and 2014, the Company's labour cost as a propor on of the total cost was 18.6%,
17.15%, 18.05% respec vely. Therefore, the Company's ability to effec vely control labour cost is a key factor for the
compe veness of the products and ul mately affect the Company's performance. In the event that the Company's
labour costs increases, the profitability of the Company's opera ons will be significantly reduced.
8.2.8 Raw material cost risk
The raw materials for the Company's products mainly consist of aluminium, fabrics, glass, polyethylene and stainless
steel. Raw material costs make up 77.49 % of the total cost, which is a very substan al component. Hence, any large
fluctua on in the prices of raw materials will increase the difficulty of produc on management. In addi on to
produc on management, the Company's profitability may also be affected by fluctua ons in the prices of raw
materials. It could even deteriorate especially when the prices of raw materials con nuously increase. The Company
has been closely observing the markets the raw materials that the Company used and aims to make procurement
plans on aluminium, stainless steel and plas cs according to the medium to long-term trends of commodity prices.
The Company also enters into supply contracts early in advance in order to secure low raw material prices.
Oneall Prospectus
88
8.2.9
Intellectual property rights
As a well-known ODM with compe ve design capacity, the Company has received great a en on in the industry.
Companies that lack design capacity may imitate OneAll's design of its popular products. The counterfeit products
can be extremely similar in style and colour to OneAll's products. However, they are o en of bad quality, which poses
a threat to the brand image of OneAll. Hence, the Company is very concerned about protec ng its intellectual
property rights. As of the beginning of 2015, the Company has registered 75 design patents in China, 87 design
patents in EU, 67 design patents in Australia and a newly developed u lity model patent. In addi on, the Company is
also devoted to figh ng piracy and other acts of infringements of intellectual property rights. In 2011, one of the top
three European chain stores sold counterfeit OneAll products in hundreds of their stores. This resulted in legal
ac on against that company. A er mul ple nego a ons in court with the help of OneAll's lawyers and clients, the
chain store agreed to destroy all the illegal replicas and compensate the Company accordingly.
8.2.10
Reliance on key personnel
Similar to all successful businesses, OneAll's business is reliant upon the provision of high-quality marke ng and
opera onal services by its senior management team. It is also dependent on its trained and skilled staff and
technical personnel for the successful and ongoing provision of its business ac vi es. Any change in the quality or
quan ty of these services, or an inability to a ract qualified and mo vated personnel to provide these services,
could have long-term effects on OneAll's business ac vi es and financial performance.
8.2.11
Land-use rights in China
According to the relevant PRC Law, all lands in the PRC are either state-owned or collec vely owned, depending on
the loca on of the land. All land in the urban areas of a city or town is state-owned while all land in the rural areas of
a city or town and all rural land is collec vely owned, unless otherwise specified by law. Individuals, businesses and
other organisa ons can possess land by being granted land-use rights from the local government for limited me
periods.
The land-use right with respect to the factories and dormitories acquired by Zhaoqing Vcare will expire on 28 August
2058. According to the Urban Real Estate Administra on Law of the People's Republic of China, the land user that
has maintained con nuous use of the land has the right to apply to the land administra on department for an
extension of the term at least one year before the expira on of the term. The applica on would be approved except
when the tract of land needs to be taken back in considera on of public interest.
When the term of the land-use right expires and if the land user has not applied for an extension, the right to use the
land is returned to the state. Under special circumstances, the state may also take back the land before the expiry of
the granted land-use right in considera on of public interest. However, the state is required to give compensa on to
the related land user. Such compensa on is determined by the remaining effec ve term of the land-use right grant
and the condi ons of development of the reclaimed land.
8.2.12 Compe
ve environment
China is the largest supplier in the global outdoor furniture market. Most manufacturing companies are located in
the southern and eastern regions of China, which accounts for over 80% of the total produc on in China. Most
Chinese companies follow an OEM model that targets low-end market, but OneAll is one of the few companies that
adopt an ODM model, where over 95 % of revenue is generated through an ODM business that targets mid- er to
high-end market. While OneAll has no direct compe on in China, OneAll competes with the top- er brands in
Europe. Currently, while the Company's products are compe ve in quality and design standards with its
compe tors, it does not have brand recogni on as strong as its compe tors. Nonetheless, OneAll offers more
affordable prices, due to the fact that the Company has its own produc on facili es and a direct distribu on model.
8.2.13
Poten al merger and acquisi on ac vi es
The Company is planning to integrate within the industry through mergers and acquisi ons, if there is sufficient
capital through fund raising or organic growth. The Company will implement strict evalua on process in any
poten al M&A deals and has a preference for companies that are closer to the end-customers. However,
transac ons may lead to unforeseen expenditures, integra on risks and difficul es in rela on to its opera onal,
financial, control and management informa on systems.
8.2.14 Insurance coverage
In the PRC, it is not customary for businesses to take out extensive insurance protec on. Zhaoqing Vcare has bought
comprehensive property insurance and vehicle insurance while Gardenart Guangzhou has bought vehicle insurance.
Zhaoqing Vcare and Gardenart Guangzhou have the abovemen oned insurance protec on against business
disrup on and, thus, may be able to recover compensa on in such circumstances.
08 Risk Factors
89
Any uninsured loss or damage, li ga on or business disrup on may result in substan al cost to Zhaoqing Vcare and
Gardenart Guangzhou, which, in turn, could have an adverse effect on Zhaoqing Vcare or Gardenart Guangzhou's
business, net assets, financial condi on and opera onal results.
8.2.15 Approvals permits and licenses
Zhaoqing Vcare and Gardenart Guangzhou have obtained all the necessary licences and permits for their daily
opera on.
The licences are subject to check or declara on by the competent PRC authori es and the required standards of
compliance may change. Zhaoqing Vcare and Gardenart Guangzhou are subject to the supervision of the authori es
and each of these authori es may be able to revoke or refuse to grant or extend the licences.
