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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 5
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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 3, 216 St Georges Terrace
Perth, Western Australia 6000
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
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
Share Registry
Securities Exchanges
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth, Western Australia 6000
Australia
Telephone: +61 8 9323 2000
Facsimile: +61 8 9323 2033
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
ASX Code: VMT
Vmoto Limited is a public company incorporated in
Western Australia and listed on the Australian
Securities 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
Financial Statements
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
Additional Shareholder Information
Page
Inside cover
2
3
5
13
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68
69
71
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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 Annual Report for the 2015 financial year, a fundamentally
successful one that saw the Company continue to grow unit sales in China and internationally, which are reflected in the
increase in revenue and underlying net profit. Particularly encouraging was the significantly expanded international
brand awareness and distribution footprint through signing new international distributors and customers and the strong
interest we received from other potential distributors and customers, highlighting the progress we are making in further
establishing our name and brand. Existing customer relationships are strong, with repeat orders, new customers and
sales channels are putting us in a healthy position for continued sales growth over the coming years.
Our China operations are now underpinned by the permanent relationship with PowerEagle through the new Joint
Venture formalised at the end of 2015 which has its own dedicated factory in Shanghai, closer to the 200 or so
PowerEagle dealers. This will have several cost and time efficiencies for getting scooters to market and providing after
sales support. It will also give Vmoto access to sell our own branded products through some of those outlets.
Financially, Vmoto generated an encouraging increase in revenue and underlying earnings. The strategic decision to exit
the Nanjing Haiyong controller business was the right one for the Company, but has naturally had a one off impact to
our statutory profit. Despite this, our gross margins are improving with economies of scale, the Company has a stronger
balance sheet than it did 12 months ago, paying down more debt over FY15 and we continue to invest in R&D in new
models and working capital as production ramps up further in 2016.
Underpinning the results was a strong increase in sales and distribution, with over 88,000 units sold in FY15; a 15%
increase on the prior 12 months. With substantial production capacity still available at the Company’s manufacturing
facilities in Nanjing for domestic and international sales and the newly leased factory in Shanghai for PowerEagle, we
are excited by the opportunities ahead to ramp up production even more as we continue execute our growth strategy.
Vmoto remains at an exciting stage in its development and is now strongly positioned to ramp up its production in line
with rapidly increasing demand for electric vehicles. The increased press, rebate incentives, technological developments
and environmental initiatives we are seeing from governments around the world provide a significant growth
opportunity for Vmoto, given its green credentials.
Looking forward, we are exceptionally well positioned to handle the increasing demand for electric vehicles in China
and abroad, with the manufacturing facility in Nanjing now freed up to focus on growing the international and domestic
China sales. With PowerEagle production now in a newly leased facility in Shanghai, we have a total group capacity of
approximately 450,000 two wheel units per annum, with no additional capex required.
The Company has market leading products, strategic distribution relationships growing our China and international
footprint and a strong balance sheet with which to continue our growth in a burgeoning transport and technology space.
I would like to thank my fellow Directors, the management team and our staff for their contributions during the 2015
financial year as well as the continuous support from all our shareholders. We look forward to a prosperous year in 2016.
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: 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 2015.
The 2015 financial year was a successful one for Vmoto and saw the Company continue to generate growth in revenue
and underlying profitability, with revenue up 11% to $47.6 million (FY14: $42.9 million).
Vmoto has continued with its strategy of design, manufacture and distribution of high quality “green” electric powered
two wheel vehicles and a range of western designed electric two wheel vehicles from its wholly owned Nanjing Facility.
The Company increased its distribution footprint in China, which as at 31 December 2015 comprised a total of 45 outlets
through a combination of its own retail outlets and third party distributors across China.
The Company’s increasing revenues are a clear demonstration of the growing traction Vmoto brands are achieving in
both the Chinese and international markets. International sales are continuing to increase as the Company is now
recognised for its premium electric scooters and is delivering on its strategy off the back of this reputation.
Over the 12 month period ended 31 December 2015, the Consolidated Entity’s net assets increased by 37% to $34.1
million (31 December 2014: $24.8 million).
As at 31 December 2015, the total operating facility drawn down was RMB10 million (approximately $2.1 million) and
the total undrawn operating facility was RMB24 million (approximately $5.1 million).
As at 31 December 2015, the Company had cash of $6.7 million.
EXISTING MARKETS
During the period, the Company achieved total unit sales of 88,450 units across the Group, up 15% from FY14 (FY14:
76,652) as it continued ramping up production across its domestic and international sales channel, which comprised 36
countries at year end.
During the year ended 31 December 2015, the Company sold approximately 25,045 units of electric two-wheel vehicles
across China through its sales network of 45 outlets of its retail stores and external distributors. The Company also
delivered 51,799 units of electric two-wheel vehicles to PowerEagle, pursuant to the Strategic Cooperation Agreement.
Internationally, the Company continued its strong relationships with its B2B and B2C customers, with many placing
orders that will flow through in future quarters.
NEW MARKETS
During the period, the Company signed an exclusive distribution agreement with a UK company to distribute, stock and
market the Company’s Vmoto and E-Max range of electric scooter products for the UK and Ireland markets. The new
distributor is very proactive in the UK and Ireland markets and has significant contacts within UK government
departments. The Company also appointed a new exclusive distributor for Israel market during the period.
As announced on 28 September 2015, the Company entered into a new international supply agreement with Saturna
Green Systems Inc, a North American telematics high-tech company, focused on developing state-of-the-art wireless
shared transportation and communication systems for electric two and three-wheel vehicles. Following initial trials,
testing and financing, Saturna intends to purchase a minimum of 32,000 units of Vmoto’s E-Max electric scooters fitted
with Saturna’s technology, platform and software over 5 years for use in Saturna’s Electric Scooter Sharing Project in
North America and Europe.
During the period, the Company also secured an order to initially supply 300 units of Vmoto’s electric two-wheel vehicle
products to a significant European supermarket group with approximately 300 stores in Europe and expects more orders
to be received in 2016.
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O P E R A T I O N S R E V I E W
The Company is also in advanced discussions with a New Zealand based company to manufacture electric two-wheel
vehicle products wholly designed by the customer on an Original Equipment Manufacturer (“OEM”) basis.
In addition to the above, Vmoto received significant interest in our electric two-wheel vehicle products from significant
post office groups in Europe, courier and delivery companies, rental companies and government departments.
ONLINE SALES PLATFORM
The Company launched its new online sales platform at www.vmotoonline.com during the year, offering state of the art
electric two-wheel vehicle products in Australia. Vmoto’s new light, foldable and portable electric bicycle, the Vmoto
Traveller, was initially launched for distribution in Western Australia and is expected to be followed by the roll-out to
other Australian states in 2016.
COLLABORATIONS, TENDERS AND JOINT VENTURES
As announced on 23 December 2015, Vmoto entered into a joint venture agreement to secure the business of its long
standing OEM customer, PowerEagle (“JV”), in which Vmoto holds a 51% interest. Vmoto’s JV partner, PowerEagle, is
one of the oldest and most recognised two wheel electric vehicle names in and around the Shanghai region. The JV not
only secures significant future production of PowerEagle models but also opens up a vast network of over 200
distributorships to Vmoto for the Company to sell its own branded and higher margin electric scooters. The JV is now
operational at a new facility being leased in Shanghai and is targeting production of 100,000 units in 2016.
During the year, the Company reduced its investment interest in the 3/4 wheel JV investment to 15%. The Company also
made a strategic decision to exit the Nanjing Haiyong controller business, resulting in one off impairments and loss of
$4.1 million in FY15.
Vmoto continues to receive significant interest for potential collaborations from new customers and partners.
Discussions with these and other parties for potential orders or collaboration are ongoing and further developments will
be announced as and when they occur.
CORPORATE
During the year ended 31 December 2015, the Company completed a 1 for 10 share consolidation. The Company issued a
total of 6,725,669 shares pre-consolidation, comprising 1,175,669 shares to consultants of the Company in consideration
for services provided, 2,000,000 shares to Directors following the vesting of performance rights and 3,550,000 shares to
employees on the exercise of ESOP options exercisable at $0.03 each on or before 23 November 2015.
Post the share consolidation, which was completed on 4 June 2015, the Company issued a further 21,736,848 shares,
comprising 19,780,000 shares at $0.45 per Share to professional and sophisticated investors to raise $8.9 million (before
costs), 1,374,891 shares to employees and consultants in recognition of services provided, 35,000 Shares following the
exercise of ESOP options exercisable at $0.30 each on or before 23 November 2015, 466,668 shares to two Directors
following the vesting of performance rights and a total of 80,289 shares to a Director in lieu of Director fees, as approved
by Shareholders.
The Company de-listed from AIM on 19 November 2015 following a strategic review of the benefits versus costs of being
on AIM. The de-listing was deemed to be in the best interests of all shareholders.
OUTLOOK
The year ended 31 December 2015 was another productive period for Vmoto as sales increased across the domestic and
international sales channels.
The Company expects to see further growth in FY16 as Vmoto continues to grow in line with management expectations
as more orders are received and new domestic and international distributors and customers continue to visit the factory
to discuss and finalise orders and agreements.
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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 2015 to 31 December
2015.
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 14 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 Cairns was appointed as Non-Executive Director of the Company on 1 September
2011.
Mr Cairns has over 16 years’ experience in the small to mid cap corporate and capital
markets space. A corporate financier, he was a Nominated Advisor for AIM companies
in London for over eight years before relocating to Perth in 2007 where he established
Pursuit Capital, a corporate and strategic advisory firm. His wide experience covers
international capital raisings, M&A, IPOs, regulatory advice, investor relations and
corporate governance.
Mr Cairns graduated with a degree in Classics from the University of Exeter and is a
member of the Securities Institute (UK).
5
Kaijian Chen
Independent
Non-Executive Director
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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
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, Ltd, 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 Jiangsu Xinri E-Vehicle Co, Ltd, which is one
of the largest electric vehicle manufacturers in China at present. The annual production
of Xinri in 2010 was over 2 million units of electric two-wheel vehicles for the Chinese
domestic market. Mr Chen is currently serving as vice president of Changzhou Supaiqi
E-Vehicle Co, Ltd.
Mr Chen holds a degree from the Beijing Institute of Technology and is based in
Changzhou, China.
Mr Chen will be retiring and seeking re-election by shareholders at the Company’s 2016
Annual General Meeting.
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 20 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 with a director of Evolution Corporate Services Pty Ltd, a company
providing corporate advisory services and is also company secretary to a number of
listed companies.
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.
