When looking at the sales and comparing them with retail prices...

When looking at the sales and comparing them with retail prices its important to remember that Vmoto sells directly to business customers most likely at a little more than we sell wholesale to distributors who would then on sell them to their dealers. There are a couple of margins to be added to what we sell for before the product reaches the customer at a retail level..

Our average sale price grew from $1,800 in 2018 to $2,287 in 2019. Its important also to realise that there were quite a few Chinese sales in those two years relative to the total sales and we have been told the Chinese sales are lower value and lower margin sales.

Its probably reasonable to expect that the average sale price with no Chinese sales will climb. Maybe the $2,500 that has been talked about is on the conservative side.

You will also notice the steady growth in GP margin 10.3% ,17.6%, 22.4% a bit of steady growth should take us to the norm on 25%

Operating expenses dropped from 14.5%% to 11.2%. It would be nice to see these plateau at 10 %

Marketing was down slightly which is not necessarily a good thing.

The small elephant in the room is of course Corporate and Admin. I say small because Charles is doing very well running an ASX listed company including raising capital in 2019 for $2.56m. Apart from the relatively small cost it is still an elephant when sales revenues are low. N.B. it was 8.7% of sales in 2018 dropping to 5.6% in 2019.

It is important to remember the size of this relatively fixed charge when looking at the NPAT as it will become a minuscule percentage when sales get to $500m and beyond.

Whilst the NPAT before impairment was 4.1% when you add back corporate and admin expenses it was 9.7%.

When sales reach 200,000 units a year if that is associated with modest growth in margins we should see total expenses of around 15 % and a NPBT margin of around 10% which is about the industry norm.

10% of $2,500/unit equals a NPBT of $250 /unit.