TIDMJQW
RNS Number : 1347R
JQW PLC
09 September 2014
Press Release 9 September 2014
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
2014.
Highlights
-- Special dividend of 5.0 pence per share proposed
-- Interim dividend of 0.2 pence per share declared (2013 final
dividend: 0.5 pence per share)
-- Revenue increased by 91% to RMB 346 million (H1-2013: RMB 181
million), which benefited from short-term packages signed before
the end of 2013
-- Profit before tax and profit after tax rose by 48% to RMB 105
million (H1-2013: RMB 71 million) and to RMB 78 million (H1-2013:
RMB 53 million) respectively
-- Strong cash position of RMB 425 million (H1-2013: RMB 177 million)
-- Diluted earnings per share increased 34% to RMB 0.39 per share
-- Net assets of RMB 303 million (H1-2013: RMB 99 million)
-- Active fee paying members increased by 33%year-on-year to 221,000
as at 30 June 2014
-- 40 sales agencies at the end of July 2014, two being franchises
(30 sales agencies at the end of 2013)
The illustrative exchange rate as at 8 September 2014 is 1 GBP:
9.926 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 that the Company has made and the positive
performance during the first half of the year. We have pre-launched
our international B2B e-commerce platform as well as appointed new
sales agencies in line with the strategy set out in our IPO
documentation. We look forward to adding more sales agencies as
well as developing platforms for smartphone users to further
broaden our offering and take advantage of the rapidly growing
Chinese B2B e-commerce market."
For further information:
JQW plc
Cai Yongde, Chairman Tel: +44 (0) 20 7398
7710
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
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
7710
jqw@abchurch-group.com www.abchurch-group.com
About JQW plc
JQW is a leading domestic business-to-business e-commerce
provider headquartered 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 Chinese
B2B e-commerce website in terms of traffic and operates, what the
directors 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
983,000 Sheng-Yi-Tong members with website "shops"
227,000 Fee-paying members
700 Rated in the top 700 websites for global website
traffic rankings
40 Sales agencies (two franchises)
2 Second (behind Alibaba) in Chinese B2B website
traffic rankings
Chairman's statement
It is with pleasure that I present to you the results of JQW for
the six months ended 30 June 2014.
Performance
Trading for the period was strong with revenue increasing by 91%
to RMB 346 million (H1-2013: RMB 181 million) and net profit after
tax rising by 48% to RMB 78 million (H1-2013: RMB 52 million).
Revenue recognition in H1-2014 was boosted in part by a large
number of new three-month contracts signed by fee paying members
towards the end of 2013. As a reminder, revenues are only
recognised over the contracts' lifetime. As these contracts were
3-months contracts as opposed to a 12 months length for all other
packages, these short-term contracts signed at the end of 2013
boosted revenue recognition in Q1-2014. There was a 33% increase in
active fee paying members totalling 221,000 as at 30 June 2014 when
compared to 30 June 2013. Although the board would not expect that
the strong growth recorded in H1-2014 will materialise again in
H2-2014, it is confident that the Group will achieve its full year
targets.
As at 31 July 2014, the Group had 227,000 fee paying members
which compares to 197,000 at the end of December 2013 and 166,000
at the end of June 2013. JQW continues to be cash generative,
resulting in a cash position at the half year of RMB 425 million
(H1-2013: RMB 177 million) and net assets of RMB 303 million
(H1-2013: RMB 99 million).
Market
The Board believes that JQW continues to be well positioned in
China's B2B e-commerce market. As at 29 August 2014, JQW.com
remained in second place behind Alibaba in the Chinese B2B website
traffic rankings, whilst being ahead of its competitors including
Youboy, b2b.cn, baimao.com, and china.cn. In terms of traffic
volume, JQW.com is 47% higher than Youboy, the third most visited
B2B e-commerce platform in China.
The market in which JQW operates continues to show growth.
According to iResearch.cn, the leading Chinese market research
firm, the monetary value of Chinese e-commerce transactions
amounted to RMB 2.82 trillion in Q2-2014. Compared to Q2-2013, this
represents an increase of 19.7% and 6.9% when compared to Q1-2014.
Online shopping now represents 22.1% of all purchases in China.
Sales agencies
JQW's main focus has been and continues to be the appointment of
new sales agencies as well as client satisfaction. As announced on
7 May 2014 and in-line with the Group's strategy, the first
franchise arrangement was launched in Chongqing City, to support
the planned roll-out of new sales agencies. Since the period end,
the second franchise was launched in Zibo, Shandong province, at
the beginning of July 2014 and the Group has invested approximately
RMB 1 million into the fixed assets of this new franchise.
Under the franchise system, JQW provides financial support to
sales agencies to acquire computer systems, fixed assets and to
refurbish offices. In return, an approximately 10 percentage points
lower percentage sales commission is earned by the franchise. The
Board believes the franchise system will help the Group expand its
presence into other provinces in China.
