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f o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 4
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C O R P O R A T E D I R E C T O R Y
Directors
Auditor
Mr Charles Chen – Managing Director
Mr Ivan Teo – Finance Director
Mr Oliver Cairns – Non-Executive Director
Mr Kaijian Chen – Non-Executive Director
Ms Shannon Coates – Non-Executive Director
Bentleys Audit & Corporate (WA) Pty Ltd
Level 1, 12 Kings Park Road
West Perth, Western Australia 6005
Australia
Company Secretary
Ms Shannon Coates
Banker
National Australia Bank
1238 Hay Street
West Perth, Western Australia 6005
Australia
Principal and Registered Office
Solicitors
Suite 5, 62 Ord Street
West Perth, Western Australia 6005
Australia
Telephone: +61 8 9226 3865
Facsimile: +61 8 9322 5230
Nominated Advisor and Joint Broker
finnCap Ltd
New Broad Street
London EC2M 1JJ
United Kingdom
Joint Broker
Mirabaud Securities LLC
33 Grosvenor Place
London SW1X 7HY
United Kingdom
Allion Legal
50 Kings Park Road
West Perth, Western Australia 6005
Australia
Austin Haworth & Lexon Legal
Level 12, 87-89 Liverpool Street
Sydney, New South Wales 2000
Australia
K&L Gates
One New Change
London EC4M 9AF
United Kingdom
Share Registry
Securities Exchanges
Computershare Investor Services Pty Ltd
Level 2, Reserve Bank Building
45 St George’s Terrace
Perth, Western Australia 6000
Australia
Telephone: +61 8 9323 2000
Facsimile: +61 8 9323 2033
Computershare Investor Services Plc
PO Box 82, The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
United Kingdom
Telephone: +44 870 702 0003
Facsimile: +44 870 703 6101
Website and Email
Website: www.vmoto.com
Email: info@vmoto.com
Australian Securities Exchange
Level 40, Central Park
152-158 St Georges Terrace
Perth, Western Australia 6000
Australia
AIM – London Stock Exchange
10 Paternoster Square
London EC4M 7LS
United Kingdom
ASX Code: VMT, AIM Code: VMT
Vmoto Limited is a public company incorporated in
Western Australia and listed on the Australian
Securities Exchange and AIM market of the London
Stock Exchange.
Inside Cover
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C O N T E N T S
Corporate Directory
Managing Director’s Letter
Operations Review
Directors’ Report
Remuneration Report
Corporate Governance Statement
Financial Statements
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
Additional Shareholder Information
Page
Inside cover
2
3
6
15
25
33
75
76
77
79
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M A N A G I N G D I R E C T O R ’ S L E T T E R
Dear Shareholders,
It is with great pleasure I present to you Vmoto Limited’s 2014 Annual Report.
2014 was another successful year of growth for Vmoto, which saw the Company generate record revenue, underlying
profit and operating cash flows. The success of 2014 followed on from 2013’s maiden profit as the Company made
substantial progress in further establishing itself in the international electric vehicle market.
Over the 12 months to 31 December 2014, Vmoto generated positive operating cash flows for four consecutive quarters
for the first time, and set new records for revenue (up 79% to $45.1 million), with and statutory net profit of $883,987 and
underlying net profit after tax of $3.2 million.
Operationally, we distributed over 76,000 units, an increase of 27% from 2013. Importantly, we significantly expanded
our international brand awareness and distribution footprint with higher margin units sold outside of China with
international sales up 104% from 2013. In China our distribution footprint continues to expand and at the end of 2014 we
had 16 of our own retail stores in China, as well as 15 distributors.
In addition to our own scooter sales, we undertook three strategic transactions in 2014. In September 2014 we agreed to
acquire Haiyong Electric Technology Co. Ltd (“Haiyong”), an advanced electronic technology company focused on
producing controllers, a key component in electric vehicle driving systems. This was an important technological addition
to the business whilst also contributing turnover and profit in the year under review. In November 2014, we signed a co-
operation agreement with Changzhou Dusheng Electrical Equipment Co. (“Dusheng”), the third largest handle bar
manufacturer in China. Both of these transactions complemented part of our longer term growth strategy to develop and
maintain a position at the technological forefront of the electric vehicle industry.
In December 2014 we agreed to form a joint venture with a number of experienced partners in the Chinese electric
vehicle market, to produce three-wheel and four-wheel electric vehicles, capitalising on the fast growing global demand
for environmentally friendly small vehicles, a market we see as having huge growth potential. The demand for three-
wheel electric vehicles in China has increased from 500,000 units per annum in 2004 to 10 million units in 2013, and it is
only expected to increase as the world shifts towards more sustainable modes of transport. Likewise, the annual demand
for four-wheel electric vehicles is expected to reach 820,000 units in China alone in 2020.
Vmoto is at an exciting stage in its development and is well positioned to handle the increasing demand for electric
vehicles in China and abroad. Given our green credentials, environmental initiatives being undertaken by the
government in China and in other countries around the world provide a significant growth opportunity for Vmoto. With
the current infrastructure in Nanjing, China still running at less than 30% capacity, based on current production, we have
significant room for growth in 2015 and 2016 as demand for our electric two-wheel vehicles sales increase and we
allocate space for the production of three and four-wheel vehicles through the new joint venture.
We can now proudly say that Vmoto has successfully completed its first 5 year stage of development since the Company
transformed into a global two-wheel vehicle manufacturing and distribution group specialising in high quality “green”
electric powered two-wheel vehicles. Vmoto has now built a strong foundation with advanced electric technology and at
the same time achieved a profitable result in 2014. The team is now structuring the next five year planning phase to
further expand and enhance Vmoto as the world's leading brand in the electric vehicle industry.
In conclusion, I would like to thank my fellow Directors, the management team and our staff for their contributions
during the 2014 financial year as well as the continuous support from all our shareholders. Having delivered an excellent
result for 2014, Vmoto is now working towards an even more prosperous year in 2015.
Yours faithfully
Charles Chen
Managing Director
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O P E R A T I O N S R E V I E W
OVERVIEW
Vmoto Limited (ASX/AIM: VMT), the global electric vehicle manufacturing and distribution group specialising in
“green” electric powered two-wheel vehicles, provides the following operations review for the year ended 31 December
2014.
The 2014 financial year was a profitable one for Vmoto and saw the Company deliver four consecutive quarters of
positive operating cash flows and generate record revenue, up 79% to A$45.1 million (2013: A$25.2 million). Vmoto
continued with its strategy of designing, manufacturing and distributing high quality two-wheel vehicles from its
manufacturing facility in Nanjing, China, whilst also strategically positioning itself to capitalise on the fast growing three
and four-wheel electric vehicle market.
Due to the significant increase in production and demand, Vmoto expanded its distribution footprint to a total of 16
retail stores and 15 distributors throughout China. During the period, the Company also capitalised on the fast growing
global demand for environmentally friendly small vehicles through the acquisition of Haiyong, an advanced technology
company focused on the production of controllers, a key component of electric vehicle driving systems; signing a co-
operation agreement with Dusheng, the third largest handle bar manufacturer in China; and entering into a joint venture
with a number of experienced Chinese electric vehicle partners to produce three-wheel and four-wheel electric vehicles.
Cash, Operating Facility and Inventory
As at 31 December 2014, the Company had cash of A$3.85 million.
The Company’s total operating facility drawn down was RMB24 million (approximately A$4.7 million) and the total
undrawn operating facility was RMB10 million (approximately A$2.0 million). As at 31 December 2014, the inventory at
the factory stood at A$5.9 million.
EXISTING MARKETS AND SALES
Sales and distribution efforts were predominantly in China, however the 2014 financial year also saw further traction
overseas. In total, over 76,000 units were sold, a 27% increase over the previous 12 month period.
ASIA
China: During the year ended 31 December 2014, the Company sold approximately 19,000 two-wheel vehicles across
China through the 16 Company owned retail stores and 15 external distribution centres.
During the year, the Company delivered approximately 48,000 units of electric two-wheel vehicles to PowerEagle,
pursuant to a Strategic Cooperation Agreement.
Vietnam: The Company delivered 552 units of electric two-wheel vehicles to its Vietnamese customer during the
financial year. The Company is excited about its progress into Vietnam as the demand for electric two-wheel vehicles is
expected to increase significantly.
Malaysia: The Company delivered 10 containers of electric two-wheel vehicle products to its Malaysian customer to
meet the demand for electric scooters. A further order for 6 containers of electric two-wheel vehicle products has been
confirmed and is expected to be delivered in April 2015.
Hong Kong: During the period, the Company provided two trial electric scooters to DHL Hong Kong. The Company is
awaiting feedback from DHL Hong Kong.
EUROPE
Denmark: During the period, the Company delivered five containers of electric two-wheel scooters to its Danish
customer. A further order of three containers of electric two-wheel vehicle products are under discussion and expected
to be delivered in first half of 2015.
Belgium: The Company delivered five sample electric scooters to its Belgium customer during the year. The Company is
awaiting feedback on their sample scooters.
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O P E R A T I O N S R E V I E W ( c o n t ’ d )
MIDDLE EAST
Iran: During the year ended 31 December 2014, the Company delivered one container of electric two-wheel vehicle
products to its Iranian customer, and received orders for a further two which will be delivered early 2015.
In addition, the Company provided containers and supplied units of electric two-wheel vehicle products to the following
countries: Croatia, Czech Republic, Greece, Italy, Japan, Korea, Mexico, Nepal and Sri Lanka.
LAUNCH OF NEW MODELS/VERSIONS IN CHINA
In early 2014, the Company launched the Vmoto 1, a foldable scooter with a light aluminium alloy frame weighing a
total of 45kg. The Vmoto 1 scooter can be folded in 30 seconds, allowing it to be easily stored at home or at the
workplace. The fashionable foldable model was designed to target both the Chinese and international market.
COLLABORATIONS, TENDERS AND JOINT VENTURE OPPORTUNITIES
Haiyong Acquisition
During the year, the Company acquired Haiyong, a technology company focused on the production of controllers, a key
component of electric vehicle driving systems. Pursuant to the terms of the acquisition, Haiyong relocated to the
Company’s Nanjing manufacturing facility in October 2014.
The strategic acquisition enables the Company access to the technologies central to the electric driving system for
Vmoto’s own products and to fast track the development of its electric vehicle driving systems, expected to generate
additional revenue and profit.
Co-operation Agreement with Handle Bar Manufacturer
The Company signed a co-operation agreement with Dusheng, the third largest handle bar manufacturer in China
during the period. Pursuant to the terms of the agreement, Dusheng has the right to use Vmoto’s patented technology in
further manufacturing, sales and distribution of its handle bars. The Company will receive a royalty based on the
volume of sales of handle bars that use the Company’s patented technology.
Joint Venture
During the financial year, the Company agreed to enter into a joint venture with a number of experienced partners in the
Chinese electric vehicle market with a focus on designing, manufacturing and distributing electric three-wheel and four-
wheel vehicles for the Chinese and international markets.
Vmoto owns a 20% equity interest in the joint venture and will be required to invest up to A$1.5 million in the first 12
months. Production is planned for early 2015 and it is estimated between 20,000 and 50,000 units of low speed electric
three-wheel and four-wheel vehicles will be produced in the preliminary year of production.
The demand for electric three-wheel electric vehicles has increased significantly with 500,000 units reported as having
sold in 2004, to approximately 10 million units in 2013 (Source: 2014-2015 Electric Three-Wheel Vehicle Market and
Outlook Research Report published by China Industry Report Net, August 2014). The demand for four-wheel models is
expected to reach 820,000 units in China alone in 2020 as the world moves towards more sustainable modes of transport
(Source: Ipsos Business Consulting).
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O P E R A T I O N S R E V I E W ( c o n t ’ d )
CORPORATE
During the year, the Company raised A$979,290 through the issue of 24,482,256 fully paid ordinary shares following
conversion of listed options exercisable at 4 cents. The remaining 122,743,307 listed options lapsed unexercised on 31
December 2014 and have been cancelled.
A further A$268,000 was raised through the issue of 9,900,000 fully paid ordinary shares on the exercise of 4,100,000 3
cent employee options and 5,800,000 2.5 cent employee options.
12,900,000 fully paid ordinary shares were issued during the period, to employees and consultants of the Company for
nil consideration and a further 45,894,329 fully paid ordinary shares were issued at a deemed issue price of 4 cents as
consideration for the Haiyong acquisition.
At the Company’s Annual General Meeting on 20 May 2014, shareholders approved the issue of 20,000,000 incentive
Performance Rights to Directors (Class J and Class K) and 4,000,000 options to Non-Executive Director Olly Cairns in
accordance with the terms of his appointment. These Performance Rights and options were subsequently issued in the
period.
During the financial year, 2,000,000 Class B Performance Rights, 2,000,000 Class D Performance Rights and 2,666,666
Class G Performance Rights vested and 6,666,666 fully paid ordinary shares were issued to certain Directors pursuant to
the terms of the Performance Rights.
OUTLOOK
It is expected that 2015 will be a prosperous year for the Company, as it seeks to capitalise on the increasing demand for
electric vehicles in China and abroad. The acquisition and joint venture undertaken in 2014 will enable the Company to
continue to grow and expand its electric vehicle capabilities.
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D I R E C T O R S ’ R E P O R T
The Directors present their report together with the consolidated financial statements of Vmoto Limited (“Vmoto” or the
“Company”) and its controlled entities (the “Consolidated Entity”) for the financial period 1 January 2014 to 31 December
2014.
Directors
The Directors of the Company at any time during or since the end of the financial year are:
Name
Experience and responsibilities
Charles Chen
Managing Director
Mr Chen was appointed as Executive Director on 5 January 2007 and Managing
Director of the Company on 1 September 2011.
Mr Chen founded Freedomotor Corporation Limited in 2004, through a management
buyout of key assets, which were subsequently acquired by Vmoto. He holds a Bachelor
of Automobile Engineering from Wuhan University of Automobile Technology (China)
and a postgraduate Diploma of Business Administration from South Wales University
(UK).
From 1993 to 2002, Mr Chen held senior executive roles with Hainan Sundiro
Motorcycle Company Limited, the largest publicly listed industrial company in Hainan
Province. Hainan Sundiro was acquired by Honda Japan in 2001.
Mr Chen is based in Nanjing, China, and oversees all of the Company’s operations and
activities.
Ivan Teo
Finance Director
Mr Teo was appointed as Finance Director of the Company on 29 January 2013. Prior to
this appointment, Mr Teo was employed as the Company’s Chief Financial Officer from
17 June 2009.
Oliver Cairns
Independent
Non-Executive Director
Mr Teo is a qualified Chartered Accountant and has over 10 years’ experience in
accounting, audit, corporate finance and international business serving private and
public companies in a diverse range of industries including automobile, manufacturing,
mining and retail.
Mr Teo holds a BCom degree from the University of Adelaide and is based in Nanjing,
China.
Mr Teo will be retiring and seeking re-election by shareholders at the Company’s 2015
Annual General Meeting.
Mr Cairns was appointed as Non-Executive Director of the Company on 1 September
2011.
Mr Cairns has over 16 years’ experience in the small-mid cap corporate and capital
markets space. Previously he was a corporate financier and Nominated Adviser for
AIM companies in London for over 8 years. During this time he was responsible for
floating and advising several resources and industrial companies before relocating to
Perth in June 2007.
In May 2009, Mr Cairns set up Pursuit Capital, a corporate advisory and investment
house based in Perth, which is focussed on long term corporate, capital and strategic
involvement with junior international companies. He is also a Director of Viridian
Capital Pty, Ltd and a Non-Executive Director of ASX listed Zeta Petroleum Plc.
Mr Cairns is a Member of the Chartered Institute for Securities and Investment (UK).
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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
Kaijian Chen
Independent
Non-Executive Director
Mr Chen was appointed as Non-Executive Director of the Company on 1 September
2011.
Mr Chen has extensive experience in the motorcycle manufacturing industry in China.
He was formerly vice president of Hainan Sundiro Motorcycle Co, which was the
second largest motorcycle manufacturer in China at the time, and which was
subsequently acquired by Honda in 2001.
Mr Chen also served as vice president for Changzhou Supaiqi E-Vehicle Co, Ltd for 5
years. Currently Mr Chen is vice president of Xinri E-Vehicle Co, Ltd, which is one of
the largest E-vehicle manufacturers in China at present. The annual production of Xinri
in 2010 was over 2 million units of electric bicycles and scooters for the Chinese
domestic market.
Mr Chen holds a degree from the Beijing Institute of Technology and is based in Wuxi,
China.
Shannon Coates
Ms Coates was appointed as Non-Executive Director of the Company on 23 May 2014.
Non-Executive Director
Ms Coates completed a Bachelor of Laws through Murdoch University in 1993 and has
since gained over 18 years’ in-house experience in corporate law and compliance for
public companies. She is a Chartered Secretary and an Associate Member of both the
Institute of Chartered Secretaries & Administrators and Chartered Secretaries Australia.
Ms Coates is currently employed as General Manager - Corporate with Evolution
Corporate Services Pty Ltd, a company providing corporate advisory services and is
also company secretary to a number of ASX and AIM listed companies.
Ms Coates will seek election by shareholders at the Company’s 2015 Annual General
Meeting.
Company Secretary
Shannon Coates
Ms Coates was appointed as Company Secretary on 10 May 2007.
A summary of Ms Coates’ qualifications and experience appears above.
Director Resignations
Simon Farrell
Non-Executive Chairman,
resigned on 20 May 2014
Mr Farrell was appointed as Non-Executive Chairman of the Company on 29 January
2013 and resigned on 20 May 2014.
Mr Farrell has over 30 year experience in private and public corporate business
especially in the mining industry at senior management and board level, principally in
the areas of finance, marketing and general management. He was previously managing
director of ASX, JSE and AIM listed Coal of Africa Limited, for which he was
responsible for growing to a market capitalisation of more than £1 billion.
Mr Farrell holds a BCom degree from the University of Western Australia and an MBA
from the Wharton School at the University of Pennsylvania. He is a Fellow of both the
Australian Society of Accountants and the Australian Institute of Company Directors.
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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
Directorships in other listed entities
Directorships in other listed entities held by Directors of the Company during the last 3 years immediately before the
date of this report are as follows:
Director
Company
Mr Charles Chen
Mr Ivan Teo
Mr Oliver Cairns
Mr Kaijian Chen
Ms Shannon Coates
Directors’ Meetings
-
-
Zeta Petroleum Plc
-
Artemis Resources Limited
Lemur Resources Limited
Metallum Limited
Period of directorship
From
-
-
2013
-
2011
2014
2011
To
-
-
Current
-
2014
Current
2012
The number of Directors’ meetings and the number of meetings attended by each of the Directors of the Company
during the period ended 31 December 2014 are:
Director
Held while Director
Attended
Board Meetings
Mr Simon Farrell
Mr Charles Chen
Mr Ivan Teo
Mr Oliver Cairns
Mr Kaijian Chen
Ms Shannon Coates
2
7
7
7
7
5
2
7
7
7
2
5
There is presently no separate Audit, Nomination or Remuneration Committee, with all committee functions being
addressed by the full Board.
Principal Activity
The principal activity of the Consolidated Entity during the year ended 31 December 2014 was the development and
manufacture, and international marketing and distribution of electric powered two-wheel vehicles, petrol two-wheel
vehicles and allterrain vehicles.
Operating and Financial Review
Review of Operations
Vmoto Limited is a global scooter manufacturing and distribution group. The Company specialises in high quality
“green” electric powered two-wheel vehicles and manufactures a range of western designed electric two-wheel vehicles
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.
