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A N N U A L R E P O R T
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 8
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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 Phillip Campbell – Non-Executive Chairman
Mr Charles Chen – Managing Director
Mr Ivan Teo – Finance 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
Squire Patton Boggs
Level 21, 300 Murray Street
Perth, Western Australia 6000
Australia
Austin Haworth & Lexon Legal
Level 12, 87-89 Liverpool Street
Sydney, New South Wales 2000
Australia
Accuro Legal
Suite 2602, Level 26, 56 Pitt 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
Australian Securities Exchange
Level 40, Central Park
152-158 St Georges Terrace
Perth, Western Australia 6000
Australia
Website and Email
Website:
www.vmoto.com
www.vmotosoco.com
Email: info@vmoto.com
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
Chairman’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
7
14
21
61
62
63
68
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C H A I R M A N ’ S L E T T E R
Dear Shareholders,
This last year has seen the continued successful implementation of the plans we put in place following the “roots and
branch” review of the Company initiated not long after I joined the Board in May 2017.
The executive team has performed well this year in executing our strategy and building our international footprint in both
the B2B and B2C market segments. The symbiotic relationship with Super Soco, which commenced in FY2017, was
strengthened during FY2018, and it continues to provide a pathway into international B2C markets.
The support we received from Shareholders via the capital raising in early FY2018 was gratifying and went a long way
towards underwriting our sales and marketing successes this last year, especially in Europe. The result was a positive,
albeit modest, EBITDA result. More importantly, the Company achieved a positive operating cash flow result in FY2018.
The markets in which we are operating continue to mature in their acceptance of electric two-wheel vehicles in both the
B2B and B2C segments. Supported by continued changes in the regulatory regimes in many countries in favour of all types
of electric vehicles, we are increasingly confident of Vmoto’s future as a leading and profitable participant in the urban
mobility and last mile delivery revolutions.
With increase in sales volume for high value, high performance electric two-wheel vehicles to international markets
especially an increase of 310% sales volume to European markets and a positive operating cash flow result in FY2018, the
market has started to reawaken to the investment opportunity that Vmoto Limited presents. We will be responding to this
renewed interest in the year ahead via a proactive investor engagement program.
I would like to sincerely thank our hardworking management team and all Vmoto Shareholders for their continued
support and look forward to meeting you at the Annual General Meeting in May 2019.
Yours faithfully
Phillip Campbell
Non-Executive Chairman
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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) (“Vmoto” or “the Company”), 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 2018 (“FY2018”).
International Growth Strategy Delivers First Positive EBITDA
In FY2018, Vmoto’s strategy to sell high-value, high-margin two-wheel electric vehicles into international markets started
to deliver results, leaving the Company well positioned to become a worldwide leading two-wheel electric vehicle supplier
and electric vehicle solution provider.
Total revenue in FY2018 increased to $19.6 million, up 30% on FY2017 ($15.1 million), largely driven by growth in
international sales, with 10,081 units of electric vehicle products sold into international markets during the period. The
Company’s ability to capitalise on new European government policy and regulation supporting electric vehicle transport
and the growth of vehicle leasing and logistics projects helped deliver this strong result.
The Company achieved positive operating cash flow and delivered earnings before interest, tax, depreciation and
amortisation of $18k for FY2018.
Sales and Marketing Initiatives and New Product Launches Build International Brand Awareness
During the year, Vmoto invested significant resources into building international brand awareness for the E-Max and
Super Soco product ranges. Super Soco products are manufactured in Vmoto’s Nanjing manufacturing facility, with the
international sales and marketing rights held by Vmoto. The Company was a participant in key market exhibitions
internationally, and developed and launched a new product focused website www.vmotosoco.com and its Vmoto Soco e-
mobility across Facebook (www.facebook.com/vmotosoco), Instagram (www.instagram.com/vmotosoco) and Youtube
(www.youtube.com/c/vmotosoco) during the period.
reputable US-based news website dedicated
In November 2018, the new CUX electric scooter and the TC-Max electric motorcycle was launched at EICMA in Milan,
Italy. Targeting B2C markets, the TC-Max was ranked as one of the coolest electric motorcycles coming in 2019 by Electrek
– a
sustainable energy
(https://electrek.co/2018/12/28/electric-motorcycles-coming-2019/). Dario Marchetti, a legendary Ducati motorcycle
racer, and Andrea Pirillo, a YouTube star who has gained more than 55 million views for his YouTube channel, promoted
and endorsed the Vmoto and the Super Soco product lines of two-wheel electric vehicles at the exhibition.
transportation and
to electric
To accelerate sales and provide after sales service in European markets, the Company established a wholly owned
European subsidiary and a warehouse in the Netherlands, which became operational in FY2018. The Company is now
able to provide direct support to its European distributors and provide more confidence to potential customers with a
local presence and after sales service offering.
The Company signed an agreement with Mr Graziano Milone, a successful Italian entrepreneur and experienced electric
vehicle operator, to equally own and jointly manage Vmoto Soco Italy srl, which is focused on distributing electric two-
wheel vehicle products in Italy. This cooperation will enable Vmoto to further penetrate the Italian market, fast track our
distribution into Italy, including consumer markets, and bring more high performance electric two-wheel vehicle products
to Italy.
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O P E R A T I O N S R E V I E W ( c o n t ’ d )
Financial Overview
Over the 12-month period to 31 December 2018, the Consolidated Entity’s net assets increased 17% to $15.3 million (31
December 2017: $13 million). The Company’s Nanjing land and Stage 1 & Stage 2 buildings are currently carried at cost on
the balance sheet as at 31 December 2018 at $6.4 million. The Company’s Nanjing land and Stage 1 & Stage 2 buildings
was independently valued by an external party at $12.2 million in March 2017, representing a valuation increment of $5.8
million above cost. With the level of urban development surrounding the Company’s Nanjing manufacturing facility, the
Company expects the value of its Nanjing manufacturing facilities (land and buildings) will increase further in the coming
years.
As at 31 December 2018, the Company’s operating facility was drawn down by RMB6 million (approximately $1.2 million),
with a total RMB19 million (approximately $3.9 million) remaining undrawn. As at 31 December 2018 the Company had
cash of $4.2 million and remains adequately funded to continue to execute on its strategic growth plans.
EXISTING MARKETS
In FY2018, the Company sold 10,875 electric two-wheel vehicles across the Group, of which 10,081 units were sold to
international markets. Sales into the European market continued on an upward trend, with 4,280 units sold into European
markets, representing a 310% increase on FY2017.
The Company continued to build on its strong relationships with its B2B and B2C customers, with many placing orders
that will flow through in FY2019.
NEW MARKETS AND DISTRIBUTORS
During the year, the Company signed a number of exclusive international distribution agreements to warehouse,
distribute and market Vmoto and/or Super Soco electric vehicle products worldwide, further expanding Vmoto’s
distribution network:
Austria and Germany: An exclusive distribution agreement was signed with Hans Leeb GmbH (“Hans Leeb”) to
warehouse, distribute and market our B2C range of electric two-wheel vehicle products in Austria and Germany. Hans
Leeb is a large importer and distributor in Austria and Germany for two-wheel, three wheel and four wheel vehicles, and
the successful distributor for renowned brand TGB in Austria and Germany.
Australia and New Zealand: An exclusive distribution agreement was signed with Urban Moto Imports Pty Ltd (“UMI”)
to warehouse, distribute and market our B2C range of electric two-wheel vehicle products in Australia and New Zealand.
UMI is a specialist premium motorcycle importer and distributor in Australia and New Zealand for MV Agusta, Bimota,
Benelli, Gas Gas, Royal Enfield and Peugeot Motorcycles and have been very successful in the Australian and American
markets.
Belgium and Luxembourg: An exclusive distribution agreement was signed with SOCS Bvba (“SOCS”) for SOCS to
warehouse, distribute and market our B2C range of electric two-wheel vehicle products in Belgium and Luxembourg.
SOCS is an experienced importer and motorcycle company in Belgium that has extensive dealers’ network in Belgium and
other European countries.
Chile: Vmoto signed an exclusive distribution agreement with Importadora Y Comercializadora Rojabe Motors Tuning
Ltda (“Rojabe”) for Rojabe to warehouse, distribute and market the TS, TC and CUX electric vehicle products in Chile.
Rojabe is a professional importer in Chile and has its own laboratory and a team of experts in the electric vehicle industry.
Rojabe has achieved and obtained the highest number of approved electric vehicles models in Chile.
Croatia and Slovenia: Vmoto signed an exclusive distribution agreement with Electric Vehicles Trade d.o.o (“EVT”) for
EVT to warehouse, distribute and market the TS and TC electric motorcycle products in the Croatia and Slovenia.
Czech Republic: Vmoto signed an exclusive distribution agreement with Eco Gear s.r.o (“Eco Gear”) for Eco Gear to
warehouse, distribute and market our B2C electric motorcycle products in the Czech Republic.
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O P E R A T I O N S R E V I E W ( c o n t ’ d )
France: Vmoto signed an exclusive distribution agreement with Mujoo France (“Mujoo”) for Mujoo to warehouse,
distribute and market our B2C range of electric two-wheel vehicle products. Mujoo is one of France’s leading motorcycle
distributors and offers high-performance electric motorcycles.
France: Vmoto signed an exclusive distribution agreement with U’Mob France to warehouse, distribute and market the
Company’s B2B delivery electric scooters in France.
Mauritius: An exclusive distribution agreement was signed with Sun Industries Ltd (“Sun Industries”) for Sun Industries
to warehouse, distribute and market the TS, TC and CU-X electric two-wheel vehicle products in Mauritius.
Mexico: Vmoto signed an exclusive distribution agreement with Vpro Sapi de CV (“Vpro”) for Vpro to warehouse,
distribute and market the E-Max and Super Soco range of electric two-wheel vehicle products in Mexico. Vpro has a
comprehensive dealership network and after sales service network covering seven states in Mexico.
Poland: An exclusive distribution agreement was signed with Karbon 2 Sp. z.o.o (“Karbon 2”) for Karbon 2 to warehouse,
distribute and market our B2C range of electric two-wheel vehicle products in Poland. Karbon 2 is a large and successful
trade company that has 30 years of experience in Poland and significant interest to expand into the electric vehicle industry.
