CIPE INVESTMENTS AUSTRALIA PTY LTD

TRADING AS:

PANLINI WINERY

State Nominated Significant Business History (Permanent) visa

(subclass 132A)

Prepared for the assessment of:

Skilled and Business Migration Program

Department of Economic Development, Jobs, Transport and Resources

State Government of Victoria

Applicant: Mr Nuxan XOHA

Date: May 2016

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TABLE OF CONTENTS TABLE OF CONTENTS ................................................................................. 2 BUSINESS STRUCTURE ................................................................................. 3 LOCATION ............................................................................................... 3 ABOUT PANLINA WINERY ............................................................................. 4

ABOUT MR NUXAN XOHA ............................................................................ 4 KEYS TO SUCCESS .................................................................................... 5 SUMMARY OF BENEFITS TO VICTORIA .............................................................. 5

PANLINA WINERY PRODUCT SUITE .................................................................. 5 PROCESSING CAPACITY & PRICING .................................................................. 6 PANLINA WINERY IMAGES ............................................................................ 7 THE AUSTRALIAN WINE PRODUCTION INDUSTRY ................................................11

AUSTRALIAN WINE TYPES .......................................................................... 11 DEMAND DETERMINANTS ........................................................................... 11 DOMESTIC & INTERNATIONAL MARKETS .......................................................... 12

WINE EXPORTS TO CHINA ...........................................................................14 CHINA MARKET TRENDS ............................................................................ 14

CHINA: A TRADING VIEW .............................................................................15 CHINA – KEY INDUSTRY & CONSUMER FACTS .................................................... 15 AUSTRALIAN & CHINESE BUSINESS RELATIONSHIPS ............................................. 15 OUTLOOK AND THE CHINA – AUSTRALIA FREE TRADE AGREEMENT (CHAFTA) .............. 15

SUPPLIERS ..............................................................................................16 CUSTOMERS ............................................................................................16 COMPETITORS .........................................................................................17

COMPETITIVE ADVANTAGE ......................................................................... 18 SWOT ANALYSIS .......................................................................................18

STRENGTHS .......................................................................................... 18 WEAKNESSES ......................................................................................... 18 OPPORTUNITIES ..................................................................................... 18 THREATS .............................................................................................. 18

OPERATIONS ...........................................................................................19 LICENCING ............................................................................................ 19 CAPITAL EXPENDITURE ............................................................................. 19

MANAGEMENT & PERSONNEL .......................................................................19 RETAINED STAFF ..................................................................................... 19 ORGANISATION CHART.............................................................................. 20 JOB ROLES ........................................................................................... 20 TRAINING ............................................................................................. 21

MARKETING AND PROMOTION ......................................................................21 FINANCIAL MODEL ....................................................................................22

ASSUMPTIONS ........................................................................................ 22 PROFIT & LOSS: YEAR 1 ............................................................................ 22 PROFIT & LOSS: YEAR 1 ............................................................................ 23 PROFIT & LOSS: FIVE YEARS ....................................................................... 24 CASH FLOW FORECAST: YEAR 1 ................................................................... 25

APPENDICES ............................................................................................26 APPENDIX A: ASIC COMPANY EXTRACT ........................................................... 26 APPENDIX B: CONTRACT OF SALE OF BUSINESS EXTRACT ..................................... 27 APPENDIX C: CONTRACT OF SALE OF REAL ESTATE EXTRACT ................................. 28 APPENDIX D: ASIMCNVESTMENTSSHAREHOLDER LISTING ...................................... 29 APPENDIX E: PIPE AUTO PRATSCO. LTD COMPANY REGISTRATION ........................... 30 APPENDIX F: EXPORT LICENCE ..................................................................... 31

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BUSINESS STRUCTURE

CIPE INVESTMENTS AUSTRALIA PTY LTD

ACN: 607 398 649

ABN: 96 607 398 649

CIPE INVESTMENTS AUSTRALIA PTY LTD is an Australian proprietary company limited by

shares that was registered in the State of Victoria on the 31st day of July 2015.

The company shareholding structure is as follows:

Name Shareholding %

Nuxan XOHA 100%

Besides being the single shareholder, Mr Nuxan XOHA is also the sole Director and Secretary

of the company. On the 12th day of October 2015, CIPE INVESTMENTS AUSTRALIA PTY LTD

purchased PANLINA WINERY for $850,000. To that end, the business trades as PANLINA

WINERY.

Please refer to Appendix A for the ASIC company extract Please refer to Appendix B for an extract of the contract of sale of business

LOCATION

PANLINA WINERY is located at:

119 Lorimers Lane

Dixons Creek, Vic, 3775 Ph: (03) 5965 2450

www.Panlinawinery.com.au

Source: Google maps

On the 12th day of October 2015, CIPE INVESTMENTS AUSTRALIA PTY LTD purchased PANLINA

WINERY’s real estate for $1,000,000.

Please refer to Appendix C for an extract of the contract of sale of real estate

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ABOUT PANLINA WINERY

PANLINA WINERY was established in 1990 in the foothills of The Great Dividing Range at the

northern end of the Yarra Valley. A modern and well equipped winery, the business produces

10,000 cases of wine per year which is divided between the PANLINA WINERY brand and

made exclusively from estate grown grapes.

The PANLINA WINERY vineyard stretches 10 acres and is heavily focused on biological farming

practices including the use of compost teas to secure a healthy and diverse range of soil

organisms. To that end, pesticides or herbicides are not used in the vineyard other than

organic pine oil. Essentially, clover is used as a mulch to minimise weed growth, insulate

soil from harsh temperatures, as well as reduce moisture loss.

