TIDMVMT
RNS Number : 8154D
Vmoto Limited
29 October 2015
VMOTO LIMITED
MARKET UPDATE 3Q15
ANNOUNCEMENT 29 October 2015
Vmoto Limited (ASX/AIM:VMT), the global scooter manufacturing
and distribution group specialising in "green" electric powered
two-wheel vehicles, is pleased to provide the following update on
its activities for the quarter ended 30 September 2015 (3Q15).
3Q15 HIGHLIGHTS
-- Trading encouraging and in line with management expectations
-- Over 23,200 units sold in 3Q15, up 15% compared with 3Q14,
with the mix of sales continuing to evolve given the growing number
of higher margin sales into international markets
-- New international supply agreement signed with North American
Telematics high-tech company, Saturna Green Systems, focused on
developing state-of-the-art wireless shared transportation and
communication systems ("Electric Scooter Sharing Project") for
electric two and three-wheel vehicles
-- Appointed newly exclusive distributor for Israel market
-- Progress with establishment of internet based retail sales
network and system in Australia, expected to be launched in
November 2015
-- Progressing significant new market entry, distribution and
customer opportunities, including North America, Denmark, Italy,
Portugal, Switzerland, United Kingdom, Brazil, Mexico and New
Zealand
-- PowerEagle negotiations continuing to extend production
agreement and working relationship post 2015
-- Strategic decision to exit Nanjing Haiyong controller business
-- Company on track to meet forecast earnings for 2015 of $4 million - $6 million underlying NPAT
Managing Director, Charles Chen commented on the Company's
activities in 3Q15:
"Historically the September quarter is a very busy period for
Vmoto, with orders and sales increasing, and 3Q15 was no exception.
Sales of our electric two-wheel vehicle products continued to
increase across our various sales channels, in particular to
international markets and interest in our electric vehicle products
continues to remain high. A number of old and new customers visited
the factory during the quarter seeking to enter into new orders or
agreements for our electric two-wheel vehicle products.
"We were excited to sign an international supply agreement with
Saturna Green Systems and expect significant benefits to flow to
Vmoto, including growth initially in the North American and
European markets for both, and synergies between the two companies
in electric vehicle technology and networks.
"We continued discussions with a significant European
supermarket group that has over 300 stores and samples have been
delivered to this customer for further evaluation and testing. We
have also further progressed the establishment of our internet
based retail sales network and system to expand sales and further
increase profitability and expect to launch this in Australia in
November 2015.
"While we made the difficult decision during the quarter to
cease the Nanjing Haiyong business and, post the end of the
quarter, to de-list from AIM, we are confident that both of these
decisions were the right ones for the Company at its current stage
of operations, and will allow management to focus on Vmoto's core
business, resulting in better outcomes for shareholders in the
longer term.
"We are excited by current growth opportunities, including
Saturna Green Systems' Electric Scooter Sharing Project and
significant B2B opportunities in Italy and South America, and look
forward to capitalising on these and other initiatives over the
remainder of FY15 and into FY16."
SALES AND MARKETING
Quarterly Sales Performance
Unit sales for 3Q15 were 23,265 units, up 5.6% from 2Q15,
comprising:
OEM 13,342
Chinese retail stores
and distributors 6,547
International 3,376
Total 23,265
3Q15 was a busy quarter for the Company with production and
sales continuing to increase quarter on quarter. This trend is
expected to continue over the coming months. Trading was
encouraging and in line with management expectations.
The mix of sales continues to evolve with sales into higher
margin international markets growing. International unit sales
increased by 41% compared with 3Q14, while unit sales to Chinese
retail stores and distributors increased by 24% compared with 3Q14.
Low margin OEM sales increased slightly by 7% compared with 3Q14 in
line with the Company's strategy to focus on higher margin sales to
drive profitability.
Internationally the Company continues its strong relationships
with its B2B and B2C customers, with many placing orders that will
flow through in future quarters.
