million EUR H1 2014 H1 20131 Change in %2
Revenues 52.2 48.7 7.1
Gross profit 12.3 10.9 13.4
Gross profit margin (%) 23.6 22.3 1.3pp
EBITDA 11.3 10.4 8.7
EBITDA margin (%) 21.6 21.4 0.2pp
EBIT 10.9 10.1 8.3
EBIT margin (%) 20.9 20.7 0.2pp
Net profit 8.2 7.5 8.5
Net profit margin (%) 15.6 15.4 0.2pp
Net cash flow from operations 4.6 3.0 53.7
1 The figures for H1 2013 concern the consolidated statements of Jian Jiang International Trading Company Ltd. and are
presented for purposes of comparison.
Letter to shareholders 4
The JJ Auto share 5
Interim group management report
6
General information on the JJ Auto Group 6
Business and operating environment 6
Results of operations 7
Operating segments development 12
Net assets and financial position 14
Non-financial key performance indicators 19
Risk and opportunity report 19
Developments after the end of the reporting period 20
Outlook 20
Condensed consolidated interim financial statements
21
Statement of comprehensive income 21
Statement of financial position 23
Statement of changes in equity 25
Statement of cash flows 27
Selected notes to the condensed consolidated interim financial statements 29 Responsibility statement and cautionary note regarding forward-looking statements 42
LETTER TO SHAREHOLDERS
LETTER TO SHAREHOLDERS
Dear fellow shareholders,
I am delighted to see the support from you to make a successful listing of JJ Auto AG at the Frankfurt Stock Exchange possible on 16th June 2014 and at the Warsaw Stock Exchange on 18th June 2014. Being listed is just a stepping stone for JJ Auto Group. As we move forward, we will work together to make JJ Auto Group a successful company on the stock exchange. JJ Auto Group was founded in 1998. I am the sole founder of the Group. We specialize in the manufacturing and selling of commercial vehicle fasteners, heavy-duty machine parts and automotive tools and parts. We started as a small workshop with a small production volume. After years of endeavor, we managed to increase our production volume to more than 80,000 tons per annum. Being a listed company, the equity market not only provides alternative financing sources to the company, it also improves the reputation and position as an overseas listed company in China. Consequently, we will be able to strengthen our competitive advantages and promote our products domestically or internationally.
In the past, the company has gone through a series of challenges such as expansion in facilities, machineries and diversification of our products and we managed to cope with all of these challenges. We will continue to strengthen the research, development and quality control of our products. As for the first half of the year, the company sales reached EUR 52 million (RMB 439 million). It will be a challenging task for the management to grow but given that our management has long term experience in the auto industry, we are confident that we can achieve our target.
Last but not least, on behalf of the management, I am really appreciative and thankful for the contributions and support given by all the stakeholders. We will take any opportunity given to us in order to make the company more valuable to the stakeholders.
Sincerely, Mr. Jianhui YE CEO of JJ Auto AG
THE JJ AUTO SHARE
Share price performance
Good start at Frankfurt and Warsaw Stock Exchange but weak post-IPO
development due to negative market sentiment
JJ Auto reached its goal of a public dual listing in Frankfurt and in Warsaw. The shares of JJ Auto started trading at a price of EUR 7.30 – above the offering price of EUR 7.17 – on the General Standard segment of the Frankfurt Stock Exchange. Trading in the Parallel Market of the Warsaw Stock Exchange started on June 18. The first price was PLN 30 – almost equal to the offering price of PLN 29.99.
Unfortunately, the XETRA share price could not remain on this level and depreciated significantly after the IPO to EUR 5.24 as of June 30, the end of the reporting period. During the following trading days this trend has been reversed, so that loss was partially compensated. As at July 2, the share quoted at EUR 6.45. Notwithstanding the negative market sentiment with regard to Chinese companies, that are also listed in Germany and released disappointing ad hoc news during the last months, JJ Auto share developed volatile and share price further decreased to EUR 5.53 as at August 18.
The benchmark indices DAX and SDAX also could not continue their positive development. In July and August, both came down closing at 9,245.33 and 6,936.3 points respectively. FOR MORE DETAILED INFORMATION ON JJ AUTO SHARE AND LATEST COMPANY NEWS, PLEASE VISIT: http://www.jj-auto.de/en/investor-relations.html
XETRA closing prices as of August 18, 2014 JJ Auto share: EUR 5.53
INTERIM GROUP MANAGEMENT REPORT
GENERAL INFORMATION ON THE JJ AUTO GROUP
JJ Auto is a specialized manufacturer and supplier of automotive parts. The company has focused on serving the automotive aftermarket and has rich industry experience and technology know-how since the commencement of its business in 1998. JJ Auto is primarily involved in the in-house manufacturing and trading of commercial vehicle fasteners, heavy-duty machine parts and automotive tools and parts.
JJ Auto is comprised of four companies; JJ Auto AG, a company incorporated under the laws of Germany, which acts as the ultimate holding company of JJ Auto and holds 100% of the equity interest in Jian Jiang International Trading Company Limited,JJ Auto Hong Kong, a company incorporated under the laws of Hong Kong, which assumes the role of an intermediate holding and trading company and holds 100% of the equity interest in Quanzhou Minke Trading Co., Ltd., a company incorporated under the laws of the People’s Republic of China (PRC) which assumes the role of a trading company and holds 100% of the equity interest in the sole manufacturing company, Quanzhou Jianjiang Automobile Fittings Co., Ltd., a company incorporated under PRC law and based in Jinjiang, Fujian province, China.
Mr. Ye, the sole shareholder of Create Win Investment Holdings Company Ltd. (Create Win), took over ectus 63. AG on 21 January 2014 through a purchase agreement with Create Win. On 22 January 2014, the Company’s name changed from “ectus 63. AG” to “JJ Auto AG” by general shareholder meeting. JJ Auto AG was registered in the Commercial Register on 10 March 2014. On 8 April 2014, JJ Auto Group was formed through a post-establishment agreement by JJ Auto AG acquired 100% of the shares in JJ Auto Hong Kong by a contribution in kind. Subsequently, JJ Auto AG was listed at the Frankfurt Stock Exchange on 16 June 2014 and listed at the Warsaw Stock Exchange on 18 June 2014.
BUSINESS AND OPERATING ENVIRONMENT
Overall economic environment
The economic growth in China is slowing down and the GDP grew by 7.4% in the first half of the year 2014. Growth in the second quarter stood at 7.5%, picking up from the 7.4% in the first quarter of Year 2014. In order to sustain the growth, China’s government is expanding its domestic consumption policies. The domestic consumption is growing steadily. For the 1st half year, retail consumption grew by 12.1%.
