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This information memorandum is dated 24 July 2018

THE YIMA TRADING COMPANY LIMITED(Incorporated in Australia)

(ACN 622 914 078)

INFORMATION MEMORANDUMissued in connection with the proposed compliance listing of all200,010,000 no par value ordinary shares in the issued share capitalof the Company on the Dutch Caribbean Securities Exchange

Listing Adviser: Biztrack Consultants Private Limited(BVI Co. No. 1844908)

Directors: (1) Peter John William COCKCROFT (2) WANG Jiefu

(3) HE Jianwen (4) GAN Gechang

(5) LEONG Chong Peng (Sharon)

Managing underwriter: Not applicable, none appointed

Trustee: Not applicable, none appointed

Guarantor: Not applicable

Listing sought: Compliance listing

Rating of equity securities: Not rated

IMPORTANT NOTICE

An application has been made for listing of the Company’s securities described in this informationmemorandum to the Dutch Caribbean Securities Exchange N.V. (DCSX). The fact that DCSX may listthe Company’s securities is not to be taken in any way as an indication of the merits of theCompany or of its listed securities. DCSX takes no responsibility for the contents of this document,makes no representations as to its accuracy or completeness and expressly disclaims any liabilitywhatsoever for any loss howsoever arising from or in reliance upon any part of this document.

TABLE OF CONTENTS

Section Page

1. Chairman’s statement 1

2. Investment overview 3

3. The Company and an overview of our business 12

4. Risk factors 28

5. Our capital structure and shareholding 35

6. Financial information 38

7. Directors and key managers 41

8. Details of the listing 49

9. Additional information 51

10. Directors’ responsibility statement 55

Corporate directory 56

Defined terms 57

Annexure A – independent market report 59

Annexure B – Overview of China’s legal framework 66

THE YIMA TRADING COMPANY LIMITED

1 Chairman’s letter1. Chairman’s statement

Dear Investor

On behalf of the directors of The Yima TradingCompany Limited (the Company), I am pleased topresent this information memorandum whichprovides an overview of the Company’s business forlisting on the DCSX.

The Company was incorporated on 30 November 2017for the sole purpose of acquiring World Lead StrategySdn. Bhd. (WLS), a company incorporated in Malaysia.WLS is the 100% owner of two companies registeredin China, Hunan Yima Tea Industry Co., Ltd. and HunanYima International Trading Co., Ltd. whose principalactivities are the growing, marketing and selling of teaand similar products in China, and potentiallyoffshore. Our company is a vertically integrated darktea company which has in place a complete supplychain from planting, harvesting, packaging andtransporting to sales.

Since our founder, HE Jianwen, started the company in 2014, our growth has been consistentwith an ever-increasing market for dark tea in China. In 2016, HE Jianwen invited WANGJiefu, an insurance and management professional, to join the Company to provide us with amore professional and structured management. Our management team has successfullyblended the traditional methods with today’s world. Using a combination of ancient andtraditional planting, harvesting and processing methods which HE Jianwen has experiencewith and modern day marketing and sales channels which WANG Jiefu brings, we foreseethis growth to continue.

Having established a wide and extensive sales network which covers 18 cities in fiveprovinces and directly administered municipalities in China to sell our tea, the Company hasstarted selling a carefully selected range of fast-selling nondurable consumer products whichwe procure from reputable suppliers. We sell these products under our own trademarks. TheCompany started selling the first of such projects which is bai-jiu, a traditional Chinese grainliquor, in the last quarter of 2017, and I am pleased to report that the bai-jiu which wesource externally but sell under our own trademark is selling well. The Company has enteredinto a product procurement agreement with an Australian trading company to source for redwine in large quantities from Australia. Barring any unforeseen circumstances, we expect theCompany to start selling Australian red wine, more particularly red wine of the Shiraz variety,under our own trademarks in the third quarter of this year.

The Company operates a clear and simple business model, one which I believe you willunderstand and appreciate after reading this information memorandum. Management has adefinite plan to grow and expand the Company’s business. This business growth plan issuccinctly explained in section 3.9 of this information memorandum. What the Company

INFORMATION MEMORANDUM 1


does, as I mention earlier in my letter, is in accordance with the business model and inpursuance of this business expansion plan. I also believe that if the Company continues tooperate as we are doing now and the results of implementing this business expansion planare what management and the board expects, the Company’s future prospects are good.

I believe this information memorandum contains all the information for you to make aninformed decision whether to invest in the Company’s shares. Therefore, I advise each ofyou, whether you are an existing shareholder or an interested investor, to read thisinformation memorandum carefully and in full, including the risk factors set out in section 4and, where necessary, seek professional advice before deciding whether to invest or trade inthe Company’s shares following its admission to the official list of the DCSX.

I thank you for your interest and look forward to you joining us as we embark on an excitingjourney to build an even more successful business.

Yours faithfully

Peter John William COCKCROFTChairman

2 INFORMATION MEMORANDUM


2 Investment overview2. Investment Overview

We have prepared this investment overview to help you make an informed investment decision byhighlighting key information in this information memorandum. Please note that the information inthis section is only a selective overview to help you navigate this information memorandum. It is notintended to replace the contents of the information memorandum. Therefore, you should read thisinformation memorandum in full before deciding whether to invest in the Shares

Question ResponseWhere to find

more information

A. About the Company

Who is issuing this information memorandum?

This information memorandum is issued by The Yima TradingCompany Limited (ACN 622 914 078) (proposed DCSX code:YIMA), a company incorporated in Australia.

Section 3.1

Who is the Company and what is its business?

We were incorporated in Australia on 30 November 2017 as thelisting entity of:

(a) Hunan Yima Tea Industry Co., Ltd. (Yima Tea); and

(b) Hunan Yima International Trading Co., Ltd. (Yima Trading),

for the proposed listing on the DCSX. Yima Tea and YimaTrading are operating entities registered in China with a trackrecord of more than three years in the case of Yima Tea andone year in the case of Yima Trading. As of the date of thisinformation memorandum, the restructuring for the purpose ofthe Listing has been completed and both Yima Tea and YimaTrading are our wholly owned subsidiaries.

Our principal businesses are:

(i) the production and sale of dark tea; and

(ii) the sale and marketing of fast-moving nondurable1

consumer products.

We produce tea, in particular the dark tea variety, at our owntea plantation, a 233 hectare (2.33 km2) matured tea plantationlocated in Taoping Village, Qujiang Town, Anhua County inHunan Province, China. We sell tea which we produce indifferent grades and in different packaging directly to end-userconsumers under our own registered Yi Lao Hei trademark. Wealso sell high-end tea-drinking paraphernalia such as tea setscomprising pots and cups.

While we operate on a business-to-consumers model, we do

Section 3.1to

Section 3.9

1 Random House Dictionary defines nondurables as being “goods that are used up quickly or purchasedfrequently, such as food and apparel”. The word nondurables that we use in this information memorandumhave this normal meaning which is explained in the Random House Dictionary.




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not operate any traditional retail outlet. We adopt a “direct-to-consumer-personal-promoting” model of sales to customers.We have established a sales network of sales teams located in18 cities in five provinces and directly administeredmunicipalities, namely Hunan, Hebei, Shanxi, Xinjiang andBeijing. Currently, our sales force stands at 376 team leadersand sales personnel comprising full-time employees and thoseengaged on a part-time commissions-only basis.

In addition to our own tea products, we also sell bai-jiu, atraditional Chinese grain liquor, under our own Yima Lao JiangJiu trademark. We source the bai-jiu in large quantities directlyfrom a carefully selected contract distillery.

We plan to continually grow our business and have devised astrategy to achieve this objective. This strategy which webelieve, if implemented well, will grow our business consists ofthree main action points, namely, we will:

(a) expand our sales network by continually expanding thesizes of our existing sales teams and by setting up newsales teams in other cities in China;

(b) expand the range of products we can sell through oursales network; and

(c) develop the Yima brand over time to be a brand which issynonymous with quality and value-for-money.

We are in an advanced stage of assessing a range of non-pharmaceutical over-the-counter health supplement productswhich, barring unforeseen circumstances, we expect to launchby the end of the third quarter of 2018.

What are the key business objectives of the Company?

Our corporate objectives are:

(a) to create value for our shareholders by increasing thescale of operations of our current business byexpanding our sales network and to source other fast-moving nondurable consumer products for our salesnetwork to sell; and

(a) to develop upstream and downstream products thatcomplement our tea production and/or are derivativeproducts of tea.

Section 3.1

What is the Company’s capital

We have on issue only one class of shares, namely, ordinaryshares. The number of ordinary shares on issue as of the date

Section 5.1




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structure? of this information memorandum is 200,010,000 ordinaryshares. The rights attaching to these shares are set out insection 9.2 of this information memorandum.

What material contracts the Company has entered into?

We have entered into a number of material contracts. They include:

Agreements in relation to the pre-Listing restructuring

(a) equity transfer agreement in relation to Yima Tea;

(b) share sale agreement in relation to WLS;

(c) debt assignment agreement in relation to shareholders’loans to Yima Tea;

Agreements in relation to our business

(d) tea plantation lease and operation agreement in relationto the Plantation;

(e) business transfer agreement in relation to the tea tradingbusiness acquired by Yima Tea;

(f) OEM outsource processing agreement for the day-to-daymanagement of the Plantation and the processing of tealeaves harvested from the Plantation.

Section 3.10

B. Business model

What is the Company’s business model?

Our business model outlined below:

(a) we plant tea on our own plantation, and we aim toproduce the best quality tea possible from tea leavesharvested from our plantation;

(b) we develop and will continue to develop a wide andefficient direct sales and marketing channel to sell the tealeaves we produce directly to consumers or other end-users; and

(c) we continue to develop and source for and procure otherfast-moving nondurable consumer products which aresuitable for us to sell through our direct sales andmarketing channel.

Section 3.2

How will the Companygenerate income?

We earn our revenue (and cash inflows) from the sales of ourproducts to customers, almost all of whom are direct end-userconsumers. Our net income before taxes is derived after

deducting expenses such as sales commissions, cost of theproducts we sell, administration and other expenses.

Section 3.2




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What are the key dependencies of the Company’s business model?

Successful implementation of our business model andexpansion plan is dependent on the following key factors:

(a) there being no occurrences of: (i) unusual weatherconditions; and (ii) other natural calamities such as insector pest attacks and plant disease infections, at our teaplantation;

(b) our ability to continue producing dark tea from our teaplantation to the standards our customers expect of us;

(c) our ability to retain and motivate our sales teams and toexpand our sales network;

(d) going forward, our ability to continue to identify othernew ranges of fast-moving nondurable consumer productswhich are in demand by our customers and being able toprocure them from reliable sources which can supplythese products with such quality, in sufficient quantitiesand at prices which are acceptable to us; and

(e) our ability to develop our own Yima (or Yima derivative)brand.

What is the Company’s historical financial performance?

We are a new company formed on 30 November 2017 to hold100% of the equity capital of the Operating Companies, namelyYima Tea and Yima Trading, are existing companies with anoperating track record of more than three financial years.Therefore, the financial information set out in this informationmemorandum comprise:

(a) the audited consolidated financial statements of YimaTea and Yima Trading for the past two financial years,that is to say, for the financial years ended 31 August2016 and 2017; and

(b) the reviewed consolidated financial statements of YimaTea and Yima Trading for the half-year period ended 28February 2018.

Section 6

C. Risk factors

What are the key risks the Company faces?

Our business, assets and operations are subject to certain riskfactors that have the potential to influence our operations andfinancial performance in the future. All businesses are subjectto risk, which means that the value of your investment in ourShares may rise or fall. Our directors aim to manage these risksby carefully planning our activities and implementing mitigatingrisk control measures. It is not possible to foresee all risks and,to that extent, there is a limit as to how those unforeseeable

Section 4




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risks can be effectively managed. We set out below specific keyrisks which we are exposed to.

Before making an investment decision, it is important that youunderstand the risks that may affect the value of yourinvestment. Further general risks associated with aninvestment in the Company are outlined in section 4.

(a) Exposure to weather conditions and other natural factors

The quantity and quality of tea which we can produce from thePlantation is greatly dependent on a number of factors,including weather conditions and other natural factors. Forexample, the quality and quantity of tea we produce will beadversely affected if:

(i) there are uncharacteristically short and warm summerdays or long and cool winter days, or if there is droughtduring the growing season or if there is heavy continuousrainfall causing water to pool and stagnate where our teashrubs grow; or

(ii) there are attacks beyond expected normal occurrencesfrom pests such as mosquito bugs (not to be confusedwith mosquitoes) and other leaf feeders such ascaterpillars; or

(iii) there is an epidemic incidence of plant diseases.

(b) Ability to maintain and expand our sales network

One contributing factor for our business growth is our ability torecruit, motivate and retain a team of qualified, motivated andhigh-achieving team leaders and sales personnel. If these teamleaders and sales personnel are to leave our employ, especiallyif they were to leave in a large number and at the same time,and if we are not able to recruit new team leaders and salespersonnel to replace those leaving, it will adversely affect ourrevenues and financial performance.

One key aspect of our business expansion plan is to expand oursales network, both in terms of the size of the sales teams inour existing locations and establishing sales teams in newlocations. If we are not able to expand our sales network, ourgrowth will be adversely affected.

(c) Ability to identify and source for new products to sell

A key strategy for future growth is to extend the range ofproducts for our sales network to sell to our customers.However, because we plan to sell all products under our Yimabrand, we have to be selective in identifying and sourcing thesenew product ranges. Where necessary, we will source theseproducts from overseas, that is to say, from suppliers outside




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China. If we are not able to identify and source suitable newproduct ranges to sell, our growth may be adversely affected,and if any new product range which we introduce to themarket in the future does not meet our customers’expectations as to quality, it will adversely affect our reputationand affect our sales and financial performance.

(d) Brand and reputation risk

We believe that establishing and maintaining our own brandsare important to enlarging our customer base, expanding oursales network and increasing our revenue. This is the reasonwhy we market our dark tea under our own Yi Lao Hei brandand our bai-jiu under our own Yima Lao Jiang Jiu brand. Weintend to brand all products we sell in the future under theYima (or a derivative) brand. Whether we are able to establishand maintain our brand largely depends on our ability tocontinually provide quality and value-for-money products. If wefail to successfully establish and maintain our brand, ourbusiness and our financial performance may be adverselyaffected.

(e) Competitive actions from our competitors

We operate in a competitive market. There are manycompanies producing and selling tea and bai-jiu in China,although as elaborated in section 4.2(e), the nature of thecompetition in these two markets is somewhat different.Nonetheless, should there be any significant increase incompetition from these competitors or if we are not able tocompete effectively against these competitors or cope withchanges in market conditions caused by increased competitionfrom these competitors, our financial performance may beadversely affected.

