TIDMJQW
RNS Number : 7054F
JQW PLC
29 April 2014
Press Release 29 April 2014
JQW plc
("JQW" or the "Company"*)
Final Results
JQW, the AIM quoted domestic Chinese B2B e-commerce operator,
today announces its maiden set of final results for the year ended
31 December 2013.
Highlights
* Revenues increased by 71% to RMB 493.1 million,
significantly ahead of market expectations (2012: RMB
287.8 million)
* Gross profit margin improved to 50% (2012: 47%)
* Profit before tax more than doubled to RMB 171.4
million (2012: RMB 84.1)
* Net profit after tax also rose by 104% to RMB 128.4
million (2012: RMB 62.9 million)
* Fully diluted earnings per share of RMB 0.69 (2012:
RMB 0.34)
* Strong cash position of RMB 344.1 million up by 218%
(2012: RMB 108.1 million) including RMB 67.5 million
raised at the IPO
* Maiden final dividend of 0.5 pence per share proposed,
subject to shareholder approval
* Fee paying members increased by 40% to 197,000 (2012:
140,000)
* 35 sales agencies at the end of March 2014
The illustrative exchange rate as at 28 April 2014 is 1 GBP:
10.515 RMB.
* Group, below, is defined as JQW, its subsidiaries and indirect
subsidiary
Yongde Cai, Chairman of JQW, commented: "The Board is delighted
to announce our maiden annual results, which show a considerable
uplift in revenue and gross profit, driven by the 40% increase in
the number of our fee paying members. This has been a significant
period of growth for the Group, culminating in the admission to AIM
on 9 December 2013. The Board is excited by the opportunities that
it has identified in the market, including developing trading
services, a bilingual platform as well as a platform for smartphone
users and we look forward to providing additional updates as we
make further progress in these areas over the coming months."
For further information:
JQW plc
Cai Yongde, Chairman Tel: +44 (0) 20 7398
7709
Chen Daocai, Chief Executive Officer www.jqw-ir.com
Kooi Wei Boon, Chief Financial Officer
Argento Capital Markets Limited
Alan MacKenzie / Jim McGeever Tel: +44 (0) 20 7093
0353
alan.mackenzie@argentocapital.net www.argentocapital.net
Cairn Financial Advisers LLP (Nomad
& Broker)
Sandy Jamieson / Liam Murray / Jo Turner Tel: +44 (0) 20 7148
7900
www.cairnfin.com
Media enquiries:
Abchurch Communications Limited
Henry Harrison-Topham / Quincy Allan Tel: +44 (0) 20 7398
7702
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 help to market Chinese SME's websites. JQW has evolved
rapidly to become the second highest ranked B2B e-commerce website
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 49 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 839
million at February 2014 and there is a considerable amount being
invested into the country's telecommunications infrastructure.
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.
The Group currently has:
10 million Registered users
5 million Page views per day
840,000 Sheng-Yi-Tong members with website "shops"
197,000 Fee-paying members
700 Rated in the top 700 websites for global website
traffic rankings
35 Sales agencies
2 Second (behind Alibaba) in Chinese B2B website
traffic rankings
Chairman's Statement
JQW is delighted to have joined the AIM market of the London
Stock Exchange.
As a Chinese-based business in the internet industry we believe
that a public profile on an international stock market enhances
JQW's reputation and profile in both our home market and
internationally. It will also help the Group attract more customers
to jqw.com.
We welcome our new shareholders from the UK, Europe, South East
Asia and China who bought shares in JQW at the IPO. We are also
delighted that further interest in the Company's shares continues
to be seen since our IPO and the Board intends to maintain as much
contact as possible with our shareholders. We believe JQW is in an
exciting period of growth and hope that our profile as a quoted
company will highlight our prospects to our clients, registered
users of jqw.com, sales agents, employees and shareholders.
2013 was a transformational year for JQW, culminating in the
successful admission to AIM on 9 December 2013. We are pleased to
announce our maiden annual results, which show a considerable
uplift in revenue and gross profit, driven by the 40% increase in
fee paying members to the platform. This has, so far, been the most
important year in JQW's history. However, the Board hopes for more
exciting years to come.
The Group's growth has been driven by a combination of factors,
including the ongoing rapid development of the e-commerce industry
in China and the increasing importance of e-commerce to China's 49
million SMEs, who are our main target market. JQW offers a direct,
cost effective way for SMEs to engage in e-commerce. The strength
of JQW's position in this market is recognised through awards that
the Group has won such as CNIT-Research's top three 'Brands with
the most influence in China's B2B industry' (which the Group won
alongside Alibaba and HC360).
