TIDMJQW
RNS Number : 8635Z
JQW PLC
23 September 2015
Press Release 23 September 2015
JQW plc
("JQW" or the "Company")
Interim Results
JQW, the AIM quoted Chinese B2B e-commerce operator, today
announces its unaudited results for the six months ended 30 June
2015.
Highlights
-- Revenue increased by 25% to RMB 433 million
(H1-2014: RMB 346 million)
-- Active fee paying members increased to 243,000
as at 30 June 2015 (H1-2014: 221,000; year-end
2014: 241,000)
-- 51 sales agencies at the end of June 2015, including
4 franchise agencies (44 sales agencies at the
end of 2014)
-- Profit before tax and profit after tax rose
by c. 5% to RMB 110 million (H1-2014: RMB 105
million) and to RMB 83 million (H1-2014: RMB
78 million) respectively
-- Strong cash position of RMB 460 million (H1-2014:
RMB 425 million)
-- Diluted earnings per share increased to RMB
0.43 per share (H1-2014: RMB 0.39 per share)
-- Net assets of RMB 349 million (H1-2014: RMB
303 million)
The illustrative exchange rate as at 22 September 2015 is 1 GBP:
9.848 RMB.
* Group, below, is defined as JQW, its subsidiaries and indirect
subsidiary
Cai Yongde, Chairman of JQW, commented: "The Board is pleased
with the progress made in spite of the challenging economic
climate. The Group has maintained the growth in contracted sales
during the period and continued to increase the number of new sales
agencies which management believes is instrumental in achieving
sustained future growth. The Board is pleased with the progress of
the e-commerce platform, which is core to the Group's
competitiveness, and continues to view the future with
optimism."
For further information:
JQW plc
Cai Yongde, Chairman Tel: +44 (0)
20 7398 7710
Chen Daocai, Chief Executive www.jqw-ir.com
Officer
Francis Chan, Chief Financial
Officer
Cairn Financial Advisers LLP
(Nomad & Broker)
Sandy Jamieson / Jo Turner Tel: +44 (0)
20 7148 7900
www.cairnfin.com
Media enquiries:
Abchurch Communications Limited
Quincy Allan / Viktoria Langley Tel: +44 (0)
20 7398 7710
jqw@abchurch-group.com www.abchurch-group.com
About JQW plc
JQW is a leading domestic business-to-business e-commerce
provider based in the Chinese province of Jiangsu. The Group's core
business is its online B2B platform, www.jqw.com, which has been
developed to encourage domestic trade by connecting Chinese SMEs
with potential trade partners. Founded in 2004, the platform was
developed to support the marketing of Chinese SME's websites. JQW
has evolved rapidly to become one of the top three B2B e-commerce
websites in China in terms of traffic and operates what the
Director's believe to be, the first dedicated B2B search engine,
www.jqw.cn.
JQW offers a low-cost entry point for Chinese SMEs to promote
themselves and their B2B products to potential buyers. In order to
increase transaction opportunities, JQW offers its clients a broad
range of services including website design, commercial search
services and advertising.
There are approximately 50 million SMEs in China manufacturing a
diverse range of products, accounting for 60% of the country's GDP.
The number of mobile internet-access users in China stood at 871
million at September 2014 and investment in the country's
telecommunications infrastructure continues to accelerate. These
factors have driven an increased demand for domestic trade of B2B,
B2C and C2C e-commerce. With the majority of these SMEs requiring
the use of third party B2B e-commerce platforms to promote their
businesses and access trade partners, the Board believes that JQW
offers a robust and highly reputable branded platform. With
exposure in over 50 industry sectors and considerable scope for
future growth, JQW is in a strong position to capitalise on the
development of this market.
