Vmoto scooting to showdown
Vmoto scooting to showdown

A long-running battle for control of Vmoto comes to a head in Perth this month when shareholders of the struggling scooter maker decide whether to sack its entire board.

At the heart of the battle is the cultural identity of a nominally Australian company which has most of it operations - and management - in China.

A group of shareholders believes that Vmoto has drifted away from its strategy of making quality, European-style vehicles and is heading down the path of producing Chinese knock-offs.

Its directors accuse their challengers of threatening the company's future at a time when it is attempting to tap into the burgeoning global market for electric scooters.

Melbourne investor Russell Goodman - Vmoto's biggest shareholder as at June 30 and former chairman - has succeeded in calling an extraordinary general meeting for November 29 to replace the board with himself and two supporters.

Fireworks are also likely at the company's annual meeting two weeks earlier when most of the embattled directors are seeking re-election.

Back in 2009, Vmoto's future appeared bright. Co-founder Patrick Davin was overseeing the completion of its Nanjing factory and its scooters and all-terrain vehicles were set to take on the world.

But two years on, the wheels have all but fallen off. A big Vietnamese contract has been plagued by delays, net losses are mounting, the share price is plunging and the board and management have been revolving doors.

Mr Goodman paints a gloomy picture to shareholders in a letter when describing an impromptu visit to the Vmoto plant in May.

"The silence was deafening," he said. "The place looked messy and unkempt and buildings which I had been assured had been finished were just shells."

Vmoto's management tells a different story. Its latest operations review says despite flat sales of $1.6 million for 777 vehicles in the September quarter, customers are on an upward trend. The company has also been trumpeting a trial of its electric scooters by Domino's Pizza in Australia.

But a number of big orders were slowed or delayed and the company continued to record negative operating cash flow. Vmoto has had net losses of more than $4 million in each of the past three years and is now valued at less than $14 million.

"Really, it's just a total dissatisfaction with the performance of the company, which has seemed to promise a lot and rarely deliver," shareholder and director candidate Gerard Fitt says of the revolt.

Trevor Beazley, a Perth corporate adviser and non-executive director at Vmoto for five years, defends the direction the company is taking. "The electric market probably hasn't taken off as quickly as people would have expected but we're in a very strong position to be able to take advantage of it because of the decisions made a few years ago.

"It's an industry that's going to grow very quickly and there isn't a large market out there for us to copy off anyway. To say that we're a copy is blatantly wrong."

That is a view backed by _The West Australian _'s motorcycle reviewer John Innes, who believes Vmoto's scooters are more comparable to European models than Chinese rivals.

"They're all as good as anybody's scooters. The (electric) E-Max 110S is a magic bit of gear," Innes says. "I've heard nothing but good reports reliability wise."

The West Australian

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