The Board is focused on continuing to increase the number of
JQW's fee paying members in a variety of ways including the
addition of sales agents in other parts of China and the
introduction of our new 'franchise' agency system. However, there
will be many other ways in which the Group can enhance its existing
services to our clients including a bilingual site and applications
for smartphone users.
The Board believes that Chinese SMEs will continue to seek more
effective marketing channels, especially through e-commerce, and
with JQW's excellent market position in the B2B sector the Board
expects the Group to benefit.
The strong growth already achieved by the Group, the
considerable opportunities for future expansion as the market
continues to develop and JQW's innovative services provides your
Board with great confidence in our future. Our commitment to
delivering shareholder value is reflected in the Board's proposal,
subject to shareholder approval at the Annual General Meeting, to
pay a final dividend of 0.5 penceper ordinary share for the
financial year ended 31December 2013.
I would personally like to thank the Board and all of our
employees for their continued hard work, as well as our existing
and new shareholders for all their support. We are excited by the
opportunities in our market and we look forward to providing
additional updates as we make further progress over the coming
months.
Cai Yongde
Chairman
28 April 2014
Group Chief Executive's Statement
JQW has established a very strong position in the B2B e-commerce
industry in China. The Board believes the Group has further
strengthened its position through the profile JQW has gained by its
Admission to AIM last year on 9 December 2013.
The Group has grown rapidly in the past five years, benefitting
from: the growth in China's GDP; the penetration of broadband in
the country; the adoption of websites by Chinese SMEs (our
principle target clients); and the increase in transactions
completed through e-commerce. This positive market background is
expected to continue. Whilst GDP growth in China is planned to slow
to more sustainable levels, there remain substantial opportunities
for additional growth in internet based services, including
e-commerce.
The strength of JQW's position in its sector and the quality of
its platform is a tribute to the Group's strategy, its management
team, employees, agents as well as our research and development
capabilities. This is clearly reflected in the results that the
Group has achieved during 2013.
Results
Revenue increased by 71.3% to RMB 493.1 million (2012: RMB 287.8
million) and the Group's gross profit margins improved to 50% from
47% in 2012. This led to pre-tax profits more than doubling to RMB
171.4 million (2012: RMB 84.1 million) and net profit after tax
rising by a similar amount, 104%, to RMB 128.4 million (2012: RMB
62.9 million). Earnings per share on a fully diluted basis went up
from RMB 0.34 to RMB 0.69 using a pro forma figure for 2012.
JQW remains a highly cash generative business. During 2013 the
Group's cash balances increased by RMB 236 million to RMB 344.1
million (including RMB 67.5 million raised by the IPO). This
provides JQW with the ability to invest in new opportunities to
provide further growth for our business.
The Group opened a new office in Yangzhou in July 2012 and
established it as our headquarters. The new sales centre which was
opened there has proved highly successful and the Group runs its
agency business from Yangzhou as well. Sales generated from agents
have continued to grow, up 88% from RMB 206.6 million in 2012 to
RMB 388.0 million in 2013, now some 79% of total sales. Our direct
sales have increased 29% from RMB 81.2 million to RMB 105.1 million
during the same period. The Board believes JQW can grow quicker by
expanding our agency model, not just in its existing form but also
through our newly launched franchised agency model. This provides
capital assistance from JQW to entrepreneurs who want to run their
own agency businesses but do not have enough capital of their own.
The Group will continue to expand into other provinces in China by
establishing local agencies which are familiar with the dialects
and customs in those areas.
JQW is targeting to reach a total of at least 60 sales agencies
by the end of 2015, from our year end level of 30. In the first
three months of this year, we have added a further five new sales
agencies, taking the total number to 35 as at 31 March 2014. This
should continue to assist in the growth in numbers of our fee
paying members, which increased by 40% to 197,000 at the year end,
which will be one of the Group's Key Performance Indicators for
2014 revenue growth.
Platform development
The Group's strategy is to continue to organically grow its
successful business model, which is profitable and highly cash
generative, and to augment it by adding additional services.
By the end of June 2014, JQW intends to launch an English based
e-commerce platform, which will add increased functionality that
will allow purchasers to place orders and make payments through the
platform internationally, using partner firms with which JQW is
establishing relationships. The Group will charge a commission on
the value of each transaction undertaken. This is an important
development for the Group in terms of its move towards adding a
sales commission-based model, rather than transactions being
completed off-platform. It is the intention to develop this into a
bilingual website and the Board will provide further updates as
this service is launched.