(f) Counter-party risk

In the course of our business, we have entered into a numberof contracts with other parties. Smooth continuity of ourbusiness operations and, where applicable, its expansion alsodepend on counter-parties to certain important contractsfulfilling their obligations under those contracts or our ability toenforce those contractual rights. If any counter-party to theabove agreements breaches its obligations and if we are notable to legally enforce that counter-party’s obligations underthe relevant agreement, smooth continuity of our businessoperations will be adversely affected.

(g) Counterfeit products

Our Yi Lao Hei branded dark tea has received marketacceptance among our existing customers and, based onfeedback from our existing customers, we expect that our YimaLao Jiang Jiu branded bai-jiu will also receive market




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acceptance from more customers. Many of our customers arerepeat customers purchasing our products multiple times.There is a risk that less than reputable suppliers will producedark tea, bai-jiu or any other product we may sell in the futureto counterfeit those which we produced or source and sellunder our own brands. If we are not able to effectively stopthese counterfeit products from being sold in the market, it willadversely affect out brand value and, in turn, affect ourrevenues and financial performance.

D. Directors and shareholdings

Who are directors of the Company?

Our directors are:

Peter John William COCKCROFT, Independent non-executive director and chairman of the board

WANG Jiefu, Executive director and chief executive officer

HE Jianwen, Executive-director

LEONG Chong Peng (Sharon), Independent non-executive director

GAN Gechang, Independent non-executive director

Peter COCKCROFT and HE Jianwen have listed publiccompany experience each having having acted as director ofpublic companies listed in Indonesia and Australia in the caseof Peter COCKCROFT, and in Hong Kong in the case of HEJianwen. Sharon LEONG has listed public companyexperience in Hong Kong, China and Australia from herinvolvement in the audits of public companies listed there.

Section 7.1

Who are the substantial shareholders of the Company?

Our substantial shareholders, defined as shareholders whohold 5% or more of our shares, are:

Substantial shareholder

Directinterest

Indirectinterest

Totalinterest

% ofissuedcapital

Avonherst Holdings Limited

78,000,000 - 78,000,000 39.00%

Pro Value Ventures Limited

42,000,000 - 42,000,000 21.00%

WANG Jiefu - 120,000,000 (1) 120,000,000 60.00%

HE Jianwen - 78,000,000 (2) 78,000,000 39.00%

(1) WANG Jiefu’s indirect interests in these 120,000,000 Sharesrefer to Shares held by Avonherst Holdings Limited

Section 5.2




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(Avonherst) (78,000,000 Shares) and by Pro Value VenturesLimited (Pro Value) (42,000,000 Shares). WANG Jiefu holds50% of the voting rights of Avonherst and 100% voting rightsof Pro Value Ventures Limited. As a result of this, he is able toexercise significant influence on how voting rights attaching tothe Company’s shares registered in the names of Avonherstand in Pro Value are exercised. Therefore, he is considered tohave relevant interests in all shares registered in the names ofAvonherst and Pro Value. As disclosed in footnote (2) below,HE Jianwen also has an indirect interest in the 78,000,000Shares registered in the name of Avonherst.

(2) HE Jianwen’s indirect interests in these 78,000,000 Sharesrefer to Shares held by Avonherst (78,000,000 Shares). HEJianwen holds the balance 50% of the voting rights ofAvonherst. As a result of this, he is able to exercise significantinfluence on how voting rights attaching to the Company’sshares registered in the name of Avonherst are exercised.Therefore, he is considered to have a relevant interest in allshares registered in the name of Avonherst. As disclosed infootnote (1) above, WANG Jiefu also has an indirect interest inthe 78,000,000 Shares registered in the name of Avonherst.

What significant benefits and interests do the directors have?

(per annum) Directors’ feesWages, salaries

and bonus

Peter COCKCROFT $24,000 -

WANG Jiefu $5,000 $60,000

HE Jianwen $5,000 $30,000

LEONG Chong Peng (Sharon) $20,000 -

GAN Gechang $10,000 -

Section 7.5

What are the transactions which the Company has entered into with related parties?

Save for:

(a) contracts relating to the restructuring which was carriedout for the purpose of the Listing and which are disclosedin section 3.10, all of which have been completed on theirterms as of the date of this information memorandum;and

(b) the remuneration which we will pay our directors asdisclosed in section 7.5,

we do not have any ongoing or potential transaction withrelated parties.

Section 3.11

What share escrow arrangements has the Company put in

Subject to the DCSX's agreement, we intend to have escrowarrangements in respect of 120,000,000 shares, representingapproximately 60.00% of our share capital. The proposed

Section 5.4




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place? escrow arrangements are as follows:

Name of holder No. of shares Escrow period

Avonherst 78,000,000 24 months from listing date

Pro Value 42,000,000 24 months from listing date

120,000,000



3 The Company and an overview of our business3. ff3.1. Introduction

We, The Yima Trading Company Limited, were incorporated in Australia under theCorporations Act on 30 November 2017. Our registration number is ACN 622 914 078.

For the purpose of the Listing, our shareholders restructured their interests in Yima Tea, acompany with an operating track record since 2014. The purpose of this restructuring was toenable them to hold their interests in Yima Tea indirectly through their shareholdings in ourshare capital in the same proportion as their interests in Yima Tea prior to the restructuring.Our corporate structure on completion of this restructuring and as at the date of thisinformation memorandum is as follows:

The Yima Trading Company Limited(Incorporated in Australia)

(Proposed DCSX code: YIMA)

Registered on: 30 November 2017

Principal activity: Investment holding

100%

World Lead Strategy Sdn. Bhd.(Incorporated in Malaysia)

Registered on: 14 September 2017


100%

Shanghai Yima Trade and Commerce Co., Ltd.[Official name: 上海裔玛商贸有限公司]

(Registered in China)

Registered on: 7 December 2017


100%

Hunan Yima Tea Industry Co., Ltd.[Official name: 湖南易马茶业有限公司]


Registered on: 14 July 2014

Principal activity: Owning tea plantation and producing tea

100%

Hunan Yima International Trading Co., Ltd.[Official name: 湖南易马国际商贸有限公司]


Registered on: 10 January 2017

Principal activity: Direct selling and marketing of tea and other fast-moving consumer products

Import and export of tea and other fast-moving consumer products

Our corporate structure is the result of completion of certain material contracts we and oursubsidiaries have entered into. Details of these material contracts are summarised in section3.10.

Our corporate objectives are:

(a) to create value for our shareholders by increasing the scale of operations of ourcurrent business by expanding our sales network and to source for other fast-moving



nondurable2 consumer products for our sales network to sell; and

(b) to develop upstream and downstream products that either complement our teaproduction and/or are derivative products of tea.

The Listing will will facilitate secondary trading of our shares by our shareholders and otherinvestors and allows us to raise funds in the future when funds are needed to achieve ourcorporate objectives.

3.2. Our business model

Our business model is simple, and can be explained as follows:

(a) we plant tea in our own plantation, and we aim to produce the best quality teapossible from tea leaves harvested from our plantation;

(b) we develop and will continue to develop a wide and efficient direct sales andmarketing channel to sell as much of the tea leaves we produce as possible directlyto consumers or other end-users; and

(c) we source for and procure other fast-moving nondurable consumer products whichare suitable for us to sell through our direct sales and marketing channel.

We earn our revenue (and cash inflows) from the sales of our products to customers, almostall of whom are end-user consumers. Our net income before taxes is derived after deductingexpenses such as sales commissions, cost of the products we sell, administration and otherexpenses.

3.3. Overview of our principal businesses

What our principal businesses are

Our principal businesses are:

(i) the production and sale of dark tea; and

(ii) the sale and marketing of fast-moving nondurable consumer products.

What our brief corporate history is

We trace our history back to 2014 when our founder, HE Jianwen, registered Yima Tea tocarry on the tea-trading business which he was operating in his own name and tocomplement the tea trading business, acquired the Plantation.

In early 2017, we established Yima Trading to carry on all our sales and marketing activities.Yima Trading is a wholly owned subsidiary of Yima Tea. Besides, selling tea which Yima Teaproduces and tea-drinking paraphernalia, Yima Trading also sources and sells other fast-

2 Random House Dictionary defines nondurables as being “goods that are used up quickly or purchasedfrequently, such as food and apparel”. The word nondurables that we use in this information memorandumhave this normal meaning which is explained in the Random House Dictionary.



moving nondurable consumer products. Currently, the only such other product which YimaTrading sells is bai-jiu, a traditional Chinese grain liquor.

For purposes of the Listing, our shareholders restructured their interests in Yima Tea. Ourcurrent corporate structure is the result of this restructuring.

What products we produce and sell

We produce and sell tea, in particular the dark tea variety, from our own tea plantation. Thistea is sold in different grades and in different packaging directly to end-user consumersunder our own registered Yi Lao Hei trademark. We also sell high-end tea-drinkingparaphernalia such as tea sets comprising pots and cups.

In addition to our own tea products, we also sell bai-jiu under our own Yima Lao Jiang Jiutrademark. We source the bai-jiu in large quantities directly from a carefully selectedcontract distillery.

Additional information on the products we sell is set out in Section 3.4 below.

How we produce the tea we sell

Our tea is produced at the Plantation which is located on the Wuling Mountain Range inAnhua County, generally considered as being one of the more well-known and prolific darktea-producing regions in China. Day-to-day management of the Plantation and theprocessing of tea leaves harvested from the Plantation is contracted to Anhua County QuZhiyuan Tea Industry Co., Ltd. (i.e., the Contractor), a third-party contractor. Furtherinformation on the Plantation and the production process to produce dark tea is set out inSection 3.6 below.

How we sell our products

While we operate on a business-to-consumers model, we do not operate any traditionalretail outlet. We adopt a “direct-to-consumer-personal-promoting” model of sales tocustomers. We find this model of sales to be more effective because it enhances thecustomers’ shopping experience by providing customers with the personal human touchwhich this sales method bring. This close interaction with customers also allows our salespersonnel to collect market feedback directly from customers which we can analyse todetermine what tea products we should produce more of and what other products which wecan successfully sell.

Under this sales model, we recruit, train, manage and motivate a team of sales personnel tosell our products directly to end-user customers. These sales personnel who operate in anumber of cities in China are engaged on a part-time, commissions-only basis. Furtherinformation on how we sell and market our products is set out in Section 3.7 below.

Where we operate

We are based in China and our head office and principal place of business is located inChangsha City, the capital city of Hunan Province. According to publicly available nationalstatistics, Hunan Province is the province with the ninth highest gross domestic product in2016, with a GDP of ¥3,155 billion (approximately $632 billion). The Plantation is located inQujiang Town, Anhua County, which is approximately 300 kilometres from Changsha City.



Our sales teams are located in 18 cities in five provinces and directly administeredmunicipalities, namely Hunan, Hebei, Shanxi, Xinjiang and Beijing.

The map on the right shows theapproximate locations of Changsha City,Anhua County where the Plantation islocated and our sales locations.

People – our biggest asset

Currently, we employ a total of 70permanent full-time employees, includingfull-time team leaders and sales personnel.The number of employees employed by usis not subject to annual seasonalfluctuations. However, the number of salespersonnel we engage on a part-time,commissions-only basis fluctuates from timeto time, such fluctuations being independent of season.

3.4. Current products

As of the date of this information memorandum, we produce and/or sell the followingproduct ranges:

(a) Dark tea

Anhua dark tea is the only product weproduce and is the main product which wesell. The tea we produce is fermented tea, aclass of tea that has undergone microbialfermentation. The fermentation of tealeaves alters their chemistry, affecting thesmell of the tea and typically mellows itstaste and reduces its bitterness, thusimproving the mouth-feel and after-taste ofthe drink brewed from it. Generally,fermented tea becomes more valuable as itages. In China, such fermented tea produced is also referred to as dark tea. The mostfamous fermented tea varieties are Pu’er, produced in Yunnan Province, and theAnhua dark tea, the variety which we produce.

We sell different grades of Anhua dark tea packed in compressed brick form in retailpackaging sizes of 250 grams, 500 grams, 1,000 grams and 1,250 grams. Anhua darktea in retail packaging we sell is sold under our own Yi Lao Hei trademark. We alsosell dark tea compressed in the traditional log form packaging, usually in weights of100 liang3 and 1,000 liang or approximately 3.78kg or 37.8kg, respectively.

3 The liang is a traditional Chinese unit of measurement for weight. Traditionally, one liang was equal to1/12 pound, or about 37.8 grams. In modern China, the liang is exactly 50 grams. However, the liang usedin the tea trade in China still refers to the traditional liang.


Sample of tea and tea sets which we sell


As mentioned above, fermented tea such as the Anhuadark tea that we sell generally becomes more valuable asit ages. Therefore, customers who buy our dark teapacked in this form usually buy it to store for furtherageing. The photo below showing dark tea packed in this1,000 liang log form is taken on-site of the actual productwe sell to our customers.

(b) Tea-drinking paraphernalia

We also sell higher-end tea-drinking paraphernalia, inparticular, tea sets comprising tea pots and tea cups. Thetea sets we sell include those crafted from the materialtillite, a type of solid rock formed from glacial sediments.We source these tea sets from third-party producers andsell them as is, that is to say, without re-branding themwith our trademarks. Sales of tea sets and other tea-drinking paraphernalia represent a very small portion ofour sales revenue.

(c) Bai-jiu

In the last quarter of 2017, we began to implement our strategy to sell otherselected fast-moving nondurable consumer products through our sales network. Thefirst and currently, the only such other product product we sell is bai-jiu. Bai-jiu,literally translated as “white liquor”, is a traditional Chinese grain liquor. It is a strongdistilled spirit, clear in appearance and generally has between 35% and 60% alcoholby volume. Bai-jiu is similar to vodka in strength and mouth-feel. It is usually distilledfrom fermented sorghum, although other grains may be used.

The bai-jiu we sell is sourced in large quantities directly from a distillery located inMaotai Town in Guizhou Province which is the premier bai-jiu producing region inChina. Moutai, produced and sold by state-owned and Shanghai-listed KweichowMoutai Co., Ltd., China’s most famous and best-selling bai-jiu is brewed and distilledin Maotai Town. As we order the bai-jiu in large quantities, they are bottled andbranded under our own trademark, Yima Lao Jiang Jiu. The bai-jiu we sell iscontained in bottles of 500ml each.

3.5. Trademarks

We believe an emphasis on product quality, both for the tea we produce and products wesell which we source from third parties, will differentiate our products from our competitors’products. Therefore, we view that the marketing of products we sell under our owntrademarks are an important aspect of this commitment to quality. In view of this, we haveregistered the following trademarks:


Dark tea in traditional log form packaging


Trademark Registration / Application No. Status

(1)

(Yi Lao Hei)

14653451 Registered.

(2) 271770262716616127166139

Pending review.