If any of the ac vi es carried out by Zhaoqing Vcare or Gardenart Guangzhou fails to meet the requirements of the
current rules or regula ons causing Zhaoqing Vcare or Gardenart Guangzhou to be held liable or responsible, or if
Zhaoqing Vcare or Gardenart Guangzhou fails to obtain the grant or renewal of the required licences or approvals,
such failure and any poten al penal es could have a material and adverse effect on Zhaoqing Vcare or Gardenart
Guangzhou's business, net assets, financial condi on and results of opera ons.
8.2.16 Risk of significant control by Exis ng Shareholders
On Comple on of the Offer, all Exis ng Shareholders will hold approximately 97.89% to 99.15% of the Shares
(subject to subscrip on amount), which enables the Exis ng Shareholders, if ac ng together, to pass any
shareholder resolu on (including a special resolu on) without any new Shareholder. As a result, the Exis ng
Shareholders would be able to exert a significant degree of influence over the Company's management affairs and
over ma ers requiring Shareholders' approval.
8.2.17 Housing Provident Fund
Pursuant to the Regula on on the Administra on of Housing provident funds and its related laws and regula ons in
China, a housing provident fund is established for each employed person. The employees' employer and the
employees themselves are required to make regular contribu ons to the fund. In the event that the employer fails in
making a deposit registra on with the relevant authori es, or establish a housing provident fund with a bank, the
relevant authori es can demand the employer to do so within a required period. If the employer remains noncompliant a er the designated period, the relevant authori es may impose a fine of no less than RMB 10,000
(approximately A$2,037) and no more than RMB 50,000 (approximately A$10,183). Addi onally, in the event that
the employer fails to make a the required contribu on in full, the relevant authority has the power to issue an order
for the employer to make the required contribu on within a me limit, which can be enforced by a court of law upon
expira on of the me limit.
As at the date of this Prospectus, Guangzhou Gardenart has paid the contribu on of Housing provident funds for 20
employees. Guangzhou Gardenart also has confirma on from the Guangzhou Housing Fund Management Center on
11 August 2015 that Guangzhou Gardenart has not been punished by the Guangzhou Housing Fund Management
Center since the opening on its account in July 2005.
8.3
General investment risks
8.3.1
Poten al fluctua ons in prices of Shares
The price at which Shares are quoted on the ASX may increase or decrease due to a number of factors. These factors
may cause the Shares to trade below the Offer Price. There is no assurance that the price for the Shares will increase
following quota on on the ASX, even if the Company's earnings increase.
The market price and demand for shares quoted on the ASX could be vola le and may fluctuate due to numerous
factors including: (i) fluctua ons in the domes c and interna onal market for listed stocks; (ii) general economic
condi ons, including interest rates, infla on rates, exchange rates, commodity prices and oil prices; (iii) changes to
government fiscal, monetary or regulatory policies; (iv) legisla on or regula on; (v) inclusion in or removal from
market indices; (vi) the nature of the markets in which the Company operates; and (vii) general opera onal and
business risks.
8.3.2
Liquidity of Shares
There is currently no public market through which the Shares of the Company may be sold. On Comple on of the
Offer, there can be no guarantee that an ac ve market will develop or that the price of the Shares will increase. There
Oneall Prospectus
90
may be rela vely few or many poten al buyers or sellers of the Shares on the ASX at any me. This may increase the
vola lity of the market price of the Shares and may prevent investors from acquiring more Shares or disposing of
Shares they acquire under the Offer. It may also affect the prevailing market price at which the Shareholders can sell
their Shares. This may result in Shareholders who acquire Shares under the Offer receiving a market price for their
Shares that is less or more than the Offer Price.
On Comple on of the Offer, all Exis ng Shareholders will hold approximately 97.89% to 99.15% of the Shares
(subject to subscrip on amount). Around 89.27% to 88.14% of the Shares held indirectly by Jianhui (Roger) Cao,
Huatang (Douts) Li and Jia Ying (Jimmy) Chen may be classified by ASX as restricted securi es and may be required to
be held in escrow for up to 24 months from the date of quota on (please refer to Sec on 9.7). The absence of sale of
Shares by the Exis ng Shareholders during the escrow period may cause, or at least contribute to, limited liquidity in
the market for the Shares. This may also affect the prevailing market price at which Shareholders are able to sell their
Shares.
8.3.3
Exposure to general economic condi ons
The opera ng and financial performance of OneAll is influenced by a variety of general domes c and global
economic and business condi ons that are outside the control of the Company. Prolonged deteriora on in general
economic condi ons may affect the demand for the Company's services and may have a material adverse impact on
the financial performance, financial posi on, cash flows, dividends, growth prospects and share price of the
Company.
8.3.4
Risk of Shareholder dilu on
In the future, the Company may elect to issue shares to raise funds for the Company's business opera ons or
addi onal acquisi ons that the Company may decide to make. While the Company will be subject to the constraints
of the ASX Lis ng Rules regarding the percentage of its capital that it can issue within a 12-month period (other than
where excep ons apply), Shareholders may be diluted as a result of such issuance of shares and fundraisings.
8.3.5
Accoun ng standards
Any changes in accoun ng standards or how they are applied and interpreted may have an adverse impact on
OneAll's financial performance and posi on.
8.3.6
Taxa on reform
Any changes to the current rate of the Company's income tax in Australia or abroad, (i.e., China) may affect
Shareholder returns. Any changes to relevant tax laws, the way they are interpreted and applied or to the current
rate of taxes could have an adverse effect on OneAll's financial performance or results. In addi on, any change in tax
rules and tax arrangements could also have an adverse effect on the level of dividend imputa on or franking and
Shareholder returns.
8.3.7
Li ga on and regulatory inquiries
OneAll may be subject to li ga on, complaints and other claims or disputes, regulatory inquiries or inves ga ons
and other enforcement ac on ini ated by customers, employees, regulators or other third par es in the course of its
business. Such ma ers may have a materially adverse effect on OneAll's financial performance and posi on. Even if
such ma ers are successfully defended or se led without financial consequences, they may have a material adverse
effect on OneAll's reputa on.