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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 31
December 2015 are as follows:
Period of directorship
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
Metallum Limited
From
-
-
2013
-
2011
2014
2011
2015
To
-
-
Current
-
2014
2016
2012
Current
The number of Directors’ meetings and the number of meetings attended by each of the Directors of the Company
during the year ended 31 December 2015 are:
Director
Held while Director
Attended
Board Meetings
Mr Charles Chen
Mr Ivan Teo
Mr Oliver Cairns
Mr Kaijian Chen
Ms Shannon Coates
9
9
9
9
9
9
9
9
2
9
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 2015 was the development and
manufacture, and international marketing and distribution of electric powered two-wheel vehicles, petrol two-wheel
vehicles and all-terrain 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.
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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
Total consolidated sales of $47.6 million were recorded for the Consolidated Entity for the year ended 31 December 2015.
The revenue of the Consolidated Entity has increased by 11% as compared to the year ended 31 December 2014, largely
as a result of the growing sales in China and internationally. During the year ended 31 December 2015, the Consolidated
Entity recorded a net loss of $753,313 after income tax, which included one-off non-cash costs of $0.6 million of share
based expenses, $2.8 million of impairment of Haiyong goodwill, $1.8 million of reversal of provision for the second
tranche of shares in relation to acquisition of Haiyong, $1.3 million of impairment of Haiyong intangibles, $1.7 million of
loss from disposal of Haiyong subsidiary, $0.6 million of tax expense adjustments related to carry forward tax losses
being utilised in FY15 and $0.3 million of tax expense adjustments related to impairment of Haiyong intangibles in FY15.
The underlying net profit for the year ended 31 December 2015 adding back these one-off non-cash expenses was
$4,142,813.
The following table provides a reconciliation between the statutory net loss after tax and underlying NPAT for the year
ended 31 December 2015:
Statutory net loss after tax for FY15
($753,313)
Add back non- cash and one off expenses:
Share based expenses
Impairment of Haiyong goodwill
Reversal of provision for the second tranche of shares in relation
to acquisition of Haiyong
Impairment of Haiyong intangibles
Loss from disposal of Haiyong subsidiary
Tax expense adjustments related to carry forward tax losses being
utilised in FY15 for which deferred tax assets were previously
recognised in FY14
Tax expense adjustments related to impairment of Haiyong
intangibles in FY15 for which deferred tax liabilities were
previously recognised in FY14
Underlying NPAT for FY15
$593,503
$2,792,156
($1,835,773)
$1,310,760
$1,736,328
$626,842
($327,690)
$4,142,813
Directors believe this information is useful to provide investors with transparency on the underlying performance of the
Company.
A more detailed review of operations for the year ended 31 December 2015 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 $9.3 million during the year ended 31 December
2015.
Cash balances increased by $2.8 million during the year ended 31 December 2015 primarily as a result of $8.9 million
capital raising completed in June 2015, the increase in working capital requirements and repayment of the Company’s
operating facilities.
Trade and other receivables have increased by $4.3 million mainly due to higher receivable from customers.
Inventories have decreased by $1.4 million and prepayments have decreased by $0.5 million mainly due to lower stock
level and prepayments as a result of disposal of Haiyong subsidiary.
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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
Property, plant and equipment increased by $0.2 million mainly due to additions of fixed assets for the newly developed
electric two-wheel vehicle models.
Trade and other payables decreased by $1.6 million during the period mainly due to more efficient payments to
suppliers in preparation to negotiate better payment terms and deeper cooperation with the suppliers.
Loans and borrowings have decreased by $2.6 million mainly due to the additional repayment of operating facilities
during the year to save interest costs.
Issued capital has increased by $9.0 million during the year ended 31 December 2015 primarily due to shares issued to
investors for $8.9 million capital raising completed in June 2015, shares issued to key management and conversion of
ESOP and listed options to shares during the year ended 31 December 2015.
No dividend has been declared or paid by the Company to the date of this Report in respect of the year ended 31
December 2015.
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 distribution network 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 Canada, Denmark, Finland, Malta, Netherlands,
Portugal, United Kingdom 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 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, patent appropriate and necessary research and development
results, recruit 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 two-wheel vehicle products and
have the protection of trademarks and patents.
• reduction in demand from China - given our reliance on the Chinese economy, reduction in demand from
China market for our electric scooter products could have 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 the Asian
and North America regions. In addition, the Company is investigating the option of expanding sales into other
emerging economies such as India and Indonesia to diversify its sales channel and reduce reliance on the
Chinese market.
1 Source: China Electric Two Wheel Vehicle Industry Research Report, 13 November 2012
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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
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.
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 2015.
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
Vesting of Performance Rights
On 5 February 2016, the Company issued 100,000 fully paid ordinary shares to Mr Yiting Chen and 100,000 fully paid
ordinary shares to Mr Oliver Cairns as a result of the vesting of Class F incentive performance rights, as approved by
shareholders on 31 July 2012.
Issue Tranche 1 Shares to Acquire PowerEagle Trademark
On 5 February 2016, the Company issued 3,333,333 fully paid ordinary shares at an issue price of $0.30 per share to
PowerEagle as Tranche 1 consideration to acquire 100% of the PowerEagle trademark and brand, as announced on 23
December 2015.
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
Options
Performance Rights
Mr Charles Chen1
Mr Ivan Teo2
Mr Oliver Cairns 3
Mr Kaijian Chen 4
Ms Shannon Coates 5
5,721,474
720,873
2,588,284
730,794
75,000
-
-
400,000
-
-
633,334
500,000
633,334
500,000
-
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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
1.
1,698,064 shares are held indirectly by Pershing Australia Nominees Pty Ltd on behalf of
Mr Charles Chen. 533,334 shares and 633,334 Performance Rights are held directly by Mr Charles Chen.
3,490,076 shares are held indirectly by Mr Chen’s spouse, Ms Jierong Zhou.
2.
720,873 shares and 500,000 Performance Rights are held directly by Mr Ivan Teo.
3.
148,889 shares are held directly by Mr Oliver Cairns. 2,303,031 shares, 100,000 options exercisable at $0.50 on or
before 21 May 2019, 100,000 options exercisable at $0.75 on or before 21 May 2019, 200,000 options exercisable
at $1.00 on or before 21 May 2019 and 633,334 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. 136,364
shares are held indirectly by Mr OW and CH Cairns as trustee for OCCM Fund. Mr Cairns is a beneficiary of
the OCCM Fund.
4.
730,794 shares and 500,000 Performance Rights are held directly by Mr Kaijian Chen.
5.
75,000 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.
Options
On 2 October 2015, 719,981 unlisted options (exercisable at $0.75 on or before 31 December 2017) were issued to brokers
as part consideration for capital raising services as announced on 12 June 2015.
On 24 November 2015, 350,000 unlisted options (exercisable at $0.30 on or before 23 November 2015) 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 May 2013
23 May 2013
23 May 2014
23 May 2014
23 May 2014
2 October 2015
23 May 2014
23 May 2014
23 May 2014
23 May 2014
23 May 2014
2 October 2015
23 May 2018
23 May 2018
21 May 2019
21 May 2019
21 May 2019
31 December 2017
40 cents
80 cents
50 cents
75 cents
$1.00
75 cents
500,000
500,000
100,000
100,000
200,000
719,981
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 15 April 2015, the Company issued 1,000,000 shares (on a pre-consolidation basis) to Mr Charles Chen and 1,000,000
shares to Mr Oliver Cairns as a result of vesting of 2,000,000 Class E incentive Performance Rights as approved by
shareholders on 31 July 2012.
On 18 June 2015, the Company issued 133,334 shares to Mr Charles Chen and 133,334 shares to Mr Oliver Cairns as a
result of vesting of 266,668 Class H incentive Performance Rights as approved by shareholders on 31 July 2012.
On 17 December 2015, the Company issued 100,000 shares to Mr Charles Chen and 100,000 shares to Mr Oliver Cairns as
a result of vesting of 200,000 Class C incentive Performance Rights as approved by shareholders on 31 July 2012.
On 5 February 2016, the Company issued 100,000 shares to Mr Charles Chen and 100,000 shares to Mr Oliver Cairns as a
result of vesting of 200,000 Class F incentive Performance Rights as approved by shareholders on 31 July 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 )
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 I
Class J
Class K
Total
Number
266,668
1,000,000
1,000,000
2,266,668
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 2015 was A$20,806.
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 68 and forms part of the Directors’ Report for the year ended
31 December 2015.
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
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.
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.
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 Charles Chen
• Mr Ivan Teo
• Mr Oliver Cairns
• Mr Kaijian Chen
• Ms Shannon Coates
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, resigned 31 July 2015)
• Mr Shuguang Han (General Manager)
• Mr Zhengjie Wu (Vice General Manager)
• Mr Kuo Lung Tseng (Vice General Manager, appointed 8 October 2014, resigned 28 February 2015)
• Mr Fei Wu (Sales Manager)
Overview of remuneration policies
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 may seek 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 established 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.
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.
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
R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
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 2015
30 Jun 2015
31 Dec 2014
30 June 2014
31 Dec 2013
12 months
6 months
12 months
6 months
12 months
In AUD
Revenue
Net profit / (loss) before tax
Net profit / (loss) after tax
$’000
47,613
(213)
(755)
$’000
24,891
1,451
1,011
$’000
42,941
257
884
$’000
15,862
211
211
$’000
25,175
404
404
In AUD
31 Dec 2015
30 Jun 2015
31 Dec 2014
30 June 2014
31 Dec 2013
12 months
6 months
12 months
6 months
12 months
Share price at start of period
Share price at end of period
Dividend
Basic and diluted earnings /
(loss) per share
$0.04
$0.33*
-
(0.52 cents)*
$0.04
$0.40*
-
0.79 cents*
$0.03
$0.04
-
0.07 cents
$0.03
$0.04
-
0.02 cents
$0.02
$0.03
-
0.04 cents
* The Company completed the consolidation of its share capital through the conversion of every ten shares in the
capital of the Company into one share (“Share Consolidation”) on 4 June 2015. The share price and EPS post 4
June 2015 are disclosed on a post Share Consolidation basis.