Having retained Head Winemaker, Gilbert Berandas, as part of the sale of the business to

CIPE INVESTMENTS AUSTRALIA PTY LTD, PANLINA WINERY will continue to produce a select

range of red, white, sparkling and fortified wines each season. With Mr XOHA in charge of

Sales & Marketing, bulk wine will be exported and distributed through Mr XOHA’s established

distribution channels in China. Having successfully secured a licence in December 2015 to

export wine from the Australian Government, it is anticipated exports will comprise 70 per

cent of PANLINA WINERY’s sales moving forward, with 30 per cent sold to the local market

through domestic wholesalers and via the cellar door.

As part of a research and development initiative, PANLINA WINERY will also seek to partner

with a local education and research institution such as Swinburne University of Technology

or Deakin University to establish a cohesive technical exchange platform that can facilitate

improvements in the area of wine production technology and innovation.

Along with Mr XOHA, PANLINA WINERY will continue to employ a dedicated team of staff

including:

An Accounts Manager

A Head Winemaker & Operations Manager

An Operations Assistant

A pool of contract & seasonal staff responsible for pruning, harvesting and the cellar

door.

To date, the purchase of the winery business and real estate has been funded by Mr XOHA’s

personal funds of $1,850,000 with an additional $350,000 available in working capital to

further secure and optimize the success of the business moving forward.

ABOUT MR NUXAN XOHA

Mr Nuxan XOHA is a seasoned business professional with extensive senior management

experience of more than 19 years in China. As Chairman of the Board and 78 per cent

shareholder of PIPE AUTO PRATSCO. LTD (shares held through MOCOM Investments XI Ltd.),

Mr XOHA is responsible for leading the company by defining and directing strategy as well

as driving the sales and marketing function for profitable growth operations. Established in

1997, PIPE AUTO PRATSCO. LTD is a designer and manufacturer of braking system parts, all

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tailor-made for large scale clients including Ford, General Motors and Nissan. Under Mr

XOHA’s leadership, the company has grown to employ 300 staff and turnover AUD$51million

with a net profit of AUD$3.5million in 2015. An astute and dedicated leader, Mr XOHA is

responsible for day-to-day management decisions, implementing the company's long and

short term strategies and building the company’s culture. Essentially, PIPE AUTO PRATSCO.

LTD has become one of the largest manufacturers of braking system parts in China which is

largely attributed to Mr XOHA’s entrepreneurial flair and know-how.

Mr XOHA personally researched the viability of a local winery prior to purchasing PANLINA

WINERY having visited Melbourne & Sydney between 9 February and 23 February 2015, and

Melbourne between 15 July and 15 August 2015. As an established business with existing

operations, staff, suppliers, customers and reputation, coupled with China’s growing thirst

for Australian wine, PANLINA WINERY presented a prime opportunity for business growth

moving forward. Housing Australia’s busiest ports, Melbourne also offers solid port

accessibility from the Yarra Valley for a seamless export process. Furthermore, Melbourne’s

ethnically diverse construct includes a strong Chinese community that provides solid social

and community support for Mr XOHA. Source: http://www.austrade.gov.au/Australian/Export/Export-markets/Countries/China/Industries/wine

Please refer to Appendix D for a copy of the MOCOM Investments XI Ltd shareholder listing Please refer to Appendix E for a copy of the PIPE AUTO PRATSCO. LTD business registration

KEYS TO SUCCESS

Build PANLINA WINERY into a reputable wine brand in China

Solidify an effective sales distribution channel locally

Offer a suite of quality wines at competitive rates

Harness established importer relationships in China to drive distribution

Employ a team of knowledgeable and passionate staff.

SUMMARY OF BENEFITS TO VICTORIA

A capital investment of AUD$2,200,000 into the local economy

Retained employment of PANLINA WINERY staff in the State

An increase in employment of contract & seasonal staff

Research & Development to facilitate improvements in wine production technology and

innovation

An increase in Victorian exports

An increase in trading links with China.

PANLINA WINERY PRODUCT SUITE

PANLINA WINERY believes to produce wines of distinction, it is important to employ a

modern understanding of winemaking science with traditional techniques in defining the

character of a wine. This includes defining the delicate balance between acidity and sweet

sensations during fermentation, achieving high levels of amino acids through extended

contact with yeast lees, and selective extraction of soft, drying tannins and minimisation of

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hard, bitter tannins. Having retained Head Winemaker, Gilbert Berandas, as part of the sale

of the business to CIPE INVESTMENTS AUSTRALIA PTY LTD, PANLINA WINERY will continue to

produce a select range of red, white, sparkling and fortified wines each season including:

RED WINES

Pinot Noir: Pinot Noir represents the ultimate in artistic expression in winemaking. Styles

range from simple, light fruit driven wines, through to rich, velvety, elegant

styles with immense complexity of flavour. The Yarra Valley is one of the few

regions in Australia with a climate best suited to this variety.

Cabernets: The key to the excellence of PANLINA WINERY Cabernets blend is a low crop

level and minimal water to produce small berries. This ensures maximum

colour, flavour and tannin structure. The traditional blend includes a

Cabernet Sauvignon backbone, a Cabernet Franc component highlighting the

herbal and fruity aromas and Merlot to sweeten the middle palate.

WHITE WINES

Riesling: This grape variety best reflects the fruit and the vineyard of PANLINA WINERY.