As announced at the time of the Group's IPO, it is intended that
a new service will be established to provide access to finance for
SMEs from financial institutions. Development of this service is
currently underway and it is anticipated that the prospect of
sourcing funding for an SME at a lower interest rate will attract
more members to jqw.com. JQW will act as the agent to bring
together the borrower with the financial institution and will
therefore not bear any credit risk as part of these transactions,
but will receive a commission for the introduction.
Dividend
As mentioned in the Chairman's Statement, the Board is delighted
to propose a maiden dividend of 0.5 pence per share, subject to
shareholder approval at the Annual General Meeting. The maiden
final dividend will be payable on 14 July 2014 to shareholders on
the register at the close of business on Friday 4 July 2014. The
shares will go ex-dividend on 2 July 2014.
Outlook
E-commerce is a rapidly developing industry. The transaction
value of the Chinese B2B market increased by 18.9% during 2013 to
RMB 7,430 billion (source: SOOTOO Research Institute). Revenue
generated by B2B platforms in China increased by 25.8% to RMB 21.0
billion (source: iResearch Consulting Group).
With the number of mobile internet-access users in China
standing at 839 million as of February 2014 (source: The Ministry
of Industry and Information Technology), this presents a
significant opportunity for the Group. In order to ensure that the
JQW platform is available to the widest possible audience of SMEs,
the Group is currently developing smartphone applications for iOS
and Android to address the increasing demand for mobile internet
access.
The SME market in China also continues to grow, with SMEs
accounting for 99% of China's total number of enterprises, 60% of
the country's GDP and 80% of urban jobs nationwide. As part of the
12(th) Five-Year Program which was released by the Ministry of
Industry and Information Technology in September 2011, China issued
its first nationwide special plan for SMEs. According to the plan,
the number of SMEs in China is expected to grow steadily over the
five year period with an average annual growth rate of 8%. With an
increasing focus on online marketing and promotion by SMEs, the
Board believes that SME online sales will continue to grow.
The current year has started well, and the Board has
considerable confidence in the future growth of JQW. The SME market
in China remains buoyant and the internet continues to develop
rapidly. JQW is operating in a fast growth market with substantial
opportunities which the Group intends to continue to pursue
vigorously.
Chen Daocai
Group Chief Executive Officer
28 April 2014
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Proforma
31 December 31 December
2013 2012
Note RMB'000 RMB'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 3 2,081 3,933
------------ ------------
2,081 3,933
CURRENT ASSETS
------------ ------------
Trade and other receivables 4 19,861 11,392
Deferred tax asset 10 33,407 14,089
Cash and cash equivalent 5 344,055 108,148
------------ ------------
397,323 133,629
------------ ------------
TOTAL ASSETS 399,404 137,562
============ ============
EQUITY AND LIABILITIES
Stated capital account 7 57,912 -
Statutory reserve 8(a) 18,312 500
Foreign exchange translation
reserve 8(b) 20 -
Retained profits 155,130 50,565
------------ ------------
231,374 51,065
Interests under contractual
arrangement 1,000 1,000
------------ ------------
TOTAL EQUITY ATTRIBUTABLE
TO OWNERS 232,374 52,065
------------ ------------
CURRENT LIABILTIES
------------ ------------
Trade and other payables 6 19,821 18,694
Deferred revenue 135,419 58,146
Income tax payable 11,790 8,657
------------ ------------
167,030 85,497
------------ ------------
TOTAL LIABILITIES 167,030 85,497
------------ ------------
TOTAL EQUITY AND LIABILITIES 399,404 137,562
============ ============
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Proforma
2013 2012
Note RMB'000 RMB'000
Revenue 17 493,132 287,815
Cost of sales (248,727) (151,463)
---------- ----------
Gross profit 244,405 136,352
Other income 330 181
Selling and distribution expenses (61,438) (42,411)
Administrative expenses (11,855) (9,984)
Finance costs (1) (1)
Profit before taxation 9 171,441 84,137
Income tax expense 10 (43,064) (21,199)
Profit after taxation 128,377 62,938
Other comprehensive income (currency
translation differences) 20 -
Total comprehensive income for
the financial year 128,397 62,938
Profit after tax attributable
to:
Owners of the Group 128,385 62,547
Interests under contractual
arrangements (8) 391
128,377 62,938
Total comprehensive income attributable