As at 30 June 2015, the Group had:
-- 12 million Registered users
-- 5 million Page views per day
-- 1,199,000 Sheng-Yi-Tong members with website "shops"
-- 243,000 Fee-paying members
-- 700 Rated in the top 700 websites for global website traffic rankings
-- 51 Sales agencies
-- 3 Top 3 in Chinese B2B website traffic rankings
Chairman's statement
I am pleased to present JQW's results for the six months ended
30 June 2015.
Performance
Revenue for the period increased by 25% to RMB 433 million
(H1-2014: RMB 346 million) and net profit after tax rose by 5% to
RMB 83 million (H1-2014: RMB 78 million). The increase in
recognised revenue during the period was mainly due to the
significant growth in contracts signed in H2 2014 and the fact that
a portion of these contracts was recognised in the current period.
The slow-down in China's economy and numerous changes within the
Chinese business environment, such as increasing operating costs,
anti-corruption and credit tightening policies, anti-counterfeit
internet efforts and other unfavourable factors have made 2015 a
challenging year for the Group. Nevertheless, the Group has
maintained the growth in contracted sales in H1 2015 at 3%, even
with significant pressure from competitors in terms of price and
diversification of services offered.
In July 2014, the Company introduced the "Gold We King" package,
which includes the ability to create an online shop on the 'WeChat'
platform, a popular mobile text and voice messaging communication
application in China. In H1 2015, the "Gold We King" package
contributed revenue RMB 22 million to the Group (H2-2014: RMB 8
million). There were 7,900 new members who subscribed to the "Gold
We King" package in H1-2015, which was approximately 100 contracts
less than the new subscribers for this package in H2-2014. This was
mainly because of China's festival season and long New Year public
holiday in H1-2015.
The Group's gross profit margin decreased to 42%, from 46% for
H1 2015. JQW's client base has continued to trade up to more
expensive packages, which provide them with advertorial services
through other media channels. The cost for JQW to purchase
advertising rights on different media channels to support the
advertorial services rose significantly from RMB 10 million in H1
2014 to RMB 17 million in H1 2015, reflecting our clients'
recognition of the value of this service.
As at 30 June 2015, the Group had 243,000 fee paying members
which compares to 241,000 at the end of December 2014 and 221,000
at the end of June 2014. JQW continues to be cash generative,
resulting in a cash position at the half year of RMB 460 million
(H1 2014: RMB 425 million) and net assets of RMB 349 million (H1
2014: RMB 303 million).
Developments
Sales agencies
JQW's main focus has been and continues to be the appointment of
new sales agencies and the achievement of excellent client
satisfaction. In line with the Group's strategy, the number of
agencies has increased from 44 as at 31 December 2014 to 51 as at
30 June 2015, including 4 franchise agencies. JQW is now
represented in 13 provinces and one directly controlled
municipality in China. In H1 2015, JQW focussed on the development
of sales agencies in the second and third-tier cities of Shandong,
Guangdong and Hubei. These cities are well developed but previously
lacked a JQW sales centre. The Group also intends to continue to
expand its presence into additional provinces and cities to gain
greater local market share. JQW remains committed to its target to
increase the number of agencies to at least 60 by the end of 2015.
The management believes a strong sales agency team is crucial to
achieving the Group's goal of continuous future growth.
B2B e-commerce platform
The evolution in the B2B environment in China has led to the
introduction of an online trading function on the platform which
was necessary to enhance our competitiveness in the market. The
Chinese e-commerce platform targets the domestic market and will
significantly improve functionality, allowing purchasers to place
orders and make payments through the platform, using carefully
selected partner firms with whom JQW has established strong working
relationships. Although management does not expect this platform to
have a substantial impact on the financial results for 2015, it is
an important milestone for JQW because it will enable the Group to
develop another commission-based revenue stream. Currently the new
platform is at the testing stage but JQW has already obtained an
encouraging response from hundreds of local enterprises who
registered as the pioneering group of suppliers. The Company is
also considering integrating mobile applications with the Chinese
platform. The Board will provide further updates when this service
is launched in the fourth quarter of 2015.