(3)

(Yima Lao Jiang Jiu)

26335417 China Trade Mark Office(CTMO) published theirpreliminary decision that YimaTrading’s application is incompliance with the relevantprovisions of China TrademarkLaw on 27 May 2018. Inaccordance with China TradeMark Law, Yima Trading willbe registered at theproprietor of the trademarkon 27 August 2018 if noobjection to this preliminarydecision is lodged with CTMO.

3.6. The Plantation and the production process of Anhua dark tea

The Plantation is a 233 hectare (2.33 km2)matured tea plantation located in TaopingVillage, Qujiang Town, Anhua County inHunan Province. It sits along the WulingMountain Range along the banks of Zi River(or Zijiang in the Chinese language), a sub-tributary of the Yangtze River. We acquiredthe operating rights to, and all economicbenefits flowing from, the Plantation undera lease which expires on 8 August 2044.The lessor of this lease is Anhua County QuZhiyuan Tea Industry Co., Ltd. (i.e., theContractor).

We contracted the day-to-day management of the Plantation and the processing of tealeaves harvested from the Plantation to the Contractor under an OEM agreement. TheContractor owns and operates a tea processing factory in Taoping Village where thePlantation is located. We will order such quantities of dark tea which we need from time totime and the Contractor will process the tea leaves from the Plantation. The processing feewe pay to the Contractor is based on a unit rate set out in the OEM agreement. Furtherinformation on the lease agreement and the OEM agreement is set out in section 3.10below.


A site photo of part of the Plantation


In summary, we pay the Contractor:

(a) annual lease payments for the Plantation under the lease agreement; and

(b) processing fees calculated based on the quantities, specifications of processed darktea we order and the unit rates set out in the OEM agreement.

The diagram below simplifies and summarises the processes which raw tea leaves have to gothrough before they become a product which we can sell.

Brief description of the various steps and processes

Step 1 Raw tea leaves which have been hand-plucked are first roasted over low tomoderate heat to wilt them. This process removes excess water from the leavesto start the enzymatic oxidation. This process is also important because itpromotes the breakdown of leaf proteins into free amino acids and increases theavailability of freed caffeine, both of which affects the taste of the tea.

Step 2 After wilting, the tea leaves are rolled and kneaded to lightly bruise them. This isto quicken oxidation. The bruising breaks down the structures inside and outsidethe leaf cells and allows for the co-mingling of oxidative enzymes with varioussubstrates4, which promotes oxidation. This process also releases leaf juices,which also aids in oxidation and in turn changes the taste profile of the tea.

Step 3 In this step of the process, the leaves are left on their own to ferment or oxidisein a climate-controlled room. The leaves will turn progressively darker. During thisprocess, chlorophyll in the leaves is enzymatically broken down, and its tanninsare released or transformed. Oxidation is important in the formation of manytaste and aroma compounds, which give our tea its colour, strength and flavour.

Step 4 This step is done to stop active oxidation of the tea leaves at a desired level, andis accomplished by moderately heating tea leaves to deactivate their oxidativeenzymes and remove unwanted scents in the leaves, without damaging theflavour of the tea.

Step 5 The tea leaves are lightly steamed to dampen them before they are pressed intobricks or into traditional log form packaging. The tea leaves are pressed intobricks using machine presses and into traditional log form packaging by hand.

4 In biochemistry, a substrate is a substance which an enzyme can act on.



Step 6 Compressed tea bricks are baked dried in temperature-controlled rooms, whilecompressed tea in traditional log form packaging is left to dry naturally.

Step 7 Compressed tea bricks are then packaged in the retail packaging for sale. The teain traditional log form packaging is sold as-is without further packaging.

3.7. Sales and marketing

We adopt what we term as a “direct-to-consumer-personal-promoting” sales model. In otherwords, we do not adopt a store-based retail model. We employ teams of sales personnel,supervised by team leaders, who promote and sell our products directly to consumers. Teamleaders as well as sales personnel are employed either as full-time permanent employees oras independent contractors on a part-time commissions-only basis. We are responsible fororder fulfilment of all sales made by our sales personnel and, unlike some other directmarketing models, our sales personnel are not required to purchase inventory as a conditionfor recruitment or membership (howsoever described).

The table below shows the differences in the remuneration schemes for full-time permanentemployees and for part-time employees.

Permanent full-time employeePart-time sales personnel and team leaders

Nature of relationship Employer-employee Independent contractor

Base salary and other statutory contributions

Yes No

Minimum sales quota (MSQ)

Yes. MSQ for a sales personnel is calculated based on his or her personal sales, while MSQ for a team leader is calculated based on total sales of team members he or she supervises.

No

Commissions Yes. Commissions for a sales personnel are calculated as a percentage of his or her sales in excess of his or her personal MSQ, while commissions for a team leader are calculated as a percentage of total sales of his or her team in excess of his or her MSQ. Generally, the rate we use to calculate commissions for sales personnel is higher than the rate we use to calculate commissions for team leaders.

Yes. Commissions for a sales personnel are calculated as a percentage of his or her sales, while commissionsfor a team leader are calculated as a percentage of total sales of his orher team. Generally, the commission rate for sales personnel is higher than for team leaders, while commission rates for part-time sales personnel and team leaders are higher than thosefor their employed counterparts.

Currently, our sales force stands at 376 team leaders and sales personnel.



To assist our sales teams to maximise their sales potential, we provide the following supportto them:

(a) Training and other pre-sales support

We provide continuing training to our sales personnel and team leaders on diversetopics, including training on product knowledge, sales techniques, marketingtheories, consumer behaviour, consumption trends and market analysis. We alsoorganise motivational talks and team-building exercises for our sales teams. Thesetraining sessions are conducted either locally in the city where the sales team islocated or at our head office in Changsha.

These training sessions are conducted by trainers whom we employ on a full-timebasis and, for more specialised topics, by external guest trainers or lecturers whomwe engage as required. Our team leaders also have responsibilities to conduct morebasic training sessions for newly recruited sales personnel and to motivate theirteam members.

(b) Sales and marketing support

In conjunction with our team leaders, we organise and carry out various sales andmarketing activities. These include, road-shows at shopping malls or at commercialareas with high foot traffic and product-tasting sessions. However, our favoured salesand marketing activity and one which we find most effective is the intimate teaappreciation sessions attended by few guests, usually a mix of existing and potentialcustomers. During these sessions, guests take part in traditional tea drinkingceremonies, try out teas of different varieties and of different ages, and generallyinteract with our sales personnel and other participants.

We do not carry out larger scaled marketing campaigns such as advertising on massmedia. We find that these modes of marketing and sales promotion are not targetedand do not bring direct benefit to our sales.

(c) After-sales support

Customers place orders through our sales personnel. Once a sale personnel receivesan order, he or she will report the order to his or her team leader who will log thesale and compile the sales of his or her team. These compiled sales orders will thenbe sent to our head office for order fulfilment. Our operations team will thenoversee payment collection, shipment of the orders directly to the customers andupdate the sales records, both for financial reporting purposes and for calculation ofcommissions payable. There is no fixed regularity as to when the team leader sendsthe compiled sales orders to our operations team. However, we target to fulfil allorders within one week. That is to say, the time between when a customer places anorder with our sales personnel and the shipping of the order to the customer is notlonger than one week.

Our operations team will also be responsible for after-sales service such asprocessing goods return requests, receiving customer feedbacks and, rarely,attending to customer complaints.



3.8. Market analysis

(a) Dark tea

As the production and sale of dark tea is a main aspect of our core business, weengaged MGI Consulting Services Pte Ltd (MGI Consulting) to prepare anindependent market report on the tea market for inclusion in the informationmemorandum. That report is reproduced in its entirety in Annexure A. We set outbelow some highlights from this report:

(i) Tea in all its forms is the world’s second most popular drink after water.Approximately 3 billion people around the world consume tea.

(ii) Global tea consumption has been increasing. Global tea production has alsobeen growing in tandem with growing tea consumption.

(iii) Taking into account factors such as inventory stock-up (particularly for darktea and other teas which become more valuable after being aged) andprocessing losses, MGI Consulting is of the view that global tea productionand consumption are generally balanced.

(iv) The global tea market sizes for the years 2013 to 2016 are shown in the tablebelow:

(In US$ billion) 2013 2014 2015 2016

Market size 34.9 36.0 37.1 38.2

These increases in the global tea market represent a compound annualgrowth rate of 3.0%, and MGI Consulting expects this growth to continue.

(v) China is the largest tea producer in the world and is also the largest teaconsuming country in the world. Showing the same trend as the globalmarket, tea consumption in China had also increased in tandem with teaproduction for the years 2009 to 2013.

(vi) The growth of tea consumption is due to two primary reasons, namely:

(A) expansion of the tea-drinking population; and

(B) the steady increase in the per-capita consumption of tea in China.

(vii) MGI Consulting expects that prospects for the Chinese tea industry arebright in the near to mid term based on the following:

(A) increasing domestic tea consumption;

(B) national tea standards and other food safety standards beingimplemented by the Chinese government will maintain productquality, leading to reinforced consumer confidence; and

(C) increasing exports to currently untapped markets overseas.



(b) Bai-jiu

Historically, bai-jiu has always been central to allaspects of Chinese life. It is present during virtuallyevery significant social occasion in China. Thisincludes such disparate occasions as the Lunar NewYear, the celebration of a successful businessventure, a wedding or gathering of friends andfamily. In modern day, bai-jiu continues to play apivotal role in Chinese life, as it serves as a socialbond and facilitator of goodwill among parties. It isalmost always served at business meals in China,and is commonly given as gifts, both personal andofficial, as tokens of goodwill.

These factors make bai-jiu the most widely soldand consumed spirit in the world, almost all of it in the Chinese market. The marketsize for bai-jiu is estimated to be worth US$23 billion a year. The bai-jiu market isfairly complex, as there is a wide variety of bai-jiu in the market, with each bai-jiubrand fitting into a specific market segment. Generally, these can be categorised asbeing the cheap or low value bai-jiu, the standard-priced bai-jiu and the mostexpensive and highly regarded bai-jiu. We consider the bai-jiu we sell to be in thestandard-priced category.

The table below is a compilation of published data showing bai-jiu consumption andproduction in China for the most recent three years where data is available:

(In ‘000,000 litres) Bai-jiu Production Bai-jiu Consumption

2014 12,571 12,559

2015 13,128 13,113

2016 13,584 13,570

In 2012, the then newly elected China President Xi Jinping launched a frugalitycampaign that banned lavish dinners and gift giving (and receiving) at all levels ofgovernment as part of a wider anti-corruption campaign. A series of practicedirectives (where it may impact the bai-jiu market) were issued between 2012 and2013. These new directives resulted in a drastic reduction in demand for bai-jiu.

While we had started to sell our range of bai-jiu only recently, in the last quarter of2017, this product range has been well-received by our customers since its launch.Taking into account the fact that bai-jiu is commonly and widely consumed in China,its demand and supply data as mentioned above and customer feedback from oursales teams since we started selling bai-jiu, we assess the prospect for our bai-jiuproduct range as follows:

(i) Sales of our bai-jiu product range will increase at a steady rate in the short tomedium term, that is to say, over the next two to three years. This is due toour customers becoming aware that they are able to buy bai-jiu directly fromus, and as the taste and quality of our bai-jiu becomes more widely known.


Photo showing a bottle of the bai-jiu we sell. Our packaging is relatively traditional in design and style.


(ii) In the medium to long term, after the initial sales growth period, bai-jiu sales(in monetary value) will stabilise and continue to be a stable and consistentcontributor to our sales.

3.9. Expansion plan

We plan to continually grow our business and have devised a strategy to achieve thisobjective. This strategy which we believe, if implemented well, will grow our businessconsists of three main action points which are explained below.

(a) Expand our sales network

We are continually expanding the sizes of our existing sales teams by activelyrecruiting additional sales personnel, particularly those joining us on a part-timecommissions-only basis, to join our existing sales teams.

In addition to expanding the sizes of our existing sales teams, we plan to set up newsales teams in other cities in China. We believe that the key to setting up an effectiveand successful sales team in a new city is to recruit a qualified, capable and self-driven person as team leader. The candidate we look for to lead a sales team in anew city must either be based in or is willing to relocate to that city and, while notnecessarily that he or she must be from that city, he or she should have a goodunderstanding and appreciation of the local culture and customs there. We arecurrently actively looking to set up sales teams in the provinces of Sichuan, Guizhouand Fujian in China.

(b) Extend our product range

Expanding the range of products we can sell through our sales network is an integralpart of our business model. In particular, we are continually sourcing for suitablefast-moving nondurable consumer products to add to the range of products our salepersonnel can sell. However, we have a set of strict criteria these products mustmeet before we offer them for sale through our sales network. We plan to be verydiscerning in selecting products which we sell through our sales network. The criteriafor products which we look for are:

(i) there must be sufficient demand for the product;

(i) the product can be sourced from a reliable and reputable supplier who cansupply in the quantities we require within the time frame we require theproducts; and

(ii) the product supplied by the selected supplier must be of a qualitysatisfactory to us and at a price acceptable to us.

By offering more suitable products for sale, we hope to be able to sell more things toour existing customer base, therefore increasing our revenue per active customerbenchmark. Just as important, by offering more products which consumers want, we



are better able to attract and recruit more sales personnel and potential teamleaders, thus accelerating the expansion of our sales network.

We are in an advanced stage of assessing a range of non-pharmaceutical over-the-counter health supplement products. These products are for weight managementand body detoxification. These products are classified as being general consumerproducts which does not require any special licensing, registration or approval beforewe can sell them to our customers. Barring unforeseen circumstances, we expect tolaunch these range of health supplements by the end of the third quarter of 2018.

We expect Australia to be a major source of products which we can sell through oursales network. For a start, we have entered into a product procurement agreementwith an Australian trading company, under which they will procure a suitablesupplier who can supply good quality red wine in sufficiently large quantities and atprices which are acceptable to us for us to label and sell under our Yima brand. Ourconsulting sommelier, having considered the demographics and gastronomic cultureof our customer base, had identified Shiraz as being the most suitable variety of redwine which we can sell. Another product range which we are now assessing tosource from Australia is organically produced honey.

(c) Develop the Yima brand

We plan to sell all our products under the Yima (or a derivative thereof) brand. Webelieve that by carefully sourcing for products which we sell and selling them under acommon brand, we will be able to develop the Yima brand over time to be a brandwhich is synonymous with quality and value-for-money. If we are able to successfullydevelop the Yima brand as we plan, it will facilitate launches of new product rangesin the future. In other words, it will be easier to sell new products we will launch inthe future as customers will consider these Yima branded products to have the sameattributes of other Yima branded products, namely quality and value for money.

As part of this plan, we are currently devising a product authentication system withour supplier of the bai-jiu products we sell. The aim for this product authenticationsystem is to enable purchasers and consumers of our Yima Lao Jiang Jiu to be able toeasily and conveniently verify whether a specific bottle of Yima Lao Jiang Jiu isauthentic or is a counterfeit product.