The Chinese economy is showing a sign of picking up, as the job market is growing and there are more positive developments regarding the structural reform. More new jobs were created in the first six months which will further increase the domestic demand. With consumption contributing to 52.4% of GDP in the first half year, the domestic demand is the main driver for growth.
The manufacturing activities slowed down in the first half of the year. As the demand of goods from domestic and overseas is starting to grow again, the manufacturing activities will
increase as well in the coming months. The purchasing managers’ index shows that there is an increase in the index for July 2014.
The Chinese government will continue with its reform agenda and transformation program. This is to ensure a healthy development of the Chinese economy in the future economic environment. The economic environment is still complicated and increases the challenges facing the Chinese government. Therefore, the government is most likely to continue its targeted easing measures to sustain growth.
Automotive industry in China
Despite a slowing economy in China, the automotive industry sales were strong during the first six months of the year. The slowing economy did have an impact on the commercial vehicle market. Sales of trucks and buses decreased but sales of passenger cars have increased.
The Chinese government will continue to invest in infrastructure and heavy industry. These will be the growth drivers for commercial vehicle and heavy duty machinery. However, what is more concerning for the commercial vehicle industry is the stricter emission standards and slowing economic growth. Stricter environmental regulations are pushing up the price for the commercial vehicles.
While there are more challenges lying ahead for the commercial vehicle industry, overseas leading commercial vehicle makers are still rushing into China. For example, MAN has partnered with SinoTruk while Mercedes-Benz has a joint venture with Foton Motor. The overseas commercial vehicle makers are taking their positions in the Chinese market. There are still a lot of opportunities for the commercial vehicle manufacturers to tap the market share as the freight activity continues to increase. One of the contributing factors is online trading which requires transportation of goods from one place to another.
The slowing down in commercial vehicles segment is expected to be a temporary development in the Chinese markets. As the Chinese government continue to stimulate domestic demand, the demand for passenger vehicles increases. This is partly due to the increase of purchasing power of Chinese consumers. In addition, the increase is due to auto financing which is readily available for the consumers to finance their vehicle.
RESULTS OF OPERATIONS
The following table shows the income statement for the financial period ended June 30, 2014 compared to the income statement for the financial period ended June 30, 2013.
On 22 January 2014, a general shareholder meeting was held and the Company’s name changed from “ectus 63. AG” to “JJ Auto AG”. JJ Auto AG was registered in the Commercial Register on 10 March 2014. JJ Auto Group was formed on 8 April 2014 through a post-establishment agreement. With the formation of JJ Auto Group, business operations in subsidiaries are absorbed into JJ Auto Group.
The legally relevant group company of JJ Auto exists since the date of its contribution (April 8, 2014). For the time period before the obligation for consolidated financial statements, the values were calculated under analogous application of the principles of reverse acquisition. Under analogous application of the principles of reverse acquisition, the income statement combines the JJ Auto Hong Kong (Jian Jiang International Trading Company Ltd.) consolidated statement with the income statement of JJ Auto AG for the period from 1 January 2014 to 30 June 2014. As for 1 January 2013 to 30 June 2013 the figures concern the consolidated statements of JJ Auto Hong Kong and presented for purposes of comparison. kEUR Q2 2014 Q2 2013 Change in % H1 2014 H1 20133 Change in % Revenue 30,786 29,962 2.8 52,221 48,741 7.1 Cost of sales (22,754) (22,982) 1.0 (39,892) (37,867) (5.3) Gross profit 8,032 6,980 15.1 12,329 10,874 13.4 Other income 20 102 (80.4) 56 130 (56.9)
Selling and distribution
expenses (283) (138) (105.1) (567) (262) (116.4) Administrative expenses (482) (336) (43.5) (867) (513) (69) Other operating expenses / income (16) 1 (1,700) (16) (130) 87.7 Profits from operations/ EBIT 7,271 6,609 10.0 10,935 10,099 8.3 Finance income 31 17 82.4 60 32 87.5 Finance expenses (20) (20) 0 (38) (42) 9.5
Profit before income
tax 7,282 6,606 10.2 10,957 10,089 8.6
Income tax (1,827) (1,695) (7.8) (2,796) (2,566) (9.0)
Net profit for the
period 5,455 4,911 11.1 8,161 7,523 8.5
Gross margin in % 26.1 23.3 2.8pp 23.6 22.3 1.3pp
3
The figures H1 2013 concern the consolidated statements of JJ Auto Hong Kong and are presented for purposes of
EBIT margin in % 23.6 22.1 1.5pp 20.9 20.7 0.2pp Net profit margin in % 17.7 16.4 1.3pp 15.6 15.4 0.2pp
Revenue
Revenue increased by kEUR 3,480 from kEUR 48,741 in H1 2013 to kEUR 52,221 in H1 2014. The increase represents 7.1% for the first six months of the year 2014. Revenue increase is mainly related to the increase of average selling price. The increase was less than expected in the second quarter of 2014 as there was a delay in sales at the end of June 2014. Revenue only increased by kEUR 824 in the second quarter of 2014 as compared with the previous year second quarter. This delay was caused by late delivery to customers.
Measured in RMB, the functional currency of JJ Auto, revenue increased from kRMB 397,442 by 10.6% in H1 2013 to kRMB 439,393 in H1 2014. In the reporting period the average selling prices increased by 6.9%.
Cost of sales
Cost of sales consists of costs for raw materials, labour costs, manufacturing overheads, trading goods and outsourcing fees.
The following table shows a breakdown of cost of sales for the period under review and as a percentage of total cost of sales for each category:
H1 2014 H1 20134 kEUR % kEUR % Raw materials 23,981 60.1 25,594 67.6 Labour costs 678 1.7 1,444 3.8 Manufacturing overheads 2,592 6.5 3,042 8.0 Trading goods 12,436 31.2 7,230 19.1 Outsourcing fees 205 0.5 557 1.5 Total 39,892 100.0 37,867 100.0
Raw material decreased from kEUR 25,594 in H1 2013 to kEUR 23,981. The production volume decreased mainly in the heavy duty parts business as demand was slowing down. However, the production volume decrease was off-set by the increase in trading goods. The trading goods increased due to higher demand especially on automotive tools and parts.
Gross profit and gross margin
The gross profit for the period of H1 2014 increased by kEUR 1,455 to kEUR 12,329 from kEUR 10,874 in H1 2013. The gross profit margin increased by 1.2 percentage points to 23.6% in H1 2014 as compared to 22.4% in H1 2013. The increase in gross profit margin is mainly due to higher average selling price as the company is promoting higher quality products with a higher selling price.