Since 31 December 2013, the Group has worked hard to expand the
number of its sales agencies by 10, taking the Group total to 40,
which includes two franchise agencies. JQW is now represented in 12
provinces and one direct controlled municipality in China and the
Group intends to continue to expand its presence into additional
provinces.
During H1-2014 JQW has seen a marked increase in average spend
from its existing customer base as a number of clients have
upgraded their subscriptions to higher value premium packages. In
addition, there has been a rise in the number of customers selling
domestic services, such as home management and cleaning services
via the JQW platform. The Board is also pleased to report healthy
revenue growth from Jilin and Shandong provinces, where additional
sales agencies have been appointed in the first half of 2014.
To ensure that JQW's e-commerce platform operates smoothly, the
Group has significantly expanded its technical team which provides
full support for its customer base. The number of direct sales
staff remained stable in the first half of 2014, while the Company
has remained focused on increasing the number of its sales
agencies.
New and future developments
Launch of international B2B e-commerce platform
During the period, JQW launched its English language B2B
e-commerce platform www.jqwmall.com. The platform was established
to enable certain of JQW's premier members and other new members,
who are high quality local suppliers to consider expanding their
sales internationally.
As announced on 2 July 2014, it is the Group's intention at this
early stage of development, to open this site only to members in
industries where there is an international price competitive
position and where there are lower barriers for exports. The
Company is satisfied with the current response to JQW Mall from the
market. The management believes the contribution will grow in the
future and the international platform will become an important
revenue stream for the Company. JQW is now actively recruiting
relevant talent to help develop the international platform business
and at the appropriate time will commence a full marketing
programme to support its promotion.
JQW has been strengthening its capacity to operate this platform
and to attract new suppliers to it. Server mirroring has now been
completed in the Shenzhen internet data centre. Some old servers
have been replaced. The server capacity is adequate to accommodate
the Company's development for the next few years.
Mobile applications
JQW has also been exploring the mobile applications space, which
should significantly improve client experience in using JQW
services. The Company continues to develop the JQW smartphone
applications for both iOS and Android systems. The Android
application is already in testing stage. It is anticipated that two
applications will be in the market in next few months. The Company
sees mobile applications as an important route for attracting new
customers to the JQW platform.
Dividends
Following shareholder approval at the AGM in June 2014, a final
dividend of 0.5 pence per share for the financial year ended 31
December 2013 was paid to shareholders on 14 July 2014.
Given the positive cash flow of JQW and the Board's continued
optimism for future growth of the Group, the Board announces today
that it proposes to declare an interim dividend of 0.2 pence per
share (approximately RMB 3.9 million in total, based on 5% of the
unaudited net profit for the first half of 2014).
Special dividend
In addition, taking into account its planned capital expenditure
and working capital requirements, and the strong cash generation of
the Group, combined with its existing healthy cash balances the
Board is recommending payment of a special dividend of 5.0 pence
per share (approximately RMB 97.7 million in total) to be paid to
shareholders.
The interim dividend as well as the special dividend will be
payable around 23 October 2014 to shareholders on the register at
the close of business on Friday 26 September 2014. The shares will
go ex-dividend on 24 September 2014.
Outlook and Strategy
The Board believes that JQW will continue to benefit from the
rapid growth of the B2B e-commerce industry in China. The Group
displays solid profitability and cash generation and the Board
plans continued investment in the business to ensure its future
development and sustained rate of growth. The management team
remains focused on the implementation of the Group's strategy and
on generating shareholder value.
