REG - Vmoto Limited - Half Yearly Report <Origin Href="QuoteRef">VMT.AX</Origin> - Part 1
RNS Number : 1777QVmoto Limited28 August 2014VMOTO ANNOUNCES A MILESTONE HALF YEAR WITH FURTHER GROWTH EXPECTED FOR SECOND HALF
announcement 28 AUGUST 2014
Vmoto Limited (ASX: VMT) is pleased to announce its results for the six month period ended 30 June 2014 that saw the Company achieve the dual milestones of delivering a maiden six month profit and generating two consecutive quarters of positive operating cash flows.
Vmoto achieved normalised net profit after tax (NPAT) for the six month period ended 30 June 2014 of $704,569, after adjusting for non-cash share based expenses of $493,809, compared to a loss of $553,785 for the six month period ended 30 June 2013. This represents a key milestone in the Company's growth history and clear evidence of the scalability of Vmoto's business as the Company continues to grow production and sales. The Company's reported NPAT for the period was $210,760.
Commenting on the result, Managing Director Charles Chen said that Vmoto was at a significant growth inflection point as a result of delivering on its strategy to enter the electric two wheel vehicle market in China.
"The first half of 2014 saw Vmoto increasingly recognised for its premium electric scooter products as the Company continued to focus on the domestic Chinese market, the world's largest electric two wheel vehicle market. With 40 million units expected to be produced in China in 2015, the Company is concentrating on growing its market share and improving margins.
"While we continue to grow our presence in China and utilise excess capacity in our existing manufacturing facilities, our electric two wheel vehicles are being recognised in a number of international markets as well. While volumes are still in their infancy, greater penetration in key international markets is another plank of our long term growth strategy."
Key financial highlights
Revenue up 62% to $15.9 million (30 June 2013: $9.8 million)
EBITDA positive generating $574k (30 June 2013: EBITDA loss of $145k)
Normalised NPAT of $705k, after removing non-cash share based expenses (30 June 2013: loss of $554k)
Reported NPAT of $211k
Positive operating cash flow of $181k (30 June 2013: outflow of $1.1 million)
Strong balance sheet, with net debt of $485k
Key operational highlights
Production up 33% to 36,705 units (30 June 2013: 27,515)
Expanded Chinese distribution footprint to 16 company owned retail stores and more than 10 distributor/dealer relationships
Continued growth in new international markets - Brazil, Indonesia and Vietnam
DHL Hong Kong trialling two sample scooters
New product development - Vmoto 1, light alloy foldable scooter
Significant new market opportunities, organic growth, electric vehicle collaborations and JV opportunities assessed and progressed
Record performance provides growth foundation
Commenting on Vmoto's best performance to date, Mr Chen said that the Company's growing revenues and profits are a clear demonstration of the recognition and demand Vmoto brands are achieving in key markets in China and Asia in general.
"During the first half of 2014, the Company increased its distribution footprint in China, which as at 30 June 2014 comprised a total of 16 Company-owned retail stores and more than 10 external distributors and dealers across China through which over 9,000 scooters were sold collectively. Vmoto's international market exposure also expanded during the half year with initial orders being received from Brazil, Indonesia and Vietnam. The increased OEM, domestic and international sales, underpinned a ramping up of production at Vmoto's manufacturing facility in Nanjing to over 36,000 units in the six month period.
"Vmoto has continued with its strategy of design, manufacture and distribution of high quality 'green' electric powered two wheel vehicles from its low cost Nanjing facility. The production increase drove manufacturing efficiencies resulting in a 15.5% gross profit margin reflecting the benefits of economies of scale.
"The Company has also invested in new marketing initiatives attending a number of exhibitions where a range of Vmoto electric two wheel scooters were showcased. These exhibitions attracted significant numbers of visitors, providing valuable brand exposure for Vmoto and generating substantial interest and enquiries," said Mr Chen.
Outlook
With growing demand globally for 'green' electric powered two vehicles, and the world's largest market for these vehicles at the Company's back door, Vmoto is well placed to ramp up growth and earnings. With annualised production still not near 30% of the facility's physical capacity, plenty of capacity is available in the Company's existing manufacturing facility (subject to the necessary production line capital expenditure) to substantially lift production and leverage the benefits of scale to drive faster growth in earnings and cash flows.
Commenting on the outlook for Vmoto, Mr Chen said:
"We are excited about the growth opportunity ahead as we focus on increasing Vmoto's market share in the expanding domestic China and international market for electric powered two wheel vehicles. The Company will continue to invest in product development and research to stay ahead of technological advances and remain at the forefront of the industry.