Other income
Other income decreased kEUR 74 by 56.9% to kEUR 56 in H1 2014 as compared with kEUR 130 in H1 2013 because less scrap steel was sold in H1 2014 as compared with H1 2013
Selling and distribution expenses
The major cost attributed to selling and distribution expenses comprised of advertisement costs which accounted for 65.1% and travelling costs which accounted for 19.2% of the total selling and distribution expenses in H1 2014. Selling and distribution expenses increased by kEUR 305 or by 116.4% to kEUR 567 in H1 2014 as compared to kEUR 262 in H1 2013. The increase was mainly due to an increase in advertisement expenses to expand the company’s distribution network and to further increase the company’s revenue.
Administrative expenses
Administrative expenses are mainly comprised of payroll related expenses and office expenses. Payroll related expenses accounted for 30.6% and office expenses accounted for 48.1% respectively in H1 2014. Administrative expenses increased by kEUR 354 by 69.0% to kEUR 867 in H1 2014 as compared to kEUR 513 in H1 2013. The increase in administrative expenses was mainly due to IPO expenses and additional expenses from the listed company in Germany.
Other operating expenses
Other operating expenses are the losses incurred on loss of disposal of machineries. Other operating expenses decreased by kEUR 114 from kEUR 130 in H1 2013 to kEUR 16 in H1 2014. This is mainly due to lesser disposal of machineries in H1 2014 as compared with H1 2013.
EBIT
EBIT increased by kEUR 836 from kEUR 10,099 in H1 2013 to kEUR 10,935 in H1 2014. EBIT increased mainly because of higher gross profit margin which was partially off-set by the increase of distribution and administrative expenses.
Income tax
Income tax increased from kEUR 2,566 in H1 2013 to kEUR 2,796 in H1 2014. The increase in income tax is due to higher pre-tax profits.
Net profit and net profit margin
Net profit increased by kEUR 638 from kEUR 7,523 in H1 2013 to kEUR 8,161 in H1 2014. The net profit margin increased from 15.4% in H1 2013 to 15.6% in H1 2014. The profit
increased in H1 2014 as compared with H1 2013 mainly because of increase in gross profit margin. The gross profit margin increased from 22.3% in H1 2013 to 23.6% in H1 2014.
OPERATING SEGMENTS DEVELOPMENT
In H1 2014 and H1 2013, the Group’s three segments revenue and gross profit developed as follows:
kEUR H1 2014 H1 20135 Change in %
Commercial vehicle fasteners
Revenue 25,611 23,299 9.9
% of total revenue 49.0 47.8 1.2pp
Gross profit 6,338 5,578 13.6
Gross profit margin % 24.8 23.9 0.9pp
Heavy-duty machine parts
Revenue 12,390 15,252 (18.8)
% of total revenue 23.7 31.3 (7.6pp)
Gross profit 3,193 3,617 (11.7)
Gross profit margin % 25.8 23.7 2.1pp
Automotive tools and other parts
Revenue 14,154 9,978 41.9
% of total revenue 27.1 20.5 6.6pp
Gross profit 2,791 1,656 68.5
Gross profit margin % 19.7 16.6 3.1pp
Others
Revenue 66 212 (68.9)
% of total revenue 0.1 0.4 (0.3pp)
Gross profit 7 23 (69.6)
Gross profit margin % 10.6 10.8 1.0pp
5 The figures H1 2013 concern the consolidated statements of JJ Auto Hong Kong and are presented for purposes of
Commercial vehicle fasteners
The sales of commercial vehicle fasteners increased by 9.9% from EUR 23.3 million in H1 2013 to EUR 25.6 million in H1 2014. The gross profit increased by 13.6% from kEUR 5,578 in H1 2013 to kEUR 6,338 in H1 2014. The gross profit margin increased by 0.9 percentage points from 23.9% in H1 2013 to 24.8% in H1 2014. The increase was mainly due to increase in high quality products with higher prices.
Heavy-duty machine parts
The sales of heavy-duty machine parts decreased by 18.8% from EUR 15.3 million in H1 2013 to EUR 12.4 million in H1 2014. The main reason for the decrease is orders in second quarter which sales will be recognized in the third quarter due to delayed delivery to customers. The gross profit decreased by 11.7% from kEUR 3,617 in H1 2013 to kEUR 3,193 in H1 2014. The gross profit margin increased by 2.1 percentage points from 23.7% in H1 2013 to 25.8% in H1 2014. The increase in gross profit margin was due to higher selling price.
Automotive tools and other parts
The sales of automotive tools and other parts increased by 41.9% from EUR 10.0 million in H1 2013 to EUR 14.2 million in H1 2014. The increase is due to higher demand in the market as the sales of passenger cars are increasing in China. The gross profit margin increased 68.5% from kEUR 1,656 in H1 2013 to kEUR 2,791 in H1 2014. The gross profit margin increased by 3.1 percentage points from 16.6% in H1 2013 to 19.7% in H1 2014. Higher demand from customers for automotive tools and other parts resulted in higher selling price for the products.
NET ASSETS AND FINANCIAL POSITION
Capital structure
The company capital increased from EUR 57.4 million as of 31 December 2013 to EUR 66.4 million as of 30 June 2014. The equity ratio increased from 82.5% as of 31 December 2013 to 83.4% as of 30 June 2014. Given the continuing cash flow from operations, the management is planning to utilize the accumulated cash flow for future expansions. There is no financing from a local bank to provide long term investment for the company.
Capital expenditures
The table below shows the cash flows from capital expenditure for H1 2014 compared to the capital expenditure for H1 2013: kEUR H1 2014 H1 20136 Change in % Machinery 0 371 100.0 Total 0 371 100.0
There were no capital expenditures incurred during first half of 2014 as compared with first half of 2013 where the management purchased machineries that amounted to kEUR 371.
The company managed to issue 100,240 of new share at Euro 7.17 per share during an initial public offering. The company is planning to expand in capacity up to 130,000 tons per annum.
Net assets
The following table shows the consolidated statement of financial position as of June 30, 2014 compared to the consolidated statement of financial position as of December 31, 2013:
kEUR Jun 30, 2014 Dec 31, 20137 Change in % Non-current assets 8,047 8,414 (4.4) Current assets 71,612 61,121 17.2 Total assets 79,659 69,535 14.6
Equity and reserves 66,399 57,370 15.7
Current liabilities 13,260 12,165 9.0
Total liabilities 79,659 69,535 14.6
Total assets increased from EUR 69.5 million as of 31 December 2013 to EUR 79.7 million as of 30 June 2014. The increase was due to continuing profit from the operations.