Cai Yongde
Chairman
8 September 2014
Condensed Consolidated Statement of Comprehensive Income
Pro forma Year
Six months Six months ended
30 June 30 June 31 December
2014 2013 2013
Unaudited Unaudited Audited
Notes RMB'000 RMB'000 RMB'000
Revenue 2 346,119 180,775 493,132
Cost of sales (185,664) (80,861) (248,727)
============== ============= ==============
Gross pro t 160,455 99,914 244,405
Other income 196 200 330
Selling and distribution
costs (45,009) (23,070) (61,438)
Administrative expenses (10,433) (6,208) (11,855)
Finance costs (25) - (1)
Pro t before tax 105,184 70,836 171,441
Income tax expense 3 (26,896) (17,966) (43,064)
============== ============= ==============
Profit for the year, attributable
to
equity holders of the parent 78,288 52,870 128,377
Other comprehensive income
(currency
translation differences) 2,272 - 20
============== ============= ==============
Total comprehensive income
for the
financial periods/year 80,560 52,870 128,397
============== ============= ==============
Profit after tax attributable
to:
- Owners of the Group 78,334 52,749 128,385
- Interests under contractual
arrangements (46) 121 (8)
============== ============= ==============
78,288 52,870 128,377
============== ============= ==============
Total comprehensive income
attributable to:
- Owners of the Group 80,606 52,749 128,405
- Interests under contractual
arrangements (46) 121 (8)
============== ============= ==============
80,560 52,870 128,397
============== ============= ==============
Earnings per share attributable
to
owners of the Group 6
- Basic, RMB 0.40 0.29 0.70
============== ============= ==============
- Diluted, RMB 0.39 0.29 0.69
============== ============= ==============
Consolidated Statement of Changes in Equity
For the six month period ended 30 June 2014 (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
2013 - 500 50,565 51,065 1,000 52,065
Profit for the
period - - 52,870 52,870 - 52,870
Total comprehensive
income - - 52,870 52,870 - 52,870
Transaction with
owners, dividend
paid - - (6,000) (6,000) - (6,000)
--------------- ---------- ---------- ---------------------- ----------------- ---------
At 30 June 2013
(Pro Forma) - 500 97,435 97,935 1,000 98,935
=============== ========== ========== ====================== ================= =========
At 1 July 2013 - 500 97,435 97,935 1,000 98,935
Profit for the
period - - 75,507 75,507 - 75,507
Other comprehensive
income - 20 - 20 - 20
=============== ========== ========== ====================== ================= =========
Total comprehensive
income - 20 75,507 75,527 75,527
Transfer to statutory
reserve - 17,812 (17,812) - - -
Issuance of share
net of issue
costs 57,912 - - 57,912 - 57,912
At 31 December
2013 57,912 18,332 155,130 231,374 1,000 232,374
=============== ========== ========== ====================== ================= =========
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) (10,560) - (10,159)
At 30 June 2014 57,912 20,604 223,259 301,775 1,000 302,775
=============== ========== ========== ====================== ================= =========
Condensed Consolidated Statement of Financial Position
As at 30 June 2014
Pro forma As at
As at As at 31
30 June 30 June December
2014 2013 2013
Unaudited Unaudited Audited
Notes RMB'000 RMB'000 RMB'000
Assets
Non-current asset
Property, plant and equipment 4 10,107 2,392 2,081
---------- ---------------- ------------
Current assets
Trade and other receivables 5 46,737 32,397 19,861
Deferred tax asset 42,392 27,008 33,407
Cash and cash equivalents 425,172 176,780 344,055
----------
514,301 236,185 397,323
---------- ---------------- ------------
Total assets 524,408 238,577 399,404
========== ================ ============
Equity and liabilities
Stated capital account 57,912 - 57,912
Statutory reserve 18,312 500 18,312
Foreign exchange translation
reserve 2,292 - 20
Retained profits 223,259 97,435 155,130
----------
301,775 97,935 231,374
----------
Interests under contractual
arrangements 1,000 1,000 1,000
---------- ---------------- ------------
Total equity attributable
to owners 302,775 98,935 232,374
---------- ---------------- ------------
Current Liabilities
Trade and other payables 27,418 9,368 19,821
Deferred revenue 169,569 110,318 135,419
Income tax payables 24,646 19,956 11,790
----------
221,633 139,642 167,030
---------- ---------------- ------------
Total equity and liabilities 524,408 238,577 399,404
========== ================ ============
Condensed Consolidated Statement of Cash Flows
For the six month period ended 30 June 2014
Pro forma
Six months
Six months ended Year ended
ended 30 June 31 December
30 June 2014 2013 2013
Unaudited Unaudited Audited
RMB'000 RMB'000 RMB'000
Cash flows from operating activities
Profit before taxation 105,184 70,836 171,441
Adjustments for:
Depreciation 311 1,608 2,141
Interest Income (196) (200) (330)
-------------- ------------
Operating cash flows before working
capital changes 105,299 72,244 173,252
Increase in trade and other receivables (26,876) (21,013) (8,469)
Increase in deferred tax asset (8,985) (12,919) (19,318)
Increase in deferred revenue 34,150 52,172 77,273
Decrease in trade and other payables (290) (9,385) (5,861)
-------------- ------------ -------------
Cash flow from operations 103,298 81,099 216,877
Income tax paid (14,040) (6,667) (39,931)
Net cash flow from operating activities 89,258 74,432 176,946
Cash flows (used in)/from investing
activities
Acquisition of property, plant
and equipment (8,337) - (289)
Interest received 196 200 330
-------------- ------------ -------------
Net cash (used in)/from investing
activities (8,141) 200 41
-------------- ------------ -------------
Cash flows (used in)/from financing
activities
Issue of share capital, net of
issue costs - - 64,920
Dividend paid - (6,000) (6,000)
--------------
Net cash (used in)/from financing
activities - (6,000) 58,920
-------------- ------------ -------------
NET INCREASEIN CASH AND CASH EQUIVALENTS 81,117 68,632 235,907
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD/YEAR 344,055 108,148 108,148
-------------- ------------ -------------
CASH AND CASH EQUIVALENTS AT END
OF
PERIOD/YEAR 425,172 176,780 344,055
============== ============ =============
Basis of Presentation and Summary of Significant Accounting
Policies
1. General information and principal activities
The 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 2014 and are
unchanged from those disclosed in the Financial Statements for the
year ended 31 December 2013.