South Africa: An exclusive distribution agreement was signed with Electric Mobility Solutions (Pty) Ltd (“Electric
Mobility Solutions”) for Electric Mobility Solutions to warehouse, distribute and market our B2C range of electric two-
wheel vehicle products in South Africa. Electric Mobility Solutions is part of Interhub Group, which is operating in the
transportation industry and offers high quality products tailored to the transportation industry. Electric Mobility Solutions
has also expressed strong interest in the Company’s E-Max products for its transportation business.
Sweden, Finland and Norway: An exclusive distribution agreement was signed with ATV Sweden AB (“ATV Sweden”)
for ATV Sweden to warehouse, distribute and market our B2C range of electric two-wheel vehicle products in Sweden,
Finland and Norway. ATV Sweden is a full service company focused primarily in quadricycles, moped and motorcycles.
ATV Sweden is part of Silverstone Group which has an 11,000 square metre warehouse for both products and spare parts.
Taiwan: An exclusive distribution agreement was signed with Startrade Component Co, Ltd (“Startrade”) for Startrade to
warehouse, distribute and market our B2C range of electric two-wheel vehicle products in Taiwan. Startrade is an
innovative company focused on vehicle telematics system, smart urban transportation and automatic driving.
With the continuous boom in the vehicles sharing economy, and consumers and businesses embracing the concept of
shared fleets, the Company expects to benefit from growth in the sharing economy in the coming months and is already
in discussions with a number of existing and potential customers by supplying electric vehicle products in their sharing
operations.
CORPORATE
On 12 January 2018, the Company announced an equity capital raising of up to $2 million (before costs) comprising of a
placement and share purchase plan (SPP) to be used towards expansion of the Company’s European distribution network,
expansion of its European warehouse to accelerate sales into European markets, expansion of its international B2B leasing
business and to meet the costs of the SPP. The Company successfully raised $2.2 million through the Placement and the
SPP, which closed oversubscribed and raised $962,500, exceeding the original target of $750,000.
During the year, 45,010,880 shares were issued, comprising 40,227,362 shares for the placement and SPP, 3,400,000 shares
to employees and consultants of the Company in consideration for services provided and 1,383,518 shares to Directors Mr
Phillip Campbell and Mr Kaijian Chen in lieu of director fees, as approved by Shareholders.
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O P E R A T I O N S R E V I E W ( c o n t ’ d )
OUTLOOK
Vmoto continues to execute its strategy of selling high value, high performance electric two-wheel vehicles to the
international markets, targeting B2B delivery, sharing and rental customers and B2C customers. The Company is focused
on the B2C market via its international sales and marketing of Super Soco two wheel electric vehicles and the B2B market
via the E-Max electric delivery scooters.
With its wholly-owned European subsidiary and warehouse now established and an Italian company established and
Italian distribution partner secured, the Company is in a strong position to accelerate sales into European markets whilst
provide direct support and presence for its European distributors and customers.
Vmoto continues to receive significant interest and has a strong pipeline of sales leads directly driven by the increase in its
sales and marketing activities during the period. With a number of additional distributors signed up in 4Q18 and
increasing firm orders, Vmoto’s management remains confident that the Company will continue to increase international
sales and further consolidate its position as a leading electric two-wheel vehicle supplier and provider to the international
markets. The Company also sees great potential in the B2B businesses for its high performance electric two-wheel vehicle
products and is in discussions with a number of business groups to secure orders and to achieve closer cooperation.
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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 2018 to 31 December
2018.
Directors
The Directors of the Company at any time during or since the end of the financial year are set out below. Directors were
in office for the entire year unless otherwise stated:
Name
Experience and responsibilities
Phillip Campbell
Mr Campbell was appointed as Non-Executive Chairman on 31 May 2017.
Independent
Non-Executive Chairman
Charles Chen
Managing Director
Mr Campbell’s career spans 35 years and includes national and international postings
across a range of industries including resources, construction, manufacturing, food, and
engineering services. Phillip is currently Chairman of ASX listed Fleetwood Corporation
(ASX: FWD) and has previously been a director of mining services company Pearl-Street
Limited; energy and technical services business, HRL Limited; agricultural company,
Fodder King Limited; and Chairman of FMCG business, Farm Pride Foods Limited. He
is currently also a director and advisor to a number of unlisted public, private and not-
for-profit organisations across Australia
leading
manufacturer of modular accommodation for government and industry, Fleetwood
Corporation Limited.
including Chairman of
the
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 Co, Ltd, 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.
Mr Teo is a qualified Chartered Accountant and has over 17 years experience in
accounting, audit, corporate finance and international business serving private and
public companies in a diverse range of industries including automobile, manufacturing,
mining and retail.
Mr Teo holds a BCom degree from the University of Adelaide and is based in Nanjing,
China.
Mr Teo will be seeking re-election by shareholders at the Company’s 2019 Annual
General Meeting.
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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
Kaijian Chen
Independent
Non-Executive Director
Mr Chen was appointed as Non-Executive Director of the Company on 1 September
2011.
Mr Chen has extensive experience in the motorcycle manufacturing industry in China.
He was formerly vice president of Hainan Sundiro Motorcycle Co, 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.
Shannon Coates
Ms Coates was appointed as Non-Executive Director of the Company on 23 May 2014.
Independent
Non-Executive Director
Ms Coates completed a Bachelor of Laws through Murdoch University 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 Governance Institute Australia. She is
also a graduate of the Australian Institute of Company Directors.
Ms Coates is 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
Ms Coates was appointed as Company Secretary on 10 May 2007.
Shannon Coates
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 2018 are as follows:
Director
Company
Mr Phillip Campbell
Mr Charles Chen
Mr Ivan Teo
Mr Kaijian Chen
Ms Shannon Coates
Fleetwood Corp Limited
-
-
-
Flinders Mines Limited
Kopore Metals Limited
Directors’ Meetings
Period of directorship
To
From
2016
-
-
-
2018
2015
Current
-
-
-
Current
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 2018 are:
Director
Held while Director
Attended
Board Meetings
Mr Phillip Campbell
Mr Charles Chen
Mr Ivan Teo
Mr Kaijian Chen
Ms Shannon Coates
6
6
6
6
6
6
6
6
4
6
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 2018 was the development and
manufacture, marketing and distribution of electric powered two-wheel 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” style electric two-wheel vehicles from its
own manufacturing facilities in Nanjing, China. Vmoto combines low cost Chinese manufacturing capabilities with
European design. The Group operates through three primary brands: Vmoto (aimed at the budget market in Asia), E-Max
(targeting international B2B markets, with a premium high-end product) and Super Soco (targeting the international B2C
markets).
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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 $19.6 million were recorded for the Consolidated Entity for the year ended 31 December 2018
(FY2017: $15.1 million). The revenue of the Consolidated Entity has increased 30% compared to the year ended 31
December 2017, largely due to increased international sales into the electric two-wheel vehicle market as the Company
capitalised on new government policies and regulation in Europe supporting electric vehicle transport and the growth of
vehicle leasing and logistics projects. During the year ended 31 December 2018, the Consolidated Entity recorded a net
loss of $917,563 after income tax (FY2017: $8.1 million). The earnings before interest, tax, depreciation and amortisation
(EBITDA) for the year ended 31 December 2018 was $18,437 (FY2017: loss before interest, tax, depreciation and
amortisation $7.3 million).
The following table provides a reconciliation between the EBITDA and statutory net loss after tax for the year ended 31
December 2018:
Earnings before interest, tax, depreciation and amortisation (EBITDA)
Depreciation and amortisation
Loss before interest and tax
Interest income
Interest expense
Income tax revenue/(expense)
Net loss after tax
$18,437
($967,128)
($948,691)
$95,990
($64,862)
-
($917,563)
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 2018 is set out in the Operations Review preceding
the Directors’ Report.
Review of Financial Position
The Consolidated Entity’s net assets increased by approximately $2.3 million during the year ended 31 December 2018.
Cash balances increased by approximately $1.0 million during the year ended 31 December 2018 due to placement and
share purchase plan to facilitate the expansion of the Consolidated Entity’s European distribution network and European
warehouse to accelerate sales into European markets. During the year, the Consolidated Entity has continued to receive
significant deposits from customers for growing orders and to invest further into stock for the Consolidated Entity’s
expanding European distribution operations, with an aim to reduce the lead time to deliver the products to the European
customers and provide greater efficiency in after sales services.
Trade and other receivables have increased by approximately $713k largely due to increased sales, which has resulted in
higher export and import VAT to be refunded.
Inventories increased by approximately $2.9 million largely due to preparation of stocks for increased orders from
international customers and purchased the stock for its European distribution operations to reduce the lead time to deliver
the products to the European customers.
Prepayments decreased by approximately $1.4 million largely due to continued utilisation of prepayments to minimise
business risks.
Intangible assets decreased by approximately $149k due to amortisation of the PowerEagle trademark.
Trade and other payables increased by approximately $2.3 million during the period primarily due to higher level of
deposits and orders received from customers in advance, for which the revenue will be recognised in FY2019, and higher
trade payables due to the purchase of stock to meet increased orders from international customers.
Issued capital increased by $2.4 million during the year ended 31 December 2018, primarily due to the $2.2 million
placement and share purchase plan completed in first quarter of 2018 and vesting of shares issued to employees during
the year.
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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
No dividend has been declared or paid by the Company to the date of this Annual Report in respect of the year ended 31
December 2018.
Business Strategies and Prospects for Future Financial Years
The Company’s business strategies for future financial years include:
• Continue to execute on its five-year strategic plan (FY2017-FY2021) to focus on higher value and higher margin
international markets and to become worldwide leading electric vehicle manufacturer and provider to B2C and
B2B customers and markets internationally;
• Continue to improve the Company’s electric two-wheel vehicle products to attract high quality international
business group customers;
Expand its European distribution network and warehouse in Europe to accelerate sales into European B2C
markets; and
Expand its international B2B business.
•
•
The potential material business risks faced by the Company that are likely to have an effect on the financial prospects of
the Company and how the Company manages these risks include:
•
•
Technological obsolescence – given the Company operates in an industry involving green and electric vehicle
technology, any technological obsolescence could have an 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 monitor 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
has the protection of trademarks and patents.
Business relationship with Super Soco – Vmoto is currently distributing Super Soco range of products to the
international B2C markets. Any changes in business cooperation and circumstances of Super Soco could have an
impact on our financial results. We address this risk through regular communications and seeking deeper
business cooperations with Super Soco while also developing and growing Vmoto’s B2B businesses. We see this
risk as minimal as Super Soco works closely with Vmoto and utilising Vmoto’s manufacturing license and the
sales of Super Soco range of products in international markets distributed by Vmoto are growing rapidly and
expect to grow further in future.