"While Vmoto's retail store roll out will slow in the short term to allow additional time to be allocated to providing support to existing dealers and distributors, we believe this will not slow sales as momentum is expected to continue through Company owned retail outlets and strong distribution partnerships.
"Production at the Nanjing facility is expected to increase in line with forecasted sales and Vmoto is well positioned to accommodate this scale with the world class facility's current manufacturing capacity estimated at more than 300,000 units per annum (depending on model and subject to production line expansion).
"Vmoto has also received significant interest from a number of other electric vehicle distributors and parties. The Company continues to seek and discuss potential collaborations and joint venture opportunities, both in China and internationally which could add value and bottom line growth to the business.
"We are also constantly evolving our product range with a new light alloy frame electric two wheel scooter currently in development. It is intended that the Vmoto 1 will only weigh 48 kilograms and can be folded in 30 seconds allowing it to be easily portable for the home, office and transport. The scooter will also support Apple's iPhone to play music and also Apple's iPhone Global Positioning System. The development of the Vmoto 1 scooter is expected to be completed in October 2014.
"With all of the Company's foundations now in place, Vmoto is focused on leveraging scale and market opportunities to continue the momentum of the first half of this financial year. The second half of this year is expected to generate substantially higher revenue and earnings relative to the first half, with the positive trend on cash flows also expected to continue."
For further enquiries, please contact:
Vmoto Limited
Charles Chen, Managing Director
Olly Cairns, Non-Executive Director
+61 (8) 9226 3865
+61 (8) 9226 3865
Investors and Media
Market Eye Pty Ltd
+61 400 009 774
Ronn Bechler
Nominated Advisor and Broker
finnCap Ltd
+44 20 7220 0500
Ed Frisby/Christopher Raggett (corporate finance)
Tony Quirke/Mia Gardner (corporate broking)
About Vmoto
Vmoto Limited (ASX: VMT) is a global scooter manufacturing and distribution group. The Company specialises in high quality "green" electric powered scooters and manufactures a range of electric scooters, based on western technology and design, from its low cost manufacturing facilities in Nanjing, China. Vmoto combines low cost Chinese manufacturing capabilities with European design. The group operates through two primary brands: Vmoto (aimed at the value market in Asia) and E-Max (targeting Western markets with a premium end product). As well as operating under its own brands, the Company also sells to a number of customers on an original equipment manufacturer ("OEM") basis.
directors' report
The Directors present their report together with the financial report of Vmoto Limited ("Vmoto" or "the Company") and its controlled entities (the "Consolidated Entity") for the six months period ended 30 June 2014 and the auditor's review conclusion thereon:
1. Directors
The Directors of the Company at any time during or since the end of the half year are:
Name
Period of Directorship
Mr Simon Farrell
Appointed 29 January 2013, resigned 20 May 2014
Non-Executive Chairman
Mr Charles Chen
Appointed 5 January 2007
Managing Director
Mr Ivan Teo
Appointed 29 January 2013
Finance Director
Mr Olly Cairns
Appointed 1 September 2011
Non-Executive Director
Mr Kaijian Chen
Appointed 1 September 2011
Non-Executive Director
Ms Shannon Coates
Appointed 23 May 2014
Non-Executive Director
2. Results
The net profit for the Consolidated Entity for the six month period ended 30 June 2014 was $210,760 (six month period ended 30 June 2013: loss of $553,785) after income tax of nil (six month period ended 30 June 2013: nil). This represents an overall improvement of 138% compared to the $553,785 loss recorded for the six month period ended 30 June 2013.
The Company notes that this net profit figure includes one-off non-cash share based expenses of A$493,809 as a result of the issue of performance rights, shares and options as approved by shareholders at the Company's AGM on 20 May 2014 and the normalised net profit for the six month period ended 30 June 2014 adding back these one-off share based expenses was $704,569.
3. Review of Activities
The consolidated revenue for the six month period ended 30 June 2014 was up 62% to $15,862,018 (six month period ended 30 June 2013: $9,789,641).
During the six month period ended 30 June 2014, the Company increased its distribution footprint in China, which as at 30 June 2014 comprised a total of 16 company-owned retail stores and more than 10 external distributors and dealers across China. During the period, the Company produced a total of 36,705 units (six month period ended 30 June 2013: 27,515 units) as itcontinued ramping up its production of PowerEagle's electric two wheel vehicles with sales totaling 23,096 units to PowerEagle in addition to 9,325 of Vmoto's own units sold through Vmoto's retail stores and its Chinese distributors, and 4,284 of Vmoto's own units sold to other international distributors and customers.