Total consolidated sales of A$45.1 million were recorded for the Consolidated Entity for the year ended 31 December
2014. The revenue of the Consolidated Entity has increased by 79% as compared to the year ended 31 December 2013,
largely as a result of the Company’s expansion into the Chinese electric two-wheel vehicle market. During the year
ended 31 December 2014, the Consolidated Entity achieved a profit of A$883,987 after income tax, which included one-
off non-cash costs of A$2.0 million impairments in relation to petrol stock and sundry receivables, A$0.9 million of share
based payments and A$0.6 million of income tax credit in relation to recognition of tax losses of China operations. The
profit after tax for the year ended 31 December 2014 excluding these impairments and share based payments is
A$3,190,756.
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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
A more detailed review of operations for the year ended 31 December 2014 is set out in the Operations Review preceding
the Directors’ Report.
Review of Financial Position
The Consolidated Entity’s net assets have increased by approximately A$7.1 million during the year ended 31 December
2014.
Cash balances decreased by A$0.6 million during the year ended 31 December 2014 primarily as a result of the increase
in working capital requirements and repayment of the Company’s operating facilities.
Trade and other receivables have increased by A$1.5 million mainly due to higher accrued sales during the financial
year.
Inventories have increased by A$0.8 million and prepayments have increased by A$1.1 million mainly due to increased
production level and requirements for higher stock level to mass produce electric two-wheel vehicle products and the
new controller products to meet customers demand.
Property, plant and equipment increased by A$2.1 million mainly due to additions of fixed assets for the newly acquired
controller operation and the effect of drop in AUD exchange rate in translating property, plant and equipment
denominated in RMB to reporting currency, AUD.
Trade and other payables increased by A$2.3 million during the period mainly due to higher level of deposits received
from customers and higher level of stocks to meet the increased sales order.
Other liabilities increased by A$1.8 million due to recognition of contingent consideration payable in relation to
acquisition of Haiyong to comply with requirements of the accounting standards.
Loans and borrowings have decreased by A$0.8 million mainly due to the additional repayment of operating facilities
during the year.
Issued capital has increased by A$3.6 million during the year ended 31 December 2014 primarily due to shares issued to
acquire controller operation, shares issued to key management and conversion of ESOP and listed options to shares
during the year ended 31 December 2014.
No dividend has been declared or paid by the Company to the date of this Report in respect of the year ended 31
December 2014.
Reconciliation to Preliminary Results
The following tables reconcile statutory consolidated net profit after tax to preliminary consolidated net profit after tax in
Appendix 4E:
Consolidated statement of profit
or loss
Appendix 4E
Adjustments
Statutory
Financial
Report
Statutory net profit after tax1
$476,285
$407,702
$883,987
1. Fully paid ordinary shares were issued during the period to employees of the Company for nil consideration. These
fully paid ordinary shares are subject to an escrow period of two years and were amortised over a two years period
in the Appendix 4E. The remaining value of the shares issued to employees of A$219,140 has been reclassified from
prepayments to share based expenses in the statutory financial report.
2. Chinese operations have carried forward tax losses and the income tax credits in relation to these tax losses have not
been recognised in the Appendix 4E. These income tax credits has been recognised in the statutory financial report
to comply with the requirements of the accounting standards.
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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
The following table reconciles the statutory consolidated statement of financial position to the preliminary consolidated
statement of financial position in the Appendix 4E:
Consolidated statement of financial
position
Appendix 4E
Adjustments
Assets
Trade and other receivables1
Other assets2
Property, plant and equipment3
Intangible assets1,3, 6
Deferred tax assets5, 6
$5,287,493
$3,738,172
$6,350,283
$6,207,031
-
($196,622)
($219,140)
$1,255,905
$2,329,750
$299,152
Statutory
Financial
Report
$5,090,871
$3,519,032
$7,606,188
$8,536,781
$299,152
Liabilities
Other payables4
Other liabilities1
Equity
Issued capital4
Reserves3
Accumulated losses2, 5
$4,771,131
-
($912,705)
$1,835,773
$3,858,426
$1,835,773
$60,381,262
($1,366,089)
($36,733,680)
$912,705
$1,225,570
$407,702
$61,293,967
($140,519)
($36,325,978)
1. Prior to the acquisition of Haiyong, it has a debt of A$196,622 payable to the Group. As part of the acquisition, this
debt has been forgiven and recorded as consideration transferred in determining the goodwill of the acquisition of
Haiyong in the statutory financial report.
Under the contingent consideration arrangement, the Group is required to pay the vendors an additional amount by
shares if Vmoto Haiyong’s profit after tax for the 12 months period after the acquisition date exceed Haiyong’s 2013
profit after tax. If Vmoto Haiyong’s profit after tax exceeds Haiyong’s 2013 profit after tax, the Group is required to
pay the vendors an additional amount in shares (Tranche 2) calculated at five times of the Vmoto Haiyong profit
after tax for the 12 months period after the acquisition less the shares consideration issued under Tranche 1. The
Directors consider that this is probable and have provisionally recognised the contingent consideration payable of
A$1,835,773 in the statutory financial report.
2. Fully paid ordinary shares were issued during the period to employees of the Company for nil consideration. These
fully paid ordinary shares are subject to an escrow period of two years and were amortised over a two years period
in the Appendix 4E. The remaining value of the shares issued to employees of A$219,140 has been reclassified from
prepayments to share based expenses in the statutory financial report.
3. The carrying amount of the property, plant and equipment and intangible assets denominated in functional
currency has been converted to presentation currency using historical exchange rate at the transaction date in the
preliminary results in the Appendix 4E. The carrying amount of the property, plant and equipment and intangible
assets denominated in functional currency has been converted to presentation currency using balance date exchange
rate in the statutory financial report to comply with the requirements of the accounting standards.
4. As at 31 December 2014, a number of holders of the 4c listed options including Directors, had lodged applications to
exercise 22,812,621 listed options with exercise funds of A$912,705. All exercise funds were received as at 31
December 2014 and recorded as liability in the Appendix 4E. This has been reclassified as equity to more accurately
disclose the nature of the item.
5. Chinese operations have carried forward tax losses and the income tax credits in relation to these tax losses have not
been recognised in the Appendix 4E. The income tax credits of A$626,842 have been recognised in the statutory
financial report to comply with the requirements of the accounting standards.
6. The trademark and patents acquired under the acquisition of Haiyong have been determined to have a fair value of
A$1,310,760. The deferred tax liability of A$327,690 in relation to this have been recognised in the statutory financial
report to comply with the requirements of the accounting standards.
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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
Business Strategies and Prospects for Future Financial Years
The Chinese market is 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 20151. The Company has begun to focus on the huge domestic Chinese market
and expects to continue its expansion into China and to increase its presence in China. We have a number of strategies to
achieve this, including:
Developing more retail stores, distributors and OEM customers in China; and
Collaborations and co-operations with parties operating in the electric vehicles sector.
The Company also expects to increase its global sales by targeting business to business (“B2B”) customers especially in
the delivery and fast food sectors, and appointing more international distributors. The Company is in discussions and
progressing with a number of interested parties in countries including Turkey, Singapore, United Kingdom, Europe and
the US.
We are also continually considering ways of reducing the Company’s cost of manufacturing and operating costs by
improving efficiency.
The Chinese government has become increasingly focused on environmental protection to reduce pollution through
new-energy and clean technology. This was highlighted in the 2015 Chinese Government Work Report from the Chinese
People’s Political Consultative Conference annual session concluded on 15 March 2015.
Chinese Government policies providing subsidies to purchasers of new-energy vehicles, accelerating the construction of
public electric charging stations and poles, and encouraging greater investment in electric vehicle technology are
reflective of the Government’s greater focus in this sector. While a number of the new policies are centred on China’s
electric car market, Vmoto is monitoring developments closely as the Company expects to benefit from new Government
policies and initiatives that encourage the use of new-energy 4 wheel and 2 wheel electric vehicles.
The material business risks faced by the Company are likely to have an effect on the financial prospects of the Company.
The potential material business risks and how the Company manages these risks includes:
technological obsolescence – given the Company operates in an industry involving green and electric vehicles
technology, any technological obsolescence could have impact on our financial results. We address this risk
through investment in research and development, patenting appropriate and necessary research and
development results, recruiting competent technicians and constantly monitoring the market. We see this risk
as minimal as the Company is constantly developing new technology and functions in its electric scooter
products and has the protection of trademarks and patents.
reduction in demand from China - given our reliance on the Chinese economy, reduction in demand from
Chinese market for our electric scooter products could impact on our financial results. Based on the views of
prominent economic commentators, we do not anticipate any significant slowdown in the Chinese economy for
the next few years. The Company also distributes its products in Europe and is expanding sales in Asian
regions. In addition, the Company is investigating the option of expanding sales into other emerging economies
such as India and Vietnam to diversify its sales channel and balance its reliance on the Chinese market.
Impact of legislation and other external requirements
The Consolidated Entity’s operations are not subject to any significant environmental regulations. The Board believes
that the Consolidated Entity has adequate systems in place for the management of its environmental regulations and is
not aware of any breach of those environmental requirements as they apply to the Consolidated Entity.
Clean Energy Legislative Package
The Clean Energy Legislative Package, which included the Clean Energy Act 2011, was passed by the Australian
Government in November 2011. It sets out the way that the government will introduce a carbon price to reduce
Australia’s carbon pollution and move to a clean energy future.
1 Source: China Electric Two Wheel Vehicle Industry Research Report, 13 November 2012
11
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
The Consolidated Entity’s manufacturing activities are primarily carried out in China and the Directors believe that the
Group will not be significantly affected by this legislation passed. The Consolidated Entity has not incorporated the
effect of any carbon price implementation in its impairment testing at 31 December 2014.
The Directors’ view is that there were no changes in environmental or other legislative requirements during the year that
have significantly affected the results or operations of the Consolidated Entity.
Events Subsequent to Balance Date
Repayment and Drawn Down of Operating Facility
On 26 January 2015, the Company repaid RMB12 million (approximately A$2.4 million) of its bank operating facility and
subsequently drew down RMB4 million (approximately A$0.8 million) on 28 January 2015 and RMB8 million
(approximately A$1.6 million) on 2 February 2015.
Issue of Shares to Advisor
On 26 February 2015, the Company appointed Mirabaud Securities LLP as joint broker and issued 86,114 shares to
Mirabaud Securities LLP under the terms of the appointment.
Other than the above and as noted elsewhere in the financial statements, there has not arisen in the interval between the
end of the financial period and the date of this report any item, transaction or event of a material and unusual nature
likely, in the opinion of the Directors, to affect significantly the operations of the Consolidated Entity, the results of those
operations, or the state of affairs of the Consolidated Entity in future financial years.
Likely Developments
Further information about likely developments in the operations of the Consolidated Entity and the expected results of
those operations in future financial years are discussed in the Operations Review.
Directors’ Interests
The relevant interests of each Director in the shares, options and Performance Rights issued by the Company at the date
of this report are as follows:
Director
Ordinary shares
Mr Charles Chen1
Mr Ivan Teo2
Mr Oliver William Cairns 3
Mr Kaijian Chen 4
Ms Shannon Coates 5
52,881,402
6,208,728
21,549,495
6,505,050
750,000
Options
-
1,000,000
4,000,000
-
-
Performance Rights
10,666,667
5,000,000
10,666,667
5,000,000
-
1
2
3
4
5
16,980,639 shares are held indirectly by Pershing Australia Nominees Pty Ltd on behalf of
Mr Charles Chen. 1,000,000 shares and 10,666,667 Performance Rights are held directly by Mr Charles Chen.
34,900,763 shares are held indirectly by Mr Chen’s spouse, Ms Jierong Zhou.
6,208,728 shares, 1,000,000 options exercisable at $0.03 each on or before 23 November 2015 and 5,000,000
Performance Rights are held directly by Mr Ivan Teo.
1,488,888 shares are held directly by Mr Oliver Cairns. 18,696,970 shares, 1,000,000 options exercisable at $0.05 on
or before 21 May 2019, 1,000,000 options exercisable at $0.075 on or before 21 May 2019, 2,000,000 options
exercisable at $0.10 on or before 21 May 2019 and 10,666,667 Performance Rights are held indirectly by
Silverlight Holdings Pty Ltd as trustee for Cairns Investment Trust. Mr Cairns is a beneficiary of the Cairns
Investment Trust. 1,363,637 shares are held indirectly by Mr OW and CH Cairns as trustee for OCCM Fund. Mr
Cairns is a beneficiary of the OCCM Fund.
6,505,050 shares and 5,000,000 Performance Rights are held directly by Mr Kaijian Chen.
750,000 shares are held indirectly by Ms Coates’ spouse, Mr Simon Kimberley Coates as trustee for the Kooyong
Trust. Ms Coates is a beneficiary of the Kooyong Trust.
12
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
Options
On 23 May 2014, 1,000,000 unlisted options (exercisable at $0.05 on or before 21 May 2019), 1,000,000 unlisted options
(exercisable at $0.075 on or before 21 May 2019), 2,000,000 unlisted options (exercisable at $0.10 on or before 21 May
2019) were issued to Mr Oliver Cairns pursuant to shareholder approval at the Company’s 2014 Annual General
Meeting.
On 2 September 2014, 2,700,000 ESOP options (exercisable at $0.025 on or before 1 September 2014) remained
unexercised on their expiry date and lapsed pursuant to the terms and conditions of the options.
On 31 December 2014, 122,743,307 listed options (exercisable at $0.04 on or before 31 December 2014) remained
unexercised on their expiry date and lapsed pursuant to the terms and conditions of the options.
At the date of this report, options over unissued ordinary shares of the Company are:
Grant Date
Vesting Date
Expiry Date
Exercise Price
Number
23 November 2012
23 May 2013
23 May 2013
23 May 2014
23 May 2014
23 May 2014
23 November 2013
23 May 2014
23 May 2014
23 May 2014
23 May 2014
23 May 2014
23 November 2015
23 May 2018
23 May 2018
21 May 2019
21 May 2019
21 May 2019
3 cents1
4 cents
8 cents
5 cents
7.5 cents
10 cents
7,400,000
5,000,000
5,000,000
1,000,000
1,000,000
2,000,000
1. These options do not confer the right to participate in any share issue or interest issue of the Company or any other
entity.
Performance Rights
On 21 January 2014, the Company issued 1,000,000 shares to Mr Charles Chen and 1,000,000 shares to Mr Oliver Cairns
as a result of vesting of 2,000,000 Class D incentive Performance Rights as approved by shareholders on 31 July 2012.
On 23 May 2014, the Company issued 1,333,333 shares to Mr Charles Chen and 1,333,333 shares to Mr Oliver Cairns as a
result of vesting of 2,666,666 Class G incentive Performance Rights as approved by shareholders on 31 July 2012.
On 31 December 2014, the Company issued 1,000,000 shares to Mr Charles Chen and 1,000,000 shares to Mr Oliver
Cairns as a result of vesting of 2,000,000 Class B incentive Performance Rights as approved by shareholders on 31 July
2012.
All performance rights convert to fully paid ordinary shares for nil cash consideration, subject to performance based
vesting conditions. At the date of this report, Performance Rights over unissued ordinary shares of the Company are:
Class
Class C
Class E
Class F
Class H
Class I
Class J
Class K
Total
Number
2,000,000
2,000,000
2,000,000
2,666,666
2,666,668
10,000,000
10,000,000
31,333,334
13
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
Indemnification and Insurance of Officers and Auditors
Indemnification
The Company has agreed to indemnify the current Directors and Officers of the Company against all liabilities to another
person (other than the Company or a related body corporate) that may arise from their position as Directors and Officers
of the Company, except where the liability arises out of conduct involving a lack of good faith.
The agreement stipulates that the Company will meet, to the maximum extent permitted by law, the full amount of any
such liabilities, including costs and expenses.
The Company has not agreed to indemnify their current auditors, Bentleys Audit & Corporate (WA) Pty Ltd.
Insurance Premiums
As at the date of this report, a Directors and Officers insurance policy has been secured. The insurance premium for this
policy during the year ended 31 December 2014 was A$20,000.
Contingent Liabilities
The Company is currently a defendant in a proceeding brought against the Company by a former employee in relation
to the employee’s past employment. Having considered legal advice, the Directors believe that the claim can be
successfully defended, without any losses (including for costs) being incurred by the Company.
Non-audit Services
During the year, Bentleys Audit & Corporate (WA) Pty Ltd, the Company’s auditor, did not perform any non-audit
services in addition to their statutory duties.
Auditor’s Independence Declaration
The Auditor’s Independence Declaration is set out on page 76 and forms part of the Directors’ Report for the year ended
31 December 2014.
14
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
R E M U N E R A T I O N R E P O R T
This remuneration report outlines the Director and executive remuneration arrangements of the Company and the
Consolidated Entity.
Director and Key Management Personnel details
The following persons acted as Directors of the Company during or since the end of the financial year:
Mr Simon Farrell (appointed 29 January 2013, resigned 20 May 2014)
Mr Charles Chen
Mr Ivan Teo
Mr Oliver Cairns
Mr Kaijian Chen
Ms Shannon Coates (appointed 23 May 2014)
The term ‘key management personnel’ is used in this remuneration report to refer to the Directors and the following
persons. Except as noted, the named persons held their position during or since the end of the financial year:
Mr Patrick Davin (President of Strategic Business Development)
Mr George Hou (General Manager, resigned 30 April 2014)
Mr Shuguang Han (General Manager)
Mr Zhengjie Wu (Vice General Manager)
Overview of remuneration policies
The Board as a whole is responsible for considering remuneration policies and packages applicable both to Directors and
executives of the Company and the Consolidated Entity.
Key management personnel have authority and responsibility for planning, directing and controlling the activities of the
Company and the Consolidated Entity, including Directors of the Company and other executives. Key management
personnel comprise the Directors of the Company, and executives for the Company and the Consolidated Entity
including the key management personnel.
Broadly, remuneration levels for key management personnel of the Company and key management personnel of the
Consolidated Entity are competitively set to attract and retain appropriately qualified and experienced Directors and
executives and reward the achievement of strategic objectives. The Board obtains independent advice on the
appropriateness of remuneration packages of both the Company and the Consolidated Entity given trends in
comparative companies both locally and internationally, and the objectives of the Company’s remuneration strategy.
Remuneration packages consist of fixed remuneration including base salary, employer contributions to superannuation
funds and non-cash benefits.
The Company has a variable remuneration package for Directors, which is known as the Performance Rights Plan. This
plan allows Directors to convert Performance Rights to fully paid ordinary shares for nil cash consideration, subject to
performance based vesting conditions.
Fixed remuneration
Fixed remuneration consists of base remuneration (which is calculated on a total cost basis and includes any FBT charges
related to employee benefits including motor vehicle), as well as employer contributions to superannuation funds.
Remuneration levels are reviewed annually by the Board through a process that considers individual, segment and
overall performance of the Consolidated Entity. The Board has regard to remuneration levels external to the Consolidated
Entity to ensure the Directors’ and executives’ remuneration is competitive in the market place.
15
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
Executive Directors are employed full time and receive fixed remuneration in the form of salary and statutory
superannuation or consultancy fees, commensurate with their required level of services.
Non-Executive Directors receive a fixed monthly fee for their services. Where Non-Executive Directors provide services
materially outside their usual Board duties, they are remunerated on an agreed retainer or daily rate basis.
Service agreements
It is the Consolidated Entity’s policy that service agreements for key management personnel are unlimited in term but
capable of termination on 3 months’ notice and that the Consolidated Entity retains the right to terminate the service
agreements immediately, by making payment equal to 3 months’ pay in lieu of notice.
The service agreement outlines the components of compensation paid to key management personnel but does not
prescribe how remuneration levels are modified year to year. Remuneration levels are reviewed annually on a date as
close as possible to 31 December of each year to take into account key management personnel’s performance.
Certain key management personnel will be entitled to bonuses as the Board may decide in its absolute discretion from
time to time, to a maximum of 50% of the key management personnel’s annual base salary per annum.
Non-Executive Directors
Total remuneration for all Non-Executive Directors, last voted upon by shareholders at the 2012 Annual General
Meeting, is not to exceed A$300,000 per annum and has been set at a level to enable the Company to attract and retain
suitably qualified Directors. The Company does not have any scheme relating to retirement benefits for Non-Executive
Directors.