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 ( 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 years ended 31 December 2014 and 31 December 2015 are:
In AUD
Executive Directors
Mr Charles Chen
Mr Ivan Teo
12 months to Dec 2015
12 months to Dec 2014
12 months to Dec 2015
12 months to Dec 2014
Non-Executive Directors
Mr Simon Farrell
(resigned 20 May 2014)
12 months to Dec 2015
12 months to Dec 2014
Mr Oliver Cairns
Mr Kaijian Chen
Ms Shannon Coates 1
12 months to Dec 2015
12 months to Dec 2014
12 months to Dec 2015
12 months to Dec 2014
12 months to Dec 2015
12 months to Dec 2014
SHORT-TERM
POST-
EMPLOYMENT
Salary & fees
$
Superannuation
benefits
$
SHARE BASED
PAYMENTS
Options /
Performance
Rights
$
259,319
221,251
151,794
122,112
-
9,944
80,000
80,000
40,000
40,000
40,000
23,333
9,975
-
-
-
-
-
-
-
-
-
-
-
-
86,250
-
86,250
-
20,300
-
182,669
-
86,250
-
-
Total
$
269,294
307,501
151,794
208,362
-
30,244
80,000
262,669
40,000
126,250
40,000
23,333
Total, all Directors
12 months to Dec 2015
12 months to Dec 2014
571,113
496,640
9,975
-
-
461,719
581,088
958,359
Value of
options/rights
as proportion of
remuneration %
% of
remuneration
based on
performance
-
28.0%
-
41.4%
-
67.1%
-
69.5%
-
68.3%
-
-
-
48.2%
-
28.0%
-
41.4%
-
-
-
32.8%
-
68.3%
-
-
-
37.2%
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 )
1. Ms Coates was appointed as Non-Executive Director on 23 May 2014. Ms Coates was appointed Company Secretary to the Company in 2007 and, via an associated company Evolution
Corporate Services Pty Ltd, provides company secretarial, corporate advisory and Australian registered office services to Vmoto for a monthly retainer. For the 2015 financial year, the Company
paid Evolution Corporate Services Pty Ltd $66,000 for these services.
In AUD
Executives
SHORT-TERM
POST-
EMPLOYMENT
SHARE BASED
PAYMENTS
Salary & fees
$
Superannuation
benefits
$
Shares
$
Total
$
Value of
options / rights
as proportion of
remuneration %
% of
remuneration
based on
performance
Mr Patrick Davin
(President of Strategic Business
Development, resigned 31 July
2015)
12 months to Dec 2015
12 months to Dec 2014
18,017
22,288
Mr George Hou (General
Manager, resigned 30 April 2014)
12 months to Dec 2015
12 months to Dec 2014
Mr Shuguang Han
(General Manager)
Mr Zhengjie Wu
(Vice General Manager)
Mr Kuo Lung Tseng
(Vice General Manager, resigned
28 February 2015)
12 months to Dec 2015
12 months to Dec 2014
12 months to Dec 2015
12 months to Dec 2014
12 months to Dec 2015
12 months to Dec 2014
Mr Fei Wu
(Sales Manager)
12 months to Dec 2015
12 months to Dec 2014
-
25,041
63,968
48,122
30,704
27,080
25,291
13,942
42,139
22,338
Total, all Executives
12 months to Dec 2015
12 months to Dec 2014
180,119
158,811
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24,800
38,000
-
-
31,000
76,000
62,000
38,000
-
-
9,300
11,400
127,100
163,400
42,817
60,288
-
25,041
94,968
124,122
92,704
65,080
25,291
13,942
51,439
33,738
307,219
322,211
57.9%
63.0%
-
-
32.6%
61.2%
66.9%
58.4%
-
-
18.1%
33.8%
41.4%
49.3%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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 )
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 plan, 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 2015, the following share based payment options arrangements were in existence:
Options
series
ESOP
Class E
Class F
Class G
Class H
Class I
Class J
Total
Number
Grant date
Grant date
Expiry date
Exercise Price Vesting
740,000
500,000
500,000
100,000
100,000
200,000
719,981
2,859,981
23/11/2012
23/05/2013
23/05/2013
23/05/2014
23/05/2014
23/05/2014
02/10/2015
fair value
A$0.11
A$0.14
A$0.13
A$0.37
A$0.35
A$0.33
A$0.16
23/11/2015
23/05/2018
23/05/2018
21/05/2019
21/05/2019
21/05/2019
31/12/2017
A$0.30
A$0.40
A$0.80
A$0.50
A$0.75
A$1.00
A$0.75
date
23/11/2013
23/05/2014
23/05/2014
23/05/2014
23/05/2014
23/05/2014
02/10/2015
The Company completed the consolidation of its share capital through the conversion of every ten shares in the capital
of the Company into one share (“Share Consolidation”) on 4 June 2015. The share based payment options
arrangements above are disclosed on a post Share Consolidation basis.
There is 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 2015, no options were granted to Key Management Personnel under the ESOP.
During the year ended 31 December 2015, 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
Ivan Teo
1,000,000
1,000,000
A$30,000
-
17
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 table summarises the value of options to Key Management Personnel granted, exercised or lapsed
during the year ended 31 December 2015:
Name
Ivan Teo
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
$
n/a
$
A$11,000
$
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
1,000,000
1,000,000
1,000,000
1,000,000
Class
Performance Conditions
Time of vesting
A
B
C
D
E
F
- 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.
-
- 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 date the VWAP
first exceeds 3 cents
The date 12 months
the
the date
after
VWAP first exceeds 3
cents
The date 24 months
the
the date
after
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
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 )
1,333,333
1,333,333
1,333,334
G
H
I
- 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 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
The Company completed the consolidation of its share capital through the conversion of every ten shares in the capital
of the Company into one share (“Share Consolidation”) on 4 June 2015. The Performance Rights above are disclosed
on a pre Share Consolidation basis.
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
The Company completed the consolidation of its share capital through the conversion of every ten shares in the capital
of the Company into one share (“Share Consolidation”) on 4 June 2015. The Performance Rights above are disclosed
on a pre Share Consolidation basis.
During the year ended 31 December 2015, the following Performance Rights arrangements were in existence:
Performance
Rights series
Number
Grant date
Class C
Class E
Class F
Class H
Class I
Class J
Class K
200,000
2,000,000
200,000
266,668
266,668
1,000,000
1,000,000
06/08/2012
06/08/2012
06/08/2012
06/08/2012
06/08/2012
23/05/2014
23/05/2014
Grant date
fair value
A$0.04
A$0.0015
A$0.015
A$0.005
A$0.005
A$0.276
A$0.069
All Performance Rights convert to fully-paid ordinary shares for nil cash consideration, subject to the above
performance based vesting conditions. During the year ended 31 December 2015, Class C, E and H Performance Rights
vested and were converted to shares.
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 Company completed the consolidation of its share capital through the conversion of every ten shares in the capital
of the Company into one share (“Share Consolidation”) on 4 June 2015. The Class E Performance Rights arrangement
above are disclosed on a pre-Share Consolidation basis as Class E Performance Rights vested and converted to shares
prior to Share Consolidation. All other Performance Rights arrangements were disclosed on a post Share Consolidation
basis.
The following Performance Rights to Key Management Personnel vested and were converted to Shares in the year
ended 31 December 2015:
Name
Performance
Rights series
During the year ended 31 Dec 2015
No. granted
No. vested
% of grant
vested
% of grant
forfeited
Charles Chen
Oliver Cairns
Class E
Class H
Class C
Class E
Class H
Class C
-
-
-
-
-
-
1,000,000
133,334
100,000
1,000,000
133,334
100,000
100%
100%
100%
100%
100%
100%
n/a
n/a
n/a
n/a
n/a
n/a
The Company completed the consolidation of its share capital through the conversion of every ten shares in the capital
of the Company into one share (“Share Consolidation”) on 4 June 2015. The Class E Performance Rights arrangement
above are disclosed on a pre-Share Consolidation basis as Class E Performance Rights vested and converted to shares
prior to Share Consolidation. All other Performance Rights arrangements were disclosed on a post Share Consolidation
basis.
Share holdings and transactions of Key Management Personnel
The movement during the year ended 31 December 2015 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 2015
Held at
date of
appointment
Net change1
Granted as
remuneration
Received on
vest of
performance
rights
Share
consolidation
Held at
date of
resignation
Held at
31 Dec 2015
Directors
Mr C Chen
Mr I Teo
Mr O Cairns
Mr K Chen
Ms S Coates
52,881,402
6,208,728
21,549,495
6,505,050
750,000
Executives
Mr P Davin
Mr S Han
Mr Z Wu
Mr K Tseng
Mr F Wu
6,320,893
2,000,000
1,000,000
-
500,000
N/A
N/A
N/A
N/A
N/A
-
1,000,000
-
-
-
-
-
-
80,289
-
1,233,334
-
1,233,334
-
-
(48,493,262)
(6,487,855)
(20,294,545)
(5,854,545)
(675,000)
N/A
N/A
N/A
N/A
N/A
5,621,474
720,873
2,488,284
730,794
75,000
N/A
N/A
N/A
N/A
N/A
(1,810,000)
-
-
-
-
80,000
100,000
200,000
-
30,000
-
-
-
-
(4,158,803)
(1,800,000)
(900,000)
-
(450,000)
432,090
N/A
N/A
-
N/A
N/A
300,000
300,000
N/A
80,000
1. Net change represents the acquisition and disposal of shares on market and exercise of options by the Key
Management Personnel.
20
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 )
Option holdings of Key Management Personnel
The movement during the year ended 31 December 2015 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 2015
Held at
date of
appointment
Additions
Granted as
remuneration
Exercised/
Expired
Share
consolidation
Held at
date of
resignation
Held at
31 Dec 2015
Directors
Mr C Chen
Mr I Teo
Mr O Cairns
Mr K Chen
Ms S Coates
Executives
Mr P Davin
Mr S Han
Mr Z Wu
Mr K Tseng
Mr F Wu
-
1,000,000
4,000,000
-
-
500,000
-
-
-
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,000,000)
-
-
-
-
-
(3,600,000)
-
-
-
-
-
-
-
(450,000)
-
-
-
-
N/A
N/A
N/A
N/A
N/A
50,000
N/A
N/A
-
N/A
-
-
400,000
-
-
N/A
-
-
N/A
-
All options are vested and exercisable.
Performance right holdings of Key Management Personnel
The movement during the year ended 31 December 2015 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 2015
Held at
date of
appointment
Granted as
remuneration
Vested as
Shares
Forfeited
Share
consolidation
Held at
date of
resignation
Held at
31 Dec 2015
Directors
Mr C Chen
Mr I Teo
Mr O Cairns
Mr K Chen
Ms S Coates
Executives
Mr P Davin
Mr S Han
Mr Z Wu
Mr K Tseng
Mr F Wu
10,666,667
5,000,000
10,666,667
5,000,000
-
-
-
-
-
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
-
-
-
-
-
-
-
-
-
(1,233,334)
-
(1,233,334)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(8,699,999)
(4,500,000)
(8,699,999)
(4,500,000)
-
-
-
-
-
-
N/A
N/A
N/A
N/A
N/A
-
N/A
N/A
-
N/A
733,334
500,000
733,334
500,000
-
N/A
-
-
N/A
-
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 )
Other Key Management Personnel Transactions
During the year ended 31 December 2015, Evolution Corporate Services Pty Ltd, an entity associated with Ms Shannon
Coates, provided company secretarial, administration and registered office services to the Group pursuant to
consultancy agreement and received total fees of A$66,000 for the year ended 31 December 2015.