The Consolidated Entity achieved a gross profit margin of 15.5% for the six month period ended 30 June 2014 (six month period ended 30 June 2013: 11.2%). The improved margin reflected the benefits of economies of scale as the Company continues to ramp up its production of electric two wheel vehicle products. The Company is confident that the gross profit margin will continue to increase with further economies of scale generated as production of units at Vmoto's manufacturing facilities in Nanjing, China (the "Nanjing Facility") increases in anticipation of higher sales in the coming financial years.
The Company's growing revenues and profits are a clear demonstration of the increasing traction Vmoto brands are achieving in key markets in China and Asia in general. Increasing international sales are also encouraging as the Company is becoming recognised for its premium electric scooter products and is delivering on its strategy off the back of this reputation.
Over the six month period ended 30 June 2014, the Consolidated Entity's net assets have increased by 4.1% to $18.5 million.
Vmoto has continued with its strategy of design, manufacture and distribution of high quality "green" electric powered two wheel vehicles and a range of western designed electric (and some petrol) two wheel vehicles from its low cost Nanjing Facility.
The Company continued to focus on the domestic Chinese market, the world's largest electric two wheel vehicle market, with 30 million units produced in 2012 and expected to increase to 40 million units in 2015 (Source: China Electric Two Wheel Vehicle Industry Research Report, 13 November 2012).
The Company's international market increased during the six month period with initial orders being received from Brazil, Indonesia and Vietnam and other new market entries being assessed regularly. The Company also delivered two sample scooters to its Hong Kong distributor to supply to DHL, a leading international delivery and courier group.
During the six month period ended 30 June 2014, Vmoto'scash flow continued to improve, with the Company achieving positive net operating cash flow over two consecutive quarters.
Vmoto's positive net operating cash flows for the six month period ended 30 June 2014 was $181,105, compared with operating cash outflow of $1.1 million for the six month period ended 30 June 2013.
During the period, the Company received $245,016 from the exercise of options.
As at 30 June 2014, the total operating facility drawn down was RMB19 million (approximately A$3.2 million) and the total undrawn operating facility was RMB15 million (approximately A$2.6 million).
As at 30 June 2014, the Company had cash of A$2.8 million.
EXISTING AND NEW CUSTOMERS
Vmoto provides the following update on developments with existing and new customers during the six month period ended 30 June 2014:
PowerEagle: The Company sold approximately 23,096 units of PowerEagle electric scooters to the customer. Production continued to be efficient and the Company remains on track to produce PowerEagle's forecast production of 64,800 units for the financial year ending 31 December 2014.
E-Tropolis: The Company progressed discussions with E-Tropolis with a view to increasing orders.
Hong Kong: Vmoto delivered two sample scooters to its Hong Kong distributor to supply to the Hong Kong branch of DHL. DHL is the world's largest international logistics company. The feedback received to date from the Hong Kong distributor has been positive.
Indonesia: The Company delivered its first container of electric scooters to its Indonesian distributor. The Company expects to receive additional orders from the distributor shortly.
Malaysia: The Company received an order for 72 electric scooters in completely knocked down form from its Malaysian distributor during the period.
Italy: Vmoto's Italian distributor supplied sample electric scooters for evaluation and testing to the Milan Police Department and TNT Post Italia. In June 2014, the Company received an order of one container from its Italian distributor which is expected to deliver in late August 2014 / early September.
Nepal: In June 2014, the Company received its first order from a new customer in Nepal. The container is expected to arrive in Nepal in September 2014. The Company is hopeful that additional orders will be placed by the customer and Vmoto will gain entry into this new market.
Taiwan: Vmoto supplied Kentfa Advanced Technology Corp with samples of electric scooters for evaluation and promotion in Taiwan. The feedback the Company has received to date has been positive. The electric scooters provided have passed the required tests and have been delivered to the local road transport department for certifying.
Vietnam: Vmoto received its first order from its Vietnamese distributor during the period. Following delivery of the initial order, the Company has received an additional order of 120 units.
Others: The Company's electric scooters were also shipped to distributors in South Africa, Canada, Greece, Japan, Mexico, Netherlands, Columbia and South Korea.
VMOTO'S RETAIL STORE AND DISTRUBTION CHANNELS
As at 30 June 2014, the Company's total retail store footprint stood at 16 retail stores. In addition Vmoto has established relationships with more than 10 distributors and dealers in China. Vmoto's retail store roll out is likely to slow to allow additional time to be allocated to providing support to new and existing distributors and dealers, however management anticipates the sales momentum will continue and revenue and profits from these sales channels will remain in line with the Company's expectations.
Sales from Vmoto's Chinese stores during the six month period totaled 6,680 units, with a further 2,645 units sold via its Chinese distributors.