to:
Owners of the Group 128,405 62,547
Interests under contractual
arrangements (8) 391
128,397 62,938
Earnings per share attributable
to owners of the Group
Basic, RMB 11 0.70 0.34
Diluted, RMB 11 0.69 0.34
========== ==========
CONSOLIDATED STATEMENT OF CHNAGES IN EQUITY
Stated Statutory Foreign Retained Attributable Interests Total
capital reserve exchange profits to owners Under equity
account translation of contractual
reserve the Group arrangements
Note RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Note 8(a) Note 8(b)
Balance at 1 January
2012
(Proforma) 3,000 500 - (12,373) (8,873) 1,000 (7,873)
Profit after taxation - - - 62,938 62,938 - 62,938
Other
comprehensive
expenses, net of
tax
Foreign currency 8(b)
translation - -
differences for
foreign
operations - - - - -
Total
comprehensive
income for the financial
year - - - 62,938 62,938 - 62,938
Issuance of shares 8,507 - - - 8,507 - 8,507
Repayment of loan to
ex-shareholders arising
from
restructuring exercise (11,507) - - - (11,507) - (11,507)
Balance at 31 December
2012
(Proforma) - 500 - 50,565 51,065 1,000 52,065
=========== ========== ============ ========= ============= ============= ===========
Stated Statutory Foreign Retained Attributable Interests Total
capital reserve exchange profits to owners under Equity
account translation of contractual
reserve the Group arrangements
Note RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Note 8(a) Note 8(b)
Balance at 1 January 2013 - 500 - 50,565 51,065 1,000 52,065
Profit after taxation - - - 128,377 128,377 - 128,377
Other comprehensive,
income, net of tax
Foreign currency
translation
differences for foreign
operations 8(b) - - 20 - 20 - 20
Total comprehensive
income
for the financial year - - 20 128,377 128,397 - 128,397
Transfer to statutory
reserve 8(a) - 17,812 - (17,812) - - -
Transaction with owners,
dividend paid - - - (6,000) (6,000) - (6,000)
Issuance of shares (net
of issue costs) 7 57,912 - - - 57,912 - 57,912
Balance at 31 December 2013 57,912 18,312 20 155,130 231,374 1,000 232,374
CONSOLIDATED STATEMENT OF CASH FLOWS
Proforma
2013 2012
Note RMB'000 RMB'000
Cash flow from operating activities
Profit before taxation 171,441 84,137
Adjustments for:-
Depreciation of property, plant
and equipment 3 2,141 1,936
Loss on disposal of property,
plant and equipment - 4
Interest income (330) (181)
Operating profit before working
capital changes 173,252 85,896
Increase in trade and other
receivables (8,469) (3,061)
Increase in deferred tax asset 10 (19,318) (7,280)
Increase in deferred revenue 77,273 29,120
(Decrease)/increase in trade
and other payables (5,861) 3,506
Cash flow from operations 216,877 108,181
Income tax paid (39,931) (13,886)
Net cash flow from operating
activities 176,946 94,295
Cash flow used in investing
activities
Purchase of property, plant
and equipment 3 (289) (5,058)
Proceeds from disposal of property,
plant and
equipment - 3
Interest received 330 181
Net cash flow used in investing
activities 41 (4,874)
Cash flow from/(used in) financing
activities
Issuance of share capital 7 67,518 8,507
Share issuance costs (2,598) -
Dividend paid during the year (6,000) (20,000)
Net cash flow from/(used in)
financing
activities 58,920 (11,493)
Net increase in cash and cash
equivalents 235,907 77,928
Cash and cash equivalent at beginning
of 108,148 30,220
the financial year
Cash and cash equivalent at
end of the financial year 5 344,055 108,148
========== ==========
NOTES TO THE FINANCIAL INFORMATION
1. General information
JQW plc (the "Company") was incorporated in Jersey on with
registration number 113593. The registered office of the Company is
13-14 Esplanade, St Helier, Jersey JE1 1BD, Channel Islands (PO Box
207).
The principal activity is the provision of business-to-business
("B2B") e-commerce service in the People's Republic of China
("PRC").
Basis of preparation
The consolidation financial statements have been prepared in
accordance with IFRS as adopted by the EU issued by the
International Accounting Standards Board ("IASB"), including
related Interpretations issued by the International Financial
Reporting Interpretations Committee ("IFRIC") and using the
accounting policies which are consistent with those adopted in the
admission document as well as applying the following accounting
policy in respect of the basis of consolidation.
Business combinations outside the scope of IFRS 3
The Directors considered IFRS 3 "Business Combinations" (Revised
2008) as the appropriate accounting treatment. However, they
concluded that this Group fell outside of the scope of IFRS 3
(revised 2008) since the Group represents a combination of entities
under common control.