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 Nanjing China, this 31st day of March 2016.
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
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 01 5
Continuing Operations
Revenue from sale of goods
Cost of sales
Gross Profit
Other income
Share of losses of associates
Gain recognised on disposal of interest in former
associate
Notes
Year ended
31 December 2015
$
Year ended
31 December 2014
$
47,613,013
42,940,835
(39,660,519)
(36,639,329)
7,952,494
6,301,506
2
11
295,501
(141,908)
143,443
161,604
-
-
Operational expenses
(1,576,793)
(1,451,180)
Marketing and distribution expenses
(491,926)
(475,521)
Corporate and administrative expenses
(1,929,631)
(2,008,206)
Occupancy expenses
Other expenses
Finance costs
Impairment of inventories
Profit/(Loss) from continuing operations before tax
Income tax revenue/(expense)
2
4
(103,486)
-
(270,812)
(59,085)
(486,094)
(275,507)
-
(1,548,071)
3,876,882
(869,144)
159,446
626,842
Profit /(Loss) after tax from continuing operations
3,007,738
786,288
Discontinued Operations
Profit/(Loss) from discontinued operations
26
(3,761,051)
97,699
PROFIT/(LOSS) FOR THE YEAR
(753,313)
883,987
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
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 ( c o n t ’ d )
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 5
Other comprehensive income
Foreign currency translation differences
1,004,201
2,154,350
Notes
Year ended
31 December 2015
$
Year ended
31 December 2014
$
Other comprehensive income for the year, net of
income tax
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR
1,004,201
2,154,350
250,888
3,038,337
Profit/(Loss) for the year attributable to:
Owners of the Company
Total comprehensive income for the year
attributable to:
Owners of the Company
(753,313)
(753,313)
883,987
883,987
250,888
250,888
3,038,337
3,038,337
Earnings per share
22
From continuing and discontinued operations:
Basic earnings/(loss) per share
From continuing operations:
Basic earnings per share
(0.52 cents)
0.71 cents
2.09 cents
0.63 cents
The consolidated statement of profit or loss and other comprehensive income
should be read in conjunction with the accompanying notes.
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 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 5
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
Other financial assets
Deferred tax assets
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Loans and borrowings
Current tax liabilities
Other liabilities
Total Current Liabilities
Note
31 December 2015
$
31 December 2014
$
5
6
7
8
9
10
11
12
4
13
14
4
15
6,657,529
9,413,278
4,548,057
3,044,107
3,850,142
5,090,871
5,945,188
3,519,032
23,662,971
18,405,233
7,846,195
5,801,541
-
1,370,094
-
15,017,830
7,606,188
8,536,781
393,244
-
299,152
16,835,365
38,680,801
35,240,598
2,233,642
2,107,837
242,302
-
4,583,781
3,858,426
4,718,929
-
1,835,773
10,413,128
TOTAL LIABILITIES
4,583,781
10,413,128
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
34,097,020
24,827,470
16
16
18
70,276,494
872,866
(37,052,340)
34,097,020
61,293,967
(140,519)
(36,325,978)
24,827,470
The consolidated statement of financial position is to be read in conjunction with the accompanying notes.
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 N S O L I D A T E D S T A T E M E NT 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 5
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 2015
$
Year ended
31 December 2014
$
50,062,921
(49,819,966)
41,971
(270,811)
1,768
46,458,103
(45,631,141)
44,739
(273,499)
27,762
Net cash used in operating activities
28
15,883
625,964
Cash flows from investing activities
Payments for property, plant & equipment
Proceeds from disposal of plant & equipment
Payments for research and developments
Payments for intangible assets
Loan to other entity
Payments for equity investments
Proceeds from disposal of equity investments
Net cash inflow on disposal of subsidiary
(858,044)
16,613
(1,504,908)
(12,960)
(1,043,275)
-
106,494
425,193
(1,101,351)
-
-
-
-
(393,244)
-
-
11
27
Net cash used in investing activities
(2,870,887)
(1,494,595)
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
9,018,000
(592,333)
4,898,724
(7,880,556)
5,443,835
1,247,290
(22,480)
4,297,144
(5,400,250)
121,704
Net (decrease)/increase in cash and cash equivalents
2,588,831
(746,927)
Cash and cash equivalents at the beginning of the year
3,850,142
4,426,994
Effect of exchange rate fluctuations on cash held
218,556
170,075
Cash and cash equivalents at the end of the year
6,657,529
3,850,142
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
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 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 5
Balance as at 1 January 2014
57,725,955
(2,654,011)
(37,340,542)
17,731,402
Issued Capital
$
Reserves
$
Accumulated
Losses
$
Total
$
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
Balance as at 1 January 2015
61,293,967
(140,519)
(36,325,978)
24,827,470
Loss 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
Transfer exercised options and vested
performance rights reserves to capital
-
-
-
9,529,572
(624,978)
-
77,933
-
1,004,201
1,004,201
-
-
114,068
(26,951)
(77,933)
(753,313)
-
(753,313)
-
-
-
26,951
-
(753,313)
1,004,201
250,888
9,529,572
(624,978)
114,068
-
-
Balance as at 31 December 2015
70,276,494
872,866
(37,052,340)
34,097,020
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
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
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 2015 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 2016.
(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 2015, 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 2015.
New and revised Standards and amendments thereof and Interpretations effective for the year end that are relevant
to the Group include:
• AASB 2015-3 ‘Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031
Materiality’
• AASB 2015-4 ‘Amendments to Australian Accounting Standards – Financial Reporting Requirements for
Australia Groups with a Foreign Parent’
The adoption of the above standards have not had a material impact on this annual financial report.
(v)
Going concern basis
The Consolidated Entity has recorded a loss after tax for the year ended 31 December 2015 of $753,313 (profit after
tax for the year ended 31 December 2014: $883,987). At 31 December 2015, the Consolidated Entity had a working
capital surplus of $19,079,190 (31 December 2014: $7,992,105).
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;
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
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 Consolidated Entity 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, RMB15 million (approximately $3.2
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 2016 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 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 23, 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.
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.
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
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 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.
(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
•
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
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 (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.
(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.
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
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 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.
• 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.
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
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 )
•
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.
(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.
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
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 )
(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”).
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.
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
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 )
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) Investments in associates and joint ventures
An associate is an entity over which the Group has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee but is not control or joint control over those
policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to
the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement,
which exists only when decisions about the relevant activities require unanimous consent of the parties sharing
control.
The results and assets and liabilities of associates or joint ventures are incorporated in these consolidated financial
statements using the equity method of accounting, except when the investment, or a portion thereof, is classified as
held for sale, in which case it is accounted for in accordance with AASB 5. Under the equity method, an investment
in an associate or a joint venture is initially recognised in the consolidated statement of financial position at cost and
adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the
associate or joint venture. When the Group's share of losses of an associate or a joint venture exceeds the Group's
interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the
Group's net investment in the associate or joint venture), the Group discontinues recognising its share of further
losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive
obligations or made payments on behalf of the associate or joint venture.
An investment in an associate or a joint venture is accounted for using the equity method from the date on which
the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint
venture, any excess of the cost of the investment over the Group's share of the net fair value of the identifiable assets
and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the
investment. Any excess of the Group's share of the net fair value of the identifiable assets and liabilities over the cost
of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the
investment is acquired.
The requirements of AASB 139 are applied to determine whether it is necessary to recognise any impairment loss
with respect to the Group’s investment in an associate or a joint venture. When necessary, the entire carrying
amount of the investment (including goodwill) is tested for impairment in accordance with AASB 136 ‘Impairment
of Assets’ as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of
disposal) with its carrying amount, Any impairment loss recognised forms part of the carrying amount of the
investment. Any reversal of that impairment loss is recognised in accordance with AASB 136 to the extent that the
recoverable amount of the investment subsequently increases.
The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or
a joint venture, or when the investment is classified as held for sale. When the Group retains an interest in the
former associate or joint venture and the retained interest is a financial asset, the Group measures the retained
interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance
with AASB 139. The difference between the carrying amount of the associate or joint venture at the date the equity
method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part
interest in the associate or joint venture is included in the determination of the gain or loss on disposal of the
associate or joint venture. In addition, the Group accounts for all amounts previously recognised in other
comprehensive income in relation to that associate or joint venture on the same basis as would be required if that
associate or joint venture had directly disposed of the related assets or liabilities. Therefore, if a gain or loss
previously recognised in other comprehensive income by that associate or joint venture would be reclassified to
profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to
profit or loss (as a reclassification adjustment) when the equity method is discontinued.
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
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 Group continues to use the equity method when an investment in an associate becomes an investment in a joint
venture or an investment in a joint venture becomes an investment in an associate. There is no re-measurement to
fair value upon such changes in ownership interests.
When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to use the
equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been
recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would
be reclassified to profit or loss on the disposal of the related assets or liabilities.
When a group entity transacts with an associate or a joint venture of the Group, profits and losses resulting from the
transactions with the associate or joint venture are recognised in the Group's consolidated financial statements only
to the extent of interests in the associate or joint venture that are not related to the Group.
(s) Available-for-sale financial assets
The Group has investments in unlisted shares that are not traded on an active market but that are classified as
available-for-sale financial assets and stated at fair value (because the directors consider that fair value can be
reliably measured). Fair value is determined in the manner described in note aa. Gains and losses arising from
changes in fair value are recognised in other comprehensive income and accumulated in the investments
revaluation reserve, with the exception of impairment losses, interest calculated using the effective interest method,
and foreign exchange gains and losses on monetary assets, which are recognised in profit or loss. Where the
investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in
the investments revaluation reserve is reclassified to profit or loss.
The fair value of available-for-sale monetary assets denominated in a foreign currency is determined in that foreign
currency and translated at the spot rate at the end of the reporting period. The foreign exchange gains and losses
that are recognised in profit or loss are determined based on the amortised cost of the monetary asset. Other foreign
exchange gains and losses are recognised in other comprehensive income.
(t) 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.
(u) 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.
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 ( c o n t ’ d )
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.
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 entities, 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.
(v)
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.
(w) 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.
The estimated useful lives of development costs for the current and comparative periods are 3 years. Amortisation
methods, useful lives and residual values are reviewed at each reporting date.
(x) 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.
(y) 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.
(z) Comparative figures
This report relates to the year ended 31 December 2015. Comparatives are for the year ended 31 December 2014.