COLLABORATIONS, TENDERS AND JOINT VENTURE OPPORTUNITIES
Vmoto continues to progress toward execution of the proposed joint venture with a private Chinese electronic technology company, as announced on 2 October 2013. Vmoto's joint venture partner is currently in situ at Vmoto's Nanjing Facility and both parties remain committed to formalising the joint venture. Further developments in this regard will be reported as and when they occur.
Vmoto continues to receive significant interest from other electric vehicle distributors and parties for potential collaboration or joint venture opportunities. Discussions are ongoing and further developments will be announced as and when they occur.
NEW PRODUCT UNDER DEVELOPMENT - VMOTO 1
The Company is currently developing a new model of electric two wheel scooter, the Vmoto 1. The Vmoto 1 scooter, once developed and tested will have a light alloy frame and only weigh 48 kgs. The key feature of the Vmoto 1 scooter is that it can be folded in 30 seconds allowing it to be easily portable for the home, office and transport. The scooter will also support Apple's iPhone to play music and also Apple's iPhone Global Positioning System. The development of the Vmoto 1 scooter is expected to be completed in October 2014.
EXHIBITIONS
Vmoto participated in the Post Expo held in Hong Kong over 20 - 21 May 2014. The exhibition generated significant interest as guests ranged from board executives, senior management from the national postal service, private postal and mailing companies and parcel and courier companies from across Asia Pacific.
The Company's Taiwanese distributor exhibited Vmoto's electric scooters at the Taipei International Electric Vehicles Exhibition over 9 - 12 April 2014.
Vmoto's Vietnamese distributor participated and exhibited in the 6th Entech Hanoi exhibition held on 21 - 23 May 2014. Over 180 booths exhibited at the exhibition, which was attended by over 140,000 visitors.
The Company's Canadian distributor promoted Vmoto's E-Max electric scooter products at the Montreal Motorcycle Show held over 28 February - 2 March 2014. This exhibition had 150 exhibitors and attended by over 36,000 visitors.
CORPORATE
On 20 May 2014, Mr Simon Farrell resigned as a Director of the Company. Ms Shannon Coates, Vmoto's Company Secretary was appointed as interim Non-Executive Director on 23 May 2014, while the Company seeks a suitable Australian resident director. Discussions have commenced with potential suitable candidates and Ms Coates will act as a Non-Executive Director until the appointment of a suitable candidate.
During the half year, the Company issued 9,075,400 shares on conversion of options and a further 4,666,666 shares were issued to Directors following the vesting of performance rights. In addition, the Company issued 4,000,000 options and 20,000,000 performance rights to Directors following shareholder approval at the Company's Annual General Meeting held on 20 May 2014.
OUTLOOK
The six month period ended 30 June 2014 was very positive for Vmoto, the key highlight being that the Company became cash flow positive for the first time as unit sales continued to increase.
Output from the Company's Nanjing Facility in China has continued to increase and is becoming more efficient as production grows to service PowerEagle and Vmoto's growing distribution channels in both the domestic Chinese and international markets.
The Company also continues to seek and discuss potential collaborations and joint venture opportunities in China and internationally which will add value and bottom line growth to the business.
4. Auditor's Independence Declaration under Section 307C of the Corporations Act 2001
The Auditor's Declaration is set out on page 17 and forms part of the Directors' Report for the half year ended 30 June 2014.
Dated at Perth, Western Australia, this 27th day of August 2014
Signed in accordance with a resolution of the Directors:
Charles Chen
Managing Director
consolidated STATEMENT OF FINANCIAL POSITION
as at 30 JUNE 2014
Note
30 June 2014
$
31 December 2013
$
CURRENT ASSETS
Cash and cash equivalents
2,764,341
4,426,994
Trade and other receivables
4,219,771
3,639,758
Inventories
5,969,206
5,180,807
Other assets
1,523,977
2,449,680
Total Current Assets
14,477,295
15,697,239
NON CURRENT ASSETS
Property, plant and equipment
5,557,402
5,473,184
Intangible assets
3,592,983
3,592,983
Total Non Current Assets
9,150,385
9,066,167
TOTAL ASSETS
23,627,680
24,763,406
CURRENT LIABILITIES
Trade and other payables
1,914,682
1,509,999
Loans and borrowings
5
3,249,752
5,522,005
Total Current Liabilities
5,164,434
7,032,004
TOTAL LIABILITIES
5,164,434
7,032,004
NET ASSETS
18,463,246
17,731,402
EQUITY
Issued capital
3
57,972,881
57,725,955
Reserves
(2,379,853)
(2,654,011)
Accumulated losses
(37,129,782)
(37,340,542)
TOTAL EQUITY
18,463,246
17,731,402
The consolidated statement of financial position is to be read in conjunction with the accompanying notes.
