Operational Review to 31 December 2014

OPERATIONAL REVIEW FOR THE

QUARTER ENDED 31 DECEMBER 2014

ANNOUNCEMENT 29 January 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 during the quarter ended 31 December 2014 (4Q14).

HIGHLIGHTS OF DECEMBER 2014 QUARTER

· Fourth consecutive (and best to date) quarter of positive operating cash flow, with approximately $430k generated in 4Q14, up from $55k in 3Q14

· Continued growth in quarterly unaudited normalised net profit after tax, to ~$1.3 million

· Highest monthly profit to date recorded for October 2014 with normalised net profit (excluding one off expenses and impairments) after tax of approximately A$537k (unaudited)

· 19,326 units sold in 4Q14; with approximately 12,483 units sold to OEM customers, over 2,567 sold through Vmoto's retail stores, and the balance sold to international and Chinese distributors and customers

· Entered into electric three-wheel and four-wheel vehicle markets via a Joint Venture (JV) company with a number of experienced partners

· Signed Co-operation Agreement with the third largest handle bar manufacturer in China for the Company's patented handle bar technology

· Following the acquisition of Haiyong Electric Technology Co, Ltd in September 2014, Haiyong has completely moved into Vmoto's manufacturing facility

· Approximately A$972k raised through the exercise of listed 4c options, including A$541k from directors

· China distribution footprint encompasses 16 company owned retail stores, in addition to relationships with 15 external distributors and dealers across China

· Received orders from its Mexican customer to target the B2B and fast food delivery groups in Mexico following successful evaluation of samples

· Delivered Vmoto's electric two-wheel vehicle products to international distributors and customers in Croatia, Denmark, Malaysia, Japan and Vietnam

· Progressing new market entry opportunities, including Mexico, Nepal, Sri Lanka and United Kingdom

FOURTH CONSECUTIVE POSITIVE QUARTERLY NET OPERATING CASH FLOW

Vmoto achieved its fourth consecutive positive operating cash flow result for the December 2014 quarter of $430k, which represents substantial progress when compared to negative operating cash outflow of $1.7 million in the December 2013 quarter.

Sales during the December 2014 quarter through the Company's retail stores and distributors, to OEM customers and internationally stood at 19,326 units.

During the quarter, the Company drew down RMB 2 million (approximately A$393k) to meet orders and provide working capital for Haiyong. As at 31 December 2014, the total operating facility drawn down was RMB 24 million (approximately A$4.7 million) and the total undrawn operating facility was RMB 10 million (approximately A$2.0 million).

As at 31 December 2014, the Company had cash of A$3.8 million (unaudited).

TRADING UPDATE - REVENUE GROWTH CONTINUING

The Company continues to grow earnings, with normalised net profit after tax generated for the December 2014 quarter of approximately A$1.3 million (unaudited) reflecting the higher margins attributable to the units sold. The one-off non-cash adjustments to reach the normalised net profit figure include A$680k of share based expenses in relation to issues to directors, management and consultants; an expected impairment of A$1.5m to stock used in the Company's petrol and Scartt operations which are no longer core to the business; and an expected impairment of A$422k in relation to sundry receivables which the Company does not now expect to recover.

The Company's growing profits are a clear demonstration of the increasing traction Vmoto brands are achieving in key markets in China and Asia, as well as the Company's international positioning in the premium end of the electric scooter market.

The breakdown of unit sales (unaudited) for the December 2014 quarter and full year 2014 is set out below:

Whilst unit sales were slightly down on the September quarter margins across the various sales channels have increased reflected in increasing cash flow and profits. The utilisation level of Vmoto's Nanjing manufacturing facility remains at less than 30% on an annualised production rate basis, providing the Company with substantial leverage to grow scale for very little capital expenditure or investment in facilities.

EXISTING AND NEW CUSTOMERS - KEY LONG TERM GROWTH DRIVERS

PowerEagle: During the December 2014 quarter, Vmoto sold approximately 12,483 electric two wheel vehicles to PowerEagle.

Denmark: During the quarter, Vmoto delivered three containers of its electric two-wheel vehicles to its Danish customer. The Company received further orders for two containers of Vmoto's electric two-wheel vehicles during the quarter and expects to deliver these products by the end of January 2015.

Croatia: During the quarter, Vmoto delivered one container of Vmoto's electric two wheel vehicles to its Croatian distributor.

Mexico: Further to the successful evaluation of a sample order during the quarter, the Company received orders from its Mexican customer for 45 Vmoto electric two wheel vehicles to target the B2B and fast food delivery groups in Mexico. The products are under preparation with delivery expected in February 2015.

Malaysia: Vmoto delivered three containers, with more than the 72 units originally anticipated, of its electric delivery scooters in completely knocked down ("CKD") form to its Malaysian Original Equipment Manufacturer ("OEM") customer during the quarter. A further order for 500 electric delivery scooters is currently under discussion to meet the increasing demand from Malaysia.

Vietnam: Vmoto completed and delivered 500 electric two wheel vehicles to its Vietnamese distributor during the quarter.

Nepal: During the quarter, Vmoto delivered one container of Vmoto's electric two wheel vehicles to its distributor in Nepal.

Japan: During the quarter, Vmoto delivered 50 units of its electric two-wheel vehicles in CKD form to its Japanese distributor. A further order from the Japanese distributor is expected in the next few weeks.

Sri Lanka: During the quarter, Vmoto delivered 5 sample units to its new customer in Sri Lanka. The Company is excited for the new market entry opportunities through its customer in Sri Lanka which represents another potential large market for the Company.