In accordance with IAS 8 "Accounting policies, changes in
accounting estimates and errors", in developing an appropriate
accounting policy, the Directors have considered the pronouncements
of other standard setting bodies and specifically looked to
accounting principles generally accepted in the United Kingdom ("UK
GAAP") for guidance (FRS 6 - Acquisitions and mergers) which does
not conflict with IFRS and reflects the economic substance of the
transaction.
Under UK GAAP, the assets and liabilities of the transferee and
transferor are recorded at book value, not fair value (although
adjustments are made to achieve uniform accounting policies),
intangible assets and contingent liabilities are recognised only to
the extent that they were recognised by the legal acquirer in
accordance within applicable IFRS, no goodwill is recognised, any
expenses of the combination are written off immediately to the
income statement and comparative amounts, if applicable, are
restated as if the combination had taken place at the beginning of
the earliest accounting period presented.
Therefore, although the Group reconstruction did not become
unconditional until 15 October 2013, the consolidated financial
statements are presented as if the Group structure had been in
place throughout the period under audit, including the activity
from incorporation of the Group's subsidiary. All entities had
common management as well as majority shareholders.
On this basis, the Directors have decided that it is appropriate
to reflect the combination using merger accounting principles as a
group reconstruction under FRS 6 - Acquisitions and mergers in
order to give a true and fair view. No fair value adjustments have
been made as a result of the combination.
The financial statements have been prepared on the going concern
basis, which assumes that the Group will continue to be able to
meet its liabilities as they fall due for the foreseeable
future.
The financial information set out above does not constitute the
Company's statutory accounts for the year ended 31 December 2013,
but is derived from those accounts. The statutory accounts will be
delivered following the Company's Annual General Meeting. The
Auditors have reported on those accounts; their report was
unqualified.
The directors have recommended the payment of a dividend of 0.5
pence per share subject to shareholder approval.
The financial information set out in this announcement was
approved and authorised for issue by the board of directors on 28
April 2014.
2. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies,
management made judgements, estimates and assumptions about the
carrying amounts of assets and liabilities that were not readily
apparent from other sources. The estimates and associated
assumptions were based on historical experience and other factors
that were considered to be reasonable under the circumstances.
Actual results may differ from these estimates. These estimates and
underlying assumptions are reviewed on an on-going basis. Revisions
to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in
the period of the revision and future periods if the revision
affects both current and future periods. There are no key
assumptions concerning the future and other key sources of
estimation uncertainty at the end of each financial year, that have
a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial
year.
3. Property, plant and equipment
Furniture Motor Office
and fittings vehicles equipment Total
RMB'000 RMB'000 RMB'000 RMB'000
As at 31 December 2013
Cost
At 1 January 2013 3,308 490 2,637 6,435
Additions - - 289 289
------------- --------- ----------
At 31 December 2013 3,308 490 2,926 6,724
------------- --------- ----------
Accumulated depreciation
At 1 January 2013 1,326 157 1,019 2,502
Charge for the year 1,359 106 676 2,141
------------- --------- ----------
At 31 December 2013 2,685 263 1,695 4,643
------------- --------- ----------
Net book value
At 31 December 2013 623 227 1,231 2,081
As at 31 December 2012(Proforma)
Cost
At 1 January 2012 146 110 1,384 1,640
Additions 3,162 380 1,516 5,058
Disposals - - (263) (263)
------------- --------- ---------- -------
At 31 December 2012 3,308 490 2,637 6,435
------------- --------- ----------
Accumulated depreciation
At 1 January 2012 67 63 687 817
Charge for the year 1,259 94 583 1,936
Disposal - - (251) (251)
------------- --------- ---------- -------
At 31 December 2012 1,326 157 1,019 2,502
------------- --------- ----------
Net book value
At 31 December 2012 1,982 333 1,618 3,933
============= ========= ========== =======
4. Trade and other receivables
As at 31 December
---------------------
Proforma
2013 2012
RMB'000 RMB'000
Trade receivables 18,968 10,553
Other receivables 893 839
----------
19,861 11,392
========== ===========
The carrying amounts of trade and other receivables approximate
their fair values.