The international trading platform was launched in July 2014 and
has generated approximately RMB 1 million commission income for the
Group in H1 2015. As with the Chinese platform, the international
platform is not expected to make a significant contribution to our
consolidated financial results for the period, but it was also an
important milestone for JQW in terms of developing commission-based
sales models. However, the requirements of some local regulatory
bodies, such as the customs authorities, have become a major
constraint to smaller size suppliers trying to access international
markets which has in turn affected the growth of JQW's
international platform. In an effort to find more effective ways to
encourage our members to trade internationally, JQW's international
trading platform team is therefore now providing our members with
information on international trade matters and assisting them in
complying with the authorities' requirements.
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Financial services
In the fourth quarter of 2014, JQW has been working with
CreditEase Group, a financial institution which provides wealth
management, credit management, microfinance investment, and
microcredit loan origination and services in China. This
relationship provides a platform and a direct link to a financial
institution that provides SMEs with microloan services. CreditEase
Group will provide microloan financing services to JQW's members
with a lower interest rate so they can fulfil certain criteria,
such as becoming a subscribed member of JQW for a defined period of
time. Up to the end of June 2015, approximately 2,500 of JQW's
members have obtained microloan facilities from CreditEase Group
with total drawdowns of more than RMB 60 million. JQW will continue
to explore similar opportunities with other financial institutions
in China in order to offer more value added services to members to
support future growth.
Outlook and Strategy
In 2015, the Chinese market is experiencing weaker growth. JQW
therefore has carefully planned its future development to identify
the most effective ways to secure sustainable growth. The
management team will remain vigilant with regards to the challenges
and opportunities that arise within the changing business
environment. The team also intends to use the Company's resources
capital to diversify into new products, which will generate more
value for both stakeholders and shareholders, while continuing to
benefit from the slower but more stable growth in e-commerce
industry of China.
The Company will keep the outlook under careful review in light
of the one month suspension of trading, as announced on 21
September.
Cai Yongde
Chairman
23 September 2015
Condensed Consolidated Statement of Comprehensive Income
Six months Six months Year
ended 30 ended 30 ended
June June 31 December
2015 2014 2014
Unaudited Unaudited Audited
Notes RMB'000 RMB'000 RMB'000
Revenue 2 432,665 346,119 783,847
Cost of sales (251,825) (185,664) (470,161)
============== ============== ==============
Gross pro t 180,840 160,455 313,686
Other income 424 196 8,443
Selling and distribution
costs (55,984) (45,009) (88,714)
Administrative expenses (12,855) (10,433) (20,190)
Finance costs (1,627) (25) (34)
Pro t before tax 110,798 105,184 213,191
Income tax expense 3 (28,225) (26,896) (66,466)
============== ============== ==============
Profit for the year,
attributable to
equity holders of
the parent 82,573 78,288 146,725
Other comprehensive
income (currency
translation on differences) 1,188 2,272 260
============== ============== ==============
Total comprehensive
income for the
financial periods/year 83,761 80,560 146,985
============== ============== ==============
Profit after tax
attributable to:
- Owners of the Group 82,725 78,334 147,927
* Interests under contractual arrangements (152) (46) (1,202)
============== ============== ==============
82,573 78,288 146,725
============== ============== ==============
Total comprehensive
income
attributable to:
- Owners of the Group 83,913 80,606 148,187
- Interests under
contractual
arrangements (152) (46) (1,202)
============== ============== ==============
83,761 80,560 146,985
============== ============== ==============
Earnings per share
attributable to
owners of the Group 6
- Basic, RMB 0.43 0.40 0.76
============== ============== ==============
- Diluted, RMB 0.43 0.39 0.76
============== ============== ==============
Consolidated Statement of Changes in Equity
For the six month period ended 30 June 2015 (Unaudited)
Interests
under
Share Other Retained contractual Total
capital reserves earnings Total arrangements equity
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
At 1 January
2014 57,912 18,332 155,130 231,374 1,000 232,374
Profit for
the period - - 78,288 78,288 - 78,288
Other comprehensive
income - 2,272 - 2,272 - 2,272
========= ========== ========== ====================== ================= ==========
Total comprehensive
income - 2,272 78,288 80,560 - 80,560