conSOLIDATED STATEMENT OF profit or loss
and other COMPREHENSIVE INCOME
for the half-year ended 30 JUNE 2014
Note
Half-year ended
30 June 2014
$
Half-year ended
30 June 2013
$
Continuing Operations
Revenue from sale of goods
15,862,018
9,789,641
Cost of sales
(13,397,780)
(8,697,501)
Gross Profit
2,464,238
1,092,140
Other income
76,660
264,617
Operational expenses
(708,586)
(672,256)
Marketing and distribution expenses
(276,511)
(352,631)
Corporate and administrative expenses
(1,096,785)
(617,888)
Occupancy expenses
(48,112)
(26,213)
Other expenses
(65,190)
(75,999)
Finance costs
(134,954)
(165,555)
Profit/(Loss) from continuing operations before tax
210,760
(553,785)
Income tax
-
-
Profit/(Loss) after tax from continuing operations attributable to owners of the company
2
210,760
(553,785)
Other comprehensive income
Foreign currency translation differences
(215,561)
72,519
Other comprehensive income for the period, net of tax
(215,561)
72,519
Total comprehensive income for the period attributable to owners of the company
(4,801)
(481,267)
Basic and Diluted Earnings/(Loss) per Share from Continuing Operations
0.02 cents
(0.06 cents)
The statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
CONSOLIDATED statement of cash flows
for the half-year ended 30 JUNE 2014
Note
Half-year ended
30 June 2014
$
Half-year ended
30 June 2013
$
Cash flows from operating activities
Receipts from customers
16,348,969
11,303,464
Payments to suppliers and employees
(16,066,835)
(12,311,343)
Interest received
31,482
535
Interest paid
(132,511)
(165,932)
Other cash receipts
-
30,955
Net cash used in operating activities
181,105
(1,142,321)
Cash flows from investing activities
Payments for property, plant & equipment
(15,857)
(214,963)
Net cash used in investing activities
(15,857)
(214,963)
Cash flows from financing activities
Proceeds from issue of equity shares
245,016
-
Payments for share issue costs
(22,480)
(221,072)
Proceeds from borrowings
3,390,569
6,527,727
Repayment of borrowings
(5,400,251)
(6,043,162)
Net cash generated by financing activities
(1,787,146)
263,493
Net increase / (decrease) in cash and cash equivalents
(1,621,898)
(1,093,791)
Cash and cash equivalents at beginning of period
4,426,994
1,834,894
Effect of exchange rate fluctuations on cash held
(40,755)
158,861
Cash and cash equivalents at end of period
2,764,341
899,964
The statement of cash flows is to be read in conjunction with the accompanying notes.
conSOLIDATED statement of changes in equity
for the half-year ended 30 JUNE 2014
Consolidated
Issued Capital
$
Reserves
$
Accumulated Losses
$
Total
$
Balance as at 1 January 2013
51,060,622
(2,798,947)
(37,862,747)
10,398,928
Loss for the period
(553,785)
(553,785)
Other comprehensive income
-
72,519
-
72,519
Total comprehensive income for the period
-
72,519
(553,785)
(481,267)
Issue of ordinary shares
-
-
-
-
Share issue costs
(40,192)
-
-
(40,192)
Issue of options
-
44,274
-
44,274
Balance as at 30 June 2013
51,020,430
(2,682,154)
(38,416,532)
9,921,744
Balance as at 1 January 2014
57,725,955
(2,654,011)
(37,340,542)
17,731,402
Profit for the period
-
210,760
210,760
Other comprehensive income
-
(215,561)
-
(215,561)
Total comprehensive income for the period
-
(215,561)
210,760
(4,801)
Issue of ordinary shares
269,406
-
-
269,406
Share issue costs
(22,480)
-
-
(22,480)
Issue of options
-
489,719
-
489,719
Balance as at 30 June 2014
57,972,881
(2,379,853)
(37,129,782)
18,463,246
The statement of changes in equity is to be read in conjunction with the accompanying notes.
notes to the conSOLIDATED financial statements
1. SIGNIFICANT ACCOUNTING POLICIES
The half year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.
The half year financial report should be read in conjunction with the Annual Financial Report of Vmoto Limited for the year ended 31 December 2013.
It is also recommended that the half year financial report be considered together with any public announcements made by Vmoto Limited and its controlled entities during the half-year ended 30 June 2014 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.
(a) Basis of Preparation
The half year financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standard AASB 134 "Interim Financial Reporting".