5. Cash and cash equivalents
As at 31 December
---------------------
Proforma
2013 2012
RMB'000 RMB'000
Cash at banks 343,916 107,993
Cash on hand 139 155
----------
344,055 108,148
========== ===========
6. Trade and other payables
As at 31 December
---------------------
Proforma
2013 2012
RMB'000 RMB'000
Trade payables 2,000 -
---------- -----------
Rent incentives 1,993 993
Other payable 1,445 11,510
Other tax payable 1,317 945
Accrued liabilities 13,066 5,246
---------- -----------
Other payables 17,821 18,694
----------
19,821 18,694
========== ===========
The carrying amounts of other payables approximate their fair
values.
As at 31 December 2013, accrued liabilities relating to the
Initial Public Offering (the "IPO") amounted to GBP 645,000 (31
December 2012: nil)
7. Stated capital account
The Company
As at 31 December
---------------------
Number
Of shares RMB'000
Issued:
On incorporation 2 -
Shares issued at IPO 9,549,991 67,518
Share issue expenses - (9,606)
Shares issued under the
Reorganisation 183,999,998 -
-----------
193,549,991 57,912
=========== ==========
On 26 July 2013, the Company was incorporated with issuance of
two ordinary shares at no par value.
The admission of the enlarged share capital to trading was
effective on 9 December 2013, with a placing of 9,549,991 ordinary
shares of no par value at 70 pence per share (totaling RMB
67,518,000) as part of the admission to trading on AIM. The share
issue costs associated with this transaction of RMB 9,606,000 have
been deducted from the Company's stated capital.
On 3 December 2013, the Company issued 183,999,998 ordinary
shares at no par value pursuant to a share swap agreement and
subscription agreement.
The holders of ordinary shares are entitled to receive dividends
from time to time and are entitled to one vote per share at
meetings of the Company.
Under the terms of a warrant deed dated 9 December 2013 the
Company issued a total of 5,080,687 warrants to subscribe for
ordinary shares at 70 pence per share to Cairn Financial Advisers
LLP and Argento Capital Markets Limited as part of the fee
arrangements with those advisers in relation to the Company's IPO.
The fair value of the warrants granted have been estimated using a
Black Scholes option pricing model with the following inputs:
warrant price - 70p, share price - 70p, expected volatility - 50%,
risk free rate of interest - 0.5%, expected dividend yield - 0% and
expected life - 1-3 years. The fair value of the warrants using the
above methodology is RMB 8,628,000. The fair value of the warrants
has been recognised in the stated capital account.
8. Reserves
(a) Statutory reserve
According to the relevant PRC regulations and the Articles of
Association of the subsidiaries, it is required to transfer 10% of
each subsidiary's respective profit after income tax to its
statutory surplus reserve until its reserve balance reaches 50% of
its registered capital. The transfer to this reserve must be made
before the distribution of dividends to equity owners. Statutory
surplus reserve can be used to make good previous years' losses, if
any, and be converted into paid-in capital in proportion to the
existing interests of equity owners, provided that the balance
after such conversion is not less than 25%of the registered
capital.
(b) Foreign exchange translation reserve
The foreign exchange translation reserves arose from the
translation of the financial statements of foreign subsidiaries and
are not distributable by way of dividends.
9. Profit before taxation
Years ended 31 December
----------------------------
Proforma
2013 2012
RMB'000 RMB'000
Staff cost 47,483 38,292
Auditors' remuneration
- audit services 804 12
Operating lease - buildings 1,688 1,436
Depreciation of property,
plant and
equipment 2,141 1,936
============= ============
10. Income tax expenses
Years ended 31 December
----------------------------
Proforma
2013 2012
RMB'000 RMB'000
Current income tax 62,382 28,479
Deferred tax
Original and reversal of temporary
differences (19,318) (7,280)
-------------
Income tax expenses recognised 43,064 21,199
============= ============
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:
Years ended 31 December
----------------------------
Proforma
2013 2012
RMB'000 RMB'000
Deferred revenue after balance for
the prior year (58,146) (29,025)
Deferred revenue balance for the
year 135,419 58,146
Temporary difference 77,273 29,121
============= ============
Profit multiplied by standard rate
of 25% 19,318 7,280
Deferred tax asset opening
balance 14,089 6,809
------ ------
33,407 14,089
====== ======
The inclusion of a deferred tax asset in the accounts for the
years ended 31 December 2013 and 2012 was derived from deferred
revenue.