Relationship between the remuneration policy and Company performance
The remuneration policy has been tailored to increase goal congruence between shareholders, Directors and executives.
Two methods have been applied to achieve this aim, the first being a performance-based rights subject to performance
based vesting conditions, and the second being the issue of options or shares to key management personnel to encourage
the alignment of personal and shareholder interests. The Company believes this policy was effective in increasing
shareholder wealth.
The tables below set out summary information about the Consolidated Entity’s earnings and movements in shareholder
wealth for the last five reporting periods:
31 Dec 2014
31 Dec 2013
31 Dec 2012
30 June 2012
30 June 2011
12 months
12 months
6 months
12 months
12 months
In AUD
Revenue
Net profit / (loss) before tax
Net profit / (loss) after tax
$’000
45,098
290
884
$’000
25,175
404
404
$’000
4,603
(1,276)
(1,276)
$’000
8,242
(7,162)
(7,162)
$’000
7,112
(4,425)
(4,425)
In AUD
31 Dec 2014
31 Dec 2013
31 Dec 2012
30 June 2012
30 June 2011
Share price at start of period
Share price at end of period
Dividend
Basic and diluted earnings /
(loss) per share
12 months
12 months
6 months
12 months
12 months
$0.03
$0.04
-
0.07 cents
$0.02
$0.03
-
0.04 cents
$0.01
$0.02
-
(0.16) cents
$0.02
$0.01
-
(1.14) cents
$0.14
$0.02
-
(0.79) cents
16
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
Directors’ and executive officers’ remuneration
Details of the nature and amount of each major element of the remuneration of each Director of the Company and the named officers of the Company and the Consolidated Entity
for the year ended 31 December 2014 are:
In AUD
Executive Directors
Mr Charles Chen
Mr Ivan Teo
Non-Executive Directors
Mr Simon Farrell (resigned 20
May 2014)
Mr Oliver Cairns
Mr Kaijian Chen
Ms Shannon Coates 1
12 months to Dec 2014
12 months to Dec 2013
12 months to Dec 2014
12 months to Dec 2013
221,251
207,861
122,112
122,440
12 months to Dec 2014
9,944
12 months to Dec 2013
22,317
12 months to Dec 2014
12 months to Dec 2013
12 months to Dec 2014
12 months to Dec 2013
12 months to Dec 2014
12 months to Dec 2013
80,000
80,000
40,000
40,000
23,333
-
SHORT-TERM
POST-
EMPLOYMENT
Salary & fees
$
Superannuation
benefits
$
SHARE BASED
PAYMENTS
Options /
Performance
Rights
$
Total
$
307,501
207,861
208,362
129,338
30,244
50,737
262,669
80,000
126,250
40,000
23,333
-
Value of
options/rights
as proportion of
remuneration %
% of
remuneration
based on
performance
28.0%
-
41.4%
5.3%
67.1%
56.0%
69.5%
-
68.3%
-
-
-
48.2%
7.0%
28.0%
-
41.4%
-
-
-
32.8%
-
68.3%
-
-
-
36.0%
-
86,250
-
86,250
6,898
20,300
28,420
182,669
-
86,250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17
Total, all Directors
12 months to Dec 2014
12 months to Dec 2013
496,640
472,618
461,719
35,318
958,359
507,936
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
1. Ms Coates was appointed as Non-Executive Director on 23 May 2014. A company associated with Ms Coates, Evolution Capital Partners Pty Ltd, provided company secretarial, corporate
advisory and Australian registered office services to Vmoto for a monthly retainer. For the 2014 financial year, tVmoto paid Evolution Capital Partners Pty Ltd $66,000 for these additional
services.
In AUD
Executives
SHORT-TERM
POST-
EMPLOYMENT
SHARE BASED
PAYMENTS
Salary & fees
$
Superannuation
benefits
$
Shares /
Options
$
Total
$
Value of
options / rights
as proportion of
remuneration %
% of
remuneration
based on
performance
Mr Patrick Davin
(President of Strategic Business
Development)
Mr George Hou
(General Manager, resigned 30
April 2014)
12 months to Dec 2014
12 months to Dec 2013
12 months to Dec 2014
12 months to Dec 2013
Mr Shuguang Han
(General Manager)
12 months to Dec 2014
12 months to Dec 2013
Mr Zhengjie Wu
(Vice General Manager)
12 months to Dec 2014
12 months to Dec 2013
22,288
62,487
25,041
52,414
48,122
-
27,080
40,305
Total, all Executives
12 months to Dec 2014
12 months to Dec 2013
122,531
155,206
-
-
-
-
-
-
-
-
-
-
38,000
-
-
13,972
76,000
-
38,000
-
152,000
13,972
60,288
62,487
25,041
66,386
124,122
-
65,080
40,305
274,531
169,178
63.0%
-
-
21.0%
61.2%
-
58.4%
-
55.4%
8.3%
-
-
-
-
-
-
-
-
-
-
18
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
Share-based payment arrangements
Options
The Company operates an Employee Share Option Plan (“ESOP”) for executives and senior employees of the
Consolidated Entity. In accordance with the provisions of the ESOP, executives and senior employees may be granted
options to purchase ordinary shares at an exercise price to be determined by the Board with regard to the market value
of the shares when it resolves to offer the options. The options may only be granted to eligible persons after the Board
considers the person’s seniority, position, length of service, record of employment, potential contribution and any
other matters which the Board considers relevant.
Each employee share option converts into one ordinary share of Vmoto Limited on exercise. No amounts are paid or
payable to the Company by the recipient on receipt of the option. The options carry neither rights to dividends nor
voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.
The number of options granted is determined by the Board.
To date, options granted under the ESOP expire within thirty six months of their issue, or immediately on the
resignation of the executive or senior employee, whichever is the earlier.
During the year ended 31 December 2014, the following share based payment options arrangements were in existence:
Options
series
ESOP
ESOP
Class E
Class F
Class G
Class H
Class I
Total
Number
Grant date
Grant date
Expiry date
Exercise Price Vesting
8,500,000
11,500,000
5,000,000
5,000,000
1,000,000
1,000,000
2,000,000
34,000,000
01/09/2011
23/11/2012
23/05/2013
23/05/2013
23/05/2014
23/05/2014
23/05/2014
fair value
A$0.010
A$0.011
A$0.014
A$0.013
A$0.037
A$0.035
A$0.033
01/09/2014
23/11/2015
23/05/2018
23/05/2018
21/05/2019
21/05/2019
21/05/2019
A$0.025
A$0.030
A$0.040
A$0.080
A$0.050
A$0.075
A$0.100
date
01/09/2012
23/11/2013
23/05/2014
23/05/2014
23/05/2014
23/05/2014
23/05/2014
There are no further service or performance criteria that need to be met in relation to ESOP options granted before the
beneficial interest vests in the recipient.
During the year ended 31 December 2014, 4 million options were granted to Mr Oliver Cairns under the share based
payment options. Apart from the above, no other options were granted to key management personnel under the share
based payment options arrangement.
During the year ended 31 December 2014, the following key management personnel exercised their options that were
granted to them as part of their compensation. Each option converts into one ordinary share of Vmoto Limited.
Name
No. of options
exercised
No. of ordinary
shares of Vmoto
Limited issued
Amount paid
Amount unpaid
Charles Chen
Ivan Teo
Oliver Cairns
Kaijian Chen
Shannon Coates
George Hou
Zhengjie Wu
6,610,763
425,000
5,000,000
1,000,000
500,000
1,000,000
800,000
A$264,431
A$17,000
A$200,000
A$40,000
A$20,000
A$30,000
A$20,000
-
-
-
-
-
-
-
6,610,763
425,000
5,000,000
1,000,000
500,000
1,000,000
800,000
19
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
The following options to key management personnel relate to the year ended 31 December 2014:
Name
Simon Farrell
Oliver Cairns
Options
series
Class E
Class F
Class G
Class H
Class I
During the year ended 31 Dec 2014
No. granted
No. vested
% of grant
vested
% of grant
forfeited
-
-
1,000,000
1,000,000
2,000,000
5,000,000
5,000,000
1,000,000
1,000,000
2,000,000
100%
100%
100%
100%
100%
n/a
n/a
n/a
n/a
n/a
The following table summarises the value of options to key management personnel granted, exercised or lapsed during
the year ended 31 December 2014:
Name
Oliver Cairns
Charles Chen
Kaijian Chen
Shannon Coates
Ivan Teo
George Hou
Zhengjie Wu
Value of options granted
at the grant date 1
Value of options exercised
at the exercise date
Value of option lapsed at
the date of lapse 2
$
A$96,419
n/a
n/a
n/a
n/a
n/a
n/a
$
n/a
-
-
-
n/a
A$11,000
A$8,000
$
n/a
-
-
-
A$10,000
n/a
n/a
1. The value of options granted during the year is recognised in compensation over the vesting period of the
grant, in accordance with Australian Accounting Standards.
2. The value of options lapsed during the year due to the failure to satisfy a vesting condition is determined
assuming the vesting condition had been satisfied using a binomial pricing model.
Performance Rights
On 6 August 2012, following shareholder approval at the Company’s general meeting held on 31 July 2012, the
Company granted a total of 32,000,000 Performance Rights to Directors Charles Chen, Oliver Cairns and former
Director Blair Sergeant.
The Performance Rights comprised:
a) 2,000,000 Performance Rights issued to Blair Sergeant pursuant to his Non-Executive Director Appointment
Agreement; and
b) 30,000,000 Performance Rights issued under the Company’s Performance Rights Plan (10,000,000 each to
Charles Chen, Blair Sergeant and Oliver Cairns), subject to the following performance conditions:
Number of
Performance Rights
per Director
1,000,000
1,000,000
Class
Performance Conditions
Time of vesting
A
B
- The volume weighted average price of
the Shares for 10 consecutive trading
days on ASX (VWAP) exceeds 3 cents
at any time on or before 31 December
2013; and
the Participating Director remains a
Director at the time of vesting.
-
- The VWAP exceeds 3 cents at any time
on or before 31 December 2013; and
the Participating Director remains a
Director at the time of vesting.
-
20
The date the VWAP
first exceeds 3 cents
The date 12 months
after
the
the date
VWAP first exceeds 3
cents
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
1,000,000
1,000,000
1,000,000
1,000,000
1,333,333
1,333,333
1,333,334
C
D
E
F
G
H
I
- The VWAP exceeds 3 cents at any time
on or before 31 December 2013; and
the Participating Director remains a
Director at the time of vesting.
-
- The VWAP exceeds 4 cents at any time
on or before 31 December 2014; and
the Participating Director remains a
Director at the time of vesting.
-
- The VWAP exceeds 4 cents at any time
on or before 31 December 2014; and
the Participating Director remains a
Director at the time of vesting.
-
- The VWAP exceeds 4 cents at any time
on or before 31 December 2014; and
the Participating Director remains a
Director at the time of vesting.
-
- The VWAP exceeds 5 cents at any time
on or before 31 December 2015; and
the Participating Director remains a
Director at the time of vesting.
-
- The VWAP exceeds 5 cents at any time
on or before 31 December 2015; and
the Participating Director remains a
Director at the time of vesting.
-
- The VWAP exceeds 5 cents at any time
on or before 31 December 2015; and
the Participating Director remains a
Director at the time of vesting.
-
The date 24 months
after
the
the date
VWAP first exceeds 3
cents
The date the VWAP
first exceeds 4 cents
The date 12 months
the
the date
after
VWAP first exceeds 4
cents
The date 24 months
the
the date
after
VWAP first exceeds 4
cents
The date the VWAP
first exceeds 5 cents
The date 12 months
after
the
the date
VWAP first exceeds 5
cents
The date 24 months
after
the
the date
VWAP first exceeds 5
cents
On 23 May 2014, following shareholder approval at the Company’s Annual General Meeting held on 20 May 2014, the
Company granted a total of 20,000,000 additional Performance Rights to Directors Charles Chen, Oliver Cairns, Ivan
Teo and Kaijian Chen.
Number of
Performance Rights
per Director
2,500,000
2,500,000
Class
Performance Conditions
Time of vesting
J
K
- The volume weighted average price of
the Shares for 10 consecutive trading
days on ASX (VWAP) exceeds 6.5 cents
at any time on or before 31 December
2016; and
the Participating Director remains a
Director at the time of vesting.
-
- The VWAP exceeds 8.5 cents at any
time on or before 31 December 2017;
and
the Participating Director remains a
Director at the time of vesting.
-
The date the VWAP
first exceeds 6.5 cents
The date the VWAP
first exceeds 8.5 cents
21
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
During the year ended 31 December 2014, the following Performance Rights arrangements were in existence:
Performance
Rights series
Number
Grant date
Class B
Class C
Class D
Class E
Class F
Class G
Class H
Class I
Class J
Class K
Total
06/08/2012
06/08/2012
06/08/2012
06/08/2012
06/08/2012
06/08/2012
06/08/2012
06/08/2012
23/05/2014
23/05/2014
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,666,666
2,666,666
2,666,668
10,000,000
10,000,000
38,000,000
Grant date
fair value
A$0.004
A$0.004
A$0.0015
A$0.0015
A$0.0015
A$0.0005
A$0.0005
A$0.0005
A$0.0276
A$0.0069
All Performance Rights convert to fully paid ordinary shares for nil cash consideration, subject to the above
performance based vesting conditions. During the 2014 financial year, Class B, D and G Performance Rights vested and
were converted to shares.
The following Performance Rights to key management personnel relate to the year ended 31 December 2014:
Name
Performance
Rights series
During the year ended 31 Dec 2014
No. granted
No. vested
% of grant
vested
% of grant
forfeited
Charles Chen
Oliver Cairns
Ivan Teo
Kaijian Chen
Class B
Class D
Class G
Class J
Class K
Class B
Class D
Class G
Class J
Class K
Class J
Class K
Class J
Class K
-
-
-
2,500,000
2,500,000
-
-
-
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
1,000,000
1,000,000
1,333 ,333
-
-
1,000,000
1,000,000
1,333,333
-
-
-
-
-
-
100%
100%
100%
n/a
n/a
100%
100%
100%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
22
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
Share holdings and transactions of key management personnel
The movement during the year ended 31 December 2014 in the number of ordinary shares held, directly, indirectly or
beneficially by each key management person, including their personally-related entities, is as follows:
Held at
1 Jan 2014
Held at
date of
appointment
Net change1
Granted as
remuneration
Received
on vest of
performan
ce rights
Held at
date of
resignation
Held at
31 Dec 2014
Directors
Mr S Farrell
Mr C Chen
Mr I Teo
Mr O Cairns
Mr K Chen
Ms S Coates
Executives
Mr P Davin
Mr M Fulton
Mr G Hou
Mr S Han
Mr Z Wu
2,272,728
42,937,306
5,783,728
13,216,162
5,505,050
N/A
15,320,893
-
1,000,000
N/A
-
N/A
N/A
N/A
N/A
N/A
250,000
-
6,610,763
425,000
5,000,000
1,000,000
500,000
-
-
-
-
-
-
-
3,333,333
-
3,333,333
-
-
2,272,728
N/A
N/A
N/A
N/A
N/A
N/A
52,881,402
6,208,728
21,549,495
6,505,050
750,000
N/A
N/A
N/A
-
N/A
(10,000,000)
-
-
-
-
1,000,000
-
-
2,000,000
1,000,000
-
-
-
-
-
N/A
-
1,000,000
N/A
N/A
6,320,893
N/A
N/A
2,000,000
1,000,000
1. Net change represents the acquisition and disposal of shares on market and exercise of options by the key
management personnel.
Option holdings of key management personnel
The movement during the year ended 31 December 2014 in the number of options over ordinary shares held, directly,
indirectly or beneficially by each key management person, including their personally-related entities, is as follows:
Held at
1 Jan 2014
Held at
date of
appointment
Additions
Granted as
remuneration
Exercised/
Expired
Held at
date of
resignation
Held at
31 Dec 2014
-
-
-
4,000,000
-
-
-
13,221,526
1,425,000
5,000,000
2,777,777
500,000
10,000,000
N/A
N/A
N/A
N/A
N/A
N/A
-
1,000,000
4,000,000
-
-
-
-
-
-
-
-
-
1,000,000
-
800,000
N/A
2,100,000
500,000
N/A
N/A
500,000
N/A
N/A
-
-
Directors
Mr S Farrell
Mr C Chen
Mr I Teo
Mr O Cairns
Mr K Chen
Ms S Coates
Executives
Mr P Davin
Mr M Fulton
Mr G Hou
Mr S Han
Mr Z Wu
10,000,000
13,221,526
2,425,000
5,000,000
2,777,777
N/A
-
N/A
N/A
N/A
N/A
500,000
500,000
2,100,000
1,500,000
N/A
800,000
N/A
N/A
N/A
-
N/A
All options are vested and exercisable.
-
-
-
-
-
-
-
-
-
-
-
23
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
Performance right holdings of key management personnel
The movement during the year ended 31 December 2014 in the number of Performance Rights held, directly, indirectly
or beneficially by each key management person, including their personally-related entities, is as follows:
Held at
1 Jan 2014
Held at
date of
appointment
Granted as
remuneration
Vested as
Shares
Forfeited
Held at
date of
resignation
Held at
31 Dec 2014
Directors
Mr S Farrell
Mr C Chen
Mr I Teo
Mr O Cairns
Mr K Chen
Ms S Coates
Executives
Mr P Davin
Mr M Fulton
Mr G Hou
Mr S Han
Mr Z Wu
-
9,000,000
-
9,000,000
-
N/A
-
-
-
N/A
-
-
N/A
N/A
N/A
N/A
-
N/A
N/A
N/A
-
N/A
-
5,000,000
5,000,000
5,000,000
5,000,000
-
-
3,333,333
-
3,333,333
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
N/A
N/A
N/A
N/A
N/A
N/A
10,666,667
5,000,000
10,666,667
5,000,000
-
N/A
-
-
N/A
N/A
-
N/A
N/A
-
-
Other Key Management Personnel Transactions
During the year ended 31 December 2014, Evolution Capital Partners Pty Ltd, an entity associated with Ms Shannon
Coates, have provided company secretarial, administration and registered office services to the Group pursuant to
consultancy agreement and have received a total fees of A$66,000 for the year ended 31 December 2014.
Other than the above, there have been no related party transactions involving any of the Key Management Personnel
identified in the table above during the year or the previous year.
This report is made with a resolution of the Directors pursuant to s298(2) of the Corporations Act 2001:
Charles Chen
Managing Director
Dated at Western Australia, this 31st day of March 2015.
24
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
The Board of Directors of Vmoto Limited is responsible for the establishment of a corporate governance framework
that has regard to the best practice recommendations set by the ASX Corporate Governance Council. Vmoto’s objective
is to achieve best practice in corporate governance and the Company’s Board, senior executives and employees are
committed to achieving this objective.
This statement summarises the corporate governance practices that have been adopted by the Board. In addition to the
information contained in this statement, the Company’s website at www.vmoto.com contains additional details of its
corporate governance procedures and practices.
ASX Best Practice Recommendations
The ASX Listing Rules require listed companies to include in their Annual Report a statement disclosing the extent to
which they have complied with the ASX best practice recommendations in the reporting period. The recommendations
are not prescriptive and if a company considers that a recommendation is inappropriate having regard to its particular
circumstances, the company has the flexibility not to adopt it. Where Vmoto considered it was not appropriate to
presently comply with a particular recommendation the reasons are set out in the relevant section of this statement.
The Board has adopted a Corporate Governance policy that (except where expressly noted below) complies with the
Principles set out in the Second Edition of the “Corporate Governance Principles and Recommendations” (“ASX
Principles”) established by the ASX Corporate Governance Council. Other than as noted below, this Corporate
Governance policy was in effect for the entire reporting period. The Company notes that for the financial year ended 31
December 2015, the Third Edition of the ASX Principles will apply and the Company will follow and report against the
Third Edition in the Annual Report for the year ended 31 December 2015.