8.3.8
Dividends may not be fully franked
Given the propor on of OneAll's earnings from offshore opera ons, it is unlikely that OneAll will have sufficient
franking credits in the future to fully frank dividends. There is likewise no guarantee that the franking system will not
be varied or abolished. In addi on, as the propor on of OneAll's earnings from offshore opera ons increases, it may
not be possible to fully frank dividends.
The value and availability of franking credits to a Shareholder will differ depending on the Shareholder's par cular
tax circumstances. Shareholders should also be aware that the ability to use franking credits, either as a tax offset or
as a refund claim a er the end of the income year, will depend on the individual tax posi on of each Shareholder.
8.3.9
Force majeure events
Force majeure events, or events beyond the control of the Company, may occur within or outside Australia that
08 Risk Factors
91
09. Addi onal informa on
Retail Client
Le :Shop inside
Right:Shop inside
Bo om:Shop outside
Oneall Prospectus
92
9.1 Incorpora on, share capital and company tax status
The Company was incorporated in Victoria as a public company limited by shares on 29 June 2015. On comple on of
the Offer, the Company will have:
117,000,000 Shares on issue including 1,000,000 Shares issued under this Prospectus in case of the
Minimum Subscrip on;
118,500,000 Shares on issue including 2,500,000 Shares issued under this Prospectus in case of the
Maximum Subscrip on.
OneAll (on a standalone basis) is and will be subject to tax at the Australian corporate tax rate. Its subsidiaries will be
subject to tax in the jurisdic ons in which they operate. Profits repatriated to OneAll from Gardenart Hong Kong will
not be subject to Australian income tax.
9.2 Corporate Structure
OneAll was incorporated in Victoria, Australia on 29 June 2015. A group restructure, commencing in June 2015 and
comple ng in August 2015, resulted in:
the acquisi on by OneAll of Gardenart Hong Kong, together with its wholly owned subsidiaries Zhaoqing
VCare which is the main manufacturing base of the business in China and Gardenart BVI; and
the acquisi on by Zhaoqing VCare of Gardenart Guangzhou which is the main opera ng company in China.
The Group structure at the date of this Prospectus is shown in the diagram below.
9.3 Summary of rights and liabili es a aching to Shares and other
material provisions of the Company's Cons tu on
09 Addi onal Informa on
93
9.3.1
General
The rights and liabili es a aching to ownership of the Shares are
detailed in the Cons tu on of the Company which may be viewed on the Company's website:
oneallinterna onal.com, or inspected during normal business hours at the registered office of the
Company; and
in certain circumstances, regulated by the Corpora ons Act, the ASX Lis ng Rules, the ASX Se lement
Opera ng Rules and the general law.
A summary of the significant rights, liabili es and obliga ons a aching to the Shares and a descrip on of other
material provisions of the Cons tu on are set out below. This summary is not intended to be exhaus ve and is
qualified by the fuller terms of the Cons tu on. This summary does not cons tute a defini ve statement of the
rights and liabili es of Shareholders. This summary assumes OneAll is admi ed to the official list of ASX.
9.3.2
Vo ng
At a general mee ng, every member present in person or by proxy, a orney or representa ve has one vote on a show
of hands and on a poll, one vote for each fully paid Share held. On a poll, partly paid Shares confer a frac on of a vote
pro-rata to the amount paid up on the Share.
9.3.3
Dividends
Subject to any special terms and condi ons of issue, the amount which the Directors from me to me determine to
distribute by way of dividend are divisible among the members in propor on to the amounts paid up on the Shares
held by them.
9.3.4
Issue of Shares
Subject to the Cons tu on, the Lis ng Rules and the ASX Se lement Opera ng Rules, the Directors have the right to
issue shares or grant op ons over unissued shares to any person and they may do so at such mes as they think fit
and on the condi ons and the issue price they think fit. Such shares may have preferred, deferred or other special
rights or special restric ons about dividends, vo ng, return of capital or otherwise, as the Directors think fit.
9.3.5
Varia on of class rights
Subject to the Corpora ons Act and the Lis ng Rules, the rights a ached to any class of shares may, unless their
terms of issue state otherwise, be varied:
with the wri en consent of the holders of 75% of the shares of the class; or
by a special resolu on passed at a separate mee ng of the holders of shares of the class.
9.3.6
Transfer of Shares
Subject to the Cons tu on, the Corpora ons Act, the Lis ng Rules and to the rights or restric ons a ached to any
shares or class of shares, holders of Shares may transfer them by a proper transfer effected in accordance with the
ASX Se lement Opera ng Rules or an instrument in wri ng in any usual form or in any other form that the Directors
approve.
The Directors may decline to register a transfer of Shares for reasons including where the transfer is not in
registrable form or where the refusal to register the transfer is permi ed under the Lis ng Rules or the ASX
Se lement Opera ng Rules. If the Directors decline to register a transfer, the Company must give the party lodging
the transfer wri en no ce of the refusal and the reason for refusal.
Oneall Prospectus
94
9.3.7
Small holdings
The Directors may sell the Shares of a Shareholder if that Shareholder holds less than a marketable parcel of Shares,
provided that the procedures set out in the Cons tu on are followed. A non-marketable parcel of Shares is defined
in the Lis ng Rules and is, generally, a holding of shares with a market value of less than A$500.
9.3.8
General mee ngs and no ces
Subject to the Cons tu on and to the rights or restric ons a ached to any shares or class of shares, each member is
en tled to receive no ce of and, except in certain circumstances, to a end and vote at general mee ngs of the
Company and receive all financial statements, no ces and other documents required to be sent to members under
the Cons tu on or the Corpora ons Act.
9.3.9
Winding up
Subject to any special or preferen al rights a aching to any class or classes of shares, the Cons tu on, the
Corpora ons Act and the Lis ng Rules, members will be en tled in a winding up to share in any surplus assets of the
Company in propor on to the shares held by them, less any amounts which remain unpaid on these shares at the
me of distribu on.