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 )
(aa) 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.
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.
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 )
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.
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.
(ab) 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
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 2015 was A$1,414,951 (31 December 2014: A$4,207,107).
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 )
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 to be no 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.
Fair value measurements and valuation processes in relation to investments available-for-sale
In estimating the fair value of the available-for-sale investments, the Group uses Level 2 fair value hierarchy to
perform the valuation.
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 )
2. REVENUES AND EXPENSES
(a) Other income
Interest income
Contributions from customers
Government subsidies
Gain from disposal of fixed assets
Net foreign exchange gain
Other income
(b) Other expenses
Doubtful debts
(c) Employee benefits expense
Wages and salaries costs
(d) Depreciation and amortisation
Depreciation of property, plant and equipment
Amortisation of intangibles
Year ended
31 December 2015
$
Year ended
31 December 2014
$
41,847
79,560
5,602
16,613
143,922
7,957
295,501
-
-
45,245
45,401
25,582
-
9,668
35,708
161,604
486,094
486,094
1,624,331
1,624,331
2,289,326
2,289,326
702,835
63,118
457,634
-
765,953
457,634
3. AUDITOR’S REMUNERATION
Audit services:
- audit of financial reports by Bentleys Audit & Corporate
(WA) Pty Ltd
84,000
84,000
74,000
74,000
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 )
Year ended
31 December 2015
$
Year ended
31 December 2014
$
4. INCOME TAX
(a) Income tax credit / (expense)
Current tax
Deferred tax
(b) Numerical reconciliation between tax benefit/(expense) and pre-
tax net profit/(loss)
Profit/(Loss) before income tax benefit
Income tax expense calculated at 30%
Effect on amounts which are not tax deductible:
Deductible amount from sale of subsidiary
Losses of foreign subsidiaries/operations not regarded as
deductible
Non-deductible items
Recognition of tax losses of China operations previously not
recognised
Effect of different tax rates of subsidiaries operating in other
jurisdictions
Deferred tax 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)
(242,302)
(626,842)
(869,144)
3,876,882
(1,163,065)
421,567
-
(10,486)
-
456,428
(573,588)
(869,144)
-
626,842
626,842
159,446
(47,834)
-
(32,659)
(11,976)
626,842
92,469
-
626,842
Potential at 30% (31 December 2014: 30%)
6,355,688
5,836,614
All tax losses relate to Australian based entities.
(d) Unrecognised temporary differences
Temporary differences for which deferred tax assets have not
been recognised:
Provision for doubtful receivables
Capital raising costs
Accrued expenses
Unrecognised deferred tax assets relating to the above temporary
differences
88,329
-
16,500
104,829
88,330
8,892
13,800
111,022
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 )
(e) Current tax liabilities
Income tax payable
(f) Deferred tax balances
31 December 2015
$
31 December 2014
$
242,302
-
Deferred tax balances are presented in the consolidated statement of financial position as follows:
Deferred tax assets
Deferred tax liabilities
(g) Tax Rates
-
-
-
626,842
327,690
299,152
The potential tax benefit at 31 December 2015 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 2014. The tax benefit and
expense at 31 December 2015 in respect of tax effect brought into account in relation to China 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
Impaired Trade Receivables
31 December 2015
$
31 December 2014
$
6,657,529
3,850,142
9,142,030
-
9,142,030
562,581
(291,333)
9,413,278
4,094,936
(62,061)
4,032,875
1,482,029
(424,033)
5,090,871
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.
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 )
Movements in the provision for impairment of trade and other receivables were as follows:
31 December 2015
$
31 December 2014
$
At beginning of the period
Provision for impairment during the period
Write off
At end of the period
294,633
-
(3,300)
291,333
At 31 December 2015, 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
4,232,557
3,968,221
412,418
800,082
291,333
9,704,611
46,300
486,094
(237,761)
294,633
2,684,903
1,032,887
668,787
704,294
486,094
5,576,965
As of 31 December 2015, trade and other receivables of $1,212,500 (31 December 2014: $1,373,081) 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 China operations, which can be claimed/used
to offset against future VAT payables.
7. INVENTORIES
Raw materials
Semi-finished goods
Finished goods
8. OTHER ASSETS
Prepayments
1,836,545
674,906
2,036,606
4,548,057
3,620,928
574,247
1,750,013
5,945,188
3,044,107
3,044,107
3,519,032
3,519,032
The prepayments are payments in advance to suppliers for the supply of electric two-wheel vehicle inventories for
the Consolidated Entity’s electric two-wheel vehicle operations.
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 )
9. PROPERTY, PLANT & EQUIPMENT
Plant &
equipment
Motor
vehicles
Office
furniture &
equipment
Land
Building
Total
Leasehold
improvement
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
812,992
954,535
(290,422)
123,897
1,601,002
27,694
118,300
(12,399)
6,404
139,999
-
-
-
-
-
782,235
-
-
218,034
1,000,269
3,850,263
93,022
(154,813)
1,076,446
4,864,918
-
-
-
-
-
5,473,184
1,165,857
(457,634)
1,424,781
7,606,188
At 31 December 2014
Cost
Accumulated depreciation
Net carrying amount
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
Year ended 31 December 2015
At 1 January 2015, net of accumulated depreciation
Additions
Disposals
Depreciation for the period
Exchange differences
At 31 December 2015, net of accumulated depreciation
1,601,002
870,279
(881,226)
(402,084)
130,998
1,318,969
139,999
-
(1,346)
(33,587)
8,026
113,092
-
-
-
-
-
-
1,000,269
-
-
-
72,043
1,072,312
4,864,918
394,995
-
(267,164)
349,073
5,341,822
-
-
-
-
-
-
-
7,606,188
7,606,188
1,265,274
(882,572)
(702,835)
560,140
7,846,195
At 31 December 2015
Cost
Accumulated depreciation
Net carrying amount
2,697,863
(1,378,894)
150,078
(36,986)
82,886
(82,886)
1,072,312
-
6,105,388
(763,566)
278,041
(278,041)
10,386,568
(2,540,373)
1,318,969
113,092
-
1,072,312
5,341,822
-
7,846,195
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 $6.4 million have been pledged to secure borrowings of the Group (see Note 14). 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.
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 )
10. INTANGIBLES
Year ended 31 December 2014
Balance at 1 January 2014
Additions
Additions from internal
development
Acquisitions through business
combinations
Amortisation for the period
Impairment for the period
Exchange differences
Balance at 31 December 2014
At 31 December 2014
Cost
Accumulated amortisation and
impairment
Licences,
trademarks
and
production
rights
Note
Goodwill
Patents
Development
costs
Total
1,414,951
-
2,178,032
1,707
-
-
-
-
-
2,792,156
-
-
-
4,207,107
-
-
-
(30,333)
2,149,406
1,310,760
-
-
-
1,310,760
-
-
3,592,983
1,707
869,508
869,508
-
-
-
-
869,508
4,102,916
-
-
(30,333)
8,536,781
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
Year ended 31 December 2015
Balance at 1 January 2015
Additions
Additions from internal
development
Disposals
Amortisation for the period
Exchange differences
Balance at 31 December 2015
At 31 December 2015
Cost
Accumulated amortisation and
impairment
Net carrying amount
4,207,107
-
2,149,406
13,146
1,310,760
-
869,508
-
8,536,781
13,146
-
(2,792,156)
-
-
1,414,951
-
-
(33,963)
84,970
2,213,559
-
(1,310,760)
-
-
-
1,537,226
(204,548)
(29,155)
-
2,173,031
1,537,226
(4,307,464)
(63,118)
84,970
5,801,541
1,414,951
2,247,522
-
(33,963)
1,414,951
2,213,559
-
-
-
2,578,377
6,240,850
(405,346)
(439,309)
2,173,031
5,801,541
The goodwill and patents on the acquisition of Haiyong in 2014 was impaired in FY2015 as the Board has taken the
strategic decision to exit the Haiyong business as the Haiyong business did not deliver the returns expected and the
sale of Haiyong business allows the Consolidated Entity to focus on its core business. This charge has been
included in the loss from discontinued operations in the profit and loss statement.
The goodwill on acquiring E-Max in January 2010 and licenses, trademarks, patents and production rights are
allocated to one cash generating unit being manufacture of two-wheel vehicle 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 have 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 discount rate applied to cash flow projections is 15% (31 December 2014: 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 such that no impairment of the goodwill
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 )
on acquisition of E-Max 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 to materially exceed its recoverable amount.
11. INVESTMENTS IN ASSOCIATES
Investments in associates
31 December 2015
$
31 December 2014
$
-
-
393,244
393,244
In the prior year, the Consolidated Entity held a 20% interest in Jiangsu Kaiyang New Energy Vehicle Co, Ltd
(“Jiangsu Kaiyang”) and accounted for the investment as an associate. In October 2015, the Consolidated Entity
disposed of a 5% interest in Jiangsu Kaiyang to a third party for proceeds of $106,494 (received in October 2015).
The Consolidated Entity has accounted for the remaining 15% interest as an available-for-sale investment whose
fair value at the date of disposal was $333,333, which was determined using recent transaction of the disposal
(Level 2 Fair Value Hierarchy). This transaction has resulted in the recognition of a gain in profit or loss,
calculated as follows:
Proceeds of disposal
Plus: Fair value of investment retained (15%)
Less: Carrying amount of investment on the date of loss of significant influence
Gain recognised
106,494
333,333
296,384
143,443
The gain recognised in the current year comprises a realised profit of $32,397 (being the proceeds of $106,494
less $74,096 carrying amount of the interest disposed of) and an unrealised profit of $111,046 (being the fair
value less the carrying amount of the 15% interest retained).
12. OTHER FINANCIAL ASSETS
Available-for-sale investments carried at fair value
Unquoted shares (i)
Loans carried at amortised cost
Loans to related parties (ii)
Total other financial assets
316,176
316,176
1,053,918
1,053,918
1,370,094
-
-
-
-
-
(i) The Consolidated Entity holds 15% of the ordinary share capital of Jiangsu Kaiyang, a company focused on
designing, manufacturing and distributing three-wheel and four-wheel electric vehicles. The Directors of the
Company do not consider that the Consolidated Entity is able to exercise significant influence over Jiangsu
Kaiyang as the other 85% of the ordinary share capital is held by other shareholders, who also manage the
day-to-day operations of that company.
(ii) During the year ended 31 December 2015, the Consolidated Entity provided loans of RMB5 million
($1,053,918) to Jiangsu Kaiyang. The loans to Jiangsu Kaiyang are interest free and repayable in two years.
