JQW.L Regulatory News (JQW)

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 continues to be well positioned for future growth."

The Group will be announcing its 2014 Final Results on Thursday, 30 April 2015. An analyst briefing given by Peter Chen (Chief Executive Officer) and Wei Boon Kooi (Chief Financial Officer), will be held at 9.30 a.m. at the offices of Abchurch Communications, 125 Old Broad Street, London, EC2N 1AR.

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About JQW plc

JQW is a leading domestic business-to-business e-commerce provider based in the Chinese province of Jiangsu. The Group's core business is its online B2B platform, www.jqw.com, which has been developed to encourage domestic trade by connecting Chinese SMEs with potential trade partners. Founded in 2004, the platform was developed to help to market Chinese SME's websites. JQW has evolved rapidly to become the second highest ranked B2B e-commerce website 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 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 871 million at September 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 recently has:

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 as of 31December 2014

600 Rated in the top 600 websites for global website traffic rankings

44 Sales agencies

3 Top 3 in Chinese B2B website traffic rankings