Transaction
with owners,
dividend paid - - (10,159) (10,159) - (10,159)
At 30 June
2014 57,912 20,604 223,259 301,775 1,000 302,775
========= ========== ========== ====================== ================= ==========
At 1 January
2015 57,912 6,532 199,535 263,979 1,000 264,979
Profit for
the period - - 82,573 82,573 - 82,573
Other comprehensive
income - 1,188 - 1,188 - 1,188
Total comprehensive
income - 1,188 82,573 83,761 - 83,761
--------- ---------- ---------- ---------------------- ----------------- ----------
At 30 June
2015 57,912 7,720 282,108 347,740 1,000 348,740
========= ========== ========== ====================== ================= ==========
At 1 January
2014 57,912 18,332 155,130 231,374 1,000 232,374
Profit for
the period - - 146,725 146,725 - 146,725
Other comprehensive
income - 260 - 260 - 260
========= ========== ========== ====================== ================= ==========
Total comprehensive
income - 260 146,725 146,985 - 146,985
Transfer from
statutory
reserve - (12,060) 12,060 - - -
Transaction
with owners,
dividend paid - - (114,380) (114,380) - (114,380)
At 31 December
2014 57,912 6,532 199,535 263,979 1,000 264,979
========= ========== ========== ====================== ================= ==========
Condensed Consolidated Statement of Financial Position
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As at 30 June 2015
As at
As at As at 31
30 June 30 June December
2015 2014 2014
Unaudited Unaudited Audited
Notes RMB'000 RMB'000 RMB'000
Assets
Non-current asset
Property, plant and
equipment 4 17,542 10,107 14,201
---------- ---------------- ------------
Current assets
Trade and other receivables 5 42,522 46,737 24,797
Deferred tax asset 43,784 42,392 46,270
Cash and cash equivalents 459,930 425,172 394,698
----------
546,236 514,301 465,765
---------- ---------------- ------------
Total assets 563,778 524,408 479,966
========== ================ ============
Equity and liabilities
Stated capital account 57,912 57,912 57,912
Statutory reserve 6,252 18,312 6,252
Foreign exchange
translation reserve 1,468 2,292 280
Retained profits 282,108 223,259 199,535
----------
347,740 301,775 263,979
----------
Interests under contractual
arrangements 1,000 1,000 1,000
---------- ---------------- ------------
Total equity attributable
to owners 348,740 302,775 264,979
---------- ---------------- ------------
Current Liabilities
Trade and other payables 21,830 27,418 20,606
Deferred revenue 175,136 169,569 186,870
Income tax payables 18,072 24,646 7,511
----------
215,038 221,633 214,987
---------- ---------------- ------------
Total equity and
liabilities 563,778 524,408 479,966
========== ================ ============
Condensed Consolidated Statement of Cash Flows
For the six month period ended 30 June 2015
Six months Six months Year ended
ended ended 31
30 June 30 June December
2015 2014 2014
Unaudited Unaudited Audited
RMB'000 RMB'000 RMB'000
Cash flows from operating
activities
Profit before taxation 110,798 105,184 213,191
Adjustments for:
Depreciation 3,105 311 3,012
Loss on disposal of property,
plant and equipment - - 174
Interest Income (424) (196) (4,576)
----------- -----------
Operating cash flows before
working capital
changes 113,479 105,299 211,801
Increase in trade and other
receivables (16,537) (26,876) (4,676)
Decrease/(increase) in
deferred tax asset 2,486 (8,985) (12,863)
(Decrease)/increase in
deferred revenue (11,734) 34,150 51,451
Increase/(decrease) in
trade and other payables 1,224 (290) 785
----------- ----------- -----------
Cash flow from operations 88,918 103,298 246,498
Income tax paid (17,664) (14,040) (70,745)
Net cash flow from operating
activities 71,254 89,258 175,753
Cash flows used in investing
activities
Acquisition of property,
plant and equipment (6,446) (8,337) (15,315)
Proceeds from disposal
of property, plant and
Equipment - - 9
Interest received 424 196 4,576
----------- ----------- -----------
Net cash used in investing
activities (6,022) (8,141) (10,730)
----------- ----------- -----------
Cash flows used in financing
activities
Dividend paid - - (114,380)
-----------
Net cash used in financing
activities - - (114,380)
----------- ----------- -----------
NET INCREASE IN CASH AND
CASH
EQUIVALENTS 65,232 81,117 50,643
CASH AND CASH EQUIVALENTS
AT
BEGINNING OF PERIOD/YEAR 394,698 344,055 344,055
----------- ----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF
PERIOD/YEAR 459,930 425,172 394,698
=========== =========== ===========
Basis of Presentation and Summary of Significant Accounting
Policies
1. General information and principal activities
The interim consolidated financial statements have been prepared
in accordance with International Financial Report Standards
("IFRS") as adopted by the European Union. The principal accounting
policies used in preparing the interim results are those the Group
expects to apply in its financial statements for the year ending 31
December 2015 and are unchanged from those disclosed in the
Financial Statements for the year ended 31 December 2014.
