TIDMJQW
RNS Number : 7748L
JQW PLC
30 April 2015
Press Release 30 April 2015
JQW plc
("JQW" or the "Group"*)
Final Results
JQW, the AIM quoted domestic Chinese B2B e-commerce operator,
today announces its audited final results for the year ended 31
December 2014.
Highlights
* Revenues increased by 59% to RMB 783.8 million, in
line with market expectations (2013: RMB 493.1
million)
* Fee paying members increased by 22% to 241,000 (2013:
197,000)
* 44 sales agencies at the end of 2014 (2013: 30
agencies)
* Profit before tax increased by 24% to RMB 213.2
million (2013: 171.4 million)
* Net profit after tax also rose by 14% to RMB 146.7
million (2013: RMB 128.4 million)
* Gross profit margin declined to 40% (2013: 50%)
* Pro-forma fully diluted earnings per share increased
to RMB 0.76 (2013: RMB 0.69)
* Strong cash position improved in 2014 by RMB 50.6
million to RMB 394.7 million despite total dividend
payments of RMB 114.4 million during the year
* Total dividend of 5.2 pence (2013: 0.5 pence) per
share, or RMB 101.6 million, was paid in October 2014
The illustrative exchange rate as at 31 December 2014 is 1 GBP:
9.54 RMB.
* Group, below, is defined as JQW, its subsidiaries and indirect
subsidiary
Cai Yongde, Chairman of JQW, commented: "2014 was an important
and exciting year for JQW in which the Group has transformed itself
from a local market oriented internet platform to an international
B2B internet enterprise. The Group's 2014 financial results reflect
this progression and show a strong increase in both revenue and
profit before tax of 59% and 24% respectively.
"Nevertheless, 2014 has also been a challenging year for the
Group with the effects of a slowing Chinese economy and government
policies making an impact on the Group's end market of small and
medium sized enterprises. In order for JQW to sustain the Group's
growth in this more challenging business environment, it has been
paramount for the JQW team to continue to focus its efforts on
adapting and responding quickly to this evolving marketplace. The
team has reacted positively by introducing innovative technologies
and additional value-add services to JQW's members, which the Board
believes will place the Group in a strong competitive position.
Trading in 2015 has started positively and the Board views the
future with optimism."
-Ends -
For further information:
JQW plc
Cai Yongde, Chairman Tel: +44 (0)
20 7398 7710
Chen Daocai, Chief Executive www.jqw-ir.com
Officer
Kooi Wei Boon, Chief Financial
Officer
Cairn Financial Advisers LLP
(Nomad & Broker)
Sandy Jamieson / Liam Murray Tel: +44 (0)
/ Jo Turner 20 7148 7900
www.cairnfin.com
Media enquiries:
Abchurch Communications Limited
Henry Harrison-Topham / Quincy Tel: +44 (0)
Allan 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 help to market Chinese SME's websites. JQW has evolved
rapidly to become one of the top three B2B e-commerce website 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.
At the end of 2014, the Group had:
11 million Registered users
5 million Page views per day
1,046,000 Sheng-Yi-Tong members with website "shops"
241,000 Fee-paying members
600 Rated in the top 600 websites for global website traffic rankings
44 Sales agencies
3 Top 3 in Chinese B2B website traffic rankings
Chairman's Statement
Since JQW was admitted to the AIM market of the London Stock
Exchange at the end of 2013, the Group has transformed itself from
a local market oriented internet platform to an international B2B
internet enterprise. JQW's reputation has been enhanced in China
and internationally with the public profile gained from joining
AIM. JQW plans to explore the new opportunities for future
development that arise from its status as a public company on a
recognised international stock market.
2014 was an important and exciting year for JQW. The Board is
pleased to announce the Group's 2014 financial results which show
an increase in revenue and profit before tax of 59% and 24%
respectively. JQW's growth has been driven by a combination of
factors, including the external influences of the rapid development
of the e-commerce industry in China as well as the increasing
importance of e-commerce to China's approximately 50million small
and medium-sized enterprises ("SMEs"), who are the Group's main
target market. In addition to this, internal factors such as fast
growth in the number of JQW's sales agencies to 44 at the end of
2014, an increase of 14 new agencies, covering new cities in China
such as Changchun, Chongqing, Shijiazhuang, Jinan, Changsa and
others.
The reputation and profile of JQW was further enhanced through a
number of prestigious awards that the Group has won over the year,
including '2014 Preferred Service Provider for China SMEs' by China
Centre for Promotion of SME Development, a state-owned entity under
the Ministry of Industry and Information Technology of the People's
Republic of China (the "PRC") and the China International
Cooperation Association of SMEs. Only 106 service providers in
China have won the award in 2014. Other award winners for 2014
included recognised companies such as Microsoft, Sina, China
Telecom and Huawei. During the 2015 International Day for
Protecting Consumers' Rights, JQW and other well-known
international enterprises such as Suning, Subaru and Foton Daimler
were also selected by China Foundation of Consumer Protection as
quality and reliable service providers in China.
Nevertheless, 2014 has also been a challenging year for the
Group. China's economic slow-down has continued with GDP reported
at 7.4% in 2014, which was slightly down from 7.7% in 2013. At the
same time, the business environment in China has also encountered a
number of changes, such as increasing operating costs and a
shortage of labour. Furthermore, anti-corruption and credit
tightening policies have been introduced by the Chinese government
and internet anti-counterfeit efforts have also been enforced by
the Chinese State Administration for Industry and Commerce. The
combined effect of these factors have dampened the high growth
rates previously seen in the Chinese e-commerce sector.
In order for JQW to sustain the Group's growth in this more
challenging business environment, the JQW team continues to focus
its efforts on adapting and responding quickly to this evolving
marketplace. The team has reacted positively by introducing
innovative technologies and additional value-add services to JQW's
members, which the Board believes will place the Group in a strong
competitive position for future growth against our B2B peer group.
Trading in 2015 has started positively and JQW views the future
with optimism.