3.10. Material contracts

We have entered into a number of important contracts. These are:

Contracts relating to our shareholders’ restructuring of their interests

(a) Equity Transfer Agreement in relation to Hunan Yima Tea Industry Co., Ltd. betweenWANG Jiefu and HE Jianwen (as transferors) and WFOE (as transferee)

WANG Jiefu and HE Jianwen (as transferors) and WFOE (as transferee) entered intoan Equity Transfer Agreement dated 20 December 2017, under which WANG Jiefuand HE Jianwen transferred their aggregate 100% equity interest in Yima Tea toWFOE for nil consideration.



The agreement, in the standard format prescribed by the local office of theDepartment of Industry and Commerce, is governed by the laws of China. Theagreement was completed on 20 December 2017 when WFOE was registered asshareholder of Yima Tea and the parties’ obligations had been fulfilled in accordancewith the terms of the agreement. On completion of this Equity Transfer Agreement,Yima Tea became a wholly owned subsidiary of WFOE, which in turn is a whollyowned subsidiary of WLS.

(b) Share Sale Agreement in relation to World Lead Strategy Sdn Bhd betweenJegathesan a/l Manoharan (as vendor) and the Company (as purchaser)

We, The Yima Trading Company Limited, entered into a Share Sale Agreement dated10 January 2018 with one Jegathesan a/l Manoharan (acting as bare nominee for theExisting Shareholders) under which we acquired all the issued and paid-up sharecapital of WLS (and, indirectly, 100% interests in each of WFOE, Yima Tea and YimaTrading) for a notional consideration of Ringgit Malaysia 3,000, the equivalent of$1,000. This purchase consideration was paid by way of $2 in cash and the issue of1,999,998 new fully paid shares in our share capital to the Existing Shareholders. Werefer you to section 5.1(b) which shows how our issued capital increased from thedate we were incorporated to the date of this information memorandum.

This Share Sale Agreement which is governed by the laws of Malaysia was completedon 30 January 2018 when the new shares were issued to the Existing Shareholders.Both parties’ obligations had been fulfilled in accordance with the terms of theagreement. On completion of this agreement, each of WLS, WFOE, Yima Tea andYima Trading became our subsidiaries.

(c) Debt Assignment Agreement in relation to shareholders’ loans amounting toRMB31,488,160 among WANG Jiefu and He Jianwen (as assignors), Hunan Yima TeaIndustry Co., Ltd. (as debtor) and the Company (as assignee)

We entered into a Debt Assignment Agreement dated 10 January 2018 with WANGJiefu, HE Jianwan and Yima Tea. Under this agreement:

(i) WANG Jiefu and HE Jianwen assigned shareholders’ loans amounting toRMB31,488,160 (approximately $6,100,000) which they had extended toYima Tea to the Company; and

(ii) Yima Tea acknowledged and accepted this assignment and agreed to paythese shareholders’ loans directly to us.

This Debt Assignment Agreement is governed by the laws of China. The effect of thisDebt Assignment Agreement is that the shareholders’ loans amounting toRMB31,488,160 which WANG Jiefu and HE Jianwen had given to Yima Tea is nowowed to the Company and not to WANG Jiefu and HE Jianwen.

In exchange for WANG Jiefu and HE Jianwen assigning these shareholders’ loansunder this Debt Assignment Agreement, we issued 2,000,000 new shares in ourshare capital to the Existing Shareholders. The new shares were issued to the Existing



Shareholders on 30 January 2018. We refer you to section 5.1(b) which shows howour issued capital increased from the date we were incorporated to the date of thisinformation memorandum.

Contracts relating to our business

(d) Tea Plantation Lease and Operation Agreement between Anhua County Qu ZhiyuanTea Industry Co., Ltd. (lessor) and Hunan Yima Tea Industry Co., Ltd. (as lessee)

We entered into a Tea Plantation Lease and Operations Agreement dated 8 August2014 with the Contractor. Under this agreement, the Contractor sub-leased themanagement and operating rights of the Plantation to us for a period of 30 yearscommencing on 8 August 2014 and expiring on 8 August 2044. Annual leasepayment payable under this agreement is RMB00,000 for the first 5 years,RMB735,000 for years 6 to 10, RMB770,000 for years 11 to 15, RMB 805,000 foryears 16 to 20, RMB840,000 for years 21 to 25 and RMB875,000 for the remainder ofthe lease period. Annual lease payments are payable on 31 December of each year.

This agreement is governed by the laws of China. Under this agreement, in return forannual lease payments, we will enjoy all management and operating rights of, andtherefore economic benefits from, the Plantation during the tenure of the lease.

(e) Business Transfer Agreement between HE Jianwen and Hunan Yima Tea Industry Co.,Ltd.

On 31 January 2015, we entered into a Business Transfer Agreement with HEJianwen, a founding shareholder. Under this agreement, HE Jianwen sold, and webought, the dark tea trading business which he was then carrying on along with aninventory of aged dark tea as listed in an annexure to the agreement. The purchaseprice of this business and inventory is a sum of RMB4,879,900 (or approximately$977,444).

(f) OEM Outsource Processing Agreement between Anhua County Qu Zhiyuan TeaIndustry Co., Ltd. and Hunan Yima Tea Industry Co., Ltd.

We entered into an OEM Outsource Processing Agreement dated 8 September 2016with the Contractor. Under the agreement, we contracted the day-to-daymanagement of the Plantation and the processing of tea leaves harvested from thePlantation to the Contractor. The fee we will pay to the Contractor under theagreement depends on the quantities and specifications of processed tea we orderfrom the Contractor under the agreement, and is calculated based on unit rates setout in the agreement. There is no minimum quantity of processed tea which wemust order from the Contractor.

This agreement is governed by the laws of China and is for an initial period of oneyear. Unless it is terminated by either party, this agreement will continue to beautomatically extended for a further one year annually.

In addition to the above material contracts, we enter into other commercial contracts duringthe ordinary course of our business. None of these commercial contracts:



(a) are entered into with a related party; nor

(b) contain onerous or unusual terms.

These commercial contracts include purchase contracts with our selected suppliers. Thesecommercial contracts are not disclosed in this information memorandum because theycontain commercially sensitive information, including the identities of our suppliers and theterms under which they supply the products to us.

3.11. Related party transactions

Save for:

(a) completed transactions with WANG Jiefu and HE Jianwen which are disclosed insections 3.10(a), 3.10(b), 3.10(c) and 3.10(e) of this information memorandum; and

(b) the remuneration and directors fees which we will pay to WANG Jiefu and to HEJianwen which are disclosed section 7.5 of this information memorandum,

we do not have any ongoing or potential transaction with related parties.

We have put in place a policy on related party transactions. If we propose to enter into anytransaction with a related party in the future, the terms of the proposed transaction with arelated party will be reviewed by our audit committee. When reviewing the terms of theproposed transaction with a related party, the audit committee will specifically have regardto the following factors:

(i) whether it will be reasonable, considering all circumstances, that we and the relatedparty are dealing at arms’ length; and

(ii) whether the terms of the proposed transaction are less favourable to the relatedparty than terms we can obtain from a non-related party.



4 Risk factors4.4.1. Introduction

Investing in the Shares should be considered speculative. An investment in our securities isnot risk free, and we recommend that you consider the risk factors described below togetherwith information contained elsewhere in this information memorandum before decidingwhether to invest in our securities. If you do not understand or have any question on thecontent of this information memorandum, you should consult your professional adviserimmediately.

There are specific risks which relate directly to our business. In addition, there are othergeneral risks, many of which are largely beyond our control or the control of directors. Therisks identified in this section, or other risk factors, may have a material impact on ourfinancial performance and the market price of our shares.

The following is not intended to be an exhaustive list of the risk factors to which we areexposed.

4.2. Risks which relate directly to our business

(a) Our tea production is dependent upon weather and other natural factors

The quantity and quality of tea which we can produce from the Plantation is greatlydependent on a number of factors which are beyond our control. Theseuncontrollable factors include but are not limited to the following:

(i) Tea is an evergreen plant that grows mainly in tropical and subtropicalclimate. Only the top one to two inches of leaves of the mature plant arepicked for tea production. During the growing season, these buds and leavesgrow every seven to 15 days. Leaves that are slow in development tend toproduce better-flavoured teas. Warm summers and frequent rains promoterapid leaf reproduction, and tea bushes lie dormant (i.e., leaves do notreproduce) during the cold winter season. Generally, temperatures above30°C and below 13°C are harmful for the growth of the tea bush.

(ii) The tea plant is affected by both excess and shortage of water. The growth,development and yield of tea depend on the soil moisture status. Inparticular, tea is highly intolerant to stagnant water. Therefore, annualrainfall is not as important as the distribution of rainfall.

If these weather conditions are not met, for example, if there are uncharacteristicallyshort and warm summer days or long and cool winter days, or if there is droughtduring the growing season or if there is heavy continuous rainfall causing water topool and stagnate where our tea shrubs grow, the quantity and quality of tea weproduce will be adversely affected. This in turn will adversely affect our revenues andfinancial performance.



In addition to the above weather condition related factors. Tea yields can also besignificantly affected by the following factors:

(iii) Insect pests

Growth of tea leaves is susceptible to attacks from pests such as mosquitobugs (not to be confused with mosquitoes) and other leaf feeders, forexample, caterpillars.

(iv) Plant diseases

Like all agricultural undertakings, the tea tree is also susceptible to variousdiseases. These diseases are caused by bacteria, viruses or fungi. Diseasedamage to our tea trees can greatly reduce yield.

While we have put in place the best possible farm practices, including the judicioususe of fertilisers and pesticides, we cannot give any assurance that the Plantation willnot be affected by incidences of pest attack(s) or plant diseases. If these incidencesoccur beyond the normal expected occurrences, the quantity and quality of the teawe produce will be adversely affected. This in turn will adversely affect our revenuesand financial performance.

(b) Our business and growth depends on our ability to retain and expand our salesnetwork

One contributing factor to our business growth is our ability to recruit, motivate andretain a team of qualified, motivated and high-achieving team leaders and salespersonnel. If these team leaders and sales personnel leave our employ, especially ifthey were to leave in a large number and at the same time, and if we are not able torecruit new team leaders and sales personnel to replace those leaving, it willadversely affect our revenues and financial performance.

One key aspect of our business expansion plan is to expand our sales network, bothin terms of the size of the sales teams in our existing locations and establishing salesteams in new locations. If we are not able to expand our sales network, our growthwill be adversely affected.

(c) Our growth depends on our ability to identify and source for suitable new productsto sell

One other aspect of our growth plan is to extend the products for our sales networkto sell to our customers. However, because we plan to sell all products under ourYima brand, we have to be selective in identifying and sourcing these new productranges. Where necessary, we will source these products from overseas, that is to say,from suppliers outside China. If we are not able to identify and source for suitablenew product ranges to sell, our growth may be adversely affected, and if any newproduct range which we introduce to the market in the future does not meet ourcustomers’ expectations as to quality, it will adversely affect our reputation andaffect our sales and financial performance.



(d) Our growth depends on our ability to establish and maintain our brand

We believe that establishing and maintaining our own brands is important toenlarging our customer base, expanding our sales network and increasing ourrevenue. This is the reason why we market our dark tea under our own Yi Lao Heibrand and our bai-jiu under our own Yima Lao Jiang Jiu brand. We intend to brand allproducts we sell in the future under the Yima (or a derivative) brand. Whether weare able to establish and maintain our brand largely depends on our ability tocontinually provide quality and value-for-money products. If we fail to successfullyestablish and maintain our brand, our business and our financial performance maybe adversely affected.

(e) Our business and growth depends on our ability to address competitive action fromour competitors

We operate in a competitive market. There are many companies in China producingand selling tea and bai-jiu. Competition is particularly intense in the tea marketwhere there is little product differentiation, particularly in the mass market segment,that is to say, a majority of consumers who are not tea connoisseurs. Because thereis little product differentiation for dark tea, brand recognition is important.Consumers tend to buy tea of brands they recognise.

The bai-jiu market, especially in the standard-priced bai-jiu category, is alsocompetitive. Unlike tea, product differentiation for bai-jiu market is high. Bai-jiucomes in different tastes, fragrances (or nose) and qualities, depending on thelocality where the bai-jiu is distilled and the skill and experience of the producer’smaster blender. Generally, while brand recognition is also important, consumers tendto buy bai-jiu which suits their personal taste buds and which are within theiracceptable price range.

Should there be any significant increase in competition from these competitors or ifwe are not able to compete effectively against these competitors or cope withchanges in market conditions caused by increased competition from thesecompetitors, our financial performance may be adversely affected.

(f) Smooth continuity of our business depends on other parties honouring theircontractual obligations to us

Smooth continuity of our business operations and, where applicable, their expansionalso depend on counter-parties to certain important contracts fulfilling theirobligations under those contracts or our ability to enforce these contractual rights. Inparticular:

(i) the Plantation is owned under a lease agreement with the Contractor;

(ii) day-to-day management and processing of tea harvested from the Plantationis contracted to the Contractor under an OEM outsource processingagreement; and



(iii) our Yima Lao Jiang Jiu branded bai-jiu which we sell is sourced from a third-party distillery under a product procurement agreement.

If any counter-party to the above agreements breaches its obligations and if we arenot able to legally enforce that counter-party’s obligations under the relevantagreement, smooth continuity of our business operations will be adversely affected.In particular:

(A) If the Contractor breaches its obligations under either or both of thePlantation lease agreement and the OEM outsource processing agreement,we will have to source for dark tea to sell under our Yi Lao Hei brand fromanother supplier. While there are numerous other tea plantations andfactories which can supply dark tea similar to the ones we sell, we need tosource from a supplier who is able to supply dark tea which is consistent intaste and quality with the Yi Lao Hei tea we currently sell, and at priceswhich are not materially higher.

(B) If our current bai-jiu supplier breaches its obligations under the productprocurement agreement, we will have to source for bai-jiu to sell under ourYima Lao Jiang Jiu brand from another supplier. While there are manydistilleries which can supply bai-jiu, we must find a distillery that producesbai-jiu with similar taste, fragrance (or nose) and quality as the bai-jiu wecurrently sell.

The process to source for an alternative supplier takes time. If the time taken for usto source for a suitable alternative supplier is longer than is expected, this willdisrupt our smooth business continuity and, if we can source only from a suitablealternative supplier at higher prices than our current cost structure, it will reduce ourprofit margins. While this is a risk we are exposed to, our directors assess that thelikelihood of this risk materialising to be low because there is no reason to expectthat we will not be able to legally enforce our rights under these agreements giventhat these are normal commercial contracts.