The interim financial information has not been reviewed nor
audited by the Company's auditors. The comparatives for the period
ended 31 December 2014 are not the Company's full statutory
accounts but have been extracted from the audited consolidated
financial information of JQW plc. A copy of the audited
consolidated financial statements for the period ended 31 December
2014, which was prepared under IFRS, is available on the Company's
website.
The interim consolidated financial statements for the six months
ended 30 June 2015 have been prepared in accordance with IAS 34,
Interim Financial Reporting.
The operations of JQW plc are not affected by seasonal
variations.
The interim report for the six months ended 30 June 2015 was
approved by the Directors on 21 September 2015.
2. Operating segments
Operating segments are based on internal reports about
components of the Group which are regularly reviewed by the Board
of Directors by the Chief Operating Decision Maker ("CODM") for
strategic decision making and resource allocation, in order to
allocate resources to the segment and to assess its
performance.
The Group reporting segments are direct sales and distribution
sales. Only segmental revenues are considered by the CODM for
strategic decision making purposes. The activities of the Group
took place solely in the PRC and as such no geographical segment
information is stated during the financial periods/year.
The segment information provided to management for the
reportable segments for the interim results is as follows:
Six months ended 30 June 2014
Distribution
Direct sales Total
sales
RMB'000 RMB'000 RMB'000
Revenue and results:
Revenue from external
customers 55,763 290,356 346,119
Segment profit 160,455
Unallocated other income
and expenses (55,271)
----------
Profit before taxation 105,184
==========
Assets and liabilities
Assets 524,408
Liabilities 221,633
The segment information provided to management for the
reportable segments for the six months ended 30 June 2015 is as
follows:
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Six months ended 30 June 2015
Distribution
Direct sales Total
sales
RMB'000 RMB'000 RMB'000
Revenue and results:
Revenue from external
customers 69,168 363,497 432,665
Segment profit 180,840
Unallocated other income
and expenses (70,042)
----------
Profit before taxation 110,798
==========
Assets and liabilities
Assets 563,778
Liabilities 215,038
Segmental information is only presented to the CODM on a revenue
basis and as such segmental information is only shown for revenue
items.
3. Taxation
The major components of the income tax expense are as
follows:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
RMB'000 RMB'000 RMB'000
Current income tax 25,739 35,881 79,329
Deferred income tax 2,486 (8,985) (12,863)
Income tax expense recognised
in the
income statement 28,225 26,896 66,466
=========== =========== ============
The tax rate used for the reconciliations below is the effective
weighted average rate of tax applicable in the jurisdiction
concerned.