Iran: Further to one container delivered in September 2014, the Company received an order for two further containers from its Iranian OEM customer. The products are currently under preparation with delivery expected in February 2015.

Taiwan: The Company reached agreement with its Taiwanese customer to supply Vmoto's electric two wheel vehicle products for use in Taiwan. The Taiwanese customer has already established and set up its battery interchange stations at a number of cities in Taiwan and has been welcomed by the governments and users in Taiwan.

Others: The Company's electric two wheel vehicle products were shipped to distributors and customers in Africa, Italy, Korea and Thailand.

VMOTO'S RETAIL STORE AND DISTRIBUTION CHANNELS IN CHINA

In addition to its existing 16 retail stores, Vmoto has relationships with 15 distributors and dealers (up from 13 in the September 2014 quarter) that distribute Vmoto's products in China. Combined sales and profits from these two sales channels are in line with market expectations.

VMOTO LEVERAGES ELECTRIC VEHICLE CAPABILITIES

During the quarter, the Company announced it had resolved to enter into a JV with a number of experienced partners in the Chinese electric vehicle market to focus on designing, manufacturing and distributing electric three-wheel and four-wheel vehicles for the Chinese domestic market and the international market.

The joint venture vehicle has now been incorporated and Vmoto owns a 20% equity interest and will be required to invest up to A$1.5 million in the first 12 months. The JV is preparing to begin operations in February 2015 and the first year of production and distribution is estimated at between 20,000 to 50,000 units of low speed electric three-wheel and four-wheel vehicles.

This JV and market opportunity presents a very attractive growth channel for Vmoto that leverages the company's technological and product capabilities across much higher margin products.

COLLABORATIONS, TENDERS AND JOINT VENTURE OPPORTUNITIES

During the period, the Company signed a co-operation agreement (Agreement) with the third largest handle bar manufacuter in China. The Agreement authorises Dusheng to use the Company's patented technology in future manufacturing, sales and distribution of its handle bars. Pursuant to the terms of the Agreement, the Company will receive a royalty based on the volume of sales of handle bars that use the Company's patented technology.

The Company continues to receive significant interest from other electric vehicle distributors and parties for potential collaboration or joint venture opportunities.

EXHIBITION AND EVENT

During the quarter, Vmoto's Brazilian distributor supplied Vmoto's electric two-wheel vehicle products to Brazil's Porsche GT3 Cup Challenge event held in November 2014. The Company is very pleased to be associated with one of the most prestigious sporting events in South America, providing Vmoto with recognition of its high quality electric two-wheel vehicle products.

SITE VISITS BY INTERNATIONAL BROKERS, FUNDS MANAGERS, DISTRIBUTORS & CUSTOMERS, AND SENIOR OFFICIAL FROM AUSTRADE

The Company is pleased by the interest shown from Australian and UK brokers and fund managers who over the last few months have visited Vmoto's Nanjing manufacturing facilities at their own cost. Groups have been lead through an inspection of the offices, production lines, warehouse, staff accommodation, staff cafeteria and the new Vmoto Haiyong operations. Vmoto has also organised test rides of the Company's electric two wheel vehicles.

A number of distributors and customers from within China and around the world including Austria, Czech Republic, Vietnam and Thailand have also recently visited Vmoto's Nanjing manufacturing facilities.

A senior official from the Australian Trade Commission also visited Vmoto's Nanjing manufacturing facilities, the new Haiyong operations, and test rode the Company's electric two wheel vehicles.

CORPORATE

During the quarter, the Company raised approximately $972k via the issue of 24,306,856 shares following the exercise of listed 4c options. The Company issued a further 2,000,000 shares in January 2015 as a result of performance rights conditions being met.

OUTLOOK

The December 2014 quarter was an extremely active period for the Company with key highlights including the JV for three-wheel and four-wheel vehicles, achieving the Company's highest monthly profit in October 2014 and continuing to progress new market opportunities internationally.

The progress achieved over the past three months has built on previous success and positioned the Company for a period of substantial growth.

Utilisation of the Company's manufacturing facility in China (still at less than 30% capacity) is increasing and starting to drive economies of scale.

Internationally, where higher margins are generated, the Company will continue to focus sales into its existing markets and customers as well as continue discussions with a range of potential new customers across the globe.

The Company anticipates it will release its preliminary results for the year ended 31 December 2014 on or before 23 February 2015, ahead of Chinese New Year.

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.

Rule 4.7B

Appendix 4C

Quarterly report

for entities admitted

on the basis of commitments

Introduced 31/3/2000. Amended 30/9/2001, 24/10/2005.

Consolidated statement of cash flows

Payments to directors of the entity and associates of the directors

Payments to related entities of the entity and associates of the related entities

Non-cash financing and investing activities

Financing facilities available

Add notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2).

Reconciliation of cash

Acquisitions and disposals of business entities

Compliance statement

1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act (except to the extent that information is not required because of note 2) or other standards acceptable to ASX.

2 This statement does give a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 29 January 2015

(Company Secretary)

Print name: Shannon Coates

Notes

1. The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2. The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below.

· 6.2 - reconciliation of cash flows arising from operating activities to

operating profit or loss

· 9.2 - itemised disclosure relating to acquisitions

· 9.4 - itemised disclosure relating to disposals

· 12.1(a) - policy for classification of cash items

· 12.3 - disclosure of restrictions on use of cash

· 13.1 - comparative information

3. Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.