In addition to existing customers in South America, Europe,
United States, South East Asia and the Middle East, Vmoto is also
progressing opportunities with potential new customers and
distributors from Denmark, Italy, Portugal, Switzerland, United
Kingdom, Brazil, Mexico and New Zealand. These potential new
customers and opportunities represent significant B2B supply
opportunities including a large European supermarket group with
over 300 stores, scooter sharing projects, vehicle rental
companies, delivery companies and OEM for international brands.
In China, the Company now has a sales network of 45 outlets
through a combination of its own retail outlets and third party
distributors.
The three-wheel and four-wheel electric vehicle company, in
which Vmoto holds a 20% equity interest, relocated its operations
to Vmoto's Nanjing manufacturing facility, after initially
producing units externally. This company focuses on three-wheel and
four-wheel electric vehicles that have applications across a number
of industries, including freight and goods delivery, leisure and
sightseeing and transportation for the aged and disabled
population. Following a thorough assessment and strategic review,
the Company has taken the decision to reduce its equity interest in
the three-wheel and four-wheel electric vehicle company from 20% to
15% and has entered into an agreement with Mr Cong Cen to sell 5%
equity interest in the three-wheel and four-wheel electric vehicle
company held by Vmoto at original cost invested by Vmoto.
As previously announced the Company is in the process of
establishing an online based retail sales network and system in
Australia that will open up a new sales stream for its products and
substantially broaden its reach throughout Australia. Work
continued on this initiative during 3Q15 and the Company remains
confident it will be operational and generating online sales by the
end of 2015.
POWEREAGLE
Senior management have had numerous meetings with senior
executives of PowerEagle to discuss a new business relationship
post 2015 once the current OEM agreement runs out. These
negotiations are ongoing and a new arrangement is expected in
December.
NEW DISTRIBUTORS
In 2Q15, Vmoto signed an exclusive distribution agreement with a
United Kingdom company to distribute, stock and market the
Company's Vmoto and E-Max range of electric scooter products for
United Kingdom and Ireland markets. During 3Q15, 40 units were
ordered and scheduled for delivery by end of October 2015 and more
orders are expected in 4Q15.
During 3Q15, the Company also appointed new exclusive
distributor in Israel.
FINANCIAL
As at 30 September 2015, the total operating facility drawn down
was RMB10 million (approximately A$2.2 million) and the total
undrawn operating facility was RMB24 million (approximately A$5.4
million). The Company repaid RMB15 million (approximately A$3.4
million) during the quarter to ease interest payments and making
working capital more efficient.
As at 30 September 2015, the Company had cash of A$6.7
million.
In light of the decision to exit the Nanjing Haiyong business,
on 23 September 2015, forecast earnings for 2015 were reduced by $1
million (reflecting $650k of earnings assumed in the forecast but
not generated by Nanjing Haiyong, a loss by Nanjing Haiyong
incurred in September and the raising of provision for doubtful
debts) to a range of:
-- $5 million - $7 million underlying EBITDA
-- $4 million - $6 million underlying NPAT.
EXHIBITION AND EVENT
During 3Q15, Vmoto's United Kingdom distributor participated in
three exhibitions and events in United Kingdom.
Vmoto's United Kingdom distributor exhibited Vmoto's electric
two wheel vehicle products at the Centre for Engineering Excellence
Low Carbon Vehicle (CENEX LCV) held on 9-10 September 2015 and
received positive feedback. The 2015 CENEX LCV achieved breaking
record with 2,852 total visitors, 211 exhibitors, 103 vehicles and
1,098 organisation represented. Vmoto was the only electric scooter
brand exbihited in 2015 CENEX LCV.
Vmoto's United Kingdom distributor also participated in the Zero
Emission Network event in 3Q15. The Zero Emissions Network is a
London project working across Hackney, Islington and Tower Hamlets
aiming to help businesses save money, reduce emissions and improve
air quality making London a better place to visit, work and do
business. The Vmoto brand received significant press interest and
reviews from the event.
Vmoto's United Kingdom distributor also participated in the 2015
Takeaway Innovation Expo held on 29-30 September 2015 and received
positive feedback and significant interest from potential
customers.
Vmoto's Spanish distributor exhibited Vmoto's electric two wheel
vehicle products at the European Mobility Week held on 19-22
September 2015 and received significant interests and positive
feedback.
HAIYONG
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