Cai Yongde
Chairman
30 April 2015
Group Chief Executive's Statement
JQW has recently celebrated the 10(th) anniversary of the Group
as well as the first year of being admitted to the AIM market of
the London Stock Exchange. The Chairman and I would like to thank
the Board and our staff for their continued hard work and
commitment to the Group. The support from all stakeholders
including our members, agents, suppliers, users, advisers, local
authorities and shareholders are all highly appreciated. I am
certain that the achievements of JQW over the last year could not
have been realised without the support and involvement from all of
our stakeholders.
In the past 10 years, JQW has evolved from being a website
designer in small region of southern China to one of the mainstream
B2B platform operators in China. The Group has also in this time
managed to expand and improve its core offering from that of pure
website design to other value-added services such as business
search engine facility, marketing clients' websites and their
businesses, providing a marketplace for users to trade their
products online in China and internationally. The enhancement of
JQW's offering has been a key factor in the rapid growth of the
Group in recent years. The strength of JQW's position in the
Chinese e-commerce sector and the quality of its platform is also
reflected in the results that the Group has achieved during
2014.
Results
Revenue increased by 59% to RMB 783.8 million (2013: RMB 493.1
million). In spite of some pressure on growth margin, this led to
pre-tax profits increasing by 24% to RMB 213.2 million (2013: RMB
171.4 million) and to net profit after tax rising by 14% to RMB
146.7 million (2013: RMB 128.4 million). Earnings per share on a
fully diluted basis went up from RMB 0.69 to RMB 0.76 when using a
pro forma figure for 2014.
The Group's gross profit margin decreased to 40%, from 50% for
the year ended 2013. Consistent with the Company's strategy, JQW's
distribution mix has seen a further rise in the sales agencies
channel, as opposed to the Group's own sales force channel, from
78% of revenues in 2013 to 84% in 2014. This has translated into
higher cost of sales as a result of commissions paid to agents. In
addition, 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 9.8 million in
2013 to RMB 58.0 million in 2014. The utilisation rate by customers
of JQW's advertorial services increased from 16% in 2013 to 66% in
2014, reflecting our clients' recognition of the value of this
service. This has also translated into a decline in gross
margin.
JQW remains a highly cash generative business. During 2014, the
Group's cash balances increased by RMB 50.6 million to RMB 394.7
million, after the Company paid out total dividends of RMB 114.4
million during the year. The Group's robust cash position provides
JQW with the ability to invest in new opportunities to deliver
further growth for our business.
JQW's two internal sales centres in Yangzhou of Jiangsu Province
and Shishi of Fujian Province have performed well in the year and
have contributed to the growth of the Group's sales. The number of
sales agencies increased by 14 to 44 at the end of 2014 (2013: 30
agencies) and the Board maintains its target to have at least 60
sales agencies by the end of 2015. Sales generated from agents have
continued to grow fast, up 69% from RMB 388.0 million in 2013 to
RMB 656.6 million in 2014, which contributed 84% of total sales.
The Group maintained its strategy to expand through the agency
model which the Board believes offers the most efficient channel
for the Group's continued growth. The agency model has allowed the
Company to expand its distribution network and geographical
presence quickly, while limiting the required investments and
limiting the risks generally associated with opening up new
regional operations. The management team continues to evaluate
suitable agency candidates and analyse new potential locations in
China in order to expand its sales agent network. In the first
three months of 2015, the Group has added three new sales agencies,
taking the total number to 47 as at 31 March 2015. The growth in
the number of new sales agencies in the first quarter of 2015 was
slower due to China's festival season and long New Year public
holiday. The Board anticipates that there will be an increase in
the signing up of new sales agencies in the subsequent months of
2015.
JQW has also generated excellent growth in the numbers of fee
paying members, which increased by 22% to 241,000 year-on-year at
the year ended 2014, which will be one of the Group's Key
Performance Indicators for 2015 revenue growth.
Platform development
B2B e-commerce platform
The Group is well aware of the increase in demand for faster,
more secure and more convenient transactions in the market. With
the improvement of facilities including internet coverage, logistic
systems and existing payment platforms having occurred, the
provision of on-line transactions will now be a crucial development
for all B2B platforms in China.
In July 2014, 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 to consider
expanding their sales internationally through JQW Mall.
Initially the Group chose to focus on suppliers in industries
where there was an international price competitive position and
where there were lower barriers for exports. At the end of 2014,
JQW Mall successfully engaged with 52 local suppliers with more
than 600 products being promoted through the platform. Although the
contribution at this stage is still small in relation to the
Group's overall financial results, the management believes that the
contribution from JQW Mall will grow in the future and the
international platform will become a more meaningful revenue stream
for the Group. JQW continues to strengthen the quality of this
platform as well as attracting more high quality suppliers to
it.
In the second half of 2015, JQW intends to launch its
Chinese-based e-commerce function on the existing Chinese B2B
platform. This Chinese transaction platform is mainly targeting the
domestic market. The new e-commerce platform will significantly
improve functionality that will allow purchasers to place orders
and make payments through the platform, using carefully selected
partner firms with which JQW has established good relations. In
line with JQW's competitors, the Group will not charge commission
on transactions undertaken as it is important for JQW to offer
value-added functionality and to boost the number of users trading
through JQW's platform. Going forward, it is the intention of the
Group to create a sales commission-based model. The Board will
provide further updates as this service is being launched in H2
2015.
Mobile Homepage on WeChat Platform
In July 2014, JQW introduced a new package to the market, 'Gold
We King', which was priced at RMB 4,000 per year. The services
included in this new package are similar to the 'Gold Shop King'
package (priced at RMB 3,000 per year) however, added to this
service was the ability to create an online shop on the 'WeChat'
platform, a popular mobile text and voice messaging communication
application in China. Through this new package, JQW's members can
now enjoy easier access to business information, link their PC
homepage to a mobile homepage, provide e-catalogue as well as
facilitate instant communication tools.
Up to the end of December 2014, more than 8,000 members
subscribed for the new 'Gold We King' package and it contributed
revenue of RMB 7.9 million. JQW will continue to explore for other
potential selling points to encourage more members to upgrade from
JQW's base package to this new package.
