TIDMVMT
RNS Number : 9091Z
Vmoto Limited
23 September 2015
VMOTO FOCUSES ON GROWTH OPPORTUNITIES
IN CORE ELECTRIC two-wheel vehicle OPERATIONS
FOLLOWING SALE OF nanjing HAIYONG ASSETS
Announcement 23 SEPTEMBER 2015
-- Strategic decision made to exit Nanjing Haiyong electric
vehicle controller operations via sale of assets
-- Sale allows management to focus on multiple growth
opportunities for Vmoto in its core electric two-wheel vehicle
operations
-- As a result of the exit and sale of Nanjing Haiyong assets,
guidance for 2015 underlying EBITDA has been reduced to $5 million
- $7 million, and 2015 underlying net profit after tax to $4
million - $6 million
-- Pipeline of potential electric two-wheel vehicle contracts
for remainder of 2015 and 2016 remains strong
Vmoto Limited (ASX/AIM: VMT) advises that following a thorough
review and assessment of Nanjing Haiyong, its electronic technology
company producing controllers for electric vehicle driving systems,
the Board of Vmoto has taken the strategic decision to exit the
Nanjing Haiyong business and has signed a binding conditional
agreement with a third party, Cen Cong, to sell all of the assets,
liabilities and intellectual property of Nanjing Haiyong.
The proceeds from the sale are expected to be RMB 2 million
(approx. A$440,000) of which the Company has so far received
RMB500,000 with the remaining RMB1,500,000 to be received by end of
September 2015. Under the terms of the acquisition agreement
pursuant to which Vmoto acquired Nanjing Haiyong, the second
tranche of Vmoto shares worth A$1.8 million that were due to the
original owner of Nanjing Haiyong will now not be issued.
The exit from the Nanjing Haiyong business via the sale of its
assets is in line with Vmoto's strict investment return criteria.
While the strategic rationale for the original acquisition was
sound, the Nanjing Haiyong business did not deliver the returns
expected. With multiple attractive growth opportunities available
in Vmoto's electric vehicle operations, this sale allows Vmoto
management to increase its focus on the company's core
business.
With controllers previously sourced from multiple suppliers, the
exit from the Nanjing Haiyong business will not impact Vmoto's
current or future electric vehicle models.
Commenting on the decision to exit from the Nanjing Haiyong
business via a sale of its assets, Managing Director Charles Chen,
said:
"This decision was not taken lightly. However, after a detailed
analysis of the performance of the Nanjing Haiyong business and the
returns it was generating, it did not strategically fit within
Vmoto's core electric vehicle business.
"Nanjing Haiyong was instrumental in providing Vmoto with the
opportunity to enter into the 3/4 wheel electric vehicle joint
venture, and for this we are thankful. However, we strongly believe
that exiting this business now via the sale of its assets is in the
best interests of Vmoto and its shareholders longer term given the
business was not generating the returns expected when it was
originally purchased.
"Our electric vehicle production and existing and potential
customer relationships will not be affected by this decision. It
will mean that we can devote all our time, effort and resources to
the growth of our electric two-wheel vehicle operations and 3/4
wheel electric vehicle joint venture.
"Our pipeline of new potential contracts both in China and
international markets continues to grow. At the same time, we are
also developing new products and repositioning existing products
for existing and potential new customers, domestic and
international. We remain as confident as ever in our ability to
meet the 2015 budget set for our core electric vehicle operations
and substantially grow Vmoto's electric vehicle business going
forward."
In light of the decision to exit Nanjing Haiyong via the sale of
its business assets, forecast earnings for 2015 has been reduced by
$1 million (reflecting $650k of earnings assumed in the forecast
but not generated by Nanjing Haiyong, a small loss by Nanjing
Haiyong incurred in September and the raising of a provision for
doubtful debts) to a range of:
-- $5 million - $7 million underlying EBITDA
-- $4 million - $6 million underlying NPAT.
A one-off non-cash impairment charge is expected to be raised
with the full year result once the final balance sheet of Nanjing
Haiyong has been finalised. This will be partially offset by the
benefit generated by the reversal of the provision for the second
tranche of shares no longer being issued.
Reflecting the multiple growth opportunities currently available
to Vmoto in its core electric two-wheel vehicle operations, the
company has multiple potential new electric two-wheel vehicle
contracts that are at various stages of progress with new
significant customers in countries including China, Canada, Iran,
Italy, Brazil and Switzerland. While there is no guarantee of
signing up all of these opportunities, management is confident of
securing some of these before the end of this year. The benefit
from these contracts, given timing, will be reflected in 2016 and
future years.
Further to the clarification as to the Company's expectation of
its performance given above and below, the Company has applied for
trading in the Company's shares on AIM to be restored and
anticipates that this will occur at 7.30am (BST) today.
- ENDS -
For further information, please contact:
Vmoto
Charles Chen, Managing Director charles@vmoto.com.cn
+86 139 133 88886
Olly Cairns, Non-Executive Director +61 8 9226 3865
finnCap Ltd
Christopher Raggett (corporate finance)
Tony Quirke (corporate broking) +44 20 7220 0500
About Vmoto
Vmoto Limited (ASX/AIM: VMT) is a global scooter manufacturing
and distribution group. The Company specialises in high quality
"green" electric powered two wheel vehicles and manufactures a
range of western designed electric scooters from its low cost
manufacturing facilities in Nanjing, China. Vmoto combines low cost
Chinese manufacturing capabilities with European design. The group
operates through two primary brands: Vmoto (aimed at the value
market in Asia) and E-Max (targeting the Western markets, with a
premium end product). As well as operating under its own brands,
the Company also sells to a number of customers on an original
equipment manufacturer ("OEM") basis.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCUOAVRVKAKURR
(END) Dow Jones Newswires
September 23, 2015 02:01 ET (06:01 GMT)
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