The above 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 or loss
per the consolidated income statements as follows:
Years ended 31 December
----------------------------
Proforma
2013 2012
RMB'000 RMB'000
Profit before taxation 171,441 84,137
============= ============
Profit multiplied by standard rate
of 25% 42,860 21,034
Effect of:
Tax impact on different statutory
tax rate 57 -
Deferred taxes on temporary differences
not recognised 125 -
Tax effect on non-deductible
expenses 22 165
------ ------
43,064 21,199
====== ======
11. Earnings per share
The calculation for earnings per share, based on the weighted
average number of shares, is shown in the table below:
Years ended 31 December
----------------------------
Proforma
2013 2012
Profit after tax attributable
to
owners of the Group (RMB'000)
128,385 62,547
Weighted average number
of shares ('000)
- Basic 184,576 184,000
- Diluted 184,882 184,000
Earnings per share (RMB)
- Basic 0.70 0.34
- Diluted 0.69 0.34
12. Subsidiaries
The details of the Company's subsidiaries are as follows
Name of Place of
Subsidiary incorporation Principal activity Effective equity
interest
As at 31 December
--------------------
2013 2012
Held by the Company
Junde International Hong Kong Investment holdings 100% Note
Holdings Limited 1
("JIL")
Held by JIL
Yangzhou Junde Investment
Consulting Development
Co., Ltd. ("Yangzhou
Junde") PRC Investment holdings 100% 100%
Held by Yangzhou
Junde
Jiangsu Province
JQW Technology Co., B2B e-commerce
Ltd. ("Jiangsu JQW") services 100% 100%
Shishi JQW Technology
Co., Ltd. ("Shishi B2B e-commerce
JQW") PRC services 100% 100%
Shenzhen JQW Information PRC IT support and Note 2 Note
Co., Ltd. ("Shenzhen B2B 2
JQW") e-commerce services
Note 1 Previously held in the name of Wang Xiufang.
Note 2 Shenzhen JQW is controlled through certain contractual
arrangements as described in the Company's AIM Admission
Document.
13. Operating lease commitments
As at each of the financial position dates, the future
aggregated minimum lease payments under non-cancellable operating
leases contracted for but not recognised as liabilities, are as
follows:
Years ended 31 December
----------------------------
Proforma
2013 2012
RMB'000 RMB'000
Within one year 1,168 1,053
After one year but before
five years 2,978 3,970
-------------
4,146 5,023
============= ============
14. Significant related party transactions
The ultimate controlling party is JQW plc, with effect from 15
October 2013.
There have been no related party transactions that have been
material to either party and have therefore, in accordance with IAS
24, have not been disclosed.
Key management compensation
Key management personnel compensation is analysed as
follows:
Years ended 31 December
----------------------------
Proforma
2013 2012
RMB'000 RMB'000
Salaries and other short-term
employee benefits 5,254 3,524
============= ============
15. Financial risk management
The main risks arising from the Group's financial statements are
credit risk, liquidity risk and foreign currency risk. The Group
reviews and agrees policies for managing each of these risks and
they are summarised below:
Credit risk
Credit risk refers to the risk that counterparty will default on
its contractual obligations resulting in a loss to the Group. The
Group has adopted a policy of only dealing with credit worthy
counter parties and obtaining sufficient collateral where
appropriate, as a means of mitigating the risk of financial loss
from defaults. The Operating Group performs ongoing credit
evaluation of its counter parties' financial condition and does not
hold any collateral as security over its customers. The Group's
major classes of financial assets are cash and cash equivalents,
trade and other receivables.
As at the end of each financial year, the Group's maximum
exposure to credit risk is represented by the carrying amount of
each class of financial assets recognised in the consolidated
statements of financial position.
As at 31 December 2012 and 2013 substantially all the cash and
cash equivalents as detailed in Notes 5 to the consolidated
financial statements are held in major financial institutions which
are regulated and located in the PRC, which management believes are
of high credit quality. The management of the Group does not expect
any losses arising from non-performance by these
counterparties.
The carrying amount of financial assets represents the maximum
credit exposure. The maximum exposure to credit risk at the
reporting date of the Group is as follows:
As at 31 December
---------------------
Proforma
2013 2012
RMB'000 RMB'000
Cash and cash equivalents 344,055 108,148
Trade receivables 18,968 10,553
Other receivables 893 839
----------
363,916 119,540
========== ===========
Credit risk (continued)
The Group has no significant concentrations of credit risk. Cash
is placed with established financial institutions. The maximum
exposure to credit risk is represented by the carrying amount of
each financial asset in the statement of financial position.
Trade receivables not impaired
The Group's trade receivables that are not impaired are as
follows:
As at 31 December
---------------------
Proforma
2013 2012
RMB'000 RMB'000
Current
31 - 60 days 18,968 10,553
61 - 90 days - -
91 to 120 days - -
----------
18,968 10,553
========== ===========
There was no requirement for an allowance for doubtful debts to
be provided during the financial year ended 31 December 2013.