Mobile applications
JQW sees mobile applications as an important route for
attracting new customers to the JQW platform and the Group has been
working on the technical aspects of broadening its services in the
mobile applications space. The Group has now developed JQW's
smartphone applications for both iOS and Android systems, which
were launched in January 2015 and February 2015, respectively. The
Board believes that mobile applications will significantly improve
clients overall experience of JQW services and the team is also
looking for new value-added features to be added to these mobile
applications.
Financial services
As a result of credit tightening in China, SME's are facing
difficulties in obtaining bank loan financing. In this respect, 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,
to provide a platform and a direct link to a financial institution
that provides SMEs with microloan services. This service commenced
in the fourth quarter of 2014. Through a cooperation agreement,
CreditEase Group will provide microloan financing services to JQW's
members with a lower interest rate provided that they can fulfil
certain criteria, such as having being a subscribed member of JQW
for a defined period of time. CreditEase Group will receive
exposure to those SMEs registered as members of JQW. The benefit of
the agreement for JQW is that the Group is able to provide a new
additional service to its existing members and can also sell this
service to attract new SME members to JQW who might need microloan
financing. JQW does not bear the credit risk from this arrangement
with CreditEase Group.
The Group is also exploring the possibility of using its
specialist knowledge of the Chinese SME sector in certain business
information and e-commerce services in order to provide more
valuable data to financial institutions for credit assessment. This
is important to create a better opportunity for the Group to
diversify its future source of income by sharing the introduction
fee with the financial institutions and JQW will be well positioned
to negotiate for improved financing terms for JQW's members.
Facilities upgraded
In the middle of 2014, server mirroring was successfully
completed in the Shenzhen internet data centre. As part of this
upgrade, some of the older servers were replaced. The server
capacity is now sufficient to accommodate the Group's development
for the next few years.
Dividend
For financial year 2014, JQW has declared a total dividend of
5.2 pence per share (an interim dividend of 0.2 pence per share as
well as a special dividend of 5.0 pence per share), with
approximately RMB 101.6 million paid out as dividend to
shareholders on 23 October 2014. In light of the significant amount
paid at that time, the Board has decided to not propose any final
dividend in respect to the financial year 2014.
Going forward, the Directors intend to resume the payment of
regular dividends, which will take into account the Group's
profitability, growth, availability of cash and distributable
reserves as well as expected financing requirements to develop and
expand the operations.
Share Price
The Board is disappointed by the share price performance of the
Company since the 2014 interim results were issued, and feels that
the share price has been disconnected from the positive financial
and operational performance of the Company since admission. This
has been caused in part by share disposals by a number of the
overseas and early stage investors who have realised returns on
their original investments. The Board is in late stage discussions
to appoint a new UK-based broker, who will focus on introducing new
investors to the Company in the coming months.
Outlook
The Board is committed to ensuring that the Group responds to
changes in the market so that it continues to improve its product
mix as well as provide a competitive and low cost entry point into
e-commerce for Chinese SMEs.
As mentioned in the Chairman's Statement, the business
environment in China is characterised by several traits including
the slow-down in the overall growth of the Chinese economy,
increasing operating costs, labour shortages, anti-corruption
legislation and credit tightening policies. Those changes in the
macro environment have also affected the SME's operating in China.
E-commerce in China is still expected to see rapid growth over the
next few years; however this has led to significant amounts of
capital support for new market entrants and other leading players
and this has directly increased the challenges from competitors who
offer lower prices and innovative features to their product mix. In
addition to responding to these changes in the market, the rapid
changes in technology has also required JQW to accelerate
investment in technology and innovation to upgrade its products and
services.
The Board believes that some of the negative factors in the
macro-environment may lead to a slow-down in the growth of
e-commerce enterprises in China, including JQW. However, this is a
transitional period that the Group will navigate carefully after
the rapid growth seen in recent years. With JQW's early awareness
of the potential risk and its depth of skills and financial
resources, the Group is well positioned and prepared to overcome
these challenges
Chen Daocai
Group Chief Executive Officer
30 April 2015
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 31 December
2014 2013
Note RMB'000 RMB'000
ASSETS
NON-CURRENT ASSET
Property, plant
and equipment 4 14,201 2,081
------------ ------------
14,201 2,081
CURRENT ASSETS
------------ ------------
Trade and other
receivables 5 24,797 19,861
Deferred tax asset 11 46,270 33,407
Cash and cash equivalent 6 394,698 344,055
------------ ------------
465,765 397,323
------------ ------------
TOTAL ASSETS 479,966 399,404
============ ============
EQUITY AND LIABILITIES
Stated capital account 8 57,912 57,912
Statutory reserve 9(a) 6,252 18,312
Foreign exchange
translation reserve 9(b) 280 20
Retained profits 199,535 155,130
------------ ------------
263,979 231,374
Interests under
contractual arrangement 1,000 1,000
------------ ------------
TOTAL EQUITY ATTRIBUTABLE
TO OWNERS 264,979 232,374
------------ ------------
CURRENT LIABILTIES
------------ ------------
Trade and other
payables 7 20,606 19,821
Deferred revenue 186,870 135,419
Income tax payable 7,511 11,790
------------ ------------
214,987 167,030
------------ ------------