13. TRADE AND OTHER PAYABLES
Current – unsecured
Trade creditors
Other creditors and accruals
1,179,346
1,054,296
2,233,642
2,372,842
1,485,584
3,858,426
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 )
14. 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
Bank operating facility
2,107,837
4,718,929
2,107,837
4,718,929
6,414,134
6,414,134
5,865,187
5,865,187
7,166,646
7,166,646
2,107,837
2,107,837
5,058,809
5,058,809
6,685,149
6,685,149
4,718,929
4,718,929
1,966,220
1,966,220
The Company secured a bank operating facility of RMB34 million (approximately $7.2 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 5.95% per annum, payable quarterly.
15. OTHER LIABILITIES
Other (Contingent Consideration)
31 December 2015
$
31 December 2014
$
-
-
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. As the Consolidated Entity has
taken the strategic decision to exit the business of Nanjing Haiyong, this contingent consideration will not be
required to be issued.
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 )
16. ISSUED CAPITAL AND RESERVES
Issued capital
31 December 2015
$
31 December 2014
$
154,562,518 (31 December 2014: 1,321,527,860 (pre-consolidation))
fully paid ordinary shares
70,276,494
61,293,967
The following movements in issued capital occurred during the period:
Balance at beginning of period
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
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
Issue of Shares at 3.5 cents each
Issue of Shares at 4.6 cents each
Issue of Shares at 3.0 cents each
Issue of Shares at nil consideration
Issue of Shares at 3.0 cents each
10 for 1 share consolidation
Issue of Shares at 30 cents each
Issue of Shares at 45 cents each
Issue of Shares at nil consideration
Issue of Shares at 35 cents each
Issue of Shares at 36 cents each
Issue of Shares at 39.5 cents each
Issue of Shares at 31 cents each
Issue of Shares at 31 cents each
Issue of Shares at nil consideration
Transfer options reserve to issued
capital
Share issue costs
Number of
Shares
31 Dec 2015
1,321,527,860
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
86,114
1,089,555
1,000,000
2,000,000
2,550,000
(1,195,427,859)
35,000
19,780,000
266,668
38,095
42,633
42,194
32,258
1,300,000
200,000
-
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
1,000,000
12,750
813,750
45,894,329
12,900,000
662,735
22,817,621
2,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
m)
n)
o)
p)
q)
r)
s)
t)
u)
v)
w)
x)
y)
z)
aa)
ab)
ac)
ad)
ae)
af)
ag)
ah)
Year
ended
31 Dec 2015
$
Year
ended
3 Dec 2014
$
61,293,967
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,014
50,120
30,000
-
76,500
-
10,500
8,901,000
-
13,333
15,438
16,667
10,000
403,000
-
77,933
57,725,955
-
1,616
5,300
20,000
24,390
81,250
43,750
63,000
100
-
30,000
30,000
510
32,550
1,835,773
490,200
26,510
912,705
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(624,978)
(29,642)
Balance at end of period
154,562,518
1,321,527,860
70,276,494
61,293,967
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.
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 )
16. ISSUED CAPITAL AND RESERVES (cont’d)
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
m)
n)
o)
p)
q)
r)
s)
t)
u)
v)
w)
x)
y)
21 January 2014 - Issue 2,000,000 shares at nil consideration on vesting of 2,000,000 Performance Rights.
13 February 2014 - Issue 40,400 shares at $0.04 each on exercise of listed options.
29 April 2014 - Issue 132,500 shares at $0.04 each on exercise of listed options.
29 April 2014 - Issue 800,000 shares at $0.025 each on exercise of ESOP options.
29 April 2014 - Issue 487,805 shares at $0.05 each for marketing and public relations expenses.
9 May 2014 - Issue 3,250,000 shares at $0.025 each on exercise of ESOP options.
23 May 2014 - Issue 1,750,000 shares at $0.025 each on exercise of ESOP options.
23 May 2014 - Issue 2,100,000 shares at $0.03 each on exercise of ESOP options.
23 May 2014 - Issue 2,500 shares at $0.04 each on exercise of listed options.
23 May 2014 - Issue 2,666,666 shares at nil consideration on vesting of 2,666,666 Performance Rights.
2 June 2014 - Issue 1,000,000 shares at $0.03 each on exercise of ESOP options.
25 September 2014 - Issue 1,000,000 shares at $0.03 each on exercise of ESOP options.
15 October 2014 - Issue 12,750 shares at $0.04 each on exercise of listed options.
7 November 2014 - Issue 813,750 shares at $0.04 each on exercise of listed options.
7 November 2014 - Issue 45,894,329 shares at deemed issue price of $0.04 as consideration for Nanjing
Haiyong Electronic Technology.
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.
17 December 2014 - Issue 662,735 shares at $0.04 each on exercise of listed options.
31 December 2014 – Issue 22,817,621 shares at $0.04 each on exercise of listed options.
31 December 2014 – Issue 2,000,000 shares at nil consideration on vesting of 2,000,000 Performance Rights.
26 February 2015 – Issue 86,114 shares at $0.035 for corporate advisory services provided to the Company.
15 April 2015 – Issue 1,089,555 shares at $0.046 for investor relation services provided to the Company.
15 April 2015 - Issue 1,000,000 shares at $0.03 each on exercise of ESOP options.
15 April 2015 - Issue 2,000,000 shares at nil consideration on vesting of 2,000,000 Performance Rights.
11 May 2015 - Issue 2,550,000 shares at $0.03 each on exercise of ESOP options.
4 June 2015 - The Company completed the consolidation of its share capital through the conversion of
every ten shares in the capital of the Company into one share (“Share Consolidation”)
17 June 2015 – Issue 35,000 shares at $0.30 each on exercise of ESOP options.
17 June 2015 – Issue 19,780,000 shares at $0.45 each as a result of completion of $8.9 million capital raising.
17 June 2015 – Issue 266,668 shares at nil consideration on vesting of 266,668 Performance Rights.
17 June 2015 – Issue 38,095 shares to a director in lieu of unpaid director fees.
z)
aa)
ab)
ac)
ad) 10 July 2015 – Issue 42,633 shares at $0.036 for corporate advisory services provided to the Company.
ae)
af)
ag)
2 October 2015 – Issue 42,194 shares to a director in lieu of unpaid director fees.
2 October 2015 – Issue 32,258 shares at $0.31 for investor relation services provided to the Company.
2 October 2015 – Issue 1,300,000 shares at a deemed price of $0.031 each to employees of the Company in
recognition of their efforts and contribution to the Company.
ah) 17 December 2015 – Issue 200,000 shares at nil consideration on vesting of 200,000 Performance Rights.
Options
The movements of options over unissued ordinary shares of the Company for the year ended 31 December 2015
were:
Expiry Date
Exercise
Price
Balance at
1 Jan 2015
Granted/
Issued
Exercised/
Forfeited
Consolidated
Held at
31 Dec 2015
ESOP options
Class E options 23 May 2018
Class F options 23 May 2018
Class G options 21 May 2019
Class H options 21 May 2019
21 May 2019
Class I options
Class J options
31 December 2017
Total
23 November 2015 30 cents
40 cents
80 cents
50 cents
75 cents
$1.00
75 cents
7,400,000
5,000,000
5,000,000
1,000,000
1,000,000
2,000,000
N/A
21,400,000
50
-
-
-
-
-
-
719,981
719,981
(3,935,000)
-
-
-
-
-
-
(3,935,000)
(3,465,000)
(4,500,000)
(4,500,000)
(900,000)
(900,000)
(1,800,000)
-
(16,065,000)
-
500,000
500,000
100,000
100,000
200,000
719,981
2,119,981
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. ISSUED CAPITAL AND RESERVES (cont’d)
The Company completed the consolidation of its share capital through the conversion of every ten shares in the
capital of the Company into one share (“Share Consolidation”) on 4 June 2015.
On 2 October 2015, 719,981 unlisted options (exercisable at $0.75 and expiring on 31 December 2017) were issued to
brokers as part consideration for capital raising services provided to the Company.
The fair value of the options granted to brokers is deemed to represent the value of the services provided to the
Company in accordance with their terms of engagement.
The weighted average fair value of options granted to brokers during the year was $114,067. 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:
$0.75
25 months
128%
1.87%
Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is
indicative of future movements.
On 3 November 2015, 350,000 ESOP options remained unexercised on their expiry date and lapsed pursuant to the
terms and conditions of the options.
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 2015 were:
Performance
Rights series
Balance at
1 Jan 2015
Granted
Vested
Consolidated
Held at
31 Dec 2015
Class C
Class E
Class F
Class H
Class I
Class J
Class K
Total
2,000,000
2,000,000
2,000,000
2,666,666
2,666,668
10,000,000
10,000,000
31,333,334
-
-
-
-
-
-
-
-
(200,000)
(2,000,000)
-
(266,668)
-
-
-
(2,466,668)
(1,800,000)
-
(1,800,000)
(2,399,998)
(2,400,000)
(9,000,000)
(9,000,000)
(26,399,998)
-
-
200,000
-
266,668
1,000,000
1,000,000
2,466,668
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
100,000
100,000
Class
Performance Conditions
Time of vesting
C
E
- The VWAP exceeds 30 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 40 cents at any
time on or before 31 December 2014;
and
the Participating Director remains a
Director at the time of vesting.
-
The date 24 months
after
the
the date
VWAP first exceeds 30
cents
The date 12 months
after
the
the date
VWAP first exceeds 40
cents
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 )
16. ISSUED CAPITAL AND RESERVES (cont’d)
100,000
133,334
133,334
250,000
250,000
F
H
I
J
K
- The VWAP exceeds 40 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 50 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 50 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 65 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 85 cents at any
time on or before 31 December 2017;
and
the Participating Director remains a
Director at the time of vesting.
-
The date 24 months
after
the
the date
VWAP first exceeds 40
cents
The date 12 months
after
the
the date
VWAP first exceeds 50
cents
The date 24 months
after
the
the date
VWAP first exceeds 50
cents
The date the VWAP
first exceeds 65 cents
The date the VWAP
first exceeds 85 cents
The Company completed the consolidation of its share capital through the conversion of every ten shares in the
capital of the Company into one share (“Share Consolidation”) on 4 June 2015. The terms of the performance rights
above have been changed from last year due to the Share Consolidation.
Reserves
Reserves at the beginning of the period
Movements in share-based payment reserve
Transfer expired options reserve to accumulated losses
Transfer exercised options and vested performance rights
reserves to issued capital
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 2015
$
31 December 2014
$
(140,519)
114,068
(26,951)
(77,933)
1,004,201
872,866
606,373
266,493
872,866
(2,654,011)
489,719
(130,577)
-
2,154,350
(140,519)
597,189
(737,708)
(140,519)
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 recognise exchange differences arising from the translation of the
financial statements of foreign operations.