Currency risk
The Group has no significant exposure to foreign exchange risk
as its cash flows and financial assets and liabilities are mainly
denominated in the respective functional currency of the companies
comprising the Group. Therefore, any increase of decrease in
foreign exchange rate against functional currency, assuming such
change had occurred as at 31 December 2013, would not have a
significant impact on the Group's results of operation and
financial position.
Interest rate risk
The Group has no significant interest rate risk as the Group has
no loan facilities, term loans or overdraft facilities as at
financial position date. Therefore, any increase of decrease in
interest rate, assuming such change had occurred as at 31 December
2013, would not have a significant impact on the Group's results of
operation and financial position.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due.
The Group's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due. The principal liabilities of the Group arise in respect
of income tax payables, trade and other payables. The liabilities
of the Group are all payable within 12 months.
The Board reviews cash flow projections on a regular basis as
well as information on cash balances.
Financial risk management (continued)
Derivatives, financial instruments and risk management
The Group does not use derivative instruments or other financial
instruments to manage its exposure to fluctuations in foreign
currency exchange rates, interest rates and commodity prices.
Capital risk management
The primary objective of the Group's capital management is to
ensure that it maintains a strong credit rating and healthy capital
ratios in order to support its business and maximise shareholder
value. It is also the Group's objective to manage its capital
structure in order to reduce the cost of capital. The capital
structure comprises the shareholders' equity of the Company,
borrowings and cash and cash equivalents.
The Group manages its capital structure and makes adjustments to
it, in light of changes in economic conditions. To maintain or
adjust the capital structure, the Group may adjust the return
capital to shareholders or issue new shares. No changes were made
in the objectives, policies or processes during each of the years
ended 31 December 2012 and 2013.
16. Fair value of financial instruments
The carrying amount of the financial assets and financial
liabilities in the consolidated financial statements approximate
their fair values due to the relative short term maturity of these
financial instruments. The fair values of other classes of
financial assets and liabilities are disclosed in the respective
notes to the financial information.
The fair values of financial assets and financial liabilities
are determined as follows:
(i) the fair value of financial assets and financial liabilities
with standard terms and conditions and trade on active liquid
markets are determined with reference to quoted market prices;
(ii) the fair value of other financial assets and financial
liabilities (excluding derivative instruments) are determined in
accordance with generally accepted pricing models based on
discounted cash flow; and
(iii) the fair value of derivative instruments are calculated
using quoted prices. Where such prices are not available,
discounted cash flow analysis is used, based on the applicable
yield curve of the duration of the instruments for non-optional
derivatives, and option pricing models for optional
derivatives.
17. Segment Information
Operating segments are based on internal reports about
components of the Group which are regularly reviewed by the Board
of Directors who are 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 years.
The segment information provided to management for the
reportable segments for the year ended 31 December 2013 is as
follows:
Segment Information (continued)
Year ended 31 December 2013
Direct sales Distribution Total
sales
RMB'000 RMB'000 RMB'000
Revenue and results:
Revenue from external
customers 105,118 388,014 493,132
Segment profit 244,405
Unallocated other income
and expenses (72,964)
-----------
Profit before taxation 171,441
===========
Assets and liabilities
Assets 399,404
Liabilities 167,030
The segment information provided to management for the
reportable segments for the year ended 31 December 2012 is as
follows:
Year ended 31 December 2012 (Proforma)
Direct sales Distribution Total
sales
RMB'000 RMB'000 RMB'000
Revenue and results:
Revenue from external
customers 81,211 206,604 287,815
Segment profit 136,352
Unallocated other income
and expenses (52,215)
-----------
Profit before taxation 84,137
===========
Assets and liabilities
Assets 137,562
Liabilities 85,497
Revenues from the Group's top three customers represent less
than 1% of the total revenue in 2013 (2012: 1.32%). The top
customers were selected based on the values of the packages
purchased.
There is no single customer from whom the revenue amounts to 10
per cent or more of the Group's revenue during the financial
year.
Segmental information is only presented to the CODM on a revenue
basis and as such segmental information is only shown for revenue
items.
18. Commitments
The Group had not entered into any material capital commitments
as at 31 December 2013.
19. Contingencies
As at 31 December 2013, the Group had a contingent liability of
RMB 2 million if it fails to meet certain financial and operational
milestones stipulated in the property lease agreement in Jiangsu
JQW.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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