TOTAL LIABILITIES 214,987 167,030
------------ ------------
TOTAL EQUITY AND
LIABILITIES 479,966 399,404
============ ============
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2014 2013
Note RMB'000 RMB'000
Revenue 18 783,847 493,132
Cost of sales (470,161) (248,727)
---------- ----------
Gross profit 313,686 244,405
Other income 8,443 330
Selling and distribution
expenses (88,714) (61,438)
Administrative expenses (20,190) (11,855)
Finance income/(costs) (34) (1)
Profit before taxation 10 213,191 171,441
Income tax expense 11 (66,466) (43,064)
Profit after taxation 146,725 128,377
Other comprehensive income
(currency translation
differences) 260 20
Total comprehensive income
for the financial year 146,985 128,397
Profit after tax attributable
to:
Owners of the Group 147,927 128,385
Interests under contractual
arrangements (1,202) (8)
146,725 128,377
Total comprehensive income
attributable to:
Owners of the Group 148,187 128,405
Interests under contractual
arrangements (1,202) (8)
146,985 128,397
Earnings per share attributable
to owners of the Group
Basic, RMB 12 0.76 0.70
Diluted, RMB 12 0.76 0.69
========== ==========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Stated Statutory Foreign Retained Attributable Interests Total
capital reserve exchange profits to under Equity
account translation Owners contractual
reserve of the arrangements
Group
Note RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Note 9(a) Note
9(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 9(b) - - 20 - 20 - 20
Total
comprehensive
income for the
financial
year - - 20 128,377 128,397 - 128,397
Transfer to
statutory
reserve 9(a) - 17,812 - (17,812) - - -
Transaction with
owners, dividend
paid - - - (6,000) (6,000) - (6,000)
Issuance of
shares
(net of issue
costs) 8 57,912 - - - 57,912 - 57,912
Balance at 31 December
2013 57,912 18,312 20 155,130 231,374 1,000 232,374
Stated Statutory Foreign Retained Attributable Interests Total
capital Reserve exchange profits to under Equity
account Note 9(a) translation owners contractual
reserve of the arrangements
Note Group
9(b)
Balance at 1 January
2014 57,912 18,312 20 155,130 231,374 1,000 232,374
Profit after
taxation - - - 146,725 146,725 - 146,723
Other
comprehensive,
income, net of
tax
Foreign currency
translation
differences
for foreign
operations 9(b) - - 260 - 260 - 260
Total
comprehensive
income for the
financial
year - - 260 146,725 146,985 - 146,985
Transfer from
statutory
reserve 9(a) - (12,060) - 12,060 - - -
Transaction with
owners,
dividend
paid - - - (114,380) (114,380) - (114,380)
Balance at 31 December
2014 57,912 6,252 280 199,535 263,979 1,000 264,979
CONSOLIDATED STATEMENT OF CASH FLOWS
2014 2013
Note RMB'000 RMB'000
Cash flow from operating
activities
Profit before taxation 213,191 171,441
Adjustments for:-
Depreciation of property,
plant and equipment 4 3,012 2,141
Loss on disposal of property,
plant and
equipment 10 174 -
Interest income (4,576) (330)
Operating profit before
working capital
changes 211,801 173,252
Increase in trade and
other receivables (4,676) (8,469)
Increase in deferred
tax asset 11 (12,863) (19,318)
Increase in deferred
revenue 51,451 77,273
Increase/(decrease) in
trade and other
payables 785 (5,861)
Cash flow from operations 246,498 216,877
Income tax paid (70,745) (39,931)
Net cash flow from operating
activities 175,753 176,946
Cash flow used in investing
activities
Purchase of property,
plant and equipment 4 (15,315) (289)
Proceeds from disposal
of property, plant and 9 -
equipment
Interest received 4,576 330
Net cash flow (used in)/from
investing
activities (10,730) 41
Cash flow from/(used
in) financing activities
Issuance of share capital 8 - 67,518
Share issuance costs - (2,598)
Dividend paid during
the year (114,380) (6,000)
Net cash flow (used in)/from
financing
Activities (114,380) 58,920
Net increase in cash
and cash
equivalents 50,643 235,907
Cash and cash equivalent at
beginning of
the financial year 344,055 108,148
Cash and cash equivalent
at end of the
financial year 6 394,698 344,055
=========== ==========
Notes To The Financial Statements - (Amounts in thousands of
Renminbi ("RMB")
1. Corporate information
JQW plc (the "Company") was incorporated in Jersey with
registration number 113593. The registered office of the Company is
13-14 Esplanade, St Helier, Jersey JE1 1BD, Channel Islands (PO Box
207).
On 26 July 2013, the Company was incorporated with the issuance
of two ordinary shares at no par value. On 15 August 2013, the two
shares of JQW plc were transferred toWang Xiufang, the largest
shareholder of the Company as at the date of the financial
statements (each share to be held through Tian Sheng Enterprises
Limited and ChengTong International Limited) and with de-facto
control of the Company.
Pursuant to a share swap agreement (the "Share Swap Agreement")
dated 5 September 2013 between, inter alia, the Company, Junde
International Holdings Limited ("JIL") and Wang Xiufang, JQW plc
acquired 1 share of HKD1 in the issued share capital of JIL in
consideration for the issue of 147,531,198 Ordinary Shares of no
par value in the capital of the Company at a price of 70 pence per
Ordinary Share (the "Consideration Shares"). Pursuant to the Share
Swap Agreement, the Consideration Shares were allotted, 92,901,598
Ordinary Shares to Wang Xiufang (to be held through Tian Sheng
Enterprises Limited and ChengTong International Limited),
10,009,600 Ordinary Shares to Hansen Drison Venture Capital Co.
Ltd, 10,009,600 Ordinary Shares to Universe Glory Enterprises
Limited, 23,680,800 Ordinary Shares to Fortune United Capital
Limited, 5,464,800 Ordinary Shares to One Capital Group Investment
Limited and 5,464,800 Ordinary Shares to Midasi Investment Limited
by way of performance of certain investment agreements entered into
between persons connected with the allottees and Wang Xiufang.
On 15 October 2013, JIL and its controlled subsidiaries
including Yangzhou Junde Investment Consulting Development Co.,
Ltd. ("Yangzhou Junde"), Jiangsu Province JQW Technology Co., Ltd.
("Jiangsu JQW"), Shishi JQW Technology Co., Ltd. ("Shishi JQW") and
Shenzhen JQW Information Co., Ltd. ("Shenzhen JQW"), were
transferred to JQW plc and became wholly owned subsidiaries of JQW
plc (the "Reorganisation"). These entities were ultimately
controlled and managed by the same parties before and after the
transfer to JQW plc and that control was not transitory (common
control).