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 2018.
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
There has not arisen in the interval between the end of the financial period and the date of this Annual 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.
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D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
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 Annual Report are as follows:
Director
Ordinary shares
Options
Performance Rights
Mr Phillip Campbell1
Mr Charles Chen2
Mr Ivan Teo3
Mr Kaijian Chen4
Ms Shannon Coates5
1,113,583
15,646,726
720,873
2,090,396
347,728
-
-
-
-
-
-
-
-
-
-
1.
431,819 shares are held indirectly by Mr Phillip Ashley Campbell & Ms Jeanette Riakos as trustee for the P & J
Super Fund. Mr Campbell is a beneficiary of the P & J Super Fund. 681,764 shares are held indirectly by Transform
Management Pty Ltd. Mr Campbell is a sole director and shareholder of the company.
2.
15,646,726 shares are held directly by Mr Charles Chen.
3.
720,873 shares are held directly by Mr Ivan Teo.
4.
2,090,396 shares are held directly by Mr Kaijian Chen.
5.
347,728 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
At the date of this Annual Report, options over unissued ordinary shares of the Company are:
Grant Date
Vesting Date
Expiry Date
Exercise Price
Number
23 May 2014
23 May 2014
23 May 2014
22 May 2018
22 May 2018
23 May 2014
23 May 2014
23 May 2014
22 May 2018
22 May 2018
21 May 2019
21 May 2019
21 May 2019
22 May 2021
22 May 2021
50 cents
75 cents
$1.00
65 cents
85 cents
100,000
100,000
200,000
2,272,727
2,272,727
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
At the date of this Annual Report, there are no Performance Rights over unissued ordinary shares of the Company on issue.
12
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
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 Annual Report, a Directors and Officers insurance policy has been secured. The insurance premium
for this policy paid during the year ended 31 December 2018 was A$35,108.
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 62 and forms part of the Directors’ Report for the year ended
31 December 2018.
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
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, key management and executives for the Company and the Consolidated
Entity.
Director and Key Management Personnel details
The following persons acted as Directors of the Company during or since the end of the financial year:
• Mr Phillip Campbell
• Mr Charles Chen
• Mr Ivan Teo
• 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 Shuguang Han (General Manager)
• Mr Jeffrey Wu (International Sales Manager)
• Ms Susan Xie (International Sales Manager)
• Ms May Wang (International Sales Manager)
• Mr Chaohui Li (Technical 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 offer Performance Rights which will convert 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.
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 )
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 tables below set out summary information about the Consolidated Entity’s earnings and movements in shareholder
wealth for the last five reporting years:
31 Dec 2018
31 Dec 2017
31 Dec 2016
31 Dec 2015
31 Dec 2014
12 months
12 months
12 months
12 months
12 months
In AUD
Revenue
Net profit / (loss) before tax
Net profit / (loss) after tax
$’000
19,578
(918)
(918)
$’000
15,079
(8,097)
(8,097)
$’000
17,271
(14,081)
(14,093)
$’000
47,613
116
(753)
$’000
42,941
257
884
In AUD
31 Dec 2018
31 Dec 2017
31 Dec 2016
31 Dec 2015
31 Dec 2014
12 months
12 months
12 months
12 months
12 months
Share price at start of period
Share price at end of period
Dividend
Basic and diluted earnings /
(loss) per share
$0.058*
$0.056*
-
(0.43 cents)*
$0.099*
$0.058*
-
(4.68 cents)*
$0.33*
$0.099*
-
(8.61 cents)*
$0.04
$0.33*
-
(0.52 cents)*
$0.03
$0.04
-
0.07 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.
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 )
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 2018 and 31 December 2017 are:
SHORT-TERM
POST-
EMPLOYMENT
SHARE BASED
PAYMENTS
Salary & fees
$
Superannuation
benefits
$
Shares
$
Total
$
Value of
shares/rights as
proportion of
remuneration %
% of
remuneration
based on
performance
In AUD
Executive Directors
Mr Charles Chen
Mr Ivan Teo
Non-Executive Directors
Mr Phillip Campbell1
Mr Oliver Cairns
(ceased 31 May 2017)
Mr Kaijian Chen2
Ms Shannon Coates3
12 months to Dec 2018
12 months to Dec 2017
12 months to Dec 2018
12 months to Dec 2017
12 months to Dec 2018
12 months to Dec 2017
12 months to Dec 2018
12 months to Dec 2017
12 months to Dec 2018
12 months to Dec 2017
350,000
210,000
152,446
150,090
55,000
33,333
-
83,333
-
-
12 months to Dec 2018
12 months to Dec 2017
50,000
40,000
-
19,950
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,000
33,333
-
-
40,000
40,000
-
-
350,000
229,950
152,446
150,090
105,000
66,666
-
83,333
40,000
40,000
50,000
40,000
Total, all Directors
12 months to Dec 2018
12 months to Dec 2017
607,446
516,756
-
19,950
90,000
73,333
697,446
610,039
16
-
-
-
-
48%
50%
-
-
100%
100%
-
-
13%
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 ( c o n t ’ d )
1. Mr Campbell was appointed as Non-Executive Chairman on 31 May 2017. For the year ended 31 December 2018, Mr Campbell is entitled to $50,000 of director fees in shares and will seek for
shareholders’ approval in the 2019 Annual General Meeting for issuing the shares.
2. Mr Kaijian Chen was appointed as Non-Executive Director on 1 September 2011. Mr Chen has agreed to receive his Director fees in shares and will seek shareholders’ approval for this issue at
the 2019 Annual General Meeting. Mr Chen’s FY2017 Director fees were also paid in shares.
3. 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 2018 financial year, the Company paid
Evolution Corporate Services Pty Ltd $66,000 for these services, which is not included in the amount above.
In AUD
Executives
Mr Shuguang Han
(General Manager)
Mr Jeffrey Wu
(Sales Manager)
Ms Susan Xie
(Sales Manager)
Ms May Wang
(Sales Manager)
Mr Chaohui Li
(Technical Manager)
Total, all Executives
SHORT-TERM
POST-
EMPLOYMENT
SHARE BASED
PAYMENTS
Salary & fees
$
Superannuation
benefits
$
Shares
$
Total
$
Value of shares
as proportion of
remuneration %
% of
remuneration
based on
performance
12 months to Dec 2018
12 months to Dec 2017
12 months to Dec 2018
12 months to Dec 2017
12 months to Dec 2018
12 months to Dec 2017
12 months to Dec 2018
12 months to Dec 2017
12 months to Dec 2018
12 months to Dec 2017
60,950
58,184
52,466
48,472
28,260
25,222
30,395
14,124
28,961
18,156
12 months to Dec 2018
12 months to Dec 2017
201,032
164,158
-
-
-
-
-
-
-
-
-
-
-
-
12,127
6,200
6,271
3,100
2,855
1,240
908
620
2,678
1,240
24,839
12,400
73,077
64,384
58,737
51,572
31,115
26,462
31,303
14,744
31,639
19,396
225,871
176,558
17%
10%
11%
6%
9%
5%
3%
4%
9%
6%
11%
7%
-
-
-
-
-
-
-
-
-
-
-
-
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 )
Share-based payment arrangements
Shares
During the year ended 31 December 2018, 3.4 million shares were granted to Key Management Personnel as an incentive
and to recognise their efforts in the year ended 31 December 2018. The shares granted to Key Management Personnel are
subject to a three-year voluntary escrow period.
Options
The Company operates an Employee Share Option Plan (“ESOP”) for executives and senior employees of the
Consolidated Entity. In accordance with the provisions of the ESOP, executives and senior employees may be granted
options to purchase ordinary shares at an exercise price to be determined by the Board with regard to the market value
of the shares when it resolves to offer the options. The options may only be granted to eligible persons after the Board
considers the person’s seniority, position, length of service, record of employment, potential contribution and any other
matters which the Board considers relevant.
Each employee share option converts into one ordinary share of Vmoto Limited on exercise. No amounts are paid or
payable to the Company by the recipient on receipt of the option. The options carry neither rights to dividends nor voting
rights. Options may be exercised at any time from the date of vesting to the date of their expiry.
The number of options granted is determined by the Board.
To date, options granted under the ESOP expire within thirty six months of their issue, or immediately on the resignation
of the executive or senior employee, whichever is the earlier.
During the year ended 31 December 2018, the following share based payment options arrangements were in existence:
Options
series
Class E1
Class F1
Class G
Class H
Class I
Tranche A
Tranche B
Total
1. Expired.
Number
Grant date
Grant date
Expiry date
Exercise Price Vesting
500,000
500,000
100,000
100,000
200,000
2,272,727
2,272,727
5,945,454
23/05/2013
23/05/2013
23/05/2014
23/05/2014
23/05/2014
22/05/2018
22/05/2018
fair value
A$0.14
A$0.13
A$0.37
A$0.35
A$0.33
Nil
Nil
23/05/2018
23/05/2018
21/05/2019
21/05/2019
21/05/2019
22/05/2021
22/05/2021
A$0.40
A$0.80
A$0.50
A$0.75
A$1.00
A$0.065
A$0.085
date
23/05/2014
23/05/2014
23/05/2014
23/05/2014
23/05/2014
22/05/2018
22/05/2018
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 2018, no options were granted to Key Management Personnel under the ESOP.
18
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
Share holdings and transactions of Key Management Personnel
The movement during the year ended 31 December 2018 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 2018
Held at
date of
appointment
Net change1
Granted as
remuneration
Received on
vest of
performance
rights
Held at
date of
resignation
/cessation
Held at
31 Dec 2018
Directors
Mr P Campbell
Mr C Chen
Mr I Teo
Mr K Chen
Ms S Coates
250,000
10,313,040
720,873
1,388,642
75,000
Executives
Mr S Han
Mr J Wu
Ms S Xie
Ms M Wang
Mr C Li
650,000
250,000
150,000
40,000
160,000
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
181,819
5,333,686
-
-
272,728
-
-
-
-
-
681,764
-
-
701,754
-
300,000
500,000
300,000
-
-
-
-
-
-
-
-
-
-
-
-
N/A
N/A
N/A
N/A
N/A
1,113,583
15,646,726
720,873
2,090,396
347,728
N/A
N/A
N/A
N/A
N/A
950,000
750,000
450,000
40,000
160,000
1. Net change represents the acquisition and disposal of shares on market and exercise of options by the Key
Management Personnel.