The Directors have prepared the financial statements on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The Directors believe this to be appropriate for the following reasons:
the Consolidated Entity has a significant working capital surplus;
the Consolidated Entity has long term supply agreements and demand for its electric powered scooter products is increasing. As the units increase, this will further reduce the cost of goods manufactured due to achieving higher levels of economies of scale, which will further improve the gross profit margins;
the Consolidated Entity achieved a profit during the period;
the Consolidated Entity's Stage 1 and 2 of the Nanjing Facility have been completed and have been used as security for its existing operating facility. As at the date of this report, RMB12 million (approximately AUD2.1 million) of the operating facility is still available for draw down if required;
the Directors have prepared cash flow forecasts that indicate the Consolidated Entity will be cash flow positive for the year ending 31 December 2014 and will enable the Consolidated Entity to pay its debts as and when they fall due.
At the date of this report and having considered the above factors, the Directors are confident that the Consolidated Entity and the Company will be able to continue operations into the foreseeable future. The financial report does not include adjustments relating to the recoverability and classification of the recorded assets and liabilities amounts that might be necessary should the Consolidated Entity and the Company not continue as going concerns.
(b) Significant changes in accounting policies
The half year consolidated financial statements have been prepared using the same accounting policies as used in the annual financial statements for the year ended 31 December 2013.
The Group has adopted all the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to their operations and effective for the current half year.
New and revised Standards and amendments thereof and Interpretations effective for the current half year included:
AASB 1031 'Materiality' (2013)
AASB 2012-3 'Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities'
AASB 2013-3 'Amendments to AASB 135- Recoverable Amount Disclosures for Non-Financial Assets'
AASB 2013-5 'Amendments to Australian Accounting Standards - Investment Entities'
AASB 2013-9 'Amendments to Australian Accounting Standards - Conceptual Framework, Materiality and Financial Instruments"
The adoption of the other standards listed above has not had a material impact on this half year financial report.
(c) Principles of Consolidation
The parent entity and its subsidiaries are collectively referred to as the "Group". The parent of this Group is Vmoto Limited. Entities over which the parent (or the Group) directly or indirectly exercises control are called "subsidiaries". The consolidated financial statements incorporate the assets, liabilities and results of all subsidiaries. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
The assets, liabilities and results of subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between group companies are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group.
2. profit for the period
Profit before income tax expense includes the following revenues and expenses whose disclosure is relevant in explaining the performance of the entity:
30 June 2014
$
30 June 2013
$
(i) Other income
Contributions from customers
-
243,131
Government subsidies
15,860
12,927
Interest income
31,769
539
Net foreign exchange gain
1,481
-
Rent
14,098
-
Other income
13,452
8,020
76,660
264,617
(ii) Expenses
Depreciation
227,930
243,724
Employee benefits
1,203,524
677,748
(iii) Other Expenses
Net foreign exchange loss
-
4,658
Doubtful debts expenses
65,190
71,341
65,190
75,999
3. issued capital
30 June 2014
$
31 December 2013
$
Ordinary shares
1,235,426,675 (December 2013: 1,221,196,804) ordinary shares, fully paid
57,972,881
57,725,955
Movements in ordinary shares on issue
Number of Ordinary Fully Paid Shares
Issued Capital
$
Balance 1 January 2014
1,221,196,804
57,725,955
Issue of Shares at nil consideration
2,000,000
-
Issue of Shares at 4.0 cents each
40,400
1,616
Issue of Shares at 4.0 cents each
132,500
5,300
Issue of Shares at 2.5 cents each
800,000
20,000
Issue of Shares at 5.0 cents each
487,805
24,390
Issue of Shares at 2.5 cents each
3,250,000
81,250
Issue of Shares at 2.5 cents each
1,750,000
43,750
Issue of Shares at 3.0 cents each
2,100,000
63,000
Issue of Shares at 4.0 cents each
2,500
100
Issue of Shares at nil consideration
2,666,666
-
Issue of Shares at 3.0 cents each
1,000,000
30,000
Share issue costs
-
(22,480)
Balance 30 June 2014
1,235,426,675
57,972,881
At the shareholders' meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.
Options
The following options to subscribe for ordinary fully paid shares are outstanding at balance date:
- 2,700,000 options exercisable at 2.5 cents each on or before 1 September 2014.
- 147,050,163 options exercisable at 4.0 cents each on or before 31 December 2014.
- 8,400,000 options exercisable at 3.0 cents each on or before 23 November 2015.
- 5,000,000 options exercisable at 4.0 cents each on or before 23 May 2018.