Recommendation
Comply
Yes / No
Page Reference
27
28
27-28
29
28
28
28
28
28-29
29
Yes
Yes
No
N/A
Yes
No
Yes
Yes
Yes
ASX Principle 1 — Lay solid foundations for management and oversight
1.1
Yes
1.2
1.3
Companies should establish the functions reserved to the
board and those delegated to senior executives and
disclose those functions.
Companies should disclose the process for evaluating the
performance of senior executives.
Companies should provide the information indicated in
the guide to reporting on Principle 1.
ASX Principle 2 — Structure the board to add value
2.1
2.2
2.3
A majority of the board should be independent directors.
The chair should be an independent director.
The roles of chair and chief executive officer (CEO) should
not be exercised by the same individual.
The board should establish a nomination committee.
Companies should disclose the process for evaluating the
performance of the board, its committees and individual
directors.
Companies should provide the information indicated in
the guide to reporting on Principle 2.
2.4
2.5
2.6
ASX Principle 3 — Promote ethical and responsible decision-making
3.1
Companies should establish a code of conduct and disclose
the code or a summary of the code as to:
The practices necessary
to maintain
confidence in the company's integrity
The practices necessary to take into account
their legal obligations and the reasonable
expectations of their stakeholders
The
responsibility and accountability of
individuals for reporting and investigating
reports of unethical practices
25
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
C O R P O R A T E G O V E R N A N C E S T A T E M E N T ( c o n t ’ d )
3.2
3.3
3.4
3.5
Companies should establish a policy concerning diversity
and disclose the policy or a summary of that policy. The
policy should include requirements for the board to
establish measurable objectives for achieving gender
diversity for the board to assess annually both the
objectives and progress in achieving them.
Companies should disclose in each annual report the
measurable objectives for achieving gender diversity set by
the board in accordance with the diversity policy and
progress towards achieving them.
Companies should disclose in each annual report the
proportion of women
the whole
organisation, women in senior executive’s positions and
women on the board.
Companies should provide the information indicated in
the guide to reporting on Principle 3.
employees
in
ASX Principle 4 — Safeguard integrity in corporate reporting
4.1
4.2
The board should establish an audit committee.
The audit committee should be structured so that it:
Consists only of non-executive directors
Consists of a majority of independent directors
Is chaired by an independent chair, who is not
chair of the board
Has at least three members
4.3
4.4
The audit committee should have a formal charter.
Companies should provide the information indicated in
the guide to reporting on Principle 4.
5.2
ASX Principle 5 — Make timely and balanced disclosure
5.1
Companies should establish written policies designed to
ensure compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a senior
executive level for that compliance and disclose those
policies or a summary of those policies.
Companies should provide the information indicated in
the guide to reporting on Principle 5.
ASX Principle 6 — Respect the rights of security holders
6.1
Companies should design a communications policy for
promoting effective communication with shareholders and
encouraging their participation at general meetings and
disclose their policy or a summary of that policy.
Companies should provide the information indicated in
the guide to reporting on Principle 6.
ASX Principle 7 — Recognise and manage risk
7.1
6.2
Companies should establish policies for the oversight and
management of material business risks and disclose a
summary of those policies.
The board should require management to design and
implement the risk management and internal control
system to manage the company's material business risks
and report to it on whether those risks are being managed
effectively. The board should disclose that management
has reported to it as to the effectiveness of the company's
management of its material business risks.
7.2
Yes
No
Yes
Yes
No
No
No
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
29
29
29
29
29
30
30
29-30
30
30
30
30
30
31
26
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
C O R P O R A T E G O V E R N A N C E S T A T E M E N T ( c o n t ’ d )
Yes
31
7.3
7.4
in accordance with section 295A of
The board should disclose whether it has received
assurance from the CEO (or equivalent) and the Chief
Financial Officer (CFO) (or equivalent) that the declaration
provided
the
Corporations Act is founded on a sound system of risk
management and internal control and that the system is
operating effectively in all material respects in relation to
financial reporting risks.
Companies should provide the information indicated in
the guide to reporting on Principle 7.
ASX Principle fairly and responsibly
8.1
8.2
The board should establish a remuneration committee.
The remuneration committee should be structured so that
it:
Yes
No
Consists of a majority of
independent
No
directors
Is chaired by an independent chair
Has at least three members
8.3
8.4
Companies should clearly distinguish the structure of
non-executive director’s remuneration
that of
executive directors and senior executives.
Companies should provide the information indicated in
the guide to reporting on Principle 8.
from
No
No
Yes
Yes
Board of Directors
Role and Responsibilities of the Board
30-31
31
31
31
31
The Board is responsible for guiding and monitoring the Company on behalf of shareholders. The specific
responsibilities of the Board include:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
appointment, evaluation, rewarding and if necessary the removal of the Managing Director, and
Chief Financial Officer (or equivalent) and the Company Secretary;
in conjunction with management, development of corporate objectives, strategy and operations
plans and approving and appropriately monitoring plans, new investments, major capital and
operating expenditures, capital management, acquisitions, divestitures and major funding
activities;
establishing appropriate levels of delegation to the Managing Director to allow him to manage
the business efficiently;
monitoring actual performance against planned performance expectations and reviewing
operating information at a requisite level, to understand at all times the financial and operating
conditions of the Company;
monitoring the performance of senior management including the implementation of strategy, and
ensuring appropriate resources are available;
via management, an appreciation of areas of significant business risk and ensuring that the
Company is appropriately positioned to manage those risks;
overseeing the management of safety, occupational health and environmental matters;
satisfying itself that the financial statements of the Company fairly and accurately set out the
financial position and financial performance of the Company for the period under review;
27
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
C O R P O R A T E G O V E R N A N C E S T A T E M E N T ( c o n t ’ d )
(i)
(j)
(k)
(l)
satisfying itself that there are appropriate reporting systems and controls in place to assure the
Board that proper operational, financial, compliance, and internal control processes are in place
and functioning appropriately;
to ensure that appropriate internal and external audit arrangements are in place and operating
effectively;
having a framework in place to help ensure that the Company acts legally and responsibly on all
matters consistent with the code of conduct; and
reporting to shareholders.
In accordance with ASX Principle 1, the Board has established a Board Charter which sets out functions reserved to
Board and those delegated to senior executives. This Charter is available on the Company’s website. The Board has
delegated responsibilities and authorities to management to enable management to conduct the Company’s day to day
activities. Matters which are not covered by these delegations, such as approvals which exceed certain limits, require
Board approval.
Evaluation of Board and Senior Executive performance
A process has been established to review and evaluate the performance of the Board, individual Directors and senior
executives. The Board is required to meet annually with the specific purpose of reviewing the role of the Board,
assessing the performance of the Board and individual Directors over the previous 12 months and examining ways in
which the Board can better perform its duties. The Company conducted a Board review process for the 2014 financial
year in Q1 2015.
The Managing Director is responsible for assessing the performance of the key executives within the Company. This is
performed through a formal process involving a formal meeting with each senior executive.
Board composition
As at the date of this Report, the Board is comprised of two executive Directors and three non-executive Directors.
The Company’s website contains details on the procedures for the selection and appointment of new Directors and the
re-election of incumbent Directors, together with the Board’s policy for the nomination and appointment of Directors.
ASX Principle 2 recommends the Board establish a Nomination Committee to focus on the selection and appointment
practices of the Company. It is further recommended that the Nomination Committee have a formal Charter.
The Company has adopted a formal Nomination Committee Charter, available on the Company’s website, which
includes information on the Company’s approach to selection and appointment of Directors. However the Company
does not presently have a separate Nomination Committee. Having regard to the Company’s current size and stage of
operations, the full Board conducts the function of such a committee, in accordance with the Charter.
The composition of the Board is reviewed at least annually to ensure the balance of skills and experience is
appropriate. The current Directors have a broad range of qualifications, experience and expertise in scooter and
motorcycle distribution and marketing and in the finance, legal and corporate advisory industries. The skills,
experience and expertise of Directors are set out in the Directors’ Report. The Board considers that the current
composition of the Board is adequate for the Company’s current size and operations, and includes the appropriate mix
of skills and expertise, relevant to the Company’s business.
The names of the Directors in office at the date of this Report, the year they were first appointed, their status as non-
executive, executive or independent Directors and whether they are retiring by rotation and seeking re-election by
shareholders at the 2015 Annual General Meeting, are set out in the Directors’ Report.
28
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
C O R P O R A T E G O V E R N A N C E S T A T E M E N T ( c o n t ’ d )
Independence of Non-Executive Directors
ASX Principle 2 recommends that a majority of the Board should be independent. The Board considers an independent
Director to be a non-executive Director who meets the criteria for independence included in Principle 2 of the ASX
Corporate Governance Principles and Recommendations. Materiality for these purposes is based on quantitative and
qualitative bases. An amount of over 5% of the annual turnover of the Company or 5% of the individual Directors’ net
worth is considered material for these purposes.
The Board has reviewed and considered the positions and associations of each of the Directors in office at the date of
this report and consider that three of the five Directors are not independent. However, the Board believes that the
structure of the Board is adequate for the Company’s current size and operations, includes the appropriate mix of skills
and expertise, relevant to the Company’s business, and that the non-independent Directors are able to and do bring
impartial judgment to all relevant issues falling within the scope of the Board.
Independent professional advice
The Board has adopted a formal policy on access to independent professional advice which provides that Directors are
entitled to seek independent professional advice for the purposes of the proper performance of their duties. The advice
is at the Company’s expense and advice so obtained is to be made available to all Directors.
Meetings
The Board held 7 scheduled meetings during the reporting period and no unscheduled meetings were held during that
period. Senior management attended and made presentations at the Board Meetings as considered appropriate and
were available for questioning by Directors.
The attendance of Directors at Board meetings during the period ended 31 December 2014 is detailed in the Directors’
Report.
Code of Conduct
The Board encourages appropriate standards of conduct and behaviour from Directors, officers, employees and
contractors of the Company.
The Board has adopted a Code of Conduct in relation to Directors and employees, available from the Company’s
website. This Code of Conduct is regularly reviewed and updated as necessary to ensure that it reflects the highest
standards of behaviour and professionalism and the practices necessary to maintain confidence in the Company’s
integrity.
A fundamental theme is that all business affairs are conducted legally, ethically and with strict observance of the
highest standards of integrity and propriety.
ASX Principle 3 recommends companies establish a policy concerning diversity and disclose the policy or a summary
of that policy. It further recommends companies should disclose in each annual report measurable objectives for
achieving gender diversity set by the Board in accordance with the diversity policy and progress towards achieving
them. Due to the current nature and scale of Vmoto’s activities, the Board has not established a diversity policy or
measurable objectives for achieving gender diversity to report against in this report for the period ending 31 December
2014. Notwithstanding, the Company notes that as at the date of this report, the proportion of women associated with
the Company is:
a) Board: 20%
b) Senior Executive: 18.2%
c) Employees: 57.8%
Financial Reporting
ASX Principle 4 recommends the Board establish an Audit Committee to focus on issues relevant to the integrity of the
Company’s financial reporting. It is further recommended the Audit Committee have a formal Charter.
29
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
C O R P O R A T E G O V E R N A N C E S T A T E M E N T ( c o n t ’ d )
The Company has prepared a formal Audit Committee Charter, available from the Company’s website, which
promotes an environment consistent with best practice financial reporting and includes information on procedures for
the selection and appointment of the external auditor and for the rotation of external audit engagement partners.
Having regard to the Company’s current size and stage of operations, the Company does not presently have a separate
Audit Committee and the full Board conducts the function of such a committee, in accordance with the Charter.
Continuous Disclosure
In accordance with ASX Principle 5, the Board has an established Continuous Disclosure Policy which is available from
the Company’s website.
The Company is committed to:
(a)
(b)
(c)
(d)
complying with the general and continuous disclosure principles contained in the Corporations
Act and the ASX Listing rules;
preventing the selective or inadvertent disclosure of material price sensitive information;
ensuring shareholders and the market are provided with full and timely information about the
Company’s activities; and
ensuring that all market participants have equal opportunity to receive externally available
information issued by the Company.
Shareholder Communication
In accordance with ASX Principle 6, the Board has established a communications strategy which is available from the
Company’s website. The Board aims to ensure that shareholders are kept informed of all major developments affecting
the Company.
The Managing Director and Company Secretary have primary responsibility for communication with shareholders.
Information is communicated through:
(a)
(b)
(c)
(d)
(e)
(f)
continuous disclosure to relevant stock markets of all material information;
periodic disclosure through the annual report (or concise annual report), half year financial report
and quarterly reporting of corporate activities;
notices of meetings and explanatory material;
the annual general meeting;
periodic newsletters or letters from the Chairman or Managing Director; and
the Company’s website at www.vmoto.com
The Company is committed to the promotion of investor confidence by ensuring that trading in the Company’s
securities takes place in an efficient, competitive and informed market.
Shareholders are encouraged at annual general meetings to ask questions of Directors and senior management and also
the Company’s external auditors, who are requested to attend the Company’s annual general meetings.
Risk Management
In accordance with ASX Principle 7, the Company has a policy for the oversight and management of material business
risks, which is available on the Company’s website.
Management determines the Company’s risk profile and is responsible for overseeing and approving risk management
strategy and policies, internal compliance and internal control. The Company’s process of risk management and
internal compliance and control includes:
30
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
C O R P O R A T E G O V E R N A N C E S T A T E M E N T ( c o n t ’ d )
(a)
(b)
(c)
(d)
establishing the Company’s goals and objectives, and implementing and monitoring strategies
and policies to achieve these goals and objectives;
continuously identifying and reacting to risks that might impact upon the achievement of the
Company’s goals and objectives, and monitoring the environment for emerging factors and
trends that affect these risks;
formulating risk management strategies to manage identified risks and designing and
implementing appropriate risk management policies and internal controls; and
monitoring the performance of, and continuously improving the effectiveness of, risk
management systems and internal compliance and controls, including an ongoing assessment of
the effectiveness of risk management and internal compliance and control.
Within the identified risk profile of the Company, comprehensive practices are in place and are directed towards
achieving the following objectives:
(a)
(b)
(c)
effectiveness and efficiency in the use of the Company’s resources;
compliance with applicable laws and regulations; and
preparation of reliable published financial information.
The Board oversees an ongoing assessment of the effectiveness of risk management and internal compliance and
control, requiring management appraise the Board of changing circumstances within the Company and within the
international business environment. During the reporting period, the Managing Director regularly reported to the
Board as to the effectiveness of the Company’s management of its material business risks. Further, in accordance with
Principle 7, the Managing Director and Finance Director have confirmed in writing to the Board that:
(a)
(b)
(c)
the Company’s financial reports present a true and fair view, in all material respects, of the
Company’s financial condition and operational results are in accordance with relevant accounting
standards.
the above confirmation is founded on a sound system of risk management and internal
compliance and control which implements the policies of the Board;
the Company’s risk management and internal compliance and control system is operating
efficiently and effectively in all material respects.
Remuneration
ASX Principle 8 recommends the Board establish a Remuneration Committee to focus on appropriate remuneration
policies. It is further recommended that the Remuneration Committee have a formal Charter.
The Company has adopted a formal Remuneration Committee Charter, available on the Company’s website, which
includes information on the Company’s approach to remuneration of Directors (executive and non-executive) and
senior executives. However the Company does not presently have a separate Remuneration Committee. Having regard
to the Company’s current size and stage of operations, the full Board conducts the function of such a committee, in
accordance with the Charter.
In accordance with Principle 8, Executive Directors and key executives are remunerated by way of a salary or
consultancy fees, commensurate with their required level of services. Non-executive Directors receive a fixed monthly
fee for their services. Non-executive Directors’ fees are currently capped at A$300,000 per annum.
The Company does not have any scheme relating to retirement benefits for non-executive Directors.
See the Remuneration Report for details of remuneration paid to Directors and key executives during the period.
31
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
C O R P O R A T E G O V E R N A N C E S T A T E M E N T ( c o n t ’ d )
Securities Trading
In compliance with Listing Rule 12.12, the Board has adopted a Securities Trading Policy which regulates dealings by
Directors, offices and employees in securities issued by the Company.
Under the policy, which is available on the Company’s website, general restrictions are imposed on Directors and
employees when in possession of inside information, while additional trading restrictions apply to Directors and some
employees.
The policy also regulates trading by key management personnel within defined closed periods, as well as providing
details of trading that is not subject to the policy, exceptional circumstances in which key management personnel may
be permitted to trade during a prohibited period with prior written clearance and the procedure for obtaining such
clearance.
Privacy
The Company has resolved to comply with the Privacy Act 1988 and associated Principles, to the extent required for a
company the size and nature of Vmoto.
32
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S
A N D O T H E R C O M P R E H E N S I V E I N C O M E
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 4
Continuing Operations
Revenue from sale of goods
Cost of sales
Gross Profit
Other income
Notes
Year ended
31 December 2014
$
Year ended
31 December 2013
$
45,098,053
25,174,809
(38,505,960)
(21,409,686)
6,592,093
3,765,123
2
166,741
453,418
Operational expenses
(1,576,688)
(1,398,897)
Marketing and distribution expenses
(507,990)
(660,342)
Corporate and administrative expenses
(2,014,827)
(1,337,819)
Occupancy expenses
Other expenses
Finance costs
Impairment of inventories
Profit/(Loss) from continuing operations before tax
Income tax
2
4
(59,946)
(486,094)
(275,507)
(1,548,071)
289,711
594,276
(43,175)
(1,002)
(372,846)
-
404,460
-
Profit /(Loss) after tax from continuing operations
attributable to owners of the company
883,987
404,460
Other comprehensive income
Foreign currency translation differences
2,154,350
207,937
Other comprehensive income for the period, net
of tax
Total comprehensive income for the period
attributable to owners of the company
2,154,350
3,038,337
207,937
612,397
Basic and Diluted Earnings/(Loss) per Share from
Continuing Operations
21
0.07 cents
0.04 cents
The consolidated statement of profit or loss and other comprehensive income
should be read in conjunction with the accompanying notes.
33
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L
P O S I T I O N
A S A T 3 1 D E C E M B E R 2 0 1 4
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Total Current Assets
NON-CURRENT ASSETS
Property, plant and equipment
Intangible Assets
Investments in associates
Deferred tax assets
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Loans and borrowings
Other liabilities
Total Current Liabilities
Note
31 December 2014
$
31 December 2013
$
5
6
7
8
9
10
11
4
12
13
14
3,850,142
5,090,871
5,945,188
3,519,032
4,426,994
3,639,758
5,180,807
2,449,680
18,405,233
15,697,239
7,606,188
8,536,781
393,244
299,152
16,835,365
5,473,184
3,592,983
-
-
9,066,167
35,240,598
24,763,406
3,858,426
4,718,929
1,835,773
10,413,128
1,509,999
5,522,005
-
7,032,004
TOTAL LIABILITIES
10,413,128
7,032,004
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
24,827,470
17,731,402
15
15
17
61,293,967
(140,519)
(36,325,978)
24,827,470
57,725,955
(2,654,011)
(37,340,542)
17,731,402
The consolidated statement of financial position is to be read in conjunction with the accompanying notes.
