RooLife signs deal to market Aussie products to an established Chinese customer base

RooLife is expanding its distribution footprint in the Chinese consumer marketplace with the signing of a binding term sheet with China-focused e-Commerce company AULife International to partner in marketing and sales initiatives for their respective portfolios of Australian and international products to Chinese consumers.

The company and AULife will establish a new operating entity which will target additional revenue streams through new product sales, as well as the provision of digital marketing, social media and e-commerce store operations to a new and targeted client base.

The new entity will be owned 51% by RooLife Group (ASX:RLG) and 49% by AULife, with profit sharing of 80% to RLG and 20% to AULife (net profit basis).

The companies will also work towards the provision of China-based e-Commerce and B2B services and operations to provide an exclusive e-commerce store dedicated to the sale and distribution of leading Australia brands to the Chinese market, in partnership with a tier-1 e-commerce platform in China.

First sales expected in July

RooLife will generate revenue through multiple channels including margins on all product sales as well as service fees and digital marketing fees – and expects first sales to be reported in July.

The additional profitability contribution combined with a reduced cost base is expected to significantly contribute towards company profitability in FY24.

“We are delighted to be working with AULife to jointly sell both RLG’s product range and AULife’s range of products across our combined sales channels – it broadens our reach and access to the market in China for both Australian and International products,” CEO Bryan Carr said.

“This agreement leverages an established sales channel and customer base and we expect to quickly lift our sales through AULife’s channels.”

Performance rights an added incentive

The term sheet also provides for the engagement of Martin Place Equity Partners to provide public and investor relations services and to introduce Chinese investors to RLG.

And as an incentive for AULife to maximise sales performance under the arrangement, the term sheet stipulates that AULife (or its nominee) will be issued 32,000,000 performance rights and Martin Place (or its nominee) will receive 8,000,000 performance rights.

Upon vesting, these rights can be exercised into fully paid ordinary RLG shares.

In aggregate, 1,000,000 performance rights held by the performance rights holders will vest for every $33,333 of net profit achieved by the operating entity, within the first 12 months after entry into the operating agreement.

“The structure of the arrangement between the parties is that AULife and Martin Place will be rewarded for provision of direct profit contribution to RLG with Performance Rights which convert to RLG shares upon achievement of agreed milestones,” Carr said.

“Additionally, the parties share a vision for sales opportunities which can be delivered to Australian companies selling into the China market, and so it makes sense to work together to amplify the sales opportunity.”

Additionally, RLG will issue 8,000,000 performance rights to AULife (or its nominee) and 2,000,000 performance rights to Martin Place (or its nominee) which vest if, within the first 12 months after entry in the operating agreement, the operating entity enters into an agreement with a Tier 1 Chinese e- commerce platform, local governments and brands (with AULife facilitating the entry into that arrangement) for a National level online store and at least $50,000 in associated product sales is achieved on that e-commerce platform provider’s platform.

This article was developed in collaboration with RooLife Group Limited, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.