Option holdings of Key Management Personnel
The movement during the year ended 31 December 2018 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 2018
Held at
date of
appointment
Additions
Granted as
remuneration
Exercised/
Expired
Held at
date of
resignation
/cessation
Held at
31 Dec 2018
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
-
-
-
-
-
-
-
-
-
Directors
Mr P Campbell
Mr C Chen
Mr I Teo
Mr K Chen
Ms S Coates
Executives
Mr S Han
Mr J Wu
Ms S Xie
Ms M Wang
Mr C Li
-
-
-
-
-
-
-
-
-
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
All options are vested and exercisable.
-
-
-
-
-
-
-
-
-
-
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 )
Other Key Management Personnel Transactions
During the year ended 31 December 2018, 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 2018.
Other than the above, there have been no related party transactions involving any of the Key Management Personnel
identified in the table above during the year or the previous year.
This report is made with a resolution of the Directors pursuant to s298(2) of the Corporations Act 2001:
Charles Chen
Managing Director
Dated at Western Australia, this 28th day of March 2019.
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
C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S
A N D O T H E R C O M P R E H E N S I V E I N C O M E
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8
Continuing Operations
Revenue from sale of goods
Cost of sales
Gross Profit
Other income
Operational expenses
Notes
Year ended
31 December 2018
$
Year ended
31 December 2017
$
19,578,395
15,079,424
(16,129,230)
(13,520,308)
3,449,165
1,559,116
2
995,858
888,658
(2,846,217)
(3,084,652)
Marketing and distribution expenses
(617,746)
(426,088)
Corporate and administrative expenses
(1,700,496)
(1,728,633)
Occupancy expenses
Other expenses
Finance costs
Impairment of prepayments
Impairment of intangibles
Impairment of other financial assets
Profit/(Loss) from continuing operations before tax
Income tax revenue/(expense)
2
8
10
4
(92,509)
(40,756)
(64,862)
-
-
-
(123,332)
(76,428)
(59,689)
(1,835,755)
(1,218,585)
(239,674)
(917,563)
(6,345,062)
-
-
Profit /(Loss) after tax from continuing operations
(917,563)
(6,345,062)
Discontinued Operations
Profit/(Loss) from discontinued operations
-
(1,751,610)
PROFIT/(LOSS) FOR THE YEAR
(917,563)
(8,096,672)
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
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 8
Other comprehensive income
Foreign currency translation differences
676,177
(113,410)
Notes
Year ended
31 December 2018
$
Year ended
31 December 2017
$
Other comprehensive income for the year, net of
income tax
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR
676,177
(113,410)
(241,386)
(8,210,082)
Profit/(Loss) for the year attributable to:
Owners of the Company
Non-controlling interests
Total comprehensive income for the year
attributable to:
Owners of the Company
Non-controlling interest
(917,563)
-
(917,563)
(241,386)
-
(241,386)
(8,056,809)
(39,863)
(8,096,672)
(8,170,219)
(39,863)
(8,210,082)
Earnings per share
21
From continuing and discontinued operations:
Basic earnings/(loss) per share
From continuing operations:
Basic earnings per share
(0.43 cents)
(4.68 cents)
(0.43 cents)
(3.66 cents)
The consolidated statement of profit or loss and other comprehensive income
should be read in conjunction with the accompanying notes.
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 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 8
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
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Loans and borrowings
Total Current Liabilities
Notes
31 December 2018
$
31 December 2017
$
5
6
7
8
9
10
11
12
4,193,790
2,098,447
5,638,169
1,749,024
3,172,792
1,385,118
2,780,782
3,119,683
13,679,430
10,458,375
8,556,335
446,650
9,002,985
7,814,943
595,533
8,410,476
22,682,415
18,868,851
6,149,449
1,235,890
7,385,339
3,867,726
1,966,878
5,834,604
TOTAL LIABILITIES
7,385,339
5,834,604
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Non-controlling interests
TOTAL EQUITY
15,297,076
13,034,247
13
13
16
14
74,814,382
(513,144)
(59,125,561)
121,399
15,297,076
72,431,566
(1,140,601)
(58,256,718)
-
13,034,247
The consolidated statement of financial position is to be read in conjunction with the accompanying notes.
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 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 8
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Other cash receipts
Notes
Year ended
31 December 2018
$
Year ended
31 December 2017
$
21,414,094
(21,580,606)
95,990
(64,862)
402,267
36,485,909
(38,913,803)
126,142
(59,689)
-
Net cash used in operating activities
26
266,883
(2,361,441)
Cash flows from investing activities
Payments for property, plant & equipment
Payments for intangible assets
Payments for equity investments
Net cash inflow on disposal of subsidiary
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of equity shares
Payments for share issue costs
Proceeds from borrowings
Repayment of borrowings
Net cash generated by financing activities
25
(734,167)
-
-
-
(734,167)
2,212,500
(33,874)
1,208,531
(2,056,023)
1,331,134
(593,183)
(2,306)
(19,197)
285,655
(329,031)
-
-
3,230,396
(1,590,635)
1,639,761
Net (decrease)/increase in cash and cash equivalents
863,850
(1,050,711)
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash held
3,172,792
157,148
4,361,855
(138,352)
Cash and cash equivalents at the end of the year
4,193,790
3,172,792
The consolidated statement of cash flows is to 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 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 E N D E D 3 1 D E C E M B E R 2 0 1 8
Issued Capital
$
Reserves
$
Accumulated
Losses
$
Non-controlling
Interests
Total
$
Balance as at 1 January 2017
71,446,718
(844,124)
(50,382,976)
609,043
20,828,661
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
Issue of ordinary shares
Transfer expired options reserve to
accumulated losses
Disposal of subsidiaries
-
-
-
984,848
-
-
-
(113,410)
(113,410)
-
(183,067)
-
(8,056,809)
-
(8,056,809)
-
183,067
(39,863)
-
(39,863)
-
-
(8,096,672)
(113,410)
(8,210,082)
984,848
-
-
(569,180)
(569,180)
Balance as at 31 December 2017
72,431,566
(1,140,601)
(58,256,718)
Balance as at 1 January 2018
72,431,566
(1,140,601)
(58,256,718)
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
Issue of ordinary shares
Share issue costs
Transfer expired options reserve to
accumulated losses
Non-controlling interests arising on
incorporation of subsidiary
-
-
-
2,413,611
(30,795)
-
-
-
676,177
676,177
-
-
(48,720)
-
(917,563)
-
(917,563)
-
-
48,720
-
-
-
-
-
-
-
-
-
121,399
13,034,247
13,034,247
(917,563)
676,177
(241,386)
2,413,611
(30,795)
-
121,399
Balance as at 31 December 2018
74,814,382
(513,144)
(59,125,561)
121,399
15,297,076
The consolidated statement of changes in equity 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
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 2018 comprises the Company and its subsidiaries
(together referred to as the “Consolidated Entity”).
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.
(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 28th March 2019.
(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)
Accounting Standards that are mandatorily effective for the current reporting year
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting
Standards Board (the AASB) that are relevant to its operations and effective for an accounting period that begins on
or after 1 January 2018.
New and revised Standards and amendments thereof and Interpretations effective for the current year that are
relevant to the Group include:
• AASB 9 Financial Instruments and related amending Standards
• AASB 15 Revenue from Contracts with Customers and related amending Standards
• AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-based
Payment Transactions
AASB 9 Financial Instruments and related amending Standards
In the current year, the Group has applied AASB 9 Financial Instruments (as amended) and the related consequential
amendments to other Accounting Standards that are effective for an annual period that begins on or after 1 January
2018. The transition provisions of AASB 9 allow an entity not to restate comparatives however there was no material
impact on adoption of the standard.
Additionally, the Group adopted consequential amendments to AASB 7 Financial Instruments: Disclosures.
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
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 )
In summary AASB 9 introduced new requirements for:
• The classification and measurement of financial assets and financial liabilities,
•
• General hedge accounting.
Impairment of financial assets, and
AASB 15 Revenue from Contracts with Customers and related amending Standards
In the current year, the Group has applied AASB 15 Revenue from Contracts with Customers (as amended) which is
effective for an annual period that begins on or after 1 January 2018.
This standard provides a single standard for revenue recognition. The core principle of the standard is that an entity
must recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard
requires: contracts (either written, verbal or implied) to be identified, together with the separate performance
obligations within the contract; determine the transaction price, adjusted for the time value of money excluding credit
risk; allocation of the transaction price to the separate performance obligations on a basis of relative stand-alone
selling price of each distinct good or service, or estimation approach if no distinct observable prices exist; and
recognition of revenue when each performance obligation is satisfied. Credit risk will be presented separately as an
expense rather than adjusted to revenue. For goods, the performance obligation would be satisfied when the
customer obtains control of the goods. For services, the performance obligation is satisfied when the service has been
provided, typically for promises to transfer services to customers. For performance obligations satisfied over time,
an entity must select an appropriate measure of progress to determine how much revenue should be recognised as
the performance obligation is satisfied. Contracts with customers will be presented in an entity's statement of
financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the
entity's performance and the customer's payment.
The entity has assessed the requirements of AASB 15, and analysed the effect this has on revenue recognition
including an analysis of the performance obligations within the Company’s contracts with Customers. Given the
nature of the Company’s operations and contracts with customers, revenue is recognised at a point in time when the
customer obtains control of the goods. As permitted by the standard the Company has continued to utilise the terms
trade and other receivables, and advances and deposits from customers rather than contract assets and contract
liabilities respectively.
There was no material impact on adoption of the standard and no adjustment made to current or prior period
amounts.
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 ( c o n t ’ d )
(v)
Going concern basis
The Consolidated Entity has recorded a loss after tax for the year ended 31 December 2018 of $917,563 (loss after tax
for the year ended 31 December 2017: $8,096,672). At 31 December 2018, the Consolidated Entity had a working
capital surplus of $6,294,091 (31 December 2017: $4,623,771).
•
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
and the Super Soco range (which are manufactured in Vmoto’s Nanjing manufacturing facility and for which
Vmoto holds international sales and marking rights outside of China) is increasing;
the Consolidated Entity has the ability to 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 Annual Report, RMB19 million (approximately
$3.9 million) of the operating facility is still available for draw down if required;
the Consolidated Entity achieved positive operating cash flows of $266,883 for the year ended 31 December 2018;
and
the Directors have prepared cash flow forecasts that indicate the Consolidated Entity will be cash flow positive
for the year ending 31 December 2019 and will enable the Consolidated Entity to pay its debts as and when they
fall due.