On 5 September 2013, the Company, Cai Yongde (the Chairman of
JQW plc), Chen Daocai(the Chief Executive Officer of JQW plc), Cai
Peixuan (the son of Cai Yongde), Champ Public Limited, a BVI
company of which 54.7% of the issued share capital is directly
owned by Cai Yongde and 45.3% is directly owned by Chen Daocai and
Dong Feng Developments Limited, a BVI company wholly owned by Cai
Peixuan entered into a subscription agreement (the "Subscription
Agreement") whereby Champ Public Limited was allotted 29,182,400
Ordinary Shares and Dong Feng Developments Limited was allotted
7,286,400 Ordinary Shares in consideration for services provided by
Cai Yongde, Chen Daocai and Cai Peixuan to the Company.
The Reorganisation and share transfers were completed on 3
December 2013.
The consolidated financial statements include the financial
statements of the Company, its controlled subsidiaries and an
entity consolidated under contractual arrangements, collectively
referred to as the "Group".
The Group is principally engaged in the provision of
business-to-business ("B2B") e-commerce services in the People's
Republic of China (the "PRC").
JQW plcdoes not conduct any substantive operations on its own
but instead conducts its business operations through its
subsidiaries.
The consolidation financial statements reflect the historical
operations of the Group as if the current organisation structure
had existed since 1 January 2013.
2. Summary of significant accounting policies
2.1. Basis of preparation
The consolidated 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").
The individual financial information of each entity is measured
and presented in the currency of the primary economic environment
in which the entity operates (its functional currency). The
consolidated financial statements of the Group are presented in
Renminbi ("RMB"), which is the presentation currency for the
consolidated financial statements. The functional currency of each
of the individual entity is the local currency of each individual
entity.
All financial information presented in RMB has been recorded to
the nearest thousand.
The consolidated financial statements have been prepared on the
historical cost basis. The principal accounting policies adopted,
which have been applied consistently in the financial year, are
outlined below.
As permitted by Jersey Company Law only the consolidated
financial statements are presented.
2.2. Standards, amendments and interpretations to published standards not yet effective
As at the date of approval of these financial statements, the
following standards and interpretations were in issue but not yet
effective:
Issued but not yet EU adopted:
IFRS 14 Regulatory Deferral Accounts
IFRS 15 Revenue from Contracts with Customers
IFRS 9 Financial Instruments
IFRS 11 Amendments: Accounting for Acquisitions of Interests in
Joint Operations
IAS 16 and IAS 38 Amendments: Clarification of Acceptable
Methods of Depreciation and Amortisation
IAS 16 and IAS 41 Amendments: Agriculture: Bearer Plants
IAS 27 Amendment - Equity Method in Separate Financial
Statements
IFRS 10 and IAS 28 Amendments: Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture (Postponed:
waiting Exposure Draft from IASB)
Annual improvements to IFRSs 2012-2014 Cycle
Amendments to IAS 1: Disclosure Initiative
Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities:
Applying the Consolidation Exception
The Directors do not anticipate that the adoption of these
standards and interpretations in future reporting periods will have
a material impact on the Group's results.
2.3. Basis of consolidation
The consolidated financial statements incorporate the financial
information of the Group. Subsidiaries are entities (including
special purposes entities) over which the Company has the power to
govern the financial operating policies, generally accompanied by
ownership of the majority of the voting rights, so as to obtain
benefits from their activities.
A subsidiary is consolidated from the date on which control is
transferred to the Group up to the effective date on which control
ceases, as appropriate.
Intra-Group balances and transactions and any income and
expenses arising from intra-Group transactions are eliminated on
consolidation. Unrealised gains and losses arising from
transactions with associates and joint ventures are eliminated
against the investment to the extent of the Group's interest in the
investee.
Financial information of subsidiaries is prepared for the same
reporting period as that of JQW plc using consistent accounting
policies.
Interests under contractual arrangements (non-controlling
interest) in the net assets of consolidated subsidiaries are
identified separately from the Group's equity. Interests under
contractual arrangements consist of the amount of those interests
at the date of the business combination (see note 2.5 below) and
the Interests under contractual arrangements share of changes in
equity since the date of the combination.
Contractual arrangements
The significant terms of the contractual arrangements are listed
below:
As at 31 December 2014, the Group operates the www.jqw.com
domain through contractual arrangements. Shenzhen JQW holds a
license to provide Internet information services in China. Yangzhou
Junde has entered into a series of contractual agreements with
Shenzhen JQW such that Yangzhou Junde has the right to collect the
economic benefits of Shenzhen JQW and to exercise effective control
over Shenzhen JQW.
The series of contractual agreements include an Entrusted
Management Agreement, an Exclusive Option Agreement, a Shareholder
Proxy Voting Agreement, and an Equity Pledge Agreement.
The Group does not enjoy direct equity ownership of Shenzhen
JQW. Instead, the contractual agreements enable the Group to:
-- exercise effective control over Shenzhen JQW;
-- receive substantially all of the economic benefits and
residual returns, and absorb all the risks of the expected losses
from Shenzhen JQW as if it were a wholly-owned subsidiary; and
-- have an exclusive option to acquire all of the equity interests in Shenzhen JQW.
The Group, through these contractual agreements, gained control
of Shenzhen JQW. These contractual agreements require Shenzhen JQW
to be treated as part of the Group for accounting purposes.
2.4. Going Concern
The financial information has been prepared assuming the Group
will continue as a going concern. Under the going concern
assumption, an entity is ordinarily viewed as continuing in
business for the foreseeable future with neither the intention nor
the necessity of liquidation, ceasing trading or seeking protection
from creditors pursuant to laws or regulations. In assessing
whether the going concern assumption is appropriate, management has
considered the group's existing working capital position and, if
required, its ability to raise potential financing. Management are
of the opinion that the Group has adequate resources to undertake
its planned program of activities for the 12 months from the date
of approval of the financial statements.
2.5. 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
generally accepted accounting practice 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.
2.6. Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any accumulated impairment losses. The
cost of property, plant and equipment includes its purchase price
and any costs directly attributable to bringing the asset to the
location and condition necessary for it to be capable of operating
in the manner intended by management. Dismantlement, removal or
restoration costs are included as part of the cost of property,
plant and equipment if the obligation for dismantlement, removal or
restoration is incurred as a consequence of acquiring or using the
property, plant and equipment. Depreciation of property, plant and
equipment is calculated using the straight-line method to allocate
their depreciable amounts over their estimated useful lives as
follows:
Years
Furniture and
fittings 1-5
Motor vehicles 4
Office equipment 3
The carrying values of property, plant and equipment are
reviewed for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable.