(g) Our business and growth may be affected by counterfeit products

Our Yi Lao Hei branded dark tea has received market acceptance among our existingcustomers and, based on feedback from our early customers, we expect that ourYima Lao Jiang Jiu branded bai-jiu will also receive market acceptance from morecustomers. Many of our customers are repeat customers purchasing our productsmultiple times. There is a risk that less than reputable suppliers will produce darktea, bai-jiu or any other product we may sell in the future to counterfeit those whichwe produced or source and sell under our own brands. If we are not able toeffectively stop these counterfeit products from being sold in the market, it willadversely affect out brand value and, in turn, affect our revenues and financialperformance.



4.3. Risks relating to where we operate

(a) Our functional currency is the Yuan (or Renminbi) and any changes in foreignexchange rates and/or foreign currency regulations in China will affect our financialperformance and business operations

The revenue we generate, and capital and operating costs we incur is denominatedin the Yuan. Therefore, our financial results which are stated in Australian Dollars willbe subject to foreign exchange currency risks due to exchange rate movements.These exchange rates are affected by numerous factors outside our control. Thesefactors include the economic conditions of China, interest rates, inflation and othereconomic factors. Significant changes in these factors (or any of them) may have animpact on the foreign exchange rates, and in turn will have effect on our financialperformance when it is translated into Australian Dollars.

The value of the Yuan can also be affected by changes in the Chinese government'spolicies and to international economic and political developments. We cannot giveany assurance that the Yuan will not become volatile against other currencies(especially the Australian Dollar) or that the Yuan will not be devalued. We do nothedge against movements in the Yuan.

The conversion of the Yuan into foreign currencies is regulated in China. UnderChinese government regulations, all foreign enterprises must establish a “currentaccount” and a “capital account” with a bank authorised to deal in foreign exchange.Currently, foreign enterprises are able to exchange Yuan into foreign currencies atdesignated foreign exchange banks for settlement of “current account” transactions,which include payment of dividends on the basis of a board resolution authorisingthe distribution of profits or dividends, without other regulatory approval.Conversion of the Yuan into foreign currencies for “capital account transactions”,which include the receipt and payment of foreign exchange for loans, contributionsand purchases of fixed assets, continues to be subject to limitations and requiresregulatory approval. We cannot give any assurance that the Chinese government willnot change or implement new regulations in the future will affect our ability torepatriate funds from China.

(b) We operate in China where its legal system is based on civil law

China operates under a civil law system. Other countries or jurisdictions whose legalsystem is based on civil law include Germany, Scotland and Japan. This system isdifferent from the common law system which Australian law is based. Whileindividual court decisions in China may be noted for reference, they may not haveprecedent value. Although legislative reforms during the last two decades havesignificantly enhanced the protection enjoyed by enterprises in China, some of theselaws, regulations and measures are relatively recent and their interpretation andenforcement remain uncertain. In addition, the legal system in China is subject tocontinuing development in areas such as foreign investment, tax and foreignexchange and these could adversely affect our operations.



(c) Political, economic and social reforms

The Chinese economy has gradually changed from a centralised economy to amarket economy. This reform has, among other things, resulted in significanteconomic growth. Political, economic and social factors may lead to furtherreadjustment of the reforms already in place. However, we cannot give anyassurance that further changes as a result of political, economic or social reforms inChina which will have a positive impact on China's economic development or ouroperations. There is a risk that these continuing changes may in fact adversely affectour operations, markets and financial performance.

4.4. General risks affecting investments

(a) Economic

General economic conditions, introduction of tax reform, new legislation,movements in interest and inflation rates and currency exchange rates may have anadverse effect on our business operations and future business plans, as well as ourability to fund business operations and growth plans.

(b) Market conditions

Share market conditions may affect the value of our quoted shares regardless of ouroperating performance. Share market conditions are affected by many factors whichincluding but are not limited to:

(i) general economic outlook;

(ii) introduction of tax reform or other new legislation;

(iii) interest rates and inflation rates;

(iv) changes in investor sentiment towards particular market sectors;

(v) the demand for, and supply of, capital; and

(vi) terrorism or other hostilities.

The market price of shares can fall as well as rise and may be subject to varied andunpredictable influences on the market for equities. We cannot warrant our futureperformance or the performance of the price of our shares or any return on aninvestment in our shares.

(c) Additional requirements for capital

Our capital requirements depend on many factors. Depending on our ability togenerate income from our operations, our future business expansion plans andavailability of other sources of funds, we may require further financing. Anyadditional equity financing will dilute our shareholders’ holdings, and debt financing,if available, may involve restrictions on financing and operating activities. If we arenot able to obtain additional financing as needed, we may reduce the scope of ouroperations and scale back on our business expansion plans as the case may be. We



are also not able to give any assurance that we will be able to secure any additionalfunding or be able to secure funding on terms favourable to us.

(d) Currently no market

There is currently no public market for our shares, the price of these shares is subjectto uncertainties, and we cannot give any assurance that an active market for theseshares will develop or continue after the Listing or that the price of these shares willincrease.

The price at which our shares are traded on the DCSX after listing may be higher orlower than the offer price and could be subject to fluctuations in response tovariations in operating performance and general operations and business risk, as wellas external operating factors that we have no control of, such as movements inexchange rates, changes to government policy, legislation or regulation and otherevents or factors.

There may be relatively few or many potential buyers or sellers of these shares onthe DCSX at any given time. This may increase the volatility of the market price of theshares. It may also affect the prevailing market price at which our shareholders areable to sell their shares. This may result in shareholders receiving a market price fortheir Shares that is above or below the price that Shareholders paid.

(e) Investment speculative

The above list of risk factors ought not to be taken as exhaustive of the risks faced byus or by our investors who invest in us. The above factors, and others not specificallyreferred to above, may in the future materially affect our financial performance andthe value of our shares.

Therefore, the shares which we will issue under this information memorandum carryno guarantee with respect to the payment of dividends, capital distribution or themarket value of those shares. Potential investors should consider that theinvestment in the Company as being speculative and should consult theirprofessional advisers before deciding whether to apply for shares pursuant to thisinformation memorandum or to purchase our shares from the secondary market onthe DCSX after the Listing.



5 Our capital structure and shareholding5.5.1. Share class information

(a) As of the date of this information memorandum and on the completion of the offerunder this information memorandum, we have and will have only one class of sharesin issue, namely ordinary shares, the details of which are as follows:

Number ofsecurities

issuedVoting rights attaching to

each security

The amount of fully paid-up or credited as being

fully paid-up security #

As of the date of this information memorandum

Ordinary shares

200,010,000 Each shareholder is entitledto one vote for each Share

$6,101,000

# Only a sum of $2, being subscription monies paid for shares issued to our initialsubscribers, is paid up in cash. The remaining shares were issued either forconsideration other than cash or for nil consideration. ASIC’s records reflect only theshares issued for cash as being the amount paid up for the Shares.

The rights attaching to these ordinary shares are summarised in section 9.2 of thisinformation memorandum.

(b) These shares were issued to our shareholders on the following dates and in thefollowing manner:

Date Description of issueNumber of

sharesAmount of

capital paid up

30 November 2017

Shares issued to initial subscribers 2 $2

30 January 2018 Shares issued as consideration for the acquisition of 100% of the share capital of WLS

1,999,998 $998

Shares issued at nil consideration 196,000,000 -

Shares issued as consideration for the assignment of debts due from Yima Tea

2,000,000 $6,100,000

7 May 2018 Shares issued for cash 10,000 $3,000

Number of shares on the date of thisinformation memorandum

200,010,000 $6,104,000

(c) There is no option or any convertible securities on issue as of the date of thisinformation memorandum.



5.2. Substantial shareholders

Shareholders who hold 5% or more of our shares on issue and their shareholdings as of thedate of this information memorandum are as follows:

Substantial shareholderDirect

interestIndirectinterest Total interest

% of issuedcapital

Avonherst Holdings Limited(BVI Co. No. 1957256)

78,000,000 - 78,000,000 39.00%

Pro Value Ventures Limited(BVI Co. No. 1957444)

42,000,000 - 42,000,000 21.00%

WANG Jiefu - 120,000,000 (1) 120,000,000 60.00%

HE Jianwen - 78,000,000 (2) 78,000,000 39.00%

(1) WANG Jiefu’s indirect interests in these 120,000,000 Shares refer to Shares held by AvonherstHoldings Limited (Avonherst) (78,000,000 Shares) and by Pro Value Ventures Limited (ProValue) (42,000,000 Shares). WANG Jiefu holds 50% of the voting rights of Avonherst and100% voting rights of Pro Value. As a result of this, he is able to exercise significant influenceon how voting rights attaching to the Company’s shares registered in the names of Avonherstand in Pro Value are exercised. Therefore, he is considered to have relevant interests in allshares registered in the names of Avonherst and Pro Value. As disclosed in footnote (2)below, HE Jianwen also has an indirect interest in the 78,000,000 Shares registered in thename of Avonherst.

(2) HE Jianwen’s indirect interests in these 78,000,000 Shares refer to Shares held by Avonherst(78,000,000 Shares). HE Jianwen holds the balance 50% of the voting rights of Avonherst.As a result of this, he is able to exercise significant influence on how voting rights attaching tothe Company’s shares registered in the name of Avonherst are exercised. Therefore, he isconsidered to have a relevant interest in all shares registered in the name of Avonherst.As disclosed in footnote (1) above, WANG Jiefu also has an indirect interest in the 78,000,000Shares registered in the name of Avonherst.

5.3. Shareholdings spread analysis

The 200,010,000 ordinary shares in our paid up share capital on issue as of the date of thisinformation memorandum are held by 391 shareholders, as follows:



5.4. Restricted securities and restrictions on trading of the Company’s shares

Subject to the DCSX's acceptance of our submission on securities to be restricted, we intendto have escrow arrangements in respect of 120,000,000 shares. These 120,000,000 sharesrepresent approximately 60.00% of the Company's issued and paid-up share capital. If theDCSX accepts our submission on securities to be restricted, the following persons (and whereapplicable, their controllers) will enter into restriction agreements with us, under which theyare restricted from dealing in any share held by them during the escrow period. Theproposed escrow arrangements are as follows:

Name of holder Number of Shares Escrow Period

1. Avonherst Holdings Limited 78,000,000 24 months from listing date

2. Pro Value Ventures Limited 42,000,000 24 months from listing date

120,000,000

The remaining 80,010,000 Shares, or any portions of it, will become trade-able on the DCSX’strading platform after they have been duly deposited with a depository nominee approvedby the DCSX.



6 Financial information6. 6.1. Introduction

(a) Our corporate structure is the result of the restructuring of our shareholdersshareholdings in the Operating Companies for the purpose of the Listing. Asthe Company is only recently incorporated for the this purpose and has notrack record of its own, financial information (the Financial Information) setout in this section relates to financial information of the Operating Companiescomprising:

(i) audited historical financial statements of Yima Tea for the financialyear ended 31 August 2016;

(ii) audited historical consolidated financial statements of Yima Tea andYima Trading for the financial year ended 31 August 2017; and

(iii) reviewed historical consolidated financial statements of Yima Tea andYima Trading for the six-months period ended 28 February 2018.

collectively, the Relevant Financial Periods.

(b) We have prepared the Financial Information in accordance with and using theInternational Financial Reporting Standards as issued by the InternationalAccounting Standards Board.

(c) HML & Co., Chartered Accountants (Malaysia), auditors of our subsidiaries,had audited or reviewed the aforesaid financial statements (as the case maybe) and had issued unqualified opinions on these financial statements. HML &Co. had carried out their audit in accordance with applicable InternationalStandards on Auditing.

(d) We had prepared and presented the Financial Information in RMB or theChinese Yuan, the currency of the primary economic environment in whichwe operate. The US Dollars equivalents of the Financial Information in thissection is derived by direct conversion using a fixed exchange rate of RMB1 =US$0.1477 (being the approximate exchange rate as at the latest practicabledate before this information is finalized for directors approval) and ispresented for reference purposes only.

6.2. Audited and reviewed financial statements

The audited historical consolidated financial statements for the Operating Companiesand the reviewed historical consolidated financial statements for the Operating



Companies for Relevant Financial Periods are lodged and disclosed separately on theDCSX announcements portal.

6.3. Tabulation of Statement of Financial Position

A tabulation of the Statement of Financial Position (or balance sheet) as at the end ofeach Relevant Financial Period are set out below:

6.4. Tabulation of Statement of Comprehensive Income

A tabulation of the Statement of Comprehensive Income (or profit and lossstatement) for each each Relevant Financial Period are set out below:



6.5. Working capital

As at the date of this information memorandum, the we have sufficient workingcapital for our current requirements. Therefore, we do not have any intention to raiseadditional funds after our listing on DCSX.



7 Directors and key managers7.7.1. Directors

We are managed by a board of directors, which currently comprises 5 directors, namely:

Name Age Date appointed Designation

Peter John William COCKCROFT

69 30 November 2017 Independent non-executive directorChairman of the board

WANG Jiefu 53 30 November 2017 Executive directorChief executive officer

HE Jianwen 55 30 November 2017 Executive director

LEONG Chong Peng (Sharon)

44 30 November 2017 Independent non-executive director

GAN Gechang 42 30 November 2017 Independent non-executive director

The qualifications, business and working experience of each director is summarised below:

(a) Peter John William COCKCROFTBachelor of Arts, University of SydneyIndependent non-executive director and chairmanof the boardAustralian citizen

Peter COCKCROFT had a distinguished internationalbusiness career, mostly in the resources sector. Hehas lived and managed entities in Australia,Indonesia, Philippines, Thailand, India, Pakistan,

France and Singapore. He currently resides in Australia and Singapore. In the past 10years, he has held board positions in different parts of the world, including aschairman on an Indonesian-listed coal company, a founding director of KuwaitEnergy Company, as well as chairman of Baraka Energy and Resources Limited(ASX:BKP), Blue Energy Limited (ASX:BUL) and Kairiki Energy Limited (ASX:KIK), and adirector of Nuenergy Gas Limited (ASX:NGY), Australian Oil Company Limited(ASX:AOC) [now Sacgasco Limited (ASX:SGC)] and European Gas Limited (ASX: EGL)[now Fitzroy River Corporation Limited (ASX:FZR).

He held senior executive positions in major resource companies including BHP andSHELL, in large independent oil companies such as Premier Oil and FletcherChallenge Petroleum, and had worked for PERTAMINA (the national oil corporationof the Republic of Indonesia) and KNOC (the national oil corporation of South Korea).

Between 2004 and 2007, Peter COCKCROFT was a visiting research fellow at theInstitute of Southeast Asian Studies (now ISEAS–Yusof Ishak Institute), anautonomous research institute in Singapore. Nowadays, he focuses on advising and



teaching risk management and negotiations to businesses and business people. Hehas recently taught for the Singapore Stock Exchange (SGX), and is currentlyauthoring a handbook about risk management for directors. Peter COCKCROFT isrecipient of numerous awards, including certification as a petroleum geologist withthe American Association of Petroleum Geologists, a life fellow of the RoyalGeographical Society and a life member of the Society of Petroleum Engineers (SPE),in which he was appointed as a distinguished lecturer on risk. He has also taughtnegotiations for the MBA programme at Edinburgh Business School.