9.3.10
Directors – appointment and removal
The minimum number of Directors is three and the maximum is to be fixed by the Directors but may not be more than
10 unless the Company passes a resolu on varying that number. Directors are elected at annual general mee ngs of
the Company. Re rement will occur on a rota onal basis so that any Director who has held office for three or more
years or three or more annual general mee ngs (excluding any Managing Director) re res at each annual general
mee ng of the Company. The Directors may also appoint a Director to fill a casual vacancy on the Board in addi on to
the Directors who will then hold office un l the next annual general mee ng of the Company.
9.3.11
Directors – vo ng
Ques ons arising at a mee ng of Directors will be decided by a majority of votes of the Directors present at the
mee ng and en tled to vote on the ma er. In the case of a ed vote, the Chair has a second or cas ng vote, unless
there are only two Directors present or qualified to vote, in which case the proposed resolu on is taken as having
been lost.
9.3.12
Directors' remunera on
The Directors, other than the Execu ve Directors, are en tled to be paid by such Directors' fees for their services as
the Directors decide, provided that the total fees do not exceed the maximum aggregate sum as may be approved
from me to me by Shareholders in general mee ng. The Cons tu on also makes provision for the Company to pay
all expenses of Directors in a ending mee ngs and carrying out their du es and for the payment of addi onal fees
for extra services or special exer ons. Any change to that maximum aggregate sum needs to be approved by
Shareholders.
9.3.13
Altera on of share capital
Subject to the Lis ng Rules, the Cons tu on and the Corpora ons Act, the Company may alter its share capital.
9.3.14
Preference shares
The Company may issue preference shares including preference shares which are liable to be redeemed or
conver ble to ordinary shares. The rights a aching to preference shares are those set out in the Cons tu on.
09 Addi onal Informa on
95
9.3.15
Varia on of the Cons tu on
The Cons tu on can only be amended by a special resolu on passed by at least three quarters of members present
and vo ng at a general mee ng of the Company. The Company must give at least 28 days' wri en no ce of its
inten on to propose a resolu on as a special resolu on.
9.3.16
Share buy-backs
The Company may buy back shares in accordance with the provisions of the Corpora ons Act.
9.3.17
Dividend plan
The Cons tu on contains a provision allowing Directors to implement a dividend reinvestment plan.
9.4
Material contracts
The Directors consider that there are a number of contracts which are significant or material to OneAll or of such
nature that an investor may wish to have details of them when making an assessment of whether to apply for Shares.
The main provisions of these contracts are summarised below, or elsewhere in this Prospectus. These summaries do
not purport to be complete and are qualified by the text of the contracts themselves.
9.4.1
Agreements associated with Company's business
Supply Contracts
Gardenart Guangzhou has entered into supply contracts for the purchase of products manufactured by outsourced
factories.Significant orders made since December 2014 include the following:
No.
Supplier
1
2
Foshan Bote
Furniture Co., Ltd.
3
Product name(s)
Contract amount
(RMB)
Signing date
Delivery date
Aluminium framed
dining chairs, etc.
2,127,674.00
9 July 2015
15 October 2015 and 15
November 2015
Aluminium framed
loungers, etc.
1,803,290.90
15 July 2015
15 December 2015
Aluminium framed
loungers, etc.
2,553,893.30
16 July 2015
15 January 2016
Sales Contracts
The sales contracts which it enters into with the buyers are all short-term contracts. The effec ve terms of these
sales contracts are usually about 3 months. The company enters into sales contracts with buyers in a standard format
with the same terms applying to all buyers. The content of the sales contracts include: the product name, item
number, order quan ty, descrip on, other material, unit price, total amount, delivery me, delivery place, mode of
transporta on, price term.
The Company's subsidiaries have entered into sales contracts with purchasers, for the provision of products
manufactured by the company and its outsourced factories. Significant orders received since December 2014
include the following:
Oneall Prospectus
96
No.
Vendor
Purchaser
Contract amount
(USD)
Signing date
Delivery date
1
Guangzhou
Gardenart
Stern GMBH & Co.KG
596,440.50
14 July 2015
30 October 2015
and 5 December
2015
2
Gardenart HK
Inicia va Exterior 3i S.A.
797,327.70
20 July 2015
31 October 2015
3
Gardenart HK
Outdoor Imp. E Exp. Ltd
922,116.67
27 July 2015
30 June 2015
4
Gardenart HK
Gardens and Roses
1,094,476.80
3 August 2015
Pending
5
Gardenart HK
Legio Purchasing NV
1,200,133.60
26 June 2015
31 December
2015
6
Gardenart HK
Legio Purchasing NV
1,280,963.35
8 July 2015
1 March 2016
9.4.2
Deeds of access, insurance and indemnity for Directors
Access
The Company has entered into deeds of access, insurance and indemnity with each Director which contain rights of
access to certain books and records of OneAll.
Indemnifica on
Under the Cons tu on, OneAll is required to indemnify all Directors and officers, past and present, against all
liabili es allowed under law. Under the deed of access, insurance and indemnity, OneAll indemnifies par es against
all liabili es to another person that may arise from their posi on as an officer of OneAll or its subsidiaries to the
extent permi ed by law. The deed s pulates that OneAll will meet the full amount of any such liabili es, including
reasonable legal costs and expenses.
Insurance
Under the Cons tu on, OneAll may arrange and maintain directors' and officers' insurance for its Directors to the
extent permi ed by law and under the deed of access, insurance and indemnity, OneAll must maintain insurance
cover for each Director for the dura on of the access period.
9.5
Related party contracts
Related party transac ons (that is, transac ons between a public company and a director, an en ty controlled by a
director, or a parent company of the public company) are regulated in Australia under the Corpora ons Act by a
requirement for disinterested shareholder approval, unless the transac on is on “arm's length terms”, represents no
more than reasonable remunera on, or complies with other limited exemp ons.
9.5.1
Delivery Contracts
Zhaoqing VCare has entered into delivery contracts with Gardenart Guangzhou, its parent company regularly in
rela on to the products manufactured by Zhaoqing VCare. There are two current significant orders: (i) one for
16,445 aluminium sling loungers at the contracted amount of RMB 6,239,973.36, signed on 27 July 2015, with
delivery date at 15 December 2015; and (ii) one for 19,654 full aluminium folding chairs at the contracted amount of
RMB 3,404,522.96, signed on 27 July 2015, with delivery date at 15 January 2016.