Non-current assets
Non-current assets consist of property, plant, equipment, land use rights and prepayments for land use rights. Property, plant and equipment accounted for 79.9% in the non-current assets as of 30 June 2014. Whereas land use rights and prepayments for land use rights accounted for 16.1% and 4.0% respectively as of 30 June 2014. Depreciation and amortization reduced non-current assets from EUR 8.4 million as of 31 December 2013 to EUR 8.0 million as of 30 June 2014. Property, plant and equipment accounted for 80.6% in the non-current assets as of 31 December 2013. Whereas land use rights and prepayments for land use rights accounted for 15.6% and 3.8% respectively as of 31 December 2013.
7
The figures for 2013 concern the Consolidated Statements of JJ Auto Hong Kong and are presented
Current assets
Total current assets increased from EUR 61.1 million as of 31 December 2013 to EUR 71.6 million as of 30 June 2014. Current assets are mainly comprised of inventories, trade receivables, other current assets, cash and bank balances. As of 30 June 2014, inventories, trade receivables, cash and bank balances accounted for 16.9%, 34.2% and 48.5% from the total current assets as compared to 7.9%, 42.4% and 48.8% as of 31 December 2013. Inventories
Inventories increased from EUR 4.9 million as of 31 December 2013 to EUR 12.1 million as of 30 June 2014. There is a significant increase of 146.9% for the first half of 2014. The company has increased the production in June 2014 due to increasing orders from customers. Higher inventories for the finished goods at the end of June 2014 are for the sales on subsequent months.
Trade receivables
Trade receivables decreased from EUR 25.9 million as of 31 December 2013 to EUR 24.5 million as of 30 June 2014. The slight decrease is due to improvement in the collection from the customers.
Other current assets
Other current assets decreased from EUR 0.6 million as of 31 December 2013 to EUR 0.3 million as of 30 June 2014. The decrease resulted from the deduction of advertisement prepayments which were charged to selling and distribution expenses.
Cash and cash equivalents
Cash and cash equivalents amounted to EUR 34.7 million as of 30 June 2014. For a description of the changes in cash and cash equivalents in the first six months of 2014, see section “Cash Flow Statement“.
Equity
Our Group equity increased from EUR 57.4 million as of 31 December 2013 to EUR 66.4 million as of 30 June 2014. This represents an equity ratio of 83.4% as of 30 June 2014. The increase in equity is due to the profits generated from operations.
Current liabilities
Current liabilities increased from EUR 12.2 million as of 31 December 2013 to EUR 13.3 million as of 30 June 2014. Current liabilities are comprised of trade payables, other financial liabilities, other current liabilities, borrowings and tax payables. As of 30 June 2014, they accounted for 61.1%, 11.8%, 4.3%, 9.0%, 13.8% and as of 31 December 2013, they accounted for 55.6%, 12.0%, 8.2%, 9.8%, 14.4%.
Trade payables
Trade payables increased from EUR 6.8 million as of 31 December 2013 to EUR 8.1 million. The increase is primarily due to an increase in purchase of raw materials because there will be an increase of production at the end of June 2014.
Other financial liabilities
Other financial liabilities increased slightly from EUR 1.5 million as of 31 December 2013 to EUR 1.6 million. The increase is due to increase of accruals on production utilities.
Other current liabilities
Other current liabilities are comprised of VAT payable. Other current liabilities decreased from EUR 1.0 million as of 31 December 2013 to EUR 0.6 million as of 30 June 2014. The Company purchases were higher which resulted in lower VAT payable at the end of June 2014.
Borrowings
Borrowings are short term revolving credit and the company borrowings amounted to EUR 1.2 million as of 30 June 2014 and 31 December 2013.
Tax payable
Tax payable of Company amounted to EUR 1.8 million as of 30 June 2014 and 31 December 2013.
Financial position
Cash Flow StatementkEUR H1 2014 H1 20138 Change in %
Cash inflow/(outflow) from operating activities 4,633 3,015 53.7
Cash inflow/(outflow) from investing activities 0 (535) 100.0
Cash inflow/(outflow) from financing activities 681 (42) 1721.4
8
The figures for H1 2013 concern the Consolidated Statements of JJ Auto Hong Kong and are presented for purposes of
Cash inflow from operating activities increased by 53.7% from kEUR 3,015 in H1 2013 to kEUR 4,633 in H1 2014. Cash flow from operating activities increased mainly due to cash inflow from collection of trade receivables in H1 2014 of kEUR 1,145 as compared with H1 2013 which had cash out flow due to increase of trade receivables of kEUR 4,803. The effect is compensated by increase of inventory in H1 2013.
There are no investing activities in H1 2014 as compared with H1 2013 where cash used in investing activities amounted to kEUR 715 and cash generated from disposal of machineries amounted to kEUR 216. The results is net cash outflow of kEUR 535 in H1 2013.
Cash flow from financing activities increased by 1,721.4% from outflow of kEUR 42 in H1 2013 to inflow of kEUR 681 in H1 2014. The cash inflow was mainly from the proceeds of issue of new shares during the initial public offering in H1 2014. On the other hand the cash out flow was due to interest paid to the bank for revolving credit in H1 2013.
The net increase of cash and cash equivalents is kEUR 5,314 in H1 2014 and kEUR 2,438 in H1 2013 respectively. Cash and cash equivalents at the end of H1 2014 amounted to kEUR 34,710 as compared to kEUR 19,165 at the end of H1 2013. Given that there is sufficient amount of cash and cash equivalents available in the Group, there are no liquidity problems in the foreseeable future.
NON-FINANCIAL KEY PERFORMANCE INDICATORS
Human resources
Number of employees H1 2014 H1 2013
Production 538 558
Sales and marketing 15 14
Quality control 6 6
Research, design and development 7 7
Administration 12 11
Finance 7 6
Purchase 3 3
Total employees 588 605
The number of employees decreased by 17 from 605 in H1 2013 to 588 in H1 2014. The decrease in the production department is due to some employees’ voluntary leave of the company due to personal reasons.
Research & Development (“R&D”)
Research and development expenses are related to payroll, moulding and raw materials. Research and development expenses decreased from kEUR 69 in H1 2013 to kEUR 44 in H1 2014. The decrease in research and development expenses were followed by no investment in machineries in H1 2014 as compared with H1 2013. Research and development expenses are expected to increase as the management are planning to invest in machineries to increase capacity. The management will continue to invest in research and development in order to improve production efficiency and to produce new high quality products.