•
•
•
At the date of this Annual 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.
(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 29, investments in subsidiaries are carried at cost and recoverable amount. Refer to Note 1(n).
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.
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 )
All differences in the consolidated financial report are taken to the profit & loss with the exception of differences on
foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken
directly to equity until the disposal of the net investment, at which time they are recognised in the profit & loss.
Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate as at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date
when the fair value was determined.
As at the reporting date the assets and liabilities of these overseas subsidiaries are translated into the presentation
currency of Vmoto at the rate of exchange ruling at the reporting date and the income statements are translated at
the weighted average exchange rates for the period where this rate approximates the rate at the date of the
transaction.
The exchange differences arising on the retranslation are taken directly to a separate component of equity.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular
foreign operation is recognised in the profit & loss.
(d) Revenue recognition
Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST
or equivalent) payable to the taxation authority.
Sale of goods
Revenue is measured when or as the control of the goods or services is transferred to a customer. Depending on the
terms of the contract and the laws that apply to the contract, control of the goods and services may be transferred over
time or at a point in time.
If control of the goods and services transfers over time, revenue is recognised over the period of the contract by
reference to the progress towards complete satisfaction of that performance obligation. Otherwise (and in most
instances), revenue is recognised at a point in time when the customer obtains control of the goods and services.
Contracts with customers may include multiple performance obligations. For such arrangements, the Company
allocates revenue to each performance obligation based on its relative standalone selling price which are generally
based on the prices charged to customers. If the standalone selling price is not directly observable, it is estimated using
expected cost plus a margin or adjusted market assessment approach, depending on the availability of observable
information.
If a customer pays consideration before the Company transfers the goods to the customer, the Company presents the
contract liability (referred to as advance and deposits from customers) when the payment is made. A contract liability
is the Company's obligation to transfer goods or services to a customer for which the Company has received
consideration.
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.
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 )
(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
•
• 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.
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 )
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) 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
Moulds
3 – 10 years
4 years
5 years
20 years
5 years
5 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
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 )
•
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.
(i) 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.
(j) 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.
(k) 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.
(l) 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.
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 )
(m) 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.
(n) 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.
(o) 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.
(p) 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”).
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 )
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i)
the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the Directors
of the Consolidated Entity, will ultimately vest. This opinion is formed based on the best available information at
balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of
these conditions is included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon
a market condition.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had
not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of
the modification, as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense
not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled
award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated
as if they were a modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding weighted average number of options as at the reporting date is considered
not material and accordingly the basic loss per share is the same as the diluted loss per share.
(q) 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.
(r) Income tax
Income tax expense recognised in the statement of profit or loss and other comprehensive income relates to current
tax and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in equity.
Current tax
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and amounts used for taxation purposes.
Deferred tax is not recognised for the following temporary differences:
i.
the initial recognition of assets or liabilities in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss; and
ii. differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable
that they will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
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 )
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.
(s)
Intangibles
Trademarks, licenses and production rights
Trademarks, licenses and production rights are recognised at cost of acquisition. Licenses and production rights have
an indefinite life and are carried at cost less any accumulated impairment losses. Trademark is estimated to have a
useful life of five years and is amortised over a five year periods. The carrying values of trademark are reviewed for
impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
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.
Customer contracts
Customer contracts 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, customer contracts 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.
(t) 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.
(u) 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.
(v) 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.
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 )
(w) Comparative figures
This Annual Report relates to the year ended 31 December 2018. Comparatives are for the year ended 31 December
2017.
(x) 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.
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 )
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.
(y) 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.
The carrying amount of goodwill at 31 December 2018 was nil (31 December 2017: nil).
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 )
Useful lives of property, plant and equipment and trademarks
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 trademarks are deemed to be no change.
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 plant and equipment, the Group uses Level 3 inputs to perform the valuation.
In estimating the fair value of customer base, the Group uses Level 3 inputs to perform the valuation.
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 )
2. REVENUES AND EXPENSES
(a) Other income
Interest income
Contributions from customers
Government subsidies
Net foreign exchange gain
Rent income
Other income
(b) Other expenses
Doubtful debts
Loss on sale of obsolete stocks
(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 2018
$
Year ended
31 December 2017
$
95,990
439,332
170,908
56,385
215,655
17,588
995,858
19,491
21,265
40,756
1,495,894
1,495,894
818,245
148,883
967,128
41,117
589,468
49,928
48,133
156,449
3,563
888,658
76,428
-
76,428
1,565,841
1,565,841
573,816
201,569
775,385
3. AUDITOR’S REMUNERATION
Audit services:
- Audit of financial reports by Bentleys Audit & Corporate
(WA) Pty Ltd
87,451
87,451
85,540
85,540
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 )
4. INCOME TAX
(a) Income tax credit / (expense)
Current tax
Deferred tax
Year ended
31 December 2018
$
Year ended
31 December 2017
$
-
-
-
-
-
-
(b) Numerical reconciliation between tax benefit/(expense) and pre-
tax net profit/(loss)
Profit/(Loss) before income tax benefit
(917,563)
(6,345,062)
Income tax credit/(expense) calculated at 27.5%
252,330
1,903,519
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
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)
-
-
(4,226)
(15,757)
(232,347)
-
(427,937)
(364,565)
(7,318)
(36,566)
(1,067,133)
-
Potential at 27.5% (31 December 2017: 30%)
6,462,253
6,893,670
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
Provision for loan to other entity
Provision for impairment loss on investments
Accrued expenses
Unrecognised deferred tax assets relating to the above temporary
differences
-
-
-
15,125
15,125
-
-
59,918
15,000
74,918
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 )
(e) Current tax liabilities
Income tax payable
(f) Deferred tax balances
31 December 2018
$
31 December 2017
$
-
-
-
-
Deferred tax balances are presented in the consolidated statement of financial position as follows:
Deferred tax liabilities
(g) Tax Rates
-
-
The potential tax benefit at 31 December 2018 in respect of tax losses not brought into account has been calculated at
27.5% for Australian entities. The tax rate applied for the year ended 31 December 2017 was 30%. The tax benefit and
expense at 31 December 2018 in respect of tax effect brought into account in relation to China operations has been
calculated at 25% for China entities. The tax benefit and expense at 31 December 2018 in respect of tax effect brought
into account in relation to Europe operations has been calculated at 20% for the Netherlands entities.
5. CASH AND CASH EQUIVALENTS
Cash and bank balances
6. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Less: Provision for impairment loss
Other receivables
Less: Provision for impairment loss
31 December 2018
$
31 December 2017
$
4,193,790
3,172,792
914,964
-
914,964
1,474,816
(291,333)
2,098,447
1,203,309
-
1,203,309
473,142
(291,333)
1,385,118
Impaired trade receivables – Expected credit losses
Trade receivables are non-interest bearing and are generally on 30-60 days terms. A provision for expected credit losses
is by reference to past default experience and an analysis of the ageing and known financial position of the debtor. The
Company writes off a receivable when there is information indicating that the debtor is in severe financial difficulty
and there is no realistic prospect of recovery.
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 )
Movements in the provision for impairment of trade and other receivables were as follows:
31 December 2018
$
31 December 2017
$
At beginning of the period
Provision for impairment during the period
Disposal of subsidiaries
Write off
At end of the period
291,333
19,491
-
(19,491)
291,333
At 31 December 2018, 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
1,519,979
53,098
26,419
498,951
291,333
2,389,780
957,470
76,428
(666,137)
(76,428)
291,333
513,051
635,721
30,342
206,004
291,333
1,676,451
As of 31 December 2018, trade and other receivables of $525,370 (31 December 2017: $236,346) were past due but not
impaired. $381,709 of the $525,370 past due relates to deferred payment arrangement with a B2B customer. The
customer has been making payments on time in full. The remaining trade and other receivables relate to a number of
independent customers for whom there is no recent history of default.
7. INVENTORIES
Raw materials
Semi-finished goods
Finished goods
8. OTHER ASSETS
Prepayments
1,692,779
295,843
3,649,547
5,638,169
1,434,374
772,248
574,160
2,780,782
1,749,024
1,749,024
3,119,683
3,119,683
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.
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 )
9. PROPERTY, PLANT & EQUIPMENT
Year ended 31 December 2017
At 1 January 2017, net of accumulated depreciation
Additions
Depreciation for the period
Discontinued operations (disposals)
Exchange differences
At 31 December 2017, net of accumulated depreciation
At 31 December 2017
Cost
Accumulated depreciation
Net carrying amount
Plant &
equipment
Motor
vehicles
Land
Building
Total
1,364,453
1,221,434
(277,902)
(384,230)
(20,940)
1,902,815
143,260
142,641
(36,616)
(199,317)
(1,495)
48,473
1,011,666
-
-
-
(11,063)
1,000,603
5,107,568
76,302
(259,298)
-
(61,520)
4,863,052
7,626,947
1,440,377
(573,816)
(583,547)
(95,018)
7,814,943
3,813,598
(1,910,783)
160,248
(111,775)
1,000,603
-
6,094,052
(1,231,000)
11,068,501
(3,253,558)
1,902,815
48,473
1,000,603
4,863,052
7,814,943
Year ended 31 December 2018
At 1 January 2018, net of accumulated depreciation
Additions
Depreciation for the period
Exchange differences
At 31 December 2018, net of accumulated depreciation
1,902,815
653,622
(484,386)
83,483
2,155,534
48,473
-
(37,869)
1,522
12,126
1,000,603
-
-
47,280
1,047,883
4,863,052
548,407
(295,990)
225,323
5,340,792
7,814,943
1,202,029
(818,245)
357,608
8,556,335
At 31 December 2018
Cost
Accumulated depreciation
Net carrying amount
4,036,766
(1,881,232)
166,804
(154,678)
1,047,883
-
6,931,028
(1,590,236)
12,182,481
(3,626,146)
2,155,534
12,126
1,047,883
5,340,792
8,556,335
1. During 2017, an independent external property valuation company valued the Company’s Nanjing land and Stage 1 & Stage 2 buildings at $12.2 million AUD.
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 12). 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.