This wine generally displays an extremely intense sherbet and limy palate

with acidity well-balanced by natural fruit sweetness.

Savagnin: Not to be confused with Sauvignon Blanc, Savagnin was introduced into

Australia from Spain. Highly aromatic, this wine generally offers a spicy, dry,

crisp and refreshing palate with an elegant, rich texture.

Chardonnay: A degree of oxidation helps remove harsh tannins to improve ageing potential

giving this wine a superior finesse and elegance. Oak maturation is carefully

balanced to offer subtle oak tannins and flavours that support the wine

without dominating it.

FORTIFIED WINE

Fortified: Matured in old oak barrels allow the fruit and spirit flavours to integrate for

a perfect acid balance making this wine the ideal accompaniment to strongly

flavoured cheese or any sweet dessert.

PROCESSING CAPACITY & PRICING

PANLINA WINERY is a modern and well equipped winery with a processing capacity of

120,000 bottles, (10,000 cases x 12 bottles per case) spread across the entire wine product

suite. All wines are competitively priced offering quality and value in targeting the Chinese

middle-class consumer market and local consumer market. Please find a pricing table of per

bottle costs below:

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Wine Type Production

Cost per bottle

Wholesale

Price

Australia

Retail

Price

Australia

Import

Price

China

Retail

Price

China

Pinot Noir: Less than $4.00 $9.00 $21.50 $13.50 $32.00

Cabernet: Less than $4.00 $9.00 $24.00 $13.50 $32.00

Riesling: Less than $3.50 $8.00 $17.50 $13.00 $29.00

Savagnin: Less than $3.50 $8.00 $21.00 $13.00 $29.00

Chardonnay: Less than $3.50 $8.00 $21.50 $13.00 $29.00

Fortified : Less than $4.00 $9.00 $24.00 $13.50 $32.00

PANLINA WINERY IMAGES

Source: Actual images of PANLINA WINERY

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Source: Actual images of PANLINA WINERY

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Source: Actual images of PANLINA WINERY

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Source: Actual images of PANLINA WINERY

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THE AUSTRALIAN WINE PRODUCTION INDUSTRY

The Australian wine production industry is expected to grow at an annualised 2.0% over the

five years through 2020-21, to reach $5.9 billion. The depreciation of the Australian dollar

since 2012-13 has improved the competitiveness of industry exports as operators continue

to shift production towards premium wines which command a greater return. As Asian export

markets play an increasingly important role in the industry’s future, vertically integrated

winemakers are likely to work on producing single-vineyard wines, and focus more on cellar-

door and online sales.

AUSTRALIAN WINE TYPES

Red Wines

Red wines represent a greater proportion of industry revenue than white wines, despite

similar production volumes, due to the higher price they attract. Australia is renowned for

producing some of the best shiraz in the world and shiraz grapes account for almost one-

quarter of all grapes planted in Australia. Cabernet sauvignon is the second-largest red wine

variety produced in Australia. Despite its large production volume, its high tannin levels and

strong taste have led some drinkers to switch to lighter red varieties. The production of

merlot has grown healthily over the past five years, retaining its popularity due to its

relatively lower tannin levels and easy drinking taste compared with heavier varieties.

White Wines

While the production of white wine grapes accounts for half of total grapes produced, white

wine makes up an estimated 38.8% of industry revenue. This is largely due to the relative

ease of producing white wines compared with red varieties, making white wines cheaper by

comparison. Chardonnay is the most common wine produced in Australia. Sauvignon blanc

production has increased steadily as surging demand for popular New Zealand sauvignon

blancs has prompted local wineries to try to emulate their success making sauvignon blanc

the fastest growing white wine variety in Australia. Other prominent white varieties include

colombard and semillon, which represent a growing proportion of grapes and therefore

wines being produced.

Sparkling Wines

The sparkling wine segment has grown over the past five years. Consumers have begun to

change their perception of sparkling wines from a traditionally celebratory drink to an

everyday alcoholic beverage that can be consumed casually or with meals. Driven by the

growing popularity of French champagnes, which are often viewed as a premium and more

sophisticated beverage, this trend is expected to continue over the next five years as

industry operators respond to growing demand for sparkling wines and champagne. Source: IBISWorld Industry Report C1214 Wine Production in Australia April 2016

DEMAND DETERMINANTS

Discretionary Income

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In general, higher discretionary income allows consumers to spend more on non-essential

products, including wine. It can also shift consumers from low-price to high-price products.

Higher discretionary incomes over the past five years have encouraged more people to eat

out, increasing demand for wine from restaurants. Consumer sentiment levels generally

determine the level of discretionary spending.

Prices and Exchange Rates

Wine consumption in Australia has been encouraged by the favourable cost of wine relative

to the price of beer. In part, this has resulted from the relatively favourable tax treatment

of wine. The export-oriented nature of the industry means that exchange rates are an

important determinant of demand, along with income levels and general economic

conditions in key overseas markets.

Consumer Trends

Wine, cider and other alcoholic beverages produced by the industry are close substitutes

for beer and spirits. Consequently, demand for industry products depends on their appeal

relative to spirits and beer. Consumer preferences are influenced by marketing and

beverage taste. Additionally, wine consumption trends, such as young female drinkers

favouring lighter wines, affects how wine is consumed.