RISK AND OPPORTUNITY REPORT
The management is aware of the importance of risk management system as part of good corporate governance. The management is in the course of implementing a risk managment system. In order to implement a comprehensive risk management system, the management is going to engage with external consultants to carry out the implementation. For information on risks and opportunities, please refer to our risk report in the prospectus. There are no significant changes in risks and opportunities as of 30 June 2014.
DEVELOPMENTS AFTER THE END OF THE REPORTING PERIOD
There are no other significant events subsequent to June 30, 2014 until the date of this report.
OUTLOOK
As China is one of the world’s largest markets for automotive industry, it is expected that more and more foreign automotive manufacturer are targeting the Chinese automotive market to compete with domestic automotive manufacturers. The slowing economy in China has not hampered the growth for automotive industry especially for the passenger cars. Overall, the sales for automotive vehicles have increased through the end of first half year. For the next few months, the Chinese government will continue its easing measures to sustain growth.
The growth of automotive industry is likely to continue as the purchasing power of the Chinese population continues to rise. This indication is from automotive manufacturers like Ford where the company is very bullish on China and continues to invest heavily in China. It has just opened a transmission plant in Chongqing, China in June 2014. It is anticipated that other companies will follow the trend to invest in China.
The price of steel as the main raw material for automotive industry is lower. As the steel price lowers, the profitability for automotive industry increases. With the potential profitability and huge market in China, the automotive industry is perceived as a growing industry with promising opportunities for both, domestic and foreign companies.
China’s automotive industry continue to power ahead in the first half of the year which surprised industry executives and analysts who expected China’s automotive market would cool after growing significantly in the previous year. The growth is expected to continue as the economy structure continued to be optimized.
JJ Auto is planning to expand its production capacity for the next few months. It is to foresee that demand for the automotive parts will improve in the next few months. The quality of JJ Auto products are well accepted in the market and the demand will continue to grow in the foreseeable future.
The management expects to achieve growth in revenue of above 15% in RMB terms in the full financial year 2014. The gross profit margin is expected be maintained at least at 23% and EBIT margin is expected to be approximately 21%.
Berlin, August 28, 2014 JJ Auto AG
The Management Board
Jianhui YE (CEO) Clement Hoo (CFO) Barong YE (COO)
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Statement of comprehensive income
9kEUR Note Q2 2014 Q2 2013 H1 2014 H1 2013 Revenue 16 30,786 29,962 52,221 48,741 Cost of sales 17 (22,754) (22,982) (39,892) (37,867) Gross profit 8,032 6,980 12,329 10,874 Other income 18 20 102 56 130 Distribution expenses (283) (138) (567) (262) Administrative expenses (482) (336) (867) (513)
Other operating expenses 18 (16) 1 (16) (130)
Profit from operations 7,271 6,609 10,935 10,099
Finance income 19 31 17 60 32
Finance expenses 19 (20) (20) (38) (42)
Profit before income tax 7,282 6,606 10,957 10,089
Income tax 20 (1,827) (1,695) (2,796) (2,566)
Net profit for the period 5,455 4,911 8,161 7,523
Other comprehensive income for the period that may be reclassified to profit or loss in subsequent periods:
9
The figures for 2013 concern the consolidated statements of JJ Auto Hong Kong and are presented for purposes of
comparison. The legally relevant group company of JJ Auto exists since the date of its contribution (April 8, 2014). For the time period before the obligation for consolidated financial statements, the values were calculated under analogous application of the
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014 Exchange differences on
foreign currency translation (84) 13 (99) 1,646
Total comprehensive income
for the period: 5,371 4,924 8,062 9,169
Profit for the period attributable to:
– Owners of the parent 5,455 4,911 8,161 7,523
Total comprehensive profit for the period attributable to:
– Owners of the parent 5,371 4,924 8,062 9,169
Basic and diluted earnings per share
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014
Statement of financial position
10kEUR Notes June 30, 2014 Dec 31, 2013
ASSETS
Non-current assets
Property, plant and equipment 3 6,429 6,785
Land use rights 4 1,295 1,307
Prepayments for land use rights 5 323 322
Total non-current assets 8,047 8,414
Current assets
Inventories 6 12,103 4,853
Trade receivables 7 24,470 25,885
Other current assets 8 329 564
Cash and cash equivalents 9 34,710 29,819
Total current assets 71,612 61,121
Total assets 79,659 69,535
EQUITY AND LIABILITIES Equity
Share capital 10 8,100 011
Capital reserve (6,547) 0
Chinese statutory reserve 11 739 739
10 The figures for 2013 concern the consolidated statements of JJ Auto Hong Kong and are presented for purposes of
comparison. The legally relevant group company of JJ Auto exists since the date of its contribution (April 8, 2014). For the time period before the obligation for consolidated financial statements, the values were calculated under analogous application of the principles of reverse acquisition
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014 Retained earnings 11 62,453 55,077 Translation reserve 11 1,654 1,554 Total equity 66,399 57,370 Current liabilities Trade payables 12 8,102 6,766
Other financial liabilities 13 1,566 1,458
Other current liabilities 14 567 1,002
Borrowings 15 1,191 1,189
Tax payable 1,834 1,750
Total current liabilities 13,260 12,165
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014
Consolidated statement of changes in equity
kEUR
Attributable to equity holders of the parent company
Share capital Statutory reserves in China Capital reserves Currency translation reserve Retained earnings Total Balance as of Dec 31, 2012/ Jan 1, 2013 0 739 0 2,383 38,015 41,137 Total comprehensive income for the year 0 0 0 1,646 7,523 9,169 Balance of Jun 30,2013 0 739 0 4,029 45,538 50,306 Total comprehensive income for the period 0 0 0 (2,475) 9,539 7,064 Balance of Dec 31, 2013/ Jan 1, 2014 0 739 0 1,554 55,077 57,370 Issuance of shares (1) 50 0 0 0 0 50 Issuance of shares (2) 7,950 0 (7,165) 0 (50) 735 Issuance of shares (3) 100 0 618 0 0 718 Total comprehensive income for the period
0 0 0 100 7,426 7,526
Balance of
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014
Note (1) On the basis of the purchase agreement dated 21 January 2014 Mr. Jianhui Ye purchased JJ Auto AG. JJ Auto AG was registered in the Commercial Register on 10 March 2014 with share capital amounting to kEUR 50.
Note (2) On 8 April 2014 through a post-establishment agreement, the Company increased 7,950,000 shares from 50,000 to 8,000,000 shares by way of contribution in kind in form of all shares in JJ Auto Hong Kong to JJ Auto AG. The contribution in kind was treated as an analogous reverse acquisition and therefore no shared capital existed as of December 31, 2013.