- 5,000,000 options exercisable at 8.0 cents each on or before 23 May 2018.
- 1,000,000 options exercisable at 5.0 cents each on or before 21 May 2019.
- 1,000,000 options exercisable at 7.5 cents each on or before 21 May 2019.
- 2,000,000 options exercisable at 10.0 cents each on or before 21 May 2019.
These options do not entitle the holder to participate in any share issue of the Company or any other body corporate.
On 29 April 2014, 1,333,333 listed options (exercisable at $0.04 and expiring on 31 December 2014) were issued to an advisor in consideration for marketing services provided to the Company.
On 23 May 2014, 1,000,000 unlisted options (exercisable at $0.05 and expiring on 21 May 2019), 1,000,000 unlisted options (exercisable at $0.075 and expiring on 21 May 2019) and 2,000,000 unlisted options (exercisable at $0.10 and expiring on 21 May 2019) were issued to Mr Oliver Cairns pursuant to shareholder approval at the Company's 2014 Annual General Meeting.
Performance Rights
All performance rights convert to fully paid ordinary shares for nil cash consideration, subject to performance based vesting conditions.
The movements of performance rights over unissued ordinary shares of the Company for the half-year ended 30 June 2014 were:
Performance rights series
Balance at
1 Jan 2014
Granted
Vested
Forfeited
Held at
30 June 2014
Class B
2,000,000
-
-
-
2,000,000
Class C
2,000,000
-
-
-
2,000,000
Class D
2,000,000
-
(2,000,000)
-
-
Class E
2,000,000
-
-
-
2,000,000
Class F
2,000,000
-
-
-
2,000,000
Class G
2,666,666
-
(2,666,666)
-
-
Class H
2,666,666
-
-
-
2,666,666
Class I
2,666,668
-
-
-
2,666,668
Class J
-
10,000,000
-
-
10,000,000
Class K
-
10,000,000
-
-
10,000,000
Total
18,000,000
20,000,000
(4,666,666)
-
33,333,334
These performance rights do not entitle the holder to participate in any share issue of the Company or any other body corporate.
4. SEGMENT REPORTING
The continuing operations of the Consolidated Entity are predominantly in the two wheel vehicle including electric and petrol two wheel vehicles, manufacture and distribution industry. Reported segments were based on the geographical segments of the Consolidated Entity, being Australia, China and Germany. The management accounts and forecasts submitted to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance are split into these components.
The two wheel vehicles segment is managed on a worldwide basis, but operates in three principal geographical areas: Australia, China and Germany. In China, manufacturing facilities are operated in Nanjing. In Germany, the after sales service and marketing centre are operated in Bremen, Germany.The following table presents revenue and profit/(loss) in relation to geographical segments for the six month periods ended 30 June 2014 and 30 June 2013:
Half year ended 30 June 2014
Continuing Operations
Total Operations
Australia
$
China
$
Germany
$
$
Revenue
Sales to external customers
-
15,862,018
-
15,862,018
Other revenues
19,424
57,236
-
76,660
Total segment revenue
19,424
15,919,254
-
15,938,678
Total income
19,424
15,919,254
-
15,938,678
Finance costs
757
134,197
-
134,954
Result
Segment profit/(loss)
(1,019,548)
1,230,308
-
210,760
Half year ended 30 June 2013
Continuing Operations
Total Operations
Australia
$
China
$
Germany
$
$
Revenue
Sales to external customers
-
9,789,183
458
9,789,641
Other revenues
3,805
260,812
-
264,617
Total segment revenue
3,805
10,049,995
458
10,054,258
Total income
3,805
10,049,995
458
10,054,258
Finance costs
757
164,798
-
165,555
Result
Segment loss
(351,823)
(202,070)
108
(553,785)
There has not been any material change in the total assets as compared to that in the last annual financial report for the year ended 31 December 2013.
5. LOANS AND BORROWINGS
The following loans and borrowings (current) were issued and repaid during the half year ended 30 June 2014:
Movements in Loans and Borrowings
Carrying Amount
$
Balance at 1 January 2014
5,522,005
New Issues:
Drawn down from bank operating facility
3,390,569
Accrued interest
131,753
Effect of movement in foreign exchange rates
(262,571)
Repayments:
Loans
(5,400,251)
Interest paid
(131,753)
Balance at 30 June 2014
3,249,752
6. SUBSEQUENT EVENTS
Operating Facility
On 24 July 2014, the Company drew down RMB3 million (approximately $513,000) from the operating facility. As at the date of this report, the total operating facility drawn down was RMB22 million (approximately $3.8 million) and the total undrawn operating facility was RMB12 million (approximately $2.1 million).