The investment revaluation reserve is used to recognise the cumulative gains and losses arising on the revaluation
of financial assets that have been recognised in other comprehensive income, net of amounts reclassified to profit or
loss when those assets have been disposed of or are determined to be impaired.
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 )
17. 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 (debt/total capital). During the year ended 31
December 2015, the Consolidated Entity’s strategy is to utilise lowest cost of the capital from the capital markets
and continuously negotiating lower interest cost with provider of its operating facility to achieve its expansion
program. The gearing ratios at 31 December 2015 and 31 December 2014 were as follows:
Total borrowings
Total equity
Total capital
Gearing ratio
31 December 2015
$
31 December 2014
$
2,107,837
34,097,020
36,204,857
4,718,929
24,827,470
29,546,399
5.8%
16.1%
The gearing ratio of the Company has decreased from 16.1% to 5.8% during the year ended 31 December 2015.
18. 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
19. SEGMENT REPORTING
Year ended
31 December 2015
$
Year ended
31 December 2014
$
(36,325,978)
(753,313)
26,951
(37,052,340)
(37,340,542)
883,987
130,577
(36,325,978)
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.
Reported segments were based on the geographical segments of the Consolidated Entity, being Australia and
China. The management accounts and forecasts submitted to the chief operating decision maker for the purpose of
resource allocation and assessment of segment performance are split into these components.
The electric two-wheel vehicle segments are managed on a worldwide basis, but operate in two principal
geographical areas: Australia and China. In China, manufacturing facilities are operated in Nanjing. The following
table presents revenue, profit or loss, assets and liabilities in relation to geographical segments for the year ended
31 December 2015 and 31 December 2014:
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 )
19. SEGMENT REPORTING (cont’d)
Continuing Operations
Australia
$A
China
$A
Spain
$A
Intersegment
elimination $A
Consolidated
$A
Year
ended
31/12/2015
Year
ended
31/12/2014
Year
ended
31/12/2015
Year
ended
31/12/2014
Year
ended
31/12/2015
Year
ended
31/12/2014
Year
ended
31/12/2015
Year
ended
31/12/2014
Year
ended
31/12/2015
Year
ended
31/12/2014
Revenue
Segment revenue
Result
Segment profit/(loss)
Assets
Segment assets
Liabilities
Segment liabilities
Depreciation/impairment of fixed
assets
27,483
-
47,585,530
42,940,835
(1,948,919)
(2,190,599)
4,956,657
3,085,752
2,954,009
1,166,289
57,411,878
56,004,744
(207,924)
(1,977,730)
(26,060,943)
(30,365,833)
(4,867)
(4,442)
(697,968)
(453,192)
Amortisation of intangible assets
-
-
(63,118)
-
-
-
-
-
-
-
-
(108,865)
-
-
-
47,613,013
42,940,835
-
3,007,738
786,288
-
(21,685,086) (21,930,435)
38,680,801
35,240,598
-
-
-
21,685,086
21,930,435
(4,583,781)
(10,413,128)
-
-
-
-
(702,835)
(457,634)
(63,118)
-
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 $47,613,013 (2014: $42,940,835) are revenues of approximately $24,606,826 (2014: $21,920,083) 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 2015 and 2014.
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 )
20. 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 2015
31 December 2014
Financial assets
Cash and cash equivalents
Trade and other receivables
Investments in associates
Other financial assets
Carrying
amount
$
6,657,529
9,413,278
-
1,370,094
Fair
Value
$
6,657,529
9,413,278
-
1,370,094
Total financial assets
17,440,901
17,440,901
Financial liabilities
Trade and other payables
Borrowings
Current tax liabilities
Other liabilities
Total financial liabilities
2,233,642
2,107,837
242,302
-
4,583,781
2,233,642
2,107,837
242,302
-
4,583,781
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
10,413,128
10,413,128
Net financial assets / (liabilities)
12,857,120
12,857,120
(1,078,871)
(1,078,871)
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.
55
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. 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 2.45%, depending on account balances.
The following annual interest rates apply to the Consolidated Entity’s credit facilities:
Bank operating facility
5.95% 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 2015
$
31 December 2014
$
6,657,529
3,850,142
(2,107,837)
4,549,692
(4,718,929)
(868,787)
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 2015
$
31 December 2014
$
+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
45,497
45,497
(45,497)
(45,497)
(8,688)
(8,688)
8,688
8,688
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.
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 )
20. 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:
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
31 December 2015
$AUD
31 December 2014
$AUD
-
1,823,031
-
2,304,103
4,127,134
-
283,975
10,322,112
10,606,087
-
(554,023)
(16,143)
(1,713,997)
(2,284,163)
(2,107,837)
10,341,221
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)
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:
31 December 2015
$
31 December 2014
$
AUD/USD, AUD/EUR, AUD/GBP and AUD/RMB +20%
Equity increase/(decrease)
(1,723,537)
57,307
AUD/USD, AUD/EUR, AUD/GBP and AUD/RMB -20%
Equity increase/(decrease)
2,068,244
(68,768)
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.
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 )
20. 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
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.
preparing forward-looking cash flow analyses in relation to its operational, investing and financing activities;
monitoring undrawn credit facilities;
obtaining funding from a variety of sources;
maintaining a reputable credit profile; and
managing credit risk related to financial assets.
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
31/12/2015 31/12/2014 31/12/2015 31/12/2014 31/12/2015 31/12/2014 31/12/2015 31/12/2014
Consolidated Group
$000
$000
$000
$000
$000
$000
$000
$000
Financial liabilities due for
payment
Bank operating facility and
loans
2,108
4,719
Trade and other payables
2,234
3,858
Current tax liabilities
Other liabilities
Total contractual outflows
Total expected outflows
242
-
4,584
4,584
-
1,836
10,413
10,413
Financial assets – cash flows
realisable
Cash and cash equivalents
Trade and other receivables
6,658
9,413
Total anticipated inflows
16,071
3,850
5,091
8,941
Net (outflow)/ inflow on
financial instruments
11,487
(1,472)
Financial assets pledged as collateral
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,108
4,719
2,234
3,858
242
-
4,584
4,584
-
1,836
10,413
10,413
6,656
9,413
16,071
3,850
5,091
8,941
11,487
(1,472)
There are no financial assets that have been pledged as security for debt and their realisation into cash is not
restricted.
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 )
21. 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
Other commitments
Other commitment 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 2015
$
31 December 2014
$
-
-
-
1,438,430
1,000,000
2,438,430
24,009
-
24,009
-
-
-
Other commitments
The Company
As announced on 23 December 2015, Vmoto entered into a joint venture agreement to secure the business of its long
standing OEM customer, PowerEagle (“JV”), in which Vmoto holds a 51% interest and to acquire 100% of
PowerEagle trademark and brand. The $2 million considerations to acquire 100% of PowerEagle trademark and
brand are payable by fully paid ordinary shares of the Company and the $438,430 consideration to commence the JV
are payable by cash.
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.
22. EARNINGS PER SHARE
Basic earnings per share
From continuing operations
From discontinued operations
Total earnings/(loss) per share
Year ended
31 Dec 2015
Cents per share
Year ended
31 Dec 2014
Cents per share
2.09
(2.61)
(0.52)
0.63
0.08
0.71
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.
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are
as follows:
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 )
Year ended
31 Dec 2015
$
Year ended
31 Dec 2014
$
Profit/(Loss) for the year attributable to owners of the Consolidated
Entity
Earnings used in the calculation of basic earnings per share
(Profit)/Loss for the year from discontinued operations used in the
calculation of basic earnings/loss per share from discontinued
operations
Earnings used in the calculation of basic earnings/loss per share
from continuing operations
(753,313)
(753,313)
3,761,051
3,007,738
883,987
883,987
(97,699)
786,288
Weighted average number of ordinary shares for the purposes of
basic earnings/loss per share
143,902,299
123,996,789
The Company completed the consolidation of its share capital through the conversion of every ten shares in the
capital of the Company into one share (“Share Consolidation”) on 4 June 2015. The weighted average number of
ordinary shares for the purposes of basic earnings per share are disclosed on a post Share Consolidation basis.
23. CONTROLLED ENTITIES
Parent entity
Vmoto Limited
Controlled entities
Country of
Incorporation
Entity interest
31 December
2015
Entity interest
31 December
2014
Australia
Vmoto Australia Pty Ltd
Vmoto International Limited
Vmoto E-Max International Limited1
Nanjing Vmoto Co, Ltd
Nanjing Vmoto Manufacturing Co, Ltd
Nanjing Vmoto E-Max Electric Vehicles Development Co, Ltd
Nanjing Haiyong Electric Driving System Technology Co, Ltd2
Australia
Hong Kong
Hong Kong
China
China
China
China
100%
100%
-
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
1. De-registered on 22 May 2015.
2. Disposed on 12 September 2015.
24. KEY MANAGEMENT PERSONNEL DISCLOSURES
Details of Key Management Personnel
(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
Ms Shannon Coates
Director (Non-Executive) – appointed 23 May 2014
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 )
24. KEY MANAGEMENT PERSONNEL DISCLOSURES (cont’d)
Details of Key Management Personnel
(ii) Executives
Mr Patrick Davin
President of Strategic Business Development – appointed 1 July 2012, resigned
31 July 2015
Mr Shuguang Han
General Manager - appointed 1 May 2014
Mr Zhengjie Wu
Vice General Manager - appointed 5 October 2009
Mr Kuo Lung Tseng
Vice General Manager - appointed 1 October 2014, resigned 28 February 2015
Mr Fei Wu
Sales Manager - appointed 1 May 2014
The totals of remuneration paid to Key Management Personnel of the Company and the Consolidated Entity during
the period ended 31 December 2015 are as follows:
Year
ended
31 Dec 2015
$
Year
ended
31 Dec 2014
$
Short-term employee benefits
Share-based payments
Total KMP compensation
761,207
127,100
888,307
655,451
625,119
1,280,570
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 2015.
25. 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)
61
Haiyong
$1,835,773
$1,835,773
$196,622
$3,868,168
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. BUSINESS COMBINATIONS (cont’d)
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 by shares (tranche 2) calculated by 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. 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 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 has a debt of $196,622 payable to the Group. As part of the
acquisition, this debt has been forgiven.
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 ended 31 December 2014 is $97,699 attributable to the additional business
generated by Vmoto Haiyong. Revenue for year ended 31 December 2014 includes $2.2 million in respect of Vmoto
Haiyong.