Note (3) JJ Auto AG was listed in Frankfurt Stock Exchange and Warsaw Stock Exchange on 16 June 2014 and 18 June 2014 respectively. The number of shares issued to public is 100,240 shares.
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014
Cash flow statement
12
12
The figures for H1 2013 concern the Consolidated Statements of JJ Auto Hong Kong and are presented for comparison
purposes. The legally relevant group company of JJ Auto exists since the date of its contribution (April 8, 2014). For the time period before the obligation for consolidated financial statements, the values were calculated under analogous application of the
EUR H1 2014 H1 2013
Operating activities
Profit before income tax 10,957 10,089
Adjustments for non-cash expenses/(income)
Amortisation of land use rights 14 10
Depreciation of property, plant and equipment 365 326
Property, plant and equipment written off 0 129
Loss on disposal of PPE 0 149
Interest expense 38 42
Other non-cash expenses (2) 1
Operating cash flow before changes in working
capital 11,372 10,746
Inventories (7,250) (4,945)
Receivables 1,650 (4,179)
Payables 1,009 2,925
Income taxes paid (2,148) (1,532)
Cash inflows from operating activities 4,633 3,015
Investing activities
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014
13 Because of the analogous application of the principle of the revenue acquisition the comparative period does not include cash
and cash equivalents of JJ Auto AG as of 1H 2013. The cash and cash equivalents are recognized at the first-time consolidation.
Proceeds from disposal of PPE 0 216
Cash inflows/(outflows) from investing activities 0 (535)
Financing activities
Proceeds from issue of shares 719 0
Interest paid from borrowing (38) (42)
Cash outflows from financing activities 681 (42)
Net increase in cash and cash equivalents 5,314 2,438
Effects on cash and cash equivalents from
currency translation (473) 634*
Cash and cash equivalents at the beginning
of the period 29,869 16,093*
Cash and cash equivalents at the end of the
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014
Selected notes to the condensed consolidated interim financial statements of
JJ Auto AG
1. General Information
JJ Auto Group is involved in manufacturing and selling of commercial vehicle fasteners, heavy-duty machine parts and automotive tools and parts. The business is using raw steel to produce various automotive parts. The parts are heavily used by the automotive vehicle, thus the automotive parts are subjected to wear and tear situation. JJ Auto products are to replace the parts that are worn. The products also supply to axle factories where the parts will be used as a part for another product.
JJ Auto is comprised of four companies; JJ Auto AG, a company incorporated under the laws of Germany, which acts as the ultimate holding company of JJ Auto and holds 100% of the equity interest in Jian Jiang International Trading Company Limited , JJ Auto Hong Kong, a company incorporated under the laws of Hong Kong, which assumes the role of an intermediate holding and trading company and holds 100% of the equity interest in Quanzhou Minke Trading Co., Ltd., a company incorporated under the laws of the People’s Republic of China ( PRC ) which assumes the role of a trading company and holds 100% of the equity interest in the sole manufacturing company, Quanzhou Jianjiang Automobile Fittings Co., Ltd., a company incorporated under PRC law and based in Jinjiang, Fujian province, China.
On 8 April 2014, the share capital of the company was increased by a shareholders’ resolution through contribution. On 16 June 2014, JJ Auto AG was listed on the Frankfurt Stock Exchange and on 18 June 2014 it was listed on Warsaw Stock Exchange.
The Group structure of JJ Auto AG is as follow:
• JJ Auto AG, Germany.
The ultimate holdings of JJ Auto Group, hold 100% of Hong Kong subsidiary.
• Jian Jiang International Trading Company Limited, Hong Kong
The company holds 100% of PRC subsidiary.
• Quanzhou Minke Trading Company Limited, PRC.
The company holds 100% of operating subsidiary.
• Quanzhou Jianjiang Automobile Fittings Company Limited, PRC.
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014 2. Significant Accounting Policies
Statement of Compliance
The financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU IFRS”), as well as with the regulations under the commercial law set forth in section 315a (I) of the German Commercial Code (Handelsgesetzbuch-HGB). The Group has adopted all EU IFRS that were effectively on or before 1 January 2014. The financial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below.
The company has adopted IIFRS for the first time and has not prepared consolidated financial statements before either under IFRS nor under local GAAP. The company is a first-time adopter in accordance with IFRS 1 and has applied all standards and interpretations that were as of 30 June 2014. Reconciliation according to IFRS 1.24 is not applicable, because there were no consolidated financial statements of the reporting unit according to international or local accounting standards.
The following new or revised IFRSs, potentially relevant to the Group’s financial statements have been promulgated by the EU, but are not yet effective and have not been early adopted by the Group:
IFRS 10 Consolidated Financial Statements IFRS 11 Joint Arrangements
IFRS 12 Disclosures of Interests in Other Entities IAS 27 Separate Financial Statements
IAS 28 Investments in Associates and Joint Ventures
There are no other IFRSs or IFRIC interpretations promulgated by the EU. The following standards and interpretations are not yet promulgated by the EU and therefore are not adopted by the Group:
IFRS 9 Financial Instruments and subsequent amendments Improvements to IFRS (2010-2012) Initial mandatory application in the EU is still unknown Improvements to IFRS (2011-2013) Initial mandatory application in the EU is still unknown Amendments to IAS 19 Employee Benefits-Employee Contributions (initial mandatory application in the EU is still unknown) Amendments to IFRS 9 and IFRS 7 Financial Instruments and Financial Instruments- Disclosures: Initial Application and Transitional Regulations (initial mandatory application in the EU
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014 is still unknown)
IFRIC 21 Levies (initial mandatory application in the EU is still unknown)
IFRS 14 Regulatory deferral accounts (initial mandatory application in the EU is still unknown)
The significant accounting policies that have been used in the preparation of these financial statements are summarized below. The consolidated financial statements of JJ Auto have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as adopted by the European Union (EU) and under the historical cost convention, except as disclosed in the accounting policies below.
Assets and liabilities that are included in the balances sheets are distinguished between short and long term, and are described in detail in the notes to the financial statements. The consolidated profit and loss statements are prepared using the cost of sales method. Profits are compared with the costs incurred for their realization. The costs are allocated to the functional areas: production, sales and administration.
Basis of preparation
The condensed interim consolidation financial statements were prepared in accordance with Section 37w German Securities Trading Act (WpHG), the International Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB), its interpretations of the International Financial Reporting Standards Interpretations Commitee (IFRS IC) for condensed interim financial information effective within the European Union and the additional requirements of German commercial law pursuant to sec. 315a (1) of the German Commercial Code (HGB). Accordingly, these condensed second quarter consolidated financial statements do not include all of the information required in annual consolidated financial statements by IFRS.