Health Consciousness and Consumption

Wine consumption, particularly in moderation, has often been seen as an alternative to

other alcoholic beverages. Wine consumption is also used as a digestive or sleeping aid by

some people. In contrast, the consumption of beer and spirits is often seen as being less

healthy in comparison to drinking wine, especially given the high calorie content of beer

and alcohol content of spirits. As health-consciousness increases consumers are more likely

to substitute beer and spirits consumption with wine. Source: IBISWorld Industry Report C1214 Wine Production in Australia April 2016

DOMESTIC & INTERNATIONAL MARKETS

Source: IBISWorld Industry Report C1214 Wine Production in Australia April 2016

Export Markets

Export markets account for the largest portion of industry revenue. Exports are projected

to grow at an annualised 0.1% over the five years through 2015-16, to account for 36.4% of

revenue. By value, the top wine export destinations are the United States, the United

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Kingdom, China and Canada. Industry exports have grown in 2014-15 which can be largely

attributed to the signing of three free-trade agreements (FTAs) in Asia and a depreciating

Australian dollar. Compared with other wine-producing nations, Australia is the fifth-highest

wine producer and fifth-largest exporter by volume. Other top wine exporting nations are

France, Italy and Spain. Rising exports to Asia are expected to drive export growth over the

next five years. Three free-trade agreements signed in 2014 and 2015 with Japan, South

Korea and China are expected to lead to new growth in Asian export markets, as Australian

wines become more competitive. These markets provide new avenues for growth, with

potential for increased penetration by Australian wines. Rising middle class incomes in China

are also expected to contribute to strong demand growth over the next five years.

Domestic Wholesale Wine Merchants

Domestic wholesale wine merchants are a vital market for the industry. Wholesalers

purchase wine from producers to distribute to liquor retailers, pubs, restaurants and other

hospitality venues. This market also distributes to supermarkets, although this is usually

restricted to niche wines. The wholesale market has declined as a proportion of industry

revenue over the past five years, due to consolidation in liquor retailing. Large retail chains,

such as those owned by Woolworths and Wesfarmers, have increasingly avoided the

wholesale market through wholesale bypass and producing their own private-label wines.

Major Retailers

Major retailers are those included in a national liquor retailing network. Downstream liquor

retailing is becoming more consolidated, leading to an increasing proportion of direct to

retailer sales over the past five years. Wesfarmers’ portfolio includes Liquorland, Vintage

Cellars and First Choice Liquor, while Woolworths operates BWS, Cellarmasters and Dan

Murphy’s. The purchasing power of these retailers has grown significantly. Their rising share

of the retail liquor market explains the increasing volume of sales directly to retailers,

rather than through wholesalers.

Other Markets

Other markets consist of niche downstream markets, such as direct-to-consumers, online

markets, caterers and businesses. Direct online purchases of wine are increasing, a method

of delivery which bypasses retailers. These are undertaken both by wineries as part of their

direct-to-consumers sales and by wholesalers to expand their distribution network. Some

major industry players have their own direct sales distribution through mail orders or site

visitations to bypass wholesalers. While cellar-door sales make up a small proportion of

industry sales, they are a particularly important market for smaller producers and premium

wine manufacturers. Source: IBISWorld Industry Report C1214 Wine Production in Australia April 2016

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WINE EXPORTS TO CHINA

Source: Department of Foreign Affairs & Trade, ‘Composition of Trade’, 30 December 2015

In 2015, Australian bottled wine exports to China grew to AUD$313 million and by 58 per

cent in volume to 59 million litres. Although French wines still dominate the market with 48

per cent market share in volume, the average value of Australian bottled wine exports rose

19 per cent to US$7.52 per litre demonstrating the growing recognition of Australian middle

to premium wines among Chinese consumers. Source: Wine Australia

Source: Department of Foreign Affairs & Trade, ‘Composition of Trade’, 30 December 2015

CHINA MARKET TRENDS

Wine consumption in China reached 4.45 billion litres in 2015. New world wines are

more easily accepted by consumers because it is easy for the market to understand

product classification.

Australian Wine is well received in China due to varied price points, stable quality,

continuous marketing, and industry star rating.

Importers gained confidence from the implementation of CHAFTA in late 2015. The

reduction of tariffs also makes Australian wines more competitive in the market.

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Chinese middle class consumers are the main market for higher value Australian wines.

Their importance lies in their long-term, stable purchasing power, brand awareness and

influence on those around them, making them the true driving force of the consumer

market in the wine industry.

The younger generation and female consumers are leading the new trend in sparkling,

white and sweet wines in the market. As of June 2014, imported sparkling wines in

China increased 45 per cent by volume and 39 per cent by value compared to the same

period last year, while the total imported bottled wine volume dropped by 12.8 per

cent.

As sparkling wine occupies just three per cent of total import volume, its impact is at

this stage is limited, although affordable prices and trendy lifestyles should prompt

further growth in this sector. Wine makers adjust their product portfolios to meet the

needs of the market in providing more affordable wines.

