Interim Results

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 2015.

Highlights

The illustrative exchange rate as at 22 September 2015 is 1 GBP: 9.848 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 made in spite of the challenging economic climate.  The Group has maintained the growth in contracted sales during the period and continued to increase the number of new sales agencies which management believes is instrumental in achieving sustained future growth. The Board is pleased with the progress of the e-commerce platform, which is core to the Group's competitiveness, and continues to view the future with optimism."

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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 support the marketing of Chinese SME's websites. JQW has evolved rapidly to become one of the top three B2B e-commerce websites 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.

As at 30 June 2015, the Group had:

· 12 million Registered users

· 5 million Page views per day

· 1,199,000 Sheng-Yi-Tong members with website "shops"

· 243,000 Fee-paying members

· 700 Rated in the top 700 websites for global website traffic rankings

· 51 Sales agencies

· 3 Top 3 in Chinese B2B website traffic rankings

Chairman's statement

I am pleased to present JQW's results for the six months ended 30 June 2015.

Performance

Revenue for the period increased by 25% to RMB 433 million (H1-2014: RMB 346 million) and net profit after tax rose by 5% to RMB 83 million (H1-2014: RMB 78 million). The increase in recognised revenue during the period was mainly due to the significant growth in contracts signed in H2 2014 and the fact that a portion of these contracts was recognised in the current period. The slow-down in China's economy and numerous changes within the Chinese business environment, such as increasing operating costs, anti-corruption and credit tightening policies, anti-counterfeit internet efforts and other unfavourable factors have made 2015 a challenging year for the Group. Nevertheless, the Group has maintained the growth in contracted sales in H1 2015 at 3%, even with significant pressure from competitors in terms of price and diversification of services offered.

In July 2014, the Company introduced the "Gold We King" package, which includes the ability to create an online shop on the 'WeChat' platform, a popular mobile text and voice messaging communication application in China. In H1 2015, the "Gold We King" package contributed revenue RMB 22 million to the Group (H2-2014: RMB 8 million). There were 7,900 new members who subscribed to the "Gold We King" package in H1-2015, which was approximately 100 contracts less than the new subscribers for this package in H2-2014. This was mainly because of China's festival season and long New Year public holiday in H1-2015.

The Group's gross profit margin decreased to 42%, from 46% for H1 2015. 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 10 million in H1 2014 to RMB 17 million in H1 2015, reflecting our clients' recognition of the value of this service.

As at 30 June 2015, the Group had 243,000 fee paying members which compares to 241,000 at the end of December 2014 and 221,000 at the end of June 2014. JQW continues to be cash generative, resulting in a cash position at the half year of RMB 460 million (H1 2014: RMB 425 million) and net assets of RMB 349 million (H1 2014: RMB 303 million).

Developments

Sales agencies

JQW's main focus has been and continues to be the appointment of new sales agencies and the achievement of excellent client satisfaction. In line with the Group's strategy, the number of agencies has increased from 44 as at 31 December 2014 to 51 as at 30 June 2015, including 4 franchise agencies. JQW is now represented in 13 provinces and one directly controlled municipality in China. In H1 2015, JQW focussed on the development of sales agencies in the second and third-tier cities of Shandong, Guangdong and Hubei. These cities are well developed but previously lacked a JQW sales centre. The Group also intends to continue to expand its presence into additional provinces and cities to gain greater local market share. JQW remains committed to its target to increase the number of agencies to at least 60 by the end of 2015. The management believes a strong sales agency team is crucial to achieving the Group's goal of continuous future growth.

B2B e-commerce platform

The evolution in the B2B environment in China has led to the introduction of an online trading function on the platform which was necessary to enhance our competitiveness in the market. The Chinese e-commerce platform targets the domestic market and will significantly improve functionality, allowing purchasers to place orders and make payments through the platform, using carefully selected partner firms with whom JQW has established strong working relationships. Although management does not expect this platform to have a substantial impact on the financial results for 2015, it is an important milestone for JQW because it will enable the Group to develop another commission-based revenue stream. Currently the new platform is at the testing stage but JQW has already obtained an encouraging response from hundreds of local enterprises who registered as the pioneering group of suppliers. The Company is also considering integrating mobile applications with the Chinese platform. The Board will provide further updates when this service is launched in the fourth quarter of 2015.

The international trading platform was launched in July 2014 and has generated approximately RMB 1 million commission income for the Group in H1 2015. As with the Chinese platform, the international platform is not expected to make a significant contribution to our consolidated financial results for the period, but it was also an important milestone for JQW in terms of developing commission-based sales models. However, the requirements of some local regulatory bodies, such as the customs authorities, have become a major constraint to smaller size suppliers trying to access international markets which has in turn affected the growth of JQW's international platform. In an effort to find more effective ways to encourage our members to trade internationally, JQW's international trading platform team is therefore now providing our members with information on international trade matters and assisting them in complying with the authorities' requirements.

Financial services

In the fourth quarter of 2014, 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. This relationship provides a platform and a direct link to a financial institution that provides SMEs with microloan services. CreditEase Group will provide microloan financing services to JQW's members with a lower interest rate so they can fulfil certain criteria, such as becoming a subscribed member of JQW for a defined period of time. Up to the end of June 2015, approximately 2,500 of JQW's members have obtained microloan facilities from CreditEase Group with total drawdowns of more than RMB 60 million. JQW will continue to explore similar opportunities with other financial institutions in China in order to offer more value added services to members to support future growth.

Outlook and Strategy

In 2015, the Chinese market is experiencing weaker growth. JQW therefore has carefully planned its future development to identify the most effective ways to secure sustainable growth. The management team will remain vigilant with regards to the challenges and opportunities that arise within the changing business environment. The team also intends to use the Company's resources capital to diversify into new products, which will generate more value for both stakeholders and shareholders, while continuing to benefit from the slower but more stable growth in e-commerce industry of China.

The Company will keep the outlook under careful review in light of the one month suspension of trading, as announced on 21 September.

Cai Yongde

Chairman

23 September 2015

Condensed Consolidated Statement of Comprehensive Income

Consolidated Statement of Changes in Equity

For the six month period ended 30 June 2015 (Unaudited)

Condensed Consolidated Statement of Financial Position

As at 30 June 2015

Condensed Consolidated Statement of Cash Flows

For the six month period ended 30 June 2015

Basis of Presentation and Summary of Significant Accounting Policies

1. General information and principal activities

The interim consolidated 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 2015 and are unchanged from those disclosed in the Financial Statements for the year ended 31 December 2014.

The interim financial information has not been reviewed nor audited by the Company's auditors. The comparatives for the period ended 31 December 2014 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 2014, which was prepared under IFRS, is available on the Company's website.

The interim consolidated financial statements for the six months ended 30 June 2015 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 2015 was approved by the Directors on 21 September 2015.

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 periods/year.

The segment information provided to management for the reportable segments for the interim results is as follows:

Six months ended 30 June 2014

The segment information provided to management for the reportable segments for the six months ended 30 June 2015 is as follows:

Six months ended 30 June 2015

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:

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:

4. Property, plant and equipment

5. Trade and other receivables

The carrying amounts of trade and other receivables approximates to their fair value.

6. Earnings per share

The calculation of loss per share is based on the following loss and number of shares:

- Ends-