Consolidation of a subsidiary begins when the company obtains control over the subsidiary and ceases when the company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit and loss and other comprehensive income from the date the Company gains control until the date when the company ceases to control the subsidiary. JJ Auto Group was formed in April 2014 when JJ Auto AG acquired 100% of the shares in JJ Auto Hong Kong by a contribution in kind. Because of the shareholding structure of the group before and after the transaction, the transaction is considered to be a transaction under common control within the meaning of IFRS 3.B1, for which IFRS 3 is not applicable reverse acquisition in terms of IFRS 3.B19 is also not applicable, because the presence of a business in the JJ Auto AG prior to the transaction would have been a precondition. Such business did not exist.
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014
have been recognized, considering the economic substance of the transaction analogous to a reverse acquisition.
3. Property, plant and equipment
All property, plant and equipment are located in the PRC. The net carrying amount is kEUR 6,429 as of 30 June 2014 (Year end 2013: kEUR 6,785)
4. Land use rights
All land use rights of the group are located in PRC. The net carrying amount of the land use rights amounts as of 30 June 2014 to kEUR 1.295 (Year end 2013: kEUR1,307). The leasing fees for the lease term were already fully paid in advance.
Normally land use rights in PRC have a lease term of 50 years and are amortized over the lease term. The amortisation is recognized in the profit and Loss.
5. Prepayments for land use rights
The prepayments for land use rights are addressed to the PRC land authority for the acquisition of land use right of the PRC. The amount is unsecured and bears no interest. As soon as the Group gets the license issued for land use rights from the PRC land authority, the prepayments will be reclassified into balance sheet item land use rights and are amortized over the relevant lease terms on straight line basis.
6. Inventories 30 June 2014 31 December 2013 kEUR kEUR Raw materials 593 2,999 Finished goods 9,684 1,368 Work-in-process 1,826 486 12,103 4,853 7. Trade receivable
The average credit period on sales on goods is 60 days. There are no trade receivables that are either past due or impaired. The amount of trade receivable as of 30 June 2014 is kEUR 24,470 (Year end 2013: kEUR 25,885).
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014 8. Other current assets
30 June 2014
31 December 2013
kEUR kEUR
Advances for social insurance 24 11
Prepayments 305 553
329 564
Other current assets are unsecured, bear no interest and are repayable on demand. 9. Cash and cash equivalents
30 June 2014 31 December 2013 kEUR kEUR Cash at bank 34,709 29,810 Cash on hand 1 9 34,710 29,819
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014 10. Share capital 30 June 2014 31 December 2013 kEUR kEUR Paid up
Paid up ordinary shares of Euro 1 each brought forward
Issuance of share (1) Issuance of share (2) Issuance of share (3) 0 50 7,950 100 0 0 0 0 Balance of June 30, 2014 8,100 0
Note (1) On the basis of the purchase agreement dated 21 January 2014 Mr. Jianhui Ye purchased JJ Auto AG. JJ Auto AG was registered in the Commercial Register on 10 March 2014 with share capital amounting to kEUR 50.
Note (2) On 8 April 2014 through a post-establishment agreement, the Company increased 7,950,000 shares from 50,000 to 8,000,000 shares by way of contribution in kind in form of all shares in JJ Auto Hong Kong to JJ Auto AG. The contribution in kind was treated as an analogous reverse acquisition and therefore no shared capital existed as of December 31, 2013.
Note(3) JJ Auto AG was listed in Frankfurt Stock Exchange and Warsaw Stock Exchange on 16 June 2014 and 18 June 2014 respectively. The number of shares issued to public is 100,240 shares.
11. Reserves
In accordance with relevant laws and regulations of the PRC, the Group is required to transfer 10% of its profit after tax, prepared in accordance with the accounting regulation of the PRC to the chinese statutory reserve until the reserve balance reaches 50% of the registered capital. Such reserve may be used to offset retained earnings or increase the registered capital of the Group, subject to the approval from the PRC authorities, and are not available for dividend distribution to the owner of the Group. The balance of chinese statutory reserve as of 30 June 2014 amounted to kEUR 739 (Year end 2013: kEUR 739).
Retained earnings is amounted to kEUR 62,453 as of 30 June 2014 (year end 2013: kEUR 55,077). Based on the resolution held on May 2014, the management proposes to declare
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014
dividends from retained earnings generated from year 2014.
Translation reserve represents exchange differences arising from the translation of the financial statements of a foreign subsidiary whose functional currency is different from that of the Group’s presentation currency and is the only component of other comprehensive income. This reserve is not available for distribution as dividends. The amount as of 30 June 2014 is kEUR1,654 (year end 2013: 1,554).
12. Trade payables
Trade payables are unsecured; bear no interest and the normal credit terms granted by the trade payables ranging from 10 days to 30 days. The carrying amount of trade payable as of 30 June 2014 is kEUR 8,102 (year end 2013: kEUR 6,766).
13. Other financial liabilities
30 June 2014 31 December 2013 kEUR kEUR Accrual of expenses 535 482
Amount due to a Director 1,031 976
1,566 1,458
Other financial liabilities are unsecured, bear no interest and are repayable on demand. 14. Other current liabilities
Other current liabilities consist of value added tax payables. The amount as of 30 June 2014 is kEUR 567 (Year end 2013: kEUR 1,002). Other current liabilities are unsecured, bear no interest and are repayable on demand.
15. Borrowings
Term loan are secured by the Group’s buildings and land use rights and personal guaranteed by a director and a key management personnel of the Group. The term loans are repayable in 12 months. The carrying amount as of 30 June 2014 is kEUR 1,191 (Year end 2013: kEUR 1,189).
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014 16. Revenue
Group’s revenue is as follows:
30 June 2014 30 June 2013 kEUR kEUR Revenue:- External customers 52,221 48,741 Geographical:- PRC 52,221 48,741 Product lines:-
Commercial vehicles fasteners 25,611 23,299
Automotive tools and
components 14,154 9,978
Quarry machine parts 12,390 15,252
Others 66 212
52,221 48,741
Revenue represents the net invoiced value of goods sold, after allowance for trade discounts, sales rebated and VAT. The Group does not have any revenue from a single external customer which represents 10% or more of the Group’s revenue during the period. The Group’s revenue contribution is exclusively from PRC.
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014 17. Cost of sales
The following table shows a breakdown of costs of sales:
30 June 2014 30 June 2013 kEUR kEUR Raw materials and
supplementary materials 23,981 25,594 Employee benefits 678 1,444 Manufacturing overheads 2,592 3,042 Trading goods 12,436 7,230 Outsourcing 205 557 39,892 37,867
18. Other income and other expenses
Other income amounted to kEUR 56 (H1 2013: kEUR 130). Other expenses amounted to kEUR 16 (H1 2013 kEUR 130).