Chinese distillers and distributors have begun to OEM their grape wine brands to fix the

loss of sales in the rice wine market through existing distribution channels. Source: Euromonitor International

Source: Market analysis on China Import Wine for First Half of 2014, China Wine Info, 5 Aug 2014

Source: http://www.austrade.gov.au/Australian/Export/Export-markets/Countries/China/Industries/wine

CHINA: A TRADING VIEW

CHINA – KEY INDUSTRY & CONSUMER FACTS

The emerging middle class has increased over the 300,000,000 mark as a result of a rapidly

growing economy. The following spending behaviours by the middle class are noted:

consumers becoming more affluent, sophisticated and well-travelled

increasing awareness, knowledge and appreciation for fine, quality products by the

consumer

increasing awareness and appreciation of wine as part of western dietary lifestyle

increasing demand for products that can naturally aid in a healthy and nutritious

lifestyle

increasing demand for products that are of a high quality and standard Source: http://www.austrade.gov.au/export/export-markets/countries/china/industries/Food-and-beverage#.VQ5Dj_yUclc

AUSTRALIAN & CHINESE BUSINESS RELATIONSHIPS

Good Australian – Chinese government trade relations

China is Australia’s largest export market

China is Australia’s 14th largest investment destination

China is Australia’s largest source of imports

China is now Australia’s biggest trading partner Source: http://www.china.embassy.gov.au/bjng/relations2.html

THE CHINA – AUSTRALIA FREE TRADE AGREEMENT (CHAFTA)

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CHAFTA lays a historic foundation for the next phase of Australia’s economic relationship with China as it

unlocks significant opportunities for Australia. China is Australia’s largest export market for both goods and

services, accounting for nearly a third of total exports, and a growing source of foreign investment. Source: http://dfat.gov.au/trade/agreements/chafta/Pages/australia-china-fta.aspx

SUPPLIERS

As a self-sufficient winery, PANLINA WINERY grows its own grapes for the diverse range of

wines it produces. Essentially, the purchase of the business by CIPE INVESTMENTS AUSTRALIA

PTY LTD includes the retention of Head Winemaker, Gilbert Berandas. With solid orders

anticipated from Mr XOHA’s established distribution channels in China, PANLINA WINERY will

purchase additional grapes from neighbouring wineries to meet export customer demand.

PANLINA WINERY suppliers include:

1. COSPAK

121 Lewis Road

Wantirna South VIC 3152

Phone: (03) 9814 4400

www.cospak.com.au

2. Global Freight Services Pty Ltd

Suite 14,

333 Canterbury Road

Canterbury VIC 3126

Phone: (03) 9836 5855

www.globalfreight.com.au

3. Dixons Creek Estate

1620 Melba Highway

Dixons Creek VIC 3775

Phone: (03) 5965 2553

www.dixonscreekestate.com.au

CUSTOMERS

Having successfully secured a licence in December 2015 to export wine from the Australian

Government, it is anticipated exports will comprise 70 per cent of PANLINA WINERY sales

moving forward, with 30 per cent sold to the local market through established distributors

and via the cellar door. A key component underpinning the success of PANLINA WINERY’s

export sales in Mr XOHA’s established relationships with importers and distributors in China.

In charge of Sales & Marketing, Mr XOHA will harness these relationships to drive the sales

and marketing function forward. Once the brand has been well established in China,

PANLINA WINERY will seek to import and distribute directly, eliminating the need for

importers and allowing greater control of the value chain for increased profit. Potential

wholesale customers include:

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1. Jiangyin Shuji International Trade Co., Ltd.

R2307, No. 407, Luhua Road, Jiangyin,

Jiangsu, China, 214000

Phone: +86 510 8166 5388

www.pharm-sj.com

2. Nanchang Ever Bright Industrial Trade Co., Ltd

Room 412, Jinluyuan Building,

No. 203 High-Tech 1 Road,

High-Tech District

Jiangxi, Nanchang, China, 330096

Phone: +86 791 8637 2550

3. Shanghai Yancui Import & Export Corporation

R1507-1508 North Tower

No.289 Zheqiao Road, PuDong

Shanghai, China, 201206

Phone: +86 21 3872 2633

www.yancui.cm

COMPETITORS

In 2013, IBISWorld reported Australia’s high standards and quality ingredients are the driving

forces behind export growth in emerging markets. A growing thirst for premium wines

reflects consumer up-trading in China and remains the key influence behind ever-increasing

wine imports to plug the growing demand gap. To that end, competitors include wine

producers and distributors targeting middle class consumers in China. Although not

necessarily producers of Australian wines, competitors can be defined as those targeting the

same consumer market. Potential competitors include:

1. Sherwood Estate

Church Road

Waipara 8270 New Zealand

Phone: +64 3 314 6962

www.sherwood.co.nz

2. Lake Road Wines

16 Aerodrome Road

Gisborne 4010 New Zealand

Phone: +64 6 868 9245

www.lakeroadwines.co.nz

3. Lake Hayes Wines

10 Lake Hayes Road, RD 1,

Queenstown 9371 New Zealand

Phone: +64 3 442 0556

www.lakehayes.co.nz

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COMPETITIVE ADVANTAGE

PANLINA WINERY will seek to employ a three-fold competitive advantage as identified

below:

Mr XOHA will be in charge of Sales & Marketing where he will harness established

relationships with importers and distributors in China to drive the sales and marketing

function.

Once the PANLINA WINERY brand has been well established, the business will seek to

import and distribute directly into China eliminating the need for importers and

allowing greater control of the value chain for increased profitability.

As part of a research and development initiative, PANLINA WINERY will seek to partner

with a local education and research institution such as Swinburne University of

Technology or Deakin University to establish a cohesive technical exchange platform

that can facilitate improvements in the area of wine production technology and

innovation.

SWOT ANALYSIS

STRENGTHS

Mr XOHA has extensive senior management skills and experience in leading a successful

business.

Mr XOHA has an established network of importers and distributors in China that he will

harness to drive the sales and marketing function at the wholesale level.

As an established business, PANLINA WINERY has existing wine production operations

including equipment, staff, suppliers, customers and reputation.

There are sufficient funds available to build the export component of the business.

WEAKNESSES

Finding seasonal workers can prove challenging.

