Operational review

OPERATIONAL REVIEW FOR THE

QUARTER ENDED 30 SEPTEMBER 2013

ANNOUNCEMENT 30 October 2013

Vmoto Limited ("Vmoto" or "the Company") (ASX:VMT, AIM:VMT), the global scooter manufacturing and distribution group specialising in "green" electric powered two wheel vehicles, provides the following update on its activities during the quarter ended 30 September 2013.

HIGHLIGHTS - SEPTEMBER 2013 QUARTER

· Sold approximately 11,292 units to Shanghai PowerEagle International Co Ltd ("PowerEagle"). With a total of 33,392 units sold, the Company remains on track to fulfil PowerEagle's forecast production of 42,000 units for year ending 31 December 2013.

· Launched five new models of electric two wheel vehicles, making a total of eleven models now available in the Chinese domestic market.

· Opened a further three retail stores in China for a total of four stores. The Company expects to open more retail stores by year end.

· Over 1,500 Vmoto units sold in the quarter to the end of September 2013 from first four Chinese stores.

· Raised A$1.5 million (before costs) in August 2013 to enable the Company to meet the demand of Chinese customers.

· Additional collaborations and joint venture opportunities progressed, including the delivery of two trial electric four-wheel cleaning vehicles to the district government in Nanjing.

· New orders received from Malaysian customer.

· Profitable month for September 2013 of ~A$126,000 (unaudited) and delivered a profitable quarter of ~A$287,000 (unaudited) for September 2013 quarter.

POST QUARTER HIGHLIGHTS

· Firm commitments received to raise an additional A$5.0 million at 2.2c per share to fund Chinese expansion and joint venture.

· Vmoto ranked number 2 in the global electric scooter market by US independent research group Navigant Research.

CASH FLOW

Operating cash flow for the September 2013 quarter decreased in comparison with the previous quarter.

As was expected by the Company, Vmoto's receipts from customers during the quarter decreased in comparison with the previous quarter as the June 2013 quarter comprised of receipts for electric scooters delivered to PowerEagle for March and June 2013 quarter.

During the quarter, employee payments increased in comparison to the previous quarter as a result of recruitment of additional technical and skilled workers to meet increased demand.

Payments in respect of advertising and marketing during the quarter increased in comparison to the previous quarter due to the Company's participation in the Australian Microcap Investment Conference held over 22-23 October 2013 in Melbourne, Australia. 

Payments in respect of other working capital (including inventories) decreased when compared to the previous quarter. The Company expects to continue building up more stocks (i) to increase production of Vmoto's eleven new models of electric two wheel vehicles for the Chinese market, (ii) for distribution in the retail stores in China in order to meet the increased market demand; and (iii) to continue ramp up in production of PowerEagle electric scooters.

As at 30 September 2013, the total operating facility drawn down was RMB29.9million (approximately A$5.2million) and the total undrawn operating facility was RMB4.1million (approximately A$720,000).

As at 30 September 2013, the Company had cash of A$1.3 million. A further A$1.2 million was raised in October, comprising Tranche 1 of the proposed $5.0 million capital raising. The remaining A$3.8 million is expected to be received on or around the Company's shareholder meeting scheduled for 13 November 2013.

EXISTING AND NEW CUSTOMERS

PowerEagle: During the September 2013 quarter, the Company sold approximately 11,292 units of PowerEagle electric scooters to the customer. Production continues to be efficient and the Company remains on track to produce PowerEagle's forecast production of 42,000 units for the year ending 31 December 2013.

E-Tropolis: The Company sold 40 units of electric scooters to E-Tropolis during the quarter.

Malaysia: The Company sold 72 units of its delivery electric scooters in completely knocked down ("CKD") form to its Malaysian Original Equipment Manufacture ("OEM") customer during the quarter. The Company's Malaysian OEM customer has delivered a first batch of the delivery electric scooters to one of the largest fast food restaurant chains in Malaysia. Pursuant to the forecast provided by the Malaysian OEM customer, it is planning to order approximately 60 units of electric scooters from Vmoto in CKD form per month commencing from January 2014 to December 2014, being a total of 720 units between January 2014 and December 2014 although the Company is hopeful that this could increase given the current number of outlets operated by the fast-food restaurant chain.

Others: The Company's electric scooters were shipped to distributors in Slovenia, Canada and South Africa, whilst European orders remain slow due to the poor economic climate.

LAUNCH OF NEW MODELS/VERSIONS IN CHINA

In September 2013, Vmoto launched five new models of electric two wheel vehicles in China (see announcement dated 3 September 2013). These new models have been produced following the success of the previous models released in June 2013. The new models have been developed to specifically target the Chinese market, with the design being modern and fashionable and at a reasonable price.

Following the launch of these new models, the Company now has eleven models of electric two wheel vehicles being sold into the Chinese market.

VMOTO'S RETAIL STORES IN CHINA

Since the quarter ended 30 June 2013, the Company has opened a further three retail stores in China, located in Jurong City, which has a residential population of over 8 million and is ideally located approximately 60 kilometres from Vmoto's manufacturing facility in Nanjing, the Lishui District in Nanjing and in the Jiading District in Shanghai, covering an area of 410m2 and the largest Vmoto retail store in China.

TRADING UPDATE

The Company delivered a profitable quarter to the end of September 2013, with a net profit after tax figure (unaudited) of approximately A$287,000. China sales from the first four stores in the quarter were over 1,500 units, with over 1,000 units of these coming from the Company's flagship store in Nanjing, opened in June 2013.

September produced a net profit after tax (unaudited) of approximately A$126,000.

October trading is in line with the Board's expectations and based on demand shown to date, the Company anticipates that it will make a maiden annual profit for the financial year ending 31 December 2013 of between A$300,000 and A$600,000.

CORPORATE

In August 2013, the Company raised A$1,500,000 (before costs) through the issue of 75,000,000 fully paid ordinary shares at an issue price of A$0.02 per share.

Following the end of the quarter the Company received firm commitments to raise a further A$5.0 million at 2.2c per share in an placing with Australian and UK institutions and sophisticated investors. A$1.2 million was raised in October 2013, comprising Tranche 1 of the proposed A$5.0 million capital raising. The remaining A$3.8 million to complete the raising is expected to be received on or around 13 November 2013, following shareholder approval.

PUBLICATION AND VMOTO'S MARKET POSITION

A recent study by Navigant Research "Navigant Research Leaderboard Report: Electric Scooters" published in 4Q 2013 ranks Vmoto as the number 2 electric scooter vendor in the global electric scooter market. Navigant Research is an independent market research company based in United States that provides in-depth analysis of global clean technology markets.

This study further validates the market position of Vmoto and as a key player in the global electric scooter market.

OUTLOOK

The Company continues to deliver on its existing OEM contracts with PowerEagle and is planning to open additional stores in China to increase the retail distribution opportunities. The Company is continuing discussions with parties already operating in the electric vehicle market for potential collaboration or joint venture opportunities.

The Company is also in discussions with a range of potential new customers across the globe, particularly India, Indonesia, Vietnam and Thailand.

AUTHORISED BY:

Charles Chen

Managing Director

For further information, please contact:

About Vmoto

Vmoto is a global two wheel vehicle manufacturing and distribution group and is listed on the Australian Securities Exchange (ASX) and on the AIM market of the London Stock Exchange. The Company specialises in high quality "green" two wheel electric powered vehicles and manufactures a range of western designed electric (and some petrol) two wheel vehicles from its low cost manufacturing facilities in Nanjing, China, marketed in Europe through its operation in Bremen, Germany and marketed outside Europe through its operations in Australia. 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.