Apart from the above, there were no other significant events subsequent to half-year ended 30 June 2014 and prior to the date of this report that have not been dealt with elsewhere in this report.
7. FAIR VALUE MEASUREMENT
In accordance with AASB13, Fair Value Measurement, the group is required to disclose for each class of assets and liabilities measured at fair value, the level of the fair value hierarchy within which the fair value method is categorized. The group view that no assets or liabilities are measured at fair value other than cash, trade and other receivables, trade and other payables and borrowings with carrying amounts assumed to approximate their fair value.
directors' declaration
The Directors declare that:
(a) in the Directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and
(b) in the Directors' opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with Accounting Standard AASB 134: Interim Financial Reporting and giving a true and fair view of the financial position as at 30 June 2014 and of its performance for the half year ended on that date.
Signed in accordance with a resolution of the Directors made pursuant to s303(5) of the Corporations Act 2001.
Dated at Perth, Western Australia, this 27th day of August 2014
On behalf of the Directors
Charles Chen
Managing Director
Appendix 4D
Half Year Report
to the Australian Stock Exchange
Part 1
Name of Entity
Vmoto Limited
ABN
36 098 455 460
Half Year Ended
30 June 2014
Previous Corresponding Reporting Period
Half Year Ended 30 June 2013
Part 2 - Results for Announcement to the Market
$'000
Percentage increase /(decrease) over previous corresponding period
Revenue from continuing operations
15,862
62%
Profit from continuing activities after tax attributable to members
211
138%
Net profit attributable to members
211
138%
Dividends (distributions)
Amount per security
Franked amount per security
Final Dividend
Nil
Nil
Interim Dividend
Nil
Nil
Record date for determining entitlements to the dividends (if any)
Not Applicable
Brief explanation of any of the figures reported above necessary to enable the figures to be understood:
Refer to the Review of Activities contained in the Directors' Report which forms part of the attached Half Year Financial Report for details.
Part 3 - Contents of ASX Appendix 4D
Section
Contents
Part 1
Details of entity, reporting period
Part 2
Results for announcement to the market
Part 3
Contents of ASX Appendix 4D
Part 4
Commentary on results
Part 5
Details relating to dividends
Part 6
Net tangible assets per security
Part 7
Details of entities over which control has been gained or lost
Part 8
Details of associates and joint venture entities
Part 9
Information on audit or review
Part 4 - Commentary on Results
Refer to the Review of Activities contained in the Directors' Report which forms part of the attached Half Year Financial Report for details.
Part 5 - Details Relating to Dividends
Date the dividend is payable
N/A
Record date to determine entitlement to the dividend
N/A
Amount per security
N/A
Total dividend
N/A
Amount per security of foreign sourced dividend or distribution
N/A
Details of any dividend reinvestment plans in operation
N/A
The last date for receipt of an election notice for participation in any dividend reinvestment plans
N/A
Part 6 - Net Tangible Assets per Security
2014
2013
Net tangible asset backing per ordinary security
1.2 cents
0.71 cents
Part 7 - Details of Entities Over Which Control has been Gained or Lost
Name of entity (or group of entities)
Not applicable
Date control gained or lost
Not applicable
Contribution of the controlled entity (or group of entities) to the profit/(loss) from ordinary activities during the period, from the date of gaining or losing control
Not applicable
Profit (loss) from ordinary activities of the controlled entity (or group of entities) for the whole of the previous corresponding period
Not applicable
Contribution to consolidated profit/(loss) from ordinary activities from sale of interest leading to loss of control
Not applicable
Part 8 - Details of Associates and Joint Venture Entities
Ownership Interest
Contribution to net profit/(loss)
2014
%
2013
%
2014
$A'000
2013
$A'000
Name of entity
N/A
N/A
N/A
N/A
Associates
Joint Venture Entities
Aggregate Share of Losses
Part 9 - Audit/Review Status
This report is based on accounts to which one of the following applies:
(Tick one)
The accounts have been audited
The accounts have been subject to review
The accounts are in the process of being audited or subject to review
The accounts have not yet been audited or reviewed
If the accounts have not yet been audited or subject to review and are likely to be subject to dispute or qualification, a description of the likely dispute or qualification:
Not applicable
If the accounts have been audited or subject to review and are subject to dispute or qualification, a description of the dispute or qualification:
Not applicable
Attachments Forming Part of Appendix 4D
Attachment #
Details
1
Half Year Financial Report
Signed By Company Secretary
Shannon Coates
Shannon Coates
Date 27th August 2014
This information is provided by RNSThe company news service from the London Stock ExchangeENDIR UBRWRSNAWUAR
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