09 Addi onal Informa on
97
9.5.2
Share Transfer Contract
On 6 August 2015, Zhaoqing Vcare entered into a share transfer contract with Jianhui (Roger) Cao and Huatang
(Douts) Li in rela on to the shares in Gardenart Guangzhou, whereby Jianhui (Roger) Cao and Huatang (Douts) Li
agreed to sell 49.87% and 50.13% of the shares in Gardenart Guangzhou for RMB 3.99 million and RMB 4.01million
respec vely, represen ng the registered capital that each of Jianhui (Roger) Cao and Huatang (Douts) Li holds in
Gardenart Guangzhou respec vely.
9.5.3
Lease Contract
Guangzhou Gardenart had entered into a Lease Contract with Jianhui (Roger) Cao for the property at Room 704, No.
123 Tiyu West Road, Tianhe District, Guangzhou, China. The lease term is 1 January 2015 to 31 December 2015, with
a rent amount of RMB 18,370.1 per month.
9.6
Exis ng Shareholder interests
The table below sets out the interests of Shareholders as at the date of this Prospectus and immediately
following the Offer:
Minimum Subscrip ons
Shareholders
Maximum Subscrip ons
Number of Shares
%
Number of Shares
%
49,334,800
42.17
49,334,800
41.63
49,334,800
42.17
49,334,800
41.63
5,776,800
4.94
5,776,800
4.87
Shares held by Exis ng Shareholders
who are non-related par es
11,553,600
9.88
11,553,600
9.73
Shares on issue at date of
Prospectus
116,000,000
99.15
116,000,000
97.89
Shares offered under this Prospectus
1,000,000
0.85
2,500,000
2.11
Total
117,000,000
100.00
118,500,000
100.00
Simply Dynamic Ltd 2
Next Champion Ltd
3
Ideal Green Investments Ltd
4
1. Simply Dynamic Ltd, Next Champion Ltd and Ideal Green Investments Ltd will retain 89.27% of the Company if
Minimum Subscrip on is achieved and 88.14% if Maximum Subscrip on is achieved.
2. Mr Huatang (Douts) Li holds 100% of the ordinary shares in Simply Dynamic Ltd.
3. Mr Jianhui (Roger) Cao holds 100% of the ordinary shares in Next Champion Ltd.
4. Mr Jia Ying (Jimmy) Chen holds 100% of the ordinary shares in Ideal Green Investments Ltd .
9.7
Escrow requirements under the ASX Lis ng Rules
Subject to the quota on of the Company's securi es on ASX, certain Shares may be classified by ASX as restricted
securi es and may be required to be held in escrow for up to 24 months from the date of quota on.
During the period in which these securi es are prohibited from being transferred, trading in Shares may be less
liquid which may impact on the ability of a Shareholder to dispose of his or her Shares in a mely manner.
The Company will announce to the ASX full details (quan ty and dura on) of the Shares required to be held in escrow
prior to the Shares commencing trading on the ASX.
Oneall Prospectus
98
9.8
Consents to be named and disclaimers of responsibility
Each of the par es referred to below (each a Consen ng Party), to the maximum extent permi ed by law, expressly
disclaims all liabili es in respect of, makes no representa ons regarding and takes no responsibility for any
statements in or omissions from this Prospectus, other than the reference to its name in the form and context in
which it is named and a statement or report included in this Prospectus with its consent as specified below.
Wri en consents to the issue of this Prospectus have been given and, at the me of lodgement of this Prospectus
with ASIC, had not been withdrawn by the following par es:
Secvest Capital Pty Ltd has given and has not withdrawn prior to the lod gement of this Prospectus with ASIC, its
wri en consent to be named in this Prospectus as the Lead Arranger and Advisor to the Company in the form and
context it is so named;
BDO Corporate Finance (East Coast) Pty Ltd has given, and has not withdrawn prior to the lodgement of this
Prospectus with ASIC, its wri en consent to be named in this Prospectus as Inves ga ng Accountant to the
Company in the form and context it is so named and to the inclusion of its Inves ga ng Accountant's Report on
the Historical Financial Informa on in Sec on 7;
BDO East Coast Partnership has given, and has not withdrawn prior to the lodgement of this Prospectus with
ASIC, its wri en consent to be named in this Prospectus as Australian tax advisers of the Company in the form
and context it is so named;
Baker & McKenzie has given, and has not withdrawn prior to the lodgement of this Prospectus with ASIC, its
wri en consent to be named in this Prospectus as Australian legal adviser to the Company in rela on to the
Offer in the form and context in which it is named;
Trend Associates has given, and has not withdrawn prior to the lodgement of this Prospectus with ASIC, its wri en
consent to be named in this Prospectus as Chinese legal adviser to the Company in rela on to the Offer in the
form and context in which it is named;
Charles Chu & Kenneth Sit in associa on with Wang Jing & Co. Law Firm has given, and has not withdrawn prior
to the lodgement of this Prospectus with ASIC, its wri en consent to be named in this Prospectus as the
Company's which has performed the work in rela on to due diligence enquiries on Hong Kong legal ma ers
Hong Kong legal adviser in the form and context it is so named;
Harney Westwood & Riegels has given, and has not withdrawn prior to the lodgement of this Prospectus with
ASIC, its wri en consent to be named in this Prospectus as the Company's which has performed the work in
rela on to due diligence enquiries on Bri sh Virgin Islands legal ma ers Bri sh Virgin Islands legal adviser in the
form and context it is so named;
Boardroom Pty Limited has given, and has not withdrawn prior to the lodgement of this Prospectus with ASIC, its
wri en consent to be named in this Prospectus as the Registry in the form and context it is so named;
Frost & Sullivan Australia Pty Ltd has given, and has not withdrawn prior to the lodgement of this Prospectus
with ASIC, its wri en consent to be named in this Prospectus as the independent expert in the form and context
it is so named;and
Bank of China Limited has given, and has not withdrawn prior to the lodgement of this Prospectus with ASIC, its
wri en consent to be named in this Prospectus as the Bank in the form and context it is so named.