19. Finance income and finance costs
Finance income consisted of Interest income from cash and cash equivalents and amounted to kEUR 60 (H1 2013: kEUR 32). Finance costs consisted of Interest expenses for borrowings and amounted to kEUR 38 (H1 2013 kEUR 42).
20. Tax expenses
Tax expense amounted to kEUR 2,796 (H1 2013 kEUR 2,566). The provision of PRC income tax is calculated for the Group based on statutory income tax rate at 25% in accordance with the relevant PRC tax rules.
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014 21. Earnings per share
30 June 2014 30 June 2013 Profit for the period attributable
to the owner of the Group (kEUR)
8,161 7,523
Weighted average number of
ordinary shares in issue (in thousands)
7,992 7,950
Basis earnings share* (EUR) 1.02 0.95
*The basic earnings per share and the diluted earnings per share are identical, because there are no dilutive equity instruments. Under analogous application of the principles of reverse acquisition, the weighted average number of the outstanding ordinary shares in the reporting period is calculated as follows:
Based on the analogous application of IFRS 3.B19, the calculation of the weighted average number in the period, in which the reverse acquisition has been made, was done in
accordance with IFRS 3.B26. Consequently, the denominator in the calculation of earnings per share is calculated as the sum of:
(a) the number of outstanding ordinary shares from the beginning of that period to the acquisition date, based on the weighted average number of outstanding shares of the formal-legal acquiree (the accounting acquirer), which are multiplied with the exchange ratio stated in the merger agreement; and
(b) the number of outstanding ordinary shares from the acquisition date to the end of this period equal to the actual number of outstanding shares of the formal-legal acquirer (the accounting acquiree) in this period.
Under analogous application of the principles of reverse acquisition, consequently the special requirements of IFRS 3.B27 have to be applied for the calculation of the earnings per share for the comparative period. Based on the exchange ratio, the average number of ordinary shares for the year ended 31 December 2013 amounts to 7,950,000.
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014 22. Segment information
The segment information for H1 2014 and H1 2013 are as follow:
30 June 2014 Commercial vehicles fastener Heavy-duty machine parts Automotive tools and other parts Others Total
kEUR kEUR kEUR kEUR kEUR
Revenue:
External customers 25,611 12,390 14,154 66 52,221
Inter-segments 0 0 0 0 0
Total 25,611 12,390 14,154 66 52,221
Segments gross profit 6,338 3,193 2,791 7 12,329
30 June 2013 Commercial vehicles fastener Heavy-duty machine parts Automotive tools and other parts Others Total
kEUR kEUR kEUR kEUR kEUR
Revenue:
External customers 23,299 15,252 9,978 212 48,741
Inter-segments 0 0 0 0 0
Total 23,299 15,252 9,978 212 48,741
Segments gross profit 5,578 3,617 1,656 23 10,874
23. Seasonality or cyclicality
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014 24. Dividend payment or proposed dividend
The management of the company had proposed 15% of net profit from the financial year 2014 as dividend in May 2014. The declared dividend is to be paid in year 2015.
25. Currency translation
The interim condensed consolidated financial statements have been presented in Euros ("EUR"), the reporting currency of the Group. The applied rates of exchange are as outlined below:
EUR/RMB RMB/HKD
Closing rate Average rate Closing rate Average rate
June 30, 2013 8.0295 8.1542 0.8028 0.7958
December 31, 2013 8.4115 8.2239 0.7879 0.7986
June 30, 2014 8.3989 8.4141 0.7922 0.7941
26. Related party disclosures –significant related party transactions
In addition to the transactions and balances detailed elsewhere in this report, the Group had the following transactions and balances with related parties as disclosed below:
Related party, defined as close members of the family to directors, including spouse, children, brothers and sisters. Balances and transactions between the company and its subsidiaries, which are related parties of the company have been eliminated on consolidation and are not disclosed in the note.
kEUR 30,2014 June Dec 31 2013
Other current liabilities
Loan due to a directors (non-trade) 1,032 976
The balances due from related parties are unsecured, interest-free and repayable on demand.
There were no outstanding balances arising from related party transactions other than those described above.
27. Events after the reporting date
There have been no events since June 30, 2014 that will require an adjustment to the carrying amount of the assets and liabilities, or that will need to be disclosed under this.
FOR THE PERIOD JANUARY 1 TO JUNE 30, 2014 28. Contingencies and other financial obligations.
There are no contingencies and other financial obligation under the period. 29. German Corporate Governance Code
The current declaration of the executive board and supervisory board of JJ Auto AG pursuant to Sec.161 AktG (“Aktiengesetz”: German Stock Corporation Act) on the German Corporate Governance Code will be published in December 2014.
30. Auditor’s review
The condensed interim consolidated financial statements and the interim management report were neither reviewed nor audited by an public auditor (Section 37w Para. 5 of the German Securities Trading Act).
Berlin, August 28, 2014 JJ Auto AG
The Management Board
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
RESPONSIBILTY STATEMENT
To the best of our knowledge, and in accordance with the applicable reporting principles for interim reporting, the interim condensed consolidated financial statements provide a true and fair view of the assets, liabilities, financial position and profit and loss of the Group, and the Group interim management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group in the remaining months of the fiscal year.
Berlin, August 28, 2014 JJ Auto AG
The Management Board
Jianhui YE (CEO) Clement Hoo (CFO) Barong YE (COO)
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This document contains forward-looking statements, which are based on the current estimates and assumptions by the corporate management of JJ Auto AG. Forward-looking statements are characterized by the use of words such as expect, intend, plan, predict, assume, believe, estimate, anticipate and similar formulations. Such statements are not to be understood as in any way guaranteeing that those expectations will turn out to be accurate. Future performance and the results actually achieved by JJ Auto AG and its affiliated companies depend on a number of risks and uncertainties and may therefore differ materially from the forward-looking statements. Many of these factors are outside JJ Auto AG’s control and cannot be accurately estimated in advance, such as the future economic environment or the actions of competitors and others involved in the marketplace. JJ Auto AG neither undertakes nor plans to update any forward-looking statements.
IMPRINT
Published by
JJ Auto AGc/o Squire Sanders (US) LLP Unter den Linden 14
10117 Berlin Germany
Investor Relations contact
Clement Hoo CFO Email: [email protected] Kirchhoff Consult AG T.: +49 40 60 91 86 0 F.: +49 40 60 91 86 60 Email: [email protected]