We appointed Peter COCKCROFT as chairman of the board because of his extensivecorporate governance experience gained from sitting on boards of listed Australianpublic companies. As chairman, his primary function is to ensure that the boardperforms its functions effectively and efficiently.

(b) WANG JiefuBachelor of Applied Mathematics, Dalian University ofTechnology (China)Masters of Science in Mathematics (Statistics), East ChinaNormal University (China)Executive director and chief executive officerChinese national

Prior to joining us and becoming our substantial shareholder in 2016, WANG Jiefu’sextensive career was in academia and the insurance industry. WANG Jiefu wasadmitted to university to read mathematics at the age of 16. After he graduated withhis MSc in 1987, he joined the faculty at Central South University in China where healso supervised and tutored post-graduate level candidates. He then joined theInsurance Professional College5, an educational Institution sponsored by the ChinaLife Insurance Group, as an Associate Professor. Between 2001 and 2015, WANGJiefu joined the insurance industry in which he assumed a number of senioroperations and management roles. These include being operations manager ofTaikang Life Insurance Co., Ltd. (Guangzhou City branch), branch manager rising todeputy general manager of Shenzhen and Hong Kong listed New China Life InsuranceCo., Ltd. and branch general manager of Minsheng Insurance Co., Ltd. (HunanProvince branch).

WANG Jiefu brings with him vast experience in operations management, financialcontrol, regulatory compliance and sales channel management. As chief executiveofficer, WANG Jiefu has overall responsibility for the day-to-day management of ouroperations, including the management and expansion of our sales network, ourfinancial performance and the implementation of our business plans.

5 In 2003, the Insurance Professional College was restructured into a public full-time institution specialisingin insurance and financial planning education.



(c) HE JianwenExecutive directorChinese national

Based on his experience and business acumen, HE Jianwenwill primarily be responsible for the Plantation and qualitycontrol of our tea products produced by the Contractor andwill provide us with entrepreneurial drive and direction.

HE Jianwen, our founder, is a seasoned entrepreneur andbusinessman dealing mainly in the trade of agricultural products. His businesssuccesses include founding and running a logistics business specialising intransporting goods and produce on barges along the rivers in Hunan Province. Hehas since disposed of this business. HE Jianwen was born and raised in Liuyang Cityin Hunan Province, where tea plantation, agriculture and fish farming are themainstay of its economy. Therefore, he had naturally developed an interest in the teaindustry, and has now accumulated more 30 years of experiences in this industry.Between 2016 and 2017, HE Jianwen was appointed executive director of KSLHoldings Limited, a public company listed on the Growth Enterprise Market board ofthe Stock Exchange of Hong Kong.

(d) LEONG Chong Peng (Sharon)Bachelor of Commerce, Curtin UniversityIndependent non-executive directorAustralian citizen

Sharon LEONG is a Certified Practising Accountant andRegistered Company Auditor in Australia. Currently, she is adirector of CPL Corporate, a professional Perth-basedpractice specialising in providing accounting and corporate

services to medium-sized and small businesses. Sharon LEONG speaks and writesEnglish and Chinese, and is also fluent in the Chinese Cantonese dialect. Prior tofounding CPL Corporate, Sharon LEONG was an executive director of the Australianmember firm of a mid-tier international accounting network and, in her early career,worked at the Hong Kong, Shanghai and Perth offices of a Big-Four internationalaccounting firm. During her career, she had participated in the audits ofmultinational and listed companies in Hong Kong, China and Australia and hadgained experience in accounting, corporate governance, risk management andcorporate compliance. She was also involved in initial public offerings in bothAustralia and Hong Kong.

Given her financial qualifications and experience, Sharon LEONG will chair ourboard’s audit committee.



(e) GAN GechangBachelor in International Finance, Hunan University (China)Independent non-executive directorChinese national

After a short stint teaching at Changsha Social Work Collegeupon his graduation from university, GAN Gechang hasspent the last 16 years of his working life in the insuranceindustry, both as a regulator and a practitioner. He is

currently deputy general manager of Funde Sino Life Insurance Co., Ltd. (Hunanbranch). Between 2005 and 2012, he was a director at the Hunan branch of theChina Insurance Regulatory Commission. His other positions within the insuranceindustry are district manager of New China Life Insurance Co., Ltd. (Hunan branch)and deputy general manager of Mingsheng Insurance Co., Ltd. (Hunan branch).

7.2. Company secretary

To assist us with all regulatory compliance in Australia, we have appointed an experiencedand qualified company secretary. The qualifications and professional experience of ourcompany secretary is summarised below:

(a) LI Xuekun (Age: 41)Member, Association of Chartered Certified Accountants (ACCA)Member, Governance Institute of Australia

LI Xuekun is a chartered company secretary and a qualified accountant with morethan 20 years’ experience in financial accounting and corporate governance. Shepreviously worked as an audit manager at the China practice of a Big-Fourinternational accounting firm where she was involved in audits both for periodicfinancial reporting and for initial public offerings. She relocated to and commencedher career in Australia in 2006. LI Xuekun speaks and writes English and Chinese, andis also fluent in the Chinese Cantonese dialect. She is an executive at L.X.K.Consulting, a Perth-based accounting and corporate services business. Herappointments include being company secretary of ASX-listed Energy Metals Limited(ASX:EME).

7.3. Key management personnel

Day-to-day management of our business is tasked to our chief executive officer,WANG Jiefu and executive director, HE Jianwen. They are supported by experiencedand qualified key management personnel, namely:

(a) YANG Xiaohui (Age: 40)Diploma in Accounting and Finance, The Open University of ChinaFinancial Controller

YANG Xiaohui has overall responsibility for all our accounting and finance functions.Her main functions are cash management (including cash and bank reconciliation),disbursements, account record-keeping and timely financial reporting. Shesupervises a team who assists her in the discharge of her duties. Prior to joining us,



YANG Xiaohui had worked in senior accounting and finance positions in a few othercompanies in the property development, logistics, investment holdings and e-commerce industries.

(b) DENG Qian (Age: 39)Diploma in Finance, Central Television Broadcasting University (now The Open University of China)Vice-president (Training and brand promotion)

DENG Qian is responsible for identifying training needs and setting the trainingobjectives to design the training programme for our sales personnel. He acts astrainer for a number of these training modules. He is also responsible for arrangingand engaging external trainers as may be required under the programme which hedesigns. He is also responsible for developing our brand management and promotionstrategies and for their execution.

DENG Qian first worked in the broadcast industry at Anhua County Television Stationbefore furthering his tertiary education, and joining the insurance industry after hisgraduation. In the eight years prior to joining us in 2016, he had worked in variouscapacities at New China Life Insurance Co., Ltd., including as city-level generalmanager in charge of personal insurance.

(c) SHEN Bing (Age: 42)Diploma in Economic Management and Administration, Hunan Textile Vocational UniversityDeputy general manager (Sales and marketing)

SHEN Bing, who joined us in 2016, assists our chief executive officer to set, monitorand review targets and budgets for our sales teams and employed sales personneland team leaders. He is also responsible for designing and executing sales andmarketing strategies. He has overall responsibility for the day-to-day management ofour entire sales teams and for their performance. Where necessary, SHEN Bing workswith DENG Qian to organise ad-hoc training sessions for selected sales personnel tosupplement our regular training programmes.

SHEN Bing is also an insurance industry veteran having spent more than 10 years inthe industry in which he worked in a number of senior and management positions atthe Hunan provincial branches of New China Life Insurance Co., Ltd. and EvergrandeLife Insurance Co., Ltd.. SHEN Bing also has real estate sales experience and hasworked in various state-owned enterprises.

7.4. Directors' holdings

As of the date of this information memorandum, Directors' interests in Shares are as follows:

Direct interest Indirect interest Total interest % of issued capital

WANG Jiefu - 120,000,000 (1) 120,000,000 60.00%

HE Jianwen - 78,000,000 (2) 78,000,000 39.00%



(1) WANG Jiefu’s indirect interests in these 120,000,000 Shares refer to Shares held by AvonherstHoldings Limited (Avonherst) (78,000,000 Shares) and by Pro Value Ventures Limited (ProValue) (42,000,000 Shares). WANG Jiefu holds 50% of the voting rights of Avonherst and100% voting rights of Pro Value. As a result of this, he is able to exercise significant influenceon how voting rights attaching to the Company’s shares registered in the names of Avonherstand in Pro Value are exercised. Therefore, he is considered to have relevant interests in allshares registered in the names of Avonherst and Pro Value. As disclosed in footnote (2)below, HE Jianwen also has an indirect interest in the 78,000,000 Shares registered in thename of Avonherst.

(2) HE Jianwen’s indirect interests in these 78,000,000 Shares refer to Shares held by Avonherst(78,000,000 Shares). HE Jianwen holds the balance 50% of the voting rights of Avonherst.As a result of this, he is able to exercise significant influence on how voting rights attaching tothe Company’s shares registered in the name of Avonherst are exercised. Therefore, he isconsidered to have a relevant interest in all shares registered in the name of Avonherst.As disclosed in footnote (1) above, WANG Jiefu also has an indirect interest in the 78,000,000Shares registered in the name of Avonherst.

We issued these Shares to WANG Jiefu and HE Jianwen, as well as other ExistingShareholders, during the restructuring referred to in the second paragraph of section 3.1. Asthese Shares were issued pursuant to the restructuring for the sole purpose of our listing onan offshore securities exchange, these Shares were issued at a notional (or nominal) price. Insummary, and taking into account this fact, the Shares were issued to Avonherst and ProValue at the following dates and at the following notional prices:

Number of Shares issued Notional issue price

Avonherst Pro ValueIn AUD, the

currency of issue In USD

30 November 2017 1 1 2 1

30 January 2018 77,999,999 41,999,999 3,660,598 2,715,432

78,000,000 42,000,000 3,660,600 2,715,433

7.5. Remuneration received by directors and their related entities

We will pay Directors the following remuneration:

(Amount per annum)

Director's fees Wages, salaries and/or bonus

$ In RMB In $

Peter COCKCROFT 24,000 -

WANG Jiefu 5,000 300,000 60,000

HE Jianwen 5,000 150,000 30,000

LEONG Chong Peng (Sharon) 20,000 -

GAN Gechang 10,000 -

We may also pay a director fees or other amounts as the board determines if he or sheperforms special duties or otherwise performs services outside the scope of the ordinary



duties of a director. We may also reimburse a director for out-of-pocket expenses incurred asa result of his or her directorship or any special duties.

Wages, salaries and/or bonus payable to WANG Jiefu and HE Jianwen disclosed above arepayable under an employment contract which Yima Tea had entered into which each one ofthem. A summary of the key terms of these employment contracts are set out in the tablebelow:

Employment contract of

WANG Jiefu HE JIanwen

Contract date: 30 November 2017 30 November 2017

Commencement date: 30 November 2017 30 November 2017

Term of employment: 3 years from commencement date, and unless notified otherwise by either party, will be renewed automatically for a further period of 1 year on expiry.

3 years from commencement date, and unless notified otherwise by either party, will be renewed automatically for a further period of 1 year on expiry.

Remuneration: RMB300,000 per year, plus all statutory contributions.

RMB150,000 per year, plus all statutory contributions.

Early termination: Either party may terminate theagreement with immediate effect for cause. Otherwise, by either party giving three months notice to the other party or the payment of three months salary in lieu of notice.

Either party may terminate theagreement with immediate effect for cause. Otherwise, by either party giving three months notice to the other party or the payment of three months salary in lieu of notice.

Other important clauses: None. None.

7.6. Other information on directors

As of the date of this information memorandum:

(a) there are no family relationships among any of the directors; and

(b) none of the directors has, in any jurisdiction, been convicted in any criminalproceeding or has had a bankruptcy petition filed against him or any partnership inwhich he is or was a partner or any body corporate of which he is or was a directoror has been sanctioned or otherwise disciplined by any self-regulatory securitiesassociation of which he is or has been a security holder or any securities supervisoryor regulatory body or any such event is pending.

7.7. Corporate governance statement

Our corporate governance practices are based on the principles and recommendations setout in Corporate Governance Council’s Principles and Recommendations, 3rd Edition issuedby ASX Corporate Governance Council, which we had modified to take into account our



current size and scale of operations. You can request for a copy of our corporate governancestatement, which is also our “if not, why not” statement, by sending your request in writingby e-mail to us at [email protected]. A copy of our corporate governance statement will beprovided to you at no cost.


mailto:[email protected]


8 Details of the listing8. 8.1. DCSX listing

We have applied to DCSX for admission to the Official List and for official quotation of theShares on DCSX. The fact that DCSX may list these Shares or other securities issued by us isnot to be taken in any way as an indication of our merits and commercial viability or thelisted securities. DCSX takes no responsibility for the contents of this informationmemorandum, makes no representations as to its accuracy or completeness and expresslydisclaims any liability whatsoever for any loss arising from or in reliance upon any part of thecontent of this information memorandum.

Directors expect that trading of the Shares on DCSX will commence as soon as practicableafter approval for admission to the Official List is granted and all conditions (if any) applicablethereto have been fulfilled.

8.2. Listing price of the Shares

We propose to list the Shares at a price of US$0.30 per Share. This represents an impliedprice-earnings ratio 65X based on an assumed FY2018 earnings per share (EPS) of US$0.46(HY2018 EPS multiply by 2). We believe that this is reasonable taking into account thefollowing factors:

(a) our compounded growth rate since FY2016 is approximately 104% calculated basedon an assumed FY2018 EPS, or approximately 63% calculated based on historicalHY2018 EPS; and

(b) our inventory includes a large quantity of aged black tea which increases in value asthey age further. These inventory were acquired a number of years ago and,adopting a conservative approach to accounting, have been carried in our accountingrecords at cost. In other words, the carrying value in our accounting records of thisinventory of aged tea does not reflect its current market value.

8.3. Purpose of the Listing

Our application to DCSX is to list the Shares on DCSX by way of a compliance listing 6. No newcapital will be raised by us as a result of the Listing. Nonetheless, directors believe that thelisting of the Shares on DCSX is beneficial us and our shareholders because a listing on DCSXwill:

♦ allow Shareholders who may wish to trade their shares through a stock exchange todo so;

♦ broaden the Company's shareholder base;

6 The term “compliance listing” which we use in this information memorandum means a listing without anoffer of securities. This terminology is commonly used in Australia, our country of incorporation. Anotherequivalent term commonly used elsewhere is “listing by introduction”.



♦ facilitate the Group to raise further capital when such additional capital is requiredto expand the Group's business operations or for such other purposes as they mayarise;

♦ raise the Group's profile and promote the Yima brand; and

♦ allow suppliers, customers and other strategic partners to take an equity stake in theCompany so as to align their interests with that of the Company.