No en ty or person referred to above in Sec on 9.8 has made any statement that is included in this Prospectus or any
statement on which a statement made in this Prospectus is based, except as stated above. Each of the persons and
en es referred to above in this Sec on 9.8. has not authorised or caused the issue of this Prospectus, does not
make any offer of New Shares and expressly disclaims and takes no responsibility for any statements in or omissions
from this Prospectus except as stated above in this Sec on 9.8.
In addi on, as permi ed by ASIC Class Order [CO 00/193] this Prospectus may include or be accompanied by certain
statements fairly represen ng a statement by an official person, or from a public official document or a published
book, journal or comparable publica on.
09 Addi onal Informa on
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9.9
Costs of the Offer
If the Offer proceeds, the es mated costs of the Offer (excluding the impact of taxes), by type of cost, are shown in
the table below:
Es mated expenses (A$)(exclusive of
non-recoverable GST, where applicable)
Minimum Subscrip on
(A$)
Maximum Subscrip on
(A$)
Corporate advisory
840,000
840,000
Legal fees
390,000
390,000
ASX fees
138,000
138,000
Inves ga ng accountant and taxa on fees
67,000
67,000
Independent Market Report
27,000
27,000
Prin ng and other costs
52,000
52,000
Total es mated expenses 1
1,514,000
1,514,000
1 .Final expenses may be higher due to tax impacts.
9.10
Working capital statement
The Directors believe that, on Comple on of the Offer, the Company will have sufficient working capital to carry out
its objec ves as stated in this Prospectus.
9.11
Governing law
This Prospectus and the contracts that arise from the acceptance of the Applica ons and bids under this Prospectus
are governed by the laws applicable in New South Wales and each Applicant under this Prospectus submits to the
exclusive jurisdic on of the courts of New South Wales.
9.12
Legal proceedings
So far as the Company is aware, there is no current or threatened civil li ga on, arbitra on proceedings or
administra ve appeals, or criminal or governmental prosecu ons of a material in which the Group is directly or
indirectly concerned which is likely to have a material adverse effect on the business or financial posi on of the
Group.
9.13
Tax considera ons
Set out below is a general overview of the Australian taxa on implica ons for investors who acquire the New Shares
on capital account. This Sec on 9.13 is based on legisla on applicable at the me of its prepara on. Given the
complexity of taxa on laws, it does not cover all possible implica ons for par cular investors.
As the tax posi on of each investor may vary depending on their individual circumstances, this Sec on 9.13 should
not be considered advice specific to any par cular investor. Before lodging an Applica on, each investor should seek
independent professional advice with respect to the tax consequences applicable to their individual circumstances.
Oneall Prospectus
100
9.13.1
Taxa on of dividends
The treatment of the dividends which are paid to investors will vary depending on whether or not the investor is an
Australian resident or foreign resident. The taxa on treatment will also vary depending on the extent to which any
dividends carry a franking credit.
Dividends received by Australian resident Shareholders
For Australian resident individuals and complying superannua on en es, dividends on the New Shares will be
assessable income of the Shareholder in the income year in which they are paid (or deemed to be paid) to the
Shareholder. If the dividend carries a franking credit (for imputed Australian corporate tax paid by OneAll) then the
dividend paid (or deemed to be paid) plus the franking credit will be included in the Shareholder's taxable income
and subject to tax at the Shareholder's marginal tax rate. The Shareholder will be en tled to offset the franking
credit against tax payable by the Shareholder if the Shareholder is a qualified person. A qualified person is a
Shareholder who sa sfies the holding period rule (by holding shares on which the dividend is "at risk" for at least 45
days con nuously from the day a er the Shareholder acquires the shares to the 45 th day a er the shares become exdividend) and the related payments rule.
Individuals and complying superannua on funds are en tled to a refund of any part of the franking credits that
exceed their tax payable.
Australian resident companies can convert excess franking credits to tax losses that can poten ally be deduc ble
against income in future years.
Unfranked dividends received by Australian resident Shareholders will be taxable at the Shareholder's marginal tax
rate. For individuals, this tax rate may be up to 49% (including Medicare levy and temporary Budget Repair levy). For
companies and complying superannua on funds, rates of tax are generally 30% and 15% respec vely.
Dividends received by non-resident Shareholders
Dividend withholding tax is not imposed on fully franked dividends paid to foreign Shareholders.
It may be necessary for OneAll to withhold tax from unfranked dividends paid to foreign Shareholders and remit the
tax to the Australian Taxa on Office.
Where unfranked dividends are paid to non-resident Shareholders, and the unfranked dividend is not declared to be
"conduit foreign income", dividend withholding taxes must be deducted from the gross dividends paid. If the
Shareholder is a resident of a country that does not have a Double Tax Agreement (DTA) with Australia then a 30%
withholding tax rate will be applied to dividends paid to the non-resident Shareholder. If the Shareholder is a
resident of a country that does have a DTA with Australia then the DTA will determine the maximum amount of
withholding tax that can be imposed. DTA dividend withholding tax rates generally range from 0% to 15%.
9.13.2
Disposal of Shares
As noted above, the following overview of Australian tax implica ons associated with disposal of New Shares is
confined to investors who hold their shares on capital account. Australian income tax laws impose tax on capital
gains (CGT).
Persons who acquire New Shares on revenue account or for a share trading purpose should seek independent
professional advice as the issues are complex and the tax implica ons depend heavily on individual circumstances.
Disposal of Shares by Australian resident Shareholders
Disposal of some or all of the New Shares held on capital account by Australian resident investors will give rise to a
CGT event and investors may become liable to pay CGT if they make a capital gain on disposal, or another CGT event
occurs in respect of the New Shares.
