Market Update

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:

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

As announced on 23 September 2015, following a thorough review and assessment of Nanjing Haiyong, Vmoto's electronic technology subsidiary company producing controllers for electric vehicle driving systems, the Board of Vmoto made the strategic decision to exit the Nanjing Haiyong business and signed a binding conditional agreement with a third party to sell all of the assets, liabilities and intellectual property of Nanjing Haiyong.

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 Board believes that 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.

CORPORATE

During the quarter, the Company issued a total of 1,417,085 fully paid ordinary shares, comprising 42,633 shares and 791,200 options (exercisable at $0.75 on or before 31 December 2017) to brokers in part consideration for the provision of services relating to the Company's capital raising completed on 17 June 2015; 32,258 shares issued to a consultant in part consideration for services provided; 1,300,000 shares issue to employees and consultants and 42,194 shares to Non-Executive Director Mr Kaijian Chen in lieu of Director fees, as approved by shareholders at the Company's general meeting on 1 October 2015.

AIM DE-LISTING

Post the end of the quarter, as announced on 15 October 2015, the Company advised it had decided to cancel the admission of its ordinary shares to trading on AIM with effect from 7.00am (GMT) on 19 November 2015 (in accordance with the timetable set out in the AIM Rules for Companies). This decision was made following a thorough review of the Company's AIM listing by the Board. Given the Company's shareholder base is predominantly Australian and the majority of the Company's share trading occurs on the ASX, the Board concluded that the costs incurred in maintaining a secondary listing on AIM, exceeded the benefits obtained from the listing. On this basis, the Board considered it in the best interests of the Company and all shareholders to seek a cancellation of its shares from trading on AIM, enabling management to focus on the business for the benefit of all shareholders.

OUTLOOK

3Q15 was a strong quarter for the Company, with production and sales in line with expectations and management expects 4Q15 to be equally as productive as the Company meets its current order book and secures new contracts.

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, Denmark, Italy, Portugal, Switzerland, United Kingdom, Brazil, Mexico and New Zealand. 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.

In light of the above, the Company remains confident that production and sales will continue in line with expectation and the revised forecast earnings for FY2015 will be achieved.

For further information, please contact:

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.