The estimated useful lives, residual values and depreciation
methods are reviewed, and adjusted as appropriate, at the end of
each financial year.
The gain or loss arising on disposal or retirement of an item of
property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of the asset and
is recognised in comprehensive income statement.
Fully depreciated plant and equipment are retained in the
financial statements until they are no longer in use.
2.7. Intangible assets (Domain names)
www.jqw.com and www.jqw.cn have a life of 64 years and 16 years,
registered on 15 September 1999 and 17 March 2003 respectively.
These were gifted to the Group by one of the founders of the
business; therefore, the cost is shown as nil.
2.8. Impairment of tangible and intangible assets excluding goodwill
At the end of each financial year, the Group reviews the
carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where it is not possible to
estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs. Intangible assets with indefinite useful
lives and intangible assets not yet available for use are tested
for impairment annually, and whenever there is an indication that
the asset may be impaired.
The recoverable amount of an asset or cash-generating unit is
the higher of its fair value less costs to sell and its value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of
money.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
the comprehensive income statement, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is
treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised immediately in the comprehensive
income statement, unless the relevant asset is carried at a
revalued amount, in which case the reversal of the impairment loss
is treated as a revaluation increase.
2.9. Income tax
Income tax expense represents the sum of the tax currently
payable and deferred tax.
The tax currently payable is based on taxable profit for each
year. Taxable profit differs from profit as reported in the
comprehensive income statement because it excludes items of income
or expense that are taxable or deductible in other years and it
further excludes items that are not taxable or tax deductible. The
Group's liability for current tax is calculated using tax rates
(and tax laws) that have been enacted or substantively enacted in
countries where JIL and its subsidiaries operate by the end of the
financial period.
Deferred tax is recognised on the differences between the
carrying amounts of assets and liabilities in the financial
information and the corresponding tax bases used in the computation
of taxable profit, and are accounted for using the financial
position liability method.
Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised on taxable temporary
differences arising on investment in subsidiary, except where the
Group is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse
in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the
end of each financial year and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset
realised based on the tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the financial
year.
Deferred tax is charged or credited to the comprehensive income
statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt
with in equity, or where they arise from the initial accounting for
a business combination. In the case of a business combination, the
tax effect is taken into account in calculating goodwill or
determining the excess of the acquirer's interest in the net fair
value of the acquirer's identifiable assets, liabilities and
contingent liabilities over cost.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
2.10. Financial instruments
Financial assets and financial liabilities are recognised on the
Group's consolidated statement of financial position when the Group
becomes a party to the contractual provisions of the
instrument.
Effective interest method
The effective interest method is a method of calculating the
amortised cost of a financial instrument and allocating the
interest income or expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future
cash receipts or payments (including all fees on points paid or
received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the
expected life of the financial instrument, or where appropriate, a
shorter period, to the net carrying amount of the financial
instrument. Income and expense are recognised on an effective
interest basis for debt instruments other than those financial
instruments at fair value through comprehensive income
statement.
Financial assets
Financial assets within the scope of IAS 39 are classified as
either:
(i) financial assets at fair value through profit or loss
(ii) loans and receivables
(iii) held-to-maturity investments
(iv) available-for-sale financial assets
The classification depends on the purpose for which the
financial assets were acquired. Management determines the
classification of its financial assets at initial recognition and
re-evaluates this classification at every reporting date. As at the
financial position date of the financial statements, the Group did
not have any financial assets at fair value through profit or loss,
and in the categories of held-to-maturity investments and
available-for-sale financial assets.
All regular way purchases and sales of financial assets are
recognised on the trade date, i.e. the date that the Group commits
to purchase the asset. Regular way purchases and sales are
purchases or sales of financial assets that require delivery of the
financial assets within the period generally established by
regulation or convention of the market place concerned.
Financial assets are derecognised when the rights to receive
cash flow from the financial assets have expired or have been
transferred and the Group has transferred substantially all risks
and rewards of ownership.
Financial assets at fair value through profit or loss
(FVTPL)
Financial assets are classified in this category if they are
acquired for the purpose of selling in the short term. Gains or
losses on investments held for trading are recognised in the
comprehensive income statement.
Loans and receivables
Trade receivables, loans and other receivables that have fixed
or determinable payments that are not quoted in active market are
classified as loans and receivables. Loans and receivables are
measured at amortised cost, using the effective interest method
less impairment. Interest is recognised by applying the effective
interest method, except for short-term receivables when the
recognition of interest would be immaterial.
Impairment of financial assets
Financial assets, other than FVTPL, are assessed for indicators
of impairment at the end of each financial year. Financial assets
are impaired where there is objective evidence that, as a result of
one or more events that occurred after the initial recognition of
the financial asset, the estimated future cash flows of the
investment have been impacted.
For financial assets carried, at amortised cost, the amount of
the impairment is the difference between the asset's carrying
amount and the present value of estimated future cash flows,
discounted at the original effective interest rate.
The carrying amounts of all financial assets are reduced by the
impairment loss directly with the exception of trade receivables
where the carrying amount is reduced through the use of an
allowance account. Changes in the carrying amount of the allowance
account are recognised in comprehensive income statement.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment loss was recognised, the previously
recognised impairment loss is reversed through comprehensive income
statement to the extent the carrying amount of the investment at
the date the impairment is reversed does not exceed what the
amortised cost would have been had the impairment not been
recognised.
In respect of available-for-sale equity instruments, any
subsequent increase in fair value after an impairment loss is
recognised directly in equity.
Derecognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another entity. If the Group
neither transfers nor retains substantially all the risks and
rewards of ownership of the financial asset and continues to
control the transferred asset, the Group recognises its retained
interest in the asset and an associated liability for amounts it
may have to pay. If the Group retains substantially all the risks
and rewards of ownership of a transferred financial asset, the
Group continues to recognise the financial asset and also
recognises a collateralised borrowing for the proceeds
receivable.
