01/09/2009 - 09:03

Vmoto reports growth despite $4m loss

01/09/2009 - 09:03

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Scooter manufacturer Vmoto has delivered its fourth successive year of revenue growth but has posted a $4 million loss for the 2009 financial year, largely attributable to the development of its new facility in China.

Scooter manufacturer Vmoto has delivered its fourth successive year of revenue growth but has posted a $4 million loss for the 2009 financial year, largely attributable to the development of its new facility in China.

The Perth-based manufacturer said in its report that revenue had increased 37 per cent to $48.4 million, up from $35.3 million recorded the previous year.

Despite the revenue growth, Vmoto reported a loss of $4.1 million for the year, largely attributed to the capital expenditure required for the Nanjing facility.

"Completion of the Facility, coupled with implementation of the Company's recent cost saving initiatives, means Vmoto can now look forward to profitable operations from higher margin sales, to be delivered from its own factory," Vmoto said.

 

The announcement is below:

 

 

SUMMARY

The financial year ended 30 June 2009 was an incredibly challenging yet highly rewarding one for Vmoto Limited ("Vmoto" or "the Company").

Construction of the Company's new manufacturing facility in Nanjing, China ("Nanjing Facility") coincided with arguably the biggest economic slowdown since the Great Depression. Despite this, the team at Vmoto completed the factory build on time and on budget, while at the same time securing large and continuing orders to ensure the
Facility's success.

The Nanjing Facility was completed in September 2008 and has subsequently achieved all necessary regulatory certification to enable the manufacture of engines, scooters and small 4WD vehicles for the world export markets. Compliance testing was also completed within this period and new models of scooters designed and developed to meet production requirements for the second half of calendar year 2009.

The Nanjing Facility was fully fitted with production facilities, including 3 production lines which will become operational later this calendar year. Staff training has also taken place to ensure the highest standard of quality for products coming off the production lines.

The two rental premises that were previously being used by the Company in China have now been closed and all manufacturing plant and equipment has been transferred to and re-commissioned at the Nanjing Facility.

Vmoto has grown its revenue base by nearly 37% in the period, the Company's fourth year of consistent growth. Freedomotor Corporation Limited ("FMC") (which is anticipated to be renamed Vmoto International) has again achieved excellent growth, with sales of over A$48 million. Most of this revenue was attributed to FMC's agency business, however with the Nanjing Facility now operational, it is anticipated this business will gradually be transferred to Vmoto manufactured products.

Despite growth in revenue, the Company experienced a loss of $4,095,578 for the period, which can largely be attributed to the capital expenditure required for the development of the Nanjing Facility. Completion of the Facility, coupled with implementation of the Company's recent cost saving initiatives, means Vmoto can now look forward to
profitable operations from higher margin sales, to be delivered from its own factory.

To coincide with the Nanjing Facility becoming operational, Vmoto also signed a delivery contract for 30,000 scooter units for the Vietnamese market. This contract underwrites the first year's production from the Nanjing Facility, with delivery of the first part of the order expected to take place in the second half of calendar year 2009.

These scooters will represent the first mass production from the new Nanjing Facility and will feature Vmoto's 125 cc water cooled four stroke fuel injected engine, developed by the engineering team at the Vmoto Facility. This is a unique Vmoto product and is class leading in its power and emissions. Vmoto has patent applications currently
pending in relation to this engine.

Completion of the Nanjing Facility has also enabled the transfer of the manufacturing of the Scartt AWD vehicle from Spain to China and this has been completed over the last few months. Spain will continue to act as a design and distribution centre for Vmoto, with all manufacturing now taking place in Nanjing, enabling the Company to produce a better quality vehicle in larger quantities and at more competitive pricing. Customer interest in the Scartt is high and production to meet first orders is expected in late November 2009.

In conjunction with it petrol engine developments, the Company also announced it was developing a range of Green Energy Electric Vehicles, which Vmoto regards as the future of the Company's manufacturing business. A separate division within the Company has been developed for this purpose and relationships have been established with expert consultants to provide advice. It is planned to have both electric scooters and Scartt AWDs available by mid 2010.

The abovementioned developments and advancements within the Company cannot occur without funding and, via a series of recently announced capital raisings and third party arrangements, Vmoto has been able to source sufficient funds to carry out current developments and meet the Company's ongoing cash flow requirements.

2010 promises to be a year that sees the Company generate profit from its operations and focus on growing new markets as a result of massive demand for its products.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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