62
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 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
26. DISCONTINUED OPERATIONS
On 12 September 2015, the Company entered into a sale agreement to dispose of Nanjing Haiyong Electric Driving
System Technology Co, Ltd, which carried out all of the Group’s electric vehicle controller operations. The proceeds
of sale was less than the carrying amount of the related net assets and accordingly, impairment losses were
recognised on the reclassification of these operations as discontinued operations. The disposal of the electric vehicle
controller operations is in line with the Company’s strict investment return criteria. While the strategic rationale for
the original acquisition was sound, the electric vehicle controller operations did not deliver the return expected. The
disposal was completed on 29 September 2015, on which date control of the electric vehicle controller operations
passed to acquirer. Details of assets and liabilities disposed of, and the calculation of the profit or loss on disposal, are
disclosed in note 25.
The combined results of the discontinued operation (that is electric vehicle controller operations) included in the
profit for the year are set out below. The comparative profit and cash flows from discontinued operations have been
re-presented to include those operations classified as discontinued in the current year.
Loss for the year from discontinued operations
Sales revenue
Cost of goods sold
Gross profit
Expenses
Profit/(Loss) before tax
Attributable income tax expense
Profit/(Loss) after tax
Loss on disposal of operation (see note 27)
Reversal of contingent consideration in relation to acquisition of
operation
Loss for the year from discontinued operations (attributable to
owners of the Company)
Cash flows from discontinued operations
Net cash inflows/(outflows) from operating activities
Net cash inflows/(outflows) from investing activities
Net cash inflows/(outflows) from financing activities
Net cash inflows/(outflows)
27. DISPOSAL OF SUBSIDIARY
Year ended
31 Dec 2015
$
Year ended
31 Dec 2014
$
3,512,605
(2,776,432)
736,173
(821,443)
(85,270)
-
(85,270)
(5,511,554)
1,835,773
(3,761,051)
2,157,218
(1,866,631)
290,587
(160,322)
130,265
(32,566)
97,699
-
-
97,699
4,797
(59,624)
-
(54,827)
(1,037,154)
(775,151)
1,867,909
55,604
On 29 September 2015, the Company disposed of Nanjing Haiyong Electric Driving System Technology Co, Ltd,
which carried out all of the Group’s electric vehicle controller operations.
Consideration received
Consideration received in cash and cash equivalents
Total consideration received
Year ended
31 Dec 2015
$
425,978
425,978
63
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 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
Analysis of assets and liabilities over which control was lost:
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Non-current assets
Property, plant and equipment
Development costs
Goodwill
Trademark and patents
Current liabilities
Trade and other payables
Deferred tax liabilities
Net assets disposed of
Loss on disposal of subsidiary
Consideration received
Net assets disposed of
Loss on disposal
785
1,687,215
459,998
13,746
818,976
480,056
2,792,156
1,310,760
(1,298,470)
(327,690)
5,937,532
425,978
(5,937,532)
(5,511,554)
The loss on disposal is included in the loss for the year from discontinued operations (see note 26).
Net cash inflow on disposal of subsidiary
Consideration received in cash and cash equivalents
Less: Cash and cash equivalent balances disposed of
425,978
(785)
425,193
28. RECONCILIATION OF CASH FLOWS USED IN OPERATING
ACTIVITIES
Cash flows from operating activities
Profit/(Loss) for the year
Adjustments for:
- Depreciation and amortisation
- Impairments and discontinued operations
- 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
64
Year ended
31 December 2015
$
Year ended
31 December 2014
$
(753,313)
883,987
765,953
3,577,493
593,503
299,152
(4,322,407)
1,397,131
474,925
(2,016,554)
15,883
457,634
2,034,165
899,447
(626,842)
(1,451,113)
(764,380)
(1,069,353)
1,131,927
1,495,472
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. NON-DIRECTOR RELATED PARTIES
Non-director related parties are the Company’s controlled entities. Details of the Company’s interest in controlled
entities are set out in Note 23. 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
30. SUBSEQUENT EVENTS
Vesting of Performance Rights
Company
Year ended
31 Dec 2015
$
Year ended
31 Dec 2014
$
26,601,046
(26,601,046)
21,084,729
(21,084,729)
-
-
On 5 February 2016, the Company issued 100,000 fully paid ordinary shares to Mr Yiting Chen and 100,000 fully paid
ordinary shares to Mr Oliver Cairns as a result of vesting of Class F incentive performance rights as approved by
shareholders on 31 July 2012.
Issue Tranche 1 Shares to Acquire PowerEagle Trademark
On 5 February 2016, the Company issued 3,333,333 fully paid ordinary shares at an issue price of $0.30 per share to
PowerEagle as Tranche 1 consideration to acquire 100% of PowerEagle trademark and brand as announced on 23
December 2015.
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.
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 )
31. 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 2015
31 Dec 2014
$
$
2,628,201
14,503,848
17,132,049
143,322
-
143,322
1,088,371
10,398,034
11,486,405
1,365,460
-
1,365,460
16,988,727
10,120,945
70,276,494
(53,894,138)
61,293,967
(51,770,211)
606,373
16,988,727
597,189
10,120,945
Year ended
31 Dec 2015
$
2,123,927
-
2,123,927
Year ended
31 Dec 2014
$
2,190,599
-
2,190,599
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 2015.
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.
32. 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. Refer Note 11, for details of fair value measurement on investments.
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
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 23 to 66, 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 2015
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 2015.
Signed in accordance with a resolution of the Directors:
Yiting (Charles) Chen
Managing Director
Dated at Nanjing, China this 31st day of March 2016.
67
To The Board of Directors
Auditor’s Independence Declaration under Section 307C of the
Corporations Act 2001
As lead audit director for the audit of the financial statements of Vmoto Limited for the
financial year ended 31 December 2015, 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 2016
Independent Auditor's Report
To the Members of Vmoto Limited
We have audited the accompanying financial report of Vmoto Limited (“the Company”) and
Controlled Entities (“the Consolidated Entity”), which comprises the statement of financial
position as at 31 December 2015, and the statement of profit or loss and other
comprehensive income, statement of changes in equity and 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.
Directors Responsibility for the Financial Report
The directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view 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 gives a true and fair view
and 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.
Auditor’s Responsibility
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 of the financial report that
gives a true and fair view 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.
Independent Auditor’s Report
To the Members of Vmoto Limited (Continued)
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Opinion
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 2015 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.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 31 December
2015. 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.
Opinion
In our opinion, the Remuneration Report of Vmoto Limited for the year ended 31 December 2015, complies with
section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
MARK DELAURENTIS CA
Director
Dated at Perth this 31st day of March 2016
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 14 March 2016:
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 Yiting (Charles) Chen
Date Notice provided to the Company
20 August 2012
Number of Shares
6,049,372
On-Market Buy Back
There is no current on-market buy back.
Distribution Schedules
Distribution schedules for each class of security as at 14 March 2016 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
-
399
1,796
796
1,339
247,211
5,127,157
6,600,568
43,532,922
181 102,587,993
0.16
3.24
4.17
27.54
64.89
4,511 158,095,851 100.00
Class E unlisted options exercisable at $0.40 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
1
-
-
-
-
-
-
-
-
500,000 100.00
500,000 100.00
¹ Newcove International Inc holds 500,000 options comprising 100.0% of this class.
71
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 $0.80 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
1
-
-
-
-
-
-
-
-
500,000 100.00
500,000 100.00
¹ Newcove International Inc holds 500,000 options comprising 100.0% of this class.
Class G unlisted options exercisable at $0.50 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
-
-
-
-
-
-
-
-
100,000 100.00
100,000 100.00
¹ Silverlight Holdings Pty Ltd holds 100,000 options comprising 100.0% of this class.
Class H unlisted options exercisable at $0.75 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
-
-
-
-
-
-
-
-
100,000 100.00
100,000 100.00
¹ Silverlight Holdings Pty Ltd holds 100,000 options comprising 100.0% of this class.
Class I unlisted options exercisable at $1.00 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
-
-
-
-
-
-
-
-
200,000 100.00
200,000 100.00
¹ Silverlight Holdings Pty Ltd holds 200,000 options comprising 100.0% of this class.
72
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 J unlisted options exercisable at $0.75 each, expiring 31 December 2017
Range
1
1,001
5,001
10,001
100,001
Total
1,000
-
5,000
-
-
10,000
- 100,000
Over
-
Holders Units
%
-
-
-
2
11
3
-
-
-
88,888
631,093
-
-
-
12.35
87.65
719,981 100.00
¹ Pershing Australia Nominees Pty Ltd holds 613,093 options comprising 87.65% of this
class.
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
-
-
-
-
-
-
-
-
266,668 100.00
266,668 100.00
¹ 133,334 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
4
-
-
-
-
-
-
-
-
1.000,000 100.00
1,000,000 100.00
¹ 250,000 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
4
-
-
-
-
-
-
-
-
1,000,000 100.00
1,000,000 100.00
¹ 250,000 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.
73
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 1,755 as at 14 March 2016):
Holders
Units
796
807,307
Top Holders
The 20 largest registered holders of quoted securities as at 14 March 2016 were:
Fully paid ordinary shares
Name
PERSHING AUSTRALIA NOMINEES PTY LTD
UBS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
BRISPOT NOMINEES PTY LTD
SANDHURST TRUSTEES LTD
HAISHENG ZHANG
BNP PARIBAS NOMS PTY LTD
XIAONA ZHAO
MR BRENDAN DAVID GORE
1
2
3
4
5
6
7
8
9
10 MR THOMAS JOSEPH FALVEY
11
12
13
14
15
16
17 MR YAO TIEMING
18
SILVERLIGHT HOLDINGS PTY LTD
PALIR PTY LTD
CORONET BAY PTY LTD
BEAUFORT NOMINEES LIMITED
ROY NOMINEES LIMITED <664943>
VANFULL INVESTMENTS LIMITED
YANG PTY LTD
MR ANDREW STUART CARNEGIE HARRISON & MRS LINDEN
MARGARET HARRISON
MR ANTHONY FRANCIS DOYLE & MS SHERYL MAREE UPTON
19
20
No. Shares %
6,049,372
5,677,030
5,667,234
4,219,084
4,053,521
3,957,438
3,759,035
3,433,333
3,245,000
2,437,540
2,303,031
2,200,000
1,670,000
1,597,000
1,532,072
1,500,000
1,492,000
1,275,500
1,275,001
5.72
3.59
3.58
2.67
2.56
2.50
2.38
2.17
2.05
1.54
1.46
1.39
1.06
1.01
0.97
0.95
0.94
0.81
0.81
1,178,000
61,518,191
0.75
38.91
Corporate Governance
The Company’s Corporate Governance Statement for the 2015 financial year can be accessed at:
http://www.vmoto.com/investors/governance.aspx?ID=20
74