more than doubled for me since27 Apr 2015 13:14
Pre-Close Trading Update
Mon, 16th Feb 2015 07:00
RNS Number : 9410E
JQW PLC
16 February 2015
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Press Release
16 February 2015
JQW plc
("JQW", the "Group" or the "Company")
Pre-Close Trading Update
Notice of Preliminary Results
JQW plc, a domestic Chinese B2B e-commerce operator, provides the following trading update as the Group enters its close period.
The Board confirms that revenues for the period were ahead of market expectations, with unaudited management accounts showing revenues reaching approximately RMB 784 million (2013: RMB 490 million).
Profits for the period were in line with expectations and profit before tax for the period has increased to around RMB 212 million (2013: RMB 170 million) (exchange rate: RMB 9.6 : £1). Consistent with recent trends, our distribution mix has seen a further rise in the sales agencies channel, as opposed to our own sales force channel, from 78% of revenues in 2013 to 88% in 2014. This has translated into higher cost of sales as a result of commissions paid to agents. Similarly, our 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 from RMB 10 million in 2013 to around RMB 58 million in 2014. This has also translated into a decline in gross margin.
As at 31 December 2014, the Group had 241,000 active fee paying members which compares to 221,000 at the end of June 2014 and 197,000 at the end of December 2013. JQW remains highly cash generative and the Group maintains its strong balance sheet with cash as at 31 December 2014 amounting to RMB 395 million (2013: RMB 344 million). This robust cash position, which is after the Group paid an interim and special dividend to shareholders totalling RMB 101.6 million in October 2014, is equal to 21.3 pence per share or 195% of the Group's market capitalisation as at 13 February 2015.
Yongde Cai, Chairman of JQW, said: "The Board is extremely pleased with the solid progress that the Group has made throughout 2014. Trading in the new financial year has started positively and we are close to finalising the development of our platforms for smartphone users which will further broaden our offering and take advantage of the rapidly growing Chinese B2B e-commerce market.
"As expected in such a fast growth marketplace, we are beginning to witness some increased pricing competition from other B2B platforms in China. JQW's management team anticipated this market evolution and have already initiated a focused marketing strategy as well as a review of the packages that we offer our customers in order to maintain our competitive advantage.
"JQW remains committed to its AIM listing and the Board believes that JQW c