34
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 4
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Other cash receipts
Note
Year ended
31 December 2014
$
Year ended
31 December 2013
$
46,458,103
(45,631,141)
44,739
(273,499)
27,762
27,835,244
(31,324,457)
8,542
(375,681)
30,955
Net cash used in operating activities
25
625,964
(3,825,397)
Cash flows from investing activities
Payments for property, plant & equipment
Payments for intangible assets
Payments for equity investments
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of equity shares
Payments for share issue costs
Proceeds from borrowings
Repayment of borrowings
Net cash generated by financing activities
(1,101,351)
-
(393,244)
(1,494,595)
1,247,290
(22,480)
4,297,144
(5,400,250)
121,704
(402,528)
(5,486)
-
(408,014)
6,540,660
(438,298)
6,527,726
(6,043,162)
6,586,926
Net (decrease)/increase in cash and cash equivalents
(746,927)
2,353,515
Cash and cash equivalents at the beginning of the year
4,426,994
1,834,894
Effect of exchange rate fluctuations on cash held
170,075
238,585
Cash and cash equivalents at the end of the year
3,850,142
4,426,994
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
35
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
C O N S O L I D A T E D S T A T E M E N T S O F C H A N G E S I N E Q U I T Y
F O R T H E Y E A R D E N D E D 3 1 D E C E M B E R 2 0 1 4
Issued Capital
$
Reserves
$
Accumulated
Losses
$
Total
$
Balance as at 1 January 2013
51,060,622
(2,798,947)
(37,918,747)
10,342,928
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Issue of ordinary shares
Share issue costs
Issue of options
Transfer expired options reserve to
accumulated losses
-
-
-
7,006,800
(341,467)
-
-
-
207,937
207,937
-
-
110,744
(173,745)
404,460
-
404,460
-
-
-
173,745
404,460
207,937
612,397
7,006,800
(341,467)
110,744
-
Balance as at 31 December 2013
57,725,955
(2,654,011)
(37,340,542)
17,731,402
Balance as at 1 January 2014
57,725,955
(2,654,011)
(37,340,542)
17,731,402
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Issue of ordinary shares
Share issue costs
Issue of options and Performance Rights
Transfer expired options reserve to
accumulated losses
-
-
-
3,597,654
(29,642)
-
-
-
2,154,350
2,154,350
-
-
489,719
(130,577)
883,987
-
883,987
-
-
-
130,577
883,987
2,154,350
3,038,337
3,597,654
(29,642)
489,719
-
Balance as at 31 December 2014
61,293,967
(140,519)
(36,325,978)
24,827,470
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
36
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Vmoto Limited (“Vmoto” or “the Company”) is a limited company incorporated in Australia. The consolidated financial
report of the Company as at and for the year ended 31 December 2014 comprises the Company and its subsidiaries
(together referred to as the “Consolidated Entity”).
(a) Basis of preparation
(i)
Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance with Australian
Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian Accounting
Standards Board (AASB) and the Corporations Act 2001. The consolidated financial report of the Consolidated
Entity complies with International Financial Reporting Standards (IFRSs) and interpretations adopted by the
International Accounting Standards Board (IASB).
The financial statements were approved by the Board of Directors on 31 March 2015.
(ii)
Basis of measurement
The consolidated financial statements of the Consolidated Entity are prepared on an accruals basis and are based
on historical costs except where otherwise stated.
(iii)
Functional and presentation currency
The consolidated financial statements of the Consolidated Entity are presented in Australian dollars, which is
different from its functional currency, determined to be Renminbi. A different presentation currency has been
adopted as the Board of Directors believe that financial statements presented in Australian dollar (which is the
functional currency of parent company) are more useful to the users and shareholders of the Company who are
predominantly in Australia.
(iv)
Standards and interpretations affecting amounts reported in current period (and/or prior periods)
During the year ended 31 December 2014, the Consolidated Entity adopted all of the new and revised Australian
Accounting Standards and Interpretations applicable to its operations which became mandatory. The adoption of
these standards has not significantly impacted the recognition, measurement and disclosure of the transactions of
the Consolidated Entity and its consolidated financial statements for the year ended 31 December 2014.
New and revised Standards and amendments thereof and Interpretations effective for the year end 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 136 – Recoverable Amount Disclosures for Non-Financial Assets’
AASB 2013-4 ‘Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation
of Hedge Accounting ‘
AASB 2013-5 ‘Amendments to Australian Accounting Standards – Investment Entities’
AASB 2013-9 ‘Amendments to Australian Accounting Standards’ – Part B: ‘Materiality’
AASB 2014-1 ‘Amendments to Australian Accounting Standards’
Part A: ‘Annual Improvements 2010-2012 and 2011-2013 Cycles’
Part B: ‘Defined Benefit Plans: Employee Contributions (Amendments to AASB 119)’
Part C: ‘Materiality’
Interpretation 21 ‘Levies’
37
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
(v)
Going concern basis
The Consolidated Entity has recorded a profit after tax for the year ended 31 December 2014 of $883,987 (year
ended 31 December 2013: $404,460). At 31 December 2014, the Consolidated Entity had a working capital surplus of
$7,992,105 (31 December 2013: $8,665,235).
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 financial year and it will further reduce corporate and
other non-sales resources without materially affecting revenue activities;
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, RMB9 million (approximately AUD1.8
million) of the operating facility is still available for draw down if required; and
the Directors have prepared cash flow forecasts that indicate the Consolidated Entity will be cash flow positive
for the year ending 31 December 2015 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.
The accounting policies set out below have been applied consistently to all periods presented in the consolidated
financial statements, and have been applied consistently by all entities in the Consolidated Entity.
(b) Principles of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential
voting rights that currently are exercisable are taken into account. The financial statements of subsidiaries are
included in the consolidated financial statements from the date that control commences until the date that control
ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies
adopted by the Consolidated Entity.
Non-controlling interests in equity and results of the entities that are controlled by the Company are shown as a
separate item in the consolidated financial statements.
In Note 22, investments in subsidiaries are carried at cost and recoverable amount. Refer to Note (o).
Transactions eliminated on consolidation
Unrealised gains and losses and inter-entity balances resulting from transactions with or between subsidiaries are
eliminated in full on consolidation.
(c) Foreign currency translation
The functional currency of each of the Group’s entities is measured using the currency of the primary economic
environment in which that entity operates. The consolidated financial statements are presented in Australian
dollars, which is the parent entity’s functional currency.
38
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the
rate of exchange ruling at the reporting date.
All differences in the consolidated financial report are taken to the profit & loss with the exception of differences on
foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken
directly to equity until the disposal of the net investment, at which time they are recognised in the profit & loss.
Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate as at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date
when the fair value was determined.
As at the reporting date the assets and liabilities of these overseas subsidiaries are translated into the presentation
currency of Vmoto at the rate of exchange ruling at the reporting date and the income statements are translated at
the weighted average exchange rates for the period where this rate approximates the rate at the date of the
transaction.
The exchange differences arising on the retranslation are taken directly to a separate component of equity.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular
foreign operation is recognised in the profit & loss.
(d) Revenue recognition
Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax
(GST) payable to the taxation authority. Exchange of goods or services of the same nature without any cash
consideration are not recognised as revenue.
Sale of goods
Revenue from the sale of goods is recognised upon delivery of goods to customers as this corresponds to the
transfer of significant risks and benefits of ownership of the goods and the cessation of all involvement in those
goods.
Interest income
Interest income is recognised using the effective interest method.
(e) Trade and other receivables
Trade and other receivables include amounts due from customers for goods sold in the ordinary course of business.
Receivables expected to be collected within 12 months of the end of the reporting period are classified as current
assets. All other receivables are classified as non-current assets.
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using
the effective interest method, less any provision for impairment.
(f) Acquisition of assets
All assets acquired including plant and equipment and intangibles other than goodwill are initially recorded at their
cost of acquisition at the date of acquisition, being the fair value of the consideration provided plus incidental costs
directly attributable to the acquisition.
When equity instruments are issued as consideration, their market price at the date of acquisition is used as fair
value. Transaction costs arising on the issue of equity instruments are recognised directly in equity subject to the
extent of proceeds received, otherwise expensed.
39
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
(g) Business Combination
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a
business combination is measured at fair value which is calculated as the sum of the acquisition-date fair values of
assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquire and the equity
instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in
profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value,
except that:
deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised
and measured in accordance with AASB 112 ‘Income Taxes’ and AASB 119 ‘Employee Benefits’ respectively;
liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based
payment arrangements of the Group entered into to replace share-based payment arrangements of the acquire
are measured in accordance with AASB 2 ‘Share-based Payment’ at the acquisition date; and
assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 ‘Non-current Assets
Held for Sale and Discontinued Operations’ are measured in accordance with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any)
over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after
reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed
exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the
fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in
profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of
the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non-
controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets. The
choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests
are measured at fair value or, when applicable, on the basis specified in another Standard.
Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting
from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair
value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are
adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are
adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed
one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as
measurement period adjustments depends on how the contingent consideration is classified. Contingent
consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is
remeasured at subsequent reporting dates in accordance with AASB 139, or AASB 137 ‘Provisions, Contingent
Liabilities and Contingent Assets’, as appropriate, with the corresponding gain or loss being recognised in profit or
loss.
Where a business combination is achieved in stages, the Group’s previously held equity interest in the acquire is
remeasured to its acquisition date fair value and the resulting gain or loss, if any, is recognised in profit or loss.
Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in
other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that
interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see above), or additional assets or
liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the
acquisition date that, if known, would have affected the amounts recognised as of that date.
40
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
(h) Goodwill
Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the excess of the sum
of:
the consideration transferred;
any non-controlling interest; and
over the acquisition date fair value of net identifiable assets acquired.
the acquisition date fair value of any previously held equity interest;
The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date
fair value of any previously held equity interest shall form the cost of the investment in the separate financial
statements.
Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of profit or loss and other
comprehensive income. Where changes in the value of such equity holdings had previously been recognised in
other comprehensive income, such amounts are recycled to profit or loss.
The amount of goodwill recognised on acquisition of each subsidiary in which the Group holds less than a 100%
interest will depend on the method adopted in measuring the non-controlling interest. The Group can elect in most
circumstances to measure the non-controlling interest in the acquiree either at fair value (full goodwill method) or at
the non-controlling interest's proportionate share of the subsidiary's identifiable net assets (proportionate interest
method). In such circumstances, the Group determines which method to adopt for each acquisition and this is stated
in the respective notes to these financial statements disclosing the business combination.
Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is
included in investments in associates.
Goodwill is tested for impairment annually and is allocated to the Group's cash-generating units or groups of cash-
generating units, representing the lowest level at which goodwill is monitored not larger than an operating segment.
Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity disposed
of.
Changes in the ownership interests in a subsidiary are accounted for as equity transactions and do not affect the
carrying amounts of goodwill.
(i) Property, Plant and Equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of assets may include
the cost of materials and direct labour, and any other costs directly attributable to bringing the assets to a working
condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which
they are located.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within
“other income” in profit or loss.
Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the
item if it is probable that the future economic benefits embodied within the part will flow to the Consolidated
Entity and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment
are recognised in the profit & loss as incurred.
41
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each of
property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful
lives unless it is reasonably certain that the Consolidated Entity will obtain ownership by the end of the lease term.
Land is not depreciated. Assets will be depreciated once the asset is in the condition necessary for it to be capable of
operating in the manner intended by management.
The estimated useful lives for the current and comparative periods are as follows:
Plant and equipment
Motor vehicles
Office furniture & equipment
Building
Leasehold improvements
3 – 10 years
10 years
5 years
20 years
5 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the
cash-generating unit to which the asset belongs.
If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or
cash-generating units are written down to their recoverable amount.
The recoverable amount of property, plant and equipment is the greater of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
(j) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
(k) Payables
Payables, including goods received and services incurred but not yet invoiced, are recognised at the nominal
amount when the Consolidated Entity becomes obliged to make future payments as a result of a purchase of assets
or receipt of services.
(l) Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the
amount of GST incurred is not recoverable from the taxation authority. In these circumstances the GST is recognised
as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or
payable to, the tax office is included as a current asset or liability in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising
from investing and financing activities which are recoverable from, or payable to, the tax office are classified as
operating cash flows.
42
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
(m) Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories includes expenditure
incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to
their existing location and condition.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses.
(n) Operating Leases
Operating leases and the leased assets are not recognised on the Consolidated Entity’s statement of financial
position. Payments made under operating leases are recognised as an expense in the profit and loss.
(o) Recoverable amount of assets
At each reporting date, the Consolidated Entity assesses whether there is any indication that an asset may be
impaired. Where an indicator of impairment exists, the Consolidated Entity makes a formal estimate of recoverable
amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired
and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual
asset, unless the asset's value in use cannot be estimated to be close to its fair value less costs to sell and it does not
generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the
recoverable amount is determined for the cash-generating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
(p) Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs
associated with the borrowing.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using
the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount
or premium on settlement.
Gains and losses are recognised in the profit & loss when the liabilities are derecognised as well as through the
amortisation process.
(q) Share-based payment transactions
The Consolidated Entity provides benefits to employees (including Directors) of the Consolidated Entity in the form
of share-based payment transactions, whereby employees render services in exchange for shares or rights over
shares (‘equity-settled transactions’).
The Company operates an incentive scheme to provide these benefits, known as the Vmoto Employee Share Option
Plan (the “ESOP”).
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at
which they are granted. The fair value is determined using a Black Scholes Option Valuation model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions
linked to the price of the shares of Vmoto Limited (“market conditions”).
43
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance conditions are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (“vesting date”).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects
(i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the
Directors of the Consolidated Entity, will ultimately vest. This opinion is formed based on the best available
information at balance date. No adjustment is made for the likelihood of market performance conditions being met
as the effect of these conditions is included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional
upon a market condition.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had
not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of
the modification, as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any
expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the
cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award
are treated as if they were a modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding weighted average number of options as at the reporting date is considered
not material and accordingly the basic loss per share is the same as the diluted loss per share.
(r) Employee benefits
Liabilities for employee benefits for wages, salaries and annual leave represent present obligations resulting from
employees’ services provided to reporting date, calculated at undiscounted amounts based on remuneration, wage
and salary rates that the Consolidated Entity expects to pay as at reporting date including related on-costs, such as
workers compensation insurance and payroll tax.
(s) Income tax
Income tax expense recognised in the statement of profit or loss and other comprehensive income relates to current
tax and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in equity.
Current tax
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and amounts used for taxation purposes.
Deferred tax is not recognised for the following temporary differences:
i.
the initial recognition of assets or liabilities in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss; and
ii. differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable
that they will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
44
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on a different
tax entity, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities
will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against
which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
The Company and its subsidiaries have unused tax losses as at the reporting date. However, no deferred tax
balances have been recognised, as it is considered that asset recognition criteria have not been met at this time.
(t) Intangibles
Trademarks, licenses and production rights
Trademarks, licenses and production rights are recognised at cost of acquisition. They have an indefinite life and
are carried at cost less any accumulated impairment losses.
Patents
Patents acquired in a business combination and recognised separately from goodwill are initially recognised at
their fair value at the acquisition date (which is regarded as their costs). Subsequent to initial recognition, patents
acquired in a business combination are reported at cost less accumulated amortisation and accumulated
impairment losses, on the same basis as patents that are acquired separately. The patents acquired in a business
combination are deemed to have useful lives of 5 years.
(u) Development Costs
Development costs are capitalised only when technical feasibility studies identify that the project is expected to
deliver future economic benefits and these benefits can be measured reliably. Capitalised development costs have a
finite useful life and are amortised on a systematic basis based on the future economic benefits over the useful life
of the project.
(v) Provisions
Provisions are recognised when the Consolidated Entity has a legal or constructive obligation, as a result of past
events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably
measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the
reporting period.
(w) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks and other short-term
highly liquid investments with maturities of 3 months or less.
(x) Comparative figures
This report relates to the year ended 31 December 2014. Comparatives are for the year ended 31 December 2013.
(y) Fair value of assets and liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis,
depending on the requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an
orderly (ie unforced) transaction between independent, knowledgeable and willing market participants at the
measurement date.
45
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to
determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific
asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using
one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of
observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (ie
the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a
market, the most advantageous market available to the entity at the end of the reporting period (ie the market that
maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after
taking into account transaction costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant's ability to use the
asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and
best use.
The fair value of liabilities and the entity's own equity instruments (excluding those related to share-based payment
arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial
instruments, by reference to observable market information where such instruments are held as assets. Where this
information is not available, other valuation techniques are adopted and, where significant, are detailed in the
respective note to the financial statements.
Valuation techniques
In the absence of an active market for an identical asset or liability, the Group selects and uses one or more
valuation techniques to measure the fair value of the asset or liability, The Group selects a valuation technique that
is appropriate in the circumstances and for which sufficient data is available to measure fair value. The availability
of sufficient and relevant data primarily depends on the specific characteristics of the asset or liability being
measured. The valuation techniques selected by the Group are consistent with one or more of the following
valuation approaches:
Market approach: valuation techniques that use prices and other relevant information generated by market
transactions for identical or similar assets or liabilities.
Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a
single discounted present value.
Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service
capacity.
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when
pricing the asset or liability, including assumptions about risks. When selecting a valuation technique, the Group
gives priority to those techniques that maximise the use of observable inputs and minimise the use of unobservable
inputs. Inputs that are developed using market data (such as publicly available information on actual transactions)
and reflect the assumptions that buyers and sellers would generally use when pricing the asset or liability are
considered observable, whereas inputs for which market data is not available and therefore are developed using
the best information available about such assumptions are considered unobservable.
Fair value hierarchy
AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair
value measurements into one of three possible levels based on the lowest level that an input that is significant to the
measurement can be categorised into as follows:
Level 1
Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity
can access at the measurement date.
46
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly or indirectly.
Level 2
Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly or indirectly.
Level 3
Measurements based on unobservable inputs for the asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more
valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market
data. If all significant inputs required to measure fair value are observable, the asset or liability is included in Level
2. If one or more significant inputs are not based on observable market data, the asset or liability is included in
Level 3.
The Group would change the categorisation within the fair value hierarchy only in the following circumstances:
(i) if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa; or
(ii) if significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa.
When a change in the categorisation occurs, the Group recognises transfers between levels of the fair value
hierarchy (i.e. transfers into and out of each level of the fair value hierarchy) on the date the event or change in
circumstances occurred.
(z) Critical judgements in applying accounting policies and key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the
end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year.
Contingent liabilities
Under the contingent consideration arrangement in the acquisition of Nanjing Haiyong Electronic Technology Co,
Ltd, the Group is required to pay the vendors an additional amount by shares if Vmoto Haiyong’s profit after tax
for the 12 months period after the acquisition date exceed Haiyong’s 2013 profit after tax. If Vmoto Haiyong’s profit
after tax exceeds Haiyong’s 2013 profit after tax, the Group is required to pay the vendors an additional amount by
shares (Tranche 2) calculated at five times Vmoto Haiyong’s profit after tax for the 12 months period after the
acquisition less the shares consideration issued under Tranche 1. If Vmoto Haiyong’s profit after tax for the 12
months period after the acquisition date does not exceed Haiyong’s profit after tax for 2013, the Group will not be
required to pay any additional amount to the vendors. The Directors consider it is probable that this payment will
be required and have therefore recognised the contingent consideration payable in the statutory financial report.
The Company is currently a defendant in one proceeding brought against it by a former employee in relation to the
employee’s past employment. Having considered legal advice, the Directors believe that the claims can be
successfully defended, without any losses (including for costs) being incurred by the Company.
Impairment of goodwill and other indefinite intangible assets
Determining whether goodwill is impaired required an estimation of the value in use of the cash-generating units
to which goodwill has been allocated. The value in use calculation requires the directors to estimate the future cash
flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present
value. Where the actual future cash flows are less than expected, a material impairment loss may arise.
The carrying amount of goodwill at 31 December 2014 was A$4,207,107 (31 December 2013: A$1,414,951).
47
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Useful lives of property, plant and equipment and patents
The Group reviews the estimated useful lives of property, plant and equipment and patents at the end of each
reporting period. During the current year, the Directors determined that the useful lives of property, plant and
equipment and patents are deemed not to have changed.
Fair value measurements and valuation processes in relation to business combination acquisition
As part of business combination, assets and liabilities are measured at fair value for reporting purposes. The
Directors have determined the appropriate valuation techniques and inputs for fair value measurements.