8.4. Listing Adviser

Companies intending to list on DCSX are required to have a Listing Adviser (LAD). It iscontemplated that, with a LAD for each company, investors will be offered better protectionbecause LADs are required to make sure that companies meet the on-going requirements forlisting on DCSX. The Company has appointed Biztrack Consultants Private Limited as its LAD.



9 Additional information9. g9.1. Litigation

There is no litigation or claims of material importance made against us or any of our childentities in the last five (5) years or which is pending or threatened against.

9.2. Rights attaching to the Shares

Full details of the rights and liabilities attaching to the Shares are:

(1) detailed in the Constitution, a copy of which can be inspected, free of charge, at ourregistered office during normal business hours; and

(2) in certain circumstances, regulated by the Corporations Act, the Listing Rules and thegeneral law.

The following is a summary of the more significant rights attaching to the Shares. Thissummary is not exhaustive and does not constitute a definitive statement of the rights andliabilities of Shareholders. If you wish to obtain such a statement, you should seekindependent legal advice.

(a) General meetings

Shareholders are entitled to be present in person, or by proxy, attorney orrepresentative to attend and vote at general meetings of the Company. Shareholdersmay requisition meetings in accordance with Section 249D of the Corporations Actand the Constitution.

(b) Voting rights

Subject to any rights or restrictions for the time being attached to any class or classesof Shares, at general meetings of Shareholders or classes of Shareholders:

(i) each Shareholder entitled to vote may vote in person or by proxy, attorneyor representative;

(ii) on a show of hands, every person present who is a Shareholder or a proxy,attorney or representative of a Shareholder has one vote; and

(iii) on a poll, every person present who is a Shareholder or a proxy, attorney orrepresentative of a Shareholder shall, in respect of each fully paid Share heldby him, or in respect of which he is appointed a proxy, attorney orrepresentative, have one vote for the Share, but in respect of partly paidShares, shall have such number of votes as bears the same proportion to thetotal of such Shares registered in the Shareholder’s name as the amountpaid (not credited) bears to the total amounts paid and payable (excludingamounts credited).



(c) Dividend rights

Subject to the rights of any preference Shareholders and to the rights of the holdersof any shares created or raised under any special arrangement as to dividend,Directors may from time to time declare a dividend to be paid to the Shareholdersentitled to the dividend which shall be payable on all Shares according to theproportion that the amount paid (not credited) is of the total amounts paid andpayable (excluding amounts credited) in respect of such Shares.

Directors may from time to time pay to the Shareholders any interim dividends asthey may determine. No dividend shall carry interest against the Company. Directorsmay set aside out of the profits of the Company any amounts that they maydetermine as reserves, to be applied at the discretion of Directors, for any purposefor which the profits of the Company may be properly applied.

Subject to the Listing Rules and the Corporations Act, the Company may, byresolution of Directors, implement a dividend reinvestment plan on such terms andconditions as Directors think fit and which provides for any dividend which Directorsmay declare from time to time payable on Shares which are participating Shares inthe dividend reinvestment plan, less any amount which the Company shall either,pursuant to the Constitution, or any law be entitled or obliged to retain, be appliedby the Company to the payment of the subscription price of Shares.

(d) Winding-up

If the Company is wound up, the liquidator may, with the authority of a specialresolution of the Company, divide among the shareholders in kind the whole or anypart of the property of the Company, and may for that purpose set such value as heconsiders fair upon any property to be so divided, and may determine how thedivision is to be carried out among the Shareholders or different classes ofShareholders.

The liquidator may, with the authority of a special resolution of the Company, vestthe whole or any part of any such property in trustees upon such trusts for thebenefit of the contributories as the liquidator thinks fit.

(e) Shareholder liability

As the shares issued under this information memorandum are fully paid shares, theyare not subject to any calls for money by Directors and will therefore not becomeliable for forfeiture.

(f) Transfer of Shares

Generally, Shares are freely transferable, subject to formal requirements, theregistration of the transfer not resulting in a contravention of or failure to observethe provisions of a law of Australia and the transfer not being in breach of theCorporations Act or the Listing Rules.



(g) Variation of rights

Pursuant to Section 246B of the Corporations Act, the Company may, with thesanction of a special resolution passed at a meeting of Shareholders, vary orabrogate the rights attaching to Shares.

If at any time the share capital is divided into different classes of Shares, the rightsattached to any class (unless otherwise provided by the terms of issue of the sharesof that class) may be varied or abrogated with the consent in writing of the holdersof three-quarters of the issued shares of that class, or if authorised by a specialresolution passed at a separate meeting of the holders of the shares of that class.

(h) Alteration of Constitution

The Constitution can be amended only by a special resolution passed by at leastthree quarters of Shareholders present and voting at the general meeting. Inaddition, at least 28 days’ written notice specifying the intention to propose theresolution as a special resolution must be given.

9.3. Continual Disclosure

Upon admission to the Official List, we are required to notify the DCSX of information whichmay have a material effect on the price or value of the Shares. To comply with its continualdisclosure obligations:

(a) our nominated advisers have provided and will continue to provide on a periodicbasis briefings on continuous disclosure obligations to our Directors and seniormanagement; and

(b) Directors meet regularly during which continual disclosure is a standing agenda item.

9.4. Electronic information memorandum

If you have received this information memorandum as an electronic informationmemorandum, please ensure that you have received the entire information memorandum. Ifyou have not, please contact us at [email protected], and we will send you, free of charge,either a hard copy or a further electronic copy of this information memorandum or both.

We will not accept an application form from you if we have reason to believe that when thatyou were given access to the electronic application form, it was not provided together withthe electronic information memorandum and any relevant supplementary or replacementinformation memorandum or any of those documents were incomplete or altered.

9.5. Electronic register of securities

We operate an electronic register of securities. Under this arrangement, we will not issuecertificates to shareholders. Instead, shareholders will receive holding statements that setout the number of shares each shareholder owns. This statement will also adviseshareholders of their Security-holder Reference Number (SRN). A statement will routinely besent to shareholders at the end of every calendar month during which the balance of their


mailto:[email protected]


holding changes. A shareholder may at any other time request a statement of his or hershareholding from our share registry. Our share registry may charge a fee for these additionalstatements.

We will, as long as we remain listed of DCSX, appoint an authorised officer of DCSX as aperson authorised to give instructions to our share registry to affect changes to ourelectronic register of securities, including the transfers of the Shares which have been tradedon DCSX are cleared and settled in accordance with the Rules and Regulations of the DutchCaribbean Securities Exchange.

9.6. Privacy statement

The Company will include information about Shareholders (including names, addresses anddetails of the Shares held) in its register. The information contained in the Company’s registermust remain there even if that person ceases to be a Shareholder. Information contained inthe Company’s register is also used to facilitate distribution payments and corporatecommunication (including the Company’s financial results, annual reports and otherinformation that the Company may wish to communicate to its security holders) andcompliance by the Company with legal and regulatory requirements.

9.7. Consents

Each of the following persons who were involved in the preparation of this information hasgiven and has not, before the date of this information memorandum, withdrawn his writtenconsent to be named in this information memorandum in the form and context in which heis named:

(a) Biztrack Consultants Private Limited, our Listing Adviser;

(b) HML & Co. Chartered Accountants (Malaysia), auditors of the Operating Subsidiaries;and

(c) Shulun & Partners (Shanghai), our counsel as to China law.



10 Directors’ responsibility statement10. Directors’ statement

This information memorandum has been seen and approved by all directors who collectivelyand individually accept responsibility for this information memorandum and confirm, afterhaving made all reasonable enquiries, that to the best of their knowledge and belief, thefacts stated and opinions expressed in this information memorandum are fair and accurate inall material respects as at the date of this information memorandum and that there are nomaterial facts the omission of which would make any statement in this informationmemorandum misleading.

Each director has consented to lodgement of this information memorandum with DCSX andhas not withdrawn that consent, and has authorised this information memorandum for issueon the date of this information memorandum.

For and on behalf ofThe Yima Trading Company Limited

WANG Jiefu HE JianwenExecutive director and Executive directorchief executive officer



Corporate directorycorporate directory

Directors Registered office

Peter John William COCKCROFT@, independent director and chairman of the board

WANG Jiefu, executive director and chief executive officer

HE Jianwen, executive director

LEONG Chong Peng (Sharon)@, independent director

GAN Gechang@, independent director

20/217 Hay Street Subiaco WA 6008, AustraliaE-Mail: [email protected] number: (61) 413 041 820

Principal management office

Room 1301 Guishui Tower No. 469 Middle Wanjia Li Road (First Secton)Yuhua District, Changsha CityHunan Province, ChinaE-Mail: [email protected] hotline number: (86) 181 6361 1810

@ Members of the audit committee, a board committee chaired by LEONG Chong Peng (Sharon)

Counsel on Chinese law Company secretary #

Shulun & Partners (Shanghai)Unit 1104A, 333 Zhaojiabang RoadShanghai, China

LI Xuekun20/217 Hay Street Subiaco WA 6008, Australia

Share registry #

AutomicLevel 3, 50 Holt StreetSurry Hills NSW 2010

Auditor # Auditor for the subsidiaries

Pitcher Partners BA&A Pty Ltd.Level 1, 914 Hay StreetPerth WA 6000

HML & Co. (AF-1325), Chartered Accountants (Malaysia)No. 1-23B Jalan Desa 1/3, Desa Aman Puri 52100 Kuala LumpurMalaysia

Listing Adviser

Biztrack Consultants Private LimitedRoom 703 Kowloon Building555 Nathan RoadHong Kong

Principal banker # Website

China Construction BankChangsha branch (Guangyi sub-branch)

www.yima1ma.com

Agricultural Bank of ChinaChangsha branch (Xiangfu Road sub-branch)

# These persons were not involved in the preparation of this information memorandum (IM) and have not made anystatement included in this IM nor is there any statement in this IM made on the basis of a statement made by thesepersons. They did not consent to being named in this IM and did not authorise or cause the issue of this IM.


http://www.yima1ma.com/


Defined terms11. GlossaryUnless the context otherwise permits or unless otherwise stated, each defined term used in thisinformation memorandum has the meaning ascribed to it in the table below:

Key term Ascribed meaning

$ The Dollar, the official currency of Australia

ASIC Australian Securities and Investments Commission

China The People’s Republic of China

Company The Yima Trading Company Limited (ACN 622 914 078)

Constitution The constitution of the Company

Contractor Anhua County Qu Zhiyuan Tea Industry Co., Ltd. [Official name: 安化渠之源茶业有限公司]

DCSX The Dutch Caribbean Securities Exchange N.V. or, where the context so requires, the securities exchange which it operates

Directors Directors of the Company

Existing Shareholders

Shareholders of the Company as at the date of this information memorandum

Group The Company and its subsidiaries

Listing The Company's application to the DCSX for a compliance listing of the Shares on the DCSX or, where the context so require, the Company's listing of the Shares on the DCSX

Listing Rules The Listing Rules of the DCSX, as amended from time to time

Official List The list of issuers maintained by the DCSX in accordance with the Listing Rules

Operating Companies

Collectively, Yima Tea and Yima Trading

Plantation The 233 hectare (2.33 km2) matured tea plantation located in Taoping Village, Qujiang Town, Anhua County in Hunan Province, China owned and operated by Yima Tea under a lease expiring on 8 August 2044

RMB or Yuan Renminbi or the Chinese Yuan, the official currency of China, often represented by the symbol “¥”

Share One ordinary share in the issued and paid-up share capital of the Company

Shareholder A shareholder of the Company, that is, a holder of a Share



Key term Ascribed meaning

We, us or our The Company or, where the context so requires, the Group

WFOE Shanghai Yima Trade and Commerce Co., Ltd. [Official name: 上海裔玛商贸有限公司]

WLS World Lead Strategy Sdn. Bhd.

Yima Tea Hunan Yima Tea Industry Co., Ltd. [Official name: 湖南易马茶业有限公司]

Yima Trading Hunan Yima International Trading Co., Ltd. [Official name: 湖南易马国际商贸有限公司]



ANNEXURE AIndependent market report



‘



ANNEXURE BOverview of China’s legal framework

This section is prepared by our counsel for Chinese law, Shulun & Partners (Shanghai). It contains abrief outline of the legal framework and key laws and regulations of China which are relevant to usand our shareholders. This summary is not exhaustive and you should seek your own advice ifnecessary.

China’s legal system

The legal system of China is based on its Constitution (the Chinese Constitution) and is made up ofwritten laws, regulations and directives. Decided court cases do not constitute binding precedents inthe PRC.

The National People’s Congress of China (NPC) and the Standing Committee of the NPC (StandingCommittee) are empowered by the Chinese Constitution to exercise the legislative powers of theState including the power to amend the Chinese Constitution and to enact and amend primary laws.

The State Council of China (State Council) is the highest organ of state administration and has thepower to enact administrative rules and regulations. Ministries and commissions under the StateCouncil are also vested with the power to issue orders, directives and regulations.

The power to interpret laws is vested by the Chinese Constitution in the Standing Committee. Incases where the limits of articles of laws need to be further defined or additional stipulations need tobe made, the Standing Committee shall provide interpretations or make stipulations by means ofdecrees.

At the regional level, the people’s congresses of provinces and municipalities and their standingcommittees may enact local rules and regulations and the local people’s government maypromulgate administrative rules and directives applicable to their own administrative area. However,these local laws and regulations may not be in conflict with the Chinese Constitution, any nationallaws or any administrative rules and regulations promulgated by the State Council.

Judicial system

The People’s Courts are the judicial organs of the PRC. The People’s Courts comprise the SupremePeople’s Court, the local level of the People's Courts, military courts and other special People’sCourts. The local People's Courts are divided into three levels, namely, the lower People's Courts,intermediate People's Courts and higher People's Courts. The lower People's Courts are divided intocivil, criminal and administrative divisions. The intermediate People's Courts have divisions similar tothose of the basic People's Courts and, where the circumstances so warrant, may have other specialdivisions such as intellectual property divisions. The higher People’s Courts deal with significantimpact cases, in civil, criminal and administrative divisions. The judicial functions of People's Courtsat lower levels are subject to supervision of People's Courts at higher levels. The Supreme People’sCourt is the highest judicial organ of the PRC. It supervises the administration of justice by thePeople's Courts of all levels.

The People's Courts adopt a two-tier final appeal system. A party may before the taking effect of ajudgement or order appeal against the judgement or order of the first instance of a local People's



Court to the People's Court at the next higher level. Judgements or orders of the second instance ofthe same level and at the next higher level are final and binding.