09 Addi onal Informa on
101
An investor will be taken to have acquired New Shares when these are issued or transferred to the investor and to
have disposed of the New Shares when the investor transfers (or agree to transfer) the New Shares to another
person. Taxa on law also deems a disposal to have occurred in some other circumstances as well.
To calculate the capital gain that is subject to tax ini ally requires the cost base of shares to be subtracted from the
considera on (money or property) received from their disposal. If the calcula on results in a nega ve number, then
a capital loss has been incurred.
The market value of shares at the me of their disposal may be subs tuted as considera on if the disposal is for nil or
not undertaken on an arm's length dealing basis. In the case of New Shares acquired pursuant to the Prospectus, the
cost base for CGT purposes will generally be the amount paid for the New Shares (A$1.00 per share), plus incidental
transac on costs (such as brokerage fees) incurred in selling the shares.
If the Shareholder has also derived capital losses in the income year, or has accumulated capital losses that are
deduc ble, then those losses may be offset against the capital gain derived from the disposal of the shares. A capital
loss cannot be offset against ordinary taxable income but may be carried forward and offset against future capital
gains. However, u lisa on of carried forward capital losses is subject to various loss integrity tests. Considera on of
these loss provisions is beyond the scope of this Sec on.
For those investors that are companies, a net capital gain made on the disposal of New Shares (a er any capital
losses are offset) must be included in the company's taxable income and subject to tax at the prevailing general
corporate tax rate (30%).
Investors who are either individuals or complying superannua on funds (or another similar form of qualifying
en ty), and dispose of New Shares held for at least 12 months, may be en tled to a CGT discount of 50% and 33 1/3%
respec vely. Companies are not en tled to any discount and special rules apply for trusts.
The net capital gain remaining a er permi ed offsets and discounts, is added to the investor's other taxable income,
and the total amount is then subject to tax at the investor's marginal tax rate.
Where shares are held by a trust (and the trust is not taxed as a company for Australian tax purposes) then a CGT
discount of 50% is generally available. When the capital gain is distributed to the beneficiary by the trustee of the
trust, the capital gain needs to be grossed up and the relevant beneficiary(s) will need to determine for themselves
whether or not they are able to access the CGT discount provisions.
Disposal of Shares by non-Australian resident Shareholders
Foreign residents are only subject to CGT on the disposal of taxable Australian property. For tax purposes, New
Shares will generally only be considered taxable Australian property where the following condi ons are sa sfied:
the investor owns an interest of 10% or more in OneAll; and
more than 50% of the value of OneAll relates to assets that are taxable Australian real property such as land and
buildings or interests in land and buildings. For example, leasehold rights over land situated in Australia are
considered to be taxable Australian real property.
Based on informa on contained in the Prospectus regarding the planned opera on of the business, OneAll shares
are unlikely to be taxable Australian property. As such, foreign residents that dispose of their shares are unlikely to
be subject to CGT on any gains made in Australia. However, the circumstances of the company should be reviewed by
investors as at the me they dispose of some or all New Shares.
9.13.3
Tax File Numbers quota on
It is not compulsory for Australian resident Shareholders to provide OneAll with details of their Tax File Number
(TFN) or Australian Business Number (ABN). However, a failure to quote a TFN or ABN to OneAll will result in OneAll
being required to withhold and remit tax of 49% (47% for years ended following 30 June 2017 based on current
legisla on) from unfranked dividends paid to the relevant Shareholder. The amount withheld in these circumstances
should be available as a credit against the investor's tax liability.
Oneall Prospectus
102
9.13.4
GST and transfer duty
No GST is applicable to the issue or transfer of the New Shares given that, under current law, shares in a company are
a financial supply for GST purposes. Shareholders may not be en tled to claim full input tax credits in respect of GST
paid on costs incurred in connec on with the acquisi on of shares.
Transfer duty will not be payable on New Shares issued pursuant to the Prospectus.
9.14
Statement of Directors
Each Director has authorised the issue of this Prospectus and has consented to the lodgement of this
Prospectus with ASIC in accordance with sec on 720 of the Corpora ons Act.
This prospectus is signed by a Director of OneAll Interna onal Limited in accordance with sec on 351 of the
Corpora ons Act.
Chairman
Huatang (Douts) Li
09 Addi onal Informa on
103
10. Glossary
In-house Design
Le : Freehand Sketching
Right:Roger Cao
Bo om: Design Team
Oneall Prospectus
104
1HFY
First half financial year, ending on 30 June of any year, and the four digits
following FY indicate which year (for example 1HFY2015 means the first half
financial year ending 30 June 2015).
A$ or AUD or AUD$
Australian dollars, the lawful currency of the Commonwealth of Australia.
ABN
Australian Business Number.
ACN
Australian Company Number.
AEST
Australian Eastern Standard Time.
Applicant
A person who has applied to subscribe for Shares under the Offer.
Applica on
A valid applica on for Shares made under this Prospectus.
Applica on Form
The form accompanying or a ached to this Prospectus by which an Applicant
may apply for Shares.
Applica on Monies, Money
or Applica on Amount
Money payable for Shares applied for by an Applicant.
ASIC
Australian Securi es and Investment Commission.
ASX or Australian Securi es
Exchange
ASX Limited (ABN 98 008 624 691), or the securi es market it operates, as the
context requires.
ASX Lis ng Rules or Lis ng
Rules
The official lis ng rules of the ASX.
ASX Recommenda ons
The corporate governance principles and recommenda ons of ASX, as amended
from me to me.
ASX Se lement
ASX Se lement Pty Limited (ABN 49 008 504 532).
ASX Se lement Opera ng
Rules
The se lement rules of the se lement facility provided by ASX Se lement.
Bank
Bank of China Limited
Board
The Board of Directors of the Company.
CEO
Chief Execu ve Officer of the Company.
CFO
Chief Financial Officer of the Company.
10 Glossary
105
China or PRC
The People's Republic of China.
Closing Date
5:00pm (AEST) on 12 October 2015 or such other date as the Board may decide,
and is the date on which the Offer closes.
Comple on
The issue of the Shares to Successful Applicants.