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 )
10. INTANGIBLES
Goodwill
Licences, trademarks
and production rights
Development
Costs
Customer base
Total
Year ended 31 December 2017
Balance at 1 January 2017
Adjustments
Amortisation for the period
Impairment for the period
Discontinued operations (disposals)
Balance at 31 December 2017
At 31 December 2017
Cost
Accumulated amortisation
Accumulated impairment
Net carrying amount
Year ended 31 December 2018
Balance at 1 January 2018
Amortisation for the period
Balance at 31 December 2018
At 31 December 2018
Cost
Accumulated amortisation
Accumulated impairment
Net carrying amount
-
-
-
-
-
-
3,971,428
-
(3,971,428)
-
-
-
-
3,971,428
-
(3,971,428)
-
-
-
-
-
-
-
1,959,440
-
-
-
(1,959,440)
-
4,836,105
(565,657)
(4,270,448)
-
-
-
-
4,836,105
(565,657)
(4,270,448)
-
-
-
-
-
-
-
-
-
-
-
-
4,092,773
(117,646)
(201,569)
(1,218,585)
(1,959,440)
595,533
10,823,220
(767,226)
(9,460,461)
595,533
595,533
(148,883)
446,650
10,823,220
(916,109)
(9,460,461)
446,650
2,133,333
(117,646)
(201,569)
(1,218,585)
-
595,533
2,015,687
(201,569)
(1,218,585)
595,533
595,533
(148,883)
446,650
2,015,687
(350,452)
(1,218,585)
446,650
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 )
11. TRADE AND OTHER PAYABLES
Current – unsecured
Trade creditors
Advance and deposits from customers
Other creditors and accruals
12. 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
31 December 2018
$
31 December 2017
$
2,233,423
3,592,630
323,396
6,149,449
1,381,769
2,183,392
302,565
3,867,726
1,235,890
1,235,890
1,235,890
1,966,878
1,966,878
1,966,878
6,388,675
6,388,675
5,863,655
5,863,655
5,149,543
5,149,543
1,235,890
1,235,890
3,913,653
3,913,653
4,917,194
4,917,194
1,966,878
1,966,878
2,950,316
2,950,316
The bank operating facility is secured by the Company’s Nanjing manufacturing 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 loan facility does not have any bank
covenant conditions.
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 )
12. LOANS AND BORROWINGS (cont’d)
Reconciliation of liabilities arising from financing activities
31 Dec 2017
Cash flows
Non-cash changes
Foreign exchange
movement
31 Dec 2018
Short term bank operating facility
1,966,878
(847,492)
116,504
1,235,890
Total liabilities from financing
activities
1,966,878
(847,492)
116,504
1,235,890
13. ISSUED CAPITAL AND RESERVES
Issued capital
31 December 2018
$
31 December 2017
$
221,016,020 (31 December 2017: 176,005,140) fully paid ordinary
shares
74,814,382
72,431,566
The following movements in issued capital occurred during the period:
Number of
Shares
31 Dec 2018
Number of
Shares
31 Dec 2017
Year
ended
31 Dec 2018
$
Year
ended
31 Dec 2017
$
Balance at beginning of period
a)
Issue of Shares at 7.5 cents each
b)
Issue of Shares at 7 cents each
c)
Issue of Shares at nil consideration
d)
Issue of Shares at 5.5 cents each
e)
Issue of Shares at 5.5 cents each
Issue of Shares at 5.7 cents each
f)
Issue of Shares at 5.6 - 7.1 cents each g)
h)
Issue of Shares at nil consideration
Vesting of share based expenses
Share issue costs
176,005,140
-
-
-
22,727,273
17,500,089
701,754
681,764
3,400,000
-
-
160,769,006
11,764,706
571,428
2,900,000
-
-
-
-
-
-
-
72,431,566
-
-
-
1,250,000
962,500
40,000
41,667
-
119,444
(30,795)
71,446,718
882,353
40,000
-
-
-
-
-
-
62,495
-
Balance at end of period
221,016,020
176,005,140
74,814,382
72,431,566
a)
b)
c)
d)
e)
f)
g)
h)
31 January 2017 – Issue 11,764,706 shares at 7.5 cents as Tranche 2 shares consideration to acquire trademark
of Powereagle.
1 June 2017 – Issue 571,428 shares at 7 cents each to a Director in lieu of unpaid Director fees.
1 December 2017 – Issue 2,900,000 shares at nil consideration to employees of the Company in recognition
of their efforts and contribution to the Company. These share based expenses will be recognised over a three
year vesting period.
16 Jan 2018 – Issue 22,727,273 shares at 5.5 cents each for $1.25 million placement.
21 Feb 2018 – Issue 17,500,089 shares at 5.5 cents each for $962,500 share purchase plan.
22 May 2018 – Issue 701,754 shares at 5.7 cents each to a director in lieu of unpaid director fees.
22 May 2018 – Issue 681,764 shares between 5.6 and 7.1 cents each to a Director in lieu of unpaid Director
fees.
19 December 2018 – Issue 3,400,000 shares at nil consideration to employees of the Company in recognition
of their efforts and contribution to the Company. These share based expenses will be recognised over a three
year vesting period.
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 )
Options
The movements of options over unissued ordinary shares of the Company for the year ended 31 December 2018 were:
Expiry Date
Exercise
Price
Balance at
1 Jan 2018
Granted/
Issued
Exercised/
Forfeited
Expired
Held at
31 Dec 2018
23 May 2018
Class E options
23 May 2018
Class F options
21 May 2019
Class G options
21 May 2019
Class H options
Class I options
21 May 2019
Tranche A options 22 May 2021
Tranche B options 22 May 2021
Total
40 cents
80 cents
50 cents
75 cents
$1.00
6.5 cents
8.5 cents
500,000
500,000
100,000
100,000
200,000
-
-
1,400,000
-
-
-
-
-
2,272,727
2,272,727
4,545,454
-
-
-
-
-
-
-
-
(500,000)
(500,000)
-
-
-
-
-
(1,000,000)
-
-
100,000
100,000
200,000
2,272,727
2,272,727
4,945,454
Reserves
Reserves at the beginning of the period
Transfer expired options reserve to accumulated losses
Movements in foreign currency translation reserve
Reserves at the end of the period
Comprises of:
Share-based payment reserve
Foreign currency translation reserve
Reserves at the end of the period
31 December 2018
$
31 December 2017
$
(1,140,601)
(48,720)
676,177
(513,144)
96,419
(609,563)
(513,144)
(844,124)
(183,067)
(113,410)
(1,140,601)
145,139
(1,285,740)
(1,140,601)
The share-based payments reserve is used to recognise the fair value of options issued but not exercised.
The foreign currency translation reserve is used to recognise exchange differences arising from the translation of the
financial statements of foreign operations.
14. NON-CONTROLLING INTERESTS
31 December 2018
$
31 December 2017
$
Balance at the beginning of the period
Share of loss for the year
Disposal of interests of Shanghai Jiye
Non-controlling interests arising on incorporation of subsidiary
Balance at the end of the period
-
-
-
121,399
121,399
609,043
(39,863)
(569,180)
-
-
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 )
15. CAPITAL RISK MANAGEMENT
The Consolidated Entity manages its capital to ensure its 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 2018, 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 2018 and 31 December 2017 were as follows:
Total borrowings
Total equity
Total capital
Gearing ratio
31 December 2018
$
31 December 2017
$
1,235,890
15,297,076
16,532,966
1,966,878
13,034,247
15,001,125
7.5%
13.1%
The gearing ratio of the Company has decreased from 13.1% to 7.5% during the year ended 31 December 2018.
16. ACCUMULATED LOSSES
Year ended
31 December 2018
$
Year ended
31 December 2017
$
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
(58,256,718)
(917,563)
48,720
(59,125,561)
(50,382,976)
(8,056,809)
183,067
(58,256,718)
17. SEGMENT REPORTING
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, China and
Europe. 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 vehicles segment is managed on a worldwide basis, but operates in three principal
geographical areas: Australia, China and Europe. In China, manufacturing facilities are operated in Nanjing. In
Europe, the warehouse and distribution centre are operated in Netherlands. The segment information reported does
not include any amounts for the discontinued operations, which are described in more detail in Note 24. The
following table presents revenue and profit or loss in relation to geographical segments for the twelve month periods
ended 31 December 2018 and 31 December 2017:
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 )
17. SEGMENT REPORTING (cont’d)
Continuing Operations
Australia
$A
Nanjing, China
$A
Netherlands, Europe
$A
Intersegment elimination
$A
Consolidated
$A
Year
ended
31/12/18
Year
ended
31/12/17
Year
ended
31/12/18
Year
ended
31/12/17
Year
ended
31/12/18
Year
ended
31/12/17
Year
ended
31/12/18
Year
ended
31/12/17
Year
ended
31/12/18
Year
ended
31/12/17
Revenue
Segment revenue
Result
Segment profit/(loss)
Assets
Segment assets
Liabilities
Segment liabilities
72,758
44,187
18,752,716
15,035,237
752,921
(842,406)
(1,015,640)
83,474
(5,329,422)
(158,631)
1,634,657
961,135
42,011,775
39,834,569
1,310,356
(141,252)
(172,971)
(29,429,284)
(27,588,486)
(89,176)
Depreciation of fixed assets
(3,942)
(4,300)
(814,211)
(569,516)
(92)
Impairment of intangible
assets
Amortisation of intangible
assets
-
(1,218,585)
(148,883)
(201,569)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19,578,395
15,079,424
(917,563)
(6,345,062)
(22,274,373)
(21,926,853)
22,682,415
18,868,851
22,274,373
21,926,853
(7,385,339)
(5,834,604)
-
-
-
-
-
-
(818,245)
(573,816)
-
(1,218,585)
(148,883)
(201,569)
The principal activity of the continuing Consolidated Entity is the design, manufacture, marketing and distribution of electric two-wheel vehicles.
Information about major customers:
The Consolidated Entity has generated revenue from sales to its largest customer at approximately $2.3 million (2017: 2 customers $6.4 million). No other single customers contributed 10%
or more of the Group’s revenue for the year.
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 )
18. 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:
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
Borrowings
Total financial liabilities
31 December 2018
31 December 2017
Carrying
amount
$
4,193,790
2,098,447
6,292,237
6,149,449
1,235,890
7,385,339
Fair
Value
$
4,193,790
2,098,447
6,292,237
6,149,449
1,235,890
7,385,339
Carrying
amount
$
3,172,792
1,385,118
4,557,910
3,867,726
1,966,878
5,834,604
Fair
Value
$
3,172,792
1,385,118
4,557,910
3,867,726
1,966,878
5,834,604
Net financial assets / (liabilities)
(1,093,102)
(1,093,102)
(1,276,694)
(1,276,694)
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.