A foreign individual or foreign enterprise is accorded the same litigation rights and obligations as aChinese citizen or legal person. But if the courts of a foreign country impose restrictions on the civillitigation rights of Chinese citizens, legal persons and other organisations, the People's Courts ofChina shall follow the principle of reciprocity regarding the civil litigation rights of the citizens, legalpersons and organisations of that foreign country. If any party to a civil action refuses to comply witha judgement or order made by a People's Court or an award made by an arbitration body in China,the aggrieved party may apply to the People's Court to enforce the judgement, order or award.

A party seeking to enforce a judgement or order of a People's Court against a party who or whoseproperty is not within China may apply to a foreign court with jurisdiction over the case forrecognition and enforcement of such judgement or order.

China has not concluded or acceded to any international convention on recognition and enforcementof foreign courts judgements. Nonetheless, enforcement of judgements of a foreign court is possiblein principle but it may be difficult to do so. To enforce a judgement of a foreign court in China, it isnecessary to demonstrate either that:

(i) there is a bilateral enforcement treaty between China and the country where the judgementoriginates; or

(ii) reciprocity between China and that country. That is to say, that the foreign jurisdiction fromwhich the judgement originates enforces Chinese judgements.

Australia does not have such a reciprocal arrangement with China. While there is currently no systemof binding precedent in China and judgements do not have persuasive effect, it is noteworthy that in2007, an application to enforce an Australian court judgement in China was refused by the People’sSupreme Court. If either the above conditions is satisfied, then, when considering an application toenforce a foreign judgement (such as a judgement by an Australian court), the Chinese court willexamine the judgement in substance in accordance with China’s Law of Civil Procedure. In a casewhere the judgement violates basic principles of Chinese laws or it conflicts with the statesovereignty, security or social public interests, the foreign judgement will not be recognised orenforced. One practical issue which the Chinese court will examine is whether the Chinese party hadbeen duly served with the summons of the foreign proceedings in China.

Arbitration and enforcement of arbitral awards

Under the Arbitration Law of China, an arbitral award is final and binding on the parties. If a partyfails to comply with an award, the other party to the award may apply to the People's Court forenforcement. A People's Court may refuse to enforce an arbitral award made by an arbitrationcommittee if there are mistakes, an absence of material evidence or irregularities over thearbitration proceedings, or the jurisdiction or constitution of the arbitration committee.

China has acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards(the New York Convention) adopted on 10 June 1958 pursuant to a resolution of the StandingCommittee of the NPC passed on 2 December 1986. The New York Convention provides that allarbitral awards made by a state which is a party to the New York Convention shall be recognised andenforced by other parties to the New York Convention subject to their right to refuse enforcement



under certain specific circumstances. Under the terms of China's accession to the New YorkConvention, China will recognise and enforce foreign arbitral awards only if the foreign arbitral awardis made:

(a) by an arbitration committee from a state which recognises arbitral awards from the PRC; and

(b) in relation to disputes considered under Chinese laws as disputes arising from contractualand non-contractual mercantile (or commercial) legal relations.

Foreign Exchange Control and payments by a PRC entity to a foreign entity

The Regulations on Administration of Foreign Exchange of the People’s Republic of China of January1996 and the subsequent amendments in 1997 and in 2008 by the State Council set out theregulatory framework on foreign exchange of China (Foreign Exchange Regulations). In accordancewith the Foreign Exchange Regulations, the Yuan (or the Renminbi) can be freely exchanged forsettling current accounts transactions, including trading and service related foreign exchangetransactions and dividend distributions. This means that Yima Tea can, subject to the conditions andprocedures set out in the section below, freely exchange funds denominated in Yuan to foreigncurrency to pay dividends to us who are its ultimate shareholder.

Foreign exchange for purposes of direct investments, loans or securities investments outside China isrestricted and requires the prior approval of the State Administration of Foreign Exchange. In 2016,the People’s Bank of China issued the directive Measures for the Administration of FinancialInstitutions’ Reporting of High-Value Transactions and Suspicious Transactions. This directive, whichcame into effect in July 2017, directs all banks and financial institutions in China to report cash andother foreign currency transactions in excess of certain set amounts. It also directs the StateAdministration of Foreign Exchange to supervise all overseas direct investments by Chinese entitiesin excess of US$50 million.

This means that in future, if the Company proposes to make investments outside China or for itsChinese subsidiaries to make loans to the Company using Yuan denominated funds the Group earnsor raises in China, exchanging foreign currency for any of these purposes will be restricted andrequires prior approval of the State Administration of Foreign Exchange.

Taxation

The applicable income tax laws, regulations, notices and decisions related to foreign investedenterprises (FIE) and their investors within China (collectively, the Applicable Foreign Enterprises TaxLaw) include the following:

(a) Enterprise Income Tax Law

The enterprise income tax in China is calculated based on the taxable income determinedunder Chinese accounting standards and regulations.

In March 2007, the NPC enacted a new Enterprise Income Tax Law (EIT Law), which cameinto effect on 1 January 1 2008. The new tax law imposes a unified income tax rate of 25% onall domestic invested enterprises (DIE) and FIEs unless they qualify under certain limitedexceptions. The new tax law permits companies to continue to enjoy their preferential taxtreatment under the prior tax regime until such treatment expires in accordance with its



terms, on condition that such preferential tax treatment is available under the “grandfatherclause” of the new tax law.

The EIT Law provides that a withholding tax of 10% is normally applicable to dividendspayable to a “non-resident enterprise” to the extent such dividends are derived from sourceswithin China, or a lower tax rate on the condition that China has a tax treaty with thenational jurisdiction which the “non-resident enterprise” is subject to.

Under the EIT Law and its implementing rules, an enterprise established outside China with“de facto management bodies” within China is considered a resident enterprise and will besubject to enterprise income tax at the rate of 25% on worldwide income. The implementingrules define the term “de facto management bodies” as entities that carry out substantialand overall management and control over the manufacturing and business operations,personnel, accounting, properties or other such management functions of the enterprises.This definition was further defined under the Notice Regarding the Determination of ChineseControlled Offshore Incorporated Enterprises as People’s Republic of China Tax ResidentEnterprises on the Basis of De Facto Management Bodies dated 22 April 2009 issued by theState Administration of Taxation (Circular No. 82).

This means that:

(i) Yima Tea (or any of the Company’s Chinese subsidiaries), being a DIE and not havingreceived any preferential tax treatment, is subject to enterprise income tax at a rateof 25% of its worldwide income; and

(ii) should the Company directly earn income in China (i.e., not income earned by itsChinese subsidiaries) in the future, if:

(A) the Company, notwithstanding it being a foreign entity, is deemed by therelevant tax authorities in China to have a “de facto management body”within China (i.e., that the Company is a Chinese tax resident enterprise), theCompany will be subject to enterprise income tax at a rate of 25% of itsworldwide income; or

(B) if the Company is deemed by the relevant tax authorities in China as notbeing a Chinese tax resident enterprise, its Chinese-sourced income willeither be subject to a withholding tax at a rate of 10% (if it is determinedthat the Company does not have a permanent establishment in China) or besubject to enterprise income tax at a rate of 25% (if it is determined that theCompany has a permanent establishment in China).

(b) Tax treaty benefits on dividends received from China

Under the EIT Law, dividends paid by a FIE (including a WFOE) to its immediate parentcompany outside China are subject to a 10% withholding tax, unless any such foreigninvestor’s jurisdiction of incorporation has a tax treaty with China that provides for apreferential withholding arrangement. In October 2009, the State Administration of Taxationissued the Circular on How to Interpret and Recognise the “Beneficial Owner” in TaxAgreements (Circular 601), and certain other related rules. Under these rules:



(i) non-resident enterprises which cannot provide valid supporting documents as to itsbeneficial owners may not be permitted to enjoy tax treaty benefits;

(ii) beneficial owners refer to individuals, enterprises or other organisations which arenormally engaged in the enterprise’s substantive operations; and

(iii) Conduit companies or companies established for the purposes of avoiding orreducing tax obligations or transferring or accumulating profits and not engaged inactual operations such as manufacturing, sales or management shall expressly beexcluded as being beneficial owners.

(c) Value Added Tax

The current Provisional Regulations of the People’s Republic of China Concerning ValueAdded Tax promulgated on 13 December 1993 and amended on 5 November 2008, providesthat value added tax is imposed on goods sold in or imported into China and on processing,repair and replacement services provided within China. Value added tax payable in China ischarged on an aggregated basis at a rate of 13% or 17% (depending on the type of goodsinvolved) on the full price collected for the goods sold or, in the case of taxable servicesprovided, at a rate of 17% on the charges for the taxable services provided but excluding, inrespect of both goods and services, any amount paid in respect of value added tax includedin the price or charges, and less any deductible value added tax already paid by the taxpayeron purchases of goods and services in the same financial year.

(d) Business Tax

The current Provisional Regulations of the People’s Republic of China on Business Tax,promulgated on 13 December 1993 and amended on 5 November 2008, provides that anybusiness that provides services, or assigns intangible assets or sells immovable property isliable to pay a business tax at a rate ranging from 3% to 5% of the charges of the servicesprovided, intangible assets assigned or immovable property sold, as the case may be.

Trademark protection

The principal legislation governing trademarks in China is the Trademark Law of the People's Republicof China (China Trademark Law) which was adopted at the 24th Session of the Standing Committeeof the NPC on 23 August 1982. Since then, it was amended three times, in 1993, 2001 and 2013. Thecurrent form of China Trademark Law has been implemented since 1 May 2014 after the thirdamendment came to force. The amendments seek to facilitate trademark registration procedures,ensure a fair market for trademark holders and strengthen the legal protection of trademarks inChina in line with international standards.

The administrative department in charge of enforcing trademark rights in China is the trademarkoffice (CTMO) of the State Administration for Industry and Commerce (SAIC) who shall also establisha trademark review and adjudication board to be responsible for handling trademark disputes.



Under China Trademark Law, there are three types of registrable trademarks, namely:

(a) trademarks for goods and services;

(b) collective trademarks; and

(d) certification trademarks.

The owner of a registered trademark (including trademarks for goods and service) enjoys theexclusive right to the use of the trademark, which shall be protected by law. The protection periodfor a registered trademark is 10 years, counted from the day the registration is approved. Where theowner of a registered trademark intends to continue using the registered trademark upon expiry ofthis initial protection period, the owner of the registered trademark must apply to renew theregistration period within 12 months prior to the expiry date. A six-months extension for the periodto apply for renewal of a trademark may be granted. Each renewal of registration for a trademarkshall be valid for ten years calculating from the date immediately following the expiry date of the lastvalidity period of the trademark. If no application for renewal is filed upon expiry of the extensionperiod, the registered trademark shall be cancelled.

The following briefly describes the application and approval procedures for trademarks

(1) An applicant can apply for registration of a trademark according to the prescribed categoriesof goods indicating in the application the types and the names of goods for which thetrademark is to be used. CTMO must complete the examination of a trademark applicationwithin nine months from the date of receiving the application documents for trademarkregistration, and will issue a preliminary decision whether the application is in compliancewith the relevant provisions of China Trademark Law.

(2) Where CTMO determines that a trademark for which an application has been made does notconform to the relevant provisions of China Trademark Law or that is identical with or similarto the trademark already registered by another person or is given preliminary examinationand approval for use on the same kind of goods or similar goods, CTMO shall reject theapplication. Where CTMO approves a trademark registration application, it shall issue thecertificate of trademark registration to the applicant and make an announcement thereon.

(3) A person whose trademark is infringed may commence civil proceedings against thedefaulting for damages. In addition and as an alternative to commencing civil proceedingsagainst the infringing party, the trademark owner can refer the infringement to SAIC foraction. If SAIC is of the opinion that the infringement is established, it may:

(a) order the infringing party to immediately cease the infringing acts;

(b) confiscate and destroy the infringing goods and instruments mainly used formanufacturing the infringing goods;

(c) in certain circumstances, impose a fine on the infringing party.

Circulation of rural land



In China, land in rural areas is collectively owned, and farmers are granted with only the right to usethe land. The "collective" in this context refers to a collective economic organization of farmers, suchas an agricultural production cooperative, which owns the land on the farmers' behalf. Since the1980s, as China pursued greater reform, the basic production system in rural areas has changed from"people's communes" to a "household contract system". Under the "household contract system",farmers are given the "right to use" the land to which they have been contracted to work, ratherthan outright ownership of the land.

As more young workers from agricultural communities migrate to urban areas to seek employment,agricultural land to which they once contracted to work is now left deserted and idle because itcannot be sold. To address this issue, the Standing Committee of the NPC had promulgated by OrderNo. 73 of the President of China on 29 August 2002 the Land Contract in Rural Areas Law.

Under the Land Contract in Rural Areas Law:

(a) Members of the collective economic organizations in rural areas (Contracting Household)have the right to undertake rural land contracts (Land Contracts) with their own collectiveeconomic organizations that give out the contracts.

(b) The nature of ownership of land in rural areas which is contracted shall remain unchangedand the contracted land may not be purchased or sold.

(c) The term of contract for arable land is 30 years, for grassland ranges between 30 to 50 yearsand for forest land ranges from 30 to 70 years. The land on which the Plantation sits on isclassified as being forest land.

(d) The Contracting Household shall obtain the right to the land as of the date the Land Contractgoes into effect and during the term of Land Contract, the party giving out the contract maynot take back the contracted land.

(e) The Contracting Household:

(i) shall enjoy in accordance with law the rights to use the contracted land contracted,to reap the yields and to circulate the right to land contractual management, and theright to make its own decision regarding the arrangements for production andoperation as well as the disposition of the products; and

(ii) is entitled to obtain appropriate compensation for the contracted land that isrequisitioned or occupied according to law.

(f) Benefits derived from the contract which are due to a Contracting Household may beinherited in accordance with the provisions of the Succession Law.

(g) The rights obtained under a Land Contract may, according to law, be circulated bysubcontracting, leasing, exchanging, transferring or other means and, may may, within avalidity period of of the Land Contract, subcontract or lease part or all of the contracted landto a third party.

(h) During the term of the Land Contract, the party giving out the contract may not unilaterallyrevoke the contract.



Labour

Under the Employment Contract Law which came into effect on 1 January 2008, an employer mustsign an employment contract with an employee upon, or within one month from, the time theemployee commences service with the employer. There are three types of employment contracts,namely:

(a) an employment contract with a fixed term, under which employment terminates on the fixeddate agreed;

(b) an employment contract with an indefinite term, under which the date of termination ofemployment is not explicitly provided and thus remains indefinite; and

(c) an employment contract termination subject to consummation of certain work, under whichemployment is terminated upon consummation of certain work.

An employment contract shall be deemed to be an employment contract with indefinite term if:

(i) an employer signs an employment contract with fixed term with the same employee twotimes consecutively; or

(ii) an employer fails to sign any written employment contract with an employee after one yearfrom the date the employee commences service with the employer.

An employer who fails to sign a written employment contract with an employee within one monthafter the employee commences service with the employer and still does not sign an employmentagreement after one year, has to pay that employee double the salary.


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