Corpora ons Act
Corpora ons Act 2001 (Cth).
Directors
The directors of the Company, and Director means any one of them.
EBITDA
Earnings before interest, taxes, deprecia on and amor sa on.
New Shares or New Share
Share(s) to be issued under the Offer.
OneAll or Company
OneAll Interna onal Limited, the Group's holding company, incorporated in
Victoria under the ABN 606 740 701.
Execu ve Director
A Director appointed as an execu ve director of the Company.
Exis ng Shareholders
Those persons or en es who are holders of Shares of the Company as at the
date of this Prospectus.
Exposure Period
has the meaning given in "Important Informa on" Sec on.
Financial Informa on
has the meaning given in Sec on 6.
Forecast Financial
Informa on
has the meaning given in Sec on 6.
FY
Financial year, ending on 31 December of any year, and the four digits following
FY indicate which year (for example FY2014 means the financial year ending 31
December 2014).
Gardenart BVI
Gardenart Co., Ltd. (Company No. 552299), a company incorporated in Bri sh
Virgin Islands.
Gardenart Guangzhou
Guangzhou Gardenart furniture Co., Ltd., a company incorporated in China.
Gardenart HK
Gardenart Furniture Co. Limited, a company incorporated in Hong Kong.
Group
The consolidated group comprising the Company and its subsidiaries.
GST
The meaning given in sec on 195–1 of the A New Tax System (Goods and
Services) Tax Act 1999 (Cth).
Historical Financial
Informa on
has the meaning given in Sec on 6.
HK$ or HKD
Hong Kong dollars, the lawful currency of Hong Kong.
Oneall Prospectus
106
HKFRS
The Hong Kong Financial Repor ng Standards, a set of financial repor ng
standards issued by the Hong Kong Ins tute of Cer fied Public Accountants in
Hong Kong. These standards are consistent with Interna onal Financial
Repor ng Standards.
Holding Statement
A holding statement of Shares.
Hong Kong or HK
The Hong Kong Special Administra ve Region of China.
Hong Kong Companies
Ordinance
Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as amended
from me to me.
IFRS
Interna onal Financial Repor ng Standards.
Inves ga ng Accountant
BDO Corporate Finance (East Coast) Pty Ltd.
Lis ng Date
The date that the Company is admi ed to the Official List of ASX.
Lead Arranger and Advisor
Secvest Capital Pty Ltd.
New Shareholder
An investor who subscribes for Shares under the Offer and is not an Exis ng
Shareholder.
Non-Execu ve Director or
NED
A Director appointed as a non-execu ve director of the Company.
Offer
The invita on in this Prospectus to subscribe for Shares.
Offer Informa on Line
The Offer Informa on Line being 1300 737 760 within Australia and +61 2 9290
9631 outside Australia.
Offer Period
The period from the Opening Date un l the Closing Date.
Offer Price
A$1.00 per Share.
Official List
The official list of en
Official Quota on
The quota on of the Shares on ASX.
Opening Date
8:30am (AEST) on 8 September 2015.
Pro Forma Historical
Consolidated Statement of
Financial Posi on
The pro forma historical consolidated statement of Financial Posi on as at 30
June 2015 as presented in Sec on 6.
Prospectus
This document and any supplementary or replacement prospectus in rela on to
this document.
Register
The register of shareholders of the Company.
es that ASX has admi ed and not removed.
10 Glossary
107
Registry
Boardroom Pty Limited.
Related Body Corporate
The meaning ascribed to that term in the Corpora ons Act.
RMB, Renminbi or ¥
Chinese Renminbi, the lawful currency of the PRC.
SAFE
The State Administra on of Foreign Exchange of the PRC.
Sec on
A sec on of this Prospectus
SFO
The Securi es and Futures Ordinance (Cap. 571) of the Laws of Hong Kong, as
amended from me to me.
Shares or Share
Ordinary fully paid shares in the Company.
Shareholder
A holder of Share(s).
Subscrip on
The Subscrip on amount under the Offer, being A$1,000,000 in the case of
minimum subscrip on, and A$2,500,000 in the case of maximum subscrip on.
Successful Applicant
An Applicant who is issued Shares under the Offer.
TFN
Tax file number.
UK or United Kingdom
The United Kingdom of Great Britain and Northern Ireland.
US or United States
United States of America
US Securi es Act
US Securi es Act of 1933, as amended.
US$ or USD
US dollars, the lawful currency of the United States of America.
WFOE
A wholly foreign owned enterprise incorporated in China.
Zhaoqing VCare
Zhaoqing VCare Industries Co., Ltd., a company incorporated in China.
Oneall Prospectus
108
109
110
Corporate Directory
OneAll Interna onal Limited
Registered Office
C/- Baker & McKenzie
Level 27, 50 Bridge Street
Sydney NSW 2000
Offer website:
oneallinterna onal.com/investor/prospectus
Proposed ASX Code: 1AL
OneAll Share Offer
Informa on Line
Within Australia: 1300 737 760
Outside Australia: +61 2 9290 9631
Open 8:30am to 5:00pm AEST Monday to Friday
Lead Arranger and Advisor
Secvest Capital Pty Ltd
Level 3, 257 Clarence Street
Sydney NSW 2000
Inves ga ng Accountant
BDO Corporate Finance (East Coast) Pty Ltd
Level14,140 William Street
Melbourne VIC 3000
Australian Legal Adviser
Baker & McKenzie
Level 27, 50 Bridge Street
Sydney NSW 2000
Auditor and Tax Adviser
BDO East Coast Partnership
Level14,140 William Street
Melbourne VIC 3000
Chinese Legal Adviser
Trend Associates
Level 28, Zhongshan Tower
154 Hudong Rd
Fuzhou, China 350003
Registry
Boardroom Pty Limited
Level 12, 225 George Street
Sydney NSW 2000
Independent Expert
Frost & Sullivan
Suite 1, Level 9
189 Kent Street
Sydney NSW 2000
Bank
Bank of China Limited
Sydney Branch
39-41 York Street
Sydney NSW 2000
111
www.oneallinternational.com