In estimating the fair value of the patents, plant and equipments, the Group uses Level 3 inputs to perform the
valuation. Refer to Note 24 for details of the valuation performed.
48
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Year ended
31 December 2014
$
Year ended
31 December 2013
$
2. REVENUES AND EXPENSES
(a) Other income
Interest income
Contributions from customers
Government subsidies
Net foreign exchange gain
Other income
(b) Other expenses
Net foreign exchange loss
Doubtful debts
(c) Employee benefits expense
Wages and salaries costs
(d) Depreciation and amortisation
Depreciation
3. AUDITOR’S REMUNERATION
Audit services:
- audit of financial reports by Bentleys Audit & Corporate
(WA) Pty Ltd
- audit of financial reports by William Buck Audit (WA)
Pty Ltd (previous auditor)
45,245
45,401
25,582
9,668
40,845
166,741
-
486,094
486,094
2,289,326
2,289,326
457,634
457,634
8,514
351,189
29,660
-
64,055
453,418
1,002
-
1,002
1,423,229
1,423,229
484,112
484,112
74,000
-
40,000
20,200
74,000
60,200
49
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
4. INCOME TAX
(a) Income tax credit / (expense)
Current tax
Deferred tax
(b) Numerical reconciliation between tax benefit and pre-tax net
profit
Profit/(Loss) before income tax benefit
Income tax credit calculated at 30%
Tax effect on amounts which are not tax deductible:
Losses of foreign subsidiaries/operations not regarded as
deductible
Recognition of tax losses of China operations previously not
recognised
Miscellaneous
Non-deductible items
Deferred tax asset not brought to account
Income tax credit / (expense)
(c) Tax losses
Unused tax losses for which no deferred tax asset has been
recognised (as recovery is currently not probable)
Year ended
31 December 2014
$
Year ended
31 December 2013
$
(32,566)
626,842
594,276
289,711
(86,913)
(32,659)
626,842
(11,976)
-
98,982
594,276
-
-
-
404,460
(121,338)
(6,760)
-
(15,149)
-
143,246
-
Potential at 30% (31 December 2013: 30%)
5,836,614
4,724,255
(d) Unrecognised temporary differences
Temporary differences for which deferred tax assets have not
been recognised:
Employee benefits provision
Provision for doubtful receivables
Capital raising costs
Accrued expenses
Unrecognised deferred tax assets relating to the above temporary
differences
(e) Deferred tax balances
-
88,330
8,892
13,800
111,022
-
25,890
7,230
-
33,120
Deferred tax balances are presented in the consolidated statement of financial position as follows:
Deferred tax assets
Deferred tax liabilities
31 December 2014
$
31 December 2013
$
626,842
327,690
299,152
-
-
-
50
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Temporary differences
Intangible assets
Unused tax losses and credits
Tax losses – China operations
At 31 December 2014
(f) Tax Rates
Opening
balance
Recognised in
profit or loss
Acquisitions Closing balance
-
-
-
-
-
-
-
(327,690)
(327,690)
(327,690)
(327,690)
626,842
626,842
-
-
626,842
626,842
626,842
(327,690)
299,152
The potential tax benefit at 31 December 2014 in respect of tax losses not brought into account has been calculated at
30% for Australian entities. This same rate applied for the year ended 31 December 2013. The tax benefit at 31
December 2014 in respect of tax losses brought into account and recognised as deferred tax asset in relation to
Chinese operations has been calculated at 25% for China entities.
5. CASH AND CASH EQUIVALENTS
Cash and bank balances
6. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Less: Provision for impairment loss
Other receivables
Less: Provision for impairment loss
31 December 2014
$
31 December 2013
$
3,850,142
4,426,994
4,094,936
(62,061)
4,032,875
1,482,029
(424,033)
5,090,871
2,500,182
-
2,500,182
1,185,876
(46,300)
3,639,758
51
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Impaired Trade Receivables
Trade receivables are non-interest bearing and are generally on 30-60 days terms. A provision for impairment loss is
recognised when there is objective evidence that an individual trade receivable is impaired.
Movements in the provision for impairment of trade and other receivables were as follows:
At 1 January 2014
Provision for impairment during the period
Write off
Translation difference
At 31 December 2014
46,300
486,094
(237,761)
-
294,633
At 31 December 2014, the ageing analysis of trade and other receivables is as follows:
0 – 30 Days
31 – 60 Days
61 – 90 Days past due not impaired
+90 Days past due not impaired
+90 Days considered impaired
2,684,903
1,032,887
668,787
704,294
486,094
5,576,965
23,794
17,159
-
(5,347)
46,300
2,458,491
28,783
278,519
873,965
46,300
3,686,058
As of 31 December 2014, trade and other receivables of $1,373,081 (31 December 2013: $1,152,484) were past due but
not impaired. These relate to a number of independent customers for whom there is no recent history of default. The
past due not impaired balance also includes VAT refundable from the Chinese operations, which can be claimed /
used to offset against future VAT payables.
7. INVENTORIES
Raw materials
Semi-finished goods
Finished goods
31 December 2014
$
31 December 2013
$
3,620,928
574,247
1,750,013
5,945,188
3,598,785
383,785
1,198,237
5,180,807
Inventory written off during the period amounted to $1,548,071, which related exclusively to petrol two-wheel
vehicles and Scartts. The Group is now fully focused its direction on electric two-wheel vehicle market.
8. OTHER ASSETS
Prepayments
3,519,032
3,519,032
2,449,680
2,449,680
52
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
9. PROPERTY, PLANT & EQUIPMENT
Year ended 31 December 2013
At 1 January 2013, net of accumulated depreciation
Additions
Depreciation for the period
Exchange differences
At 31 December 2013, net of accumulated depreciation
At 31 December 2013
Cost
Accumulated depreciation
Net carrying amount
Year ended 31 December 2014
At 1 January 2014, net of accumulated depreciation
Additions
Depreciation for the period
Exchange differences
At 31 December 2014, net of accumulated depreciation
At 31 December 2014
Cost
Accumulated depreciation
Net carrying amount
Plant &
equipment
Motor
vehicles
Office
furniture &
equipment
1,152,317
87,940
(399,533)
(27,732)
812,992
13,594
19,545
(5,445)
-
27,694
433
-
(433)
-
-
Land
Building
782,235
-
-
-
782,235
3,666,217
265,590
(78,701)
(2,843)
3,850,263
Leasehold
improvement
Total
5,614,796
373,075
(484,112)
(30,575)
5,473,184
-
-
-
-
-
2,407,697
(1,594,705)
38,472
(10,778)
82,886
(82,886)
782,235
-
4,102,483
(252,220)
278,041
(278,041)
7,691,814
(2,218,630)
812,992
27,694
812,992
954,535
(290,422)
123,897
1,601,002
27,694
118,300
(12,399)
6,404
139,999
-
-
-
-
-
-
782,235
3,850,263
782,235
-
-
218,034
1,000,269
3,850,263
93,022
(154,813)
1,076,446
4,864,918
-
-
-
-
-
-
5,473,184
5,473,184
1,165,857
(457,634)
1,424,781
7,606,188
3,339,440
(1,738,438)
166,283
(26,284)
82,886
(82,886)
1,000,269
-
5,330,549
(465,631)
278,041
(278,041)
10,197,468
(2,591,280)
1,601,002
139,999
-
1,000,269
4,864,918
-
7,606,188
An impairment test has been performed in conjunction with intangible assets and the details of assumptions used are in Note 10.
Assets pledged as security
Land and buildings with a carrying amount of approximately $5.9 million have been pledged to secure borrowings of the Group (see Note 13). The freehold land and buildings have
been pledged as security for the bank operating facility under a mortgage. The Group is not allowed to pledge these assets as security for other borrowings or to sell them to another
entity.
53
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
10. INTANGIBLES
Licences,
trademarks
and
production
rights
Note
Goodwill
Patents
Development
costs
Total
Year ended 31 December 2013
Balance at 1 January 2013
Additions
Amortisation and impairment
Exchange differences
Balance at 31 December 2013
At 31 December 2013
Cost
Accumulated amortisation and
impairment
Net carrying amount
internal
from
Year ended 31 December 2014
Balance at 1 January 2014
Additions
Additions
development
Acquisitions through business
combinations
Amortisation and impairment
Exchange differences
Balance at 31 December 2014
1,414,951
-
-
-
1,414,951
2,173,581
4,451
-
-
2,178,032
12,149,545
2,178,032
(10,734,594)
-
1,414,951
2,178,032
1,414,951
-
2,178,032
1,707
-
-
-
-
-
-
-
-
-
-
-
-
-
24
2,792,156
-
-
4,207,107
-
-
(30,333)
2,149,406
1,310,760
-
-
1,310,760
-
-
-
-
-
3,588,532
4,451
-
-
3,592,983
376,192
14,703,769
(376,192)
(11,110,786)
-
3,592,983
-
-
3,592,983
1,707
869,508
869,508
-
-
-
869,508
4,102,916
-
(30,333)
8,536,781
At 31 December 2014
Cost
Accumulated amortisation and
impairment
14,941,701
2,149,406
1,310,760
1,245,700
19,647,567
(10,734,594)
-
-
(376,192)
(11,110,786)
Net carrying amount
4,207,107
2,149,406
1,310,760
869,508
8,536,781
The goodwill on acquiring E-Max in January 2010 and Haiyong in September 2014 and licenses, trademarks, patents
and production rights are allocated to one cash generating unit being manufacture of two-wheel vehicle (including
controller) within the Chinese geographical location segment as the Company’s manufacturing facility and main
operations are located in China. The recoverable amount of these intangible assets has been determined using value
in use method based on the net present value of projected earnings before interest, tax and depreciation using cash
flow projections based on financial budgets approved by senior management covering a three-year period and
extrapolated to five years. The cash flow projections were prepared based on past experience and contracts that are in
place.
The pre-tax, risk free discount rate applied to cash flow projections is 15% (31 December 2013: 15%) and an average
growth rate used to extrapolate managements cash flow forecasts beyond three years is 3%. The calculated
recoverable amount exceeds the carrying amount of the goodwill of E-Max and Haiyong such that no impairment of
the goodwill on acquisition of E-Max and Haiyong has occurred. Sensitivity analysis was performed by varying the
discount rate applied to the cash flow projections by 5%. The calculated recoverable amount still exceeds the carrying
amount of these assets. Management believe that no reasonably possible change in any of the above key assumptions
would cause the carrying amount of the goodwill on acquisition of E-Max and Haiyong to materially exceed its
recoverable amount.
54
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
11. INVESTMENTS IN ASSOCIATES
Investments in associates
31 December 2014
$
31 December 2013
$
393,244
393,244
-
-
During the year, the Group acquired a 20% interest in Jiangsu Kaiyang New Energy Vehicle Co, Ltd focuses on
designing, manufacturing and distributing three-wheel and four wheel electric vehicles (EV). The acquisition is
deemed to be an investment and initially recorded at cost based on consideration paid.
12. TRADE AND OTHER PAYABLES
Current – unsecured
Trade creditors
Other creditors and accruals
13. INTEREST BEARING LOANS AND BORROWINGS
Current
Secured – Interest bearing
Bank operating facility
The carrying amounts of non-current assets
pledged as security are:
Land and buildings
Financing arrangements
The Consolidated Entity has access to the following facilities:
Total facilities available:
Bank operating facility
Facilities utilised at end of the period:
Bank operating facility
Facilities not utilised at end of the period:
Bank operating facility
55
2,372,842
1,485,584
3,858,426
796,451
713,548
1,509,999
4,718,929
5,522,005
4,718,929
5,522,005
5,865,187
5,865,187
4,632,497
4,632,497
6,685,149
6,685,149
4,718,929
4,718,929
1,966,220
1,966,220
6,279,203
6,279,203
5,522,005
5,522,005
757,198
757,198
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
13. INTEREST BEARING LOANS AND BORROWINGS (cont’d)
Bank operating facility
The Company secured a bank operating facility of RMB34 million (approximately AUD6.7 million) with China Rural
Credit Cooperative in May 2011. The bank operating facility is secured by the Company’s Nanjing Facility, including
the land, Stage 1 and Stage 2 of the manufacturing facility. This bank operating facility is a revolving line of credit
facility and the undrawn facility is available for draw down throughout the period.
The average interest rate for the bank operating facility is 7.0% per annum, payable quarterly.
14. OTHER LIABILITIES
Other (Contingent Consideration)
31 December 2014
$
31 December 2013
$
1,835,773
1,835,773
-
-
The other liabilities of $1,835,773 represented the contingent consideration recognised as part of the Company’s
acquisition of the business of Nanjing Haiyong Electronic Technology Co, Ltd. This contingent consideration is
expect to be settled in the financial year ending 31 December 2015 and will be payable in the form of shares.
15. ISSUED CAPITAL AND RESERVES
Issued capital
1,321,527,860 (31 December 2013: 1,221,196,804) fully paid
ordinary shares
61,293,967
57,725,955
The following movements in issued capital occurred during the period:
Balance at beginning of period
Issue of Shares at 2.0 cents each
Issue of Shares at 2.8 cents each
Issue of Shares at 2.2 cents each
Issue of Shares at 2.2 cents each
Issue of Shares at 2.9 cents each
Issue of Shares at nil consideration
Issue of Shares at nil consideration
Issue of Shares at 4.0 cents each
Issue of Shares at 4.0 cents each
Issue of Shares at 2.5 cents each
Issue of Shares at 5.0 cents each
Issue of Shares at 2.5 cents each
Issue of Shares at 2.5 cents each
Issue of Shares at 3.0 cents each
Issue of Shares at 4.0 cents each
Issue of Shares at nil consideration
Issue of Shares at 3.0 cents each
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
m)
n)
o)
p)
q)
Number of
Shares
31 Dec 2013
896,087,712
75,000,000
2,000,000
54,545,455
186,363,637
5,200,000
2,000,000
-
-
-
-
-
-
-
-
-
-
-
Year
ended
31 Dec 2014
$
Year
ended
3 Dec 2013
$
57,725,955
-
-
-
-
-
-
-
1,616
5,300
20,000
24,390
81,250
43,750
63,000
100
-
30,000
51,060,622
1,500,000
56,000
1,200,000
4,100,000
150,800
-
-
-
-
-
-
-
-
-
-
-
-
Number of
Shares
31 Dec 2014
1,221,196,804
-
-
-
-
-
-
2,000,000
40,400
132,500
800,000
487,805
3,250,000
1,750,000
2,100,000
2,500
2,666,666
1,000,000
56
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
15. ISSUED CAPITAL AND RESERVES (cont’d)
Number of
Shares
31 Dec 2014
Number of
Shares
31 Dec 2013
Year
ended
31 Dec 2014
$
Year
ended
3 Dec 2013
$
Issue of Shares at 3.0 cents each
Issue of Shares at 4.0 cents each
Issue of Shares at 4.0 cents each
Issue of Shares at 4.0 cents each
Issue of Shares at 3.8 cents each
Issue of Shares at 4.0 cents each
Issue of Shares at 4.0 cents each
Issue of Shares at nil consideration
Share issue costs
r)
s)
t)
u)
v)
w)
x)
y)
1,000,000
12,750
813,750
45,894,329
12,900,000
662,735
22,817,621
2,000,000
-
-
-
-
-
-
-
-
-
-
30,000
510
32,550
1,835,773
490,200
26,510
912,705
-
(29,642)
-
-
-
-
-
-
-
-
(341,467)
Balance at end of period
1,321,527,860
1,221,196,804
61,293,967
57,725,955
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.
a) 30 August 2013 - Issue 75,000,000 shares at $0.02 each on completion of placement.
b) 30 August 2013 - Issue 2,000,000 shares at a deemed price of $0.028 each to Blair Sergeant for the provision of
professional services in 2012.
c) 11 October 2013 - Issue 54,545,455 shares at $0.022 each on completion of Tranche 1 of placement.
d) 15 November 2013 - Issue 186,363,637 shares at $0.022 each on completion of Tranche 2 placement.
e) 15 November 2013 - Issue 5,200,000 shares at a deemed price of $0.029 each to employees of the Company in
recognition of their efforts and contribution to the Company.
17 December 2013 - Issue 2,000,000 shares at nil consideration on vesting of 2,000,000 Performance Rights.
f)
g) 21 January 2014 - Issue 2,000,000 shares at nil consideration on vesting of 2,000,000 Performance Rights.
h) 13 February 2014 - Issue 40,400 shares at $0.04 each on exercise of listed options.
i)
29 April 2014 - Issue 132,500 shares at $0.04 each on exercise of listed options.
j)
29 April 2014 - Issue 800,000 shares at $0.025 each on exercise of ESOP options.
k) 29 April 2014 - Issue 487,805 shares at $0.05 each for marketing and public relations expenses.
l)
9 May 2014 - Issue 3,250,000 shares at $0.025 each on exercise of ESOP options.
m) 23 May 2014 - Issue 1,750,000 shares at $0.025 each on exercise of ESOP options.
n) 23 May 2014 - Issue 2,100,000 shares at $0.03 each on exercise of ESOP options.
o) 23 May 2014 - Issue 2,500 shares at $0.04 each on exercise of listed options.
p) 23 May 2014 - Issue 2,666,666 shares at nil consideration on vesting of 2,666,666 Performance Rights.
q) 2 June 2014 - Issue 1,000,000 shares at $0.03 each on exercise of ESOP options.
r) 25 September 2014 - Issue 1,000,000 shares at $0.03 each on exercise of ESOP options.
s) 15 October 2014 - Issue 12,750 shares at $0.04 each on exercise of listed options.
t)
u) 7 November 2014 - Issue 45,894,329 shares at deemed issue price of $0.04 as consideration for Nanjing Haiyong
7 November 2014 - Issue 813,750 shares at $0.04 each on exercise of listed options.
Electronic Technology.
v) 11 November 2014 - Issue 12,900,000 shares at a deemed price of $0.038 each to employees of the Company in
recognition of their efforts and contribution to the Company.
w) 17 December 2014 - Issue 662,735 shares at $0.04 each on exercise of listed options.
x) 31 December 2014 – Issue 22,817,621 shares at $0.04 each on exercise of listed options.
y) 31 December 2014 – Issue 2,000,000 shares at nil consideration on vesting of 2,000,000 Performance Rights.
57
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Options
The movements of options over unissued ordinary shares of the Company for the year ended 31 December 2014 were:
Expiry Date
Exercise
Price
Balance at
1 Jan 2014
Granted/
Issued
Exercised/
Forfeited
Held at
31 Dec 2014
ESOP options
Listed options
ESOP options
Class E options
Class F options
Class G options
Class H options
Class I options
Total
1 September 2014
2.5 cents
4.0 cents
31 December 2014
23 November 2015 3.0 cents
4.0 cents
23 May 2018
8.0 cents
23 May 2018
5.0 cents
21 May 2019
7.5 cents
21 May 2019
10.0 cents
21 May 2019
8,500,000
145,892,230
11,500,000
5,000,000
5,000,000
N/A
N/A
N/A
175,892,230
-
1,333,333
-
-
-
1,000,000
1,000,000
2,000,000
5,333,333
8,500,000
147,225,563
4,100,000
-
-
-
-
-
159,825,563
-
-
7,400,000
5,000,000
5,000,000
1,000,000
1,000,000
2,000,000
21,400,000
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.
On 2 September 2014, 2,700,000 unlisted options remained unexercised on their expiry date and lapsed pursuant to
the terms and conditions of the options.
On 31 December 2014, 122,743,307 listed options remained unexercised on their expiry date and lapsed pursuant to
the terms and conditions of the options.
The fair value of the options granted to Mr Oliver Cairns is deemed to represent the value of the incentive in
accordance with the terms of Mr Oliver Cairns’ appointment as Non-Executive Director as announced on 1
September 2011.
The weighted average fair value of options granted to Mr Oliver Cairns during the year was $96,419. These values
were calculated using the Black-Scholes option pricing model applying the following inputs:
Weighted average exercise price:
Weighted average life of the option:
Expected share price volatility:
Risk-free interest rate:
$0.05, $0.075 and $0.10
5 years
112%
3.45%
Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is
indicative of future movements.