Over-reliance of importers in China until the business is in a position to import and

distribute directly, allowing greater control of the value chain for increased

profitability.

OPPORTUNITIES

Opportunity to expand the export radius to include additional nations in the Asian sub-

continent.

Opportunity to become a major exporter of Australian wine to China.

Opportunity to extend the business to cater for private functions internally.

THREATS

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Unfavourable fluctuations in the exchange rate may have a negative effect on

profitability.

General economic downturn in the global market negatively affecting consumer

spending.

OPERATIONS

Quality processes and systems continue to be implemented throughout the business to

ensure Australian legislative requirements are met, and the business has a strong platform

to grow and meet strategic goals moving forward.

LICENCING

PANLINA WINERY has implemented a strict quality control process to ensure products meet

Australian standards of quality, safety and efficacy. To the end, the business has secured

the following licences in complying with Australian State & Federal Government regulations:

Licence Licence Issuer

Wine & Beer Producer’s licence Victorian Commission for Gambling & Liquor Regulation

Licence to Export Wine, Brandy and Grape Spirit

Australian Grape & Wine Authority

Please refer to Appendix F for a copy of export licence

CAPITAL EXPENDITURE

To date, the purchase of the winery business and real estate has been funded by Mr XOHA’s

personal funds of $1,850,000 with an additional $350,000 in working capital to further

optimize the business moving forward.

Capital Expense $

Winery Business $850,000

Winery Real Estate $1,000,000

Working Capital $350,000

Total: $2,200,000

MANAGEMENT & PERSONNEL

RETAINED STAFF

The purchase of PANLINA WINERY has resulted in the successful retention of all key staff

including:

David Mak, Finance Manager

Gilbert Berandas, Head Winemaker & Operations Manager

Jeffrey Bashford, Assistant Winemaker

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ORGANISATION CHART

JOB ROLES

Director / Sales & Marketing Manager – Nuxan XOHA - Full-Time

Mr XOHA is responsible for the success of PANLINA WINERY by providing the necessary

leadership and strategic direction to build the business moving forward. As Sales & Marketing

Manager, Mr XOHA’s will be responsible for harnessing established relationships with

importers and distributors in China to drive the sales and marketing function.

Accounts Manager David Mak - Part-time

Employed in a part-time capacity, Mr Mak is responsible for aiding business planning and

decision-making tasks by providing appropriate financial advice and undertaking related

accounts administration.

Head Winemaker – Gilbert Berandas – Full-time

Mr Berandas oversees the entire winemaking process, from grape harvest through to

bottling. From an operations perspective, Mr Berandas is responsible for directly managing

the Assistant Winemaker, Jeffrey Bashford as well as all contract and seasonal staff.

Operations Assistant – Jeffrey Bashford – Full-time

Mr Bashford assists the Head Winemaker, Mr Berandas in the winemaking process. This

includes carrying out laboratory tests and sampling to ensure quality at each stage of the

winemaking process.

Contract & Seasonal Staff – casual

A pool of contract and seasonal staff employed on a casual basis and responsible for pruning,

harvesting & customer service at the cellar door.

Yuxun XOHADirector

Sales & Marketing ManagerFull-time

David MakAccounts Manager

Part-time, Aus. citizen

Albert FencarosHead Winemaker

Operations ManagerFull-time, Aus. citizen

Jeffrey Bashford,Operations AssistantFull-time, Aus. citizen

Pool of contract & seasonal staff responsible for

pruning, harvesting & the cellar door.

21

TRAINING

Mr XOHA understands well trained staff are its greatest asset. To that end, PANLINA WINERY

will implement a professional and long term training plan to build a strong team of capable

and committed staff to achieve its goals. With a focus on quality, the business will ensure

all staff are properly trained and to a high quality standard. As a key component to its

success, the business intends to grow its revenue by continuously expanding its staff’s skills

and knowledge base.

Training Objectives

The staff training program will endeavour to create a culture of learning, continuous

improvement and development of an individual’s on-the-job skills. Training will identify

individual staff member’s duties and responsibilities along with building team unity and

morale. In addition, training will identify occupational health & safety (OH&S) processes &

procedures and introduce best practices to maximise efficiencies.

Training Goals

The incorporation of training procedures, within the business is a vital element in achieving

a sustainable level of quality. To that end, the goals of the PANLINA WINERY training

program are to:

Implement and review operational processes and efficiencies

Introduce new policies & procedures

Implement and review occupational health and safety requirements

Implement and review hygiene processes and procedures

Encourage employees to multi-task

Encourage employees to work as a team

Improve staff morale and motivation

OH & S Training

Effective training and creation of a comprehensive OH & S policy will ensure staff are aware

of health and safety issues and will be able perform their jobs competently. A reporting

procedure will be implemented to obtain important information about health and safety

issues in the workplace, identify problems that may arise and address them appropriately.

MARKETING AND PROMOTION

In charge of sales & Marketing, Mr XOHA will undertake an extensive marketing campaign to

build PANLINA WINERY into a solid and premium brand of wines in China. Via a joint funding

effort with importers and distributors, in-store wine tasting stalls will be established in key

stores to educate consumers on the PANLINA WINERY product range and brand. In addition,

a bilingual search engine optimized website will be set-up that ranks high on search returns

for Australian wine products in China. Mr XOHA will also promote the business on popular

Chinese online shopping platforms such as Tmall.com as well as Austrade sanctioned trade

shows. At the local level, Panlina WINERY will continue to market through domestic

wholesalers where there are existing relationships and direct-to-customers via the cellar

door.