50
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
18. 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 2.15%, depending on account balances.
The following annual interest rates apply to the Consolidated Entity’s credit facilities:
Bank operating facility
5.08% 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 2018
$
31 December 2017
$
4,193,790
3,172,792
(1,235,890)
2,957,900
(1,966,878)
1,205,914
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 2018
$
31 December 2017
$
+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
29,579
29,579
(29,579)
(29,579)
12,059
12,059
(12,059)
(12,059)
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 US dollars, Chinese RMB and
Europe Euro.
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 )
18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d)
At balance date, the Consolidated Entity had the following exposure to US dollars and Chinese RMB foreign currency
that is not designated in cash flow hedges:
Financial assets
Cash and cash equivalents (USD)
Cash and cash equivalents (RMB)
Cash and cash equivalents (EUR)
Trade and other receivables (USD)
Trade and other receivables (RMB)
Trade and other receivables (EUR)
Financial liabilities
Trade and other payables (USD)
Trade and other payables (RMB)
Trade and other payables (EUR)
Borrowings (RMB)
Net exposure
31 December 2018
AUD
31 December 2017
AUD
2,491,009
398,119
304,743
3,193,871
253,106
1,525,124
74,110
1,852,340
(2,652,693)
(3,266,327)
(89,176)
(6,008,196)
(1,235,890)
(1,235,890)
638,771
1,740,557
7,657
2,386,985
439,239
927,306
6,968
1,373,513
(1,255,517)
(2,439,238)
-
(3,694,755)
(1,966,878)
(1,901,135)
The following sensitivity is based on the foreign currency risk exposures in existence at the reporting date.
At 31 December 2018, 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 2018
$
31 December 2017
$
AUD/USD and AUD/RMB +20%
Equity increase/(decrease)
AUD/USD and AUD/RMB -20%
Equity increase/(decrease)
366,313
313,569
(439,575)
(376,283)
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.
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 )
18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d)
The total credit risk exposure of the Consolidated Entity could be considered to include the difference between the
carrying amount of the receivable and the realisable amount. At balance sheet date there were no significant
concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each
financial asset in the balance sheet. Details with respect to credit risk of trade and other receivables are provided in
Note 6.
Liquidity risk
preparing forward-looking cash flow analyses in relation to its operational, investing and financing activities;
Liquidity risk arises from the possibility that the Consolidated Entity might encounter difficulty in settling its debts or
otherwise meeting its obligations related to financial liabilities. The Consolidated Entity manages this risk through the
following mechanisms:
1.
2.
3.
4.
5.
managing credit risk related to financial assets.
obtaining funding from a variety of sources;
maintaining a reputable credit profile; and
monitoring undrawn credit facilities;
The table below reflects an undiscounted contractual maturity analysis for financial liabilities.
Financial liability and financial asset maturity analysis
Within 1 Year
1 to 5 Years
Over 5 Years
Total
31/12/2018 31/12/2017 31/12/2018 31/12/2017 31/12/2018 31/12/2017 31/12/2018 31/12/2017
Consolidated Group
$000
$000
$000
$000
$000
$000
$000
$000
Financial liabilities due for
payment
Bank operating facility and loans
1,236
Trade and other payables
6,149
Current tax liabilities
Other liabilities
Total contractual outflows
Total expected outflows
-
-
7,385
7,385
1,967
3,868
-
-
5,835
5,835
Financial assets – cash flows
realisable
Cash and cash equivalents
Trade and other receivables
Total anticipated inflows
4,194
2,098
6,292
3,173
1,385
4,558
Net (outflow)/ inflow on
financial instruments
(1,093)
(1,277)
Financial assets pledged as collateral
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,236
6,149
-
-
7,385
7,385
1,967
3,868
-
-
5,835
5,835
4,194
2,098
6,292
3,173
1,385
4,558
(1,093)
(1,277)
There are no financial assets that have been pledged as security for debt and their realisation into cash is not restricted.
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. OPERATING LEASE ARRANGMENTS
All operating lease contracts contain market review clauses. The lessee does not have an option to purchase the property
at the expiry of the lease period.
Non-cancellable operating lease receivables
Not later than one year
Later than one year but not later than five years
20. COMMITMENTS AND CONTINGENT LIABILITES
Operating lease commitments
Future operating lease rentals not provided for in the financial
statements and payable:
Not later than one year
Later than one year but not later than five years
31 December 2018
$
31 December 2017
$
257,265
721,800
979,065
242,083
920,740
1,162,823
31 December 2018
$
31 December 2017
$
59,508
6,866
66,374
71,909
76,060
147,969
Contingent liabilities
The Company is currently a defendant in a proceeding brought against the Company by a former employee in relation
to the employee’s past employment. Having considered legal advice, the Directors believe that the claim can be
successfully defended, without any losses (including for costs) being incurred by the Company.
21. EARNINGS PER SHARE
Basic earnings per share
From continuing operations
From discontinued operations
Total earnings/(loss) per share
Year ended
31 Dec 2018
Cents per share
Year ended
31 Dec 2017
Cents per share
(0.43)
-
(0.43)
(3.66)
(1.02)
(4.68)
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.
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 )
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are
as follows:
Year ended
31 Dec 2018
$
Year ended
31 Dec 2017
$
Profit/(Loss) for the year attributable to owners of the Consolidated
Entity
Earnings used in the calculation of basic earnings per share
(917,563)
(917,563)
(8,056,809)
(8,056,809)
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
-
(1,751,610)
(917,563)
(6,305,199)
Weighted average number of ordinary shares for the purposes of
basic earnings/loss per share
213,823,446
172,148,080
22. CONTROLLED ENTITIES
Parent entity
Vmoto Limited
Controlled entities
Country of
Incorporation
Entity interest
31 December
2018
Entity interest
31 December
2017
Australia
Vmoto Australia Pty Ltd
Vmoto International Limited
Nanjing Vmoto Co, Ltd
Nanjing Vmoto Manufacturing Co, Ltd
Nanjing Vmoto E-Max Electric Vehicles Development Co, Ltd
Vmoto Europe B.V
Vmoto Soco Italy srl1
Australia
Hong Kong
China
China
China
Netherlands
Italy
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
-
1. Vmoto Soco Italy srl is a new subsidiary incorporated in Italy during the year.
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 )
23. KEY MANAGEMENT PERSONNEL DISCLOSURES
Details of Key Management Personnel
(i) Directors
Mr Phillip Campbell
Chairman (Non-Executive) – appointed 31 May 2017
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 Kaijian Chen
Director (Non-Executive) – appointed 1 September 2011
Ms Shannon Coates
Director (Non-Executive) – appointed 23 May 2014
(ii) Executives
Mr Shuguang Han
General Manager - appointed 1 May 2014
Mr Jeffrey Wu
Sales Manager - appointed 1 May 2014
Ms Susan Xie
Sales Manager - appointed 1 March 2010
Ms May Wang
Sales Manager - appointed 1 January 2016
Mr Chaohui Li
Technical Manager - appointed 1 September 2017
The total remuneration paid to Key Management Personnel of the Company and the Consolidated Entity during the
period ended 31 December 2018 was as follows:
Year
ended
31 Dec 2018
$
Year
ended
31 Dec 2017
$
Short-term employee benefits
Share-based payments
Total KMP compensation
808,478
114,839
923,317
708,835
117,973
826,808
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 2018.
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 )
24. DISCONTINUED OPERATIONS
On 27 November 2017, the Company entered into a sale agreement to dispose 51% interest of Shanghai Jiye, which
focuses on the Chinese electric two-wheel vehicle market. 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 interest in Shanghai Jiye operations is in line with the Company’s strict
investment return criteria. While the strategic rationale for the original acquisition was sound, the Shanghai Jiye
operations did not deliver the return expected and is facing increasing business risks and stricter government
regulations in the Chinese electric two-wheel vehicle market. The disposal was completed on 30 November 2017, on
which date control of the Shanghai Jiye 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 Shanghai Jiye 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 revenue/(expense)
Profit/(Loss) after tax
Loss on disposal of operation (see Note 25)
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)
Year ended
31 Dec 2017
$
16,930,467
(14,979,623)
1,950,844
(2,231,769)
(280,925)
49,893
(231,032)
(1,520,578)
(1,751,610)
(1,540,476)
(114,281)
668,564
(986,193)
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 )
25. DISPOSAL OF SUBSIDIARY
On 30 November 2017, the Company disposed its 51% interest in Shanghai Jiye Electric Vehicle Co, Ltd, which focuses
on the Chinese electric two-wheel vehicle market.
Consideration received
Consideration received in cash and cash equivalents
Total consideration received
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
Intangible assets
Current liabilities
Trade and other payables
Deferred tax liabilities
Loans and borrowings
Non-current liabilities
Loans and borrowings
Equity
Non-controlling interests
Net assets disposed of
Loss on disposal of subsidiary
Consideration received
Net assets disposed of
Loss on disposal
Year ended
31 Dec 2017
$
415,487
415,487
129,832
1,346,819
3,442,594
225,645
481,224
1,759,867
(2,603,238)
(439,967)
(1,776,411)
(61,120)
(569,180)
1,936,065
415,487
(1,936,065)
(1,520,578)
The loss on disposal is included in the loss for the year from discontinued operations (see Note 24).
Net cash inflow on disposal of subsidiary
Consideration received in cash and cash equivalents
Less: Cash and cash equivalent balances disposed of
415,487
(129,832)
285,655
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 )
26. RECONCILIATION OF CASH FLOWS USED IN OPERATING
ACTIVITIES
Year ended
31 December 2018
$
Year ended
31 December 2017
$
Cash flows from operating activities
Profit/(Loss) for the year
Adjustments for:
- Depreciation and amortisation
- Loss on disposals
- Impairments
- Share based payment expenses
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
27. NON-DIRECTOR RELATED PARTIES
(917,563)
(8,096,672)
967,128
-
-
209,444
259,009
(733,205)
(2,857,387)
1,370,659
2,227,807
266,883
775,385
1,520,578
1,458,259
141,214
(4,201,236)
1,492,178
4,207,045
836,245
(4,695,673)
(2,361,441)
Non-director related parties are the Company’s controlled entities. Details of the Company’s interest in controlled
entities are set out in Note 22. Details of dealings with these entities are set out below.
Transactions - The loans to controlled entities are unsecured, interest-free and of no fixed term. The loans are provided
primarily for capital purchases and working capital purposes.