The interim financial information has not been reviewed nor
audited by the Company's auditors. The comparatives for the period
ended 31 December 2013 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
2013, which was prepared under IFRS, is available on the Company's
website.
The interim consolidated financial statements for the six months
ended 30 June 2014 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 2014 was
approved by the Directors on 8 September 2014.
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 years.
The segment information provided to management for the
reportable segments for the interim results is as follows:
Six months ended 30 June 2013 (Pro forma)
Distribution
Direct sales sales Total
RMB'000 RMB'000 RMB'000
Revenue and results:
Revenue from external customers 41,786 138,989 180,775
Segment profit 99,914
Unallocated other income and
expenses (29,078)
---------
Profit before taxation 70,836
=========
Assets and liabilities
Assets 238,577
Liabilities 139,642
The segment information provided to management for the
reportable segments for the six months ended 30 June 2014 is as
follows:
Six months ended 30 June 2014
Distribution
Direct sales sales Total
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
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:
Pro Forma
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2014 2013 2013
RMB'000 RMB'000 RMB'000
Current income tax 35,881 30,885 62,382
Deferred income tax (8,985) (12,919) (19,318)
Income tax expense recognised
in the
income statement 26,896 17,966 43,064
=========== ============ ============
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:
Pro Forma
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2014 2013 2013
RMB'000 RMB'000 RMB'000
Deferred revenue balance for
prior period/year (135,419) (58,146) (58,146)
Deferred revenue balance for
the period/year 169,569 110,318 135,419
Temporary difference derived
from deferred
revenue 34,150 52,172 77,273
Other temporary differences 1,790 (496) -
-------------- ------------ ------------
35,940 51,676 77,273
============== ============ ============
Profit multiplied by standard
rate of 25% 8,985 12,919 19,318
Deferred tax asset opening
balance 33,407 14,089 14,089
-------------- ------------ ------------
42,392 27,008 33,407
============== ============ ============
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:
Pro Forma
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2014 2013 2013
RMB'000 RMB'000 RMB'000
Profit before taxation 105,184 70,836 171,441
Profit multiplied by standard
rate of 25% 26,296 17,709 42,860
Effect of:
Tax impact on different statutory
rate 599 24 57
Deferred taxes on temporary
differences not
recognised 1 102 125
Tax effect on non-deductible
expenses - 131 22
-------------- ------------ ------------
26,896 17,966 43,064
============== ============ ============
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 2013 (Pro
forma)
Cost
At 1 January 2013 3,308 490 2,637 6,435
Additions - - 67 67
------------- --------- ----------
At 30 June 2013 3,308 490 2,704 6,502
------------- --------- ----------
Accumulated depreciation
At 1 January 2013 1,326 157 1,019 2,502
Charge for the period 1,207 59 342 1,608
------------- --------- ----------
At 30June 2013 2,533 216 1,361 4,110
------------- --------- ----------
Net book value
At 30 June 2013 775 274 1,343 2,392
As at 31 December 2013 (Proforma)
Cost
At 1 July 2013 3,308 490 2,704 6,502
Additions - - 222 222
------------- --------- ---------- -------
At 31 December 2013 3,308 490 2,926 6,724
------------- --------- ----------
Accumulated depreciation
At 1 July 2013 2,533 216 1,361 4,110
Charge for the period 152 47 334 533
------------- --------- ---------- -------
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 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
============= ========= ========== =======
5. Trade and other receivables
Pro forma
As at As at As at
30 June 30 June 31 December
2014 2013 2013
RMB'000 RMB'000 RMB'000
Trade receivables 40,645 27,089 18,968
Other receivables 6,092 5,307 893
46,737 32,397 19,861
========= ========== ============
The carrying amounts of trade and other receivables
approximately to their fair value.
6. Earnings per share
The calculation of loss per share is based on the following loss
and number of shares:
Pro Forma
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2014 2013 2013
RMB'000 RMB'000 RMB'000
Profit after tax attributable to
owners of the Group (RMB'000) 78,334 52,749 128,385
Weighted average number of shares
('000)
- Basic 193,550 184,000 184,576
- Diluted 198,631 184,000 184,882
Earnings per share (RMB)
- Basic 0.40 0.29 0.70
- Diluted 0.39 0.29 0.69
- Ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
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