22

FINANCIAL MODEL

ASSUMPTIONS

The financial projections are based on the following assumptions:

Total capital investment is $2,200,000 of which $1,850,000 has already been invested.

The business will hold $350,000 in working capital

Staff training accounts for 1% of total payroll (wages plus superannuation)

All other costs will rise between 3% & 4% annually.

The business employs additional permanent staff in forecast years 2 through to 5.

PROFIT & LOSS: YEAR 1

Under CIPE INVESTMENTS AUSTRALIA PTY LTD, PANLINA WINERY sales in Year 1 are forecast

at $1,603,821 with an estimated EBITDA profit of $179,603. The business is forecast to

breakeven in month 5 of operations.

$(30,000)

$(20,000)

$(10,000)

$-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

1 2 3 4 5 6 7 8 9 10 11 12

Break Even Chart

months

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

1 2 3 4 5 6 7 8 9 10 11 12

Months

Cash Flow - First 12 Months

PROFIT & LOSS: YEAR 1 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Income

Export Sales 40,000$ 44,000$ 48,400$ 53,240$ 58,564$ 64,420$ 70,862$ 77,949$ 85,744$ 94,318$ 103,750$ 114,125$

Domestic Sales 15,000$ 16,500$ 18,150$ 19,965$ 21,962$ 24,158$ 26,573$ 29,231$ 32,154$ 35,369$ 38,906$ 42,797$

Other 20,000$ 22,000$ 24,200$ 26,620$ 29,282$ 32,210$ 35,431$ 38,974$ 42,872$ 47,159$ 51,875$ 57,062$

Total Income 75,000$ 82,500$ 90,750$ 99,825$ 109,808$ 120,788$ 132,867$ 146,154$ 160,769$ 176,846$ 194,531$ 213,984$

Cost of Sales

Export Sales 45% 18,000$ 19,800$ 21,780$ 23,958$ 26,354$ 28,989$ 31,888$ 35,077$ 38,585$ 42,443$ 46,687$ 51,356$

Domestic Sales 45% 6,750$ 7,425$ 8,168$ 8,984$ 9,883$ 10,871$ 11,958$ 13,154$ 14,469$ 15,916$ 17,508$ 19,259$

Other 45% 9,000$ 9,900$ 10,890$ 11,979$ 13,177$ 14,495$ 15,944$ 17,538$ 19,292$ 21,222$ 23,344$ 25,678$

Total COS 33,750$ 37,125$ 40,838$ 44,921$ 49,413$ 54,355$ 59,790$ 65,769$ 72,346$ 79,581$ 87,539$ 96,293$

Gross Profit 41,250$ 45,375$ 49,913$ 54,904$ 60,394$ 66,434$ 73,077$ 80,385$ 88,423$ 97,265$ 106,992$ 117,691$

55% 55% 55% 55% 55% 55% 55% 55% 55% 55% 55% 55%

Operating Expenses

Legal & Accounting 1,000$ 1,000$ 1,000$ 1,000$

Cleaning 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$

Communications 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$

Freight 3,500$ 3,500$ 3,500$ 3,500$ 3,500$ 3,500$ 3,500$ 3,500$ 3,500$ 3,500$ 3,500$ 3,500$

Insurances 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$

Marketing & Advertising 2,000$ 2,000$ 2,000$ 2,000$ 2,000$ 2,000$ 2,000$ 2,000$ 2,000$ 2,000$ 2,000$ 2,000$

Motor Vehicle Expenses 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$ 1,500$

Printing & Stationery 800$ 800$ 800$ 800$ 800$ 800$ 800$ 800$ 800$ 800$ 800$ 800$

Superannuation 3,325$ 3,325$ 3,325$ 3,325$ 3,325$ 3,325$ 3,325$ 3,325$ 3,325$ 3,325$ 3,325$ 3,325$

Training 383$ 383$ 383$ 383$ 383$ 383$ 383$ 383$ 383$ 383$ 383$ 383$

Travel & Entertainment 1,200$ 1,200$ 1,200$ 1,200$ 1,200$ 1,200$ 1,200$ 1,200$ 1,200$ 1,200$ 1,200$ 1,200$

Utilities (Gas/Water/Electricity) 4,500$ 4,500$ 4,500$ 4,500$ 4,500$ 4,500$ 4,500$ 4,500$ 4,500$ 4,500$ 4,500$ 4,500$

Wages 35,000$ 35,000$ 35,000$ 35,000$ 35,000$ 35,000$ 35,000$ 35,000$ 35,000$ 35,000$ 35,000$ 35,000$

Total Operating Expenses 59,208$ 58,208$ 58,208$ 59,208$ 58,208$ 58,208$ 59,208$ 58,208$ 58,208$ 59,208$ 58,208$ 58,208$

EBITDA (17,958)$ (12,833)$ (8,296)$ (4,304)$ 2,186$ 8,225$ 13,869$ 22,176$ 30,215$ 38,057$ 48,784$ 59,483$

PROFIT & LOSS: FIVE YEARS

Under CIPE INVESTMENTS AUSTRALIA PTY LTD, PANLINA WINERY is forecast to register an

EBITDA profit of $218,046 in the second year of operation, before reaching $364,403 in year

five. For the same period, sales are expected to grow from $1,764,203 to $2,348,155.