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Group
are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial
liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities. Equity instruments are recorded at the proceeds
received, net of direct issue costs.
Financial liabilities
Financial liabilities are classified as either financial
liabilities at fair value through the comprehensive income
statement or other financial liabilities.
Financial liabilities are classified as at fair value through
the comprehensive income statement if the financial liability is
either held for trading or it is designated as such upon initial
recognition.
Other financial liabilities
Trade and other payables
Trade and other payables are initially measured at fair value,
net of transaction costs, and are subsequently measured at
amortised cost, where applicable, using the effective interest
method, with interest expense recognised on an effective yield
basis.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire.
2.11. Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits, and other short-term highly liquid investments which are
readily convertible to known amounts of cash and are subject to
insignificant risk of changes in value.
2.12. Leases
Rentals payable under operating leases are charged to the
comprehensive income statement on a straight-line basis over the
term of the relevant lease unless another systematic basis is more
representative of the time pattern in which economic benefits from
the leased asset are consumed. Contingent rentals arising under
operating leases are recognised as an expense in the period in
which they are incurred.
In the event that lease incentives are received to enter into
operating leases, such incentives are recognised as a liability.
The aggregate benefit of incentives is recognised as a reduction of
rental expense on a straight-line basis, except where another
systematic basis is more representative of the time pattern in
which economic benefits from the leased asset are consumed.
2.13. Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of a past event, it is probable
that the Group will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end
of each financial year, taking into account the risks and
uncertainties surrounding the obligation. Where a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows.
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, the
receivable is recognised as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably.
Changes in the estimated timing or amount of the expenditure or
discount rate are recognised in comprehensive income statement when
the changes arise.
2.14. Retirement benefit costs
Defined contribution plans are post-employment benefit plans
under which the Group pays fixed contributions into separate
entities such as the social security plan in PRC on a mandatory,
contractual or voluntary basis. The Group has no further payment
obligations once the contributions have been paid.
Contributions to defined contribution plans are recognised as an
expense in the Statement of Comprehensive Income in the same
financial year as the employment that gives rise to the
contributions.
The expenses recognised for defined contribution plans are RMB
6,359,000 for the year ended 31 December 2014 (31 December 2013:
RMB 4,402,000).
2.15. Related parties
A party is related to an entity if:-
(i) directly, or indirectly through one or more intermediaries, the party:-
-- controls, is controlled by, or is under common control with,
the entity (this includes parents, subsidiaries and fellow
subsidiaries);
-- has an interest in the entity that gives it significant influence over the entity; or
-- has joint control over the entity;
(ii) the party is an associate of the entity;
(iii) the party is a joint venture in which the entity is a venturer;
(iv) the party is a member of the key management personnel of the entity or its parent;
(v) the party is a close member of the family of any individual referred to in (i) or (iv);
(vi) the party is an entity that is controlled, jointly
controlled or significantly influenced by, or for which significant
voting power in such entity resides with, directly or indirectly,
any individual referred to in (iv) or (v); or
(vii) the party is a post-employment benefit plan for the
benefit of employees of the entity, or of any entity that is a
related party of the entity.
Close members of the family of an individual are those family
members who may be expected to influence, or be influenced by, that
individual in their dealings with the entity.
2.16. Revenue recognition
Revenue
Revenue is derived from providing B2B e-commerce services to
small to medium sized suppliers in PRC who pay varying service fees
depending on the service packages they subscribe for.
Revenue is recognised upon the transfer of significant risks and
rewards of ownership of the services to the customers, which
generally coincides with delivery time and is recognised over the
life specified in the terms of the contracts.
Revenue from operating activities is made up of the sale of
packages directly to customers or through agencies. The revenue
stated in the Statement of Consolidated Comprehensive Income is
gross of commission paid to agencies.
Deferred revenue is spread over a period of three months to one
year depending on which service package the customer subscribed
to.
Commission income
The Group earns commission income from the suppliers when
completing transactions on the Group's marketplaces. Revenue
related to commission income is recognised in the consolidated
statement of comprehensive income at the time when the underlying
transaction is completed.
Interest income
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the applicable effective interest
rate.
2.17. Operating segments
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transactions with any of the Group's other components. An operating
segment's operating results are reviewed regularly by the chief
operating decision maker to make decisions about resources to be
allocated to the segment and assess its performance, and for which
discrete financial information is available.
2.18. Dividend distribution
Dividend distributions to shareholders are recognised as a
liability in the Group's financial information in the period in
which the dividends are approved by the Company's shareholders.
JQW plc is a holding company incorporated in Jersey. The ability
of JQW plc to pay dividends depends substantially on the receipt of
dividends from its subsidiaries. In particular, each of the
subsidiaries in the PRC and Hong Kong may pay dividends only out of
its accumulated distributable profits, if any, determined in
accordance with its articles of association, and the accounting
standards and related regulations.
Moreover, pursuant to relevant PRC laws and regulations
applicable to the subsidiaries in the PRC, a certain percentage of
after-tax profits are required to be set aside in a statutory
common reserve fund. Allocations to these statutory reserves may
only be used for specific purposes and are not distributable to JIL
in the form of loans, advances, or cash dividends.
Furthermore, if any of JQW plc's subsidiaries incurs debt on its
own behalf in the future, the instruments governing the debt may
restrict its ability to pay dividends or make other payments to JQW
plc.
3. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are
described in Note 2, 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.
4. Property, plant and equipment
Furniture Motor Office
and fittings vehicles equipment Total
RMB'000 RMB'000 RMB'000 RMB'000
As at 31 December
2014 (Proforma)
Cost
At 1 January 2014 3,308 490 2,926 6,724
Additions 4,454 - 10,861 15,315
Disposals - - (1,621) (1,621)
------------- --------- ---------- -------
At 31 December
2014 7,762 490 12,166 20,418
------------- --------- ----------
Accumulated depreciation
At 1 January 2014 2,685 263 1,695 4,643
Charge for the
year 804 90 2,118 3,012
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 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
5. Trade and other receivables
As at 31 December
------------------ -------
2014 2013
RMB'000 RMB'000
Trade receivables 24,098 18,968
Other receivables 699 893
------------------
24,797 19,861
================== =======
The carrying amounts of trade and other receivables approximate
their fair values.