The fair value of the listed options granted to advisor is deemed to represent the value of the marketing services
provided to the Company.
The weighted average fair value of listed options granted to the advisor during the year was $28,000. These values
were calculated by referring to the market price of the listed options as at the date of issued on the Australian
Securities Exchange.
58
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
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 year ended 31
December 2014 were:
Performance
Rights series
Balance at
1 Jan 2014
Granted
Vested
Forfeited
Held at
31 Dec 2014
Class B
Class C
Class D
Class E
Class F
Class G
Class H
Class I
Class J
Class K
Total
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,666,666
2,666,666
2,666,668
-
-
18,000,000
-
-
-
-
-
-
-
-
10,000,000
10,000,000
20,000,000
2,000,000
-
2,000,000
-
-
2,666,666
-
-
-
-
6,666,666
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
-
2,000,000
2,000,000
-
2,666,666
2,666,668
10,000,000
10,000,000
31,333,334
The above Performance Rights issued under the Company’s Performance Rights Plan were subject to the following
performance conditions:
Number of
Performance Rights
per Director
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,333,333
Class
Performance Conditions
Time of vesting
B
C
D
E
F
G
- The VWAP exceeds 3 cents at any time
on or before 31 December 2013; and
the Participating Director remains a
Director at the time of vesting.
-
- The VWAP exceeds 3 cents at any time
on or before 31 December 2013; and
the Participating Director remains a
Director at the time of vesting.
-
- The VWAP exceeds 4 cents at any time
on or before 31 December 2014; and
the Participating Director remains a
Director at the time of vesting.
-
- The VWAP exceeds 4 cents at any time
on or before 31 December 2014; and
the Participating Director remains a
Director at the time of vesting.
-
- The VWAP exceeds 4 cents at any time
on or before 31 December 2014; and
the Participating Director remains a
Director at the time of vesting.
-
- The VWAP exceeds 5 cents at any time
on or before 31 December 2015; and
the Participating Director remains a
Director at the time of vesting.
-
The date 12 months
the
the date
after
VWAP first exceeds 3
cents
The date 24 months
after
the
the date
VWAP first exceeds 3
cents
The date the VWAP
first exceeds 4 cents
The date 12 months
after
the
the date
VWAP first exceeds 4
cents
The date 24 months
after
the
the date
VWAP first exceeds 4
cents
The date the VWAP
first exceeds 5 cents
59
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
1,333,333
1,333,334
2,500,000
2,500,000
Reserves
H
I
J
K
- The VWAP exceeds 5 cents at any time
on or before 31 December 2015; and
the Participating Director remains a
Director at the time of vesting.
-
- The VWAP exceeds 5 cents at any time
on or before 31 December 2015; and
the Participating Director remains a
Director at the time of vesting.
-
- The volume weighted average price of
the Shares for 10 consecutive trading
days on ASX (VWAP) exceeds 6.5 cents
at any time on or before 31 December
2016; and
the Participating Director remains a
Director at the time of vesting.
-
- The VWAP exceeds 8.5 cents at any
time on or before 31 December 2017;
and
the Participating Director remains a
Director at the time of vesting.
-
The date 12 months
after
the
the date
VWAP first exceeds 5
cents
The date 24 months
after
the
the date
VWAP first exceeds 5
cents
The date the VWAP
first exceeds 6.5 cents
The date the VWAP
first exceeds 8.5 cents
Reserves at the beginning of the period
Movements in share-based payment reserve
Transfer share-based payment reserve to accumulated losses
Movements in foreign currency translation reserve
Reserves at the end of the period
Comprises of:
Share-based payment reserve
Foreign currency translation reserve
Reserves at the end of the period
31 December 2014
$
31 December 2013
$
(2,654,011)
489,719
(130,577)
2,154,350
(140,519)
597,189
(737,708)
(140,519)
(2,798,947)
110,744
(173,745)
207,937
(2,654,011)
238,047
(2,892,058)
(2,654,011)
The share-based payments reserve is used to recognise the fair value of options issued but not exercised and
Performance Rights issued.
The foreign currency translation reserve is used to record exchange differences arising from the translation of the
financial statements of foreign operations.
60
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
16. CAPITAL RISK MANAGEMENT
The Consolidated Entity manages its capital to ensure their ability to continue as a going concern and to achieve
returns to the shareholders and benefits for other stakeholders through the optimisation of debt and equity balance.
The capital structure of the Consolidated Entity is adjusted to achieve its goals whilst ensuring the lowest cost of the
capital.
Management monitors capital on the basis of the gearing ratio (net debt / total capital). During the year ended 31
December 2014, the Consolidated Entity’s strategy is to utilise its operating facility and also achieve its expansion
program. The gearing ratios at 31 December 2014 and 31 December 2013 were as follows:
Total borrowings & trade and other payables
Less: cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
31 December 2014
$
31 December 2013
$
8,577,355
(3,850,142)
4,727,213
24,200,628
28,927,841
7,032,004
(4,426,994)
2,605,010
17,731,402
20,336,412
16.3%
12.8%
The gearing ratio of the Company has increased from 12.8% to 16.3% during the year ended 31 December 2014.
17. ACCUMULATED LOSSES
Accumulated losses at the beginning of the period
Profit/(Loss) for the period
Transfer from share-based payment reserve
Accumulated losses at the end of the period
18. SEGMENT REPORTING
Year ended
31 December 2014
$
Year ended
31 December 2013
$
(37,340,542)
883,987
130,577
(36,325,978)
(37,918,747)
404,460
173,745
(37,340,542)
AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group
that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and
to assess their performance.
The continuing operations of the Consolidated Entity are predominantly in the electric two-wheel vehicles
manufacture and distribution industry.
In prior years, reported segments were based on the geographical segments of the Group, being Australia, Spain and
China. This assessment of identifiable segments has not changed in the current period, as 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 same components.
The electric two-wheel vehicle segments are managed on a worldwide basis, but operate in three principal
geographical areas: Australia, China and Spain. In China, manufacturing facilities are operated in Nanjing.
61
Revenue
Segment revenue
Result
Segment result
Assets
Segment assets
Liabilities
Segment liabilities
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
18. SEGMENT REPORTING (cont’d)
Continuing Operations
Australia
$A
China
$A
Spain
$A
Intersegment
elimination $A
Consolidated
$A
Year
ended
31/12/2014
Year
ended
31/12/2013
Year
ended
31/12/2014
Year
ended
31/12/2013
Year
ended
31/12/2014
Year
ended
31/12/2013
Year
ended
31/12/2014
Year
ended
31/12/2013
Year
ended
31/12/2014
Year
ended
31/12/2013
-
-
45,098,053
25,174,809
-
-
(2,190,599)
(911,751)
3,183,451
1,338,744
(108,865)
(22,533)
-
-
-
45,098,053
25,174,809
-
883,987
404,460
1,166,289
2,754,810
56,004,744
42,182,395
(1,977,730)
(85,465)
(30,365,833)
(26,354,897)
Acquisition of non-current assets
4,788
21,500
2,471,829
87,940
Depreciation/impairment of non-
current assets
(4,442)
(2,172)
(453,192)
(459,407)
-
-
-
-
114,302
(21,930,435) (20,288,101)
35,240,598
24,763,406
(879,743)
21,930,435
20,288,101
(10,413,128)
(7,032,004)
-
(22,533)
-
-
-
-
2,476,617
109,440
(457,634)
(484,112)
The principal activity of the continuing Consolidated Entity is the manufacture, marketing and distribution of electric two-wheel vehicles.
Information about major customers
Included in revenues arising from the sales of goods of $45,098,053 (2013: $25,174,809) are revenues of approximately $21,920,083 (2013: $13,843,527) which arose from sales to the
Consolidated Entity’s largest customer. No other single customer contributed 10% or more to the Consolidated Entity’s revenue for 2014 and 2013.
62
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Consolidated Entity’s principal financial instruments comprise bank and other loans, cash and short-term
deposits. The main purpose of these financial instruments is to raise finance for the Consolidated Entity’s operations.
The Consolidated Entity has various other financial instruments such as trade debtors and trade creditors, which
arise directly from its operations.
It is, and has been throughout the period under review, the Consolidated Entity’s policy that no trading in derivative
instruments shall be undertaken.
Fair values
The Directors consider that the carrying amount of financial assets and financial liabilities recorded in the financial
statements approximates their fair values.
The following table details the fair value of financial assets and liabilities of the Consolidated Entity:
31 December 2014
31 December 2013
Financial assets
Cash and cash equivalents
Trade and other receivables
Investments
Total financial assets
Financial liabilities
Trade and other payables
Borrowings
Other liabilities
Carrying
amount
$
3,850,142
5,090,871
393,244
9,334,257
3,858,426
4,718,929
1,835,773
Fair
Value
$
3,850,142
5,090,871
393,244
9,334,257
3,858,426
4,718,929
1,835,773
Total financial liabilities
10,413,128
10,413,128
Carrying
amount
$
4,426,994
3,639,758
-
8,066,752
1,509,999
5,522,005
-
7,032,004
Fair
Value
$
4,426,994
3,639,758
-
8,066,752
1,509,999
5,522,005
-
7,032,004
Net financial assets / (liabilities)
(1,078,871)
(1,078,871)
1,034,748
1,034,748
The main risks arising from the Consolidated Entity’s financial instruments are interest rate risk, liquidity risk,
foreign currency risk and credit risk. The Board reviews and agrees policies for managing each of these risks and they
are summarised below.
Sensitivity analysis
In managing interest rate and currency risks, the Company endeavours to reduce the impact of short-term
fluctuations on the Company’s earnings. Over the longer term, however, permanent changes in foreign exchange
and interest rates will have an impact on consolidated earnings, although the extent of that impact will depend on
the level of cash resources held by the Consolidated Entity. A general increase of one percentage point in interest
rates would not be expected to materially impact earnings.
63
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d)
Interest rate risk
The Consolidated Entity’s exposure to market risk for changes in interest rates relates primarily to the Consolidated
Entity’s short term debt obligations.
Cash includes funds held in term deposits and cheque accounts during the year, which earned interest at rates
ranging between 0% and 2.35%, depending on account balances.
The following annual interest rates apply to the Consolidated Entity’s credit facilities:
Bank operating facility
7.0% variable
All other financial assets and liabilities are non-interest bearing.
At balance date, the Consolidated Entity had the following mix of financial assets and liabilities exposed to variable
interest rate risk that are not designated in cash flow hedges:
Financial assets
Cash and cash equivalents
Financial liabilities
Bank operating facility
Net exposure
31 December 2014
$
31 December 2013
$
3,850,142
4,426,994
(4,718,929)
(868,787)
(5,522,005)
(1,095,011)
The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date.
At 31 December, if interest rates had moved, as illustrated in the table below, with all other variables held constant,
pre-tax profit and equity would have been affected as follows:
Judgements of reasonable possible movements:
31 December 2014
$
31 December 2013
$
+1% (100 basis points)
Pre-tax profit increase/(decrease)
Equity increase/(decrease)
-1% (100 basis points)
Pre-tax profit increase/(decrease)
Equity increase/(decrease)
Foreign currency risk
(8,688)
(8,688)
8,688
8,688
(10,950)
(10,950)
10,950
10,950
The Consolidated Entity is exposed to foreign currency on sales, purchases and borrowings that are denominated in
a currency other than Australian Dollars. The currency giving rise to this risk is primarily Euro dollars, US dollars
and Chinese RMB.
64
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d)
At balance date, the Consolidated Entity had the following exposure to Euro dollars, US dollars, UK pounds and
Chinese RMB foreign currency that is not designated in cash flow hedges:
31 December 2014
$AUD
31 December 2013
$AUD
Financial assets
Cash and cash equivalents (EUR)
Cash and cash equivalents (USD)
Cash and cash equivalents (GBP)
Cash and cash equivalents (RMB)
Trade and other receivables (EUR)
Trade and other receivables (USD)
Trade and other receivables (RMB)
Financial liabilities
Trade and other payables (EUR)
Trade and other payables (USD)
Trade and other payables (GBP)
Trade and other payables (RMB)
Borrowings (RMB)
Net exposure
145,760
2,185,815
4,659
779,805
3,116,039
68,537
92,991
4,843,938
5,005,466
(367,610)
(1,653,616)
(24,628)
(1,700,560)
(3,746,414)
(4,718,929)
(343,838)
34,781
567,188
18,754
1,621,449
2,242,172
272,055
30,168
2,932,528
3,234,751
(109,091)
(403,079)
(9,417)
(912,364)
(1,433,951)
(5,522,005)
(1,479,033)
The following sensitivity is based on the foreign currency risk exposures in existence at the reporting date.
At 31 December, had the Australian Dollar moved, as illustrated in the table below, with all other variables held
constant, equity would have been affected as follows:
Judgements of reasonable possible movements:
AUD/USD, AUD/EUR and AUD/RMB +20%
Equity increase/(decrease)
AUD/USD, AUD/EUR and AUD/RMB -20%
Equity increase/(decrease)
31 December 2014
$
31 December 2013
$
57,307
246,505
(68,768)
(295,806)
At this stage, the Consolidated Entity does not seek to hedge this exposure.
Credit risk
The credit risk on financial assets of the Consolidated Entity which have been recognised on the statement of
financial position is generally the carrying amount, net of any provision for impairment losses.
The Consolidated Entity continuously monitors credit risks arising from its trade receivables which are principally
with significant and reputable companies. It is the Consolidated Entity’s policy that credit verification procedures,
including assessment of credit ratings, financial position, past experience and industry reputation, are performed on
new customers that request credit terms. Risk limits are set for each customer and regularly monitored. Receivable
balances are monitored on an ongoing basis with the result that the Consolidated Entity’s exposure to bad debts is
not significant.
65
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d)
The total credit risk exposure of the Consolidated Entity could be considered to include the difference between the
carrying amount of the receivable and the realisable amount. At balance sheet date there were no significant
concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each
financial asset in the balance sheet. Details with respect to credit risk of trade and other receivables are provided in
Note 6.
Liquidity risk
preparing forward-looking cash flow analyses in relation to its operational, investing and financing activities;
Liquidity risk arises from the possibility that the Consolidated Entity might encounter difficulty in settling its debts
or otherwise meeting its obligations related to financial liabilities. The Consolidated Entity manages this risk through
the following mechanisms:
1.
2.
3.
4.
5.
managing credit risk related to financial assets.
obtaining funding from a variety of sources;
maintaining a reputable credit profile; and
monitoring undrawn credit facilities;
The table below reflects an undiscounted contractual maturity analysis for financial liabilities.
Financial liability and financial asset maturity analysis
Within 1 Year
1 to 5 Years
Over 5 Years
Total
31/12/2014 31/12/2013 31/12/2014 31/12/2013 31/12/2014 31/12/2013 31/12/2014 31/12/2013
Consolidated Group
$000
$000
$000
$000
$000
$000
$000
$000
Financial liabilities due for
payment
Bank operating facility and
loans
4,719
5,522
Trade and other payables
Other liabilities1
3,858
1,836
Total contractual outflows
10,413
Total expected outflows
10,413
1,510
-
7,032
7,032
Financial assets – cash flows
realisable
Cash and cash equivalents
Trade and other receivables
Total anticipated inflows
3,850
5,091
8,941
4,427
3,640
8,067
Net (outflow)/ inflow on
financial instruments
(1,472)
1,035
Financial assets pledged as collateral
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,719
5,522
3,858
1,836
10,413
10,413
1,510
-
7,032
7,032
3,850
5,091
8,941
4,427
3,640
8,067
(1,472)
1,035
There are no financial assets that have been pledged as security for debt and their realisation into cash is not
restricted.
1. Contingent consideration to be settled by shares.
66
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
20. COMMITMENTS AND CONTINGENT LIABILITES
Operating lease commitments
Future operating lease rentals not provided for in the financial
statements and payable:
Not later than one year
Later than one year but not later than five years
31 December 2014
$
31 December 2013
$
24,009
-
24,009
48,017
24,009
72,026
Contingent liabilities
The Company is currently a defendant in a proceeding brought against the Company by a former employee in
relation to the employee’s past employment. Having considered legal advice, the Directors believe that the claim can
be successfully defended, without any losses (including for costs) being incurred by the Company.
21. EARNINGS PER SHARE
The calculation of basic earnings per share at 31 December 2014 was based on the profit attributable to ordinary
shareholders at $883,987 (year ended 31 December 2013: $404,460) and a weighted average number of ordinary
shares outstanding during the year ended 31 December 2014 of 1,239,967,888 (31 December 2013: 959,249,953)
calculated as follows:
Year ended
31 Dec 2014
Number
Year ended
31 Dec 2013
Number
Issued ordinary shares at beginning of period
Effect of shares issued on 30 August 2013
Effect of shares issued on 30 August 2013
Effect of shares issued on 11 October 2013
Effect of shares issued on 15 November 2013
Effect of shares issued on 15 November 2013
Effect of shares issued on 17 December 2013
Effect of shares issued on 21 January 2014
Effect of shares issued on 13 February 2014
Effect of shares issued on 29 April 2014
Effect of shares issued on 29 April 2014
Effect of shares issued on 29 April 2014
Effect of shares issued on 9 May 2014
Effect of shares issued on 23 May 2014
Effect of shares issued on 23 May 2014
Effect of shares issued on 23 May 2014
Effect of shares issued on 23 May 2014
Effect of shares issued on 2 June 2014
Effect of shares issued on 25 September 2014
Effect of shares issued on 15 October 2014
Effect of shares issued on 7 November 2014
Effect of shares issued on 7 November 2014
Effect of shares issued on 11 November 2014
Effect of shares issued on 17 December 2014
Effect of shares issued on 31 December 2014
Effect of shares issued on 31 December 2014
Weighted average number of ordinary shares at 31 December
1,221,196,804
-
-
-
-
-
-
1,890,411
35,640
89,664
541,370
330,104
2,110,274
1,069,178
1,283,014
1,527
1,629,223
583,562
268,493
2,725
122,620
6,915,584
1,802,466
27,236
62,514
5,479
1,239,967,888
896,087,712
25,479,452
679,452
12,254,047
23,997,509
669,589
82,192
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
959,249,953
The Company’s potential ordinary shares are not considered dilutive and accordingly the basic loss per share is the
same as the diluted loss per share.
67
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
22. CONTROLLED ENTITIES
Parent entity
Vmoto Limited
Controlled entities
Vmoto Australia Pty Ltd
Vmoto International Limited
Vmoto E-Max International Limited
Nanjing Vmoto Co, Ltd
Nanjing Vmoto Manufacturing Co, Ltd
Nanjing Vmoto E-Max Electric Vehicles Development Co, Ltd
Vmoto Europe Operations S.L.1
Nanjing Haiyong Electric Driving System Technology Co, Ltd
1 De-registered on 15 April 2014
23. KEY MANAGEMENT PERSONNEL DISCLOSURES
Details of key management personnel
Country of
Incorporation
Entity
interest
31
December
2014
Entity
interest
31
December
2013
Australia
Australia
Hong Kong
Hong Kong
China
China
China
Spain
China
100%
100%
100%
100%
100%
100%
0%
100%
100%
100%
100%
100%
100%
100%
100%
0%
(i) Directors
Mr Charles Chen
Mr Ivan Teo
Managing Director (Executive) – appointed Executive Director 5 January 2007
and Managing Director 1 September 2011
Finance Director (Executive) – appointed Chief Financial Officer 17 June 2009
and Finance Director 29 January 2013
Mr Oliver Cairns
Director (Non-Executive) – appointed 1 September 2011
Mr Kaijian Chen
Director (Non-Executive) – appointed 1 September 2011
Mr Simon Farrell
Director (Non-Executive) – appointed 29 January 2013, resigned 20 May 2014
Ms Shannon Coates
Director (Non-Executive) – appointed 23 May 2014
(ii) Executives
Mr Patrick Davin
President of Strategic Business Development – appointed 1 July 2012
Mr George Hou
General Manager – appointed 6 July 2012, resigned 30 April 2014
Mr Shuguang Han
General Manager - appointed 1 May 2014
Mr Zhengjie Wu
Vice General Manager - appointed 5 October 2009
68
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
23. KEY MANAGEMENT PERSONNEL DISCLOSURES (cont’d)
The totals of remuneration paid to key management personnel of the Company and the Consolidated Entity during
the period ended 31 December 2014 are as follows:
Year
ended
31 Dec 2014
$
Year
ended
31 Dec 2013
$
Short-term employee benefits
Share-based payments
Total KMP compensation
619,171
613,719
1,232,890
692,181
56,188
748,369
Refer to the remuneration report contained in the Directors’ Report for details of the remuneration paid or payable to
each member of the Consolidated Entity’s key management personnel for the year ended 31 December 2014.