Receivables - Aggregate amounts receivable from non-director related parties:
Non-current
Unsecured loans to controlled entities
Provision for non-recovery
28. SUBSEQUENT EVENTS
Company
Year ended
31 Dec 2018
$
23,656,597
(23,656,597)
-
Year ended
31 Dec 2017
$
22,223,200
(22,223,200)
-
There has not arisen in the interval between the end of the financial period and the date of this Annual 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.
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 )
29. 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 2018
31 Dec 2017
$
$
954,928
11,957,864
12,912,792
140,427
-
140,427
799,876
10,607,360
11,407,236
164,977
-
164,977
12,772,365
11,242,259
74,814,382
(62,138,436)
72,431,566
(61,334,446)
96,419
12,772,365
145,139
11,242,259
Year ended
31 Dec 2018
$
Year ended
31 Dec 2017
$
804,290
-
804,290
6,359,016
-
6,359,016
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 2018.
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.
31. 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.
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
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 21 to 60, 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 2018
and its performance, as represented by the results of its operations and 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 2018.
Signed in accordance with a resolution of the Directors:
Yiting (Charles) Chen
Managing Director
Dated at Western Australia, this 28th day of March 2019.
61
To The Board of Directors
Auditor’s Independence Declaration under Section 307C of the
Corporations Act 2001
As lead audit partner for the audit of the financial statements of Vmoto Limited for the
financial year ended 31 December 2018, 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
DOUG BELL CA
Partner
Dated at Perth this 28th day of March 2019
Independent Auditor's Report
To the Members of Vmoto Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Vmoto Limited (“the Company”) and its
subsidiaries (“the Consolidated Entity”), which comprises the consolidated statement of
financial position as at 31 December 2018, the consolidated statement of profit or loss
and other comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies, and the
directors’ declaration.
In our opinion:
a.
the accompanying financial report of the Consolidated Entity 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 2018 and of its financial performance for the year then
ended; and
(ii)
complying with Australian Accounting Standards and the Corporations
Regulations 2001.
b.
the financial report also complies with International Financial Reporting Standards
as disclosed in Note 1(a)(i).
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Those
standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance about
whether the financial report is free from material misstatement. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Consolidated Entity in
accordance with the auditor independence requirements of the Corporations Act 2001
and the ethical requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independent Auditor’s Report
To the Members of Vmoto Limited (Continued)
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report of the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Key audit matter
How our audit addressed the key audit matter
Existence and valuation of inventory
(refer note 7)
The Consolidated Entity had an inventory balance of
$5,638,169 at year end, an increase of $2,857,387
from 2017.
Existence and valuation of inventory were
considered key audit matters due to:
− The quantum and increase of inventory on hand
Our procedures amongst others included:
− Attending stock takes conducted at year end
and performing sample counts;
− During site visits we observed to consider
damaged or obsolete stock on hand;
− Reviewing gross margins on sales during the
− The location of the inventory
year on a monthly basis;
− Risk of stock obsolescence from changing
− For a sample of items we tested unit costs of
technology
− The importance of inventory in relation to
generating positive operating cash flows.
inventory items and related sales to supporting
documentation to assess whether the inventory
is held at the lower of cost and net realisable
value;
− Reviewing margins and inventory turnover via
analytical procedures.
Existence and recoverability of other assets
(refer note 8)
Other assets consist of prepayments to suppliers of
$1,749,024 (2017: $3,119,683).
Prepayments predominately relate to payments
made by the Consolidated Entity in advance to
suppliers for the purchase of raw materials and
stock items.
Existence and recoverability of prepayments were
considered key audit matters due to the:
Our procedures amongst others included:
− Reviewing aged prepayments listing and
investigating old and/or material balances;
− On a sample basis, agreeing the outstanding
balances to suppliers’ confirmations;
− Testing of the ageing report to confirm the
accuracy of the report; and
− Quantum of prepayments;
− Ageing of prepayments;
− Risk of suppliers not fulfilling orders or the
prepayments not being utilised by the
Consolidated Entity.
− Assessing the recoverability of the
prepayments.
Independent Auditor’s Report
To the Members of Vmoto Limited (Continued)
Key audit matter
How our audit addressed the key audit matter
Revenue Recognition
During the year ended 31 December 2018, the
Consolidated Entity generated sales revenue of
$19,578,395 (2017: $15,079,424).
We reviewed the Consolidated Entity’s revenue
accounting policy and their contracts with customers
and considered how management:
In 2018, the Consolidated Entity adopted AASB 15
Revenue from Contracts with Customers for the first
time. The core principal of the standard is that an
entity must recognise revenue to depict the transfer
of goods to customers in an amount that reflects the
consideration to which the entity expects to be
entitled in exchange for those goods or services.
AASB 15 introduced a 5-step approach to revenue
recognition with prescriptive guidance with respect
to the identification of contracts with a customer, the
performance obligations in the contract, the
transaction price, the allocation of the transaction
price to the performance obligations and the
recognition of revenue when (or as) the entity
satisfies the performance obligation.
−
−
Identified the contract
Identified the performance obligations within the
contracts;
− Determined the transaction price;
− Allocated the transaction price to the
performance obligations
− Recognised revenue when the performance
obligation was satisfied
In addition to the above our procedures amongst
others included:
− Understanding the policies and procedures
applied to the sales process and their
application to revenue recognition;
− Performing substantive audit procedures on a
sample basis by verifying revenue to relevant
supporting documentation including approved
price lists, delivery/shipping documentation,
verification of cash receipts and ensuring the
revenue was recognised at the appropriate time
and classified correctly; and
− Performing a range of substantive analytical
and cutoff procedures.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Company’s annual report for the year ended 31 December 2018, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
Independent Auditor’s Report
To the Members of Vmoto Limited (Continued)
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors 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 (a)(i),
the directors also state in accordance with Australian Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial report complies with International Financial Reporting Standards.
In preparing the financial report, the directors are responsible for assessing the Consolidated Entity’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Consolidated Entity or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our responsibility is to express an opinion on the financial report based on our audit. Our objectives are to
obtain reasonable assurance about whether the financial report as a whole is free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
−
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
−
Obtain an understanding of internal control relevant to the audit 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 Consolidated Entity’s internal control.
−
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
−
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Consolidated Entity’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Consolidated Entity to cease to
continue as a going concern.
Independent Auditor’s Report
To the Members of Vmoto Limited (Continued)
−
−
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Consolidated Entity to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Consolidated Entity audit. We remain
solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 31 December
2018. The directors of the Company are responsible for the preparation and presentation of the remuneration
report in accordance with s 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.
Auditor’s Opinion
In our opinion, the Remuneration Report of the Company, for the year ended 31 December 2018, complies
with section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
DOUG BELL CA
Partner
Dated at Perth this 28th day of March 2019
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 21 March 2019:
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
Raymond and Susan Munro ATF Munro Family Super Fund
Xiaona Zhao
Xiaorui Ding
Yiting (Charles) Chen
Number of
Shares
14,145,400
11,753,095
8,823,529
15,646,726
On-Market Buy Back
There is no current on-market buy back.
Distribution Schedules
Distribution schedules for each class of security as at 21 March 2019 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
-
221,428
379
2,888,855
1,042
3,615,927
443
915
32,837,760
228 181,452,050
0.10
1.31
1.64
14.86
82.10
3,007 221,016,020 100.00
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% of this class.
68
A D D I T I O N A L S H A R E H O L D E R I N F O R M A T I O N ( c o n t ’ d )
V M O T O L I M I T E D
A B N 3 6 0 9 8 4 5 5 4 6 0
Class H 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% 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% of this class.
Unlisted options exercisable at $0.065 each, expiring 22 May 2021
Range
1
1,001
5,001
10,001
100,001
Total
1,000
-
5,000
-
-
10,000
- 100,000
Over
-
Holders Units
%
-
-
-
2
71
-
-
-
124,777
2,147,950
-
-
-
5.49
94.51
9
2,272,727 100.00
¹ Mr Erchuan Zhou holds 713,013 options comprising 31.37% of this class.
Unlisted options exercisable at $0.085 each, expiring 22 May 2021
Range
1
1,001
5,001
10,001
100,001
Total
1,000
-
5,000
-
-
10,000
- 100,000
Over
-
Holders Units
%
-
-
-
2
71
-
-
-
124,777
2,147,950
-
-
-
5.49
94.51
9
2,272,727 100.00
¹ Mr Erchuan Zhou holds 713,012 options comprising 31.37% of this class.
69
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 7,693 as at 21 March 2019):
Holders
Units
1,614
4,324,679
Top Holders
The 20 largest registered holders of quoted securities as at 21 March 2019 were:
Fully paid ordinary shares
Name
1
2
MR YITING CHEN
MR RAYMOND EDWARD MUNRO + MRS SUSAN ROBERTA MUNRO
MS XIAONA ZHAO
MR ERCHUAN ZHOU
MS XIAORUI DING
OUTRIGHT INTERNATIONAL BUSINESS GROUP LIMITED
MR YI CHEN
MR LIANG CHEN
TRESDAM PTY LTD
SPELIZA INVESTMENTS PTY LTD
3
4
5
6
7
8
9
10
11 MR BRENDAN DAVID GORE
12
MR ANDREW STUART CARNEGIE HARRISON + MRS LINDEN
MARGARET HARRISON
CITICORP NOMINEES PTY LIMITED
13
14 MR ZHENGJIE WU
15 MR THOMAS JOSEPH FALVEY
16
17
18 MR KAIJIAN CHEN
19 MR STEPHEN COLBECK
20
YANG PTY LTD
SILVERLIGHT HOLDINGS PTY LTD
EDLINS PROSPERITY PLUS PTY LTD
No. Shares
15,646,726
14,145,400
11,753,095
9,002,853
8,823,529
8,300,000
4,800,803
3,917,787
3,483,740
3,482,148
3,245,000
3,076,661
2,947,791
2,636,366
2,437,540
2,436,365
2,225,901
2,090,396
2,000,000
1,920,500
108,372,601
%
7.08
6.40
5.32
4.07
3.99
3.76
2.17
1.77
1.58
1.58
1.47
1.39
1.33
1.19
1.10
1.10
1.01
0.95
0.90
0.87
49.03
Corporate Governance
The Company’s Corporate Governance Statement
www.vmoto.com/Corporate/Investors
for
the 2018
financial year
can be accessed at
70