6. Cash and cash equivalents
As at 31 December
------------------ --------
2014 2013
RMB'000 RMB'000
Cash at banks 394,557 343,916
Cash on hand 141 139
------------------
394,698 344,055
================== ========
7. Trade and other payables
As at 31 December
------------------ --------
2014 2013
RMB'000 RMB'000
Trade payables 450 2,000
------------------ --------
Rent incentives 2,993 1,993
Other payable 829 1,445
Other tax payable 1,628 1,317
Accrued liabilities 14,706 13,066
------------------ --------
Other payables 20,156 17,821
------------------
20,606 19,821
================== ========
The carrying amounts of other payables approximate their fair
values.
8. Stated capital account
The Company
As at 31 December
2014
-------------------
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 0.70 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 the Share Swap Agreement and the
Subscription Agreement (Note 1).
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.
9. (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.
10. Profit before taxation
Profit before taxation is Years ended 31
stated after charging: December
--------------- --------
2014 2013
RMB'000 RMB'000
Staff cost 61,882 47,483
Auditors' remuneration
- audit services 800 804
Operating lease -
buildings 1,823 1,688
Loss on disposal
of property, plant
and
equipment 174 -
Depreciation of property,
plant and
equipment 3,012 2,141
=============== ========
11. Income tax expenses
Years ended 31
December
--------------- --------
2014 2013
RMB'000 RMB'000
Current income tax 79,329 62,382
Deferred tax:
Original and reversal of
temporary differences (12,863) (19,318)
---------------
Income tax expenses
recognised 66,466 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:
Years ended 31
December
--------------- --------
2014 2013
RMB'000 RMB'000
Deferred revenue after balance
for the prior year (135,419) (58,146)
Deferred revenue balance
for the year 186,870 135,419
Temporary difference 51,451 77,273
=============== ========
Profit multiplied by standard
rate of 25% 12,863 19,318
Deferred tax asset
opening balance 33,407 14,089
------ ------
46,270 33,407
====== ======
The inclusion of a deferred tax asset in the accounts for the
years ended 31 December 2014 and 2013 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
--------------- --------
2014 2013
RMB'000 RMB'000
Profit before taxation 213,191 171,441
=============== ========
Profit multiplied by standard
rate of 25% 53,298 42,860
Effect of:
Tax impact on different
statutory tax rate 777 57
Deferred taxes on temporary
differences not recognised 3 125
Withholding tax derived
from dividend declared 12,604 -
Tax effect on non-deductible
expenses 456 22
Tax effect on non-taxable
income (672) -
------ ------
66,466 43,064
====== ======
12. 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
-------
2014 2013
Profit after tax
attributable to
owners of the Group
(RMB'000) 147,927 128,385
Weighted average
number
of shares ('000)
- Basic 193,550 184,576
- Diluted 193,550 184,882
Earnings per share
(RMB)
- Basic 0.76 0.70
- Diluted 0.76 0.69
13. Subsidiaries
The details of the Company's subsidiaries are as follows
Name of Place
of
Subsidiary incorporation Principal Effective
activity equity interest
As at 31
December
-------------------
2014 2013
Held by the
Company
Investment
JIL Hong Kong holdings 100% 100%
Held by JIL
Investment
Yangzhou Junde PRC holdings 100% 100%
Held by Yangzhou
Junde
B2B e-commerce
Jiangsu JQW PRC services 100% 100%
B2B e-commerce
Shishi JQW PRC services 100% 100%
Shenzhen JQW PRC IT support Note Note
and B2B 2 2
e-commerce
services
As described in Note 2.4 above, although the Group
reconstruction did not become unconditional until 3 December 2013,
share capital is presented on a pro-forma basis as if the Group
structure had been in place continually during 2013.
Note 1 Shenzhen JQW is controlled through contractual
arrangements as described in Note 2.3.
14. 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
--------------- --------
2014 2013
RMB'000 RMB'000
Within one year 1,302 1,168
After one year but
before five years 2,085 2,978
---------------
3,387 4,146
=============== ========
15. Significant related party transactions
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
--------------- --------
2014 2013
RMB'000 RMB'000
Salaries and other
short-term
employee benefits 7,568 5,254
=============== ========
16. 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 creditworthy
counterparties and obtaining sufficient collateral where
appropriate, as a means of mitigating the risk of financial loss
from defaults. The Group performs ongoing credit evaluation of its
counterparties' 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 2013 and 2014 substantially all the cash and
cash equivalents as detailed in Note 6 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
------------------ --------
2014 2013
RMB'000 RMB'000
Cash and cash equivalents 394,698 344,055
Trade receivables 24,098 18,968
Other receivables 699 893
------------------
419,495 363,916
================== ========
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
------------------ --------
2014 2013
RMB'000 RMB'000
Less than 30 days 24,098 18,968
31 - 60 days - -
61 - 90 days - -
91 to 120 days - -
------------------
24,098 18,968
================== ========
There was no requirement for an allowance for doubtful debts to
be provided during the financial year ended 31 December 2014.
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 2014, 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
2014, 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.
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 2013 and 2014.
17. 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.
18. Segment Information
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 year ended 31 December 2014 is as
follows:
Year ended 31 December 2014
Direct Distribution Total
sales sales
RMB'000 RMB'000 RMB'000
-------- ------------- ------------
Revenue and results:
Revenue from external
customers 127,257 656,590 783,847
Segment profit 313,686
Unallocated other
income
and expenses (113,099)
------------
Profit before taxation 200,587
============
Assets and liabilities
Assets 479,966
Liabilities 214,987
The segment information provided to management for the
reportable segments for the year ended 31 December 2013 is as
follows:
Year ended 31 December 2013
Direct Distribution Total
sales 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
Revenues from the Group's top three customers represent less
than 1% of the total revenue in 2014 (2012: less than 1%). 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.
19. Commitments
The Group had not entered into any material capital commitments
as at 31 December 2014.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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