69
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
24. BUSINESS COMBINATIONS
Subsidiary acquired
2014
Nanjing Haiyong Electronic
Technology Co, Ltd
Principal activity
Manufacture and
distribute EV
controllers
Date of
acquisition
22 September
2014
Proportion of
shares
acquired
Consideration
100%
$3,868,168
$3,868,168
Nanjing Haiyong Electronic Technology Co, Ltd (“Haiyong”) was acquired so as to expand the Group’s electric
technology capabilities and to fast-track the Group’s development in electric driving system for electric vehicle
products. The Group established a new company, Nanjing Haiyong Electric Driving System Technology Co, Ltd
(“Vmoto Haiyong”) and all key assets of Haiyong including plant and equipment, trademark and patents are
transferred to Vmoto Haiyong.
Consideration
Shares issued (tranche 1)
Contingent consideration arrangement (tranche 2) (a)
Debt forgiveness (b)
Haiyong
$1,835,773
$1,835,773
$196,622
$3,868,168
a) Under the contingent consideration arrangement, the Group is required to pay the vendors an additional
amount by shares if Vmoto Haiyong’s profit after tax for the 12 months period after the acquisition date exceed
Haiyong’s 2013 profit after tax. If Vmoto Haiyong’s profit after tax exceeds Haiyong’s 2013 profit after tax, the
Group is required to pay the vendors an additional amount in shares (Tranche 2) calculated at five times of the
Vmoto Haiyong’s profit after tax for the 12 months period after the acquisition less the shares consideration
issued under Tranche 1. If Vmoto Haiyong’s profit after tax for the 12 months period after the acquisition date
does not exceed Haiyong’s profit after tax for 2013, the Group will not be required to pay any additional amount
to the vendors. The Directors consider it is probable that this payment will be required.
b) Prior to the acquisition of Haiyong, Haiyong held a debt of $196,622 payable to the Group. As part of the
acquisition, this debt was forgiven.
70
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Assets acquired and liabilities assumed at the date of acquisition
Non-current assets
Plant and equipment
Trademark and patents
Deferred tax liabilities
Haiyong
$92,942
$1,310,760
($327,690)
$1,076,012
The fair value of plant and equipment acquired is determined based on vendors’ best estimate of the likely fair value.
The fair value of trademark & patents acquired are calculated based on five year cash flow projections using the pre-
tax, risk free discount rate of 15%.
Goodwill arising on acquisition
Consideration
Less: Fair value of identifiable net assets acquired
Goodwill arising on acquisition
Haiyong
$3,868,168
($1,076,012)
$2,792,156
Goodwill arose in the acquisition of Haiyong because the cost of the combination included a control premium. In
addition, the consideration paid for the combination effectively included amounts in relation to the benefit of
expected synergies, revenue growth, future market development and advanced technology in EV related products.
The benefits are not recognised separately from goodwill because they do not meet the recognition criteria for
identifiable intangible assets.
Net cash outflow on acquisition of subsidiary
Year ended
31 Dec 2014
Year ended
31 Dec 2013
Consideration paid in cash
Less: Cash and cash equivalents balances acquired
Net cash consideration paid in cash
-
-
-
-
-
-
Impact of acquisitions on the results of the Group
Included in the profit for the year is $97,699 attributable to the additional business generated by Vmoto Haiyong.
Revenue for the year includes $2.2 million in respect of Vmoto Haiyong.
71
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
25. RECONCILIATION OF CASH FLOWS FROM/ (USED IN)
OPERATING ACTIVITIES
Cash flows from operating activities
Profit/(Loss) for the year
Adjustments for:
- Depreciation
- Impairments
- Share based payment expenses
- Income tax benefit
Operating loss before changes in working capital and provisions
(Increase)/decrease in receivables
(Increase)/decrease in inventories
(Increase)/decrease in other assets
(Decrease)/ increase in payables
Net cash (used in) operating activities
26. NON-DIRECTOR RELATED PARTIES
Year ended
31 December 2014
$
Year ended
31 December 2013
$
883,987
404,460
457,635
2,034,165
899,447
(626,842)
(1,451,113)
(764,380)
(1,069,353)
262,418
625,964
484,112
-
159,596
-
(1,837,582)
(2,030,159)
(1,855,979)
850,155
(3,825,397)
Non-Director related parties are the Company’s controlled entities. Details of the Company’s interest in controlled
entities are set out in Note 22. Details of dealings with these entities are set out below.
Transactions
The loans to controlled entities are unsecured, interest-free and of no fixed term. The loans are provided primarily
for capital purchases and working capital purposes.
Receivables
Aggregate amounts receivable from non-director related parties:
Non-current
Unsecured loans to controlled entities
Provision for non-recovery
27. SUBSEQUENT EVENTS
Repayment and Drawn Down of Operating Facility
Company
Year ended
31 Dec 2014
$
Year ended
31 Dec 2013
$
21,084,729
(21,084,729)
19,408,358
(19,408,358)
-
-
On 26 January 2015, the Company repaid RMB12 million (approximately A$2.4 million) of its bank operating facility and
subsequently drew down RMB4 million (approximately A$0.8 million) on 28 January 2015 and RMB8 million
(approximately A$1.6 million) on 2 February 2015.
Issue Shares to Advisor
On 26 February 2015, the Company appointed Mirabaud Securities LLP as joint broker and issued 86,114 shares to
Mirabaud Securities LLP under the terms of the appointment.
72
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Other than the above and as noted elsewhere in the financial statements, there has not arisen in the interval between the
end of the financial period and the date of this report any item, transaction or event of a material and unusual nature
likely, in the opinion of the Directors, to affect significantly the operations of the Consolidated Entity, the results of those
operations, or the state of affairs of the Consolidated Entity in future financial years.
28. PARENT ENTITY DISCLOSURES
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total Liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Share based payment premium reserve
Total equity
Financial performance
Loss for the period
Other comprehensive income
Total comprehensive income
31 Dec 2014
31 Dec 2013
$
$
1,088,371
10,398,034
11,486,405
1,365,460
-
1,365,460
2,678,947
9,363,118
12,042,065
85,466
-
85,466
10,120,945
11,956,599
61,293,967
(51,770,211)
57,725,955
(46,007,404)
597,189
10,120,945
238,048
11,956,599
Year
ended
31 Dec 2014
$
2,190,599
-
2,190,599
Year
ended
31 Dec 2013
$
880,533
-
880,533
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity has not entered into any guarantees in relation to the debts of its subsidiaries during the year ended
31 December 2014.
Commitments for the acquisition of property, plant and equipment by the parent entity
The parent entity has no commitments for any acquisition of property, plant and equipment.
73
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
29. Fair Value Measurement
In accordance with AASB 13, 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
categorised. 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.
74
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
D I R E C T O R S ’ D E C L A R A T I O N
In the opinion of the Directors of Vmoto Limited:
(a) the financial statements and notes, set out on pages 33 to 74, are in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the financial position of the Consolidated Entity as at 31 December 2014
and their performance, as represented by the results of their operations and their cash flows, for the
year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
(b) the attached financial statements also comply with International Financial Reporting Standards, as stated in Note 1
to the financial statements; and
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the
Managing Director and the Finance Director for the year ended 31 December 2014.
Signed in accordance with a resolution of the Directors:
Yiting (Charles) Chen
Managing Director
Dated at Western Australia, this 31st day of March 2015.
75
To The Board of Directors
As lead audit director for the audit of the financial statements of Vmoto Limited for the
financial year ended 31 December 2014, I declare that to the best of my knowledge and
belief, there have been no contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
any applicable code of professional conduct in relation to the audit.
Yours faithfully
BENTLEYS
Chartered Accountants
MARK DELAURENTIS CA
Director
Dated at Perth this 31st day of March 2015
We have audited the accompanying financial report of Vmoto Limited (“the Company”)
and Controlled Entities (“the Consolidated Entity”), which comprises the consolidated
statement of financial position as at 31 December 2014, and the consolidated statement
of profit or loss and other comprehensive income, consolidated statement of changes in
equity and consolidated statement of cash flows for the year then ended, notes
comprising a summary of significant accounting policies and other explanatory
information, and the directors’ declaration of the Consolidated Entity, comprising the
Company and the entities it controlled at the year’s end or from time to time during the
financial year.
The directors of the Company are responsible for the preparation and fair presentation of
the financial report in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that is free from material
misstatement, whether due to fraud or error. In Note 1, the directors also state, in
accordance with Accounting Standards AASB 101: Presentation of Financial Statements,
that the financial statements comply with International Financial Reporting Standards.
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether
the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
In conducting our audit, we followed applicable independence requirements of Australian professional ethical
pronouncements and the Corporations Act 2001.
In our opinion:
a. The financial report of Vmoto Limited is in accordance with the Corporations Act 2001, including:
i.
giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2014 and
of its performance for the year ended on that date; and
ii.
complying with Australian Accounting Standards and the Corporations Regulations 2001;
b. The financial statements also comply with International Financial Reporting Standards as disclosed in
Note 1.
We have audited the Remuneration Report included in the directors’ report for the year ended 31 December
2014. The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
In our opinion, the Remuneration Report of Vmoto Limited for the year ended 31 December 2014, complies
with section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
MARK DELAURENTIS CA
Director
Dated at Perth this 31st day of March 2015
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
A D D I T I O N A L S H A R E H O L D E R I N F O R M A T I O N
The following information is current as at 12 March 2015:
Voting Rights
The voting rights attaching to ordinary shares are that on a show of hands every member present in person or by proxy
shall have one vote and upon a poll each share shall have one vote.
Options and Performance Rights do not carry any voting rights.
Substantial Shareholders
The number of shares and options held by substantial shareholders and their associates who have provided the
Company with substantial shareholder notices are set out below:
Name of Substantial Shareholder
Mr Bing Wu
Mr Yiting (Charles) Chen
Huimin Zhou
Date Notice provided to the Company
20 August 2012
20 August 2012
28 August 2012
Number of Shares
37,664,114
35,873,052
38,582,316
Number of Options
12,554,705
2,000,000
12,860,771
On-Market Buy Back
There is no current on-market buy back.
Distribution Schedules
Distribution schedules for each class of security as at 12 March 2015 are set out below. Where a person holds 20% or
more of the securities in an unquoted class, the name of that holder and number of securities is also provided.
Fully paid ordinary shares
Range
1
1,001
5,001
10,001
100,001
Total
Holders
Units
%
-
1,000
-
5,000
10,000
-
- 100,000
Over
-
13,618
58
399,870
101
2,152,324
244
2,268
102,349,224
1,296 1,216,698,938
0.00
0.03
0.16
7.74
92.06
3,967 1,321,613,974 100.00
Class E unlisted options exercisable at $0.04 each, expiring 23 May 2018
Range
1
1,001
5,001
10,001
100,001
Total
1,000
-
5,000
-
-
10,000
- 100,000
Over
-
Holders Units
%
-
-
-
-
11
-
-
-
-
-
-
-
-
5,000,000 100.00
1
5,000,000 100.00
¹ Newcove International Inc holds 5,000,000 options comprising 100.0% of this class.
79
A D D I T I O N A L S H A R E H O L D E R I N F O R M A T I O N ( c o n t ’ d )
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
Class F unlisted options exercisable at $0.08 each, expiring 23 May 2018
Range
1
1,001
5,001
10,001
100,001
Total
1,000
-
5,000
-
-
10,000
- 100,000
Over
-
Holders Units
%
-
-
-
-
11
-
-
-
-
-
-
-
-
5,000,000 100.00
1
5,000,000 100.00
¹ Newcove International Inc holds 5,000,000 options comprising 100.0% of this class.
Class G unlisted options exercisable at $0.05 each, expiring 21 May 2019
Range
1
1,001
5,001
10,001
100,001
Total
-
1,000
-
5,000
10,000
-
- 100,000
Over
-
Holders Units
%
-
-
-
-
11
-
-
-
-
-
-
-
-
1,000,000 100.00
1
1,000,000 100.00
¹ Silverlight Holdings Pty Ltd holds 1,000,000 options comprising 100.0% of this class.
Class H unlisted options exercisable at $0.075 each, expiring 21 May 2019
Range
1
1,001
5,001
10,001
100,001
Total
1,000
-
5,000
-
10,000
-
- 100,000
Over
-
Holders Units
%
-
-
-
-
11
-
-
-
-
-
-
-
-
1,000,000 100.00
1
1,000,000 100.00
¹ Silverlight Holdings Pty Ltd holds 1,000,000 options comprising 100.0% of this class.
Class I unlisted options exercisable at $0.10 each, expiring 21 May 2019
Range
1
1,001
5,001
10,001
100,001
Total
1,000
-
5,000
-
-
10,000
- 100,000
Over
-
Holders Units
%
-
-
-
-
11
-
-
-
-
-
-
-
-
2,000,000 100.00
1
2,000,000 100.00
¹ Silverlight Holdings Pty Ltd holds 2,000,000 options comprising 100.0% of this class.
80
A D D I T I O N A L S H A R E H O L D E R I N F O R M A T I O N ( c o n t ’ d )
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
ESOP options exercisable at $0.03 each, expiring 23 November 2015
Range
1
1,001
5,001
10,001
100,001
Total
1,000
-
5,000
-
-
10,000
- 100,000
Over
-
Holders Units
%
-
-
-
-
13
-
-
-
-
-
-
-
-
7,400,000 100.00
13
7,400,000 100.00
Class C Incentive Performance Rights, subject to vesting criteria
Range
1
1,001
5,001
10,001
100,001
Total
1,000
-
5,000
-
-
10,000
- 100,000
Over
-
Holders Units
%
-
-
-
-
2
2
-
-
-
-
-
-
-
-
2,000,000 100.00
2,000,000 100.00
¹ 1,000,000 Performance Rights held by each of Silverlight Holdings Pty Ltd and Mr Yiting
(Charles) Chen, comprising 50.00% each.
Class E Incentive Performance Rights, subject to vesting criteria
Range
1
1,001
5,001
10,001
100,001
Total
1,000
-
5,000
-
-
10,000
- 100,000
Over
-
Holders Units
%
-
-
-
-
2
2
-
-
-
-
-
-
-
-
2,000,000 100.00
2,000,000 100.00
¹ 1,000,000 Performance Rights held by each of Silverlight Holdings Pty Ltd and Mr Yiting
(Charles) Chen, comprising 50.00% each.
Class F Incentive Performance Rights, subject to vesting criteria
Range
1
1,001
5,001
10,001
100,001
Total
1,000
-
5,000
-
-
10,000
- 100,000
Over
-
Holders Units
%
-
-
-
-
2
2
-
-
-
-
-
-
-
-
2,000,000 100.00
2,000,000 100.00
¹ 1,000,000 Performance Rights held by each of Silverlight Holdings Pty Ltd and Mr Yiting
(Charles) Chen, comprising 50.00% each.
81
A D D I T I O N A L S H A R E H O L D E R I N F O R M A T I O N ( c o n t ’ d )
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
Class H Incentive Performance Rights, subject to vesting criteria
Range
1
1,001
5,001
10,001
100,001
Total
-
1,000
-
5,000
10,000
-
- 100,000
Over
-
Holders Units
%
-
-
-
-
2
2
-
-
-
-
-
-
-
-
2,666,666 100.00
2,666,666 100.00
¹ 1,333,333 Performance Rights held by each of Silverlight Holdings Pty Ltd and Mr Yiting
(Charles) Chen, comprising 50.00% each.
Class I Incentive Performance Rights, subject to vesting criteria
Range
1
1,001
5,001
10,001
100,001
Total
1,000
-
5,000
-
-
10,000
- 100,000
Over
-
Holders Units
%
-
-
-
-
2
2
-
-
-
-
-
-
-
-
2,666,668 100.00
2,666,668 100.00
¹ 1,333,334 Performance Rights held by each of Silverlight Holdings Pty Ltd and Mr Yiting
(Charles) Chen, comprising 50.00% each.
Class J Incentive Performance Rights, subject to vesting criteria
Range
1
1,001
5,001
10,001
100,001
Total
1,000
-
5,000
-
-
10,000
- 100,000
Over
-
Holders Units
%
-
-
-
-
-
-
-
-
4 10,000,000 100.00
-
-
-
-
4 10,000,000 100.00
¹ 2,500,000 Performance Rights held by each of Silverlight Holdings Pty Ltd and Mr Yiting
(Charles) Chen, Mr Yin How (Ivan) Teo and Kaijian (Jacky) Chen comprising 25.00% each.
Class K Incentive Performance Rights, subject to vesting criteria
Range
1
1,001
5,001
10,001
100,001
Total
1,000
-
5,000
-
-
10,000
- 100,000
Over
-
Holders Units
%
-
-
-
-
-
-
-
-
4 10,000,000 100.00
-
-
-
-
4 10,000,000 100.00
¹ 2,500,000 Performance Rights held by each of Silverlight Holdings Pty Ltd and Mr Yiting
(Charles) Chen, Mr Yin How (Ivan) Teo and Mr Kaijian (Jacky) Chen comprising 25.00% each.
82
A D D I T I O N A L S H A R E H O L D E R I N F O R M A T I O N ( c o n t ’ d )
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
Unmarketable Parcels
Holdings of less than a marketable parcel of ordinary shares (being 15,625 as at 12 March 2015):
Holders
Units
739
7,056,806
Top Holders
The 20 largest registered holders of quoted securities as at 12 March 2015 were:
Fully paid ordinary shares
Name
COMPUTERSHARE CLEARING PTY LTD
PERSHING AUSTRALIA NOMINEES PTY LTD
HAISHENG ZHANG
MR BING WU
MR BRENDAN DAVID GORE
MR THOMAS JOSEPH FALVEY
PALIR PTY LTD
SILVERLIGHT HOLDINGS PTY LTD
MR YAO TIEMING
YANG PTY LTD
VANFULL INVESTMENTS LIMITED
UBS NOMINEES PTY LTD
1
2
3
4
5
6
7
8
9
10
11
12
13 MR ER CHUAN ZHOU
14 MR YI CHEN
15
MR ANTHONY FRANCIS DOYLE & MS SHERYL MAREE UPTON
CAMBRIAN HOLDINGS PTY LTD
EDLINS PROSPERITY PLUS PTY LTD
16
17
18 MR ANTHONY FRANCIS DOYLE & MS SHERYL UPTON
19 MR IAN KENNETH EDLIN & MRS NILA LEA EDLIN
20
FIRST AVENUE ENTERPRISES PTY LTD
No. Shares
%
163,063,127
90,463,718
39,574,374
33,200,478
30,200,000
24,375,391
20,000,000
18,696,970
17,920,000
17,450,000
16,830,000
15,479,650
15,274,150
10,910,931
10,775,000
10,306,110
9,550,000
8,000,000
6,850,000
6,599,630
565,519,529
12.34
6.84
2.99
2.51
2.29
1.84
1.51
1.41
1.36
1.32
1.27
1.17
1.16
0.83
0.82
0.78
0.72
0.61
0.52
0.50
42.79
83