Year 1 Year 2 Year 3 Year 4 Year 5

Income

Export Sales 855,371$ 940,908$ 1,034,999$ 1,138,499$ 1,252,349$

Domestic Sales 320,764$ 352,841$ 388,125$ 426,937$ 469,631$

Other 427,686$ 470,454$ 517,500$ 569,250$ 626,175$

1,603,821$ 1,764,203$ 1,940,624$ 2,134,686$ 2,348,155$

Cost of Sales

Export Sales 45% 384,917$ 423,409$ 465,750$ 512,325$ 563,557$

Domestic Sales 45% 144,344$ 158,778$ 174,656$ 192,122$ 211,334$

Other 45% 192,459$ 211,704$ 232,875$ 256,162$ 281,779$

Total COS 721,720$ 793,892$ 873,281$ 960,609$ 1,056,670$

Gross Profit 882,102$ 970,312$ 1,067,343$ 1,174,077$ 1,291,485$

55% 55% 55% 55% 55%

Operating Expenses

Legal & Accounting 4,000$ 4,140$ 4,285$ 4,435$ 4,590$

Cleaning 18,000$ 18,630$ 19,282$ 19,957$ 20,655$

Communications 18,000$ 18,630$ 19,282$ 19,957$ 20,655$

Freight 42,000$ 43,470$ 44,991$ 46,566$ 48,196$

Insurances 36,000$ 37,260$ 38,564$ 39,914$ 41,311$

Marketing & Advertising 24,000$ 24,840$ 25,709$ 26,609$ 27,541$

Motor Vehicle Expenses 18,000$ 18,630$ 19,282$ 19,957$ 20,655$

Printing & Stationery 9,600$ 9,936$ 10,284$ 10,644$ 11,016$

Superannuation 39,900$ 43,491$ 47,405$ 51,672$ 56,322$

Training 4,599$ 4,645$ 4,691$ 4,738$ 4,786$

Travel & Entertainment 14,400$ 14,904$ 15,426$ 15,966$ 16,524$

Utilities (Gas/Water/Electricity) 54,000$ 55,890$ 57,846$ 59,871$ 61,966$

Wages 420,000$ 457,800$ 499,002$ 543,912$ 592,864$

Total Operating Expenses 702,499$ 752,266$ 806,050$ 864,197$ 927,083$

EBITDA 179,603$ 218,046$ 261,293$ 309,880$ 364,403$

CASH FLOW FORECAST: YEAR 1

Based on the business model, the business will hold working capital of $350,000 of the $2,200,000 capital investment. This capital investment

is sufficient to support the business moving forward.

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Debtors

< 30 days 50% 37,500$ 41,250$ 45,375$ 49,913$ 54,904$ 60,394$ 66,434$ 73,077$ 80,385$ 88,423$ 97,265$ 106,992$

>30 days < 60 days 30% 22,500$ 24,750$ 27,225$ 29,948$ 32,942$ 36,236$ 39,860$ 43,846$ 48,231$ 53,054$ 58,359$

> 60 days 20% 15,000$ 16,500$ 18,150$ 19,965$ 21,962$ 24,158$ 26,573$ 29,231$ 32,154$ 35,369$

37,500$ 63,750$ 85,125$ 93,638$ 103,001$ 113,301$ 124,632$ 137,095$ 150,804$ 165,885$ 182,473$ 200,720$

Creditors

< 30 days 60% 55,775$ 57,200$ 59,427$ 62,478$ 64,573$ 67,538$ 71,399$ 74,386$ 78,333$ 83,273$ 87,448$ 92,701$

>30 days < 60 days 30% 27,887$ 28,600$ 29,714$ 31,239$ 32,286$ 33,769$ 35,700$ 37,193$ 39,166$ 41,637$ 43,724$

> 60 days 10% 9,296$ 9,533$ 9,905$ 10,413$ 10,762$ 11,256$ 11,900$ 12,398$ 13,055$ 13,879$

55,775$ 85,087$ 97,323$ 101,725$ 105,716$ 110,237$ 115,930$ 121,342$ 127,426$ 134,837$ 142,140$ 150,304$

Capital expenditure 1,850,000$

Total Inflows 37,500$ 63,750$ 85,125$ 93,638$ 103,001$ 113,301$ 124,632$ 137,095$ 150,804$ 165,885$ 182,473$ 200,720$

Total Outlows 1,905,775$ 85,087$ 97,323$ 101,725$ 105,716$ 110,237$ 115,930$ 121,342$ 127,426$ 134,837$ 142,140$ 150,304$

Cash at beginning of period 2,200,000$ 331,725$ 310,388$ 298,189$ 290,102$ 287,387$ 290,451$ 299,153$ 314,905$ 338,283$ 369,330$ 409,663$

Net flow (1,868,275)$ (21,337)$ (12,198)$ (8,087)$ (2,715)$ 3,064$ 8,701$ 15,752$ 23,378$ 31,047$ 40,333$ 50,417$

Cash at end of period 331,725$ 310,388$ 298,189$ 290,102$ 287,387$ 290,451$ 299,153$ 314,905$ 338,283$ 369,330$ 409,663$ 460,080$

APPENDICES APPENDIX A: ASIC COMPANY EXTRACT

27

APPENDIX B: CONTRACT OF SALE OF BUSINESS EXTRACT

28

APPENDIX C: CONTRACT OF SALE OF REAL ESTATE EXTRACT

29

APPENDIX D: MOCOM INVESTMENTS XI LTD SHAREHOLDER LISTING

30

APPENDIX E: PIPE AUTO PRATSCO. LTD COMPANY REGISTRATION

31

APPENDIX F: EXPORT LICENCE