The deferred tax is derived from the deferred revenue stated in
the following table:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
RMB'000 RMB'000 RMB'000
Deferred revenue balance
for prior period/year (186,870) (135,419) (135,419)
Deferred revenue balance
for the period/year 175,136 169,569 186,870
-------------- ----------- ------------
Temporary difference
derived from deferred
revenue (11,734) 34,150 51,451
Other temporary differences 1,790 1,790 -
-------------- ----------- ------------
(9,944) 35,940 51,451
============== =========== ============
Profit multiplied by
standard rate of 25% (2,486) 8,985 12,863
Deferred tax asset opening
balance 46,270 33,407 33,407
-------------- ----------- ------------
43,784 42,392 46,270
============== =========== ============
Deferred tax assets are recognised to the
extent that it is probable that the future
taxable profits will allow the deferred tax
assets to be recovered.
The charge for each year can be reconciled
to the profit per the consolidated statements
of comprehensive income as follows:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
RMB'000 RMB'000 RMB'000
Profit before taxation 110,798 105,184 213,191
Profit multiplied by
standard rate of 25% 27,700 26,296 53,298
Effect of:
Tax impact on different
statutory rate 297 599 777
Deferred taxes on temporary
differences not
recognised 228 1 3
Withholding tax derived
from dividends
declared - - 12,604
Tax effect on non-deductible
expenses - - 456
Tax effect on non-taxable
income - - (672)
-------------- ----------- ------------
28,225 26,896 66,466
============== =========== ============
4. Property, plant and equipment
Furniture Motor Office
and fittings vehicles equipment Total
RMB'000 RMB'000 RMB'000 RMB'000
As at 30 June 2014
Cost
At 1 January 2014 3,308 490 2,926 6,724
Additions - - 8,337 8,337
------------- --------- ----------
At 30 June 2014 3,308 490 11,263 15,061
------------- --------- ----------
Accumulated depreciation
At 1 January 2014 2,685 263 1,695 4,643
Charge for the period 152 45 114 311
------------- --------- ----------
At 30 June 2014 2,837 308 1,809 4,954
------------- --------- ----------
Net book value
At 30 June 2014 471 182 9,454 10,107
As at 31 December
2014
Cost
At 1 July 2014 3,308 490 11,263 15,061
Additions 4,454 - 2,524 6,978
Disposal - - (1,621) (1,621)
------------- --------- ---------- -------
At 31 December 2014 7,762 490 12,166 20,418
------------- --------- ----------
Accumulated depreciation
At 1 July 2014 2,837 308 1,809 4,954
Charge for the period 652 45 2,004 2,701
Disposal - - (1,438) (1,438)
------------- --------- ---------- -------
At 31 December 2014 3,489 353 2,375 6,217
------------- --------- ----------
Net book value
At 31 December 2014 4,273 137 9,791 14,201
============= ========= ========== =======
As at 30 June 2015
Cost
At 1 January 2015 7,762 490 12,166 20,418
Additions - - 6,446 6,446
------------- --------- ---------- -------
At 30 June 2015 7,762 490 18,612 26,864
------------- --------- ----------
Accumulated depreciation
At 1 January 2015 3,489 353 2,375 6,217
Charge for the period 1,027 45 2,033 3,105
------------- --------- ---------- -------
At 30 June 2015 4,516 398 4,408 9,322
------------- --------- ----------
Net book value
At 30 June 2015 3,246 92 14,204 17,542
============= ========= ========== =======
5. Trade and other receivables
As at As at As at
30 June 30 June 31 December
2015 2014 2014
RMB'000 RMB'000 RMB'000
Trade receivables 41,743 40,645 24,098
Other receivables 779 6,092 699
42,522 46,737 24,797
========= ========= ============
The carrying amounts of trade and other receivables approximates
to their fair value.
6. Earnings per share
The calculation of loss per share is based on the following loss
and number of shares:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
RMB'000 RMB'000 RMB'000
Profit after tax attributable
to owners of the
Group (RMB'000) 82,725 78,334 147,927
Weighted average number
of shares ('000)
- Basic 193,550 193,550 193,550
- Diluted 193,550 198,631 193,550
Earnings per share (RMB)
- Basic 0.43 0.40 0.76
- Diluted 0.43 0.39 0.76
- Ends-
This information is provided by RNS
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